WASHINGTON — The European Commission kept the heat on the U.S. Wednesday, with a report that called U.S. steel exclusions "manifestly insufficient" in advance of a critical recommendation on whether to slap retaliatory sanctions on U.S. goods, including apparel.

EU Trade Commissioner Pascal Lamy will base his recommendation to the EU Council of Ministers Friday on this report, which could set the stage for retaliatory sanctions on over $300 million in U.S. goods. A final decision is slated to be made on July 22.

The EU has threatened to impose punitive duties of about $335 million on U.S. goods to retaliate against the Bush administration imposing tariffs of up to 30 percent on imported steel.

EU officials have picked several women’s and men’s apparel products to target. The garments are made in key Southern states that are key battlegrounds in November’s election, which could determine whether Republicans maintain control of the House.

EU officials have delayed taking action since the U.S. announced it would allow some exclusions of specialty steel products from the punitive tariffs. The report released Wednesday, however, gives an indication that EU officials are not satisfied with the amount of steel products the U.S. has exempted.

The Commission’s report claims the punitive duties levied by the U.S. have hurt U.S steel producers more than EU producers and are creating artificially high prices and maintaining inefficient capacity. The Bush administration said it levied the tariffs to protect the flagging steel industry in the face of low-cost import competition, a temporary measure allowed by the World Trade Organization in order to give an industry time to regroup.

The WTO will take the matter up in the second half of next year, at which time it will review formal complaints lodged by several countries. If the WTO condemns the U.S. steel duties, and the U.S. does not immediately withdraw them, the EU is prepared to levy additional broad-based sanctions on more than $2 billion worth of goods.

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