(Agencies)
Updated: 2008-01-15 09:50

WASHINGTON -- The United States said Monday it would temporarily hold fire on sanctions on European Union goods in a last-ditch attempt to resolve a bitter trade dispute over genetically modified crops.

Delegates enter the World Trade Organisation (WTO) headquarters in Geneva January 14, 2008. [Agencies]

The EU missed a World Trade Organization deadline Friday to comply with a decision against EU restrictions on some genetically modified organisms (GMOs).

And on the same day, the French government announced it was imposing a ban on the only genetically modified crop grown in the country.

"We have agreed with the EU to suspend for a limited period the proceedings on our WTO request for authority to suspend concessions in order to provide the EU an opportunity to demonstrate meaningful progress on the approval of biotech products," said US Trade Representative (USTR) spokeswoman Gretchen Hamel.

"The United States remains very concerned with EU treatment of agricultural biotech products," she said.

The European Commission on Friday failed meet the WTO deadline in a GMO case that Europe lost in September 2006. The WTO ruled that an EU moratorium on the authorization of GM products between 1999 and 2004 broke world trade rules.

The United States was joined in the 2003 complaint by Canada and Argentina. The complainants are entitled to launch retaliatory customs duties in the absence of compliance with the decision.

"US seed companies, farmers and exporters continue to experience significant commercial losses as a result of the EU actions," Hamel said. "The patience of US stakeholders is close to exhaustion."

In Brussels, a European Commission spokesman said: "We welcome the measured response by the United States, and reiterate our commitment to advance the difficult dossier of biotechnology through dialogue."

Hamel said the US would evaluate EU progress toward normalizing trade over the coming months, without setting a deadline for WTO compliance.

The Canadian government said it has extended the deadline for compliance to February 11. "Canada has found there is constructive progress on this issue," said foreign affairs and international trade ministry spokeswoman Renee David. Under EU laws, a member state can invoke a safeguard clause enabling it to bar a genetically modified (GM) crop that has otherwise been given EU-wide authorization, provided it has scientific evidence to back this decision.

Although the import of some of the GM products covered by the case have been authorized in the EU, Austria has continued to practice a ban, in particular on the import of GM maize strain, Mon 810, which is produced by US agricultural biotechnology giant Monsanto.

France's decision to join the ban on the planting of Mon 810, the only biotech corn variety currently cultivated in the EU, drew sharp words from the USTR spokeswoman.

"It is hard to overstate our disappointment with this new biotech ban announced Friday by the Government of France," she said.

"This newly banned variety of corn has been grown safely in the EU, the United States, and around the world for over a decade."

Opponents of GMOs -- a fiercely contested issue in Europe -- welcomed the French government's decision to invoke the EU procedure to bar the Mon 81, the only GM crop grown in France.

"With the principle of precaution at stake, I am making a major political decision to carry our country to the forefront of the debate on the environment," French President Nicolas Sarkozy said over the weekend.

The Austrian agriculture ministry last week said it was determined to maintain its "rejection of any sort of use of GM organisms" in the country.