But the commission also said it will check that a new US law providing export assistance is compatible with World Trade Organisation rules.

"Following the American president's decision, I am going to propose to the (European Union's) Council of Ministers to put an end to sanctions," outgoing trade commissioner Pascal Lamy told a press conference here.

On Friday, Bush signed legislation repealling the "foreign sales corporation (FSC)" and "extraterritorial income" provisions of the US tax code -- a five-billion-dollar-(four-billion-euro)a-year tax break for exporters.

In January 2003, the World Trade Organisation ruled the old law flouted global trade rules by allowing US firms, operating through subsidiaries in offshore tax havens, to benefit from reduced export taxes.

"I am very pleased that (the United States) respected the WTO decision before the end of this commission's term," Lamy said six days before he is to leave his post.

The new US law is aimed at painlessly resolving a six-year dispute over tax breaks for US companies with foreign operations such as Microsoft, IBM, Boeing and Caterpillar.

"This signature is good news. It's good news for the rule of law, and it's good news for the World Trade Organisation," Lamy said, while expressing thanks to US counterpart Robert Zoellick.

The commission nonetheless voiced concern over a so-called "grandfathering" clause in the US reforms that maintain FSC provisions until the end of 2006 and "in certain cases for an unlimited period after that date".

As a result, the EU's executive arm will ask for a new WTO ruling on Washington's revised position.

"We said we were willing to accept a transition period as long as everything ended at the end of that period. But we have some doubts," Lamy said.

The law that Bush signed Friday extends massive new assistance for US companies valued at nearly 140 billion dollars over the next decade.