The US has threatened to impose $1.6bn-worth of trade sanctions on the EU over a new European import system that Washington claims unfairly favours imports from former European colonies.

At the WTO meeting both Brussels and Washington said they were not prepared to make concessions to end the six-year long dispute over preferential EU treatment for Caribbean bananas.

US and EU officials told reporters that they intended to invoke the trade body's settlement procedures over the row.

The EU says unilateral sanctions are not allowed. The US says they are, and is sticking with its decision to slap a 100% duty on European goods early next year.

The measure was announced earlier this month in retaliation against the EU's failure to implement a WTO ruling on reforming its banana regime.

Unfair trade

The EU ambassador said the US threat of sanctions on a wide range of EU imports was having a chilling effect on trade.

The EU is due to bring in new rules on banana imports on 1 January, after the WTO said previous import laws were against open trading.

Banana regime

Brussels says it has complied with the ruling, while the US and Latin American banana exporters say the reforms still discriminate against them.

The US accuses the EU of stalling and perpetuating protectionism, saying it had only tweaked its banana trade regime.

The BBC's Correspondent in Geneva, Claire Doole, says the escalating war of words has led other members of the WTO to express concern that the row between the two biggest trading powers is undermining the multilateral trading system.