US, EU beef trade war heat up; no solution yet in sight

 

 

According to a senior EU official, the region's increased market access would be used for US grown beef without artificial growth hormones and would be granted through a tariff-rate quota (TRQ). Bilateral talks on market access are suspended, according to sources.

 

 

The official added that EU offered to expand market access for US beef by 58,000 tonnes, while the US demanded roughly 10,000 tonnes more. The US originally was asking for an expansion of 100,000 tonnes, according to trade sources.

 

Another unresolved issue is the US' lifting of its retaliatory trade sanctions, which was imposed in 1999 as the EU refused to alter the hormone ban after an adverse World Trade Organization ruling. During the bilateral talks, the US demanded that it should maintain sanctions until such time as the new TRQ is filled by US exporters.

 

The EU however rejected this condition, arguing that sanctions should be lifted immediately and that the EU should not be obligated to ensure the quota is filled, EU sources said.

 

Still unresolved is the US' demand that beef exports could be treated with antimicrobial washes to ensure it is clean, which the European Commission has rejected during the talks. While US beef processors currently do not use the antimicrobial rinses for EU exports, they argue that ramped up production to fill the quota would make their use necessary to ensure cleanliness of the product, an industry source said.

 

EU member states have disapproved any imports that are treated with these washes as the process is applied by EU producers. Most notably, the US pressed hard last year to convince the EU to accept poultry exports also treated with antimicrobial washes. The European Commission made a proposal to that effect but it was rejected by EU member states. 

 

Sources said that some within the Commission, such as the agriculture and trade sections, are also open to importing beef on which these washes have been used, so long as those imports are accompanied by labels clearly identifying their use.

 

But the US beef industry has resisted any labelling requirements and the Commission itself is also divided on this potential solution. For example, the environment section of the Commission opposes allowing antimicrobial washes accompanied with labelling, one industry source said.

 

This source said the firm demands by the US on market access for US poultry exports and the fact that EU member states resoundingly rejected a Commission proposal to allow antimicrobial washes for poultry makes it unlikely that the US can convince the EU to accept beef treated in the same manner.

 

Some EU industry groups are striving to convince their member state governments to embrace the washes for beef as a safe and effective way to ensure cleanliness, as the governments may be more willing to listen to its own industry groups, one industry source said.

 

But sources acknowledged that there are nevertheless lingering questions about the effects of antimicrobial treatments on the environment and whether their use encourages unclean processing methods in the United States.

 

The EU official said the two sides held the beef market access talks in the context of the Doha round and would have found a solution if a Doha breakthrough on agriculture and non-agricultural market access had been concluded last year.

 

He said the EU was open to resuming beef talks with the Obama administration but the legal dispute over the hormone ban is heating up at that time. The EU feels compelled to respond with WTO action to the Bush administration's decision to rotate its retaliation list which it did in the hope of increasing pressure on member states to come to a resolution of the long-standing dispute.

 

In addition, the EU late last year took the first step towards challenging the legitimacy of the US trade sanctions with the argument that a 2003 change in the hormone ban is consistent with the Agreement on Sanitary and Phytosanitary Measures. It requested formal consultations with the US in the WTO late last month.

 

EU stands that its ban now complies with these WTO obligations and if proven, the US will lose its right to impose retaliatory trade sanctions.

 

As for the legality of the US-only TRQ, the increased quota for US beef exports would supposedly be open to all countries in order to conform to WTO rules, but the two sides would configure it in such a way so that it in practice would only be open to US exports, sources said.