* U.S. energy chief said Congress should consider duties

* Climate trade dispute could be "disastrous" for WTO

By Doug Palmer

WASHINGTON, March 25 (Reuters) - Rich countries cannot afford to start a trade war with China and other developing countries that they believe are not doing enough to fight global warming, the Netherlands' top trade official said on Wednesday.

"Should we use a loophole under the WTO rules to impose trade restrictions on, for example, China, for doing too little to reduce CO2 emissions, the Chinese will use the exact same methods to block our trade and investment," said Dutch Minister for Foreign Trade Frank Heemskerk.

"If we go that route, it's a recipe for a trade war so let's not start that," Heemskerk said at a discussion on trade and climate issues hosted by the Swedish Embassy.

Many U.S. energy-intensive industries fear they will be put at a disadvantage if Congress passes legislation this year to fight global warming and major developing countries like China and India do not take on similar obligations.

U.S. Energy Secretary Steven Chu said last week the United States should consider an import duty on products from countries that don't do their part, an idea that China's senior climate change official rejected as protectionist.

Countries hope to reach a new international agreement by the end of the year to reduce carbon dioxide and other greenhouse gas emissions blamed for global warming. But China and India are resisting deep commitments, arguing that rich countries caused the problem and must do the most.

Tariffs would not be effective against China "because the Chinese firms that export are often best in class, including in the environment," Heemskerk said.

The duties probably would not hit the firms that pollute the most since those mainly serve China's domestic market, he said.

Steve Charnowitz, an assistant law professor at George Washington University, said countries should agree to a three-year moratorium on import duties or other border measures imposed in the name of protecting the environment or preventing jobs in energy-intensive sectors from moving overseas.

That would give major greenhouse gas emitters time to agree on a "code of conduct" for trade that might prevent the issue from coming before the World Trade Organization's dispute settlement body, Charnowitz said.

"If you have a big climate change case at the WTO and it goes against climate, it's going to be disastrous" for public support of the Geneva-based body, he said, adding that it would also would harm the rules-based trading system if the WTO allowed unjustified protectionism. (Reporting by Doug Palmer)

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