U.S.A. to challenge EU's policy on 'Frankenfoods' in WTO

WASHINGTON

The United States has decided to challenge the European Union's de facto moratorium on genetically modified foods in the World Trade Organization, senior administration sources said.

"We've been pushed against a wall here," a senior administration official told AFX News, a subsidiary of AFP, on condition of anonymity, adding that a case is expected to be filed by "mid-June" at the latest.

"Sooner is probably more likely," the official said. Officials are still debating when to file the legal papers. At issue is whether to file the case before or after the upcoming group of eight summit in Evian, France.

Bush is set to travel to the southern French coast early next month for the annual gathering of the heads of state of Great Britain, Canada, France, Germany, Italy, Japan, Russia and the United States.

Richard Mills, spokesman for U.S. trade representative Robert Zoellick, whose office would lodge the complaint, declined to comment on the decision to go ahead with the case, saying simply "the EU's moratorium is illegal under WTO rules and needs to be lifted."

A group of EU countries including France has placed a moratorium on approving genetically modified food imports, effectively halting the trade. The United States contends that the ban, applied since 1999, harms its exports of maize, cotton and soy.

Washington has considered filing a case against the EU for several months, but delayed because of the war with Iraq, officials have said.

In January, Zoellick stunned reporters when he announced that he held "the view that we now need to bring a case" in the WTO even though there was not an official government consensus on the matter.

Senate Finance Committee Chairman Charles Grassley, who has been a vocal proponent for filing a case, separately summoned a group of senior administration officials to his Capitol Hill office this week to press for filing a case.

EU Trade Commissioner Pascal Lamy has said in recent months that if the United States did file a case, the EU would win.

"We would win a case like this," Lamy told reporters in Washington in March after meetings with U.S. lawmakers and administration officials, including Zoellick.

EU officials have suggested that there would be a consumer backlash against American goods resulting in boycotts of American food products.

The spat comes on the heels of strained U.S.-EU relations over the war in Iraq and a separate trade dispute over tax breaks that benefit U.S. exporters such as Boeing and Microsoft.

Earlier this week, the EU was authorized by the WTO to levy up to $4 billion in sanctions against the United States for tax breaks given to U.S. exporters that have been found to be illegal under the rules of the Geneva-based trade body.