The European Union is sticking to a plan for sanctions of up to $4.4 billion on US goods from March unless Washington changes a disputed trade law, the EU Commission said, after a US request for patience.

US Ambassador to the European Union Rockwell Schnabel told Germany's Die Welt newspaper that Washington could not meet a March 1 deadline set by the EU for it to amend its Foreign Sales Corporation (FSC) Act and pleaded for more time.

"They (sanctions) will kick in on March 1 unless there is compliance on the US side (to change the law)," said Arancha Gonzalez, spokeswoman for EU Trade Commissioner Pascal Lamy.

The EU has decided to start the sanctions gradually, starting with penalties of five per cent of the total amount, rising by one per cent a month to reach 17 per cent by 2005.

Ms Gonzalez noted that both the administration of President George W. Bush and Congress had committed themselves to meeting the March 1 deadline to repeal the FSC programme, which was ruled illegal by the World Trade Organisation (WTO).

The programme gives export tax credits to help US companies. Major multinationals have been among the beneficiaries, including Microsoft.

Congressional aides said it was possible that either the House of Representatives or the Senate could approve legislation to repeal the tax breaks by March 1.

But it might be more difficult for both chambers to agree on a final bill before then, they said.

Reuters