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For Now, an End to the Beef Hormone Dispute

29 July 2009

The beef hormone dispute between Europe and the US ran for 20 years before recently being brought to a four year close. Adam Anson, reporting for TheCattleSite finds out what the resolution will hold.

The dispute began back in 1989 when the EU banned imports of hormone treated meat on fears of food safety. But this ban was to have a profound effect on trade with the US and Canada whose industry largely comprised of treating beef cattle with hormones in order to make them grow faster and bigger.

The US and Canada responded by imposing retaliatory measures against the ban, suspending their obligations and imposing import duties in excess of bound rates on imports from the EU, and by initiating a WTO dispute settlement proceeding.

This case is now the single longest running dispute in the history of the World Trade Organisation, fluctuating between favourable verdicts on both sides for almost two decades. This year, the two sides tried something new and began an attempt to solve the dispute outside of WTO courts.

March 2009, the United States Trade Representative (USTR) spokesperson Nefeterius McPherson announced that the USTR was in discussions with the European Commission on a possible interim solution that would provide benefits for US beef producers.

"These discussions have made progress, although several important issues remain to be resolved,” Mr McPherson said.

At the same time the US were due to impose additional duties on EU products in connection with the beef hormone ban, but the USTR decided to delay these by a month whilst the interim negotiations took place.

Days later, it became apparent that EU trade Commissioner, Catherine Ashton, was scheduled to be in Washington DC for talks with the US Administration and key members of Congress over the issue. "I am confident we will find a solution very soon," she said before departing on her journey. Her confidence was not ill-placed.

The Beginning

The initial beef-hormone dispute went to the WTO court back in 1989 after the ban was challenged by the US and Canada. The EU lost on the grounds that the legislation was not based on a full scientific risk assessment in relation to the risk arising from the ingestion of meat from animals treated with hormonal growth promoters.


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"An agreement is in our mutual interest."
Ambassador Kirk and Commissioner Ashton in a joint statement issued just before the

According to a recent account outlined in an extract of the European Commission's United States Barriers to Trade and Investment Report for 2008, the Appellate Body overruled the earlier Panel but recommended that the EU bring its measures into conformity with obligations under the Agreement on Sanitary and Phytosanitary Measures (SPS).

"The EU followed by eliminating the WTO inconsistencies and based its new Hormones Directive of 22 July 2003 on a full scientific risk assessment," says the European Commission. But, despite what the EC believe are a compliance with WTO rules the US and Canada continue to apply their retaliatory measures.

The European Commission says that the amendments to the Hormones Directive were adopted by the Council on 22 July 2003, and the new Directive 2003/74/EC, implementing the WTO ruling, entered into force on 14 October 2003. "On 27 October 2003, the EU notified to the WTO that it had implemented the WTO ruling of 1998 and that, as a consequence, the US' sanctions vis-à-vis the EU were no longer justified," says the report.

However, the US disagreed and since then has not lifted its sanctions. At the Dispute Settlement Body meeting of 7 November 2003, the EU proceeded to notify the new Directive as compliant in this case. The US (and Canada) disagreed and kept their retaliatory measures. Furthermore the US did not initiate a compliance dispute in the WTO, as is foreseen for such situations according to the WTO's Dispute Settlement Understanding, says the European Commission.

"Informal attempts to persuade the US to suspend its sanctions and to initiate a WTO review under Article 21.5 DSU failed. Consequently the EU requested on 8 November 2004 formal consultations with the US (and Canada) regarding the continued application of the countermeasures," the report reads.

"The EU's challenge was directed against the US' continued suspension of its obligations and its continued imposition of import duties in excess of bound rates on imports from the EU despite the EU's removal of the inconsistent measures. The EU considered that the WTO Agreement does not allow simply continuing to apply sanctions since this would amount to a prohibited unilateral determination of alleged non-compliance by the EU.

"The Appellate Body however ruled that WTO Members are permitted to maintain sanctions until the WTO-compliance of the implementation measure has been demonstrated in a compliance WTO-dispute. The Appellate Body also recommended that the United States, (Canada) and the EU initiate such compliance proceedings without delay." But, according to the report, The EU has already initiated such compliance proceedings by requesting consultations with the US and Canada.

The End?

It was in April when the EU Trade Commissioner Ashton and US Trade Representative Ron Kirk, over a telephone conversation, agreed to yet further talks in order to find a negotiated solution. The principle measures of the new solution were laid out then, which were to see hormone-treated beef remain out of EU markets in return for the promise of a higher duty-free access of US beef to EU markets.

“An agreement is in our mutual interest, and we will now discuss this with our respective stakeholders and constituencies in an effort to finalise it as soon as possible," said Ambassador Kirk and Commissioner Ashton in a joint statement issued soon after.

The full arrangements were made in May 2009. While new Carrousel sanctions would not apply, the U.S. would maintain the currently reduced level of existing sanctions against EU products (68 per cent or $79 million lower) and would eliminate all sanctions beginning in the fourth year of the agreement.

According to the European Commission, in return, the agreement would provide additional duty-free access to the EU market for the type of high quality beef traditionally exported by the U.S. and produced from cattle that have not been treated with growth-promoting hormones.

"The agreement would provide additional duty-free access for 20,000 tonnes of beef in the first three years, increasing to 45,000 tonnes beginning in the fourth year. Before the end of the four-year period, the two sides will seek to agree on the conditions for the settlement applicable beyond that period," reports the commission.

The EU bought a total of 20,660 metric tons of US beef in 2008 valued at $99.7 million, according to figures from the US Meat Export Federation.

July 2009

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