Beef threatens to join bananas as the next point of tension as threats and counter-threats are mounting between the world's t wo largest trading blocks.

The EU ban on US hormone-treated beef, which has been ruled unlawful by the World Trade Organistion, could prompt a substantial increase in the range and value of European goods under threat from US retaliatory import duties.

The dispute over banana imports already threatens £300m ($500m) in these punitive taxes on a wide range of European goods sold to the US.

Clothes and food targeted

If the beef ban is not lifted, a new range of export goods including clothes and food would have 100% duties imposed by US officials in mid-May, according to the Wall Street Journal.

A provisional list of EU products worth $900m, but not including wine, would be reduced by May to a final list of $300m (£200m), after representations from producers.

Richard Rominger, the Deputy Secretary for Agriculture, has confirmed the list is being drawn up but that he is still hoping for a negotiated settlement of the row.

WTO agrees with US

The World Trade Organisation (WTO) ruled the EU's ban unlawful last year saying it was not based on credible risk analysis. It has set a 13 May deadline for the ban to be lifted. However, the EU says this does not allow it enough time to conduct a more acceptable scientific analysis to test the long-term health effects of hormone treatment.

Many US farmers treat beef cattle with hormones to make them grow fatter more quickly.

The WTO is already presiding over the long and bitter 'banana war' which has the US accusing the EU of discriminatory import rules which favour former British and French colonial producers at the expense of Latin American growers and US companies.

The US says the 11-year ban costs its meat industry at least $250m in annual exports.

Compromise rejected

US trade officials have proposed a compromise which would see US exporters label the origin of its products allowing "consumers and not the government to decide whether they want to eat American beef". Meat would not be labeled "hormone-treated" under the plan, leading to the EU's rejection of the offer.

Annual EU and US agricultural trade is worth an estimated $16bn to $18bn (£9.6bn to £10.8bn).