U.S. In Long-Running Trade Dispute With E.U.

One of the Bush administration's last acts was to levy punitive tariffs on a wide range of luxury foods from Europe — including fancy mineral water, exquisite chocolates and Roquefort cheese — in retaliation for an E.U. ban on hormone-treated American beef. Professor Chad Bown of Brandeis University talks about this and earlier trade disputes.

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JACKI LYDEN, Host:

Mr. ROY RODMAN (Owner, Rodman's Gourmet Stores): Can you show this young lady the Moroccan sardines? Oh, really? We're out?

LYDEN: Meet Roy Rodman. he's the owner of Rodman's, a small gourmet grocery chain here in Washington, D.C. His customers are about to get a rude shock at the check-out counter. The Bush administration, on its way out the door earlier this month, tripled the already stiff tariffs on French Roquefort cheese to 300 percent. It also jacked up duties on other European Union luxury items like chocolate, mineral water and - sit still - foie gras. It's the latest salvo in a trade dispute over the E.U.'s ban on hormone-treated beef from America. The Roquefort rumble has been getting a lot of press, but Roy Rodman says what really worries him are the tariffs on things like sparkling water and chocolates.

Mr. RODMAN: This is Niederegger imported chocolate, dark chocolate-covered marzipan. My understanding is that all filled chocolates will have the duty on them, which is a lot of high-end delicious imported candies.

LYDEN: That little bar of chocolate-covered marzipan sells for $4.49 now and with the new duties, it could cost nine bucks. To find out more about this tempest in a shopping bag, we called Chad Bown. He's an economics professor at Brandeis and a fellow at the Brookings Institution who specializes in just this sort of trade dust-up. And Bown says there's logic behind the new tariffs.

Dr. CHAD BOWN (Professor of Economics, Brandeis University and Fellow, Brookings Institution): What the U.S. government would like to do is to generate some pressure within Europe to get these policies removed and they want to pick out relatively high-profile products that are going to make media attention and receive news headlines and not anger - the American public by picking products that everybody consumes.

LYDEN: So, for example, you wouldn't perhaps go after olive oil in the same way which many, many people buy?

Dr. BOWN: That's correct. Of course, there are certain high-end olive oils that you might be able to differentiate between and just like in this instance when they decided to retaliate against cheese, they didn't pick popular brands of French cheese like brie or even Camembert, but they went for the really high-end stuff, Roquefort, which really only a handful of consumers in United States buy.

LYDEN: Mm, hmm. Is this a common tactic? Can you think of other times that something like this as the retaliatory sorts of measures have been at play?

Dr. BOWN: It isn't that common. The World Trade Organization has been in existence since 1995. There have been close to 400 now, these kinds of disputes that have erupted, but only 10 of which have actually reached the stage where countries like the U.S., in this instance, have been authorized to retaliate, and even fewer instances in which they actually followed through and do so. One relatively high-profile instance of this was back in 2003 where the United States had imposed trade barriers on European products. In this case, it was steel. And the Europeans took their dispute to the WTO. They won all the legal arguments. The U.S. was thinking about complying and to put pressure on them, the Europeans identified a list of products that they would target if the U.S. refused to get rid of the trade barriers. In that instance, this was right before the 2004 presidential election. And so, the Europeans identified politically sensitive products from important swing states in Florida because they picked citrus products from Florida and other swing states like Pennsylvania and Ohio and Wisconsin. Harley Davidson motorcycles comes to mind, so...

LYDEN: Mm hmm.

Dr. BOWN: There aren't a lot of instances in which this has happened, but this is a relatively common approach when the disputes actually do reach this stage.

LYDEN: Well, what are Roquefort lovers to do? President Obama has reversed a number of Bush's late-term decisions. Do you think there's any chance he's going to roll back the cheese and mineral water tariffs?

Dr. BOWN: It's tough for consumers, you know, probably the best bet is to try and find some sort of alternative...

LYDEN: Stilton.

Dr. BOWN: Exactly.

Dr. BOWN: Or just simple blue cheese, maybe.

LYDEN: Chad Bown. He's an economics professor at Brandeis University and a co-editor of an upcoming book on what else? Trade wars. Thanks very much.

Dr. BOWN: Thank you, Jacki. ..COST: $00.00

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