After failing to settle a dispute over EC subsidies on oilseeds - soybeans, sunflower seeds, and other vegetable oil crops - the United States and the European Community, are teetering on the brink of a trade war that could dash global efforts to reform international trade.

After three days of meetings here between EC Farm Commissioner Ray MacSharry and US Agriculture Secretary Edward Madigan the US Agriculture department announced it is seeking approval from the 108-nation General Agreement on Tariffs and Trade to retaliate against EC oilseed subsidies. The EC has said it would counter such a move. GATT panels twice have upheld US contentions that the subsidies violate trade agreements.

The Bush administration has threatened to impose tariffs of up to 100 percent on up to $1 billion worth of EC products. Washington is expected initially to announce sanctions on $300 million to $350 million worth of EC imports.

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