The European Commission has proposed sanctions on a range of US goods as punishment for the US failure to repeal the Byrd Amendment anti-dumping law.
EU Trade Commissioner Peter Mandelson: taking a tough stance
The Byrd Amendment permits US firms to benefit from anti-dumping fees gained from foreign companies considered to be selling items too cheaply.
The World Trade Organisation ruled it illegal more than a year ago.
The Commission said US paper, farm goods, textiles and machinery would face an extra 15% duty from May 1.
The Commission has acted in concert with seven other countries which have also protested to the WTO about the Byrd Amendment. It said it was expecting Japan, South Korea and Brazil to impose similar penalties soon.
EU will vary the levy of additional duties each year in line with Byrd
Commission officials said no meetings with US officials were scheduled to take place before the additional duty was imposed.
Earlier this month talks on the subsidies given to European aircraft maker Airbus and US manufacturer Boeing faltered when both EU trade commissioner Peter Mandelson and Robert Zoellick, former US Deputy Secretary of State, accused the other of hanging up the phone durign a call.
Under a WTO ruling, the Byrd Amendment should have been repealed by the end of December 2003.
The Commission said it has decided to impose the additional duties in the "light of the continuing failure of the United States to bring its legislation in conformity with its international obligations".
Why are we waiting?
"More than a year later, the United States has still not respected its international obligations," the European Commission said.
The level of retaliation imposed by the Commission will be just below $28m and will be related to the latest amount of duty redistributed to US companies under the Byrd Amendment.
The Commission has drawn up a list of products that will be affected, but its also has a reserve list in case it needs to raise additional retaliatory duty in future years.
It says that since 2000 US companies have received $1bn in anti-dumping fees redistributed to them under the Byrd Amendement.
It expects to see a significant rise in this figure from 1 October if Byrd is not repealed. "That distribution alone could amount to $1.6bn," the European Commission said.
All eight complainants - which include the EU, Brazil, Canada, Chile, India, Japan Korea and Mexico - are authorised to apply sanctions against the US. Canada is expected to announce sanctions against the US shortly.