U.S. SLAPS 'KILLER DUTIES' ON GOURMET EU GOODS

JIM OSTROFF / FAIRCHILD NEWS SERVICE

WASHINGTON -- A smoldering trade war with Europe has flared anew and the United States now is targeting a raft of gourmet-food products for imposition of "killer duties" that will bar these and other consumer products from American stores.

Just two weeks after Congress acted to strengthen trade enforcement, the Office of the U.S. Trade Representative announced that starting today it will slap 100% or greater import duties on a bevy of European Union consumer goods in retaliation for the EU's refusal to alter its banana trade policy and import ban on beef raised with growth hormones.

The agency set last Wednesday as the cutoff date for public comment on a list of European products that will be subject to "killer duties," so dubbed because they are set high enough to virtually preclude importation.

The proposed retaliation list for bananas includes: Pecorino cheese, biscuits and wafers and various bacon products, as well as some nonfood items.

The retaliation for the beef ban is far more extensive, with the agency targeting these duties for several dozen gourmet-food products, including Roquefort cheese; processed and prepared beef, pork and poultry products, soups and broths; prepared and preserved fruits and vegetables; fruit juices; condiments; mineral waters; truffles; chocolates; bath preparations; candles; and fresh flowers.

The USTR said in a Federal Register notice the value of the banana action will total $191.4 million and the beef action will amount to $116.8 million. These are the same amounts the United States targeted in European goods last year, following a World Trade Organization ruling that the EU was illegally blocking the importation of bananas from Central American nations where U.S. firms like Chiquita and Dole have interests. The WTO, in sanctioning U.S. retaliation, also ruled the EU had no scientific basis for banning hormone-fed beef.

Despite these U.S. sanctions, the EU has not budged on its positions, instead lodging WTO complaints claiming the United States illegally subsidizes exports by companies with offshore operations. The EU also has initiated regulatory proceedings to ban the importation of genetically modified foods.

Much of the retail-food industry was perturbed last year when the United States first imposed sanctions on EU food imports in the banana and beef cases. There is even more concern now that the United States has made it known it will re-target EU products every six months -- with food products the backbone of the retaliatory action.

"It puts the retailers in a very difficult position of trying to explain something to consumers that really doesn't make sense to them," said Timothy Hammonds, president of the Food Marketing Institute here. He noted that few shoppers are conversant with the WTO's international trade-dispute resolution mechanisms.

Hammonds said the FMI sent out information packets to its member companies after the banana and beef import actions were first put in place last year, and expects it will do so again. He is unable to judge how effective this was in helping retailers deal with consumers who expressed displeasure at not being able to buy some European product, and could not estimate the lost-sales effect of these trade actions.

Hammonds said disputes, such as the beef-hormone one, perhaps could be headed off in the future by having the United States shift authority for food safety to a single agency, rather than having the Agriculture Department and the Food and Drug Administration share responsibility for this.

"Having an agency that is separated from trade and promoting commodities would make people much more comfortable that when the U.S. makes a determination on food safety, it focused only on scientific issues and not because we want to promote a product," he said.

At the Reston, Va.-based National Grocers Association, a spokesman said, "In an era when the economic benefits from free trade are so pervasive and beneficial to consumers, it's unfortunate the U.S. has been forced into a position such as this."

At the Grocery Manufacturers of America, here, Sarah Fogarty, senior manager for international trade, said issuing new import hit lists every six months may be less than effective, noting, "in reality, some will look at the lists and just stockpile products" that could be on the next list.

Fogarty said the U.S. action is not painless for domestic food manufacturers. "For example, roasted chicory -- used in the specialty-niche market for Louisiana coffees -- is on the list today," she said. "The pressure is on European [chicory] producers but, in fact, our domestic constituency is being hurt, too."