The EU Commission has decided to hit imports from the US with duties of $200m from March 2004 in retaliation against a US tax scheme.
A spokeswoman said the Commission had approved a proposal to launch sanctions gradually, with an introductory tariff of 5%. This is to increase by 1% a month for a year, by which time the EU hopes Washington will have repealed the tax laws which sparked the sanctions.
The Commission decided to impose the duties in retaliation against the foreign sales corporation mechanism (FSC) which provides tax relief to US exports and has been condemned by the World Trade Organisation.
The Commission is gearing up to slap sanctions on another $2.2 billion of US goods as early as December in a separate dispute over steel import tariffs imposed by President Bush in March 2002.
