BRUSSELS, May 30 (Reuters) - The European Union will launch a World Trade Organisation (WTO) complaint against the United States if it goes ahead with a plan to rotate sanctions on EU goods in rows over beef and bananas, an EU source said on Tuesday.
The EU threat, made a day before U.S. President Bill Clinton holds a summit meeting with top EU officials in Lisbon, adds to transatlantic trade frictions after a row over a U.S. tax scheme for exporters deepened on Monday.
The Clinton administration, acting on the instructions of Congress, cranked up the pressure on the EU on Friday to resolve longstanding trade fights over the EU's banana import rules and its 11-year-old ban on imports of hormone-treated beef.
The U.S. Trade Representative set a June 19 deadline for deciding whether to add new goods to the list of $308.2 million worth of EU products subject to 100 percent duties in the two disputes. The policy is known as a ``carousel'' system.
"If the U.S. goes ahead with implementing the carousel, the EU will have no alternative but to take it up in the WTO," the EU source said, speaking on condition of anonymity.
The EU would argue that the U.S. step was incompatible with global trade rules, he said.
He indicated that the EU would go to the Geneva-based world trade watchdog if the bloc could not win a change of heart from U.S. officials at Wednesday's summit.
The source said the EU's executive Commission had backing from the bloc's member states for the move.
UNCERTAINTY FOR EXPORTERS
The first step in the WTO's disputes settlement procedure is to request consultations with another party. If that fails to bring a solution, the complainant can ask for a disputes panel to rule.
EU officials maintain the planned U.S. action will create uncertainty for European exporters, widening the impact of the U.S. trade retaliation beyond what was envisaged by the WTO when it authorised the U.S. sanctions last year.
EU officials had until now said they had serious doubts about the compatibility of the U.S. "carousel" move with WTO rules and were considering their response.
"How can any company plan its exports for the next six months when at any moment it can get hit by sanctions?" one EU official asked on Monday.
The beef sanctions currently affect EU products such as Danish hams, French pate and Italian tomatoes. The banana sanctions hit goods ranging from handbags to bed linen.
The United States has long complained about the EU's banana import policies, which it says favour former European colonies in the Caribbean and Africa to the detriment of Latin American producers and U.S. marketing companies.
The EU has invoked health concerns to ban beef produced with artificial growth hormones, but Washington insists the hormones are safe and accuses the EU of protectionism.
The EU threat came a day after a row escalated over a U.S. export scheme known as the Foreign Sales Corporations (FSC) programme.
The WTO ruled this year that the FSC scheme, which provides tax breaks worth billions of dollars a year for major U.S. exporters, including Microsoft, Ford and Exxon Mobil, constitutes a prohibited export subsidy.
On Monday, the EU said U.S. proposals to bring the scheme into line with WTO rules were not good enough, but the United States said it would go ahead with enacting the reforms anyway.
EU officials said the bloc would ask a WTO panel to judge whether the United States had complied with global trade rules if Washington enacted an FSC reform which was not to its liking.:
