The French Flicks and American Beef Standing in the Way of a U.S.-EU Trade Deal
On Monday, the United States and the European Union officially launched talks on creating a new free trade zone — one that could become the largest in the world, covering roughly $31 trillion in combined GDP and 30 percent of global trade — by 2014. But while the U.S. and EU may be allies, don’t ...
On Monday, the United States and the European Union officially launched talks on creating a new free trade zone — one that could become the largest in the world, covering roughly $31 trillion in combined GDP and 30 percent of global trade — by 2014. But while the U.S. and EU may be allies, don’t expect the talks to go smoothly. The world’s two largest economies don’t always see eye-to-eye when it comes to economic and regulatory policy, and bickering over things like gluten and fancy cheese has become something of a tradition.
Back in 2009, for instance, FP‘s Joshua Keating reported on the outbreak of a "cheese war," in which a trade dispute over the EU’s ban on hormone-treated U.S. beef provoked a retaliatory import duty on French Roquefort cheese. Here are some other lowpoints from the past decade in transatlantic trade.
As anyone following U.S.-EU trade relations will quickly discover, France and the United States are prone to butting heads. Whether it’s because of French ambivalence toward capitalism in general (especially the American variety) or just good old-fashioned economic self-interest, Franco-American disputes are often at the heart of U.S.-EU quarrels. This latest round of talks is no different, with the French consistently threatening to veto any agreement that fails to make an exception for French cultural subsidies, especially in music and film.
French foot-dragging on the subject is part of a government policy called "the cultural exception," which seeks to protect French language, art, and culture from what the country’s leaders view as the increasing dominance of American culture and the English language. For their part, the United States fears a "give them an inch, they’ll take a mile" scenario in which European countries scramble to protect favored domestic industries, defeating the entire purpose of the talks. Last month, EU ministers struck a deal to exclude France’s audiovisual sector from the U.S-EU free trade agreement — but the threat of a French veto will continue to loom over negotiations.
Americans are pretty anxious about what’s in their beef. Take the media circus surrounding the unfortunately named "pink slime," for example, or the popular schoolyard myth that Taco Bell’s beef is unfit for human consumption — not to mention the meteoric rise of organic food. While Americans have learned to suppress their unease (or pay a little extra for the peace of mind afforded by ‘all-natural’ meat), Europeans have pursued a regulatory solution, banning the importation of hormone-treated beef from the United States.
The beef war is one of the longest-running transatlantic trade disputes. The EU’s ban on hormone-treated beef is widely supported by European consumers, but the World Trade Organization ruled in 1999 that the ban was not consistent with scientific studies, which did not find an increased health risk from consuming hormone-treated meat — a ruling that has done little to push Europe toward accepting American beef. The ensuing series of retaliatory import duties culminated in the 2009 row over Roquefort cheese — a U.S. measure intended to force EU compliance with the WTO ruling. A cheesepocalypse was ultimately averted when the EU lifted some import duties on naturally raised cattle. While the beef war has cooled off in recent years, Minnesota-based BEEF Magazine has expressed optimism that this newest round of negotiations could settle the issue once and for all.
For decades, the "banana wars" frayed relations between the United States, the European Union, and assorted banana-producing countries in Latin America.
The EU, the world’s largest banana market, had long extended preferential banana-trading agreements to former European colonies in Africa, the Caribbean, and the Pacific, at the expense of (largely American-owned) banana producers in Latin America. While Europe claimed that it was merely aiding third-world development (perhaps the so-called ACP countries could pull themselves up by their banana peels), the United States cried foul, and the WTO issued a series of rulings against the EU’s banana favoritism. But the EU, as it is wont to do, initially refused to comply with the ruling, sparking a low-intensity trade war that at one point moved the CEO of the American-owned banana producer Chiquita to refer to the EU as an "illegal regime."
The most significant ongoing dispute between the United States and European Union involves state subsidies for the rival aircraft manufacturers Boeing and Airbus. Since the early 1990s, a U.S.-EU agreement has allowed the the two governments to support their respective airline manufacturers through state subsidies and guaranteed loans. In 2004, however, the United States withdrew from the agreement and filed a WTO challenge over EU support for Airbus. Not surprisingly, the EU filed a counter-challenge over American support for Boeing.
In 2012, the WTO ruled that both sides had violated the rules of the free trade agreement, paving the way for plenty of finger-pointing and litigation (both sides have threatened trade sanctions over the subsidies).
For transatlantic-airplane-trade-war junkies (we know you’re out there), yet another conflict looms on the horizon. In November 2012, the EU decided to freeze its controversial plan to charge foreign airlines for carbon emissions on flights to and from Europe through a cap-and-trade scheme — for one year only. Fasten your seatbelts.