Protectionism is steadily increasing in the US, the European Union's trade commissioner said yesterday, warning of fresh turbulence in international trade relations this year.

"If you look at the way Congress has voted in the past few years, both Democrats and Republicans, you have a trend towards protectionism," Mr Pascal Lamy said. He predicted a further rise in anti-dumping actions against imports.

In addition, he said, the weak dollar and the elimination of rich countries' quotas on textile imports next January would make this "a difficult year" for international trade.

Nonetheless, he was confident strains between the US and EU could be managed and said there was still a chance of World Trade Organisation (WTO) members reaching an agreement by August that would break the deadlock in the Doha world trade round.

Mr Lamy was cautious about prospects for averting threatened EU sanctions on the US because of its failure to comply with a WTO ruling against its Foreign Sales Corporation scheme of business tax breaks.

The EU will start imposing escalating sanctions on US exports if the Congress does not repeal the scheme by March 1st.

Mr Charles Grassley, chairman of the powerful Senate finance committee, has ruled out legislative action by that deadline however. Nonetheless, the commissioner said he had assurances from Washington that it wanted to resolve the issue and believed it would eventually comply with the WTO ruling. - (Financial Times Service)