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By Robert Evans, Reuters

The high-profile case brought by Canada against the EU, which represents all its 15 member states in the trade body, has attracted close attention from environmental bodies which say WTO rules often work against health and safety standards. Diplomats said the panellists had taken into account scientific studies showing that asbestos was highly toxic and caused cancer and other diseases.

News of the final ruling, which will be issued publicly in mid-September, was hailed as good news by several "green" organisations although they said they had strong reservations about the panel's reasoning.

RULING COULD HELP GLOBAL ASBESTOS BAN

The global labour union body ICFTU warmly welcomed the finding, saying it would help fuel moves for a worldwide ban on the use of asbestos and any trade in products containing it. "We're very pleased," spokeswoman Daphne Davies of the ICFTU, the Brussels-based International Confederation of Free Trade Unions, told Reuters. "It will help us turn up the heat for a global asbestos ban. "The ruling paves the way for more countries to join in the campaign we are launching."

Canada brought the case to the WTO last year, largely at the request of asbestos mining companies in Quebec and in the face of strong protests from Canadian environmental organisations which accused the government of pandering to big business. Ottawa officials argued that the fibre, almost all possible uses of which have to be abandoned in the EU by 2005 under a Brussels directive issued last year, did not present a health hazard when proper precautions were taken. Representatives of Canadian asbestos firms, speaking after the contents of the interim ruling leaked last month, accused EU governments of taking "excessive decisions" on environment and health that could wreck the global market for asbestos.

CANADA CAN APPEAL

Under WTO dispute settlement rules, Canada can appeal the ruling once it has been officially released to all 137 member countries of the WTO. Trade officials said the seven-week delay was to allow for translation. Radical environmental groups, which joined mass protests aimed at wrecking a WTO ministerial meeting in Seattle last December, had predicted the panel would back Canada and confirm their view that the trade body always sides with big companies. But moderate ecological organisations said they were concerned over the panel's finding that France had in fact broken one WTO rule barring discrimination against foreign imports of goods similar to local products. Canada had complained that the French ban covered items like its exports of brake linings which contain asbestos, giving linings without asbestos made in France or imported from other countries an unfair advantage. "This should never have been an issue," said Amy Gonzalez, trade and investment officer at the Swiss-based World Wide Fund for Nature International. "We will have to keep vigilant."