30 June 2000

US facing up to wheat gluten imports defeat

WASHINGTON appears to have lost its battle with Brussels over the tight import restrictions it has imposed on EU wheat gluten for the past two years.

The 24,500t-a-year quota was introduced on the grounds that the USs own industry was suffering due to high EU subsidies for wheat starch. Wheat gluten, as the by-product, was effectively subsidised too, it argued, putting undue pressure on US prices.

The move limited the EU to 60% of its former trade, prompting Brussels to raise the matter with the World Trade Organisa-tion in Geneva. The commission has consistently argued that it is not imports from Europe that have put pressure on US wheat gluten producers, but competition from the USs own maize starch producers.

An interim ruling from the WTO disputes panel last week tended to support this view.

A final ruling is expected next month, and should pave the way for the EU to retaliate. A k5/t (£3.15/t) tax on 2.73m tonnes of US corn gluten is planned.

Tension between the two trade blocs was heightened earlier this year when the US cut its quota for EU wheat gluten. &#42