The draft underlined "the continuous need to respect fully the provisions of the WTO dispute settlement understanding in the settlement of bilateral disputes"."In this context, the European Council takes the firm view that the viability of the multilateral trading system depends on parties to it avoiding recourse to unilateral action damaging to the WTO dispute settlement system which lies at the heart of this trading system," the draft said.

The United States has threatened to impose punitive 100 per cent tariffs on selected European imports from January 21 unless the EU ends preferential treatment forbanana imports from former European colonies over so-called "dollar bananas" from US allies in Latin America.

The EU has previously said it would retaliate if Washington carried out that threat. But Saturday's draft statement made no mention of retaliation and stressed the importance which Europe attached to economic partnership with the United States.

The threat of a transatlantic trade war is likely to loom large at a EU-US summit meeting in Washington on December 18.

The US administration has accused the union of setting "unacceptable conditions" for an accelerated WTO review of its new banana licencing system, due to go into effect on January 1 replacing a previous import regime which the WTO ruled illegal.

The United States, backed by five Latin American countries, says the new EU regime still violates world trade rules by discriminating against Latin producers in favour of former Caribbean colonies of EU members.

The threatened US trade sanctions are largely targeted at France and Britain, themain former colonial powers concerned, and would hit imports worth up to $1 billion of goods ranging from wine and cheese to cosmetics and sewing machines.

A final list of targeted goods is due to be published next week.

The EU says the new system conforms with WTO regulations, but says it is ready for the members of the original panel to be called back to look at it as long as the United States drops its timetable for sanctions.