U.S. Delivers Threat of Tariffs to Europe if Beef Ban Remains

WASHINGTON —  A U.S.-European tiff that started with bananas erupted into a full-fledged food fight Monday as the United States threatened to slap punitive tariffs on nearly $1 billion in European food exports if Europe doesn’t drop its long-standing ban on American beef treated with growth hormones.

The flare-up is the latest sign of rising world trade tension, fueled in part by an ever-growing U.S. trade deficit that soared to an all-time high in January.

It worsens the strain between the world’s two bastions of economic strength at a time when the rest of the global economy is in sorry shape. It adds one more conflict to a broader list of global controversies over trade in steel, jetliners, agriculture and other goods.

The Clinton administration’s move threatens to make U.S. grocery shelves prohibitively expensive for European beef, pork, poultry and dozens of other products designated Monday for 100% tariffs as early as June.

Administration officials hope the threat will persuade individual European countries to vote to loosen the restrictions, which the European Union has imposed since 1989 on grounds that hormone-treated beef poses health risks for consumers.

The U.S. beef industry, arguing that Europe’s health claims are nothing but trade barriers in disguise, has requested sanctions on at least $500 million worth of European imports per year--the amount of beef it says it could sell in Europe. The administration’s list of potential targets of punitive tariffs totaled $900 million.

Even if the United States ultimately imposes the tariffs, U.S. officials expect to pare back the list, which now includes ham, mustard, tomato paste, chewing gum, soup, grape juice, onions, paprika, mineral water, dried carrots, peaches, pears, cut flowers, Roquefort cheese and yarn.

“The EU’s 10-year, arbitrary and scientifically unjustified ban on U.S. beef has had a substantial negative impact on U.S. beef producers,” U.S. Trade Representative Charlene Barshefsky said in a statement. U.S. officials had hoped for a “mutually acceptable solution,” she said, adding that “we must also begin preparations to protect our rights if the EU does not comply with its obligations.”

European officials, already facing threatened U.S. sanctions over Europe’s limits on imported bananas sold by such American firms as Chiquita and Dole, retorted that the U.S. measures “will inevitably have a chilling effect on trade.”

To some analysts, the stubborn trade conflicts hold significance far beyond the industries immediately involved. Continued friction between the United States and Europe could affect what has been a broad, worldwide trend toward more liberal trade.

Later this year, for example, the 134 member nations of the World Trade Organization plan to convene in Seattle, where they hope to push forward with a broad agenda for trade liberalization. Yet protectionist pressures are rising on several fronts at once in the United States, the world’s biggest and most robust market.

“Is this [flap] a cause of concern? Absolutely,” said Jeffrey J. Schott, a trade expert at the Institute for International Economics. “Here we have a deteriorating global economic climate, where protectionist pressures are rising due to slow growth and unemployment.

“The United States and the European Union need to work together to help prepare for these new negotiations, and instead what are we doing? We’re fighting over bananas. We’re fighting over beef. We’re fighting over sanctions.”

The banana fight is among the more bizarre trade sagas, pitting the United States, which grows virtually none, against Europe, which is favoring its own distributors as well as America’s own neighbors in the Caribbean by limiting imports of superior bananas grown by U.S. firms in Central America.

The United States has announced plans to retaliate by imposing 100% tariffs on selected European luxury products, including Scottish cashmere and Italian prosciutto. U.S. officials will make final decisions about the affected products and overall scope of the banana-related sanctions after an assessment by a WTO panel on the financial harm suffered by the U.S. firms.

“We expect [that] to be done by the end of March,” Peter Scher, special U.S. trade negotiator, told reporters Monday.

Like bananas, the beef hormone dispute encompasses a range of political pressures, including protectionist demands by European agricultural interests as well as a history of WTO decisions that have upheld the U.S. position. It also reflects the anxiety of European consumers about growth hormones, a technology widely used for beef sold inside the United States.

In February 1998, world trade arbitrators gave European officials until May 13 to open up their market, but European negotiators earlier this month sought more time to study the matter. That triggered Monday’s threat of retaliation.

In their statement Monday, European officials sought to take a high road. They said trade concessions were “always to be preferred over trade retaliation” and that “the EU stands ready to continue discussions with the U.S. with a view to reaching a mutually acceptable solution” before the May 13 deadline.

U.S. officials, backed by the cattle industry, maintain that scientific research has persuasively ruled out concerns that hormone-treated beef poses health risks. They note that this country already exports such meat to 138 countries.