The European Union and Canada will impose retaliatory duties on US imports ranging from paper to machinery from May 1st, because of Washington's failure to repeal a controversial anti-dumping law deemed illegal by the World Trade Organisation.

The Byrd amendment, dating from 2000, has required duties collected in US anti-dumping cases to be paid directly to plaintiffs.

Critics charge that the law has encouraged a raft of anti-dumping complaints by American producers of shrimp, candles, furniture and other goods seeking windfall profits.

The European Commission, the EU's executive body, said yesterday it would go ahead with the sanctions, worth about $28 million (€21.5 million) a year, because of "the continuing failure of the US to bring its legislation in conformity with its international obligations".

The EU sanctions will add a duty of 15 per cent on a range of US goods, including paper, textiles and machinery.

The administration of President George W. Bush has proposed repealing the law, but it faces stiff opposition from the US Congress. A spokesman for the US Trade Representative said the US was "disappointed" by the EU move.

Brussels has singled out products which could help put more political pressure on Congress to repeal the law, while targeting goods where the US market share of imports is less than 20 per cent in order not to hurt European businesses that rely on US imports.

Canada said it would impose 15 per cent duties on imports of live swine, cigarettes, oysters and certain speciality fish, sanctions worth about $14 million a year.

"Retaliation is not our preferred option, but it is a necessary action," said Jim Peterson, Canada's international trade minister.

US companies have collected more than $1 billion since the law was passed.

Payouts to US companies could reach $1.6 billion in the coming fiscal year if the law is not repealed, largely due to tariffs collected on Canadian lumber sales in the US. - (Financial Times Service)