US and EU Reach Provisional Agreement in Beef Dispute

May 5, 2009 07:00 PM
 


Today United States Trade Representative Ron Kirk and European Union (EU) Trade Commissioner Catherine Ashton agreed in principle on a way forward in the long-running dispute over hormone-treated beef.  

The agreement in principle would provide additional duty-free access to the EU market for high-quality beef produced from cattle that have not been treated with growth-promoting hormones – 20,000 tons in the first three years and increasing to 45,000 tons beginning in the fourth year. 

Under the agreement, the United States will maintain existing sanctions and will not impose new sanctions on EU products during the initial three-year period, and will eliminate all sanctions during the fourth year.  The two sides will refrain from further litigation at the World Trade Organization regarding the EU's ban on beef treated with certain growth-promoting hormones for at least 18 months.  Before the end of the four-year period, the two sides will seek to conclude a longer-term agreement. 

Under the current tariff-rate quota, the EU allows 11,500 metric tons (MT) of hormone-free, high-quality, grain-fed ("Hilton”) beef imports each year from the U.S. USTR and industry will closely monitor the terms of the agreement, and should it not be carried out satisfactorily, the U.S. reserves the authority to reinstate carousel duties on EU exports to the United States. 

The EU has cited the use of growth-promoting hormones in U.S. cattle as the reason for imposing a trade barrier on U.S. beef for the past 20 years ago—despite the fact that these growth promotants have all been scientifically proven safe through rigorous Food and Drug Administration (FDA) testing, according to a press release from the National Cattlemen's Beef Association.

In response to the EU's unjustified trade barrier, the U.S. has been imposing $116.8 million in retaliatory sanctions on various European goods since 1999. As recently as October 16, 2008, the World Trade Organization (WTO) Appellate Body confirmed that the U.S. has the right to continue imposing these sanctions until the dispute is resolved.  In January of this year, USTR announced plans to modify—or "carousel”—the list of goods subject to increased tariffs in order to step up pressure on the EU. On April 22, the day before the carousel rotation was set to take effect, USTR announced it would delay the rotation until May 9 in order to provide more time to negotiate a settlement. 

"This accommodation conceded nothing in terms of the science; it is simply changing the terms of the payment plan,” explained Gregg Doud, NCBA chief economist. "This gives the U.S. beef industry an opportunity to gain duty-free access to one of the most valuable markets in the world. But this does not resolve the hormone dispute.”


For questions or comments, e-mail Kim Watson, editor Beef Today.
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