EU leaders have warned the US, China and other major polluters that their industries could face sanctions if they do not sign up to an international agreement on fighting global warming by next year.
"If international negotiations fail, appropriate measures can be taken," the 27 EU leaders said on Friday in declaration after a two-day summit.
French President Nicolas Sarkozy went further.
"Our main concern is to set up a mechanism that would allow us to strike against the imports of countries that don't play by the rules of the game on environmental protection," he said.
The warning came as the economic turndown focused European minds on the impact on industry of their groundbreaking agreement last year to cut carbon emissions by 20 percent from 1990 levels by 2020.
European leaders are hoping for similar commitments from other major economies at a conference in Copenhagen, Denmark, next year.
Otherwise they say protection will be needed for European companies who will face unfair competition from heavily polluting rivals elsewhere.
"Industry, faced with global competition could be exposed to a real disadvantage if no international climate accord is struck, but we in Europe have very strict rules," German Chancellor Angela Merkel said.
Despite economic concerns, the EU leaders said they would stick to their carbon-cutting targets, which are among the world's most ambitious. They set a year-end deadline for resolving differences among the 27-nation bloc over which countries will have to bear the biggest burdens of the cuts.
EU leaders also agreed to consider a joint French-British plan to encourage industry by halving sales tax on environmentally friendly products.
For the first time, the leaders also looked at the security implications of global warming, calling it a "threat multiplier" bound to worsen tensions and instability through loss of arable land, water shortages, diminishing food and fish stocks and severe flooding and droughts.
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