The United States slammed a World Trade Organization ruling Monday that favored Canada in a longstanding battle over lumber imports, holding the case up as further justification for Washington's campaign to drastically reform the global trade body.

The WTO's dispute settlement body -- long a target of attacks by US Trade Representative (USTR) Robert Lighthizer -- agreed with Canada's complaints that Washington had violated trade rules when imposing duties on lumber widely used in construction.

Lighthizer called the findings "erroneous" and said they "prevent the United States from taking legitimate action in response to Canada's pervasive subsidies for its softwood lumber industry."

"This flawed report confirms what the United States has been saying for years: the WTO dispute settlement system is being used to shield non-market practices and harm US interests," he said in a statement.

Under President Donald Trump, Lighthizer has led a campaign to reform the WTO, claiming it is unfair to the United States, and as a result the US has paralyzed the Dispute Settlement Body which arbitrates trade grievances among members.

The upheaval led to the resignation of WTO Director-General Roberto Azevedo.

The United States lost to Canada in a dispute over prices of imported softwood lumber used in home construction
The United States lost to Canada in a dispute over prices of imported softwood lumber used in home construction AFP / Clement Sabourin

In a column last week, Lighthizer said the trade body and the dispute system needs major changes, and he blamed it for allowing "profound distortions to the world economy" caused by China.

Returning to a strictly bilateral system would be better than the current flawed structure, he wrote.

The WTO report upheld most of Ottawa's complaints against the US, saying Washington's claims the government was providing illegal subsidies to lumber producers were based on miscalculated prices and transactions like purchase of electricity that did not qualify as subsidies.

It was the ninth complaint filed by Ottawa over Washington's use of antidumping and countervailing duty measures -- long the subject of anger from American trading partners.

In the latest battle in the 40-year-old dispute, the US in 2017 imposed import duties of 18 percent on Canadian softwood lumber imports to compensate for what it said was "dumping" of the product, meaning it was sold below market prices and received government subsidies, thereby hurting US producers.

USTR said imports of softwood lumber products from Canada in 2016 totaled $5.78 billion.

"The United States is evaluating options in response to the panel report," USTR said.