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Thursday, June 3, 1999 Published at 20:18 GMT 21:18 UK

Business: The Economy

WTO approves US sanctions

Meat being checked for hormones

The World Trade Organisation (WTO) has approved an American request to impose sanctions on the European Union in response to its ban on hormone-treated beef.

World trade wars
But a meeting of the WTO dispute settlement body also agreed to a European request for a neutral arbitration panel to study the amount due to the US and Canada.

This panel will report back in the middle of July, so delaying the implementation of sanctions.

[ image: The beef dispute is another blow to the WTO]
The beef dispute is another blow to the WTO
Under its rules the WTO was compelled to agree to both requests.

European Trade Commissioner Sir Leon Brittan said the EU would seek to reduce sharply the amount of threatened US sanctions: "They can't justify that amount, it's grossly excessive. They haven't suffered that amount of damage, so they won't get away with that."

The US wants to impose 100% duties against $202m worth of imports from the EU, the amount of trade it says it has lost because of the 11-year-old ban.

Cancer risk

The EU says the true damage caused by its ban on imports of beef from cattle treated with hormones is less than half the amount Washington claims.

Long-running efforts to reach a compromise between the two sides have failed.

While the Americans say there is no health risk, the EU maintains that some of the hormones may cause cancer.

It is conducting further scientific studies on their safety. Meanwhile, it has refused to lift the ban, even though the WTO has ruled it is illegal.

A panel of three neutral arbitrators had ruled last year that the EU's beef ban broke global trade rules and had given it to 13 May to comply.

Chewing gum

Canada also plans sanctions on trade worth $51m, the amount it claims to have lost as a result of the ban on exports to European Union countries of its hormone-treated beef.

The WTO will rule on both sanctions requests seperately.

Washington has not yet named the final products, but a preliminary list included canned hams, pork, beef and poultry, various tomato products, Roquefort cheese, truffles, onions, chestnuts, paprika, goose liver, chewing gum, chocolate and mineral water.

Rita Hayes, the US ambassador to the WTO, said: "The final list of sanctions will not be drawn up until we receive WTO authorisation."

Hormones are widely used in US agriculture, with more than 90% of American cattle producers feeding them to their cattle to make them grow faster and bigger.

In 1989 the US promised to export only hormone-free beef to Europe because of the EU's ban.

However earlier this year EU experts discovered that some of the US beef labelled 'hormone-free' did in fact contain banned growth hormones.

A similar set of sanctions from the US on European exports has already been imposed as a result of another long-running trade dispute, over banana quotas.

The failure to reach a compromise is a further blow to the leaderless WTO, which was set up with the aim of smoothing out global trade disputes without the need for tit-for-tat sanctions.

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