Clare Doole: The emergency meeting is fanning the flames of the dispute

The world's two major trading blocks are crossing swords at an emergency session of the World Trade Organisation in Geneva - called in the hope of resolving the dispute.

The US has imposed tariffs of 100% on a wide range of European imports, because it says the EU is continuing to favour banana exporters in the Caribbean and Africa over American companies operating in Latin America.

Ambassador Roderick Abbott, the head of the EU trade delegation in Geneva, said the US had acted illegally by effectively imposing sanctions on European products.

Jim Fish reports: The trade row is coming to a head

In a statement to the WTO's General Council, Mr Abbott charged the US with "declaring war on any or all WTO members whose compliance (with panel decisions) it decides is inadequate".

He said the WTO's members were "faced with the fact that a leading member of the WTO, the United States, has decided to defy the rules and procedures of the organisation and has taken action in blatant disregard for its fundamental obligations."

US stands firm

American officials were adamant that the Clinton administration's actions did not violate world trade rules.

Ambassador Rita Hayes, the head of the US delegation, said it was the Europeans' job to resolve the dispute.

"It's up to the Europeans. They have to bring their banana trade regime into conformity.

"We are very sorry that things had to come to this point, but we are going to reserve our rights," she warned.

The EU called the meeting after Washington announced last week that importers of a range of European products - including Scottish cashmere sweaters and Italian cheese - would have to post bonds equivalent to 100% tariffs on the goods' value.

The US wants to impose these sanctions on EU exports to compensate for the $520m it estimates have been lost by American banana exporters as a result of the alleged European policy.

But the EU claims the US has shown "blatant disregard" for WTO dispute settlement procedures and is acting illegally.

The EU maintains that it has changed its policy on banana imports to bring it into line with WTO regulations.

Andrew Walker reports on the row that has become an important test case for the WTO

But the US has lost patience with both the EU and the WTO, which has postponed a decision on whether Brussels is breaking trading laws.

Although the meeting cannot force the US to back down, the EU will be hoping that support from other nations among the WTO's 134 members will increase the pressure on Washington to change its approach.

However many WTO trade diplomats were reported to be wishing only for an end to the dispute which has been blocking the organisation's other business.

End in sight?

The WTO's Director-General Renato Ruggiero said on Monday he believed there may be an answer to the complex dispute within the next few weeks.

He renewed his appeal to the US and the EU to settle their dispute through direct negotiations.

"We seek a solution to a problem firstly by mutual agreement and not by imposing rulings on either side," he said.