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EU and US Sign Agreement in Beef Hormone Dispute
May 14, 2009


On May 13, 2009, United States Trade Representative Don Kirk (USTR) announced the signing of a Memorandum of Understanding (MOU) between the European Commission and the US that may eventually lead to the resolution of the long standing EU – Beef Hormones Dispute. The MOU provides three phases which grant US producers market access to the EU through a quota and in return the US will refrain from modifying certain retaliatory measures.

In the first phase, which will last three years, the EU will open an annual tariff rate quota (TRQ) of 20,000 tons, at zero duty, for beef produced without growth-promoting hormones.  The United States may maintain the additional import duties currently applied to certain EU products, and will not impose the new duties that were announced in January 2009. The duty free quota will be in addition to the current annual EU 11,500 TRQ subject to a 20% duty rate that the US shares with Canada.

After the third year, the agreement provides for the opportunity to enter into a second phase, lasting one year, in which the EU would increase the TRQ to 45,000 tons. If the EU and US agree to proceed to Phase 2, the US would suspend the application of all additional import duties imposed on EU products in connection with the dispute. For the US, the determination to proceed to Phase 2 will be based on the conditions allowing US producers to make full use of the additional quota.

Should the EU and US proceed with the second phase, at the end of year four, the agreement provides the opportunity to enter into a third phase. In this phase, the EU would maintain the 45,000 ton TRQ and the US would continue not to apply increased retaliatory import duties. A decision on whether to move to Phase 3 would be made following negotiations on several issues, including duration, withdrawal, and the status of World Trade Organization (WTO) litigation on the EU’s compliance with the WTO ruling in the Beef Hormones dispute.  

For at least the first 18 months of the agreement, neither party will move forward with WTO litigation on the EU’s compliance with the WTO’s ruling in the Beef Hormones dispute. After 18 months, either or both parties would be free to request a WTO panel. If either party makes this request, compliance litigation would commence and move forward until the panel is ready to issue its interim report (i.e., the report that reveals to the parties for the first time the panel’s findings and reasoning). At that point, the parties would instruct the panel not to issue the interim report to the parties and request that the panel suspend its work until at least the end of the fourth year. The status of any such interim report, including whether it would ever be disclosed, and the status of the panel would be the subject of the consultations that occur at the end of Phase 2.

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