990382 New Duties Threatened in a Battle Over Beef

Washington Post - The transatlantic trade war spread from bananas to beef as the United States threatened to impose duties that would double the price of hundreds of millions of dollars' worth of European products because of Europe's ban on meat from cattle given growth hormones.

The U.S. Trade Representative's Office yesterday published a preliminary list of European goods worth more than $900 million -- mostly food and agricultural products such as Danish ham, Belgian chocolates and mineral water - - that may be subject to 100% duties because of the dispute over beef.

Washington has already slapped punishing provisional duties on a list of luxury European goods, including French handbags and cashmere sweaters, because of the spat over bananas.

The sanctions in the beef case wouldn't go into effect for at least 2 1/2 months while negotiations continue over a possible compromise.

But the dispute could further inflame trade tensions because of the emotions it raises, particularly on the European side.

Although beef from hormone-treated cattle is widely sold and consumed in the United States, it is banned in the European Union largely because of intensive opposition from consumer groups and health activists who argue that such meat may be unsafe. To many Europeans, Washington's effort to eliminate the ban is tantamount to cramming a potentially harmful product down their throats.

But U.S. officials contend that tough measures are warranted because the EU has lost a World Trade Organization ruling on the issue and is refusing to comply -- the same problem that Washington is having with the Europeans over bananas.

A WTO panel has determined that the prohibition on hormone-treated beef lacks a scientific basis and therefore violates global trading rules. But the EU has indicated that it won't meet a WTO deadline of May 13 for changing its meat restrictions.

Asked whether Washington's back-to-back threats of sanctions might risk wrecking relations between the world's biggest economic superpowers, Peter Scher, the special trade representative for agriculture, replied: "Well, I hope [Europe] will have concern that deciding to ignore its obligations in back-to- back rulings of the WTO is not helpful to U.S.-European trade relations, or to the credibility of the world trading system."

Scher contended that there are "no scientific or health justifications for this ban" on hormone-treated beef, but to the extent that concerns remain, Washington remains willing to negotiate a "reasonable labeling regime" so that European consumers can decide whether to buy it.

EU officials have been chary of the U.S. labeling proposal, contending that the Americans appear willing only to accept labels that identify hormone-treated beef as raised in the United States rather than explicitly disclosing the use of hormones. But Scher retorted that the EU "has not provided any assurances that it will lift the ban at any time in the future," even with labeling.

In a statement, the European Commission said it "regrets" the U.S. move, which it said "will inevitably have a chilling effect on trade."

The commission, the EU's executive body, said it preferred compensating the United States by providing new market-opening concessions allowing greater sales in Europe of U.S. beef that hasn't been treated with hormones. But Scher said such compensation would only be acceptable if it were a stopgap measure that paved the way for an opening of the market to hormone-treated beef.

If a compromise can't be struck, Scher said, the 100% duties would go into effect on June 12 at the earliest and July 12 at the latest, and a final list of products to be sanctioned would be published in early June.

Between now and then, the list will be winnowed down substantially so that it reflects the amount of sales U.S. beef producers claim they are losing because of the EU ban -- a figure that Scher said has yet to be determined.

On April 21, a hearing will be held for exporters and importers of the products involved to plea for their removal from the list.

In addition to fighting over beef hormones and the EU's banana-import system, Washington and Brussels are dueling over other economic issues, including a proposed European ban on aircraft with certain types of noise- muffling systems that are used by several U.S. airlines.

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