Brussels, 08/12/2003 (Agence Europe) - On Monday morning, the Council of the EU formally adopted a regulation setting out sanctions applicable from March 2004 if the United States fails to cancel its "Foreign Sales Corporation" law, which was ruled incompatible with World Trade Organisation rules. In May 2003, the WTO dispute settlement panel authorised the European Union to apply measures to the tune of $4 billion in compensation for losses incurred as a result of the US export subsidy system. The Council approved a Commission proposal whereby 5% customs duty will apply to a long list of imports (mainly farm products, food, cosmetics, clothing, furniture, jewellery, metals, wood and pulp, leather, glass, etc.) on 1 May 2004, hence leaving the US some time to abide by the WTO dispute settlement panel's decision. To up the pressure on the US, the customs duty in question will rise by 1% a month until it hits 17% in March 2005. The Council will cancel the regulation when the United States fully applies the WTO dispute settlement panel's recommendations.