990543 U.S. Nears Retaliation In EU Beef Dispute

Washington - The United States moved closer to slapping steep retaliatory duties on hundreds of millions of dollars of European Union goods after the EU missed a key deadline in a decade-old beef trade dispute.

If imposed, Americans could have to pay twice as much for European products such as Evian Natural Spring Water and Dijon mustard, as well as Danish hams and other specialty meats -- if those products remain available at all.

Some manufactured goods, such as small-engine motorcycles used for racing and off-road recreation, could also be hit in the dispute over beef from cattle treated with hormones.

U.S. Agriculture Secretary Dan Glickman told reporters on Thursday the United States was determined to retaliate if the EU did not drop its 10-year-old import ban as required by the World Trade Organization.

“I think we indicated that if the EU did not meet the deadline, that we would proceed in accordance with our responsibilities and rights under the World Trade Organization,” Glickman said.

To keep the EU off balance, the United States might not specify which products it will hit in dispute for two more months, trade sources said. Because the EU is expected to ask the WTO to arbitrate the final retaliation amount, the earliest that any duties could go into effect is probably Mid-July.

U.S. cattle producers have urged the Clinton administration to wait until arbitration is over before saying which goods it will hit. Even so, the U.S. Trade Representative's Office could announce as early as Friday the size of the retaliation.

Earlier in the day, the EU formally notified the WTO that it will not meet the May 13 deadline set in 1998 for it to open its market to beef from cattle treated with hormones.

Two WTO dispute settlement panels in a case brought by the United States and Canada ruled the EU's 10-year-old import ban violated international trade rules. Canada has also said it would retaliate if the EU does not open its market.

In Hong Kong, EU Trade Commissioner Sir Leon Brittan told reporters on Thursday that the EU would not drop its ban until it is satisfied the meat products are safe.

The United States says that was proven long ago and that the EU has not presented any new evidence that the artificial growth hormones are harmful when used properly.

The U.S. Food and Drug Administration has allowed the use of growth hormones in cattle production for decades.

U.S. cattlemen said they were disappointed with the EU's decision not to open its market. But the EU could still avoid U.S. retaliation by setting “a firm date” to drop its ban, George Swan, president of the National Cattlemen's Beef Association, said in a statement.

“All plant and animal foods contain hormones,” Swan noted. “In fact, one bowl of split-pea soup has over 9 times as much naturally occurring estrogen as a 5-ounce portion of beef, from either an implanted or non-implanted steer.”

Last week, the EU released a new scientific report which concluded that estradiol -- one of the six hormones used by North American cattle producers -- could cause cancer.

U.S. officials blasted the report as inflammatory and misleading because the amount of estrogen that causes cancer is more than is used in cattle production.

Clinton administration officials from the U.S. Agriculture Department, the U.S. Trade Representative's Office and other executive branch agencies were to meet on Thursday to discuss the next step in the matter.

USTR published a preliminary list in late March of more than $900 million worth of EU food and other products that could be hit with 100% duties if the EU did not open its market by the May 13 deadline.

U.S. farm groups have urged the administration to set the final retaliation list at at least $500 million. That is how much beef they estimate the United States could ship to the EU each year if the ban were removed.

U.S. sales of “hormone beef” to the EU totaled about $100 million in 1989, when trade was cut off. But U.S. cattlemen argue that shipments would have increased -- as they have to other large markets -- over the past ten years.

On Wednesday a USTR spokeswoman said officials were still calculating how much the EU ban has damaged the U.S. cattle industry on an annual basis. Washington has 20 days after the May 13 deadline to present a final damage estimate to the WTO.

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