The European bloc and its northern neighbour agree that retaliatory action may be necessary if the simmering transatlantic trade wars are not to overbalance in America's favour.

"The government has today decided to impose a 30% extra duty on some American goods if the United States does not lift its measures against Norwegian steel exports," the foreign ministry said in a statement on Friday.

The World Trade Organisation's highest court ruled on November 10 that tariffs imposed by President George Bush in March 2002 to protect the ailing US steel industry violated international trade laws.

Norway said the extra duties would affect products including wine, steel pipelines, apples, garage doors made of steel and hunting rifles.

Norse courage

The measures would affect imports from the United States worth $12.21 million in 2002. It said the US tariffs had hit steel exports by Norwegian group Corus Packaging Plus, based in the western port of Bergen.

Norway said the WTO was due to give a formal ruling on 1 December on the US tariffs.

Norway, which is not a member of the European Union, said its measures would come into effect on 6 December in line with threatened EU sanctions.

"Retaliation clearly hurts ... But we are ready to retaliate if necessary"

Pascal Lamy,
EU trade commissioner

The European Union trade chief Pascal Lamy said on Friday that the EU is determined to take steps against the United States if it fails to comply with WTO rules, but retaliation would be a last resort.

Despite the threat of EU sanctions against the United States, he said there was not "overall sickness" in the world trade system and was optimistic that world trade talks which collapsed in Cancun, Mexico, in September would be revived.

Reluctant to retaliate

Lamy said the EU did not relish the prospect of imposing penalties in two rows over US tax breaks for exporters and steel import tariffs.

But he said it remained determined to do so if Washington did not comply with World Trade Organisation rules before deadlines due next month.

"Retaliation is the last resort that the system provides, the final tool that can be used to incentivise compliance. Retaliation clearly hurts ... But we are ready to retaliate if necessary," Lamy, the EU's trade commissioner, told the Irish Institute of European Affairs in Dublin.

The European Commission approved a plan earlier this month to launch sanctions on up to $4.0 billion of US goods gradually from March 2004 unless the United States repeals disputed tax breaks for US exporters by the end of the year.

Both sides are mindful of the billion-dollar-a-day EU-US trade relationship.