U.S., EU reach accord on beef | TSLN.com

U.S., EU reach accord on beef

Chris Clayton

Photo by Debbie HarwoodThe U.S. and the EU have reached an accord on a long-running beef dispute.

OMAHA (DTN) – The Obama administration has accepted a deal from the European Union that allows the U.S. to export more non-hormone-treated beef to the EU in exchange for not imposing new sanctions in legal trade battle over beef.

In a joint news release issued Wednesday, the two sides announced they had “reached an understanding that provides a pragmatic way forward in the long-running beef dispute.”

An agreement prevents a 100 percent levy on 40 EU products from going into effect. The sanctions had been imposed by the Bush administration in retaliation over the beef dispute.

The EU and U.S. have been in a legal fight over the safety of hormone-treated beef since the late 1980s with each appeal or ruling in the World Trade Organization simply leading to more consultations and arguments over the safety. The decisions have prevented the U.S. from exporting more beef to Europe.

The agreement announced Wednesday does not change the dynamics on hormone-treated beef. The EU will continue to ban such products.

Under the new agreement, the U.S. would not impose new sanctions on EU products. In return, the EU will provide additional duty-free imports of non-hormone treated beef from U.S. beef exporters. Packers would be allowed to ship an additional 20,000 tons for each of three years, increasing to 45,000 tons in the fourth year of the agreement. By the end of the four-year period, the U.S. and EU would have to agree on conditions for further beef trade.

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The overriding question now is, despite the tariff-rate quota increase, whether U.S. packers and beef producers will be able to increase production to meet the potential of the duty-free shipments. Beef producers have been reluctant to move away from hormone treatments due to the higher feed costs associated with non-hormone-treated beef because cattle take longer to feed out before going to slaughter.

Currently, the U.S. is allowed to export 11,500 tons of non-hormone-treated beef to Europe. U.S. beef exports to Europe have steadily increased in recent years. In the first half of 2008, U.S. beef exports to Europe were triple the volume over the same period in 2007, according to the U.S. Meat Export Federation. The Federation projects Europe will have to steadily increase its volume of imports in the coming years to meet beef demand.