UK cashmere business faces trade threat

THE BRITISH cashmere industry could be devastated and 1,000 jobs lost through US trade sanctions threatened in a bitter transatlantic dispute over banana imports.

The claim by EU officials yesterday came as new efforts were under way in Geneva to break the deadlock in the dispute that threatens to embroil Europe and the US in a full-scale trade war. The US government has said it will impose 100 per cent tariffs on a range of European imports if the EU does not offer concessions in its banana import regime.

British government figures released by the European Commission show that the proposed tariffs would hit the cashmere industry harder than any other UK sector, jeopardising exports worth pounds 18m in 1997.

"Up to 2,400 jobs in the UK are at risk," said a Commission spokesman. "Factory closures and substantial job losses could mean the disappearance of the UK cashmere industry."

The Scottish Cashmere Association and Borders Knitwear Manufacturers Forum say: "Initial estimations indicate that in the region of a minimum of 700 jobs would be lost immediately, costing up to pounds 20m worth of business. This could increase to 1,000 job losses through indirect business with the US and other clients."

In a statement, the two groups said the tariff move would be "nothing short of catastrophic to the Borders knitwear industry".

UK cashmere production is concentrated in Scotland - particularly the Border region - and West Yorkshire. Of the list of 17 items selected for tariffs by the Americans, cashmere is the biggest-value export. The next largest industry affected is printed cards, which in 1997 exported more than pounds 18m.

The US argues that the EU import regime, offering preferential quotas to former European colonies, discriminates against American-owned producers operating primarily in Latin America.

Sir Leon Brittan, vice-president of the European Commission, says EU import regulations have been amended to take into account objections from the World Trade Organisation, adding that under the existing system 78 per cent of EU banana imports come from Latin America.

Trade officials were negotiating last night to head off the US threat to implement the trade sanctions, which could come into force within 10 days.