USTR PUBLISHES PRELIMINARY LIST OF PRODUCTS IN PREPARATION TO EXERCISE WTO RIGHTS ON BEEF TRADE ISSUE OFFICE OF THE UNITED STATES TRADE REPRESENTATIVE Executive Office of the President Washington, D.C. 20508 USTR Press Releases are available on the USTR home page at WWW.USTR.GOV. They are also available through the USTR Fax Retrieval System at 202-395-4809. 99 - 27 embargoed for release until 1:00 p.m. Contact: Jay Ziegler Sunday, March 22, 1999 Helaine Klasky Amy Stilwell (202) 395-3230 USTR PUBLISHES PRELIMINARY LIST OF PRODUCTS IN PREPARATION TO EXERCISE WTO RIGHTS ON BEEF TRADE ISSUE The Office of the United States Trade Representative today announced preliminary actions in response to on-going uncertainty about whether the European Union (EU) will comply with WTO rulings which call for it to end its ban on imports of U.S. beef from animals treated with any of six scientifically-proven safe hormones. The Office of the U.S. Trade Representative outlined a preliminary list of products which would be subject to prohibitive tariffs if the EU does not comply by the WTO-mandated deadline of May 13, 1999. Under WTO rules, the United States is supposed to seek authorization to suspend concessions within 30 days after May 13, 1999. U.S. law requires adequate notice and comment of such action. The final list of products that could be affected by possible suspension of concessions will be drawn from the preliminary list. "The EU's ten-year, arbitrary, and scientifically unjustified ban on U.S. beef has had a substantial negative impact on U.S. beef producers," said United States Trade Representative Charlene Barshefsky. "Our hope is that we can reach a mutually acceptable solution with the EU that provides access for U.S. beef producers in Europe consistent with WTO rules. At the same time, we must also begin preparations to protect our rights if the EU does not comply with its obligations. The publication of this preliminary list is fully consistent with WTO rules, and reflects the transparency of the U.S. process. We will continue to abide by the WTO schedule as we prepare to exercise our WTO rights." "We would like to resolve this issue with the EU," Secretary of Agriculture Dan Glickman noted, "and we have offered a proposal to do just that. But if a reasonable solution cannot be agreed to, we are prepared to protect our rights." Background The safety of consuming beef from cattle treated with certain hormones has been thoroughly researched since the 1950s. On all occasions of FDA testing, the six hormones subject to this trade dispute have always been found to be safe. The clear international scientific consensus is that these approved and licensed products are safe when used in accordance with good veterinary practices. Even the EU's own scientists have agreed with these findings. At present, U.S. beef is shipped to 138 countries. The origin of this trade dispute is nearly two decades old and began in 1980 with the EU's debate on the use of natural and synthetic hormones in livestock. In December 1985, the EU adopted a directive on livestock production restricting the use of natural hormones to therapeutic purposes, banning the use of synthetic hormones, and prohibiting imports of animals, and meat from animals, to which hormones had been administered. That directive was later declared invalid by the European Court of Justice on procedural grounds and had to be re-adopted by the Council, unchanged, in 1988 ("the Hormone Directive"). These measures became effective January 1, 1989, notwithstanding U.S. attempts to resolve this issue bilaterally and multilaterally, including through dispute settlement under the General Agreement on Tariffs and Trade (GATT). On December 24, 1987, the President of the United States announced an increase in duties on selected European products in response to the Hormone Directive and related measures, but immediately suspended this action to promote a negotiated solution of the issue. The USTR enacted the increase in duties in January 1989 when the EU began implementing the hormone ban against imports from the United States. The USTR subsequently modified the application of increased duties on a number of occasions. During the early 1990s, the United States continued to encourage resolution of this dispute and worked in the FAO/WHO Codex Alimentarius to develop principles that reenforce the pre- eminent role of science in establishing high food safety standards. Following entry into force of the WTO Agreement on the Application of Sanitary and Phytosanitary Measures ("SPS Agreement") on January 1, 1995, the United States and, later, Canada, proceeded with formal WTO dispute settlement procedures against the hormone ban. On May 20, 1996, the DSB established a dispute settlement panel ("the WTO panel") to examine the consistency of the EU's hormone ban with the its WTO obligations. (Prior to the establishment of the WTO panel, the EU replaced the Hormone Directive with another directive that re-codified and expanded the hormone ban.) On August 18, 1997, the WTO panel issued its report finding that the hormone ban is not based on scientific evidence, a risk assessment, or relevant international standards in contravention of the EU's obligations under the SPS Agreement. The Appellate Body issued its report on January 16, 1998 affirming that the hormone ban is not consistent with the EU's obligations under the SPS Agreement. At its February 13, 1998 meeting, the DSB adopted the Panel and Appellate Body reports on hormones. The EU subsequently requested four years to implement the DSB recommendations and rulings, two years to conduct additional risk assessments and two years to revise its measures to reflect the results of those risk assessments. The WTO Arbitrator appointed to determine the reasonable period of time observed that the compliance period should not be used to "demonstrate the consistency of a measure already judged to be inconsistent," in response to the EU's arguments that it would need a substantial period of time to conduct additional risk assessments. The Arbitrator determined that the reasonable period of time for implementation was fifteen months and would expire on May 13, 1999. To date, the EU has taken no action to implement the DSB recommendations and rulings. The EU has made no modifications to the hormone ban, but rather initiated seventeen new risk assessments. In its status report for the March meeting of the WTO Dispute Settlement Body, the EU indicated that it does not expect to be in compliance by the May 13, 1999 WTO-mandated deadline. On March 3-4, 1999, U.S. and EU officials held discussions in Washington to explore options to resolve this dispute. The United States presented a proposal for labeling U.S. beef as a way to address European consumers' concerns. However, the EU indicated that a resolution of this matter would be conditional on the completion of the additional risk assessments, which may not be completed until sometime in late 1999 or 2000, and other bureaucratic hurdles in the EU. Resolution of this issue depends on overcoming uncertain and lengthy procedural hurdles, and addressing the substantive requirements of the WTO hormones decisions. - 30 - PRODUCT LIST Increased duties of 100 percent ad valorem may be applied to articles that are classified in the headings and the subheadings of the Harmonized Tariff Schedule of the United States (HTS) listed below and that are products of the member States of the European Union. In the instances where a 4-digit HTS heading appears in the left column of this list, products classified in any of the 8-digit subheadings appearing in the HTS under those 4-digit headings may be subject to increased duties. The product descriptions in this press release are for information purposes only; they are not intended to delimit in any way the scope of the products that would be subject to increased duties. HTS Description 0201 MEAT OF BOVINE ANIMALS, FRESH OR CHILLED 0202 MEAT OF BOVINE ANIMALS, FROZEN 0203 MEAT OF SWINE (PORK), FRESH, CHILLED OR FROZEN 0206 EDIBLE OFFAL OF BOVINE ANIMALS, SWINE, SHEEP, GOATS, HORSES ETC., FRESH, CHILLED OR FROZEN 0207 MEAT AND EDIBLE OFFAL OF POULTRY (CHICKENS, DUCKS, GEESE, TURKEYS AND GUINEAS), FRESH, CHILLED OR FROZEN 0210110 0 Hams, shoulders and cuts thereof with bone in, salted, in brine, dried or smoked 0210120 0 Bellies (streaky) and cuts thereof of swine, salted, in brine, dried or smoked 0210200 0 Meat of bovine animals, salted, in brine, dried or smoked 0210902 0 Meat and edible offal of chickens, ducks, geese, turkeys and guineas, salted, in brine, dried or smoked; flour and meal of these animals 0210904 0 Meat and edible offal nesoi, salted, in brine, dried or smoked; flour and meal, nesoi 0406402 0 Roquefort cheese in original loaves, not grated or powdered, not processed 0406404 0 Roquefort cheese, other than in original loaves, not grated or powdered, not processed 0504000 0 Guts, bladders and stomachs of animals (other than fish), whole and pieces thereof 0603900 0 Cut flowers and flower buds, suitable for bouquets or ornamental purposes, dried, dyed, bleached, impregnated or otherwise prepared 0604910 0 Foliage, branches and other parts of plants without flowers or flower buds, and grasses, suitable for bouquets or ornamental purposes, fresh 0604993 0 Foliage, branches, parts of plants without flowers or buds, and grasses, suitable for bouquets or ornamental purposes, dried or bleached 0702002 0 Tomatoes, fresh or chilled, entered during Mar.1 to July 14, or the period Sept.1 to Nov.14 in any year 0702004 0 Tomatoes, fresh or chilled, entered during July 15 to Aug.31 in any year 0702006 0 Tomatoes, fresh or chilled, entered from Nov. 15 thru the last day of Feb. of the following year 0703104 0 Onions, other than onion sets or pearl onions not over 16 mm in diameter, and shallots, fresh or chilled 0709520 0 Truffles, fresh or chilled 0712901 0 Dried carrots, whole, cut, sliced, broken or in powder, but not further prepared 0712907 4 Dried tomatoes, in powder 0712907 5 Dried tomatoes, whole, cut, sliced, broken or in powder, but not further prepared 0712907 8 Dried tomatoes, whole, cut, sliced or broken but not further prepared 0802400 0 Chestnuts, fresh or dried, shelled or in shell 0904202 0 Paprika, dried or crushed or ground 1004000 0 Oats 1104120 0 Rolled or flaked grains of oats 1104220 0 Grains of oats, hulled, pearled, clipped, sliced, kibbled or otherwise worked, but not rolled or flaked 1505900 0 Fatty substances derived from wool grease (including lanolin) 1601 SAUSAGES AND SIMILAR PRODUCTS, OF MEAT, MEAT OFFAL OR BLOOD; FOOD PREPARATIONS BASED ON THESE PRODUCTS 1602100 0 Homogenized preparations of meat, meat offal or blood, nesoi 1602202 0 Prepared or preserved liver of goose 1602204 0 Prepared or preserved liver of any animal other than of goose 1602310 0 Prepared or preserved meat or meat offal of turkeys, nesoi 1602320 0 Prepared or preserved meat or meat offal of chickens, nesoi 1602390 0 Prepared or preserved meat or meat offal of ducks, geese or guineas, nesoi 1602411 0 Prepared or preserved pork ham and cuts thereof, containing cereals or vegetables 1602412 0 Pork hams and cuts thereof, not containing cereals or vegetables, boned and cooked and packed in airtight containers 1602419 0 Prepared or preserved pork hams and cuts thereof, not containing cereals or vegetables, nesi 1602422 0 Pork shoulders and cuts thereof, boned and cooked and packed in airtight containers 1602424 0 Prepared or preserved pork shoulders and cuts thereof, other than boned and cooked and packed in airtight containers 1602491 0 Prepared or preserved pork offal, including mixtures 1602492 0 Pork other than ham and shoulder and cuts thereof, not containing cereals or vegetables, boned and cooked and packed in airtight containers 1602494 0 Prepared or preserved pork, not containing cereals or vegetables, nesoi 1602496 0 Prepared or preserved pork mixed with beef 1602499 0 Prepared or preserved pork, nesoi 1602500 5 Prepared or preserved offal of bovine animals 1602500 9 Prepared or preserved meat of bovine animals, cured or pickled, not containing cereals or vegetables 1602501 0 Corned beef in airtight containers 1602502 0 Prepared or preserved beef in airtight containers, other than corned beef, not containing cereals or vegetables 1602506 0 Prepared or preserved meat of bovine animals, not containing cereals or vegetables, nesoi 1602509 0 Prepared or preserved meat of bovine animals, containing cereals or vegetables 1704100 0 Chewing gum, not containing cocoa, whether or not sugar-coated 1704902 5 Sugar confectionary cough drops, not containing cocoa 1806310 0 Chocolate and other cocoa preparations, in blocks, slabs or bars, filled, not in bulk 1905400 0 Rusks, toasted bread and similar toasted products 2002100 0 Tomatoes, whole or in pieces, prepared or preserved otherwise than by vinegar or acetic acid 2002900 0 Tomatoes, other than whole or in pieces, prepared or preserved otherwise than by vinegar or acetic acid 2002904 0 Tomatoes, in powder, prepared or preserved otherwise than by vinegar or acetic acid 2002908 0 Tomatoes (including paste and puree) prepared or preserved otherwise than by vinegar or acetic acid, nesoi 2007990 5 Lingonberry and raspberry jams 2008304 2 Satsumas, prepared or preserved, in airtight containers, aggregate quantity n/o 40,000 metric tons/calandar yr 2008304 6 Satsumas, prepared or preserved, in airtight containers, aggregate quantity o/40,000 metric tons/calandar yr 2008400 0 Pears, otherwise prepared or preserved, nesoi 2008700 0 Peaches (excluding nectarines), otherwise prepared or preserved, nesoi 2009600 0 Grape juice (including grape must), concentrated or not concentrated 2009806 0 Juice of any other single fruit, nesoi, (including cherries and berries), concentrated or not concentrated 2009904 0 Mixtures of fruit juices, or mixtures of vegetable and fruit juices, concentrated or not concentrated 2101300 0 Roasted chicory and other roasted coffee substitutes and extracts, essences and concentrates thereof 2103304 0 Prepared mustard 2104100 0 Soups and broths and preparations therefor 2201100 0 Mineral waters and aerated waters, not containing added sugar or other sweetening matter nor flavored 2309901 0 Mixed feed or mixed feed ingredients used in animal feeding 3506105 0 Products suitable for use as glues or adhesives, nesoi, not exceeding 1 kg, put up for retail sale 5504100 0 Artificial staple fibers, not carded, combed or otherwise processed for spinning, of viscose rayon 5510110 0 Yarn (other than sewing thread) containing 85% or more by weight of artificial staple fibers, singles, not put up for retail sale 8510200 0 Hair clippers, with self-contained electric motor 8711200 0 Motorcycles (incl. mopeds) and cycles, fitted w/recip. internal- combustion piston engine w/capacity o/50 but n/o 250 cc 8711300 0 Motorcycles (incl. mopeds) and cycles, fitted w/recip. internal- combustion piston engine w/capacity o/250 but n/o 500 cc - 30 -