The Washington Post / By John Burgess / Washington Post Staff Writer
So will it be goose liver, truffles, hair clippers or tomato powder that feels the wrath of U.S. trade diplomacy in the next six months? Or fancy fizzy water, or chewing gum that has no cocoa? Or motorcycles with engines under 500 cubic centimeters?
On Friday, the Office of the U.S. Trade Representative hopes to publish a list of European products that will be slapped with 100 percent import duties. The idea is to price them out of the American market, thereby putting pressure on Europe to settle long-running disputes over trade in beef and bananas.
And ever since May, when the USTR published a list of products that are possible targets, Americans who import at-risk goods have been anxiously trying to ensure that someone else's item gets hit with the extra tariff.
Go after Dutch tomatoes and 50 warehouse workers in the Bronx will lose their jobs, a New York produce company argues. Tax light and easily air-freighted items and our profits take a dive, United Airlines contends. Hit oats and you're unfairly punishing more than 2,000 small feed mills, a trade association says.
Four hundred letters and briefs making such arguments landed at the USTR last month, supplemented by countless phone calls and face-to-face meetings. Add to that pleas from half a dozen other federal agencies, members of Congress and several European governments, and the result is one of Washington's more delicate decisions. "Three-level chess" is how USTR General Counsel Robert Novick describes it.
Sanctions are the last resort of dispute resolution in the international economy, the trade world's equivalent of destroying a village in order to save it. In the cause of furthering free trade, countries diminish it for a while. The idea is to shake up politically powerful industries in the target country, leading them to knock on the doors of their government to lower the barriers that caused the dispute.
But it's a reality of international economics that sanctions also mean pain for the country that imposes them. For every European product on the list, there is some U.S. importer that will have to stop stocking it and some consumer who'll have to pay a much higher price for it--or do without entirely.
Trade officials say that in drafting the list, they try to minimize the economic impact in the United States by hitting products that can be bought from other countries at a comparable price. And they go after luxury products--a tip of the hat to populist notions that it's all right to inconvenience the rich, but not ordinary Americans.
The sanctions grow from trade complaints that the United States filed at with World Trade Organization. U.S. officials contend that Europe illegally refuses to import hormone-treated beef and discriminates against bananas sold by American companies. After extensive litigation, the WTO ruled in the United States' favor and last year authorized it to apply more than $300 million in sanctions.
Duties went into effect against an earlier list of products starting in the spring of 1999, but the Europeans haven't budged. Congress this spring ordered up a new system it thinks will increase the pressure. Every six months, the USTR must revise the list to better spread the pain around.
It's unclear whether that will work, but so far there's no doubt that the system is a boon for trade lawyers and lobbyists, who every six months will file papers and make visits on behalf of their clients--and run up billable hours in the process.
A representative of McCormick & Co., the spicemaker based in Sparks, Md., made the case that trying to lock out Spanish tomato powder would backfire. Spanish powder is in a class of its own, he argued in a filing; many customers insist on it: "McCormick would have no choice but to continue importing from Spain. Any increased duties would solely burden U.S. interests, specifically McCormick."
United Airlines filed, too, lobbying to keep confectionery cough drops and cut flowers, among other things, off the list. These and other products move by air, it pointed out, raising the specter of United jets flying home from Europe with empty cargo holds. "The profitability of United's overall trans-Atlantic operation will suffer if these items are priced out of the market," it said.
Coffeemakers are currently under sanction, even though they have nothing to do with beef and bananas, complains the Association of Home Appliance Manufacturers. Now hair clippers are under consideration.
"What influence can Wahl Clipper or its subsidiaries have on the government of Germany in a dispute about beef hormones?" asks Charles Samuels, government relations counsel for the association, citing one of its member companies. Moreover, while mentioning that Wahl is a family-owned business, he notes that the company recently bought a German company and wouldn't be able to import into the United States from that plant.
In drafting the list, the USTR also must balance the concerns of other agencies. The State Department, one trade official said, tends to worry most about the negative political impact of sanctions. The USTR must also hear out diplomats from the target countries who came in to argue behind closed doors for one product or another.
That the European Union is the target adds yet another level of complexity. It's a bloc of 15 countries that are treated as one in trade policy. Yet some of the countries in the EU are more sympathetic to the U.S. position than others. So, should products from sympathizers be exempted from the duties? Or if they're politically influential at EU headquarters in Brussels, shouldn't they be hit regardless?
France figures it absorbed roughly 30 percent of the sanctions from the last list even though it accounts for only about 12 percent of European trade. In talks with U.S. officials, France has argued that the sanctions are wrong, but that if they are going to be levied anyway, it is unfair to give France such a burden.
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