The United States Thursday said it will impose punitive tariffs on imports of selected European wine and agricultural products worth nearly $312 million a year, and then turned up the pressure in its dispute with the European Community by threatening sanctions on perfume, auto tires and other manufactured products from the EC.
The first sanctions, which were expected, will take effect Dec. 5 unless the EC meets U.S. demands in reducing its subsidies of oilseed production, U.S. Trade Representative Carla Hills said in Washington.A second round of retaliation, covering up to $700 million in EC goods, could be imposed in several months if the dispute is not settled. A senior U.S. official said this probably wouldn't occur until after President-elect Bill Clinton takes office.
(The threat of a trade war prompted a call for an emergency GATT meeting. Story, Page 3A.)
The European Community's ruling commission remained sharply split over the issue Wednesday, after Commission President Jacques Delors "apparently pulled the plug" Tuesday on negotiations to end the dispute, according to the U.S. trade official.
That official, however, still held out hope for resolving the conflict and reviving the Uruguay Round of trade talks, which have been blocked by U.S.-EC differences on agricultural trade reform. He said U.S. and community negotiators could meet as soon as the middle of next week to try to settle the oilseeds dispute.
Mrs. Hills said she has had no contact with President-elect Clinton or his transition team about the trade dispute, but that she was ready to brief him on it if he so requested.
Under the proposed retaliation that would take effect in December, the United States would impose tariffs of 200 percent of the value of white wine, rapeseed oil and wheat gluten imported from any of the European Community's 12 members. While this, strictly speaking, would not block imports, it would make them prohibitively expensive.
The sanctions would fall hardest on France, Italy and Germany, in that order.
Using an average of import volume from 1989 through 1991, Agriculture Department officials said the United States imports $278.1 million of white wine, excluding champagne, from the 12 nations.
Of that total, $128 million worth comes from France, $98 million from Italy and $41 million from Germany. Small amounts are shipped from Spain and Portugal.
The retaliation list also includes imports of $21.6 million a year of rapeseed oil, most of it from Germany, and $11.8 million of wheat gluten, from several countries.
Mrs. Hills also announced that the second round of retaliation could include any of $1.7 billion worth of industrial products from Europe.
This list, which will be whittled down after public hearings, includes perfume, automobile tires, clay-coated paper for magazines, ceramic tiles, glassware, steel pipe, sound recordings and blank tape, and some furniture.
Mrs. Hills said the broadening of the list is intended to spread the pain among American companies that sell European imports, but it could also be an attempt to involve those European manufacturers that stand to gain from the Uruguay Round.
In Brussels, the EC Commission didn't respond Thursday to the U.S. decision to impose sanction against community imports, but it is expected to announce countermeasures today.
Commission officials declined any comment, other than to repeat remarks by the EC external affairs commissioner, Frans Andriessen, on Wednesday that he favors retaliation against the United States.
The EC Commission has already drawn up a list of American products that will face higher tariffs but would not say which U.S. imports are targeted. The most likely targets will be soybeans and corn gluten, an EC official said.
EC trade ministers likely will debate a response to the U.S. sanctions at a meeting in Britain today.
Michael Heseltine, president of Britain's Board of Trade, told Parliament the EC will not retaliate until the U.S. measures take effect Dec. 5. The U.S. action was "highly regrettable," Mr. Heseltine said.
Britain, which hold's the EC's revolving presidency, is preparing a diplomatic offensive to head off a damaging conflict with the EC's biggest trading partner.
Senior EC commissioners are to meet soon to decide the Commission's response.
EC foreign and trade ministers have the final say on countermeasures, deciding by a weighted majority vote.
While some countries are uneasy about escalating the conflict, they are expected to close ranks in the face of the U.S. challenge.
US IMPOSES TARIFFS ON EC GOODS
U.S. imposed some $300 million in tariffs on the goods listed below after international trade talks broke down. Values are based on average annual imports 1989-91, in millions of dollars.
(1)US Imports of Affected Goods From EC:
White wine $278.l
Rapeseed oil & beans $21.6
Wheat gluten $11.8
(2)Sources of US White Wine Imports From EC (pie chart):
SOURCE: U.S. Department of Agriculture
Doug Pinkerton / Journal of Commerce