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United States – Continued Suspension of Obligations in the EC – Hormones Dispute (Panel 2008)

United States – Continued Suspension of Obligations in the EC – Hormones Dispute (Panel 2008). Erin R. R. Hale Shafei M. Hali. Case Summary. History & Context.

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United States – Continued Suspension of Obligations in the EC – Hormones Dispute (Panel 2008)

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  1. United States – Continued Suspension of Obligations in the EC – Hormones Dispute(Panel 2008) Erin R. R. Hale Shafei M. Hali

  2. Case Summary

  3. History & Context • “The US successfully challenged the EC’s prohibition on the importation of meat from cattle that had been administered certain growth hormones in 1996”* • The EC unsuccessfully appealed the ruling by the Dispute Settlement Body (DSB) • http://useu.usmission.gov/Dossiers/Beef_Hormones/Mar3108_WTO_Dispute_Panel.asp

  4. History & Context (continued) • The DSB authorized the US to increase tariffs on imports from the EC in the amount of $116.8 million per year • The EC amended the ban and brought the current dispute against the US claiming the US should have initiated a compliance proceeding under Article 21.5 of the Dispute Settlement Understanding (DSU) and ended sanctions

  5. Main WTO Issue • The EC believes that by continuing to implement tariffs, the US is in violation of DSU obligations and Article II of the GATT • The national act in question is 2003/74/EC which prohibits the use of hormonal or thyrostatic action and beta-agonists in stock farming • 2003/74/EC is inconsistent with the Sanitary and Phytosanitary Measures (SPS) Agreement

  6. Position of the Main Parties • The EC requested consultations with the US on November 8, 2004 to discuss: • The failure by the United States to remove the retaliatory measures despite the EC’s removal of the WTO-inconsistent measures • The unilateral determinations by the United States that the new EC legislation is a continued WTO violation  • The failure of the United States to follow DSU Article 21.5 dispute settlement procedures to adjudicate the matter • The US believes the EC’s amended ban on hormones is not scientifically justified and does not comply with WTO obligations

  7. Decisions of the Panel • The United States made the following procedural violations: • The EC changed its legislation but the US did not take any steps determine whether tariffs should be lifted and thus breached Article 23.1 of the DSU • By determining the EC committed a violation without taking the matter to the DSB, the US breached Article 23.2(a) of the DSU

  8. Decisions of the Panel (continued) • The EC did not remove the measure that is inconsistent with the SPS Agreement so the US has not breached Article 22.8 of the DSU • Because Article 22.8 was not breached, the EC has not established a violation of Articles 23.1 and 3.7 of the DSU as a result of a breach of Article 22.8

  9. Panel Recommendations • The US should prove it acted consistently with the DSU or risk nullifying the right to issue tariffs • The DSU should request the US to bring its measure into conformity with its obligations • The US should determine what needs to be done to fulfill its obligations, but it is not the responsibility of DSU to explain how to do so

  10. US Response to the Panel • The US did not interpret the panel report as stating sanctions must be lifted, only that the US “address the procedural errors by using one of the several dispute settlement options available.”* • The US appealed the Panel Report on June 10, 2008. • *Gretchen Hamel, USTR spokeswoman

  11. EC Response to the Panel • The EU appealed the Panel Report on May 29, 2008 & requested the Appellate Body review: • Two interpretations of Articles • The function of Article 21.5 • Whether due process was followed when taking advice from scientific experts • The interpretation of scientific evidence and the required amount needed • Burden of proof under the SPS Agreement • The panel’s that insufficiently clarifies the implications of their findings

  12. International Implications • Countries are increasingly coming to different definitions of safe food, especially in terms or organic and hormone-free goods • Nine third parties are involved in the case, which speaks to its worldwide interest • If the EC provides valid evidence that hormones are harmful to human health, many countries are likely to follow suit in a ban resulting in a healthier global population • If the DSB rules in favor of the US, it would enhance the trading ability of all countries using hormones

  13. Proposal for Dispute Dissolution • We feel the WTO should continue to insist the EC lift the ban on hormone treated cattle until there is a scientific consensus that hormones are harmful to human health • This allows the US to continue tariffs on imports from the EC and EC has a financial pressure to abide by WTO obligations

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