EU prepares massive US sanctions list

US products ranging from cereals to nuclear reactors are on a European Union draft list for potential trade sanctions totalling up to €4.1bn.

US products ranging from cereals to nuclear reactors are on a European Union draft list for potential trade sanctions totalling up to €4.1bn.

The list, to be published by the European Commission today, follows a ruling last month by the World Trade Organisation which authorised the sanctions after finding that the US gave illegal tax breaks to its companies operating abroad.

Designed to maximise pressure on Washington, the list includes politically sensitive farm exports such as oil seeds and wheat gluten, as well as iron and steel exports - already the subject of a separate trade row.

But it is far from certain that the EU will actually impose the sanctions, which would be 20 times bigger than any previously allowed.

Experts said the EU are likely to use it as a bargaining chip to force Washington to amend its law quickly.

"This issue has been and will be more valuable as a threat," said Richard Cunningham, a trade expert at Steptoe & Johnson in Washington.

"It tends to emasculate US initiatives against Europe," in such other trade disputes such as the EU ban on biotech foods.

US President George Bush has promised to work with Congress to comply with WTO obligations, and the EU is following the progress.

"We trust that they will abide by their commitment," said Commission spokeswoman Arancha Gonzalez.

"If they don’t, and we see that there is no work in progress, we will activate the list."

Individual EU governments and industries now have two months to comment on the list, which gets pared down and becomes final in early November.

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