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Thursday, April 29, 1999 Published at 11:57 GMT 12:57 UK

Business: The Economy

Thaw in EU-US trade tensions

First it was bananas, now beef threatens US-EU relations

United States agriculture officials say a compromise deal has been reached in the dispute with the European Union over American beef imports.

BBC correspondent Richard Quest: Latest dispute more about noise than results
Last night, the European Union said that from 15 June it would ban all imports of beef from the US in protest at the discovery of hormones in supplies labelled as drug-free.

Now, American officials say the beef imports will be allowed to continue while more checks are carried out. This has still to be confirmed by the EU.

But in another move which could help thaw the trade tension between the two trading blocks, the EU has delayed for one year the implemention of legislation which phases out aircraft with hush kits, or noise mufflers.

[ image: Concorde: Could be heading for trouble in the trade war]
Concorde: Could be heading for trouble in the trade war
This was another bone of contention between the two sides and would hit nearly a billion pounds worth of American aircraft equipment. In retaliation Washington was threatening to ban Concorde flights to New York.

US commerce secretary William Daley said: "Hopefully this is the first of many positive signs in our relationship."

Beef about beef

The EU imposed the beef ban and turned the tables on the US as members of the World Trade Organisation (WTO) met in Geneva to consider a request by the Americans to try and get restrictions on the beef trade lifted.

Beef from cattle fed on hormones has been banned by the European Union since 1988 on the grounds that it is not safe.

The EU says it cannot be sure that beef certified as hormone-free by US inspectors does not contain the banned substances.

[ image: Europeans do not want hormones in beef]
Europeans do not want hormones in beef
The United States and Canada have already secured a ruling from the World Trade Organisation that the original ban on hormone-fed beef is illegal under international trade law. It says that there is no scientific basis for the ban.

And the United States and Canada have threatened to introduce more sanctions against EU products if no agreement is reached on the beef issue.


EU Trade Commissioner Leon Brittan said that he was 'anxious to engage in urgent discussions to resolve this issue promptly'.

Recent talks have centred around how North American beef entering the EU should be labelled in order to ensure consumers have enough information to make an informed choice.

Hormones are widely used in US agriculture, but the EU says it is still studying the scientific evidence on their safety.

[ image: Like athletes, will cows need to be dope-tested to ensure they are drug free?]
Like athletes, will cows need to be dope-tested to ensure they are drug free?
The total amount of US beef sold in Europe is only $20m - but any questioning of its safety is seen as a threat to the massive US agricultural export sector.

Olive branch?

The EU's legislation banning all aircraft using engine noise mufflers, known as hush kits, from its territory will start from April 2002.

The gradual implementation of the ban will begin from April next year by making it illegal for European airlines to add aircraft equipped with hush kits to their fleets.

The ban was to come into force from Thursday.

Under the terms of the ban, from 1 April 2002, aircraft registered outside the EU will not be permitted to land or take off within the bloc's territory unless they were operating there before April 1999.

Brussels insists that, despite US protests, hush kits do not always effectively reduce aircraft noise and that they cause added pollution because aircraft fitted with them often burn more fuel.

Rising tension

The trade wars between the United States and Europe have been escalating.

Last month the US introduced sanctions against a range of European products in order to force the EU to agree to import more 'dollar bananas' from Central America.

Although the EU and the United States are each other's biggest trading partners, the growing imbalance in world trade is leading to tensions.

The US is running a huge trade deficit with the rest of the world, and has said that it cannot continue to bear all the costs of the world's economic slowdown.

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