President Reagan raised tariffs on European pasta products yesterday in retaliation for a tariff imposed by the European Community on American citrus products.
U.S. pasta producers have complained that EC subsidies to European companies, principally Italian, allow them to sell their pasta products at unfairly low prices in this country.
The pasta tariffs will be raised from their current rate of about 1 cent per pound to 40 percent of the products' cost in the country of origin and 25 percent of the overseas cost on pasta containing egg.
Reagan said the retaliation is a response to the EC tariff on U.S. citrus fruits that ranges seasonally from 8 to 20 percent of the cost of the fruit and transportation. According to American citrus growers, Mediterranean growers are required to pay only about a 2 percent tariff.
"This measure does not have a legal basis and is contrary to GATT General Agreement on Tariffs and Trade rules," said Willy de Clercq, EC commissioner for external relations. "It undermines the credibility of American declarations in favor of strengthening the multilateral trading system. The community has no choice but to immediate take retaliatory action, which the community will propose at once." Sources indicated that this action probably will be taken against American citrus products.
The U.S. citrus industry first filed a complaint under Section 301 of the 1974 Trade Act in 1976. The U.S. trade representative estimates that America loses $48 million worth of citrus sales in the EC annually as a result of the steep tariffs.
Curt Anderson, vice president of Sunkist Cooperative, a cooperative of 6,000 U.S. citrus growers, said Sunkist sold only 250,000 40-pound crates of oranges in EC countries last year. The cooperative, which he says produces about 60 percent of America's total citrus crop, had worldwide sales last year of 68 million crates.
According to Joseph M. Lichtenberg, president of the National Pasta Association, European pasta producers receive a subsidy from the EC that allows them to make pasta for a lower cost than their American competitors.
GATT provisions forbid subsidies of processed food, and the trade group ruled in 1983 that pasta falls into this category. According to Lichtenberg, the EC ignored this ruling. European pasta makers receive about 3 cents in subsidies per pound of pasta they produce because they have to buy durum, a type of wheat used in pasta, outside the EC.
The pasta tariff "will more than neutralize the illegal subsidy on the product," Lichtenberg said of the pasta tariff.
According to the National Pasta Association, European pasta -- virtually all of it Italian-made -- holds only slightly more than 5 percent of the market share in the United States, which totaled 2.3 billion pounds last year.