The United States is preparing to escalate its complaint that Mexico's ban on genetically modified corn violates the neighbours' free-trade deal, Bloomberg News said on Thursday.

The office of the U.S. Trade Representative plans to request the formation of a dispute resolution panel under the US-Mexico-Canada Agreement (USMCA), according to the report, which cited people familiar with the matter.

The U.S. Trade Representative did not immediately respond to a Reuters request for comment.

In June, the U.S. sought a new round of trade dispute settlement consultations with Mexico under the pact.

Wednesday marked the 75-day deadline for the two sides to resolve the conflict, failing which the U.S. can request a dispute settlement panel to decide the case.

This month the United States denied a request by Mexico to jointly conduct scientific research on the health impact of genetically-modified corn, Reuters reported, a sign the two could be inching closer to a formal trade dispute.

Mexico produces mainly white corn, used to make tortillas, but has a deficit of yellow corn, used for livestock consumption and industrial purposes.

Mexico wants to ban GM corn for human consumption in the food staple, made mostly of white corn, and eventually substitute GM yellow corn used for livestock feed, arguing that biotech corn harms native varieties and could have health risks.

(Reporting by Anirudh Saligrama in Bengaluru; Editing by Jacqueline Wong and Clarence Fernandez)