Twenty-year stalemate ended; EU, U.S. settle beef hormone dispute

WASHINGTON — The United States and the European Commission (EC) are a step closer to resolving an ongoing beef hormones dispute.

According to U.S. Trade Representative Ron Kirk, a memorandum of understanding between the two parties was signed last week in Geneva.

The agreement, which was signed in Geneva, will provide U.S. producers significant additional access, at zero duty, to the European Union market for beef produced from cattle that have not been treated with growth-promoting hormones. (Read a .pdf of the Memorandum of Understanding.)

The EU import quota would be set at 20,000 tons in each of the first three years, and this would increase to 45,000 tons in the fourth year.

Step Two

Under the agreement, the United States and the EC will seek to use experience gained in the first phase to enter into the second phase. Before the end of the second phase, they would seek to conclude a follow-on agreement that will extend the arrangement for a number of additional years.

“This agreement will give U.S. beef producers substantially increased access to the EU market,” Kirk said, adding that the European market “has been largely closed for far too long.”

And in contrast to the existing access, which is subject to a 20 percent duty, the new access will be duty-free.

“The EU remains one of the few markets to ban beef from cattle given growth-promoting hormones — beef that is perfectly safe to eat — but we see this agreement as a pragmatic way forward,” said Kirk.

Long road

U.S. Secretary of Agriculture Tom Vilsack also applauded the beef agreement.

“After 20 years of disputes over this issue, it appears we have found a way forward that creates economic opportunity here at home and benefits consumers in Europe,” Vilsack said. “I commend the USTR-USDA team for their tireless efforts to reach this agreement.”

Background

It all started back in 1989 when the EU banned hormone-treated beef imports from the U.S. and Canada, saying they pose a health risk. Ten years later, the WTO authorized the U.S. and Canada to impose their own sanctions, which the U.S. promptly did — serving up a list of food imports with attached punitive tariffs, including European pork imports and more highbrow imports like truffles and Roquefort cheese.

The U.S. and the EU have been battling the trade war in courts and trade negotiations ever since.

U.S./EU beef dispute agreement

– Phase 1: In the first phase, which will last three years, the EU will open an annual Tariff Rated Quota (TRQ) of 20,000 tons, at zero duty, for beef produced without growth-promoting hormones. The U.S. may maintain the additional import duties currently applied to certain EU products, and will not impose the new duties that were announced in January 2009.

– Phase 2: The agreement provides for the opportunity to enter into a second phase, lasting one year, in which the EU would further expand the quota to 45,000 tons. During this phase, the U.S. would suspend the application of all additional import duties imposed on EU products. For the U.S., a decision on whether to move to Phase 2 would depend on the existence of conditions at the end of Phase 1 that would allow the U.S. beef industry to make full use of the additional quota.

– Phase 3: The agreement provides for the opportunity to enter into a third phase at the end of the fourth year. In this phase, the EU would maintain the 45,000-ton quota and the U.S. would continue not to apply any increased import duties. A decision on whether to move to Phase 3 would be made following negotiations on several issues, including duration, withdrawal, and the status of WTO litigation on the EU’s compliance with the WTO ruling in the Beef Hormones dispute.

For at least the first 18 months of the agreement, neither party will move forward with WTO litigation on the EU’s compliance with the WTO’s ruling in the Beef Hormones dispute. After 18 months, either or both parties would be free to request a WTO panel.

Listen to comments from U.S. Meat Export Federation’s John Brook, USMEF regional director for Europe, Russia and the Middle East: (June 1, 2009)

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