UK fights back on Scottish cashmere

The cashmere industry is coming under threat

The US Government says Scottish cashmere could become involved in the trade row between the European Union and the US continues over Caribbean bananas.

Britain has so far fought successfully to keep cashmere from the list of goods hit by punitive American duties.

But a new list is overdue and US farm groups were told on Thursday that the issue of the luxury fabric had not been resolved.

UK Prime Minister Tony Blair is leading a diplomatic battle to persuade Washington not to penalise the Scottish industry.

Free-trade row

The dispute was sparked by World Trade Organisation allegations that the EU favours bananas from former European colonies in the Caribbean and elsewhere.

This affects the export of bananas from Latin America, some of which are controlled by American companies, and the WTO has accused the EU of breaking free-trade rules.

The US Government has retaliated by hitting certain European products with 100% import duties.

President Bill Clinton's administration, under orders from Congress to vary its targets, is now deciding which products to target next.

Jobs at risk

According to diplomatic sources, Mr Blair has called President Clinton, as he did ahead of the first list published, but Mr Clinton has put off making a decision.

A snub for Mr Blair could make for a sour atmosphere when the two attend a Millennium summit in New York early next month.

Cashmere products are mostly exported to the US and it is now feared that if they are included on a fresh list it could spell the end of the industry in Scotland.

That would put thousands of jobs in the Borders at risk.