The European Union has agreed to file a trade suit against Argentina's import restrictions with the World Trade Organization (WTO), a senior Spanish government source said on Monday.
The suit is not directly linked to Argentine President Cristina Fernandez's decision to seize control of its biggest oil company, YPF, a subsidiary of Spain's Repsol (REP.MC).
But the move last month played a role in the EU's decision, the source told Reuters.
"The European Union has decided to file a complaint (with the WTO) which will mean, if the EU wins, very serious trade sanctions for Argentina," the source said.
"The EU's decisions follow from all the non-fulfillments which Argentina has built up before the WTO. The Repsol problem has really just been the straw that broke the camel's back."
The complaint will be lodged with the WTO within the next few days, the source said.
A spokesman for EU trade commissioner Karel de Gucht could not immediately be reached for comment.
The issue prompted a war of words between the South American country and at least 14 of its trading partners in recent weeks.
U.S. Ambassador to the WTO Michael Punke led the criticism at a March 30 meeting of the WTO's Goods Council, where he said Argentina had put a blanket restriction on trade by requiring import licenses on all imported goods from Feb 1 this year.
Argentina's Secretary for International Economic Relations Cecilia Nahon has said the country was being made into an example to discourage developing countries from using legitimate economic policies./.