The EU has complied with the first phase of the understanding, and so today the United States will lift its WTO-authorised retaliatory duties

US Trade Representative Robert Zoellick

The Clinton administration had put 100% tariffs on a range of European goods, from British bed linen to French handbags, doubling their price in America.

The US was retaliating against European Union protection of Caribbean banana growers.

The US tariffs cost EU exporters a total of $191.4m (215.2m euros) annually.

Banana imports

Under the new deal, the EU agreed to gradually increase its quotas for bananas grown in Latin America until 2006, when all preferential quotas will be eliminated.

The US still has tariffs against French cheese

Two big US companies - Chiquita Brands International and Dole Foods - said they had lost almost half their European sales since the EU implemented a preferential quota system in 1993.

The US announcement on Sunday means that European goods including bath preparations, handbags and wallets, felt paper and paperboard, lithographs, bed linen, batteries and coffee makers will be available again in the US.

Other disputes

But it is not the end of trade disputes between the two blocs, who are the world's two largest trading partners.

The European Union is currently considering big tariffs on US goods because of what it alleges are unfair subsidies to US exporters - and has recently won a $4bn judgement against the US in the World Trade Organisation.

And the US currently has 100% tariffs against Danish ham, French cheese and German chocolate, totalling $119m, in retaliation for a European ban on American beef, which is produced with growth hormones

The disputes are casting a shadow over plans to resume the World Trade Organisation's free trade talks which are scheduled to take place in Qatar in the Persian Gulf in November.

The head of the WTO, Mike Moore, has said that agreement needs to be reached on an agenda for those talks by the end of July if they are to have any chance of success.

Previous trade talks in Seattle in December 1999 were abandoned after the EU, the US and developing countries failed to agree the agenda - amid anti-globalisation riots that paralysed the city.