EU vs US. Beef Hormone Dispute.

1
EU vs US.Beef Hormone Dispute.

• Presented by
• Danielle Moretti
• Shirley E. McDonald
• Loralie R. Noutong
• Meg E. McConnell

2
Background

• On January 1, 1989, The European Union banned
  imports of red meat from animals treated with 6
  growth promotants
• 3 Natural Estradiol (Oestradiol 17ß in EU),
  Progesterone, Testosterone
• 3 Synthetic Trenbolone Acetate, Zeranol,
  Melengestrol Acetate (MGA)
• This cut off almost all U.S. Beef exports to the
  EU.

3
Overview of Beef Hormones

• 3 Natural Hormones- Estradiol, Progesterone,
  Testosterone
• 3 Synthetic Hormones
• Trenbolone Acetate- Mimics Testosterone
• Zeranol- Mimics Estradiol
• Melengestrol Acetate (MGA)- Mimics Progesterone
• FDA and USDA say hormones are safe when properly
  used.
• Usually implanted by pellet in the animals ear
  using a time released cocktail dose.

4
U.S. Beef Exports and Imports 1999 Percentages
5
The U.S. has a Long History as a Beef Importer
is a More Recent Entrant into Beef Export
Marketing
6
Beef Exports Have Also Reduced the Beef Trade
Deficit to Near 40-Year Lows
7
Beef Import Markets 1991 to 2001
8
US Beef Exports Impact Other Agricultural Issues

• Impact on Corn Prices
• 2003 beef exports totaled 2.5 Billion lbs.
  carcass weight equivalent to nearly 3.2 Million
  head of cattle.
• 175 Million bushels of corn consumed by cattle
  (beef) exports or 3.4 Million bushels per week.
• Value of corn exported as beef 400 to 500
  Million or 7.5 to 9.5 Million per week.
• Additional demand for corn due to beef exports
  increases corn prices 0.10 to 0.15 per Bushel.
• Beef Hormone Issue may set WTO precedents
  affecting US produced GMO foods.

9
Basis for EU Action

• In 1981, Directive 81/602/EEC, prohibited the use
  of substances having a hormonal action for growth
  promotion in farm animals. Examples are
  Estradiol (Oestradiol 17ß), Testosterone,
  Progesterone, Zeranol, Trenbolone Acetate and
  Melengestrol Acetate (MGA).
• The prohibition applies to Member States and
  imports from third countries alike. The legal
  instrument in force is Directive 96/22/EC as
  amended by Directive 2003/74/EC.
• In 1999, The Scientific Committee on Veterinary
  Measures relating to Public Health (SCVPH)
  re-evaluated the risks to human health from
  hormones but concluded that that no acceptable
  daily intake could be established.
• For Estradiol (Oestradiol 17ß) it concluded that
  there is a substantial body of evidence
  suggesting that it has to be considered as a
  complete carcinogen (exerts both tumor initiating
  and tumor promoting effects) and that the data
  available would not allow a quantitative estimate
  of the risk. Having examined additional
  scientific data the SCVPH confirmed its opinion
  in 2000 and 2002.

10
US Requests Consultations

• Jan 26, 1996, the US requests consultations with
  the EU Communities.
• Claiming that actions are inconsistent with GATT
  Articles III or X, SPS Agreement Articles 2, 3
  and 5, TBT Agreement Article 2 and the Agreement
  on Agriculture Article 4.
• Canada, Australia, New Zealand join the US beef
  hormone action against the EU in 1996.

11
US Position

• Americans claim that Europeans are trying to
  protect their EU beef producers.
• US retaliates by imposing 100 duties on a
  variety of European Imports.
• The six hormones used in beef production have
  posed no adverse health effects.
• The US has an extensive regulatory control system
  to ensure proper use of hormones.
• Hormone implants in cattle are safe.
• Administration of hormone results in higher
  quality beef usually at lower costs.

12
EU Position

• EU claims that hormone treated beef pose health
  risks to their consumers.
• Since 1985, the European Community (EC) has
  banned the use of natural hormones in animals.
  In 1988 EC bans all US meat.
• In October 2003, the EU passes legislation
  permanently banning the use of estradiol for
  growth promoting purposes in animals.
• The EU argues it should be allowed to use the
  Precautionary Principle.

13
Panel Report

• In 1996 a WTO Panel was formed.
• On August 18, 1997 the panel found that the EUs
  ban is inconsistent under the SPS Agreement.
• In September 1997 the EU appealed the Panels
  findings.

14
Appellate Body Report

• The Appellate Body upheld the ban as being
  inconsistent with the SPS agreement.
• In January 1998, The Appellate Body ruled that
  the EU could maintain higher food standards than
  those of Codex provided that there was
  scientific evidence.
• The Appellate body affirmed that the
  Precautionary principle should be applied in the
  assessment of risk.

15
Implementation Decision

• 1996 The EU maintains its ban on hormone meat.
  The US requests consultations under Article XXII
  of the World Trade Organization (WTO) regarding
  the EU's hormone ban.
• 1997, June 30th Panel report finds that the EUs
  ban on the use of hormones to promote the growth
  of cattle is inconsistent with the EUs
  obligations under the SPS Agreement and that the
  EUs ban is not based on science, i.e., on a risk
  assessment or on the relevant international
  standards.

16
Conforming Results

• May 1999 The deadline for EU compliance
  expires. The United States seeks WTO
  authorization to impose retaliatory tariffs.
• July 26, 1999 The DSB authorizes U.S.
  retaliatory tariffs amounting to 116.8 million a
  year, the level of damage to U.S. producers
  calculated by arbitrators.

17
The SPS Agreement

• Sanitary and Phytosanitary Agreement authorizes
  the use of SPS measures to restrict trade to
  protect against subsequent risks to human or
  animal and plant.
• Science and Technology as tools for risk
  assessment in trade.

18
The SPS Agreement (2)

• Ban on beef violates articles 2, 3 and 5.
• Article 2 requires Members to ensure that any SPS
  measure be based on scientific principles and not
  be maintained without sufficient scientific
  evidence. But it is unclear about what
  constitutes a sound scientific evidence.
• Article 3 identifies three international
  organizations to promote this objective the
  Codex Alimentarius Commission (Codex, for food
  safety measures) the International Office of
  Epizootics (OIE, also known as the World Animal
  Health Organization). EUs actions were
  independent to those three institutions.
• Article 5 deals with risk assessment and the
  determination of the appropriate level of SPS
  protection

19
Science and Technology in Trade Regulation

• For the EU Maintain beef prices high and
  protect small producers.
• For the US Fear that the ban could spread to
  Japan and make them lose a market which is more
  profitable than EU.
• Possible non-tariff trade barrier in the future
  in non EU countries.
• Possible loss of comparative advantage due to
  productivity enhancing technologies

20
Compliance Issues

• Interpretation of compliance
• Publication of the ECs Directive on hormones
• Does this bring the EC into compliance?

21
Other Issues

• Perception of risk
• Precautionary Principle
• While many governments apply precautionary
  approaches in a variety of contexts (e.g. food
  safety, animal and plant health, the environment,
  etc.), the EU's precautionary principle provides
  that politicians can over-rule science-based
  decisions of regulators.
• - US Embassy
• Where preliminary objective scientific evaluation
  indicates that there are reasonable grounds for
  concern that the potentially dangerous effects on
  the environment, human, animal or plant health
  may be inconsistent with the high level of
  protection chosen for the Community.
  - EU Commission

22
Harmonization

• SPS Agreement
• Ensure balance between food safety and free trade
• Precautionary measures on a provisional basis
• International Health Organizations
• Food Safety and Standards

23
Proposal

• Bilateral talks between US and EC outside the WTO
• Send to WTO General Counsel or to trade round
  negotiations
• Alternative system for dealing with issues having
  deep political ramifications
• International scientific consensus

24
Update

• In February 2005 The EU claims that the US and
  Canada have not lifted the retaliatory tariffs of
  100 on EU products.
• EU bases it claim upon a 2003 study which found
  that Estradiol was harmful to human health.
• WTO set up two complaints panels to rule on the
  dispute.
• Australia, China, Mexico and Taiwan asked to be
  3rd parties to the dispute.

25
Conclusion

• Has this and other disputes reached an impasse?
• Will lead to a need for reform of WTOs Dispute
  Settlement Understanding?
• How deal with ideological trade disputes?

26
Sources

• Barfield, Claude.  "WTO Dispute Settlement System
  in Need of Change" American Enterprise Institute
  for Public Policy Research.  May 1, 2002. 
• Bernauer, Thomas and Caduff, Ladina.  "The
  European Union's Food Safety Trilemma" Swiss
  Federal Institute of Technology (ETH) Zurich. 
  November 2003. 
• CRS Report for Congreess, RS 20142 The European
  Unions Ban on Hormone-Treated Meat, Updated
  December 19, 2000.
• "DSU Update GMOs, Beef Hormones", Bridges Weekly
  Trade News Digest, Volume 8, Number 38, 10
  November 2004.  www.ictsd.org/weekly/04-11-10/stor
  y3.htm
• Europa Food Safety Chemical Safety of Food
  http//europa.eu.int/comm/food/food/chemicalsafety
  /contaminants/hormones/aspects_en.htm
• "European Union Trade Policy Monitoring European
  Union Bans Estradiol USDA Foreign Agricultural
  Service.  GAIN Report, 10/16/2003.
• "European Union Trade Policy Monitoring Historic
  Overview and Chronology of EU's Hormone Ban" USDA
  Foreign Agricultural Service.  GAIN Report,
  11/7/2003.

27
Sources

• Food Safety Network www.foodsafetynetwork.ca
• Foreign Agricultural Service EU- US Hormone
  Dispute www.fas.usda.gov/itp/policy/hormone.html
• Foreign Agricultural Service U.S. Mission to the
  European Union Last update December 14,
  2004www.useu.be/agri/ban.html
• US Mission to the EU A Primer on Beef Hormones
  www.useu.be/issues/
• "Understanding the WTO Agreement on Sanitary and
  Phytosanitary Measures"WTO  www.wto.org/english/tr
  atop_e/sps_e/spsund_e.htm
• U.S. Department of Agriculture www.usda.gov
• WTO Panel and Appellate Body Report for Case
  WT/DS26 www.wto.org