Duty Hikes to 200% on European Goods Told : Gin at $30 a Bottle Envisioned in Retaliation for Common Market Taxes on American Grain

The United States, retaliating for Common Market taxes on imports of American grain, Tuesday announced sharp increases in duties imposed on European gin, brandy, white wines, cheeses and other agricultural products.

The duties on the products, now as low as 15% of the imported value, would jump to 200%.

Thus the increases, disclosed one day before New Year’s Eve, could drive the cost of a $10 bottle of imported gin as high as $30--effectively pricing the beverage out of the U.S. market unless an international agreement is reached within the next month, before the higher duties would take effect.

As viewed by the Reagan Administration, the dispute between the United States and the 12-nation European Economic Community, known as the Common Market, is centered on the Europeans’ failure to adequately compensate the United States for sharply increased tariffs imposed on such U.S. feed grains as corn and sorghum.

The tariffs, imposed on Spanish imports of U.S. grain last March 1 by the Common Market, “have effectively cut off what had been a $400-million market for U.S. feed grains,” the White House said in a written statement.

So, said Clayton K. Yeutter, the U.S. trade representative, “we’re leveling the playing field.”

“If the (European) community counter-retaliates, it will unbalance this issue again,” he said, acknowledging that such retaliations would make a widening trade war a “probability.”

Punitive Duties’

(In Brussels, spokeswoman Francoise le Bail told the Associated Press that the Common Market will impose punitive import duties on some American products in retaliation for the tariffs announced by the Reagan Administration. The Europeans will impose duties on American corn gluten feed, rice and wheat, she said.

(The exact level of duties on the American products has not been decided, Le Bail said, but they will take effect on the same date as the U.S. tariffs and affect a similar value of trade.)

The dispute pits the United States against some of its closest and most important allies: Britain, France, West Germany and Italy, as well as Denmark, the Netherlands, Belgium and Greece.

According to a White House official, Yeutter flew to Palm Springs specifically to make the announcement to White House reporters covering President Reagan. The President is spending the year-end holiday at the Rancho Mirage estate of former Ambassador and Publisher Walter H. Annenberg.

Other Commodities

In addition to imported gin, brandy and lower-priced white wine, the higher tariffs would be applied to certain canned hams, Edam, Gouda and certain soft ripened cheeses, imported endives, unripe olives packed in brine and carrots imported in airtight containers.

Overall, the decision is intended to raise the duty on these products by a total of $400 million. Yeutter said $320 million of that would result from the higher taxes on wine, brandy and gin.

“The intent is to stop that trade in its tracks,” he said.

However, a subsequent impact could be to raise the consumer prices of many of the same items produced in the United States, because the producers would be free of competition from imports.

Near Total Cutoff

Yeutter said that the tariff imposed by Spain on U.S. grain imports before Spain joined the Common Market had been 20% of the value of the corn and sorghum. When the Common Market insisted that a higher duty of about 150% be imposed, the effect was a near total cutoff of the sales.

Thus, the failure to reach an agreement has an impact that touches more people than simply consumers of European alcoholic beverages, cheeses and other foods in this country.

If the grain shipments are not resumed, the effect will reach into the troubled farm communities of the Midwest. In November’s congressional elections, dissatisfaction with the Reagan Administration’s farm program played a role in the Republicans’ loss of control of the Senate.

Effective Jan. 30

Yeutter said the higher duties would take effect no later than Jan. 30. However, White House spokesman Larry Speakes said:

“The United States is prepared to restore the pre-existing tariff rates at any time that there is agreement with the European Community to provide adequate compensation for U.S. feed grain losses.”

Yeutter said the negotiations will continue, but the two sides “are still a long way apart.”

Neither Yeutter nor experts in Washington could specify the precise impact that the higher tariffs would have on consumers.

While the duties would drive import costs up, importers and distributors in some cases might still seek to restrain retail prices as part of overall marketing strategies.

Staff writer Tom Redburn in Washington contributed to this story.