Venezuela-U.S. Rift Sets Up Test for Trade Body

A squabble between Venezuela and the United States over environmental standards for gasoline will be the first test of a new organization created to referee global trade disputes.

Venezuela has hauled the United States before the World Trade Organization, claiming its gasoline standards are tougher on foreign companies and give American producers an unfair edge.

The case will test the WTO’s ability to end trade disputes. A new approach by the organization puts teeth into decisions that could be ignored by the losing country under the old General Agreement on Tariffs and Trade, or GATT.

A WTO official, who requested anonymity, said Monday that the organization has set up a dispute-settlement panel to review the case, starting a process that will result in a ruling that both sides will have to accept.

Under the new procedure--even allowing for appeals--the decision of the panel will have to be implemented within 18 months. Consensus of all countries is required to stop the process.

The WTO, a more powerful international watchdog on trade policy than GATT, was set up a year ago in a sweeping global reform. It started taking over from GATT in January.

Venezuela originally filed a complaint late last year with GATT, but withdrew it. The country refiled the complaint this year with the WTO after discussions with the United States failed to resolve the differences.

The case is the first to reach a WTO dispute-settlement panel.

A U.S. representative said Washington had no objection to the procedure going forward, officials said.

The case centers on a U.S. policy that requires refineries to produce cleaner-burning gasoline to reduce air pollution from auto emissions.