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February 24, 1999
Overview
For the past 15 years, the United States and the European Union (EU) have been disputing the safety of growth promotants used in cattle. The disagreement over the use of hormones in cattle peaked in 1989 when the EU banned the import of beef from cattle treated with growth promotants, effectively cutting off U.S. exports of beef.
The United States has always maintained that U.S. beef from cattle treated with certain approved growth hormones poses no public health risk, and therefore, the EU’s hormone ban is unjustified. Numerous scientific studies and evaluations, including those conducted by the EU and CODEX, the international food safety standard setting body, have supported the U.S. position.This dispute took a turn in 1996 when the United States presented its case against the EU’s hormone ban to the World Trade Organization (WTO). After a
thorough review of the scientific evidence, the WTO Panel upheld the U.S. position and ruled that there was no scientific basis for the EU’s hormone ban. The EU’s hormone ban is inconsistent with WTO principles. After an appellate decision upheld this ruling, the EU was given until May 13, 1999 to bring its measure into compliance.The debate now is over the EU’s compliance with the WTO rulings and honoring its obligations under international agreements.
During the Uruguay Round negotiations, the EU committed to uphold the principles of the WTO. In maintaining its unscientific ban, the EU does nothing to further the objective of protecting public health, but instead undermines the WTO Sanitary and Phytosanitary Agreement (SPS) and invites other countries to renege on their international obligations.History of the U.S. - EU Hormone Dispute Settlement Process
The WTO Dispute Settlement Understanding (DSU) was developed to provide security and predictability to the multilateral trading system and to preserve the rights and obligations of WTO Members. The EU’s recalcitrance in implementing the adopted WTO rulings in this case will seriously threaten the viability of the DSU.
The DSU outlines a progression of steps for resolving disputes between countries beginning with consultations between the disputing parties. If, through consultations, a solution is not reached, the complaining member may request a "panel" to review the dispute. The panel is composed of well-qualified individuals who are selected with a view to ensuring independence and diversity of background and experience. The disputing members must agree on the panel members. Once the panel is chosen, the disputing members present their case. The parties can appeal the panel’s findings to the WTO Appellate Body for a final decision.
WTO rules call for the member whose measure has been found to be inconsistent to bring the measure into compliance "within a reasonable period of time". If the disputing members can not agree on the reasonable period of time, they can proceed to arbitration. The arbitrator will then make a binding determination of the "reasonable period of time".
The objective of dispute settlement is the withdrawal of measures found to be inconsistent with the provisions of the WTO. The DSU is clear on the issue of compensation. Compensation must be mutually agreed upon by both parties and is only temporary pending the withdrawal of the offending measure. Finally, the DSU outlines the procedures by which an injured member may suspend concessions if an acceptable solution is not found.
The United States and the European Union are now approaching the end of this lengthy dispute settlement process. The panel, the appellate body, and the arbitrator have all stated in their findings that the EU’s hormone ban is inconsistent with WTO principles – it is not based on science -- and must be withdrawn by May 13, 1999.
WTO Dispute Settlement Panel
Following unproductive WTO consultations in March 1996 (in which the United States was joined by Canada, Australia, and New Zealand), the United States requested a WTO dispute, settlement panel. Each side presented its case, incorporating both verbal and written testimonies from expert scientists. The panel thoroughly reviewed the case, including information from independent scientific experts convened by the Panel. On August 18, 1997, the panel found that the EU’s ban on the use of hormones to promote the growth of cattle is inconsistent with the EU’s obligations under the Sanitary and Phytosanitary (SPS) Agreement. In particular, the panel’s report affirms that the EU’s ban is not supported by scientific evidence. The panel found that the ban was not based on a risk assessment or on the relevant international standards. This was the first dispute involving the new SPS Agreement, and the panel’s ruling is a clear endorsement of the principles espoused in the new Agreement - the use of sound science as the basis for non-tariff import restrictions.
Results of the Appellate Body
In September 1997, the EU appealed the Panel’s findings. In its report, the Appellate Body (AB) firmly upheld the Panel’s finding that the EU’s ban is inconsistent with the SPS Agreement
and must be brought into conformity with the WTO principles. The AB clearly affirmed the Panel’s findings that the EU ban was imposed and maintained without credible evidence of any health risks posed by eating beef from cattle treated with hormones, and despite scientific evidence showing such meat to be safe.Arbitration Report on Implementation of WTO Rulings
On March 13, 1998, the EU announced only that it would implement the Appellate Body finding in "as short a time as possible."
This was unacceptable to the United States. Because the parties were not able to agree on a "reasonable period of time" for implementation, the EU requested binding arbitration. The arbitrator decided that the EU only needed 15 months. The arbitrator’s ruling was clear in that the "reasonable period of time" is provided to bring the measure into compliance and not to conduct studies to demonstrate the consistency of a measure already judged to be inconsistent with WTO principles. The "reasonable period of time" for the EU to come into compliance with the WTO rulings ends on May 13, 1999.Compensation and Suspension of Concessions
According to Article 22.2 of the DSU, if the EU fails to comply within the reasonable period of time and no mutually acceptable temporary compensation has been agreed to, the United States has the right to request authorization to suspend trade concessions.
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