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Thursday, May 13, 1999 Published at 17:05 GMT 18:05 UK

Business: The Economy

US demands sanctions in EU beef row

The trade row is escalating

The trade dispute between the US and the European Union over beef is escalating.

World trade wars
The United States has now asked the World Trade Organisation (WTO) for permission to impose more than $0.5bn (£300m) worth of sanctions against Brussels as the deadline for EU compliance expires.

US Agriculture Secretary Dan Glickman said Washington would "proceed in accordance with our responsibilities and rights under the World Trade Organisation".

Sanctions worth $550m?

BBC News' Pallab Ghosh reports on the science behind the row
US officials from several departments and agencies will now discuss the size of possible sanctions.

In late March, US trade officials had published a preliminary list of EU food and other products worth more than $900m that could be hit with 100% punitive tariffs.

The US government now has 20 days to present to the World Trade Organisation its estimate of the damage done to its beef farmers.

However, the Washington government has indicated that its retaliation list will be slimmed down - and that it could take more than two months until it is published.

This would give both sides more time to find a compromise.

Farm groups in the United States have urged that sanctions should total at least $500m.

On Wednesday, the EU Acting Trade Commissioner Leon Brittan and US Trade Representative Charlene Barshefsky had failed to come to an agreemen during a meeting in Tokyo.

Trade wars

BBC's Jonathan Beale reports on the latest trade tension between the US and the EU
The Americans have already imposed sanctions on some European imports in a separate row over bananas.

The latest dispute is over Brussels' refusal to lift a 10-year-old ban on importing American beef which has been treated with hormones.

The Europeans have refused to meet the deadline set by the World Trade Organisation (WTO) to justify the ban, saying research into possible health risks is incomplete.

Disputes procedure

Under WTO rules, the two sides have 20 days to reach a solution following the end of Thursday's deadline.

The United States would then have a further 10-day period from 2 June when it can receive final approval for sanctions.

[ image: Sir Leon Brittan is offering compensation as a compromise]
Sir Leon Brittan is offering compensation as a compromise
The EU has said it will maintain its ban because of fears that the growth hormones could cause cancer, nerve disorders and other health problems - an argument rejected by the United States.

The EU wants more time to complete scientific research.

Washington has vowed to impose sanctions on a variety of EU products including pork, beef, chocolate and even motorbikes, if Brussels does not back down.

Ms Barshefsky warned: "We, as you know, have rights in the WTO of compensation or retaliation in the event a trading partner does not comply with a dispute settlement ruling.

"We will not drop our plan."

Compensation offer

There had been signs of a possible deal on Monday when Sir Leon Brittan said in Berlin that he was ready to offer to pay compensation to the US as a compromise.

This would have involved lowering duties on other goods from the United States and Canada, whose beef is also banned for the same reason.

The United States may still be prepared to consider the compensation offer, but only as a temporary measure pending the eventual lifting of the beef ban.

US farmers angry

Hormones are widely used in US agriculture, with more than 90% of American cattle producers feeding them to their cattle to make them grow faster and bigger.

[ image: Growth hormones are widely used in US agriculture]
Growth hormones are widely used in US agriculture
In 1989, the United States promised to export only hormone-free beef to Europe because of the EU's ban.

However, several weeks ago EU experts discovered that some of the US beef labelled 'hormone free' did in fact contain banned growth hormones.

George Swan of the US National Cattlemen's Beef Association said: "Ten years of delaying tactics, ten years of false accusations, ten years of lost markets for US cattlemen and lost opportunities for European consumers.

"It is time for the EU to play fair with us and with its own people."

US trade spokesman Peter Scher said: "This course of action is not one we choose and not one we desire, but one which unfortunately we have to take to demonstrate once again that there is a price to pay for repeated failure to comply with WTO obligations.

"If countries like the EU continue to fail to meet their obligations, then industries in Europe will have to suffer just like the cattlemen have suffered."

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