Kate Hotze/ Anna Mc Fadden/ Moyosore Idowu

1. EU-U.S. Hormone Con’t Suspension (AB 2008, WT/DS 26, 48)(aka: “The Mother of All Transatlantic Food Safety Conflicts”) Kate Hotze/ Anna Mc Fadden/ Moyosore Idowu

2. Source: Dispute Settlement: http://www.wto.org/english/tratop_e/dispu_e/cases_e/ds26_e.htm

3. For Discussion • Background/ History/ Context • Main WTO Issues • Contested Issues • Specific WTO agreement and provisions • Consistency of contested national act with WTO obligations • Positions • Where Dispute Stands Currently • Proposals for Resolving • Implications

4. Background: Setting the Stage

5. History “ European consumers' concern over the use of hormones for growth promotion purposes in livestock grew steadily throughout the 1970s as the result of the illegal use of dethylstilboestrol, commonly known as DES in veal production in France and incidents, particularly in Italy, where adolescents had been reported to be suffering from hormonal irregularities and veal had come under suspicion as a possible cause. ” Source: http://www.sice.oas.org/DISPUTE/wto/horm-can.asp

6. Case Facts: The Basics • Since 1988, EC has had ban on hormone-treated beef • Originally banned 6 hormones for growth promotional purposes • EC is prohibiting the importation of meat from cattle that had been administered certain growth hormones since 1996 • This is one of the longest and oldest WTO cases Source: http://www.ustr.gov/assets/Trade_Agreements/Monitoring_Enforcement/Dispute_Settlement/asset_upload_file685_5697.pdf?ht=

7. Hormone Facts: The Basics • Of the six hormones involved in this dispute, three are naturally occurring hormones produced by humans and animals • The other three hormones involved in this dispute are artificially produced hormones: These hormones mimic the biological activity of the natural hormones • Scientists reviewed the hormones and established that the hormones are safe for human consumption • The human body is continually making the natural hormones that are subject to the ban, and these hormones also occur naturally in foods such as eggs and butter (often in larger concentrations than are in meat from the cattle treated with them) • The hormone levels the EC is concerned about are 50 times less than the acceptable daily intake and they represent a tiny fraction of what occurs naturally in an egg or one glass of milk* Sources: http://www.ustr.gov/assets/Document_Library/Press_Releases/2008/October/asset_upload_file626_15173.pdf?ht=; http://www.sice.oas.org/DISPUTE/wto/horm-can.asp

8. History of The Dispute • The WTO dispute began in January 1996 • 1997 – Beef Hormone Panel Report circulated • In 1999 the United States had successfully challenged the ban in front of a WTO panel and the Appellate Body • The United States obtained authorization from the WTO to suspend concessions and impose additional tariffs on EU products drawn from a list submitted to the WTO • The United States exercised this authorization by raising tariffs on certain European products Source: http://www.ustr.gov/Document_Library/Press_Releases/2009/January/USTR_Announces_Revised_Trade_Action_in_Beef_Hormones_Dispute.html

9. Positions

10. EU Position: Complainant • Scientific data inadequate; therefore more studies needed • Controls necessary to maintain safe administration of hormones not in place in US • Ban justified by EU’s historical use of “precautionary principle” • EU approaches risk assessment differently than US • EU rejects idea that ban is based on protectionism rather than health concerns – EU has historically maintained a higher level of protection for its consumers Source: http://iis-db.stanford.edu/pubs/11379/HORMrev.pdf

11. US Position: Respondent • US claims EU has no scientific basis, prior to the ban and pursuant to the SPS, for proving that the hormones posed any real danger – protectionist ban aimed at helping EU cattle industry – therefore a disguised restriction on trade • Inconsistencies found • Ban in the EU also undermined by illegal use of growth hormones eventually leading to meat consumption • Consumer concerns should not play a significant role in trade restrictions Source: http://iis-db.stanford.edu/pubs/11379/HORMrev.pdf

12. Main WTO Issues

13. “Precautionary Principle” • Basically says protective action should be taken “before there is complete scientific proof of a risk” • In this case, the EU has attempted to expand the reach of the precautionary principle beyond the multinational environmental realm and into the WTO global trading system • It remains uncertain whether it can succeed in utilizing this principle to alter the WTO regime • Its ability to incorporate that norm within the SPS and TBT Agreements remains uncertain Source: http://www.wto.org/english/tratop_e/sps_e/sps_agreement_cbt_e/c8s2p1_e.htm

14. The Issue of Protectionism • With the internationalization of the food industry, trade conflicts over food regulatory issues are becoming more common. Many of these regulations are set in place to protect human, plant and animal health from disease or other affliction that might occur as a result of trade. It has been suggested that many of these measures are in place simply to protect the livelihood of local producers who would not otherwise be able to compete. As a non-tariff barrier to trade, there has been an increasing international focus on the elimination of such back-door protective measures Source: http://iis-db.stanford.edu/pubs/11379/HORMrev.pdf

15. Other Issues • Tariffs of US$116.8 million, CDN$11.3 million were imposed on the European Union imports • Is fraction of trade in terms of $, but is hugely important in terms of relations • The Appellate Body had initially told the EC when the case was first brought to the DSB there was no risk assessment done to any of the beef products to show that they where harmful to humans • Making the case unsuccessful for them Source: Dispute Settlement: http://www.wto.org/english/tratop_e/dispu_e/cases_e/ds26_e.htm

16. Timeline • 1996 – US and Canada challenge EC ban of imports with WTO • 5/13/1999 – EC does not meet deadline to comply with recommendations/ rulings of DSB; US requests authorization to suspend concessions for certain EC products • 7/12/1999 – EC requests arbitration concerning amount of suspension; is $116.8MM • 7/26/1999 – DSB authorizes US to suspend concessions; US proceeded to impose 100% “ad valorem” duties on list of products worth same amount • 2003 – EU amends its ban and lists “provisional” bans on 5 hormones, showing its compliance with SPS law – EU became net IMPORTER of beef (changed from net EXPORTER) • 11/2004 – EC brings disputes to board (referred to a common panel) saying that after ban was amended, US should have initiated a compliance proceeding under Article 21.5 and terminated sanctions (Articles 21.5 and 23 of DSU) • 2005 – US petitions WTO because EU did not implement recommendations and rulings • 3/31/2008 – WTO circulates the panel reports on these disputes – says ban is still inconsistent • 10/16/2008 – WTO AB (Appellate Body) heard appeals and delivered final report – reaffirms prior stance from March 2008 • 10/31/2008 – USTR considers increasing its existing sanctions or shifting the targets to different products (in order to increase pressure for a market access settlement), case not closed • 12/22/2008 – EC requested consultations with US and Canada under Article 21.5 • 1/16/2009 – US requested to join consultations requested by Canada • 1/19/2009 – Canada requested to join consultations requested by US

17. Where It Stands

18. AB Findings - 2008 1. EC ban fails to satisfy the requirements of SPS Agreement -failed to show that it had removed the inconsistent measure because its amended ban still fails to satisfy the requirement - Ban still excludes same products as it did over ten years ago 2. A country has broad discretion in electing what level of protection it wishes to implement, in doing so it must fulfill requirements of SPS Agreement 3. The United States was not required to initiate an Article 21.5 proceeding, but that the United States should have had recourse to some form of dispute settlement after the notification of the EU’s amended ban 4. Because the Panel made certain legal errors in its analysis of the scientific basis (in 2008) for the EC’s amended ban, the question has not been fully resolved Source: http://www.ustr.gov/assets/Document_Library/Press_Releases/2008/March/asset_upload_file376_14683.pdf?ht=

19. Case NOT Closed • The hormone ban and the sanctions both remain in place, Canadian and US beef still have no access to the enlarged EC market, and all must engage in yet another round of WTO litigation (as of 12/18/08) • EC vows to “engage in next steps to solve this dispute”

20. Implementation? • There is no implementation as it stands currently – there is no resolution – EU says they are complying, US is arguing that it is not • All three parties are in consultation now

21. Implications for WTO • US was vindicated by WTO AB on 10/16/2008 for continuing to impose duties on certain EU products - WTO Members that are subject to additional duties for failing to bring themselves into compliance with the WTO’s rulings and recommendations must do more than simply claim compliance in order to obtain relief from such duties (according to Ambassador Schwab) Source: http://www.ustr.gov/assets/Document_Library/Press_Releases/2008/October/asset_upload_file626_15173.pdf?ht=

22. WTO Implications, Cont’d 2. Because amended ban was repackaged as having “provisional” bans, EC can now claim compliance – What to do when the WTO Dispute Settlement Body (DSB) has authorized sanctions against the trade of a Member found to have failed to implement DSB recommendations, the Member then adopts an implementing measure, and the original complainant does not believe that the measure brings the implementing Member into compliance? Source: American Society of International Law, http://www.asil.org/insights081218.cfm

23. WTO Implications, Cont’d 3. US is arguing for greater transparency into DSU, and arguing to make it more accessible - If this occurs, would provide even more legitimacy and acceptance (by international civil society) to one of the greatest successes of global trading system

24. Global Trade Implications • As US continues to apply tariffs to EU-imported items, penalties for EU exporters could hurt business • Example: US has tripled tariffs on French-produced Roquefort cheese • Exporters face uncertainty as the list of targeted goods changes every 6 months (new tariffs scheduled to go into effect 3/23) • As more countries join US and CA, EU is continuously hurt Source: http://www.eubusiness.com/news-eu/1232046136.38/

25. National Implications • If US and EU continue debating this topic, US could continue to impose sanctions on imports • In context of current global economy, this could turn around to bite the US for our exports, and this could affect the value of our currency • Long-term, this could damage our relationship in terms of foreign affairs as the EU is a historic ally of US • (Same arguments can be made for EU)

26. Proposals for Resolution • WTO must determine if implications discussed previously will still hold in context of global trade • Because of long-term, deeply rooted fundamental differences in the way citizens in US and EU look at science, this issue may never be resolved • Need a shift in beliefs • With negotiation and diplomacy, resolution may be possible – new administration has opportunity to resolve • Until these issues are resolved, the EU and US will continue to argue the merits of the case, regardless of the case itself anymore

27. Quotes • 3/31/08 – Susan C. Schwab: “EU consumers should have access to U.S. beef – it is of high quality, safe and competitive. Considering the EU’s position as the world’s second largest beef importer, resolution of this dispute will benefit not only U.S. cattle producers and beef exporters, but also EU importers and consumers.” • “The findings confirm the principle that measures imposed for health reasons must be based on science,” [Schwab] said. “It is high time for the EU to come into compliance with its obligations on this matter.” Source: http://www.ustr.gov/assets/Document_Library/Press_Releases/2008/March/asset_upload_file376_14683.pdf?ht=

28. Source: www.ipezone.blogspot.com