By DOUG SCHMITZ
Iowa Correspondent

WASHINGTON, D.C. — After 20 years of stalled talks, the U.S. Trade Representative (USTR) last week said the European Union (EU) has provisionally agreed to raise the current tariff-rate quota with the United States regarding the use of cattle growth promotants, despite still partially closing the EU market to U.S. beef exports.
“The American Farm Bureau Federation (AFBF) appreciates the efforts of the Office of the United States Trade Representative to expand beef marketing opportunities,” said AFBF President Bob Stallman on May 7. “However, we are disappointed that the provisional agreement announced (May 6) between the United States and the European Union in the beef hormone dispute did not fully open the EU market to U.S. beef.”

Under the current tariff-rate quota, the EU only allows 11,500 metric tons (MT) of hormone-free, high quality grain-fed beef imports each year from the U.S. But upon approval, the new measure would provide for an additional 20,000 MT at zero duty, allowing an extra 25,000 MT for a total of 45,000 MT at zero duty after three years.
Despite rigorous Food and Drug Administration testing that has scientifically proven these growth promotants to be safe, 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.

In response to the EU’s trade barrier, the U.S. has been imposing $116.8 million in retaliatory sanctions on various European goods since 1999. Last October, 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.

While the WTO side of the dispute started in January 1996, in 1998 the WTO found that the EU’s ban on U.S. beef wasn’t supported by science and was inconsistent with WTO rules. In July 1999, the U.S. imposed additional duties on a list of EU products in accordance with the WTO authorization, which remained unchanged until the modifications were announced this January.

But the EU amended its ban in 2003, claiming that the ban now complied with WTO requirements, and challenged the continued application of additional tariffs by the U.S. In January of this year, the USTR announced plans to “carousel” the list of goods subject to increased tariffs to increase pressure on the EU.

However, in March, the USTR announced it would delay imposing additional duties on a modified list of EU products by one month, in connection with the WTO dispute settlement rulings in the EU-Beef Hormones dispute.

“The purpose of the modified trade action announced earlier this year was to encourage a resolution of the long-standing Beef Hormones dispute that would offer a fair outcome for the U.S. beef industry, while also addressing the economic impact of the prior trade action on U.S. interests,” said USTR spokesperson Nefeterius McPherson.

But on April 22, the day before the carousel rotation was set to take effect, the USTR announced it would delay the rotation until May 9 to provide more time to reach a settlement.

“This accommodation conceded nothing in terms of the science; it is simply changing the terms of the payment plan,” said Gregg Doud, National Cattlemen’s Beef Assoc. (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.”

During the past several years, the NCBA has been working closely with the U.S. beef industry and the USTR to resolve this trade dispute. “We appreciate the leadership and persistence of Ambassador (Ron) Kirk and his USTR team in getting this process moving in the right direction after 20 years of unsuccessful efforts,” Doud said.

“Once approved, this will be a positive step forward in our goal of expanding U.S. beef market access, but we still have a long way to go before this issue is resolved to our satisfaction.”

After talks with Kirk, EU Trade Commissioner Catherine Ashton said the May 7 provisional agreement was mutually beneficial and an effort would be made to quickly finalize it.

“Following a very good discussion today, we have reached an understanding that provides a pragmatic way forward in the long-running beef dispute,” she explained.

But Stallman said the EU’s agreement continues to allow it to maintain its restrictions on U.S. beef imports in a manner inconsistent with science-based decision-making and WTO rules. While the agreement provides new duty-free access for hormone-free beef, he said it is long past time for the EU to abide by the WTO’s rules and dispute settlement decisions.

“We strongly support efforts to require our trading partners to comply with international standards and fully open their markets to U.S. beef,” he said.

“The United States must continue to work for the benefit of all U.S. beef producers and support trade through the acceptance and implementation of international trade rules.”