US erects trade barriers

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WASHINGTON - The Clinton administration yesterday fulfilled a threat to impose trade sanctions against the European Community in a dispute over telecommunications contracts, announcing that the measures will formally come into force today, writes David Usborne.

Though considerable warning was given, Washington's move will none the less deepen tensions between the new administration and the Twelve at a time when both sides are struggling to close differences in the world trade negotiations of the General Agreement on Tariffs and Trade (Gatt).

In Brussels, Sir Leon Brittan, the EC Commissioner responsible for foreign trade, said he greatly regretted the US action, arguing that it was 'neither justified, wise or necessary'. A spokesman for Sir Leon said consultations with member states would begin immediately to determine what retaliatory action might be taken.

Washington contends that EC legislation unfairly restricts US companies from the European telecommunications sector. Under the new sanctions, EC firms will in turn be barred from competing from federal contracts in the telecommunications market. Only a relatively modest amount of trade, worth barely dollars 20m ( pounds 13m) a year, is likely to be affected by the move.

The measures were announced by the US Trade Represenative, Mickey Kantor, who has often crossed swords with Sir Leon since coming to office in the new US administration.