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An anti-U.S. ruling by a World Trade Organization (WTO) dispute panel is threatening to damage relations between the European Union (EU) and the U.S. The panel decided that a U.S. safeguard measure imposed against imports of EU wheat glutton was illegal. The decision follows a recent spate of anti-U.S. judgments by the WTO. As a result, the European Commission (EC) has now threatened to impose retaliatory tariffs on U.S. wheat products if it fails to withdraw the offending measure. The EU and U.S. are its main financial backers and have the biggest bilateral trading and investment relationship in the world at $1 billion per day. Their relationship has been dogged by several high- profile disputes and the failure of both sides to comply with WTO judgments made against them. The wheat glut decision coincides with the publication of an EC report on U.S. trade barriers. The report says that the EU has 11 WTO cases against the U.S. and that America has disregarded the fundamental principles of its dispute settlement mechanism. It mentions recent WTO anti-U.S. judgments, which have condemned the effect on EU trade of U.S. export subsidies, trade sanctions, intellectual property laws, and various U.S. trade policy instruments. A commission spokesman says, “The Commission expects the U.S. to fully implement these WTO rulings and will closely monitor its compliance in these cases.” Todd Friedbacher, a leading international trade attorney at the Geneva office of Atlanta-based Powell Goldstein, says, “One of the things that is very dangerous in relation to WTO disputes is that when influential members do not listen to the WTO dispute panels they are effectively encouraging others to do the same. “They must honor decisions in order to maintain WTO legitimacy.” Speaking on globalization at the London Business School, Stephen Byers, the Secretary of State for Trade and Industry, says, “It is becoming increasingly clear that loopholes exist in the present rules. Allowing losing parties to delay the implementation of any remedies. Such flaws need to be resolved.” The European Commission expects the U.S. to get rid of the offending safeguard measure when the WTO panel report on its ruling is adopted by the WTO dispute settlement body.

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