By Martin Crutsinger
The Associated Press

WASHINGTON - For the first time, the United States will be hit with trade sanctions approved by the World Trade Organization because of a fight in Congress over how to restructure $5 billion in corporate tax breaks.

Starting Monday, a wide range of U.S. exports to Europe will be subject to a 5 percent penalty tariff that will ratchet higher by 1 percentage point each month.

European Union Trade Commissioner Pascal Lamy insisted that the penalty tariffs would be lifted as soon as Congress passes a World Trade Organization-compatible tax law dealing with U.S. corporations.

The Bush administration expressed disappointment with the retaliatory tariffs while Congress was considering replacement legislation.

The problem in Congress stems from competing visions of which U.S. corporations should be helped by the replacement legislation for exporter tax breaks. The WTO ruled them illegal four years ago.

Many in Congress want to target substitute corporate tax breaks to U.S. manufacturers.

Others want to let U.S.-based companies with overseas factories share in the breaks.