US issues new cashmere warning

Cashmere production employs thousands of people

The US Government says British cashmere could be targetted in the continuing trade row between the European Union and the United States over Caribbean bananas.

Britain has so far fought successfully to keep cashmere from the list of goods hit by punitive American duties, as Scotland is one of Europe's leading cashmere producers.

But the US Congress recently passed so-called "carousel" trade legislation, forcing the government to rotate punitive tariffs between different products and EU countries.

US farm groups were told on Thursday that a new "beef retaliation list" was drawn up, but that British requests to exempt the luxury fabric were delaying a new retaliation list for the banana trade war.

White House officials gave US farm leaders no time frame for making a decision.

Diplomatic battle

Peter Chase, an economic counsellor at the United States embassy in London, said there was no indication from Washington that an announcement on trade sanctions on cashmere goods from Scotland was imminent.

He believes that there may be some movement within a few weeks but for now, he said the situation was no different than it had been for some time.

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

The UK Government argues that unlike other EU members it wants to see the banana dispute resolved as soon as possible.

Scotland Office minister Brian Wilson sports a cashmere jacket

Scottish ministers have also called on America not to impose swingeing levies.

In 1999, the United States imported cashmere from the EU worth $71.5m.

The dispute was sparked by a World Trade Organisation ruling 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 like Chiquita, and the WTO has accused the EU of breaking free-trade rules.

Targets varied

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.

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.

Tony Blair is using his contacts with Bill Clinton

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.

Earlier this week Scottish Enterprise Borders chairman Tony Taylor told BBC Scotland he believed the presidential elections had been a distraction for President Clinton.

The fact that the US Congress is on holiday has also delayed a final decision on sanctions.

Mr Taylor said he understood Borders cashmere goods had escaped inclusion in the first list that had been drawn up but featured in a follow-up list.