U.S. plans to penalize Canadian wheat imports

The government issued rulings Friday that would impose penalty tariffs on two types of wheat from Canada, saying that America’s biggest trading partner unfairly subsidizes its wheat farmers and dumps grain on the U.S. market.

The Commerce Department decisions on two related trade complaints send the cases to the U.S. International Trade Commission, which will decide whether to set the border taxes, based on how much U.S. farmers are being hurt by the Canadian trade practices.

If the commission orders the border taxes, the Commerce Department says they should be set around 14 percent on imports of durum, a type of wheat used to make pasta, and hard red spring wheat used to make bakery flour and breads.

Canadian officials rejected the allegations and said they complied with global trade rules.

Federal Reserve

Greenspan defends central bank’s actions

Federal Reserve Chairman Alan Greenspan on Friday defended the Fed’s recent worries about deflation, which have sent financial markets on a roller-coaster ride. He said it was the job of a central bank to guard against even remote risk of danger.

Greenspan said it was sometimes necessary for the Fed in its conduct of interest rate policy to take out an insurance policy “against the emergence of especially adverse outcomes.”

He said that while the possibility of deflation was viewed as remote, the Fed needed to be alert to the possibility because the consequences could be so severe as it attempted to manage monetary policy in an always-uncertain environment. Greenspan and his colleagues began talking in earnest about the possibility of deflation in the spring.

Kansas City, Mo.

Aquila to pay fine

Kansas City, Mo-based Aquila Inc. agreed to pay $75,975 to settle Federal Energy Regulatory Commission charges that its merchant energy unit was involved in manipulating the Western power markets during the 2000-2001 power crisis.

In a prepared statement Friday, Aquila said it settled the case to avoid heavier litigation costs from proving that its trading practices were proper.

In March, FERC asked more than 60 suppliers to explain why certain wholesale trades didn’t constitute illegal manipulation of Western energy markets, a practice revealed in the wake of Enron Corp.’s bankruptcy filing in late 2001.

Aquila denies improper conduct and “strongly believes” the allegations against Aquila Merchant Services didn’t have any merit.

International

BP eyes Russian oil

British energy group BP PLC said Friday it had completed the biggest foreign direct investment in post-Communist Russia — a $7.7 billion deal that gives BP a 50 percent share in a major new Russian energy company.

BP signed an agreement late Thursday with its Russian partners — Alfa Group and Access-Renova — to combine their interests in Russia to create a new business with 5.2 billion barrels in proven oil reserves and daily crude production of 1.2 million barrels. Upon final regulatory approval, the new company, TNK-BP, would be Russia’s third-largest energy concern, with stakes in five refineries and 2,100 retail outlets, BP said.