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Wednesday, April 21, 1999 Published at 18:20 GMT 19:20 UK

Business: The Company File

EU beefs up US trade war

The EU found hormones in beef that was allegedly hormone-free

The European Union is threatening to impose a ban on all beef imports from the United States, in a move that could increase already serious trade tensions.

Sir Leon Brittan, EU Trade Commissioner, on the latest rift
The world's two biggest trading powers clashed recently over banana imports.

That bruising encounter resulted in the World Trade Organisation allowing the US to slap some heavy tariffs on a range of European products.

[ image: The EU and the US have already clashed over bananas]
The EU and the US have already clashed over bananas
The new focus of dispute switched to beef on Wednesday when the EU said that it was considering banning US beef imports completely from mid-June.

It says that scientists have found hormone traces in some American beef certified as hormone-free.

EU officials did tests on 500 beef samples and found hormone traces in 12% of the samples.

Commission spokesman Gerry Kiely said: "Up until 15 June we will try and identify the problem, but in the absence of a solution, US beef cannot be imported after that date."

US trade officials immediately shot back a sharp statement stressing that the use of hormones was legal in the United States and claiming that there was "is no scientific justification" for the EU ban on hormone-treated beef on health grounds.

Although the value of the beef trade is small, just $20m a year, the EU's new move will raise the temperature, as the two sides try to resolve their longstanding differences over beef that is known to be treated with hormones.

The EU banned imports of this in 1988, saying it might be harmful to human health.

The WTO has told the EU to lift its ban in mid-May, but the EU has said it will not do this as it is still conducting tests on the effects of the hormones.

Its refusal could mean the WTO allows the United States to impose more trade sanctions on the EU - on top of the ones authorised this week because of EU discrimination against bananas sold by American companies.

Escalating dispute

A compromise between the two sides could be hard to find, especially as the United States trade deficit is spiralling ever upwards.

It surged to a record $19.4bn in February as the booming US economy continues to suck imports into the country.

There is also another trade dispute looming on the horizon, over new strains of genetically modified crops, which are grown extensively in the United States, but have prompted consumer fears in the EU.

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