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WINNIPEG, Manitoba (Reuters) - Canada and South Korea are "very, very close" to diplomatically resolving an 8-year-old dispute over Canada's beef exports, the Canadian agriculture minister said on Wednesday.
Agriculture Minister Gerry Ritz said talks have made progress as a decision from a World Trade Organization panel approaches.
"We're hoping we can do something diplomatically," he said on an unrelated conference call. "I know Korea is anxious to resolve this before there's actually a penalty attached and they lose face (by) losing at a WTO level."
A decision by the WTO is expected as early as within a few weeks, and Canada is using that as a negotiating lever, Ritz said.
Negotiations could soon get sidetracked, however, by a widely expected Canadian election campaign. Opposition parties are expected to defeat Canada's minority Conservative government over its budget as early as this week, setting up an election in May.
Canada is the world's third-biggest beef shipper and South Korea was its No. 4 market in 2002, prior to many export markets closing to Canadian beef with the 2003 discovery of mad cow disease in a Canadian cattle herd.
The agriculture minister said Canada was also close to making its first commercial shipments of beef to mainland China in eight years.
China agreed to accept beef from Canada last summer, but shipments have not yet resumed.
"We're very, very close on the final (stage of) cross the T's, dot the I's with both South Korea and mainland China," Ritz said.
South Korea has already reopened its borders to U.S. beef from cattle under 30 months of age. It has a particularly strong need to import meat now because of a domestic outbreak of foot-and-mouth disease that has resulted in widespread slaughter of much of its cattle and pig herds.
Canada expects to win its WTO case, but even a decision in its favor is unlikely to produce immediate results, making a negotiated solution attractive to both sides, said John Masswohl, director of government and international relations for the Canadian Cattlemen's Association.
The WTO panel is scheduled to report its decision to the Canadian and South Korean governments by the end of April, which may be followed by appeals and a period for the countries to negotiate terms of compliance, he said.
"There's a lot of steps so (it would be beneficial) if we can move right now to that negotiation that would take place later down the road anyway and say here's what we'd be willing to accept in the medium term and in return we could suspend the WTO case."
Editing by Walter Bagley; editing by Jim Marshall