U.S., EU May Be in for Trade War
WASHINGTON (AP) -- The United States and the 15-nation European Union are
squaring off for a possibly nasty trade war that could make luxury items such
as French handbags and European cashmere sweaters scarce on American store
shelves.
The fight involves a six-year dispute over European restrictions on the import
of bananas from Latin America.
The Clinton administration announced Monday that it plans to slap punitive
tariffs of 100 percent early next year on hundreds of millions of dollars in
European imports, effectively doubling their price, to compensate U.S. banana
companies for their lost sales to Europe.
The tariffs will not go into effect until probably March 3, giving both sides
time to resolve the dispute, something U.S. Trade Representative Charlene
Barshefsky said she still hoped would occur.
``Our door remains open to a negotiated solution,'' she said in a statement.
But EU Trade Minister Leon Brittan immediately denounced the U.S. sanction
threat and said the Europeans planned to bring their own case challenging the
right of the United States to act unilaterally to impose sanctions under a
U.S. trade law known as Section 301.
``It is time to take action against the pernicious and unlawful effect of this
wholly unilateral trade legislation,'' Brittan said.
The items subject to the punitive tariffs range from clothing such as
expensive cashmere sweaters and French and Italian handbags to sheep's milk
cheese, British biscuits and German coffee makers.
Because their price in American stores would essentially double overnight,
stores would be less likely to carry them, assuming shoppers would prefer
similar products not subject to the tariffs.
Wine, which was on a preliminary sanction list, was left off the final list at
the request of American wine makers who expressed concerns that the punitive
sanctions could, in turn, harm their sales in Europe.
The World Trade Organization, the Geneva-based organization that serves as the
arbiter of trade disputes, ruled in September 1997 that European import rules
unfairly discriminate against Latin American-grown bananas in favor of bananas
grown in former British and French colonies in the Caribbean, Africa and
Pacific islands.
That ruling, which was upheld by a WTO appeals panel, required the EU to end
the discrimination against Latin American bananas. While the EU has made
modifications to its banana rules, the United States contends those changes
are merely cosmetic and don't meet the WTO objections.
The Clinton administration is pushing the case because American companies,
including Chiquita Brands International Inc. and Dole Food Co., grow their
bananas mostly in Latin America.
Chiquita has said its market share has fallen from 50 percent in Europe to 20
percent because of the European import restrictions, costing it more than $1
billion annually in lost sales.
With America's trade deficit running at a record level, U.S. trade experts
argue that the United States had little choice but to act against the EU for
failing to abide by the trade group's ruling.
``There are increasing voices in the United States questioning the wisdom of
international trade and globalization,'' said Greg Mastel of the Economic
Strategy Institute, a Washington think tank.
A coalition of farm groups including the American Farm Bureau Federation
issued a statement Monday applauding the administration action: ``By insisting
that our trading partners play by the rules, we are fighting to preserve the
integrity and effectiveness of the global trading system.''
The United States specifically exempted products from Denmark and the
Netherlands from the sanctions list because they were the only nations who
voted against the banana rules.
