001065 Clinton Opposes Lott Plan on EU Retaliation

Washington - The Clinton administration said it had "serious concerns" about legislation proposed by Senate Majority Leader Trent Lott that would make it harder to remove $308.2 million in U.S. retaliation against the European Union in beef and banana disputes.

Lott, a Mississippi Republican, hopes to attach his amendment to one of the few remaining bills that Congress is expected to approve before it adjourns for the year, which is currently expected on Friday.

"The administration has serious concerns about this proposal and strongly opposes it," said Brendan Daly, spokesman for the U.S. Trade Representative's office.

According to a draft version, the Lott amendment requires U.S. sanctions to remain in place until the World Trade Organisation rules the EU has changed its policies to conform with international trade rules or the affected U.S. industry in each case agrees retaliation is no longer necessary.

The Clinton administration is concerned the second provision would subordinate U.S. government interests by effectively giving cattle producers or Chiquita Brands International, a banana marketing giant, veto power over any deal the United States might make with the EU.

U.S. trade officials are also concerned the measure might violate WTO rules. However, they were reluctant to say if Clinton would veto any bill containing the measure, saying that could depend on the overall package.

House Ways and Means Chairman Bill Archer, Texas Republican, is also opposed to the measure.

He urged House Appropriations Chairman C.W. Bill Young, Florida Republican, not to accept the Lott amendment as part of any final spending package this year.

"This amendment raises serious substantive trade policy concerns... and has not been considered by the House Committee on Ways and Means," which has jurisdiction over trade issues, Archer said in a letter.

The Lott amendment is motivated by concerns U.S. negotiators could trade away retaliation in the beef and banana disputes in talks with the EU over a bigger trade spat involving U.S. tax breaks for exporters.

By the end of this week, Congress is expected to give final approval to a set of reforms to the U.S. Foreign Sales Corporation programme.

By beating a Nov. 1 deadline, that would put EU retaliation on potentially billions of dollars of U.S. goods on hold until the World Trade Organisation decides whether U.S. legislative changes comply with global trade rules.

If the WTO decides against the United States, President Bill Clinton or his successor could be tempted to trade away the retaliation on beef and bananas to lessen the blow of EU duties in the tax dispute, industry aides said.

The United States has had retaliatory duties on the EU in the beef and banana cases for more than a year.

Recently, there has been some progress in reaching a temporary solution to the dispute over the EU's ban on beef produced with artificial growth hormones.

However, the United States and Latin American countries contend the EU's latest proposal for revamping its banana import licensing system still violates WTO rules.

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