Transcript EC Measures concerning meat and meat products
EC Measures concerning meat and meat products
By Philip Baxter Gabriela Calder ón Xi Chen
1
Overview
• DS26,DS48: EC Measures Concerning Meat and Meat Products (Hormones) • Complaint: United States, Canada • Respondent: European Community (EC) • Issue: “EC prohibition on the placing on the market and the importation of meat and meat products treated with certain hormones.” 2
History and Context
• European consumer concern over hormone usage in livestock developed during the 1970’s • Hormones used in veal suspected as the cause of adolescent hormonal irregularities • Consumer advocate groups call for ban of veal 3
History and Context
• October 31, 1980: EC Commission proposes legislation banning all hormone products • July 31, 1981: Council Directive 81/602/EEC bans the use of five hormones in livestock • Ban substances: oestradiol-17â, progesterone, testosterone, trenbolone, zeranol and melengestrol acetate • Consumer driven restriction 4
Actions Prior to WTO
• Failed negotiations between US and EU • Issue raised with GATT’s Committee on Technical Barriers to Trade – no resolution • 1987 – US invokes dispute settlement under the Tokyo Round Agreement on Technical Barriers to Trade – no resolution • Period of retaliatory tariffs 5
Disputed Issue
• European Communities measures: – Council Directive 81/602/EEC – July 31, 1981 – Council Directive 88/146/EEC – March 7, 1988 – Council Directive 88/299/EEC – March 17, 1988 • These measures prohibited the importation of meat and meat products of cattle in which certain natural and synthetic hormones were used 6
Council Directive 81/602/EEC
• Prohibits the marketing of farm animals, and the meat products prepared by such animals, that have been administered growth hormones • Exceptions made for the use of certain hormones for therapeutic or zootechnical purposes • “EC member States are obliged to apply their regulatory schemes to imports from third countries in a manner not more favourable than that applied to intra EC trade.” 7
CD 88/146 & CD 88/299
• CD 88/146/EEC • “…Article 7 of Directive 88/146/EEC allows trade in those animals and meat from those animals treated for therapeutic or zootechnical purposes, including imports from third countries.” • CD 88/299/EEC • “The second derogation in Directive 88/299/EEC allows imports from third countries of treated animals and meat of such animals under guarantees equivalent to those for domestic animals and meat.” 8
WTO Agreements
• GATT 1994, Article III • Agreement on the Application of Sanitary and Phytosanitary Measures (SPS), Articles 2, 3, and 5 • Agreement to Technical Barriers to Trade, Article 2 • Agreement on Agriculture, Article 4 9
Primary WTO Issues
• SPS 3.1 – “To harmonize sanitary and phytosanitary measures on as wide a basis as possible, Members shall base their sanitary or phytosanitary measures on
international standards, guidelines or recommendations
…” • SPS 3.3 – “Members may introduce or maintain sanitary or phytosanitary measures which result in a higher level of sanitary or phytosanitary protection than would be achieved by measures based on the relevant international standards, guidelines or recommendations…” 10
Primary WTO Issues
• SPS 5.1 – “Members shall ensure that their sanitary or phytosanitary measures are based on an assessment…of the risks to human, animal or plant life or health, taking into account risk assessment techniques developed by the relevant international organizations.” • SPS 5.6 – “…when establishing or maintaining sanitary or phytosanitary measures to achieve the appropriate level of sanitary or phytosanitary protection, Members shall ensure that such measures are not more trade-restrictive than required to achieve their appropriate level of sanitary or phytosanitary protection, taking into account technical and economic feasibility.” 11
Codex Commission
• Purpose: “to establish safe levels of intake by setting Acceptable Daily Intakes (ADI) and to develop maximum residue limits (MRL) when veterinary drugs are used in accordance with good veterinary practice” 12
Codex Commission
• Findings: Considered five of six disputed hormones in a 1988 report. • Testosterone, progesterone, oestradiol 17â: – it was considered “unnecessary” to establish an ADI or MRL – “unlikely to pose a hazard to human health” • Zeranol and trenbolone – Recommended implementing ADI levels – restrict use of drug 13
U.S. and Canada’s Position
• EC’s sanitary measures are inconsistent with Article 5.1 of the SPS Agreement – This article demands that the measures be based on “risk assessment techniques developed by the relevant international organizations” 14
U.S. and Canada’s Position
• EC’s measures are inconsistent with Article 5.5 of the SPS Agreement – This article forbids the use of arbitrary or unjustifiable distinctions in the levels of sanitary protection which could result in discrimination or a disguised form of trade protectionism 15
U.S. and Canada’s Position
• EC’s measures violate Article 3.3 and 3.1 of the SPS Agreement – Article 3.3: EC’s “stricter-than international standards” sanitary measures are not justified under this article unless there is scientific proof – Article 3.1: Requires that members base their restrictions on international standards 16
The European Community’s Position
• EU refused to accept the scientific consensus due to an adherence to the “precautionary principle” – The SPS Agreement is based on an international scientific consensus – It allowed the import of hormone-free beef if exporting country made arrangements for this, e.g. Australia 17
The European Community’s Position
• “Given the current state of scientific knowledge about the risks presented by these substances, a ban was the only scientifically, technically, and economically feasible option available to the EC regulators to satisfy exigent public health goals.” 18
The European Community’s Position
• All the studies cited by the U.S. and Canada studied hormones in isolation, they did not take into account the possible “synergistic effects” 19
The decision of the Panel
• The Panel found that the EC ban on imports of meat and meat products from cattle treated with any of six specific hormones for growth promotion purposes was inconsistent with Articles 3.1, 5.1 and 5.5 of the SPS Agreement (August 18, 1997) 20
The decision of the Appellate Body
• Upheld the Panel’s ruling that the EC measures were inconsistent with Articles 3.3 and 5.1 of the SPS Agreement – It was imposing higher standards without scientific justification – Measures were not based on risk assessment techniques developed by the relevant IGO’s 21
The decision of the Appellate Body
• Reversed the Panel’s finding that the EC import prohibition was inconsistent with Articles 3.1 and 5.5 of the SPS Agreement – The EC, while having higher standards without scientific justification (3.3) was not acting inconsistently with Article 3.1 (harmonization of SPS standards) – The EC’s measures did not result in discrimination or a disguised form of trade protectionism 22
After the decisions of the panel & AB
• EU entered into negotiations with Canada and the US regarding implementation of the panel’s ruling.
• EU requested
four years
for implementation.
• Part of this time was to be used to undertake a risk assessment of allowing hormone beef into the EU market • This long implementation period was simply interpreted as a delaying tactic by Canada and the US.
23
After the decisions of the panel & AB
• WTO stipulated the duration of the implementation in its rules as 15 months.
• This time was solely for implementation.
• The due date should be May 13, 1999.
• EU indicated that it would not comply with the ruling.
• The US and Canada then threatened retaliation and the value of trade affected would be decided later.
24
Compensation vs. Retaliation
• A WTO member who chooses not to comply has two options: offering compensation or accepting the retaliation.
• EU initially offered compensation in the form of alternative trade concessions.
• As it was a temporary measure and EU had no intention of complying with its obligations, the US and Canada rejected and retaliation became the only option.
• Retaliation began in the summer of 1999.
25
Retaliation
• US$117 million per year. (US) • The case is a major irritant in U.S. European relations which are strained by a variety of disputes over agricultural exports. • U.S. cattle producers see the case as a mixed bag; on the one hand, the United States won, but on the other hand, U.S. producers still don't have access to European consumers. • Consumer groups in the United States are generally sympathetic to the Europeans, viewing their ban on U.S. beef as a legitimate example of a domestic consumer protection measure that should be honored.
26
The Political Economy of the Beef Hormone Dispute
• Why has this issue so difficult to resolve?
– Four possible reasons: • Administrative and legal differences; • Different political circumstances which allow certain issues to be elevated; • Different cultural and tradition and the differences between the consumer reaction to risk and novel foods; • Different commercial interests across the Atlantic.
27
Implications from This Case
• Need for SPS Agreement Revisions?
– The use of international standards in setting national health and safety regulations.
– Is it a constructive way to resolve trade conflicts?
– The disagreements in CODEX probably reflects scientific differences as much as national interests. 28
Implications from This Case
• DSU is not that powerful to compel WTO members to be bound by their obligations.
– Both parties in the dispute may have “enough” time and “room” to play during consultation and arbitration.
29
• •
Implications from This Case
Is the retaliation an effective method to resolve disputes? – YES, to some powerful economic entities; – NO, to those small, less-developed countries.
It is reasonable to doubt how WTO assures the fairness if DSU only depends on retaliation method to resolve trade disputes.
30
Implications from This Case
• Most of trade disputes are often entangled with even more complicated political-economic relations and interests.
• There would be no easy answer for WTO.
• More efforts needed. Some key words are: multilateral but not unilateral, improvements on DSU system, abiding by obligations, based on scientific standards but not political principles… 31
Bibliography
• 争端解决机制无法解决美欧贸易之争的原因 , http://class.wtojob.com/class91_8483.shtml
• EC Measures Concerning Meat and Meat Products (Hormones). AB Report. January 16, 1998. Available at: http://www.internationaltraderelations.com/WTO.beef hormone%20(1998).htm
• Kerr, William A. and Hobbs, Jill E. 2002. “The North American-European Union Dispute Over Beef Produced Using Growth Hormones: A Major Test for the New International Trade Regime,”
The World Economy
Vol. 25 (2): 283-296. Blackwell Publishers Ltd. • One-page summary of the case. Available at: http://www.wto.org/english/tratop_e/dispu_e/cases_e/1pa gesum_e/ds48sum_e.pdf
• Paulson, Michael. “WTO Case File: The Beef Hormone Case,”
Seattle Post Intellegencer
November 22, 1999. Available at: http://seattlepi.nwsource.com/national/case22.shtml
32
Bibliography
• Pauwelyn, J. 1999. “The WTO agreement on sanitary and phytosanitary (SPS) measures as applied in the first three SPS disputes. EC Hormones, Australia - salmon and Japan – varietals,”
Journal of International Economic Law
Vol. 2 (4):641-664.
• Quick, R, and A Bluthner. 1999. “Has the appellate body erred? An appraisal and criticism of the ruling in the WTO Hormones case”
Journal of International Economic Law
Vol. 2 (4):603-639.
• Roberts, D. 1998. Preliminary assessment of the effects of the WTO agreement on sanitary and phytosanitary trade regulations
Journal of International Economic Law
_e/ds48_e.htm
Vol. 1 (3):377-405.
• Summary of the dispute to date. Available at: http://www.wto.org/english/tratop_e/dispu_e/cases 33