U.S. WARNING OF 100% DUTIES IN BEEF FIGHT SPARKS WORRY

JIM OSTROFF

WASHINGTON (FNS) -- The U.S. government's threatened imposition of sky-high duties that would double the price of scores of gourmet food items could cause "substantial damage to retailers and consumers," industry officials warned last week.

"It is particularly troubling that our industry has become a battle ground over which international trade battles are being fought, and involving products for which there are no good other sources" elsewhere worldwide, said Timothy M. Hammonds, president of the Food Marketing Institute here.

Hammonds' concern was raised by the U.S. government's announcement last week that it would impose 100% import duties on $900 million worth of European goods unless the European Union reverses its decade-old policies that bar the sale there of U.S. beef fed growth hormones.

The announcement of this "hit list" has led some trade analysts to warn of a looming trans-Atlantic trade war. Nearly three weeks ago, following a long dispute over the EU's banana import policies, the U.S. began requiring importers of European Pecorino cheese, bath and beauty products and cashmere sweaters to post a bond equaling 100% of these goods' ad valorem value. At the 100% duty-level, however, many products just become too expensive to import at all.

The United States has charged that the Europeans are ignoring decisions by the World Trade Organization that they are unfairly keeping out American beef treated with hormones, just as they do bananas grown in Central American nations where U.S. companies have major interests.

American trade officials said they anticipate the beef retaliation list will be pared back somewhat following April 21 hearings here, adding the duty sanctions could be imposed as early as June 12. Whether the list will be trimmed or not, Hammonds made clear the two enormous trade blocs are headed toward a no-win situation for themselves, retailers and consumers.

"Certainly, we want to support our beef suppliers in what appears to be a well-documented case" that the EU illegally is restricting U.S. beef, he said, but he warned the dispute is on the verge "of spiraling out of control."

According to Hammonds, "We would say to both sides that the consequences of not settling this dispute are horrendous and there absolutely needs to be a resolution short of imposing sanctions."

He also noted that any U.S. imposition of titanic import duties would trigger European retaliation and American counter-moves in which "both sides deliberately would select products that in the end would cause substantial damage to retailers and consumers."

A review of the 81-item proposed sanctions list in the beef dispute bears out Hammonds' contention: 74 are food products, with the rest miscellaneous items such as yarns, hair clippers and motorcycles.

The European food products that would be subject to 100% U.S. import duties include fresh, frozen, chilled, canned or preserved beef, pork, poultry and fowl, sausages of all meats, and pates. They include a large variety of fresh, chilled, juiced, sauced or preserved fruits and vegetables, Roquefort cheese, soups, broths, mustards and paprika.

In addition, the sanctions would be placed on EU-origin mineral waters, chocolates, oats and oat-cereal products, chestnuts and chewing gums.

In reviewing this proposed list, Hammonds noted, "you could pick out just about any product, say the cheeses, cured hams from Italy, the pates and so on, and find there are no good substitutes for these anywhere in the world."

Granted, he said, many of these items are sold in gourmet food and produce sections of supermarkets and their disappearance from the shelves, cooler cases and bins would not affect every customer. But the FMI president, an economist, said there's a palpable "danger that once sanctions begin, each side will ratchet up the stakes, imposing more sanctions and it could get ugly and create real problems very quickly.

"You really do not want to go down that road," Hammonds added.

Thomas F. Wenning, senior vice president and general counsel of the Reston, Va.-based National Grocers Association, concurred that "retaliation absolutely is a concern" to U.S. retailers.

"We've worked for years to promote open trade and now it seems like we're about to take some steps back toward more, rather than fewer, trade barriers," Wenning said.

Hammonds maintained the dispute's origins go beyond food-safety issues, as claimed by the Europeans, which is why resolution has eluded the two sides despite years of adjudication. "Nations are very uncomfortable about blatant protectionism and that is why they almost always disguise the issues under the food-safety veneer," he said.