To Implement Provisional Agreement
May 8th, 2009
The Office of the United States Trade Representative announced today that, in light of the May 6 provisional agreement with the European Union (EU), the United States is delaying the imposition of additional duties on a modified list of EU products and member States in connection with World Trade Organization (WTO) dispute settlement rulings in the EU – Beef Hormones dispute. The additional duties were to go into effect on May 9, 2009.
Today’s delay will prevent the additional duties from taking effect until August 15, 2009. Once the provisional agreement with the EU is signed, USTR intends to take further steps to prevent the application of any additional duties for the duration of the agreement. The agreement provides for an initial period of three years, with the opportunity to extend for a fourth year and then to negotiate a more lasting extension. The duties that have been in effect since March 23, 2009, on a reduced list of EU products (products for which additional duties were initially imposed in 1999) are unaffected by today’s action. These duties may remain in effect for the first three years of the agreement, after which they may be suspended. Likewise, the products that were removed from the retaliation list on March 23 are also unaffected by today’s action.
The details of the delay in the trade action are set out in a Federal Register notice that shortly will be posted on USTR’s website and sent to the Office of the Federal Register for publication.
BACKGROUND ON THE DISPUTE AND THE PROVISIONAL AGREEMENT
In 1988, the EU banned U.S. beef on the grounds that U.S. beef producers made use of certain growth-promoting hormones that are unapproved in the EU. The WTO dispute began in January 1996, shortly after the entry into force of the WTO Agreement. In 1998, the WTO found 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 ban into compliance with its WTO obligations, the WTO authorized the United States to take trade measures with an annual trade value of $116.8 million. In July 1999, the United States imposed additional duties on a list of EU products in accordance with the WTO authorization. That list remained unchanged until the modifications were announced on January 15, 2009.
The EU amended its ban in 2003, claiming that the ban now complied with WTO requirements, and challenged the continued application of additional tariffs by the United States. In a report released in October 2008, the WTO Appellate Body rejected the EU’s claim and confirmed that the United States has a continuing right to impose trade measures on EU products.
On November 6, 2008, USTR published a Federal Register notice seeking public comments on possible modifications to the list of products subject to additional duties. Approximately 600 comments were received by the requested due date of December 8, 2008. An interagency committee of trade experts and economists reviewed the public comments and provided recommendations to the USTR with respect to modifications that would result in a more effective action, while taking account of effects on the U.S. economy, including consumers. The USTR accepted the recommendation and announced the modified trade action on January 15, 2009.
The changes announced on January 15, 2009, made additions to and deletions from the list of the products subject to additional duties, changed the EU member States whose products are subject to the duties, and, for one product, increased the level of the additional duties. Under a decision announced on April 22, the effective date for most of the changes announced on January 15 was delayed until May 9 to allow for additional time to negotiate the provisional agreement. In light of commercial arrangements that had been made in the weeks following January 15, however, USTR permitted products identified for removal from the list to be taken off the list on March 23.
A provisional agreement to resolve this long-standing trade dispute was announced on May 6, 2009. Under the provisional agreement, which is expected to be finalized soon, the EU will provide additional duty-free access to its market for high-quality beef produced from cattle that have not been treated with growth-promoting hormones – 20,000 tons in the first three years and increasing to 45,000 tons beginning in the fourth year. Under the agreement, the United States may maintain existing sanctions and will not impose new sanctions on EU products during the initial three-year period, and may eliminate all sanctions during the fourth year. The two sides will refrain from further litigation at the World Trade Organization regarding the EU’s ban on beef treated with certain growth-promoting hormones for at least 18 months. Before the end of the four-year period, the two sides will seek to conclude a longer-term agreement.