US-EU accord ends beef import rift

Financial Times | May 6 2009

US-EU accord ends beef import rift

By Joshua Chaffin in Brussels

The European Union and the US on Thursday settled a long-running dispute over hormone-treated beef in a deal both sides said demonstrated their determination to reduce bilateral friction amid plunging world trade.

Under terms of the four-year deal the EU will be permitted to maintain its ban on hormone-fed beef - that the US and Canada have opposed - as well as the EU’s standards for the cleaning and handling of imported meat.

In return the EU has agreed to roughly quintuple the amount of hormone-free beef that can be imported from the US and Canada without facing duties. The two parties will continue talks to determine if the deal can be made permanent.

The provisional agreement came ahead of a Saturday deadline, after which the US had threatened to impose potentially crippling tariffs on a rotating selection of EU goods, from French cheese to Italian mineral water.

The spirit of co-operation is in contrast to the early days of the new administration, when a Buy American clause in initial drafts of President Barack Obama’s economic stimulus bill sparked fears of protectionism across Europe and Asia.

Baroness Ashton, the European trade commissioner, gave credit to Ron Kirk, US trade representative, and said it was important for both parties to remove any irritants in their trade relationship in order to help businesses stricken by the downturn.

“The economic crisis was a moment to reflect and see if we could sort some of these things out,” she said.

Nonetheless, Lady Ashton acknowledged that other long-running EU-US disputes - such as over genetically modified organisms or government subsidies for aircraft makers Boeing and Airbus - would not necessarily yield quick results.

A joint statement labelled the agreement “pragmatic” and said it showed a commitment to resolving disputes.

The EU first banned hormone-treated beef in the 1980s, arguing that there were links to cancer - a claim that the World Trade Organisation says is not supported by science.

In 1999 the US began to impose retaliatory tariffs worth $116.8m before announcing the rotating sanctions in January.

The EU’s current duty-free quota for so-called “Hilton Beef”, which is named for the hotel chain and primarily produced by the US and Canada, stands at 11,500 tonnes.

It will rise to 31,500 tonnes during the next three years, and then 56,500 tonnes in the fourth year of the deal. The US will rescind some $37.8m (€28m, £25m) in sanctions against EU products in the fourth year.

The agreement will test whether US producers are willing to adopt more stringent EU cleaning guidelines in order to take advantage of the enlarged quota.

At present, annual US beef exports to the EU amount to only about 5,000 tonnes because many meatpackers use chlorine and other chemicals that Brussels prohibits.

source: FT