Friday, June 22, 2001 WTO panel set to rule in major U.S.-EU trade row GENEVA, June 22 (Reuters) - A World Trade Organisation (WTO) dispute panel is due to issue a ruling on Friday that diplomats say could unleash a major trade tussle -- and a huge political row -- between the European Union and the United States. But the ruling -- the latest in a long-running battle between the two trading superpowers -- will not be publicly released by the WTO and legal analysts say it is far from certain which of the two will be found in the right. The case centres on a U.S. law giving tax breaks to exporters -- inclusing some of the top names in U.S. industry such as Microsoft Corporation (MSFT.O) and IBM (IBM.N) -- through offshore ``foreign service corporations'' or FSCs. The EU won a WTO case against the law in 1999, when a panel said it would have to be brought into line with the body's open trading rules and its regulations on export subsidies. The United States, under the then Clinton administration, had changes approved in Congress but Brussels came back to the WTO last year arguing that these made little difference and in fact boosted the subsidies. At the same time, it asked the 141-member body for authorisation to apply sanctions worth $4 billion on U.S. imports to the 15 EU member states -- the largest retaliation request ever presented in five and a half years of the WTO. Brussels suspended this request when the United States agreed not to toughen action against EU goods in other high-profile, but in money terms much smaller, rows over bananas and hormone-treated beef. BANANA ROW SOLVED Since then, the banana dispute -- which ran for over a decade in the WTO and its predecessor, the GATT -- has been resolved. But the beef dispute, highly sensitive in the United States because of the influence of the farm lobby, rumbles on. Both powers have been working hard, since President George Bush appointed Robert Zoellick as his top trade official earlier this year, to find a way out of the maze of trade disputes that has bedevilled overall relations between them. But there is still no sign of a mutually satisfactory solution to the beef row -- in which the United States is exacting sanctions on EU imports worth $116 million a year and which has become a focus for anti-WTO protesters in Europe. If the EU were to win the case -- and Friday's expected ruling is only a confidential interim finding on which the two sides have a month to forward their comments to the panel -- it could then come back to the WTO on its own sanctions request. But how exactly Brussels will react is far from obvious. In a statement issued earlier on Friday, the EU's executive Commission said it would ``carefully study the report.'' But it added: ``It would be premature and inappropriate for the Commission to comment on the content and potential implications of the report at this stage.'' Member countries of the WTO involved in dispute cases are all supposed to maintain strict secrecy on panel rulings, and even more so on interim ones which are never publicly released, until they are formally published by the trade body.
