Staff writer

Japan will ask the World Trade Organization to set up a panel to settle a dispute with the United States over a Massachusetts law imposing sanctions on companies doing business with Myanmar, government sources said Monday.

Tokyo has yet to decide when it will file the request because it wants to prepare further for the legal battle with Washington, the sources said. However, the action will come next month at the earliest, and the WTO panel could be set up by the end of the year, they said.

The WTO panel would hand down a ruling within nine months, in principle, on whether the Massachusetts law violates global trade rules set by the international organization.

In July 1997, Japan joined the 15-nation European Union in filing a complaint with the WTO — the Geneva-based watchdog in international commerce — over the controversial law, which denies state contracts to American and foreign companies doing business in Myanmar.

Japan and the EU have complained that the law, which took effect in January last year, violates a WTO agreement on government procurement practices.

The accord covers not only central but also local governments registered in the commitments made by WTO members. The U.S. agreed to put Massachusetts and other states under the WTO accord.

Myanmar has largely been shunned by the international community because of its military junta’s violations of democratic principles and human rights, including a continued harsh crackdown on the democracy movement led by opposition leader Aung San Suu Kyi.

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