The US Congressional Research Service has just updated its review of the US-EU beef hormone dispute, one of the longest-running trade disputes under GATT/WTO dating back to the 1980s. The briefing sets out the milestones in the dispute, discusses the basis for the differing positions of the EU and the US on the scientific evidence regarding the health risks of consuming hormone-treated beef, and outlines the Memorandum of Understanding signed between the two sides in 2009 which provides the basis for a potential settlement of this dispute.
The MOU provides that the EU should open an increased tariff rate quota for non-hormone-treated US beef at a reduced tariff rate, while the US agreed to delay its implementation of increased duties on particular EU imports, while retaining its existing duties which are sanctioned under the WTO dispute settlement procedure. Ultimately, there is provision for the US to drop is retaliatory duties altogether in return for a further increase in the TRQ for non-hormone-treated beef.
What seems to have encouraged the US to agree to this MOU was the outcome of the EU complaint to the WTO in 2005 claiming that the US should remove its retaliatory measures as the EU had now brought itself into compliance with its WTO obligations by conducting a risk assessment on the health effects of the disputed hormones. The Appellate Body issueed a mixed judgement in October 2008 which allowed for continued imposition of trade sanctions on the EU by the United States and Canada, but also allowed the EU to continue its ban on imports of hormone-treated beef.
The US share of EU beef imports is tiny although it has been increasing, so the cost to the EU of complying with MOU is minimal.
A wider issue of some concern is the apparent tendency to settle WTO disputes by compensating the complaining party (through an increased TRQ in the hormone case, or through financial compensation in the US cotton case taken by Brazil). These bilateral deals may satisfy the complaining party, but they undermine the MFN and non-discriminatory principle of WTO rules because other trading parties are excluded and cannot benefit.
Whether this represents a reasonable price to pay for resolving seemingly intractable disputes or represents a further weakening of the WTO dispute settlement system is a matter for debate.