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US loses trade dispute with EU

The US, facing an unprecedented joint action against its anti-dumping laws, lost a trade dispute with the European Union (EU) as the World Trade Organisation (WTO) ruled as illegal Washington's limit on imports of wheat gluten from the EU

A seven-member Appellate body of the Geneva-based WTO upheld the decision of a three-member dispute settlement panel (DSP) in July that Washington had acted illegally when it imposed the quota on the EU and other countries but excluded Canada because the two countries have a free trade pact. It rejected US's appeal against the panel decision.

The EU Agriculture Commissioner Franz Fischler said he expected the U.S. to withdraw the challenged three-year quota imposed in June 1998.

Washington justified the imposition of quota saying substantial increases in the level of wheat gluten imports were seriously damaging domestic producers.

While attacking the US for responding 'too readily' to the protectionist instincts of a domestic industry beset with domestic problems, Fischle said in hard-hitting comments that "its behaviour in pursuing this quota was entirely at odds with the rhetoric it so frequently directs at others".

Wheat gluten is the portion of the grain that adds protein to breakfast cereals, pet food and livestock feed.

Under WTO rules, countries can impose temporary safeguard measures against imports, provided they carry out a thorough investigation first.

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