Brussels may declare trade war with US

This coming week Brussels will decide whether it wants to engage in a full-scale trade war with the United States over the import of hormone-treated beef.

The Commission and the agriculture ministers will decide on their options before May 13th, when the World Trade Organisation is seeking an end to the ban, which was imposed in 1989. The WTO says the EU ban has no scientific basis.

The Union may offer trade concessions in other areas to compensate the US for banning market access for beef. But the indications are that they may push the US very hard on the matter because they feel they have the scientific evidence to have the WTO decision reversed.

Both sides also have an eye on the bigger picture. Some Europeans believe this war about small quantities of beef is a scene-setter for the major difficulties which will arise on the import of genetically-modified foods from the US.

In recent weeks the temperature has been raised by the EU announcement that it will ban hormone-free beef from June 15th, because samples imported from the US were found to have been treated with hormones.

The US had been exporting 30,000 tonnes of hormone-free beef to the Union annually under the terms of the GATT agreement. The finding of samples treated with growth promoters has given the EU the ammunition it needs.

The Union has also compiled new scientific evidence which will show that even the natural hormones which are legally used on cattle in the US, and were legal here until 1988, may create a danger to public health.

Now every piece of beef from the US is being individually sampled. Unofficially, EU officials are emphasising the lack of controls in US meat plants and on farms.

The US administration has drawn up a hit list of European goods which it will not allow in without 100 per cent tariffs if the hormone ban is not withdrawn by May 13th. That list has specified $900 million worth of goods, mainly agricultural.

It includes $18 million dollars worth of Irish exports, or two per cent of the total list.

The Danes have been hit hardest - facing trade sanctions of $197 million, mainly bacon. France faces an exclusion of $132 million worth, mainly wine, and Germany $113 million.

The US allowed 30 days for exporters to lodge objections to the first list and held hearings in the US where the Irish Food Board, An Bord Bia, was represented.

According to Mr Eoin Brooks of the board, the Republic exports about £160 million worth of food and drink to the US annually. The vast bulk of this is drink.

"However, at this time we think that around £10 million worth of Irish goods will be at risk if the US carries out its threat to impose 100 per cent tariffs on their imports," he said.

"Because drink has been excluded from the list the exposure is not as high. £5 million of the £10 million at risk is made up of bacon and pork products and the remainder is confectionery and cereals," he said.

This week in Brussels the mood against removing the 1989 ban has hardened considerably following the discovery of growth promoters in supposedly hormone-free US beef.

However, the likelihood is that the Union will offer the US trade concessions in areas other than agriculture, as a form of compensation pending a resolution of the issue by the WTO.

"That is as far as we can go because we have discovered very serious problems with the US imports. We were taking supposedly hormone-free beef from them which had been treated with hormones," said one highly-placed source.

"Not only that, we now discover that the Americans have been using hormone products for over 20 years on which no proper health risk assessments have been carried out," he said.

"The truth of the matter is that we have discovered there is no great control on production in the US and here in Europe the consumer rules the market.

"The market may lead food production in the US, but Europe's consumers will not have that. They want the strictest possible controls and we will be demanding that food proffered to them is produced and processed to the highest possible standards.

"It looks to us that the system is out of control in the US and we cannot sit on our hands and allow that happen," he said.