A leading Scottish cashmere company has welcomed President Clinton's decision to delay action over whether to include their products on a trade retaliation list.

And Scotland Office Minister, Brian Wilson, has now called on the European Commission to help find a speedy solution to the banana import crisis which is threatening the Scottish cashmere industry.

President Clinton has agreed to delay a decision on whether to include Scottish cashmere products on a trade retaliation list following appeals from UK Prime Minister, Tony Blair.

Mr Wilson says Mr Clinton's decision has created a further `window of opportunity' rather than a solution, and it is now more vital than ever that the European Commission concentrates on achieving a World Trade Organisation compliant banana importing regime.

He said: "That is the only way to resolve the issue and thereby lift both the existing retaliatory action and also the threat to industries such as cashmere knitwear.

"The UK lobbying exercise, and particularly the active engagement of the Prime Minister, has gone a long way towards persuading the Americans that we are advocating a solution in Brussels and not part of the continuing problem.

"However, we must now intensify our efforts to ensure that a regime is agreed, sooner rather than later."

James Sugden, managing director of Johnstons of Elgin, a major Scottish cashmere company said: "The news is undoubtedly better for our industry. We have lived now for so long with this uncertainty that a little longer will do no harm."

The Scottish cashmere industry employs large numbers of people, many of whose jobs depend on the lucrative export market to the US.

Under World Trade Organisation rules, the US can impose 100 per cent duties on a range of European products to retaliate for losses sustained because of the European banana import regime.

This favours former European colonies and not the South American plantations owned by American companies.

The US has drawn up the trade retaliation list to try and persuade the European Union to settle the row over banana and beef imports.

This threat to Scottish cashmere is the second crisis to hit the industry recently. Some cashmere companies are already predicting a rise in prices next year for consumers.

They say the price of cashmere has shot up over the past year and they are concerned by reports that the Chinese Government had ordered the recent cull of around 300,000 cashmere goats "to prevent an ecological disaster".

European textile trade experts fear this is a clever piece of market manipulation, designed to push potential customers in the direction of the much higher priced white cashmere.

By Deborah Bowyer