Brazil is gathering data from its business sector to determine if it should sue the European Union at the World Trade Organization over limits on poultry imports, a Brazilian diplomat said.

At issue are rules in force since May that have shut EU markets to frozen chicken meat from Brazilian exporters such as food processing giant Brasil Foods, which is thawed and processed in Europe into foods including marinated chicken for barbecues and fresh ravioli.

“We’ve told the Commission the possibility of a challenge at the World Trade Organization is not off the table. We will have a full year’s data available soon, which will help us make a decision,” said a Brazilian trade diplomat in Brussels.

“We are waiting for the economic data from the private sector. They have to show us there has been a negative impact for them,” the diplomat said.

The EU’s executive Commission says thawed meat may not be used to make “fresh” ready meals because that would mislead European consumers. Instead, such meals must be sold as frozen.

Brazil says the new rules discriminate against non-EU producers, who usually freeze chicken meat for transport to the bloc.

An EU official played down Brazil’s threat.

“To date the Brazilian authorities have not indicated to the Commission their intent to request consultations,” the official said.

A global agricultural powerhouse, Brazil exports about $1.5 billion of poultry to the European Union every year, worrying European farmers in countries such as France.

A WTO case could sour recently revived negotiations to create a free trade area between the EU and the Mercosur bloc—Brazil, Argentina, Uruguay and Paraguay.

But Brazil has a history of successful claims at the WTO, forcing the EU to reform its sugar subsidy regime and back down in a row over generic medicines transiting through the bloc. (Reuters)