The European Union said today it would press ahead with a new import system for bananas despite a US warning that this could lead to new European products being targeted for sanctions.
The flare-up in the long-running transatlantic banana row threatens to set trade relations between Brussels and US President George Bush's administration off to a sour start.
US rotation of sanctions in the banana case could make the EU more likely to retaliate against the United States in a multi-billion-dollar dispute over US tax breaks for exporters.
The United States imposed $191 million a year in sanctions on EU exports in 1999 after winning a World Trade Organisation (WTO) case against the EU's banana import rules.
The EU's current rules were judged to discriminate in favour of growers in EU territories and the Caribbean at the expense of Latin American producers and US marketing firms such as Chiquita Brands International and Dole Food Co.
Washington objects to the EU's plans for a new banana import system due to be introduced in the next few months. New US Trade Representative Mr Robert Zoellick warned yesterday that the United States could revise the list of EU goods hit by sanctions if the EU goes ahead.
"We are convinced this is a WTO (World Trade Organisation) compatible system. This means basically we are saying we are prepared to go ahead", European Commission spokesman Mr Gregor Kreuzhuber told journalists.
However, Mr Kreuzhuber said the EU's executive Commission remained open to negotiations with the US administration."Our doors remain open if the American side advances feasible solutions to this conflict", he said.