Bridges Trade BioRes • Volume 9 • Number 1 • 23rd January 2009

Trans-Atlantic Beef Hormone Dispute Heats Up Once Again

Discuss this articleShare your views with other visitors, and read what they have to say

The trans-Atlantic trade dispute over hormone treated beef is heating up once again. A 15 January move by the outgoing Bush Administration to provide greater flexibility for retaliatory tariffs against the EU over its beef ban has raised the ire of Brussels, which has recently been attempting to engage the US at the WTO.

The EU had requested formal WTO consultations in December to discuss its refusal to allow imports of Canadian and American beef in the hopes of finding a final resolution to the debate, which has spanned nearly two decades.

At the centre of the controversy is whether the EU’s ban on imported hormone-treated beef is in compliance with the WTO Agreement on Sanitary and Phytosanitary Measures, known as the SPS Agreement. That Agreement governs the use of health and safety-related trade barriers, and allows such restrictions to be justified based on scientific evidence or other pertinent information.

Canada and the US maintain that the EU ban is unfounded and have established retaliatory sanctions on EU goods in response.

The EU authorised the current ban in 2003, citing research claiming to have found overwhelming evidence that the hormone oestradiol 17-beta caused cancer and harmed genes, and substantial evidence that five other hormones were also harmful to humans. The EU had hoped that this research would bring the bloc’s import ban into compliance with a 1999 WTO ruling that found earlier restrictions unjustified.

Appellate Body Indecisive

On 16 October, the WTO Appellate Body handed down a mixed ruling on the dispute. In their decision, the EU was granted the authority to continue their ongoing restrictions, while Canada and the US were also allowed to continue imposing trade sanctions totalling over US$ 125 million annually (see Bridges Trade BioRes, 31 October 2008, http://ictsd.net/i/news/biores/32483/).

The Appellate Body held that it was unable to determine whether the EU’s assessment of human risk brought the European trading bloc into compliance with the SPS Agreement, faulting the lower WTO panel for numerous evidentiary and procedural errors. Concluding, the Appellate Body recommended that the parties re-initiate WTO dispute settlement proceedings.

Following the WTO Body’s recommendation, on 22 December Brussels requested formal consultations with Canada and the US over the legality of both the EU’s longstanding ban as well as Canadian and American sanctions.

By requesting formal consultations, the EU is inviting scrutiny of its own trade policies, an unusual move at the WTO. But Brussels says that it is confident that the import ban is legally justified.

“We are convinced that our legislation on hormones is fully in line with WTO law: the restrictions on hormone-treated beef are based on solid scientific evidence showing risks for human health,” EU spokesperson Peter Power said. “We are thus very confident and hope that the US and Canada will engage constructively in these consultations and that we can find a solution to this long-lasting dispute.”

Dispute Escalates

Having long taken a precautionary approach toward hormone-treated food, Brussels says it hopes this coming round of dispute settlement procedures will end the debate on the ban’s legitimacy, and end Canadian and American duties on EU imports as well.

But recent moves by the outgoing Bush Administration have, in fact, escalated the dispute. On 15 January, Washington announced new changes to the list of EU food products subject to US$116.8 million worth of retaliatory tariffs.

US Trade Representative Susan Schwab indicated continuing sanctions were justified following the 16 October Appellate Body ruling. “The Appellate Body’s report confirms that WTO Members that are subject to additional duties for failing to bring themselves into compliance with the WTO’s rulings and recommendations must do more than simply claim compliance in order to obtain relief from such duties. We very much welcome these conclusions by the Appellate Body” Schwab said.

Because the new changes – scheduled to take effect on 23 March – allow the US to revise the list of sanctioned goods every six months, it will make moves by the US harder to predict. The move was met with immediate criticism from the EU.

“This action is most regrettable in the view of many attempts by the EU to find a solution to the long standing dispute over hormone-treated beef,” EU Trade Commissioner Catherine Ashton said in a statement. “A large number of EU exporters will be hit with these illegal sanctions. We look forward to working with the new administration to address this situation.”

New Sanctions Aim to Force Resolution: Washington

Statements from Washington, however, indicate this latest action was designed to force the resolution of an issue that has been unresolved since the dispute began in the WTO back in 1996.

“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” US Trade Representative Susan Schwab said. “For over a decade, we have been trying to resolve this dispute with the EU but our efforts have gone nowhere.”

The USTR added that “in this time of worldwide financial problems, it is important to emphasise that the purpose of the action announced today is not to raise trade barriers, but to lower them.”

Initial reactions from Brussels, however, were markedly adversarial. “It is clear that this move by the US administration means that we will have no choice but to start preparations in order to take this to the WTO,” an EU press release warned. “As the WTO has not yet taken a view on our current hormone regime dating from 2003, the US sanctions are illegal.”

ICTSD Reporting; “US hits EU with revised sanctions in beef dispute,” REUTERS, 15 January 2009; “US, EU escalate dispute over ban on hormone beef,” ASSOCIATED PRESS, 15 January 2009; “EU Wants Sanctions Justified in WTO Beef Hormone Case,” Bloomberg, 22 December 2008; ”Busy Bush gov’t hauls EU to WTO over poultry ban,” ASSOCIATED PRESS, 17 January 2009.