Reuters | By Adrian Croft
BRUSSELS - A World Trade Organization (WTO) panel has found the United States broke trade rules by imposing sanctions on the European Union in a spat over trade in bananas, sources familiar with the case said on Thursday.
The WTO panel's confidential interim ruling, sent to parties to the case this week, finds largely in favor of the EU which complained about the United States' behavior last year.
The dispute panel found that "what the U.S. did was illegal" because it acted before getting WTO authorization, one source said.
EU officials declined comment on the content of the interim report. A U.S. official in Geneva was not available for comment, and the Geneva-based WTO itself never comments on confidential interim reports.
After the WTO found that the EU's banana import rules broke world trade rules, the United States responded in March last year by demanding that importers post bond to cover threatened 100 percent duties on $520 million of EU exports.
The EU was incensed by the move, which hit EU products ranging from Scottish cashmere sweaters to Italian pecorino cheese. It accused the United States of acting unilaterally and launched a WTO dispute.
Last April, the WTO authorized the United States to impose sanctions on only $191 million of EU exports in the case.
The United States also imposed $117 million of WTO-authorized sanctions on EU exports last year after winning a case against the EU's ban on imports of hormone-treated beef.
Both the EU and the United States have the chance to comment on the WTO panel's interim report, but this rarely changes the main findings of a panel's final report.
If the decision is confirmed, the United States would have the right to appeal.
U.S., Eu Lock Horns On Trade
The WTO case is one of several that have gone against the United States recently.
Last month, in a victory for the EU, the WTO's appeals body found that a U.S. tax scheme affecting hundreds of billions of dollars in industrial and agricultural exports violated global free trade rules.
In January, another WTO dispute panel signaled it would rule in favor of the EU in a case against the U.S. Antidumping Act of 1916.
But in December, a WTO panel rejected complaints by the EU that Washington's use of the so-called "Section 301" trade law to impose trade sanctions violated global trade rules.
The United States and the EU have locked horns over a wide range of trade issues in recent years, leading U.S. Undersecretary of Commerce David Aaron to warn in Brussels this week that the disputes risked affecting the crucial transatlantic political and security relationship.
While the two commercial superpowers reached provisional agreement this week to avoid a dispute over the privacy of European data sent to the United States, a row over a planned EU law to reduce aircraft noise deepened.
The United States on Tuesday protested to the International Civil Aviation Organization over the EU law, due to take effect on May 4, which would hit U.S. makers of "hushkits" or aircraft noise mufflers.Reuters:
