Danish ham, German mustard, French goose liver and a host of other continental delicacies will be hit with punitive 100 percent tariffs in retaliation for the European Union's ban on U.S. hormone-treated beef, the Clinton administration announced yesterday.
The move may be the final, unsatisfying blow in a battle over efforts by U.S. ranchers to sell their beef -- nearly all of which comes from cattle injected with growth-inducing hormones -- in the European market.
The announcement means that the wholesale prices of the European products on the target list, which total $116.8 million a year in value, will effectively double, making them impractical to import into the United States. But that won't necessarily change the EU's prohibition on the sale of hormone-treated meat.
The outcome is thus likely to stir debate about the World Trade Organization, which sets the rules for global commerce and adjudicates disputes. The case illustrates that, while the WTO can use leverage to prod its 134 member countries toward more open markets, it cannot force them to change their laws and rules.
Indeed, the case is the second this year in which the WTO decided in favor of a U.S. complaint against the EU's import rules, but the EU failed to change its regulations and instead was obliged to accept harsh U.S. duties on a selected group of goods. Earlier, the WTO decided against the EU's system for banana imports.
In the latest case, the WTO ruled against the EU on the grounds that, despite widespread fears among European consumers over the safety of hormone-treated beef, Brussels' ban is not based on scientific evidence. The WTO gave Washington the right to impose duties on European products equal to the amount of lost sales that American ranchers were estimated to be suffering each year. The duties go into effect July 29.
"Our goal was to have the greatest impact on the EU while minimizing the impact on U.S. interests," said Peter Scher, deputy U.S. trade representative, noting that Washington has sought to inflict pain on four EU members -- France, Germany, Italy and Denmark -- that appear to be exerting the most influence over the meat-import policy. Britain's products were exempted "because of its consistent voting record against the EU's import ban," Scher said.
Pork products constitute the biggest single category on the target list, accounting for $30 million, or nearly a quarter, of the goods to be hit with duties. Most of the other targeted products are food, such as Roquefort cheese, fruit juice and canned tomatoes.
"This is the second time in a row the EU has failed to honor its WTO obligations," Scher said. "The EU countries are the only member states of the WTO to fail to honor [WTO panel] findings. . . . We hope the EU will recognize that it alone cannot ignore the rules of the world trading system."
But in effect, the EU is simply exercising its right to keep the WTO from infringing on its sovereign powers -- a right that members of the U.S. Congress, among others, insisted on when the WTO was created. Under the WTO system, a country whose import rules are found in violation can either change its rules, accept punishment in the form of tariffs against some of its products, or provide mutually agreeable compensation to the complaining country.
Yesterday, acting EU trade commissioner Leon Brittan reiterated Brussels' view that "compensation is a more constructive approach than these sanctions." But Washington has rejected one compensation offer, which would increase the EU's import quota for hormone-free beef from the United States. So few cattle are raised without hormones on American ranches that the offer is viewed as worthless by the U.S. beef industry.
But the two sides remain far apart over the most obvious compromise: a proposal to label U.S. beef sold in Europe. The Europeans say they would be willing to allow the import of hormone-treated beef if it were labeled as such, but the U.S. side insists that any label should simply state the country of origin.
Among the European products that will have a 100 percent tariff imposed on them, as announced by the Clinton administration yesterday:
Products from Austria, Belgium, Denmark, Finland, France, Germany, Greece, Ireland, Italy Luxembourg, the Netherlands, Portugal, Spain, Sweden:
Roquefort cheese (not grated, powdered or processed)
Fresh, chilled or processed pork (including prosciutto)
Fresh, chilled or frozen meat of bovine animals
Prepared or preserved liver
Toasted bread, cake or similar toasted products
Onions (other than onion sets or pearl onions not over 16 millimeters in diameter)
Fresh or chilled shallots
Fresh or chilled truffles
Dried carrots (whole, cut, sliced or in powder but not further prepared)
Roasted chicory and other roasted coffee substitutes and extracts
From France, Germany, Italy:
Tomatoes (whole or in pieces, prepared other than by vinegar or acetic acid)
From France and Germany:
Guts, bladders and stomachs of animals other than fish
Soups and broths
Yarn (other than sewing thread) containing 85 percent or more by weight of artificial staple fibers, singles, not offered for retail sale
SOURCE: Office of the U.S. Trade Representative