Bridges Trade BioRes • Volume 9 • Number 8 • 1st May 2009

Sanctions Delayed Again as EU, US Continue Progress on Beef

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Amid strong pressure both at home and abroad, US Trade Representative Ron Kirk agreed in a telephone conversation with his EU counterpart on 22 April to delay for two weeks the start of controversial sanctions intended to strike back against Brussels’ ban on imports of hormone-treated beef. The announcement of the delay came just one day before the retaliatory measures were scheduled to take effect.

“The United States will delay the trade action until May 9, to provide a little more time to negotiate a settlement with the EU,” the USTR said in a 22 April press release. “The EU has demonstrated seriousness in their efforts to solve this problem, and two additional weeks should be sufficient to establish whether we can address the remaining issues successfully.”

In 1999, the WTO granted Canada and the US permission to retaliate against the EU ban with punitive tariffs. The US was authorised to sanction the European bloc US $116.8 million annually, and has maintained tariffs on a number of mostly agricultural products for nearly a decade.

Yet as both parties continue to argue the legitimacy of their cause, and in light of unclear guidance from the global trade body, the status of the sanctions remains unclear.

In particular, an October 2008 Appellate Body ruling granted the EU the authority to continue the ban on hormone-treated beef while allowing the US to continue its sanctions - a decision that left both sides claiming victory (see Bridges Trade BioRes, 31 October 2008, http://ictsd.net/i/news/biores/32483/).

But the dispute intensified in January when the outgoing Bush administration announced the imminent enactment of rotating tariffs on EU goods that would be subject to change every six months (see Bridges Trade BioRes, 23 January 2009 http://ictsd.net/i/news/biores/38544/). The change was immediately met with strong criticism from EU leaders, who decried the ‘carousel’ sanctions as illegal.

At the same time, business leaders on both sides of the Atlantic increased pressure for a resolution. In the United States, more than 60 Chicago-area restaurant owners protested an expected 100 percent tariff on popular Italian mineral water, while earlier this year French farmers delivered a free wheel of Roquefort cheese to the US embassy in Paris, denouncing an expected 300 percent tariff on the pungent product.

This is the second delay for the sanctions, which were originally scheduled to take effect on 23 March but which the Obama administration pushed back to 23 April (see Bridges Trade BioRes, 20 March 2009, http://ictsd.net/i/news/biores/38544/).

The 22 April phone call between Kirk and EU Trade Commissioner Catherine Ashton signalled that one of the oldest WTO disputes may be approaching a mutually agreeable conclusion.

“We are both aware that this is a difficult issue that affects businesses and consumers in both the European Union and the United States. We want to overcome those difficulties, and we believe that a solution is within reach that will benefit both sides,” Ashton said.

“This gives us the chance to avoid a crisis that would lead to harmful sanctions as well as more litigation at the World Trade Organisation. Together we can find a positive and lasting solution to this issue, and we will continue our close cooperation on other outstanding issues in the future,” she added.

ICTSD reporting; “US agrees to postpone duty hikes in beef hormone row: EU,” AFP, 23 April 2009; “US delays tariffs on Italian mineral water, other products,” Chicago Tribune, 22 April 2009; “French farmers raise stink over U.S. tariff on Roquefort cheese,” CBC News, 23 January 2009.