BRUSSELS (B)--European trade Commissioner Pascal Lamy Dec. 23 said the European Union was satisfied with a World Trade Organization dispute settlement ruling on a the U.S. section 301 trade law. Section 301 of the 1974 Trade Act protects U.S. firms against unfair foreign trade practices by allowing the U.S. Trade Representative (USTR) to investigate foreign practices and sanction countries whose trade practices are deemed unfair.

"This is a fair result, a balanced outcome to a difficult case, but overall, it is a victory for the multilateral system," Lamy said in a written press statement.

Because the U.S. told the panel that in every case it would use its discretionary powers under section 301 in compliance with WTO rules and procedures, the panel came to the final conclusion that section 301 could be considered in conformity with the WTO, Lamy noted.

The WTO panel concluded that the relevant part of the legislation as such was inconsistent with WTO rules.

"Neither side can claim a triumph, because while section 301 legislation can stay on the books, the panel has clarified that it can be used against other WTO members only as long as it strictly follows WTO rules. I am glad the U.S. have given the necessary commitments to this effect," Lamy said.

The EU challenged section 301 in 1998, arguing that it violated U.S. WTO obligations by requiring the USTR to determine whether another WTO member is denied U.S. rights or benefits under the WTO agreement before WTO dispute settlement procedures had been exhausted.

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