U.S. Plans Harsh Tariffs on White Wines of Europe : Commerce: Duties would triple the price of a bottle and could trigger a trade war. EC official denounces the action but does not threaten to retaliate.

WASHINGTON —  Brushing aside the threat of a trade war that could subject President-elect Bill Clinton to his first foreign policy crisis, the Bush Administration announced plans Thursday to impose punitive tariffs on French, German and Italian white wines, effectively pricing them out of the American market.

President Bush and Carla Anderson Hills, his chief trade negotiator, insisted that the move would not touch off an escalating spiral of trade sanctions.

A top European Community official denounced the U.S. action--which would triple the cost of European goods that account for $300 million in annual U.S. sales--but did not renew an earlier threat to retaliate.

Nevertheless, the announcement added to the long-running friction between the United States and the European Community over agricultural subsidies and further complicates prospects for completion of a long-delayed international trade accord.

Ron Loutherback, owner of the Wine Club discount store in Santa Ana, said he doesn’t expect prices to shoot up initially because of tariffs.

“There’s plenty of good Bordeaux on this side of the Atlantic to last for a couple of months anyway. I suspect there will be some importers who will try to increase the price on their inventories and blame it on this new situation, but not by the total amount” of the tariff, he said.

The announcement of the new American tariffs came two days after the breakdown in Chicago of negotiations aimed at resolving a long-simmering dispute between the United States and the EC over European subsidies for growers of soybeans and other oil-bearing crops.

The tariffs--which could raise the price of a $10 bottle of imported white wine to $30--would take effect in 30 days, a little more than a month before Clinton’s Jan. 20 inauguration, unless the dispute is resolved, Hills said.

If the European Community retaliates, it could cause both sides to impose a series of trade barriers, although that possibility was discounted by Bush and Hills.

In any case, the effect of the measures would not be felt fully until well into the new year and the new Administration.

In Little Rock, Ark., Clinton declined to comment except to say: “I’ll review it. We’ve got one President. He has to make those decisions. I don’t want to get in the way.”

Frans Andriessen, the EC trade commissioner, said in Brussels that the U.S. decision is illegal under world trading rules.

But while warning that the U.S. action endangers “the whole of international commerce,” Andriessen did not explicitly threaten EC retaliation. Only the day before, however, he had told reporters that the EC would respond “proportionally” to any U.S. measures.

“Our biggest concern is for the future, and what this will mean for the California wine industry,” said Nancy Light, spokeswoman for the Wine Institute in San Francisco, an association of California wineries. “This is a double-edged sword. We have a lot of concern for our members who are exporting.”

The United States exports about 7% of its wine, worth an estimated $150 million, Light said. California accounts for 95 percent of the $6.8 billion worth of wine produced annually in this country.

The trade dispute began Dec. 16, 1987, when American soybean producers complained that the EC was subsidizing the production of soybeans and other oil-bearing crops in violation of international trade law.

U.S. officials said the subsidies give European farmers an unfair advantage in price competition, costing U.S. exporters an annual $1 billion worth of sales in Europe.

But Europeans, particularly the French--sensitive about retaining control of their own domestic affairs and heeding their own countries’ outspoken, powerful farm interests--have defended their agricultural subsidies in general and especially for oil-bearing crops.

The Europeans argue that without the subsidies, their farmers--whose techniques are somewhat less efficient than those of American farmers--would have to set prices extraordinarily high to recover their production costs and make a reasonable profit.

Under the rules of the General Agreement on Tariffs and Trade, the United States filed a formal complaint against the Europeans. A GATT panel twice upheld the U.S. complaint, but the Europeans failed to eliminate the subsidies.

On Wednesday, the United States sought GATT permission to impose tariffs on $1 billion worth of European farm products. While a majority of member nations approved the U.S. application, it was vetoed by the EC, which took advantage of rules requiring all decisions to be unanimous.

Hills said that the Administration decided to go ahead with tariffs on only $300 million worth of imports for now. But the total would be increased to $1 billion later unless the Europeans agree to change their subsidy policy.

Besides white wine, the punitive tariffs also would be imposed on imports of European rapeseed oil, used primarily in inexpensive cooking oil, and wheat gluten, used as a binder for pet food. But 90% of the value of the imports involved is wine, ranging from elite vintages of Chardonnay to cheap Italian jug wines. Red wine and sparkling wine were not included.

Hills said the products were selected because the tariffs would produce “the least amount of harm in our home market.” She did not explain why white wine restrictions would be less disruptive than red wine tariffs.

The United States now imposes a tariff of about 7 cents a bottle on imported wines. But when the punitive tariffs take effect, the duty will increase to 200% of the value of the wine, boosting the cost of a $10 bottle to $30. At those prices, no one expects much European wine to be sold, so the effect of the tariff is likely to be halting imports, not raising money.

Hills said the effective date was delayed until Dec. 5 to permit wines now in transit to arrive here. Wines already in the United States or en route can be sold without the new tariff, so it may be months before French, Italian and German wines begin to disappear from retail shelves.

Hills said Washington is ready to spend the 30 days before the tariffs take effect in negotiations aimed at reaching a compromise agreement that would make the levies unnecessary. But Ray MacSharry, the EC’s agricultural commissioner, resigned Thursday as the community’s chief negotiator in the dispute, raising questions about when or whether the talks might resume.

MacSharry refused to talk to reporters, although he was reported to have privately criticized Jacques Delors, president of the EC’s executive commission, for interfering during the three days of talks that ended in disarray Tuesday in Chicago.

Hills said that by litigating the dispute through the GATT process for almost five years, the United States had “shown tremendous patience.”

“Either we admit, by action if not by word, that the GATT system doesn’t work or we take the rules of the GATT and apply them, even though it hasn’t had the blessing of the European Community,” she said.

Besides announcing the new tariffs, Hills issued a list of items, ranging from perfume to radial tires, that may later be subject to punitive duties. She said that ultimately the United States is determined to restrict $1 billion in European trade if the Europeans do not end their soybean subsidies.

“There is right on both sides, and folly on both sides,” said Eldon Griffiths, president of the World Affairs Council in Laguna Niguel and director of the Center for International Business at Chapman University in Orange. Both sides “should resolve this before they do tremendous damage to jobs and prices on both sides of the Atlantic.

“I still believe that common sense will prevail, and they will draw back from the brink before getting into a full-scale trade war.”

The EC is overhauling its oilseed subsidies as part of a general reform of its farm programs, which cost about $75 billion a year. The new system already has brought EC oilseed production down from 13.5 million tons last year to an estimated 11.5 million tons this year, and the EC expects a 9.5-million-ton crop next year.

In the negotiations in Chicago earlier this week, the United States reportedly insisted on a 9 million-ton ceiling.

Although soybeans might seem an unlikely trigger for a trade war between the United States and the EC, they are second in size only to corn among America’s row crops. Soybean oil is the main vegetable oil consumed in America.

Kempster reported from Washington and Havemann from Brussels. Times staff writer Donald Woutat, in Detroit, contributed to this report. Orange County staff writer Chris Woodyard and correspondent Carol Smith also contributed to this report.