100% DUTIES SLAPPED ON EU GOURMET FOOD LINES

JIM OSTROFF

WASHINGTON (FNS) -- The United States last week announced it will all but officially ban the importation of a host of European gourmet foods, in retaliation for Europe's refusal to accept U.S. hormone-treated beef.

The U.S. Trade Representative last week said that, effective July 29, 34 European products with an import value of $116.8 million would be subject to 100% import duties. These tariffs would double these products' wholesale prices and have the effect of banning them from American supermarkets, since it is impractical to pass along these increases to consumers.

This so-called hit list includes gourmet food items found in many U.S. supermarkets, such as fresh or prepared beef or pork, Roquefort cheese, fruit juices, mustards, soups and broths, chocolates, jams, truffles, pates, onions and dried carrots. Most of these products originate in France, Germany, Denmark or Italy.

The only nonfood items on the list were specialty yarns and glues, and lanolin. In the spring the United States imposed 100% duties on $194.2 million worth of European products, including some gourmet foods, in retaliation for the European Union's refusal to permit the sale of bananas harvested in Central America by U.S.-owned firms.

Last week's announcement of the retaliatory duties list drew both condemnation and praise from American retail, wholesale and grocery industry leaders.

Typical of the divisions spawned by this trade imbroglio, Timothy Hammonds, the Food Marketing Institute's president, derided the U.S. action as "a solution only a bureaucrat could love," warning it could hurt American retailers and consumers, while doing nothing to resolve the dispute.

Taking a starkly different tack, a Grocery Manufacturers of America spokesman said it "is supportive of the U.S. government's action" that was taken after the World Trade Organization ruled the European Union illegally was banning U.S. hormone-fed beef and authorized retaliatory sanctions. "The rubber has to hit the road at some point and the EU clearly has not abided by the WTO rules," the GMA spokesman added.

John Block, president of Food Distributors International, said it is "very unfortunate and a serious matter that these trade wars are escalating," but laid the blame on the EU for "refusing to comply with the WTO rules it had approved and signed."

Peter Scher, the deputy U.S. Trade Representative, said in announcing the latest hit list that the EU has turned aside proposals that might have averted the sanctions, insisting the beef ban was rooted in Europe's political affairs. "Yes, we recognize there are consumer issues within the EU about hormone-treated beef, but in our view this is related to the problem with the EU's food-safety regulatory system -- one that doesn't instill confidence in consumers that decisions are being made on the basis of science and health, instead of politics."

Separately, in an interview with SN, Scher said the European products selected for the latest hit list were selected to maximize their affect on European governments, adding "we did our best to minimize the impact on U.S. consumers and retailers."

The FMI's Hammonds does not believe the trade agency succeeded in this regard. "Retailers will be on the front lines here having to field questions from consumers about why they can no longer buy certain foods [at local supermarkets] and all retailers can say is that it's tied to beef and bananas, so we really do not have any good answers," he said.

In addition, the FMI president said retailers likely will lose sales because "there are no effective substitutes for some of the products" on the U.S. hit list.

Hammonds maintained the sanctions ultimately could lead to a retaliatory escalation of tensions between the United States and the European Union that would cause more food and other products to be unavailable in American and European stores. The FMI president instead urged World Trade Organization member nations to push for a significant change in the organization's enforcement mechanisms during the next round of world trade talks, now slated to begin next year.

For enforcement to have teeth, he said, the WTO should authorize penalties be "assessed directly on the governments making these decisions."

Hammonds also chastised the recent decision by the United States to impose hefty duties on New Zealand and Australian lamb, which a federal agency held was being sold in the United States at artificially low prices, saying "the U.S. lost any high ground it may have held by imposing trade restrictions on the importation" of this meat.

The GMA spokesman, meanwhile, said that while "the U.S. made a tough call in imposing the sanctions, hopefully this will lead sooner, rather than later, to a resolution of this" trade dispute.

The spokesman said the trade group believes the sanctions were handled appropriately, "punishing those EU nations that have acted the most egregiously while minimizing, to the extent possible, the economic impact here in the U.S."

The Food Distributors' Block said that changing the WTO enforcement system to permit the levying of fines directly on governments for noncompliance might be a good idea, but said he does not believe this would get serious consideration. "Hopefully, with enough pressure from their own companies, the EU will fall into line and comply with WTO decisions, but if they do not and any country can thumb its nose at the rules, [the WTO] runs the risk of becoming meaningless."