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Tuesday, July 13, 1999

U.S. to apply sanctions against E.U.
Tariffs of 100% set to recoup beef ban losses
By Mark Suzman and Michael Smith
Scripps Howard News Service

   WASHINGTON - The Clinton administration said Monday it would implement sanctions against the European Union in retaliation for its ban on hormone-treated beef imports after World Trade Organization arbitrators ruled that the ban had resulted in $128 million a year in lost trade for the U.S. and Canada.
   The amount is just over half the $253 million the two North American countries claimed was needed to compensate them for the ban, but was higher than the E.U.'s estimate of lost trade. The decision is the latest step in the long-running dispute over the E.U.'s failure to lift its 11-year ban on U.S. beef, despite a formal WTO ruling that there is no scientific evidence hormone-treated cattle endanger human health. The E.U. has refused to comply with the WTO decision until it has completed its own scientific studies on the issue.
   U.S. Trade Representative Charlene Barshefsky said the U.S. would exercise its rights to impose 100 percent tariffs on a list of E.U. products equivalent to its share of the damages. "The E.U. must understand that as a result of its failure to comply with WTO obligations the U.S. will act firmly and swiftly under its WTO rights to sharply raise tariffs on imports from the E.U. in an amount equivalent to the trade damage," she said.
   WTO approval for the sanctions is considered a formality. However the E.U. Monday reiterated its plea for the U.S. and Canada instead to negotiate compensation with it, in the form of better market access to the E.U. for their products.
   "Compensation would be better for all concerned; for U.S. industry, for U.S. consumers and for the European Union," said a spokesman for the European Commission, the E.U.'s executive.
   'Pay a price'
   Barshefsky said the U.S. remained willing to negotiate a resolution of the issue with the E.U. but that the E.U. had to 'pay a price' for failing to comply with WTO obligations.
   "I would urge the E.U. to reconsider its damaging actions and to demonstrate a real commitment to a rules-based multilateral trading system," she said.
   In March the U.S. unveiled a preliminary list of E.U. products, including poultry, ham, Roquefort cheese and truffles as well as some industrial goods like motorcycles which could be subject to sanctions as a result of the beef dispute. U.S. trade officials said the final list of affected products and other details regarding the tariff increase would be announced in the "near future."
   The WTO arbitration panel ruled that the U.S. was suffering losses of $116.8 million a year because of the E.U. ban on hormone-treated beef, compared with a U.S. claim of $202 million. It estimated Canada's loss at $11 million, against a claim of $51 million.
   Reaction of E.U.
   Sir Leon Brittan, E.U. trade commissioner, said the union had always said the U.S. and Canada's demands were extravagant. "We are very pleased the arbitrator has taken our arguments into account and halved the sanctions." It is thought the E.U. argued the sanctions levels should be $40 million to $50 million.
   Separately the U.S. this year implemented $191 million of sanctions against the E.U. in a dispute over Europe's banana imports regime.