But, EU Consumer Health Commissioner David Byrne said in Washington that both officials agreed that lifting the three-year EU moratorium on new biotech crops would help bring the two sides closer to an agreement.

After more than a two-hour meeting with Byrne, Veneman told reporters that the EU proposal requiring records for every level in the food-making process - from the farm to the grocery store - was seen as unworkable by the U.S. agriculture industry. U.S. officials said the new EU provisions could end up costing U.S. companies billions in lost sales.

"We need to make sure that if systems are going to be adopted...it does not impede trade," Veneman said. "At this point, the anticipation is that it could be an impediment to product moving."

Veneman said if no compromise can be found on the GMO regulations, a U.S. challenge before the World Trade Organization could be an option.

Byrne reiterated remarks he made Tuesday that the European Commission was stepping up its efforts to lift a ban on new GM products.

In October 1998, the EU froze all new GM product approvals until legislation was put in place governing issues such as consumer labels on GM products.

"We have agreed that the secret to moving ahead with all of this is to get the (new GMO) authorizations moving again," Byrne said.

Byrne said a European Commission meeting next Tuesday will gauge whether there is agreement among the 15 members over legislation governing the approval process and consumer labeling requirements for GM products.

If so, the EU likely would establish rules to mirror the legislation. Byrne said he was "hopeful" those rules could be put in place sometime next year, much faster than the legislation, which isn't likely to be approved until late 2002 or in 2003.