EC. Hormones.

Valentina Gaviria Sánchez.

Eliana Yaneth Restrepo Alvarez.

International Trade Law.

International Business, Universidad Pontificia Bolivariana.

Faculty of Business, Economy and Administration.

Medellín, Antioquia.

2018-2
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Table of Contents

Glossary 3

Introduction 4

Analysis 5

Conclusion 10

References 11
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Glossary

1- WTO: World Trade Organization.

2- EU: European Union.
3- EC: European Communities.
4- USA: United States of America.
5- Party: “Entity that takes part or is involved in an agreement, lawsuit, or transaction”. -

BusinessDictionary.com. Retrieved October 06, 2018, from: BusinessDictionary.com

website: http://www.businessdictionary.com/definition/party.html
6- 17 beta-estradiol: estrogen steroid hormone that, in this case, is used as a growth hormone

in beef meat.
7- OTC: Over-the-counter, “The phrase "over-the-counter" can be used to refer to stocks

that trade via a dealer network as opposed to on a centralized exchange”. - © 2018,

Investopedia, LLC. All rights reserved. From: Investopedia.com website:

https://www.investopedia.com/terms/o/otc.asp
8- Panels: “Panels are the quasi-judicial bodies, in a way tribunals, in charge of adjudicating

disputes between Members in the first instance”. From: WTO.org website:

https://www.wto.org/english/tratop_e/dispu_e/disp_settlement_cbt_e/c3s3p1_e.htm
9- Codex Alimentarius: international standards for food. its production and food security.

established by a commission of the same name, part of FAO.

10- SPS: WTO’s Sanitary and phytosanitary measures.
11- DSB: WTO’s Dispute Settlement Body.

Introduction

In 1989, the European Union decided to ban the use of growth hormones on beef. This altered

different trade relations in the world, especially the trade agreement with the United States of

America.
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The Beef war is one of the most discussed controversies within the framework of the solution

of international trade conflicts. Although, it is true that the economic opening allows the benefits

of exports and imports to reach all countries, it is also true that each country has an obligation to

protect the life and health of its inhabitants, and the country's environment. Besides; these

obligations are established within the provisions of the WTO. One of the main factors that made

the solution of this case so complex, was the cultural difference between the USA and the EU.

Because since 1970s there were laws inside the EU that banned the imports of beef that was

produced with growth hormones. This judicial ban was a result of other cases supported by the

scientific community; and were presented as arguments before the WTO. They argued that the

hormones, previously mentioned, had produced different changes among the young population,

also hormones had caused malformations in babies; among other similar effects.

In the next text we will explain carefully the arguments of each part, the decision made by the

WTO and how other parties got involved in this beef war.

Analysis.

The use of hormones for meat production has been approved in the United States since the

1950s. Hormones are currently added to the concentrate that is given to around the 90% of cattle

in the United States. Despite its conflicts on this topic with the EC, the position of USA is,

according to the American Public Health Association, "... the position of the government of the
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United States is that the presence of this hormone in adult beef does not represent any threat to

human health”. In the case of cattle, it is not only treated with growth hormones, but also with

antimicrobial compounds, a category in which antibiotics are also included. In addition to this,

indirectly, the use of them, hormones and antibiotics, affect the ecosystem. Mainly the water

currents.

In 1980s, the European Union restricted the use of natural hormones. Banned the use of

synthetic hormones and imports of meat from animals that had been administered hormones.

This measure is supported by the "precautionary principle", food safety policy that supports the

adoption of measures for the protection before there is a complete scientific proof of a risk

It was this situation that motivated the United States to request the "Celebration of

consultations". That is to say, the first part for the settlement of disputes before the WTO, on

January 26, 1996. USA argued that the measures the EC had applied were incompatible with the

Articles IV of the Agreement on Agriculture, which prohibits countries from establishing

measures that alter their list of concessions. Moreover, countries can not apply quantitative

restrictions on imports. As well as the Article III of the GATT 1994 "National Treatment on

Internal Taxation and Regulation", which establishes that imported products; in addition to

Article X of the same Agreement, which prohibits the quantitative restriction on imports, and

although it contains several exceptions, this case is not one of them; Article II of the

Phytosanitary Measures Agreement, which establishes the basic rights and obligations of the

members, states that countries, in order to apply these measurements, must ensure that “in only

applies whenever is necessary the health protection of population and the wildlife”. Not to

mention that the application of these measures will not be carried out as an undercover mode of

restriction to international trade. The principle of Harmonization states that phytosanitary

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standards higher than the ones recommended internationally, can be applied, if there is sufficient

scientific evidence. Article V says that the applications of these measurements will require an

adequate evaluation. Furthermore, the Article II of the OTC Agreement (which seeks that certain

rules and procedures do not create obstacles to trade) states that national governments should not

give less favorable treatment to foreign products than to domestic products, what’s more,

members must make sure there are no laws that obstruct trade; unless they are backed by

"legitimate" objectives (Likewise the preservation of population’s health).

United States’ position is based on the claim that the measures implemented by the European

community are a barrier to trade. In other words, for them, these restrictions were not only

supported by insufficient scientific research, but also, these ones were excessive. The Laws of

the WTO endorsed them by prohibiting countries from altering their list of concessions.

Giving this, USA decided to increase their tariffs, and provided that, The EC started an

eventual request for consultations on April 18th of 1996, they were suing USA. But nevertheless,

since the United States removed these tariffs on June 15th of the same year, the demand was

withdrawn, retaining the right to resume it later.

The appellate body submitted its report on January 16th of 1998, in which they argued several

mistakes that were on the United States’ panel’s report. One of them was the scientific proof that

USA presented, in which they affirmed that the MGA hormone, the one that stimulates growth

and its use was prohibited by the EC, was not harmful to health, having said that, they refused to

provide scientific information because this one was confidential. Another key thing to remember,

is that the argument was that the test did not contemplate the long-term risks that the

consumption of this good could generate and the consideration of this types of measurements
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exceeded what the el Codex Alimentarius stablishes. The CE manifested that the same had been

distorted, ignored and dismissed as well as the IAR that catalogued as inappropriate for the case.

The appellate body concluded that the measures imposed by the EC were inconsistent with

Article V, paragraph 1, that is to say the evaluation for the application of them had been

inadequate as well as with the Article III, paragraph 3, because the scientific proof was

insufficient. According to the WTO “Arbitrators determined that the level of annulment suffered

by the United States was of 116,8 million US dollars”, provided that, later on it was authorized

that the country increased its tariffs on EC products to compensate for these losses. And on the

other hand, the defendant was given a term of two years to provide scientific studies to determine

if meat, produced in this way, could have effects on human health. And a term of less than 15

months, subsequent to the other period, to revoke the clampdown to exports.

However, The European Union could prove the dire consequences that this type of goods

caused in health. To that end, when this fact was proven, they asked USA to revoke their

retaliation measures. Then again, USA opposed to this, arguing the realization of scientific

studies that verified what EU was proving at the moment and refused to lift its tariff charges to

the EC. This took the parties to another dispute in 2004. There, The European Communities

argued:

 The violation of the article 3.7, because according to this one, when the WTO allows a

country to increase their tariffs as a compensatory measure, it does it for a specific

period of time or when it is not possible to immediately suppress measures

incompatible with the Organization.

 Article 21.5 which indicates that disagreements with the measures intended to comply

with the arbitration award, will also be resolved through an arbitration process.
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 Article 22, which establishes that compensation and suspension of concessions are

temporary.
 Articles 23.1 and 23.2 who state that when a country wants to repair the breach of

obligations, must resort to the solution of conflicts and according to what is raised by

this system will follow the procedures and only by the authorization of the DSB will

suspend concessions.
 The violation of Article I, MFN, and Article II “list of concessions”. In which the

concessions stablish by a country must not be altered.

 Articles from the GATT OF 1994.

The resoluteness of this dispute was this complex, that the report of the Panels was not ready

until October of 2007. In there it was ratified that actually, USA was indeed breaking different

rules of the Organization, for instance, it suggested that the DSB asked this country to stablish its

measure based on the DSU.

Nonetheless, EC asked for a new consult celebration on December of 2008. Even more

countries added themselves to the dispute and took retaliation measures to EU’s goods. However,

after series of negotiation, on September of 2009, both parties presented a Memorandum of

Understanding related to the import of beef treated with hormones. And by 20014 the notified to

the DSB another Memorandum of Understanding in relation with the difference European

Communities - Measures affecting meat and meat products (hormones).

According the BBC, the impact of this decision is minimal for the CE, if it’s considered the

amount of meat without hormones that is produced in the United States is about 0.36%. Yet, in

terms of exports, generates benefits if we consider the tariffs imposed by USA were more than

250 million USD per year. The American country finally revoke the tariffs to European goods on
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May of 2011. The maximum quantity of quality beef exports was set on 48.200 tons annual, of

which, Canada represents an amount of 3.200 tons.

It must be noted that Canada also had conflicts with the European Community related to the

same issue and was a third party in each of the disputes between the United States and the EC.

Both countries had two disputes before the WTO, in which decisions, similar to those made with

the United States, were made.

Although at the end of the dispute the parties could reach an agreement that would benefit

both, at the beginning, the WTO ruled in favor of the American country, although it is true that

the EC did not comply with the SPS by stablishing restrictions without enough scientific proof, it

is also truth that there was sufficient evidence to question the use of hormones in meat

production.

Above all, it seems pertinent to say that in a globalized economy it is very important that

countries resolve their disagreements, and over more the monetary factor, there’s a social factor.

Peoples’ health should prime in these cases. On the other hand, there are plenty contradictions

with some of the WTO’s parameters If it is considered that the same Organization establishes the

respect for the internal legislations of the countries also endorses certain restrictions if they are

for the protection of health, safety, among others, but in practice this does not apply completely.

And even now there are still some fissures between the two parties and this case has not been

closed completely. To avoid a new dispute, EU has increased tariffs to other goods and it has stay

firm to the decision of not importing treated meat from USA.

All things considered, after a fair amount of disputed before the WTO, the European

Community accomplished to prove that some hormones affected people’s health. Importantly, the
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resoluteness of the case provided benefits to both parties. USA could export untreated meat with

a limit to the EC. And tariffs made by the EU that gave them lots of losses were eliminated.

However, not everything is said on this controversial case. This dispute opened a conversation

for commerce as a well for communities sometimes.

References:

 “OMC da a conocer informe en caso de Hormonas; Canadá, EE. UU y la Unión Europea

dicen haber triunfado”. International Centre for Trade and Sustainable Development.

April 8th of 2008 Website: https://www.ictsd.org/bridges-news/puentes/news/omc-da-a-

conocer-informe-en-caso-de-hormonas-canad%C3%A1-eeuu-y-la-uni%C3%B3n
 World Trade Organization. Official website:

https://www.wto.org/english/tratop_e/dispu_e/cases_e/ds26_e.htm
 WTO dispute settlement: One-page case summaries. 1995-20p16. -2017 EDITION.
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 “The U.S.-EU Beef Hormone Dispute”. Johnson, Renée. Specialist in Agricultural Policy.

January 14th, 2015

 “Trade deal eases EU-US beef war over hormones”. Lawrence, Peter. BBC News. March

14th, 2012. Website: https://www.bbc.com/news/world-europe-17364542

 “Punto final a la guerra comercial de la UE por la carne de EE. UU”. Food and

Agriculture Organization of the United Nations, FAO. April 27th, 2012. Website:

http://www.fao.org/in-action/agronoticias/detail/en/c/493445/
 “The Beef-Hormone Dispute and its implications for Trade Policy”. T. Josling, D.

Roberts, A. Hassan. November 6th, 2015

 “Hormone in U.S. Beef Causes Cancer EU Scientists Conclude” International Herald

Tribune and James, Barry. May 4th, 1999. Website:

https://www.nytimes.com/1999/05/04/news/hormone-in-us-beef-causes-cancer-eu-

scientists-conclude.html
 “Understanding on Rules and Procedures Governing the Settlement of Disputes”. WTO’s

official website: https://www.wto.org/english/docs_e/legal_e/28-dsu_e.htm

 “The WTO Agreement on the Application of Sanitary and Phytosanitary Measures (SPS

Agreement)”. SANITARY AND PHYTOSANUTARY MEASURES: TEXT OF

AGREEMENT. WTO’s official website:

https://www.wto.org/english/tratop_e/sps_e/spsagr_e.htm
 “The General Agreement on Tariffs and Trade (GATT 1947)” WTO’s official website:

https://www.wto.org/english/docs_e/legal_e/gatt47_01_e.htm#art1
 “Agreement on the Application of Sanitary and Phytosanitary Measures”. Uruguay

Round Agreement. WTO’s official website:

https://www.wto.org/english/docs_e/legal_e/15sps_01_e.htm#art2
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