WASHINGTON, Feb. 22, 2017 - When it comes to the European Union, the U.S. beef industry feels it just can’t win – despite a ruling by the World Trade Organization 19 years ago against EU restrictions on American beef.
After retaliatory measures and then a compromise agreement failed to end European trade restrictions over nearly two decades, industry representatives went to a hearing hosted by the U.S. Trade Representative last week to urge the Trump administration to take new action.
A WTO dispute panel ruled in 1998 that the EU was wrong in banning U.S. beef because the meat came from cattle raised with growth-promoting hormones. That had no effect on European regulators. The U.S. pushed ahead with retaliatory tariffs on a long list of European goods until 2009, when the two sides agreed to a compromise: The U.S. would drop the tariffs in return for the EU accepting an import quota.
For a couple of years, the compromise “memorandum of understanding” worked and the U.S. was selling beef to buyers in France, Germany, Belgium and other EU countries, said Thad Lively, senior vice president for trade access for the U.S. Meat Export Federation.
“When it was announced in 2009 that the U.S. and the EU had signed (an MOU) on beef trade and the EU had agreed to create a new, duty-free beef quota, we supported this initiative,” Lively told a packed hearing room in USTR headquarters. “We knew that the EU’s highly restrictive production standards would continue to exclude most of the beef produced in the United States, but we were hopeful that the agreement would create an opportunity for us to build a limited but growing presence for U.S. beef in the EU market.”
But now the quota has become virtually useless because other countries like Uruguay have been allowed to participate and U.S. beef has been pushed out.
“What we thought we had found with this additional quota is now being crowded out by other competitors,” said Darci Vetter, former agriculture negotiator for the USTR. “And frankly, we don’t think those competitors really meet the definition of what should fall in that quota, and we’d like it to operate better.”
Lively said the U.S. industry’s initial support for the MOU was based on the expectation that the duty-free quota would create new opportunities. “Instead, we have been confronted with the unacceptable fact that U.S. beef is being crowded out of the quota by countries that were not even at the table when the MOU was negotiated.”
U.S. industry representatives want a better deal, but they don’t see negotiations working without retaliations. The WTO ruled years ago that the EU restrictions were costing the U.S. about $117 million a year in lost sales.
“Despite our unhappy experience with the 2009 agreement and the duty-free quota, we remain convinced that there is a viable future for U.S. beef in the EU market,” Lively said, speaking on behalf of USMEF, the National Cattlemen’s Beef Association and North American Meat Institute.
“This is why we supported USTR’s efforts over the past two years to engage the European Commission in discussions about ways to rescue the agreement and the quota. But our frustration has only grown as the months have passed by without this dialogue producing any progress toward a satisfactory outcome. Faced with the continued erosion in our share of the quota, we have been forced to conclude that further action is needed.”
The quota is for 45,000 metric tons of beef imports per year. Competing with other countries like Australia, Uruguay and Argentina, the U.S. is only selling about 18,000 tons of beef a year to the EU – “a drop in the bucket,” Lively said, and far below what the U.S. is capable of exporting.
“We believe the demand is there,” Lively said during a question and answer period at the hearing and before a panel that included representatives from the USTR, and the departments of Agriculture, Commerce and Treasury. The EU consumes about 8 million tons of beef per year.
The Obama administration had threatened to resume retaliatory tariffs, but it’s unclear if the Trump administration will follow through on that threat. Vetter said it would be a wise move. Approval of the tariffs, she said, could spur Europe’s willingness to come to the table.
“This just keeps the process moving forward,” she told Agri-Pulse. “Obviously the (Trump)
administration will have to decide whether and when and on what products we might eventually use that retaliation, but I think it sends a signal that we are serious about having some remedy for the lack of market access … because of the ban.”
The potential for retaliatory tariffs is scary, though, for many companies that import products from the EU.
Imported chocolate bars, chewing gum and cough drops are on the list of products that could face possible 100 percent retaliatory tariffs, according to the National Confectioners Association. That’s why Laura Shumow, NCA’s vice president of scientific and regulatory affairs, testified last week at the USTR hearing.
“To end this dispute, we strongly agree with USTR that the European Union should abide by its WTO commitments, comply with the previously agreed settlement and return to the table to find a long-term solution that benefits U.S. exports,” Shumow said in testimony.