WASHINGTON, April 27: With a red-hot trade dispute over steel showing few signs of cooling, top US and European Union negotiators are planning to slip away next week for a one-day retreat at an undisclosed location somewhere in Virginia, EU officials said on Friday.

US Trade Representative Robert Zoellick and EU Trade Commissioner Pascal Lamy have scheduled the getaway one day after next Thursday’s summit meeting here between President George W. Bush and European Commission President Romano Prodi, the EU aides said.

Trade and economic issues will be on the agenda for the summit, as well as the one-day retreat.

Zoellick and Lamy will expand on the leaders’ discussion and also focus on areas of mutual interest, such as the new round of world trade talks launched last year in Qatar, EU officials said at their weekly briefing here.

Brussels has challenged Bush’s decision last month to impose temporary “safeguard” tariffs of 8 to 30 per cent in ten different steel product categories to help the struggling domestic steel industry get back on its feet.

The EU has threatened to retaliate by June 18 with 100 per cent tariffs on US exports valued at about $335 million annually if the Bush administration does not provide compensation by lowering tariffs on other products the EU ships to the United States.

In addition to the steel spat, the United States is under tremendous European pressure to change its corporate tax system following a series of WTO decisions in Brussels’ favor.

In a case that dates back to 1997, the WTO has ruled four times that US tax breaks for exporters are illegal under international trade rules.

The EU has requested the right to retaliate on US exports worth over $4 billion a year if the United States does change its tax system to comply with WTO rules.

The Bush administration has asked the WTO to limit EU sanctions to about $1 billion.

An arbitration panel is due to rule on the matter by June 17.

In a speech to a Washington business group, Zoellick said on Friday he remained optimistic the United States could avoid EU sanctions in the tax spat by showing it is serious about complying with the ruling.

As part of that effort, Zoellick said he and Lamy may meet next week with House of Representatives Ways and Means Committee Chairman Bill Thomas, a California Republican who has begun hearings aimed at revamping the corporate tax system.—Reuters