July 4, 2009

EU-US bilateral beef deal may be violation of WTO rules

The EU-US bilateral beef deal that was intended to solve the long-running hormone beef saga may be a violation of World Trade Organisation (WTO) rules, as other beef exporting countries have been excluded from the deal.

Under the deal, the US would provide additional duty-free access to the EU market for high-quality beef produced from cattle that have not been treated with growth-promoting hormones. The US will also maintain existing sanctions but will not impose new ones on EU products during the initial three-year period, and will eliminate all sanctions during the fourth year.

But beef exporters Argentina, Uruguay, Brazil, Paraguay, Australia and New Zealand have raised concerns at the WTO, demanding that the EU implement the deal in a non-discriminatory way.

The European Commission has until August 3 to draft the tariff regulation, so that it does not exclude non-US beef exporters, as that is the deadline for the EU to implement the new 20,000-tonne duty-free quota for high quality beef imports.

The EU currently has a 60,000-tonne annual quota for imports subject to a 20 percent tariff, with a 100 percent tariff applying once the quota is reached. The quota is split between beef exporting nations, with the US allowed 11,500 tonnes.

Uruguay recently complained to the WTO that if the new 20,000-tonne quota goes exclusively to US beef exporters, the US market share of high-quality beef imports in the EU will jump from 19 percent to 54 percent.

In response, US trade officials assured that the agreement is origin-neutral, meaning that the quota is not exclusively reserved for the US.