- The Washington Times - Thursday, August 3, 2000

The United States and European Union (EU) are arming themselves for a full-fledged trade war over beef and bananas. Both parties ought to rethink their strategy.

At the center of the controversy are EU policies to keep out U.S. banana and beef exports. Ostensibly the Europeans weren't concerned about beef exports themselves, but rather that they contained hormones which posed a health risk. It's a scientifically dubious proposition, but a convenient excuse for protectionist policies. The U.S. beef industry has offered to put labels on food that would acknowledge the presence of hormones, thus allowing European consumers an opportunity to make their own choice. Still the EU resists.

The Europeans can't even come up with a plausible pretext to keep out U.S. banana exports. The Clinton administration, no doubt ably assisted by White House sleepover guest and Democratic Party campaign contributor Carl Lindner, head of Chiquita Brands International Inc., demanded the banana barriers come down but to no avail.

So the United States went to the world's trade policeman, the World Trade Organization (WTO). Not surprisingly, given the merits of the respective cases, the WTO ruled in favor of the United States, finding that the EU had applied illegal quotas and license restrictions on U.S. banana exports and had improperly banned U.S. beef. After the EU failed to comply with the WTO ruling by opening its markets to these items, the WTO gave the United States the right to retaliate by applying trade sanctions on about $300 million of EU imports. In the coming days, the White House is scheduled to make public a list of imports from the EU on which it will levy a very high tariff.

Naturally the controversy didn't end there. After the United States won a favorable WTO ruling on beef and bananas, the EU went to the WTO to challenge the U.S. practice of subsidizing U.S. exports through special tax breaks. The WTO ruled in favor of the EU.

Far better than encouraging the two sides to retaliate against each other, which only punishes consumers on both sides of the Atlantic, would be for both sides to disarm: The EU should get rid of its trade barriers, and the United States should stop providing favors to U.S. exporters. Certainly many would object to this truce. U.S. companies have become accustomed to receiving this corporate welfare, and lawmakers are unenthusiastic about cutting it out. European bureaucrats, meanwhile, would anger their own politically powerful agricultural sector if they let in U.S. beef and bananas.

Each side should muster the political courage to honor WTO rulings, and lend a deaf ear to the vested interests that profit from various forms of protectionism.

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