U.S. eyes higher tariffs on EU products

Cattle Market & Farm Reports, Editorials
Dec 2, 2008
U.S. eyes higher tariffs on EU products

As a result of the European Union’s (EU) failure to adhere to multiple World Trade Organization (WTO) rulings on the matter of importing beef from the U.S., the U.S. is now contemplating higher tariff rates on EU products as a means of retaliation.

The dispute is over the EU ban on beef from animals which have been administered certain growth-promoting hormones, and dates back to 1996. The U.S. successfully challenged the ban in 1999 in front of a WTO panel and the Appellate Body and received authorization from WTO at that time to suspend concessions and impose additional tariffs on EU products drawn from a list submitted to WTO. In 2003, the EU presented an amended ban which it claimed complied with WTO requirements and began the process of challenging the continued application of additional tariffs by the U.S. In a report issued by the WTO Appellate Body on Oct. 16, 2008, the EU’s claim was rejected and authority to impose additional tariffs was issued to the U.S. Now, United States Trade Representative (USTR) Susan Schwab and her office is seeking comment from importers, businesses and the public on how additional tariffs on selected incoming EU products might affect U.S. interests. At the conclusion of the comment period, USTR will decide which tariffs will see rate hikes.

“The WTO found over 10 years ago that the EU’s ban on U.S. beef was not supported by science and was thus inconsistent with WTO rules. When the EU failed to bring its measures into compliance with its WTO obligations, the United States imposed tariffs on certain imports from the EU, as authorized by the WTO. Since that time, we have been trying to resolve this dispute with the EU without changing the composition of tariffs,” explained Schwab. “It is now time to revisit those tariffs to see if modifications would be appropriate.”

Schwab recently visited with EU representatives in Brussels to discuss multilateral and bilateral trade ties ahead of the G20 meeting in Washington on Nov. 15. Beef hormones and poultry were at the top of the list in the discussion, according to EU Trade Commissioner Catherine Ashton.

“With leadership and determination, a Doha deal is within our grasp as the details of a final agreement could be agreed within weeks. The EU and the U.S. will continue to provide leadership to maintain the openness that has brought growth and prosperity in past decades. It’s very important that the G20 meeting in Washington on 15 November send a clear signal to negotiators to achieve this objective,” noted Ashton.

“At this critical time, it is all the more important that we not only avoid retrenchment in market opening, but move ahead with an ambitious and balanced Doha Round that creates new trade flows and generates economic opportunities worldwide,” said Schwab.

Jim Herlihy of the U.S. Meat Export Federation explained that it’s difficult to tell whether any additional tariffs would soften EU opposition to beef raised with hormones.

“The fundamental question is whether it will affect EU attitudes toward U.S. beef and hormone-free beef,” he said. “I don’t know that anyone expects a tariff hike to affect any kind of immediate movement given how long this has been an issue. It’s difficult to speculate what kind of retaliation might create meaningful change at this point in time.” Though the dispute has been drawn out for over a decade, Herlihy insists that it’s too valuable an issue to abandon.

“I can’t speak for USTR and what they’ll do going forward, but from the beef industry side, it’s a market that would be very nice to have open,” he explained. “In the EU, there’s no growth in domestic production and they do import a lot of protein, so there’s probably broad-based support for some kind of retaliatory measure. Everybody realizes that the EU’s ban is not science-based and that the U.S. should probably become very vocal about getting movement on the issue.” — Tait Berlier, WLJ Editor