A major steel-trade row that has sharply pitted the United States against Japan, the European Union and nine other steel exporters is entering a new phase amid the global economic slowdown.

The World Trade Organization will hold its first hearing in early February over a controversial U.S. antidumping law, government sources said Thursday.

The sources said a WTO dispute-settlement panel will hold two days of hearings beginning Feb. 5.

The WTO is a Geneva-based watchdog on international commerce.

At issue is the legality of the Byrd Law -- as one U.S. antidumping law is commonly called -- which allows the U.S. administration to compensate domestic steelmakers hurt by dumping by sharing revenues from antidumping duties with them.

Dumping is the practice of exporting goods at price below those charged domestically or below production costs.

The WTO panel is expected to hold a second hearing in March, then hand down an interim ruling in May and a final ruling in June, the sources said. The case may not end there, however, if the losing side appeals the panel's decision to the Appellate Body, the highest WTO court.

The U.S. has lost two straight steel trade-related cases filed by Japan and other economies with the WTO.

The Byrd Law was enacted in October 2000 when it reached the desk of Democratic President Bill Clinton as an attachment to a comprehensive agriculture bill.

Although Clinton and his administration officials objected to the Byrd amendment, they reluctantly agreed to enact it so as not to kill the comprehensive farm-spending bill.

At the end of December, Japan, the 15-nation EU and seven other economies filed a complaint with the WTO over the Byrd Law, vehemently insisting that subsidizing domestic companies with revenues collected through antidumping procedures is incompatible with WTO rules.

Under WTO rules, member economies are allowed to impose antidumping duties. But there is apparently no clause explicitly banning the practice of using revenues from antidumping duties as subsidies to domestic companies affected.

Japan, the EU and seven other economies also claim that the Byrd Law will further encourage American steelmakers to file antidumping complaints with the U.S. administration against their foreign rivals.

After filing a complaint with the WTO over the Byrd Law, Japan, the EU and seven other economies held "bilateral consultations" with the U.S. in early February -- the first stage of the WTO's dispute-settlement procedures.

The seven other economies are Australia, Brazil, Chile, India, Indonesia, South Korea and Thailand.

Canada and Mexico, U.S. partners in the North American Free Trade Agreement, later joined the complainants by filing a separate document with the WTO and holding separate "bilateral consultations" with the U.S. in June.

In July, the first group moved on to the second stage of the WTO's dispute-settlement procedures by requesting the trade referee to set up a neutral panel to adjudicate on the case. The WTO decided to set up such a panel in August.

In September, the WTO decided to let Canada and Mexico join the original nine complainant economies.

The Byrd Law was enacted amid persistently strong Congressional pressure for tough action to protect the U.S. steel industry against a flood of cheap foreign steel products.

Although Japan and its allies in the trade row had hoped the new administration of Republican President George W. Bush to agree to rescind the law, their expectations were betrayed.

The Bush administration has vowed not to urge Congress to nullify the Byrd Law. Furthermore, the Bush administration is now considering whether to invoke Section 201 of the 1974 Trade Act to impose "safeguard" import restrictions on a wide range of foreign steel products, including some products that have not yet faced antidumping duties.

The decision on the matter is expected in February.

But earlier this month the world's major steel-producing countries agreed in Paris to cut nearly 10 percent of their combined capacity, as demanded by the Bush administration, and invoking Section 201 now appears less likely.

Ministers from more than 140 WTO member economies agreed in Qatar in early November to launch a new round of global trade liberalization negotiations in January.

In a significant concession to Japan and many other countries, which was apparently made to ensure the start of the new round, the U.S. agreed to put a review of antidumping rules on the negotiating table.

In reviewing the rules, Japan hopes to ensure that importing countries don't "abuse" WTO safeguards.