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MEAT PRODUCTS TRADE BETWEEN U.S. & EUROPEAN COMMUNITY.
Term Paper ID:22893
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Effects of growth hormone ban, health & safety, protectionism, irradiation, GATT, World Trade Organization, politics, supply & demand, pricing, future.... More...
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Paper Abstract:
Effects of growth hormone ban, health & safety, protectionism, irradiation, GATT, World Trade Organization, politics, supply & demand, pricing, future.
Paper Introduction:
MEAT PRODUCTS TRADE BETWEEN THE EUROPEAN COMMUNITY AND THE UNITED STATES
Introduction
This research examines the meat products trade between the European Community (EC) and the United States (US). Both red-meat and poultry meat products are included in this examination. One focal point of this examination concerns the effects of the General Agreement on Tariffs and Trade (GATT) and the treaty establishing the World Trade Organization (WTO) likely will have on the meat products trade between the EC and the US.
The 1988-1990 Period
The most serious and long-running dispute between the EC and the US in relation to meat products trade involves the EU ban on the importation of meat products produced from animals that have b
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It takes an average of twelve years to bring an animalpharmaceutical to market. As the tariff tide goes down, what becomes visible are suchhazards to international trade navigation as national procurement rules,subsidies, investment restrictions, etc. the animal health industry is confronted with adeeply-held, almost religious belief that chemical inputs are dangerous, arational presentation of the facts is not enough to convert them" (FEDESA,1994, p. Underthe Uruguay Round agreement, sluicegate prices and the variable levy willbe replaced by a fixed tariff. Much of the future of the meat products industry rests on the abilityof the industry to persuade consumers in other regions of the world toaccept American-produced meat products (Fee, 1994, p. Thus a product could go all the way through thedevelopment process, only to be rejected on grounds that have little to dowith science. Foreign trade barriers.Washington: U.S. Other growth-promoting hormones covered in the report included peptide hormones, such asbovine and porcine somatotropin, antibiotics, and the antimicrobial drugscarbadox and olaquindox. This could lead toreduced livestock productivity, greater extra-label drug use, and increasedmeat imports into Europe. The EU isin the process of implementing new legislation that requires all animalproduct imports to undergo harmonized frequencies of documentary, identityand physical checks by veterinarians before entering the EU. E8). Knowing EU import requirements: A must for U.S. FoodProcessing, 54(7), 12-15. 1242). New Statesman &Society, 31(2), 31-32. "But because poultry prices willfall more, relative to beef, beef demand will contract and the EU will needto import less while maintaining its exports, unless there is a dramaticproduction decline .... A major issue associated with attempts to globalize trade concernsrestrictions on production and processing methods (PPMs) of items producedor services performed outside the regulating country (Watson, 1994, p.1247). By the year 2 2, the GATT effect onpork trade is even more marked, with EU net exports down by over 6 % tojust over 25 , t. Using as a current baseline a model produced by the ForeignAgricultural Policy Research Institute of the Universities of Iowa andMissouri Columbia, ... Discovery and development of animal health products is a risky and costlyundertaking .... Most animal products andbyproducts currently exported to the EU, including inedible tallow andcattle hides and skins, enter duty free. An EU scientific report confirmed "safety" of natural hormones. Successful Farming,92(8), 27-32. "In light of this, and the fact that consumers' concernsand resistance to hormone-treated beef are seen ... The contention of proponents is that BST will increase milk productionsubstantially in dairy cattle (United States Trade Representative, 1995, p.11 ). Recentlegislation will transfer the authority for approving third-country poultryslaughter and processing facilities from the member countries to theEuropean Commission. (1996, 19 January).Agra Europe, (1679), E3-E4. The American producers could, of course, gain immediate accessto EU markets simply by following the rules laid down by the EU-rules thatwould be appreciated by most American meat products consumers. Agra Europe, (1622), E7-E9. The EC has not retreated from the ban on the use of growth hormones,nor has the US retreated on its efforts to have the ban removed. Market protection for poultry meat and egg products works on the sameprinciple as that for pork. Suchhormones as zeranol and trenbolone do not pose a danger to human healthwhen used in beef production, according to the report. In this narrow context, ionization wouldbe beneficial to both consumers and to the level of EU-US trade in both red-meat and poultry-meat products. BST, however, is not widely used in the United States because ofstrong and strident consumer objections to the hormone. Nearly all eligible livestock and poultry species require negativelaboratory test results for various diseases and veterinary inspection forimportation into the EU. as being just asimportant (if not more so) than any scientific conclusions, it now seemsvery unlikely that" the EU "will give in to the American threat"(Commission, 1996, p. A strong believer inthe technology, SPI ... The EU will reduce subsidized exports andrelieve some pressure on world markets. As ... In this context, the tariffbarriers significantly reduced by recent GATT rounds can be characterizedas comprising a "metaphorical 'tariff lake' that is being progressivelydrained. To integrate production processes and supportservices located in many different countries into a unified productionsystem, enterprises require some uniformity in technologies, standards,business relationships, and support systems, all of which can be affectedby domestic regulations and sectoral policies. Even where the EU has made thesovereign decision to forego such 'progress,' the fruits of these technicalfixes are foisted upon us in the name of free trade-like dairy productsfrom BST-treated cows, the genetically-engineered non-rotting tomato, orhormone-laced US beef." The EU also promulgated the Third Country Meat Directive that requiresmeat packing and processing plants located outside of the EU to comply withspecific health and safety provisions before products from those plants arecertified for import into the EU (United States Trade Representative, 1995,p. E3). Some of these products were deemed to posecertain risks to human health, while others were seen as safe" (Commission,1996, p. (1995, 23 June). Market access will be improvedthrough the creation of a tariff-rate quota totaling 75, tons by theyear 2 , including a 39, -ton allocation to tenderloins, boneless loinsand boneless hams. In the face of such numbers, ... (2 December1994). Government Printing Office. Asianimport commitments and strong growth in consumer demand will stimulate beefexports from Australia, New Zealand, and the US while South Americancountries will see a decline in exports as increased domestic demandabsorbs production increases. "When the Commission receives evidence thatproduct has entered the Union at prices below the sluicegate price, itattaches an additional amount equal to the average difference between theimport price and the sluicegate price to imports from that country. Applications for licenses must be made to the intervention boardsin the member states during the first five days of each month" (Knowing,1995, p. By 2 2, EU poultry net exports could be some 45%below baseline projections .... 11 -111). ... The EU hasprohibited both the use of the hormone and the importation of products fromcattle which have been fed or injected with BST. References Commission to "vigorously" defend EU hormone ban. The current political climate in the EU is hostile to the animalhealth products industry according to representatives of that industry."There is no single market for animal health products in the EU ....Permits are issued by member states according to their individual policies. It is crucial to the animal health industry thatpublic perceptions of biotechnology are changed. E4). 11 ).BST is said by the United States Trade Representative (1995, p. As ... E-B ionization zaps salmonella. exporters will need to work hard to keep up-to-date onEU tariff and non-tariff access restrictions, phytosanitary and sanitaryrequirements and harmonized EU food standards and regulations" (Knowing,1995, p. And with globalization, thebenefits are enormous: genuine free trade in manufactured goods would add 5to 1 percent to ... the long-termprogress toward globalization is irreversible" (Lewis & Harris, 1992, p.115). 14). Overall, by 2 2 beef exportswill fall from an estimated peak of 3.3 million tonnes to stabilise ataround 2.6mt, poultry net exports will rise by some 5 , t from the 1994level and pork exports, while rising in 1995, will slip gently backwards"(GATT, 1994, p. The EC imposed a ban on the use of suchhormones for livestock production within the EU on 1 January 1988, and theban became effective for meat products imported into the EU on 1 January1989. Until this legislation is fully implemented, however,the member states will maintain separate lists of approved poultryfacilities in third countries (Knowing, 1995, p. is undaunted and continues to champion E-B forexpanded food applications. Brazilian exports will be constrained bygrowth in domestic demand and Asian country imports will be only slightlyabove the baseline. In this line of argument, the US calls for Europeanagriculture to become a full partner in the GATT. Since the beginning of the Uruguay Round, the restructuring of"older industries such as steel, automotive, and shipbuilding and theconcomitant rise of the new knowledge-based industries such asmicroelectronics, computer software, and biotechnology" have begun to occur(Watson, 1994, p. This case is one wherein American meat producers are able to sellproducts of questionable safety in the US and then demand to be allowed toalso sell such products elsewhere. "Beef livers carry a flatad valorem duty of 7 percent, and all other beef offal is charged 4 percenton an ad valorem basis. The SPI productcan irradiate three tons of food per hour with an average dosage of fivekilograms. 14). The United States hasprotested this action. United States Trade Representative. Given the very serious debate generated by thisissue, there will inevitably be a rethinking on when domestic rules can beimposed on goods and services produced abroad. Animals that qualify for export are issued ahealth certificate with the appropriate test and certification statementsrequired by the EU (Knowing, 1995, p. The net impact of GATT is one of redistributing ratherthan creating additional poultry-meat trade. Butnow herbicides could be used to cut soil erosion to near zero, andprecision farming could protect ground and surface waters from over-fertilisation" (FEDESA, 1994, p. E9). The conclusion: a resounding 'No.' Over time, as experience teaches,economic benefits and improved standards of living win out over politicaland/or cultural opposition and resistance. "With the shift to direct income payments, ... Importantly, the report emphasized that much more research needed tobe carried out in order to assess whether hormones in general posed a riskto human health. 1242). Pork offal imports are charged the same duties as beefoffal. 32) wrote American agriculture is moving"toward surreal extremes: mating seasons manipulated to produce more lambs,chickens bred without feathers to avoid heat-stress, plants adorned withanimal genes, and turkeys too fat too fuck. exporters. Oddly, however,in opposition to making a product that the consumers of the world desire,American meat products producers appear to be determined to make a producttailored to their own profit goals, and then demand in the name of free-trade policy that the consumers in other countries buy their products. Declining demand for beef, increasing consumption of pig-meat and asharp reduction in poultry exports are the likely consequences of the GATTagreement on the European Union's meat sector (GATT, 1994, p. The use ionization, however, restricted bylegislation in both the EC (except for France) and the US. In addition to beef cuts entering the EU under the HQB quota, beefoffal also is excluded from the variable levy. 12). 15). (1992, Spring). there is a realissue as to extraterritorial restrictions beyond these accepted norms"(Watson, 1994, p. M3). the public iscritical of the unknown, biotechnology arouses an irrational fear, whereaspeople are prepared to take risks with known dangers, e.g., smoking oreating fatty foods. 11 ) to be"a naturally-occurring protein hormone, produced by innovativebiotechnology ...." If the hormone truly were naturally occurring, ofcourse, it would not be necessary to produce it through the application ofinnovative biotechnology. Far more striking, the fulldiffusion of improved know-how across the service sectors ..., togetherwith manufacturing free trade, would boost aggregate output by 25 percent.Moreover, were Europe and Japan to catch up with the United States in realgoods and services per employee, it would add roughly $1.5 trillion totheir national accounts. (1994, August). Many of the EUfood import requirements, these experts observed, are changing as a resultof new EU single market regulations and will change further as the GATTUruguay Round (UR) agreement is implemented over the next few years. Irradiation, however, is strongly opposed by consumers in both the USand the EC. Only one in 12 chemicals ever makes it fromthe test tube to approval, and the process costs ECU4 -65 million. All beef, pork, and horse meat imported into the EU for humanconsumption must come from slaughterhouses, cutting plants and cold storesapproved by the EU. 111). FSIS can certify only meat that has been graded USDA 'choice' or 'prime'or that has come from cattle not over 3 months of age that have been fed ahigh-energy ration for at least 1 days. By the middle of the period the projected GATTeffects are still relatively modest but by the year 2 2 they become morepronounced. (1994, 2December). Both red-meat and poultry meatproducts are included in this examination. The United States estimated that the trade damage value of the banapproximates $97 million per year (United States Trade Representative,1995, pp. as aconsequence, many animal health products would cease to be available andthere would be no major new ones to replace them. (1995). (1995,February). "For example, imports of frozen bonelessbeef cuts face a variable levy (currently $1.3 per pound) plus a 2 -percent ad valorem duty. Instead,horse meat is charged a flat 8-percent ad valorem duty (Knowing, 1995, p.15). This little piggie. Lewis, W. The 1995 Period By 1995, some American agricultural experts were beginning to preachsome reason in attempts to market meat products in the EU. AndEuropean regulators have placed limitations and restrictions on thetechnologies, just as the FDA and the USDA have .... One focal point of thisexamination concerns the effects of the General Agreement on Tariffs andTrade (GATT) and the treaty establishing the World Trade Organization (WTO)likely will have on the meat products trade between the EC and the US. The overall volume ofworld trade in pigmeat will, however, decline sharply relative to baselinelevels and also marginally below current levels while world pork pricestrend cyclically upwards as trade volume falls. 11 ). M3). Until theUruguay Round provisions are fully implemented, pork meat presented forimport into the Union at prices below the EU's sluicegate price (aninstitutional price meant to reflect the world cost of production) will becharged a supplementary levy equal to the average difference between theimport price and the sluicegate price" (Knowing 1995, p. To qualify for entryunder HQB quotas, your product must be accompanied by a certificate ofauthenticity from USDA's Food Safety and Inspection Service (FSIS)attesting that the meat satisfies the EU's definition of high-quality beef. The variable levy does not apply to horse meat imports. the GATT effects over baseline suggest that SouthAmerican beef exports will be 7-8 % lower, EU exports down 42 %, Australianexports up 9 % and Japanese net imports 6 % higher. 16). At present, it is accepted that certain PPM restrictions can beapplied, "even to certain activities outside the jurisdiction of theregulating state (e.g., meat inspectors can be sent abroad to approve aproduct coming into the domestic market). 15). 1247). The ban has effectively eliminated the export of red-meat productsfrom the US to the EC. Ionization kills pathogens such assalmonella and escherichia coli. Meating the world: Future livestock profitshinge on global acceptance of U.S. By the mid implementationperiod, EU exports will have fallen significantly (by 12 , tonnes),Japanese imports will have risen by some 2 , t and there will be asubstantial reduction in US imports. Under the Uruguay Round agreement, the levy will beconverted to a tariff equivalent which, in the case of frozen loins, willbe reduced to $.45 per pound in the last year of the six-yearimplementation period of the agreement. Upon further tariff drainage,stumps and boulders appear representing regulatory practices, e.g., thedelegation of rule-making authority to private industry associations thatthen administer this authority in a restrictive fashion, and the concertedactions of groups of companies which engage in preferential buyingpractices or other activities which are either not proscribed by domesticlaws, or are proscribed by domestic laws that are not enforced" (Watson,1994, p. Since 1989, the EU has prohibited meat imports fromcattle treated with growth hormones. Although imports of pork also face the variable levy (currently $ .55per pound for frozen loins), selected market opportunities exist in the EUfor US producers. 1242). Theindustry fears that pressure from the 'green' lobby will prompt governmentsto introduce new criteria for acceptance, beyond demonstration of quality,safety and efficacy. A French company, Societe de Proteines Industrielles (SPI), beganpromoting electron beam (E-B) ionization of food to provide safer andlonger-lasting food products. In time," the company contends "that electronbeam technology will become more widely accepted in the food industryworldwide, and export restrictions on ionized foods will be eased" (Rice,1993, p. (1993, July). Agra Europe, (1622), M3. These refrains are played long and loudly by the UnitedStates Trade Representative in efforts to defeat EU directives that havethe effect of restricting the access to the EU by American meat productsproducers. Ravan, H. In the pigmeat market,EU prices will fall as internal cereal prices fall, stimulating porkconsumption and reducing exports as restrictions on export subsidies bite.The pigmeat sector in eastern Europe will expand and other west Europeanand key Asian countries will increase pork imports. "However, thescientists have agreed that further research is needed in assessing therisks posed by artificial growth promoters such as beta-agonists, and onthe effect hormones have on animals and the environment. E4). Consumers "have some perception problems with both gammairradiation (Cobalt 6 ) and electron beam ionization of food products. "In industries that havebecome globalized, the demand for a 'level playing field' and 'common rulesof the game' accordingly embraces an increasing number of policies thataffect the relative production costs of international competitors" (Watson,1994, p. This means that investment in the industry is beingdiscouraged, and companies are merging in an effort to survive. 13). Fee, R. To bring productinto the EU under the HQB quota, importers must first obtain an importlicense. 16). The Uruguay Round agreement will eliminate the 7-percent duty on beef livers in six equal annual installments" (Knowing,1995, p. Although American producers cannot, because ofpublic pressure, use BST in the production of goods for sale in theAmerican market, they nevertheless demand the right to foist such productsoff on consumers in other countries under the guise of free-trade policy. 27). W., & Harris, M. The EU and the US negotiated some changes tothe directive that have allowed additional US packing houses to export tothe EU. 1242). "Under the Uruguay Round agreement, the 7-percent duty on porklivers will be eliminated in six equal annual installments. Rice, J. AgExporter, 7(2 ), 14-17. However, ... MEAT PRODUCTS TRADE BETWEEN THE EUROPEAN COMMUNITY AND THE UNITED STATES Introduction This research examines the meat products trade between the EuropeanCommunity (EC) and the United States (US). The 1994 Period Fundamental to the framework of the new trade agenda is the imperativeof addressing the conflict between evolving forms of commercial activity,associated with deeper international economic and trade integration, andthe emerging web of non-tariff constraints that can significantly impedethis evolution (Watson, 1994, p. GATT agreement will mean sharp cut in EU poultry exports. In retaliation, as of 1 January 1989 the US beganimposing 1 percent tariffs in EU agricultural imports to the UnitedStates in the value of $97 million per year. The cattle mustcome from an EU-approved source and must be slaughtered in a slaughterhousethat has been approved by the Union for handling untreated beef. The US contends that the EU does not have a surplus problem, but atrade barrier problem. The 1996 Period and the Future The EU has declared that the European Commission will "vigorously"defend the EU ban on hormones if the US decides to formally seek a WTOpanel to try to force the EU to lift its ban on imports of hormone-treatedbeef" (Commission, 1996, p. Lower cereal prices on their own mightstimulate production of poultry-meat in the EU. McKinsey Quarterly, (2), 114-131. Watson, P. FEDESA forum: "Green" benefits of intensive farming. European farmingcould become both high-yielding and fully sustainable. (1994, Summer). 15). beef and pork. S. Import opportunitiescurrently exist for selected products that are already covered by fixed,relatively low tariffs or special import quotas. Deeper internationaleconomic integration also increases competition among companies located indifferent countries, and this competition enhances the commercial impact ofvariations in national regulatory policies. The EU also committed to cuttariffs on processed turkey from 17 to 8.5 percent over the six-yearimplementation period" (Knowing, 1995, p. Most notably, the EUgrants levy-free access for annual imports of up to 1 , tons of beeffrom the United States and Canada under a high-quality beef (HQB) quota.(Imports under this quota are still charged a 2 -percent ad valorem duty,which is preserved in the Uruguay Round agreement). However, reduced exportopportunities will put downward pressure on internal poultry prices andalso stimulate consumption. Ionized products have been successfully marketed in France, andSPI predicts that ionization applications will expand (Rice, 1993, p. About thegrowth hormones, Ravan (1995, p. The American rationale for such actions is that the polices theyoppose are a form of protectionism that must be defeated at all costs."The verdict is finally in on the likelihood that protectionism-in any ofits forms-can fundamentally derail the process of economic globalization.... The framework for the new trade agenda.Law and Policy in International Business, 25(4), 1237-1257. The United States challenged this directive claiming that it is aviolation of GATT agreements. France, the contentionruns, could be competitive in farm exporting, as could the Netherlands andDenmark. The likely impact is a neutral or perhaps smallpositive increase in EU net exports in the early part of the GATTimplementation period. The 1988-199 Period The most serious and long-running dispute between the EC and the US inrelation to meat products trade involves the EU ban on the importation ofmeat products produced from animals that have been raised with the use ofeither natural or synthetic growth hormones (United States TradeRepresentative, 1995, p. Under the Uruguay Round agreement, the levy willbe converted to a tariff equivalent of $1.14 per pound plus a 12.8-percentad valorem duty in the agreement's last year. US producers of beef from animals nottreated with hormones may export to the European Union. Why globalization mustprevail. "Inthe meantime, U.S. Over-fertilisationhad caused environmental problems, such as algal blooms in the past. annual economic output. The 1991-1993 Period Bovine somatotropin (BST) was approved for use in dairy cattle in theUnited States in 1993 (United States Trade Representative, 1995, p. These free-market impediments are coming into greater focus largelydue to the emerging needs of international business (Watson, 1994, p.1242). The EU beef market is largely insulated from the world market by highimport duties on most products. The EU definition of high-quality beef includes meat from North American bison. Access for poultry will be increasedthrough the creation of a tariff-rate quota of 19, tons in 1995,increasing to 29, tons in the year 2 .
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