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The following story is from the May 7 issue of International
Trade Reporter
Current Reports:
Agriculture
U.S., EU Announce Provisional Deal
In Long-Running Dispute Over Beef Trade
The United States and the European Union May 6 agreed in principle on a path forward for resolving their dispute over the EU's long-standing ban on imports of beef produced with growth-promoting hormones.
Both sides said they would seek to finalize the tentative deal as soon as possible.
U.S. Trade Representative Ron Kirk and European Trade Commissioner Catherine Ashton, announcing the agreement, said that they had reached an “understanding” in a telephone conversation earlier in the day “that provides a pragmatic way forward in the long-running beef dispute.”
“An agreement is in our mutual interest,”
the two officials said in a joint prepared statement, “and we will now discuss this with our respective stakeholders and constituencies in an effort to finalize it as soon as possible.”
45,000 Tons Duty-Free in Fourth Year
Kirk's office said that the agreement would provide additional duty-free access to the European market for “high-quality U.S. beef” produced from cattle that have not been treated with growth-promoting hormones—namely, 20,000 tons in the first three years of the four-year pact and rising to 45,000 tons beginning in the fourth year.
The USTR statement said that, under the terms of the agreement, the United States will maintain the sanctions that it imposed on European imports a decade ago in response to the failure of the EU to lift the ban on hormone-treated beef but will not impose new sanctions on European products during the initial three-year term of the pact.
The United States will also agree to eliminate all beef-related sanctions against the EU during the fourth year of the agreement, the statement said. It said, moreover, that the two sides will refrain from further litigation at the World Trade Organization with respect to the EU ban on beef treated with certain growth-promoting hormones for at least 18 months and will seek to conclude a longer-term agreement before the end of the four-year period.
Kirk, Ashton Meetings
U.S. and European officials, meanwhile, said that Kirk and Ashton will meet in Geneva on May 12 to discuss the tentative deal, as well as the Doha Round of WTO negotiations and other trade-related issues—their second face-to-face meeting since sitting down together for roughly two hours in Washington, D.C., on March 19 immediately following Kirk's Senate confirmation (26 ITR 407, 3/26/09).
Kirk and Ashton will also meet WTO Director-General Pascal Lamy and the ambassadors from several WTO members while in Geneva next week, the officials said.
Under the terms of the agreement announced May 6, according to a statement from the European Commission in Brussels, the United States will agree not to impose new so-called carousel sanctions against the EU, which were due to come into force this week and would have affected a range of European products, including Italian mineral water, Roquefort cheese from France, and a number of other agricultural goods.
$37.8 Million in Sanctions Remain
The statement said that the United States will maintain the currently reduced level of existing sanctions against EU products—affecting about $37.8 million in annual trade—and will eliminate all sanctions beginning in the fourth year of the agreement.
Last month, Kirk announced that the United States had agreed to delay until May 9 the imposition of the carousel trade sanctions that were due to take effect against the EU on April 23 “to provide a little more time to negotiate a settlement” (26 ITR 540, 4/23/09).
Other officials said that the negotiations, held in Geneva, focused on expanding the EU's current tariff-rate import quota of 11,500 tons for non-hormone-treated beef in exchange for a commitment from the United States to drop the trade sanctions that have been in place against the EU for the past 10 years.
USTR announced in March that the United States would postpone by one month—i.e., until April 23—the effective date of additional import duties on a modified list of EU products
(26 ITR 377, 3/19/09), which were announced by then-U.S. Trade Representative Susan C. Schwab in January (26 ITR 97, 1/22/09).
The dispute dates back to 1998, when a WTO panel ruled that the EU's import ban on hormone-treated beef, imposed a year earlier, was not supported by scientific evidence and therefore violated WTO rules.
A year later, the WTO Dispute Settlement Body authorized the United States to increase tariffs on EU products with a total annual trade value of $116.8 million, which it did. The EU amended its import ban in 2003 and claimed that it had now complied with WTO requirements. But in a report released last October, the WTO Appellate Body rejected that claim and said that the United States has the right to continue imposing sanctions until the dispute has been resolved (25 ITR 1504, 10/23/08).
David O'Sullivan, director-general for trade at the European Commission, told reporters while accompanying Ashton on her visit to Washington, D.C., the week of March 17 that the two sides were “quite close” to concluding an agreement that could eventually resolve the dispute (26 ITR 416, 3/26/09). But the negotiators reportedly encountered some difficulty finding a way to resolve their differences over the use of so-called antimicrobial washes in the United States to sanitize beef products—a procedure not permitted in the EU.
Timothy Reif, the general counsel at USTR, said at a conference on April 27 that “we are very hopeful”
of settling the dispute. “Our goal is to settle these matters and [to] open trade rather than to get into a fracas,” he said.
By Gary G. Yerkey
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