EU Prepares WTO Action Over US Beef Sanctions

by Ulrika Lomas, Tax-News.com, Brussels

20 January 2009

The European Commission has denounced the US’s decision to suspend the so called ‘carousel’ trade sanctions legislation on hormone-treated beef, stating that the new measure, which will allow the US to revise the sanctions every six months, will be more punitive than its predecessor.

In a statement to the press the Commission said:

"Today (January 15), in a clear attempt to escalate the EU-US hormones dispute, the outgoing US administration has decided to suspend the so called 'carousel' trade sanctions legislation and thereby allow the US to revise, every six months, the list of goods subject to sanction. It is more punitive than the current measure, which sanctions a 100% import duty on EU exports on a fixed list of goods. It is clear that exporters will face increased uncertainty as their goods could be subject to tough duties at short notice. The trade implications of this measure will be significant."

The EU Trade Commissioner Catherine Ashton said: “Transatlantic trade needs champions, not sanctions. This action is most regrettable in view of many attempts by the EU to find a solution to the long-standing trade dispute over hormone-treated beef. A large number of EU exporters will be hit by these illegal sanctions. We look forward to working with the new administration to address this situation.”

The Commission said that the US decision leaves it with "no choice but to start preparations in order to take this to the WTO."

"A great deal of effort had been put into finding a mutually agreed settlement to this on-going dispute. This task has now become mush more difficult. As the WTO has not yet taken a view on our current hormone regime dating from 2003, the US sanctions are illegal," the Commission claimed in its statement.

"The carousel measure was due to have been referred to the WTO when it was introduced in 2000, but we held off as the US agreed to suspend it without ever implementing it. [The Commission] is convinced the carousel measure is illegal as it breaches the WTO requirement of equivalence between the damage caused by the sanction or ban and the retaliation proposed," the statement added.

In 1999, the WTO Dispute Settlement Body authorized the United States to impose increased tariffs on EU products with a total annual trade value of USD116.8m. On October 16, 2008, the WTO Appellate Body confirmed that the United States has a continuing right to impose trade measures until the EU Beef Hormones dispute is resolved.

"For over a decade, we have been trying to resolve this dispute with the EU, but our efforts have gone nowhere," commented US Trade Representative Susan Schwab last Thursday. "In these circumstances, I have decided it is time to modify the duties to try to encourage a resolution of this longstanding dispute so as finally to provide a fair outcome to the US beef industry, while addressing the economic impact of such long-standing duties on US interests."

"Particularly in this time of worldwide financial problems, it is important to emphasize that the purpose of the action announced today is not to raise trade barriers, but to lower them," Schwab added. "The existing duties have been in place for over 9 years; the goal of these modifications is to reach a resolution of the dispute under which the EU would allow market access for US beef and the United States could end its trade action."

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