BRADLEY S. KLAPPER

Associated Press

GENEVA (AP) -- The World Trade Organization opened investigations Thursday into a European Union ban on American poultry, and U.S. labeling rules for cattle and hog imports from Canada and Mexico.

In a dispute meeting dominated by agriculture, the WTO set up panels to review the poultry and country-of-origin labeling complaints and deliver rulings within nine months.

The global trade arbiter also authorized Brazil to raise tariffs on U.S. goods to punish the U.S. for providing American cotton growers with billions of dollars in illegal subsidies.

In the poultry case, Washington and Brussels have argued for more than a decade over EU restrictions on imports of poultry treated with four anti-bacterial chemicals: chlorine dioxide, acidified sodium chloride, trisodium phosphate and peroxyacids.

Each has been approved for poultry processing by the U.S. Food and Drug Administration and the U.S. Agriculture Department, but the 27-nation bloc has banned poultry carcasses processed with such treatments since 1997.

The U.S. took the dispute to the WTO in the final days of ex-President George W. Bush's tenure, when it was seen largely as a farewell gift from the Bush administration to the American farm lobby and a final insult to the EU after years of sometimes bitter trade and political disputes. It was inherited by the Obama administration, which has gone ahead with the case.

Canada and Mexico, meanwhile, are hoping the WTO will rule against a U.S. decision last year to no longer allow Mexican and Canadian calves that are raised and slaughtered in the United States to qualify as being cattle of U.S. origin. They say the law poses an unfair impediment to fair competition, but Washington defends it as a legitimate way to provide greater customer information.

The WTO cannot force countries to comply with its rulings, but it can authorize commercial sanctions against nations continuing to break the rules.

Trade cases generally take years to reach sanctions, as illustrated by the WTO's authorization Thursday for Brazil to target U.S. products from fruits, juices and medicine as retaliation in a cotton dispute that dates back to 2002.

The total value of the sanctions remained unclear.

The WTO ruled in August that American goods could face $295 million in annual penalties as a result of the illegal U.S. cotton subsidies paid in 2006, but said the sanction level should be recalculated each year as support programs expand or decrease.

Brazil says subsidy programs have increased since then, meaning it can raise tariffs on goods and target U.S. patents and trademarks. The Latin American country says the U.S. has provided payment details from 2008. But Brazil wants the most current information on subsidies so that it can set sanctions appropriately.

Copyright 2009 The Associated Press.

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