The international food fight between the United States and the European Community escalated yesterday with a European attack on walnuts and lemons.
The action -- the latest in a series of transatlantic assaults on chickens, raisins, nuts and noodles -- has prompted a call for even further retaliation: wine import quotas.
The latest battle in the 16-year trade war between the United States and the European Community occurred yesterday when the EC raised the tariff on American walnuts and lemons.
The EC retaliation came just a week after the United States placed fat duties on European pasta imports.
The United States picked on the pasta when the Europeans ignored a recommendation by an international trade body that the EC ease the tariff disadvantage on American oranges and lemons.
Acting U.S. Trade Representative Michael B. Smith yesterday said the latest European attack was "totally uncalled for." A spokesman for Smith said there were not yet any plans for retaliation against the counter retaliation.
However, Sen. Pete Wilson (R-Calif.) yesterday suggested that President Reagan further retaliate by limiting wine imports from Europe, which constitute about $1.8 billion in trade annually.
"The strongest and most clear-cut signal the president could send to the EEC that demonstrates the seriousness with which America views the situation would be to immediately increase the duty on wine imports from the EEC," said Wilson.
Walnuts are grown primarily in California, in addition to lemons and oranges. California also accounts for a lot of the U.S. wine production.
Although the United States and the EC have fought in recent years over raisins, flour, poultry and trade in other foods, the latest skirmish actually began in the late 1960s when the EC granted preferential tariff treatment to Mediterranean lemons and oranges, government trade officials said.
After years of negotiations with Europe failed, a group of U.S. citrus growers filed a petition with the government in 1976, alleging that the EC preferential import duties had an adverse effect on them.
The United States and the EC have held consultations under the dispute settlement mechanism of the General Agreement on Tariffs and Trade (GATT) since 1980, and earlier this year a GATT panel found that U.S. citrus growers indeed were discriminated against by EC practices.
The EC refused to accept the GATT panel's recommendation to reduce its most-favored-nation duty on imports of oranges and lemons. That's when President Reagan said he would impose duties on pasta products ranging from 25 percent to 40 percent that would take effect by July 6. He can rescind his order if the citrus dispute is settled.
However, yesterday, the EC decided to raise the duties on imports of U.S. walnuts to 30 percent and "This could be considered a warning shot. When there is a war, you don't talk, you shoot." -- EC Vice President Frans Andriessen on lemons to 20 percent. Both currently have duties of 8 percent. These duties would only take effect if Reagan carries out his retaliatory duties, the EC said.
Walnut exports to the EC last year were $32.5 million and lemon exports were $1.17 million, according to government figures.
The United States contends that the preferential treatment, which costs American citrus exporters about $48 million a year in lost business, violates international trading rules. The EC maintains that its plan is part of a development policy for the Mediterranean.
U.S. officials said that, despite the retaliation yesterday, the EC may be willing to settle the citrus dispute soon, which would draw an end to the threats against European pasta and U.S. walnuts. The latest EC act is to take effect about two days after President Reagan's action against pasta begins.
"I think it is very serious," said a spokesman for the EC. "The amounts of money aren't huge," but it is an issue of great emotional intensity.
EC Vice President Frans Andriessen threatened the retaliation earlier this week and said the pasta retaliation represented the warning shot of a trade war. "As long as we are talking, we're not at war," Andriessen said. "This could be considered a warning shot. When there is a war you don't talk, you shoot."