Byline: Joanna Ramey

WASHINGTON — A truce of sorts was called Friday in the European Union-U.S. trade war over bananas, which retailers and apparel importers have feared could escalate into the U.S. slapping punitive duties on EU cashmere sweaters and luxury imports.
EU Trade Commissioner Pascal Lamy and U.S. Trade Representative Robert Zoellick announced they’ve agreed to tackle the dispute anew. As part of their agreement, Lamy told reporters he would delay by a few months implementing new banana import regulations over which the U.S. still has qualms.
Lamy said he and Zoellick decided to “take some more time to look at how we can resolve this dispute.” However, Lamy noted that he has until about July before EU lawmakers favoring the new banana regulations will want to move forward with the rules.
The EU already has about $190 million in punitive duties imposed on certain exports to the U.S. arising from the banana wars. The World Trade Organization last year authorized the sanctions after ruling the EU wrongly favors banana imports from the Caribbean at the expense of the fruit grown in Latin America where U.S. banana companies have interests.
Angry that the EU has remained recalcitrant on the banana issue, Congress last year mandated that the White House periodically rotate the list of products on the sanctions list, which until now, hasn’t targeted any key retail products.
First the Clinton administration and now the Bush White House have shown reluctance to change the list. If it was changed, the EU has said it will reciprocate by levying $4 billion in WTO-approved sanctions on U.S. products because of another dispute involving the WTO declaring a U.S. export subsidy illegal.
“I think we are both committed to resolve it,” said Zoellick, about the banana trade wars.
While indicating the two sides are still far apart on the issue, he shared Lamy’s collegial outlook about addressing differences, which also include the EU’s opposition to U.S. imports of hormone-treated beef and genetically modified food. Zoellick’s tone stood in contrast to his comments earlier in the week before the House Ways and Means Committee, when he said there was “no other recourse” than to change the sanctions list.
Lamy was in town for two days of meeting with administration officials and Capitol Hill lawmakers. On the Hill, Lamy said he stressed the importance of Congress granting the administration track negotiating authority in order to get a new round of trade-liberalizing WTO talks off the ground.
Zoellick said both sides are committed to it, but said it was up to developing countries, as well. At the Seattle WTO summit two years ago talks collapsed when these nations balked at the Clinton administration’s calls for linking trade to increased labor standards.