Euro Clash

Removing tariffs is easy. Breaking down social barriers to trade is hard.

The bureaucratic dispute is also frustrating for U.S. honey growers, who see the strong euro and low U.S honey prices combining to provide the best export opportunity in a decade. “I am losing between half a million and $1 million in revenue this year,” says Doug McGinnis, vice president of the family-owned Tropical Blossom Honey Co., in Edgewater, Florida. McGinnis, whose firm is one of the largest U.S. honey exporters, says exports now make up 12 percent of his revenue, but that could go as high as 50 percent if Europe dropped its ban. (Ironically, if and when honey exports resume, they’ll be slapped with Europe’s 5 percent retaliatory tariff against the FSC.)

Likewise, Reinsch cites a proposal introduced in October by the EU to require that manufactured and imported chemicals undergo certain types of testing and be registered in a central database. As currently written, the so-called REACH proposal “would essentially shut out smaller and midsize companies outside of the EU that wouldn’t have the ability to jump through all the hoops and spend all the money to register,” says Chris VandenHeuvel of the American Chemistry Council (ACC), a trade group. The ACC has also warned the EU that the current REACH proposal violates WTO rules.

Although the WTO recognizes the rights of its members to protect public health or the environment, they’re also supposed to do so in ways that minimize the impact on trade. “That’s what the arguments tend to be about now,” says Reinsch. Indeed, as Lamy noted, “The scope of these rules is not always terribly clear, and case law in this field…is both incomplete and subject to interpretation.” That’s a concern for Reinsch, because in his view, the EU’s approach to setting standards “creates opportunities for mischief,” in which standards appear to favor European production methods over those of importers.

Clarity Begins at Home

Of course, Europe isn’t the only place where social choices and safety regulations are sometimes at odds with free trade. The EU has long complained that drug-approval procedures by the U.S. Food and Drug Administration “continue to give non-U.S.-based firms difficulties.” Similar technical differences exist on electrical and electronic equipment. More significant, the United States also has come in for criticism of its own protectionist bent, notably the recent backlash against offshore outsourcing. “One of the most disquieting aspects of U.S. policy is that domestic pressure to adopt protectionist measures appears to be stronger than the willingness to seek internationally agreed[-on] solutions,” notes an EU inventory of U.S. trade barriers published last November.

In a February speech, British Trade Secretary Patricia Hewitt blasted the Bush White House — “an Administration supposedly committed to free trade” — for the now-repealed steel tariffs. Then Hewitt took aim at both American political parties. “The Presidential economic adviser who dares to speak the truth on globalization is threatened with redundancy by Republican members of Congress,” she declared. “And Democrat candidates are vying with each other in protectionist rhetoric.”

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