The Americans have already imposed sanctions on some European imports in a separate row over bananas.

BBC's Jonathan Beale reports on the latest trade tension between the US and the EU

The latest dispute is over Brussels' refusal to lift a 10-year-old ban on importing American beef which has been treated with hormones.

The Europeans have refused to meet Thursday's deadline set by the World Trade Organisation (WTO) to justify the ban, saying research into possible health risks is incomplete.

The two sides say they hope to avert a trade war at talks next week.

The European Union plans to send a letter to the WTO's Dispute Settlement Board on deadline day formally stating that the ban will stay in place.

Under WTO rules, the two sides have 20 days to reach a solution following the end of Thursday's deadline.

The United States would then have a further 10-day period from 2 June when it can ask for WTO authorisation for sanctions.

Hopes of a last-ditch deal rested on talks between US Trade Representative Charlene Barshefsky and European Commission Vice President Leon Brittan in Tokyo on Wednesday.

Asked whether any new proposal was made, Ms Barshefsky told a group of reporters: "No, we just had general discussions."

Sir Leon Brittan is offering compensation as a compromise

The EU has said it will maintain its ban because of fears that the growth hormones could cause cancer, nerve disorders and other health problems - an argument rejected by the United States.

The EU wants more time to complete scientific research.

Washington has vowed to impose £600m ($900m) worth of sanctions on EU products including pork, beef, chocolate and even motorbikes if Brussels does not back down.

Ms Barshefsky warned: "We, as you know, have rights in the WTO of compensation or retaliation in the event a trading partner does not comply with a dispute settlement ruling.

"We will not drop our plan."

Compensation offer

There had been signs of a possible deal on Monday when Sir Leon Brittan said in Berlin that he was ready to offer to pay compensation to the US as a compromise.

This would involve lowering duties on other goods from the United States and Canada, whose beef is also banned for the same reason.

Mr Brittan said: "I don't have an instant solution and recognise that we're not going to be able to do anything specific by May 13."

US farmers angry

Hormones are widely used in US agriculture, with more than 90% of American cattle producers feeding them to their cattle to make them grow faster and bigger.

Growth hormones are widely used in US agriculture

In 1989, the United States promised to export only hormone-free beef to Europe because of the EU's ban.

However, several weeks ago EU experts discovered that some of the US beef labelled 'hormone free' did in fact contain banned growth hormones.

The cattle industry has put lost export sales at $500m annually.

George Swan of the US National Cattlemen's Beef Association said: "Ten years of delaying tactics, ten years of false accusations, ten years of lost markets for US cattlemen and lost opportunities for European consumers.

"It is time for the EU to play fair with us and with its own people."

US trade spokesman Peter Sher said: "This course of action is not one we chose and not one we desire, but one which unfortunately we have to take to demonstrate once again that there is a price to pay for repeated failure to comply with WTO obligations.

"If countries like the EU continue to fail to meet their obligations, then industries in Europe will have to suffer just like the cattlemen have suffered."

The beef row is just the latest sign of escalating tensions between the US and the EU - America recently slapped $191.4m (£117m) worth of sanctions on EU products because of a row over banana imports.