US set to begin banana sanctions

THE TRANSATLANTIC war over Europe's banana imports was plunged into a new and dangerous crisis last night after the US said it would go ahead with sanctions on $520m of European imports, while suspending payments, pending a World Trade Organisation ruling.

The American government said it would demand bonds from US importers to cover the cost of 100 per cent import tariffs on a range of goods.

Peter Scher, the US negotiator for agriculture, said: "It is only after exhausting every opportunity thus far to try to resolve this dispute that we have reached this position."

The move was attacked by the European Union, which demanded immediate consultations, and accused the US of effectively implementing a sanctions regime. Sir Leon Brittan, vice president of the European Commission, described the US action as "unacceptable and unlawful".

The suspended 100 per cent tariffs will be on a range of luxury goods, from cashmere sweaters to chandeliers. Importers would be liable to pay the punitive tariffs if the WTO gave the go-ahead, said Mr Scher. The tariffs would be imposed on goods imported now, but would be paid retroactively once the ruling occurred, he added.

Washington argues that the EU banana import regime is unfair to South American distributors, most of which are owned by US companies, because it allows preferential treatment for former European colonies including the Windward Islands.