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BRUSSELS (Reuters) - A World Trade Organization panel is expected to find on Monday that U.S. and Canadian sanctions against EU goods in response to curbs on imports of hormone-treated meat failed to respect WTO rules, EU sources said.
The sources said on condition of anonymity that the ruling in a case brought by the European Union could lead to retaliatory steps by the EU unless the sanctions were withdrawn.
"The panel is very likely to find that the U.S. sanctions do not respect the rules of the WTO," one of the sources said.
In 1999, Roquefort cheese was among EU products subjected to punitive 100 percent duties when the United States imposed sanctions amounting to $117 million in response to the EU's refusal to lift a ban on hormone-treated beef. Other EU products affected included pork, truffles, tomatoes and mustard.
"The U.S. has tried to say the EU itself is non-compliant. The panel will say that is not relevant, that the U.S. and Canadian measures are inconsistent with the WTO and what ultimately the U.S. has to do is to withdraw the sanctions," the source said.
"Otherwise if they don't comply, we are entitled to impose sanctions."
However, the source said the WTO panel was not satisfied with a 2003 EU directive containing an assessment highlighting risks to human health from residues in meat from hormone-treated cattle.
"They looked also at the compatibility of our new directive and there they found it was also not WTO compatible," the source said.
"But the key is the panel is likely to say that the U.S., Canada, you are not entitled to rule unilaterally -- it is wrong ... you have to go through a new panel."
The source said the ruling would mean the United States would have to apply again to the WTO if it wished to impose sanctions as the EU had changed its rules since they were imposed. "Basically what that panel says is that the U.S. and Canada took the law into their own hands," he said.
The WTO panel report is the final ruling in the case. Both sides have 60 days to appeal against the findings.
Reporting by David Brunnstrom; Editing by Dale Hudson and Andrew Dobbie