Little men are the losers in US game of tit-for-tat

IT IS a classic example of what can happen when a couple of playground friends fall out. One child hits another; the other hits backs where it hurts. And these are precisely the tactics to which the United States has resorted in the continuing transatlantic trade war with its closest political allies.

Angry about a long-standing European Union ban on hormone-treated American beef, Washington has threatened to slap a punitive import tariff of 100 per cent on a catalogue of European products.

This is no random list. American trade officials clearly gave careful thought to selecting traditional products that would cause the most upset to EU member states.

French truffles, Dutch cut flowers and Spanish tomatoes are among the exports which will be in effect frozen by the crippling duties.

In the case of Britain, products close to the national heart - such as English mustard, liquorice allsorts, bacon and raspberry jam - were chosen. Hundreds of companies around the country, both large and small, will be affected. In the case of smaller businesses, the American move could jeopardise their survival.

The provisional list, announced on Monday, comes on top of products already affected by a parallel row with the US over European imports of bananas. These items include perfumes, bath oils and cashmere sweaters.

American officials are unabashed about their strategy, and made clear yesterday that it was a tit-for-tat aimed at forcing the EU to revoke the 10-year-old ban. They say that beef from cows injected with growth hormones is perfectly safe. The EU is not yet convinced, although Britain has no objection to its import.

Jay Ziegler, spokesman for the Office of US Trade Representatives, told BBC Radio 4's Today programme: "Our hope is to provide an impetus for member states of the European Commission to come to the negotiating table and reach an effective compromise.

"This list has been drawn up with the idea of encouraging the member states to focus on the importance of reaching a negotiated solution. We are using our market leverage to send a very clear signal that if the European Union is unwilling to open its market, we will retaliate with action in kind."

British businesses, meanwhile, are at a loss to understand how they have become embroiled in an esoteric trade dispute with no relevance to the products that they send across the Atlantic.

Peter Cook, joint managing director of Tiptree Jams, a small Essex-based company that has been exporting its products to the US since early this century, said: "We are caught up like minnows in a pond while the politicians play games with us. The list is very odd. It seems to have been drawn up with no rhyme or reason. Why is only raspberry jam affected and no other jams?"

Certainly, the list of threatened goods makes for strange reading. It encompasses a whole range of meat products, such as "edible offal of bovine animals, fresh, chilled or frozen", and also lists "guts, bladders and stomachs of animals (other than fish), whole and pieces thereof".

More bizarrely, it also includes onions "other than onion sets, or pearl onions not over 16mm in diameter", dried carrots, corned beef, cough drops, yarn (but not sewing thread), motorcycles with 50-250cc engines and "hair clippers, with self-contained electric motor".

Roger Knowles, chairman of Woods of Windsor, a family perfume and toiletries company that has been trading since 1770, said: "They seem to have plucked out the victims at random. The list is an absurd mixture."

His company was hit by the earlier banana row, which led to the US imposing heavy duties on European luxury items. Bubble bath was deemed by the US authorities to be a luxury.

Mr Knowles said: "We have won the Queen's Award for exports twice. The failed politicians who run Europe should be helping, not hindering us."

Yesterday there was more bad news. A large American group telephoned to cancel a pounds 100,000 order for moisturising bath and shower cream.

Brett Bateman, managing director of Woods, said: "The Americans are very keen on quintessentially English products like ours. But they were not prepared to take the risk of having to pay the tariff once we had delivered them."

Manufacturers of traditional British confectionery, such as Terry's Chocolate Oranges and Trebor Basset's Liquorice Allsorts, will also be affected. Richard Johnson, a spokesman for York-based Terry's Suchard, said that the tariffs could cost the company millions of pounds in lost sales if the threat becomes a reality.

"Chocolate Oranges are a growing market for us in the US," said Mr Johnson, who pointed out that Terry's Suchard was owned by Kraft Foods, an American company. "There is a certain irony in the fact that a hit list drawn up in the US could end up affecting the fortunes of a US food group," he said.

Tunnock's, a Scottish family firm whose chocolate-covered caramel wafers are highly popular in the US, has been forced to suspend exports because of the crisis. The firm is also suffering from an import ban imposed three years ago by Saudi Arabia, which is avoiding British milk products because of the BSE scare.

The losers in this affair are not only the manufacturers in Britain. British expatriates in America rely on being able to buy traditional items from home, such as English jam and chocolate bars.

Brian Lownds Pateman, whose Torquay-based company, Lownds Pateman, exports ceramics and toiletries, said: "The whole affair has become very petty." To mark the banana dispute, which has hit his products, the firm has begun manufacturing banana split dishes. "I hope the Americans don't turn round and stick tariffs on them," he said.