990548 US Threatens $202 Million Duties In EU Beef Row

Washington - The United States escalated its brewing trade war with the European Union Friday by threatening to impose $202 million in punitive duties on the EU for banning imports of U.S. beef from hormone-treated cattle.

U.S. Trade Representative Charlene Barshefsky said Washington remains open to negotiations to resolve the decade-old dispute.

But “we will absolutely protect our rights and we will without question retaliate if the EU persists in disregarding the rules,” Barshefsky told reporters.

In Brussels, EU Farm Commissioner Franz Fischler said the EU would ask the World Trade Organization to review the U.S. plan to impose $202 million in 100- percent duties on EU goods.

“We will certainly challenge this sum and the U.S. will have to try to justify (it) before a WTO arbitrator,” Fischler said in a statement.

That review, which could result in a higher or lower figure than the one sought by Washington, would delay any duties until at least July 12 -- the deadline for the WTO arbitration.

Targeted goods could include EU pork, beef, poultry and other foods such as Dijon mustard and Evian Natural Spring Water. Oats and small-engine motorcycles could also be hit.

Those items were on a preliminary list released by the Clinton administration in late March. The United States will wait until the arbitrator decides the final amount before announcing which products will be hit, Barshefsky said.

Meanwhile, Canada, which is also party to the WTO suit, will seek permission to impose $48 million in retaliatory duties on the EU, Canadian Trade Minister Sergio Marchi said in Ottawa. “Canada plays by the rules, and expects others to do so as well,” Marchi said in a statement.

U.S. officials said they had to seek retaliation after the EU failed to meet a May 13 deadline set by the WTO. Two WTO dispute settlement panels ruled that the EU's ban was illegal and gave the EU 15 months to comply with trade rules.

“There is no legitimate reason for the EU's unfair restriction on free trade,” U.S. Agriculture Secretary Dan Glickman said. “The WTO decision recognizes that American beef is safe. Scientific study after study confirms this.”

Nonetheless, European officials say they remain concerned about potential health risks from eating the beef.

While the United States and Canada have insisted that the WTO deadline meant the EU must drop its imports, the EU contends it is only required to do a new risk assessment.

Last week, it released a preliminary report that concluded that one of the hormones -- estradiol -- could cause cancer. But U.S. officials blasted the report as inflammatory and misleading, saying the amount of estrogen it takes to cause cancer is much more than is used in cattle production.

In the banana dispute, the United States sought permission to impose $520 million in punitive duties on EU products. But after the EU sought WTO arbitration, the final figure was whittled down last month to $191 million.

Given that experience, the National Cattlemen's Beef Association said they supported the Clinton administration decision to seek only $202 million in retaliation “in order to expedite the WTO review that will now proceed.”

Ranchers had sought more than $500 million in retaliation based on estimated annual sales to the EU if the market had remained open the past 10 years. However, Barshefsky said the $202 million figure reflected a “very careful” estimate of actual lost sales. “We believe the figure will stand up very well to scrutiny,” she said.

Ranchers also wanted duties to be structured so they would hit a different set of EU countries every six months. But Barshefsky said no decision had yet been made on that.

Washington also signaled that despite the tough talk it was not too late to negotiate a compromise.

Both Barshefsky and Glickman said the United States remains willing to discuss an interim compensation package as long as the EU promises to open its market. Under that arrangement, the EU would temporarily compensate the United States for lost sales due to the import ban, rather than face retaliation.

The United States also remains prepared to discuss a labeling scheme that would let EU consumers decide whether to buy U.S. beef products, U.S. officials said.

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