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A Trade Battle on Two Fronts

A BEEF WAR has been threatened by the US because Europe has banned the sale of beef from hormone-treated cattle. The US Food and Drug Administration (FDA) had approved the use of six hormones to boost cattle size. The US protested to the World Trade Organisation (WTO) that the ban was unfair. The WTO sided with the US. In 1997 it gave the EU 15 months to find scientific evidence against treated beef. That deadline expires in May. Though fears remain that traces of the chemicals could linger in the meat on sale, the EU has offered no proof.

Plans to label the meat have been rejected by the US. Europe says it will not have a decision by May.

As a result, another front has been opened in the trade war, which could affect exporters of $300m (pounds 187m) of goods from Europe to the US.

THE BANANA WAR stems from a ruling by the WTO in 1996 that Europe must stop favouring its former colonies in the Caribbean.

The US had protested to the WTO that these islands - whose economies often depend on the banana trade - were being given an unfair advantage over often cheaper producers in Central and South America.

However, Europe says that 78 per cent of its banana imports already come from South America.

This had led critics to claim that the US stance is more about flexing its muscles against a powerful European trading bloc than about the principle of free trade.

Last month the US instituted 100 per cent tariffs on a range of European imports, worth pounds 365m. This move has hit, among others, makers of British cashmere sweaters.