Europe Gives U.S. The Raspberry

In an apparent flexing of newfound muscles, the European Union is picking another trade fight with the United States, threatening to file a World Trade Organization complaint against the U.S. over fees on cargo ships at U.S. ports, increasing tensions between the two trading giants. In a letter released last Tuesday, European Commission vice president Leon Brittan said harbor fees proposed by the Clinton administration, like those they would replace, constituted an unfair tax on European shipping lines, container vessels and their cargoes. "This discriminatory application of a fee that is not justified in the first place simply cannot continue," Brittan told U.S. Trade Representative Charlene Barshefsky. If a settlement is not reached by Jan. 1, 2000, Brittan said the commission was likely to ask the World Trade Organization (WTO) to take action. The 134-member organization oversees global trading rules. Brittan's letter, dated Aug. 20, was made available by the European Commission's office in Washington. U.S. officials had no comment. U.S.-European trade relations soured in recent months over products ranging from bananas to hormone-treated beef. Clinton administration officials and analysts said they were worried that the U.S. Congress will retaliate if trade relations get any worse. The disputed harbor services fee, proposed in May by U.S. President Bill Clinton, would pay for operations and maintenance at U.S. ports and harbors. Over objections from the European Commission (EC), it would also fund new construction, improvements and other projects at American harbors. The proposal would raise nearly $1 billion a year by imposing fees on cargo ships and would replace the harbor maintenance tax (HMT), which was struck down by the U.S. Supreme Court. U.S. officials said the new fees were fair because they would be charged to vessel operators and would be based on the services that vessels receive. The HMT was charged to shippers and based on the value of the cargo. But the European Commission said the new fee would disproportionally punish European container vessels and the cargoes they carry. According to the commission, container vessels would be forced to pay fees that are up to 25 times higher than the fees paid by other types of vessels. "While I sincerely appreciate your efforts to resolve the WTO problems of the HMT, the proposal the administration has made to replace the HMT with a new fee is far from satisfactory," Brittan told Barshefsky. "The new fee would not be a true user fee, but a tax," he added. "This tax would directly and significantly affect the profit and loss account of EC shipping lines, which will be asked to bear a disproportionate burden to finance activities that benefit that entire U.S. economy. EC goods will continue to be negatively affected." Brittan urged the U.S. administration to come up with a new harbor plan that would treat European shipping lines fairly.