New Trade Sanctions Averted In EU-US Beef Dispute

by Ulrika Lomas, Tax-News.com, Brussels

08 May 2009

United States Trade Representative Ron Kirk and European Union (EU) Trade Commissioner Catherine Ashton have reached an agreement in principle on a way forward in the long-running dispute over hormone-treated beef, avoiding an escalation of retaliatory tariffs on EU goods by the US.

Under the terms of the agreement, the US would agree not to impose new so-called 'carousel' sanctions that would affect a range of EU products including Italian mineral water, Roquefort cheese and a number of other food products. The US would maintain the currently reduced level of existing sanctions against EU products (68% or USD79m lower), and would eliminate all sanctions beginning in the fourth year of the agreement.

In return, the agreement would provide additional duty-free access to the EU market for US beef exporters but produced from cattle that have not been treated with growth-promoting hormones. The agreement would provide additional duty-free access for 20,000 tons of beef in the first three years, increasing to 45,000 tons 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.

“Following a very good discussion, we have reached an understanding that provides a pragmatic way forward in the long-running beef dispute,” Ashton and Kirk commented in a joint statement. “An agreement is in our mutual interest, and we will now discuss this with our respective stakeholders and constituencies in an effort to finalize it as soon as possible.”

“Reaching an agreement on this issue will be a clear sign of our commitment to working through -- and, where possible, resolving -- the bilateral disputes in our trade relationship,” they added. “We will continue our close cooperation on other outstanding issues in the future.”

The EU ban on hormone treated beef has been in place since the early 1980s. The US and Canada challenged the EU's non-discriminatory ban at the World Trade Organization (WTO) in 1996. The WTO Appellate Body found in 1998 that the rules were not consistent with one provision of the WTO Agreement on Sanitary and Phytosanitary Measures and in 1999 the US and Canada were given permission to impose sanctions in the form of tariffs to the value of USD116.8m.

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