EU urges Bush to prevent trade war

EU Trade Commissioner Pascal Lamy pressed for US action on Monday to avoid possible sanctions on more than US$6 billion worth of US exports in a pair of long-running trade disputes.

Lamy to answer reporters' questions as he met with US lawmakers and Bush administration officials in an effort to head off a damaging trans-Atlantic trade war.

EU have warned they would impose sanctions on more than US$4 billion worth of US exports unless Congress repeals a set of illegal tax breaks for exporters by end of the year. Brussels is also threatening sanctions on US$2.2 billion worth of US exports in a separate dispute over steel.

Senate Finance Committee chairman Charles Grassley, an Iowa Republican, told reporters he would press Lamy for patience in the bigger of the two disputes. The committee passed a bill last month repealing the illegal tax breaks and using the US$50 billion in revenues that would result over 10 years to cut taxes for US manufacturers.

Grassley he was confident the legislation would pass in the Senate as soon as Majority Leader Bill Frist, a Republican, can find an opening in the crowded legislative agenda to bring it to the floor.

But that may not happen this year, he said.

Congressional would like to adjourn before the Thanksgiving holiday in late November. However, a pile of unfinished appropriations bill and other priority issues increase the chance of an extended session.

Amy Call, a spokeswoman for Frist, told Reuters that the Senate majority leader wanted to move on the bill if the legislative schedule allows.

US Treasury John Snow told Lamy the Bush administration was "strongly encouraging" both the House and the Senate to finish work on a bill this year, Treasury spokesman Rob Nichols said.

Meanwhile, a WTO appeals panel is expected to rule on Monday whether US steel tariffs imposed in March last year violated WTO rules.