(Adds details, EU business reaction)
By Doug Palmer and Darren Ennis
WASHINGTON/BRUSSELS, Jan 15 (Reuters) - The outgoing Bush administration on Thursday cranked up pressure on the European Union to drop a ban on U.S. beef treated with growth hormones by changing a list of European food products it has targeted with sanctions.
The U.S. action, which is effective March 23, is good news for European exporters whose products have faced 100-percent U.S. duties since 1999, but bad news for other companies whose goods will be added to the list.
The EU reacted angrily, vowing to challenge the move at the World Trade Organization.
U.S. Trade Representative Susan Schwab said efforts to resolve the dispute, which emerged when the EU banned imports of hormone-treated meat in the early 1980s, had proved fruitless.
"For over a decade, we have been trying to resolve this dispute with the EU but our efforts have gone nowhere," Schwab said in a statement.
"In these circumstances, I have decided it is time to modify the duties to try to encourage a resolution of this longstanding dispute so as finally to provide a fair outcome to the U.S. beef industry, while addressing the economic impact of such long-standing duties on U.S. interests."
U.S. sanctions on European food products are worth $116.8 million a year.
Washington has added to the list beef, pork and poultry products from the EU's 27 member states, as well as chewing gum, chocolate, certain jams, peaches and pears.
The revised list, posted on USTR's website (www.ustr.gov), shows mineral water and chestnuts from France would now face punitive duties among other items. But, more than a dozen items were dropped from the list including tomatoes, yarn and onions.
The EU called the move illegal and said it feared the action could lead to the United States changing its sanctions list every six months.
"Transatlantic trade needs champions, not sanctions," said EU Trade Commissioner Catherine Ashton in a statement, calling the U.S. action "regrettable".
"We look forward to working with the new administration to address this situation," the statement read.
"CAROUSEL MEASURES"
The EU's top business group said the EU and the new U.S. administration should work together to resolve the dispute amicably and in full respect of WTO rules.
"That means that the EU needs to take steps to open its markets to U.S. beef but also that the U.S. should refrain from carousel measures which create unpredictability for business," Eoin O'Malley, BusinessEurope's senior adviser on international trade, told Reuters.
The United States imposed the duties after winning a World Trade Organization case in which it argued the EU's ban on beef from cattle treated with artificial growth hormones was not supported by science and inconsistent with WTO rules.
The EU amended its ban in 2003 and filed another case challenging the continued application of the retaliatory tariffs. The WTO's top court issued a decision in October that the United States says upheld its continuing right to impose trade measures on EU products.
The European Commission, which oversees the bloc's trade policy, said its decision to ban U.S. hormone-treated beef was based on scientific advice and not protectionism.
Earlier in the case, U.S. cattle producers had pushed the trade representative's office to take a "carousel" approach to the trade duties, under which the list of EU goods hit with retaliatory sanctions would be changed every six months to maximize pressure on Brussels to lift the ban.
U.S. officials rejected that approach at the time. The idea of changing the sanctions list re-emerged only recently. (Editing by Katie Nguyen)