President Bill Clinton said he was limiting lamb imports to 1998 levels, and imposing a punitive 40% tariff on any additional imports, in order to protect American sheep farmers.

But Australian Prime Minister John Howard, who is due to visit the United States next week, reacted with fury.

"They condemn others who don't practice open trade, but when it suits their own convenience because they are the strongest country in the world they just slam on these punitive tariffs," he said.

Anger at President Clinton in Australia

And the Australian press roundly condemned the move, with the Sydney Daily Telegraph leading with the headline 'Damn Ewe'.

Australia has said it will take the US to the World Trade Organisation over the ban, which it says will cost jobs and cut farm income. Trade Minister Tim Fisher said:

"We should get angry, but it would nicer to get even. .. the only crime unsubsidised and efficient Australian lamb producers are guilty of is creating a market in the US for a high quality product at a competitive price."

Australia will also cut taxes for its lamb producers in order to cushion the blow.

It has been trying to diversify its lamb exports from the traditional dependence on the UK market.

Protectionist pressures

President Clinton, who is under increasing protectionist pressures at home, acted after the US International Trade Commission ruled that the vast increase in lamb meat was harming the domestic industry.

He also announced a $100m package of aid for sheep farmers.

"The package of import relief and domestic assistance has been carefully crafted to help our lamb industry achieve sustained competitiveness," said Presidential spokesman Joe Lockhart.

But the Australian Trade Minister warned that protectionism would backfire for US farmers.

"They are in fact sounding the death knell for their own lamb industry if they don't get export-oriented," Tim Fisher said.

Trade talks

The row comes as plans for a new round of trade talks are being drawn up in world capitals.

Australia has been a traditional ally of the United States in presssing for trade liberalisation in agriculture.

But the current dispute could add to the difficulties of reaching agreement in the so-called 'Millenium Round' of trade negotiations.

Australia has also, until now, been trying to play a key role in organising trade talks in the Asia-Pacific region ahead of a summit in the autumn.