US warns EU against protectionism

She was speaking in Brussels after French President Nicolas Sarkozy said a European tax could be imposed on states that refused to cap carbon emissions.

Ms Schwab said the United States had been "dismayed" at climate being used as a reason to close markets.

Speaking alongside her, EU trade commissioner Peter Mandelson agreed restrictions were not the way forward.

"They're not cost efficient, they carry a risk of retaliation, they would result in increasing cost for European industry at large," he said.

Ms Schwab also remarked on a World Trade Organisation (WTO) dispute surrounding European resistance to genetically modified organisms.

Although the United States has suspended its right to retaliate while the EU attempts to lift a ban on biotech products, she criticised attitudes in Europe.

"Using bad science to make trade policy decisions is certainly a practice that would come back to haunt all of us in other countries," she said.

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