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    THE BridgeNews FORUM: Viewpoints
    on issues in international trade.
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  * EU's Politically Motivated Ban Jeopardizes Long-Term Success Of WTO
 
 
    By David Walker, agricultural economist
 
    NORWICH, England--The dispute between the United States and the European
Union on trade in beef produced with growth hormones is almost certainly an
embarrassment to both parties.
 
    Although the issue needs to be resolved before the next round of
negotiations by the World Trade Organization, the timing of the dispute has
turned out to be unfortunate.
 
    This is the first high-profile test of the WTO Sanitary and Phytosanitary
Agreement (SPS), an integral part of the Uruguay Round of trade talks. Much as
the EU may wish to honor its WTO commitments, the lifting of the beef-hormone
ban is now next to impossible in the political context of current European
food-safety perceptions.

    The dispute, now 10 years old, was referred to the WTO's Dispute Settlement
Body in 1996. In August 1997 it ruled that, because no health hazard was
implicated, the EU's ban on imports of US growth-hormone-produced beef violated
the EU's WTO trade obligations. It made a similar ruling on Canadian beef in
February 1998. In May 1998 the WTO gave the EU a deadline of May 13, 1999, to
comply.
 
    As that date approaches, there is more is at stake than beef.

    The original 1947 General Agreement on Tariffs and Trade recognized that
limiting trade with others might be necessary for a nation ''to protect human,
animal or plant life or health.'' Too often, however, this was regarded as a
loophole to avoid trade liberalization commitments.
 
    The recent Uruguay Round included important agricultural trade
liberalization measures for the first time. This increased the urgency for
closing the loophole. The SPS agreement was designed to insure that actions to
protect public health or the environment are justified and not simply a
political convenience.
 
    The EU ban on beef imports produced with growth hormones was imposed in
January 1989 -- well before the Uruguay round was concluded and soon after the
EU had imposed its ban on the use of growth hormones in EU beef production. Even
this latter ban was a contentious one, particularly in Britain, because it was
introduced for political reasons. Members of the EU, and the European Parliament
in particular, turned their backs on the scientific advice exonerating growth
hormones that was provided over a period of years leading up to the ban.
 
    The current WTO decision resulted from requests by the United States and
Canada in 1996 for the setting up of SPS dispute settlement panels. From the
outset, it seemed likely that, armed with the EU's own scientific advice, they
would be successful. From the EU's perspective, there was some advantage in
defending the ban if, in the meantime
, public concerns about food safety might have diminished. This would have made
the political decision to accept growth hormones easier. But it was not to be.
 
    To overcome the problem of not being able to use growth hormones, British
beef producers now produce much more bull as opposed to bullock beef -- steer
beef in North American parlance. The bulls are more difficult to handle and, to
some, the beef is of lower quality than that from the castrated bullocks. But
with bulls, growth hormones are naturally occurring and do not have to be
''added.'' If the European Parliament knew this, they might just be daft enough
to pass a directive that all bulls have to be castrated.
 
    The heightened European public awareness of food safety issues, resulting
from the BSE (mad cow disease)epidemic and the advent of genetically modifies
crops, has added to the challenge faced by the EU. The EU agriculture
commissioner and the European Parliament both oppose the lifting of the beef
ban. At the same time, the US agriculture secretary has indicated anything less
than a date for the end of the ban is unacceptable.
 
    The EU has offered the United States compensation for trade concessions and
says it will accept hormone-produced beef provided it is labeled as such. The
United States has indicated that these would be acceptable as temporary
measures, but only if a date for the eventual lifting of the ban is specified.
 
    If agreement can not be reached by May 13, under WTO rules the United States
and Canada will be in a position to impose punitive tariffs on EU imports. The
process of selecting the EU commodities to be targeted and setting rates is well
advanced. For the Americans, the issue is one of principle rather than
economics, so the targets are likely to be selected to influence those EU
decision-makers most opposed to lifting the ban.
 
    The posturing continues. The EU published interim findings of two of 17
studies it had commissioned; both inferred health risks in hormone-produced
beef. It used them as a pretext for saying there was now no question of lifting
the ban. The United States described the reports as deliberately misleading,
unsubstantiated and a repeat of information previously rejected by the SPS
panel.
 
    The implications in the short term and in a total world-trade context may
not be great. If the issue is allowed to continue unresolved, however, it will
make progress on the upcoming round of WTO trade negotiations extremely
difficult.

    In the context of heightened European awareness of food safety issues, the
timing is difficult, but the danger is that a delay in resolving the issue will
create greater challenges.
 
    DAVID WALKER, an agricultural economist, lives on his family's farm outside
Norwich, England. He recently served as senior economist in London for the
Home-Grown Cereals Authority and previously was executive director of the
Alberta Grai
n Commission in Canada. His views are not necessarily those of
whose ventures include the Internet site http://www.bridge.com/.
 
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