WASHINGTON, D.C. — Europe doesn’t trust American beef, barring it in a long-running spat over growth hormones in cattle. Now the United States might retaliate by imposing big fees – fines, if you will – that could double the selling price on European motor scooters and small motorcycles.
Call it tit for tat – a Vespa for a steak, a KTM or Ducati for a rump roast.
That’ll show ’em, right?
Maybe not, complain a number of American motorcycle and scooter importers and dealers, including KTM North America, the Amherst, Ohio-based distributor of KTM motorcycles, a premium brand of off-road motorcycles made in Austria.
“This tariff could affect my job and whether I could keep my home and way of life,” Brian Muzilla, a KTM North America purchasing manager and 30-year employee, said in a letter to the United States Trade Representative’s office, which is considering the retaliatory move against the European Union.
“Trade disputes within the agricultural industry should not be solved with sanctions against non-agricultural products,” he wrote.
Ohio motorcycle dealers that specialize in European brands also say that by retaliating against Europe for its beef ban, the United States could put local dealers out of business. The European brands – including KTM, Husqvarna, Beta — “comprise what I would call the premium off-road motorcycle market in the U.S.,” Jim Miller, general manager of Championship Powersports, a dealer in Wauseon, near Toledo, said in a telephone interview.
“In terms of the impact at the dealership level, this would be devastating,” Miller said.
Why motorcycles? Why retaliation? Here’s why.
The beef:
The dispute goes back to the 1980s, when the European Union refused to allow in American beef because it questioned the safety of consuming meat from cattle raised with growth-promoting hormones. This led to the United States retaliating by placing duties – the equivalent of an import tax that raises the cost – on certain food imports from Europe.
The two sides went back and forth, and the matter wound up before the World Trade Organization, or WTO, a trade court that judges disputes between countries that agree to exchange goods but that sometimes spar over the rules. The WTO eventually issued a mixed ruling in 2008: Europe had a right to its health and safety rules, but the United States had a right to impose retaliatory duties under international trade rules.
As the United States considered ramping up its duties on a variety of European products – to 100 percent or more on many goods, which would double the cost of products — the two sides in 2009 agreed to a truce of sorts. Europe would allow in a certain amount of specially produced beef that met its standards.
Yet those imports from the United States have since slowed and eventually stopped, according to three groups representing the United States beef industry: the National Cattlemen’s Beef Association, the North American Meat Institute and the U.S. Meat Export Federation. So on Dec. 9, the groups wrote to Michael Froman, who was President Barack Obama’s trade representative, and asked him to act.
The response:
Froman is no longer in office, and President Donald Trump has nominated his own trade representative, who is not yet Senate-confirmed. But on Dec. 22, Froman responded with a proposal to levy tariffs on a variety of European goods. He said that while the European Union had proposed settling the dispute through a new trans-Atlantic trade agreement under negotiation, that agreement had stalled. Now “it’s time to take action,” he said.
The proposed tariffs would be placed on European goods that include meats and Roquefort cheese, cut flowers, chewing gum, grape and cranberry juice, some chocolates, and lingonberry and raspberry jams.
But they also included motorcycles and mopeds with engines between 51 cubic centimeters and 500 cubic centimeters. These are on the smaller side of motorcycles. The big BMW models popular with upscale riders would not be affected.
The reason:
It baffles people that a motorcycle or scooter could be used to retaliate against a beef ban. But it turns out that WTO rules give countries a variety of ways – and a variety of products – with which to respond to unfair trade restrictions.
There is a simple reason in this case, trade experts say: The United States does not import much European beef.
So instead, authorities can consider imposing tariffs on other products if there is a corresponding economic impact on the country or region that’s not playing fair.
That’s the way trade works in general, with each country making concessions when entering into agreements – or in this case, considering retaliation – across a range of products or services, said Rufus Yerxa, president of the National Foreign Trade Council, which promotes trade and investment across nations.
The next step:
This does not yet mean doom for European motorbike importers and dealers. The trade representative’s office has not decided, and this is not the first time that motorbikes have been used as a threat. It happened in 2008, too, before the United States pulled back.
First, the trade office will hold a two-day hearing in Washington this Wednesday and Thursday to hear from all sides. Robert Dingman, president of the American Motorcyclist Association, a Pickerington, Ohio-based group that represents riders, plans to testify.
Several months are likely to pass before the United States makes a final decision. It is too soon to know whether the Trump administration will embrace the case, but in theory, the issue goes to the heart of Trump’s threats during and after his election campaign: Mess with the United States and the United States will mess with you.
But the motorcycle and motocross industries are pleading: Don’t mess with us.
Another outcome is always possible, including a pullback by the European Union. European motorcycle companies, fearing loss of revenue in the United States, could lobby the European Union to open up the beef market. Or the United States could leave the recreational riding industry alone.
If not, warned a lengthy filing from the law firm Squire Patton Boggs on behalf of KTM North America and Husqvarna Motorcycles North America, the retaliation “would threaten thousands of American jobs and the existence of hundreds of small and medium-sized American businesses.”
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