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BRUSSELS, Sept. 13 — The European Union threatened again today to impose sanctions of up to $4 billion on American imports as it published a list of potential products for retaliation if the United States does not scrap a tax break for its exporters.
The list includes agricultural products, food and clothing, timber products, steel and iron structures, electrical goods and parts for nuclear reactors. The items have combined annual sales in Europe of $8 billion to $12 billion.
That will be whittled down to $4 billion in mid-November, after the European Union considers requests by European companies to exclude certain products and raw materials.
Last month, the World Trade Organization, the arbiter of trade disputes, gave the European Union permission to impose sanctions of up to $4 billion after ruling that a United States tax break favoring foreign sales divisions of American companies violated trade rules.
Rather than set a deadline for the removal of the tax benefit, a trade spokeswoman at the European Commission, Arancha Gonzalez, said Europe would monitor progress in Washington toward that end. "When we see that there is no work in progress," Ms. Gonzalez said, "we would have to take a decision on imposing sanctions."
President Bush said in May that he would work with Congress to align the tax code with world trade rules. Republicans on the House Ways and Means Committee have introduced a bill that would repeal the tax break and replace it with other benefits that would reduce corporate taxes on foreign income.
In Washington, Representative Bill Thomas, Republican of California and chairman of the House Ways and Means Committee, used the release of the list today to drum up support for the Republican bill.
Waving an avocado in one hand and a zucchini in the other to demonstrate the "A to Z" range of potential tariffs, Mr. Thomas argued that defenders of the old tax break must "accept reality" and look for new solutions.
"We have gotten some reactions of, `Oh my gosh, how do I get off the list?' " Mr. Thomas said. "You can't get off the list. The retaliation list is there because the United States has refused, after four findings that we are in violation of international trade rules, to make changes." The bill has run into heavy opposition from companies like Boeing, Caterpillar and Microsoft, who are heavy users of the tax benefit. Representative Charles B. Rangel of Manhattan, the ranking Democrat on the Ways and Means Committee, said the Republican bill would raise taxes for exporters while helping companies that have moved factories overseas. "There has got to be winners and losers," he said, "but at least we can come up with something where we say as Democrats and Republicans that we did the best we could for America and especially for exporters.".
Congressional elections in November are expected to delay any progress on the bill, but Ms. Gonzalez said European officials would be patient as long as "we are satisfied that work is still continuing."
The items on today's list were chosen because they make up 20 percent or less of the European Union's total imports in each category, a limit intended to minimize disruption to European companies. But some industry groups still worry that their members will suffer from sanctions.
Although it is by far the biggest trans-Atlantic trade dispute to date, the long argument over tax breaks is one of many souring the relationship between Europe and the United States. The Bush administration's duties of up to 30 percent on steel imports and its planned increases in subsidies to American farmers have also provoked the threat of sanctions. The United States, meanwhile, is fighting Europe's bans on imports of hormone-treated beef.
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