The World Trade Organisation has upheld a previous ruling that a nine-year European Union ban on US beef is illegal.

Now Europe must decide whether to import American beef or compensate US farmers, who say trade to the EU would be worth $250m a year.

The WTO appeal body confirmed the EU could not prevent the export of beef into its 15 member states, despite concerns over hormones added to the meat.

But the decision permits the EU to alter the conditions of the ban rather than lift it.

Concerns about the addition of six hormones to more than 90% of American beef led to the sanction.

The WTO agreed with American studies showing the hormones to be safe, but EU officials retain their reservations.

One source said: "The bottom line is we will not be importing hormone-treated beef into the EU."

The WTO gave the EU two months to decide whether to allow US beef imports or pay compensation instead.

The US special trade negotiator, Peter Scher, said America's goal was to see the nine-year ban lifted.

"We have no interest in compensation," he said.

In America, the National Cattlemen's Beef Association chairman, Mark Armentrout, said the verdict was a vindication for US farming techniques.

"The WTO first ruled in May 1997 that the EU ban was not based on sound science," he said.

"Rather than open its markets, the EU attempted to stretch the dispute resolution process as long as possible. Enough is enough."

The US Agriculture Secretary, Dan Glickman, added: "It is time to put an end to this long-running trade dispute and allow EU consumers to decide for themselves what they want to buy.

"The WTO dispute-settlement process has run its course and the EU must now honour its obligations."

The American Farm Bureau welcomed the ruling, hinting strongly that it had always suspected the ban smacked of protectionism.

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