APPELLATE BODY FINDS EC HORMONE BAN INCONSISTENT WITH WTO OBLIGATIONS Release No. 0020.98 Jay Ziegler (202) 395-3230 Laura Trivers (202) 720-4623 laura.trivers@usda.gov APPELLATE BODY FINDS EC HORMONE BAN INCONSISTENT WITH WTO OBLIGATIONS UNDER SPS AGREEMENT WASHINGTON, Jan. 15, 1998--In response to press reports out of Europe on Wednesday, the United States Trade Representative confirmed today that the Appellate Body of the World Trade Organization (WTO) affirmed the finding of a dispute settlement panel that the European Communities' (EC) import ban on meat produced using growth-promoting hormones violates the Agreement on Application of Sanitary and Phytosanitary Measures (SPS Agreement). This was the first dispute involving the SPS Agreement that has reached the Appellate Body. "The Appellate Body report confirms the value of the WTO in rules distinguishing legitimate food safety requirements from unscientific and unjustified barriers to U.S. exports," U.S. Trade Representative Charlene Barshefsky said. "The EC ban on U.S. beef was not based on scientific principles. Every country, including the EC members, that has assessed whether such hormones pose a human health risk has found that they do not. We applaud the Appellate Body's findings, which emphasize both the rights of each country to establish appropriate levels of protection for human health and the requirement that any measures developed to protect human health be adopted consistent with the principles set forth in the SPS Agreement, including the requirement for a risk assessment. We look forward to working with the EC on full implementation of the Appellate Body's findings." One of the most important principles incorporated in the SPS Agreement is that each WTO Member country may establish its own appropriate level of protection respecting sanitary risks, including those associated with food safety. However, while countries are free to implement levels of protection for human health that are different than those set forth in existing international standards, they cannot implement trade barriers disguised as health measures. The WTO has agreed that the EC has no scientific basis for blocking the sale of American beef in Europe based on the use of growth hormones. This is a sign that the WTO dispute settlement system can handle complex and difficult disputes. "We join U.S. beef producers in welcoming this landmark decision supporting the U.S. complaint and reaffirming the principles of fair trade and good science," Agriculture Secretary Dan Glickman said. "We hope and expect that the EU will now take the necessary steps to bring its policies into compliance with WTO obligations by moving to lift the ban on beef from the United States and other affected countries. We stand ready to work with EU officials toward resuming normal trade as soon as possible. It is time to put an end to this long-running trade dispute and allow EU consumers to decide for themselves what they want to buy. The WTO dispute-settlement process has run its course, and the EU must now honor its obligations." Note: The full text of all WTO Appellate Reports will be available from January 16, 1998, on the WTO's World Wide Web site at http://www.wto.org. The Appellate Body report, entitled, EC Measures Concerning Meat and Meat Products (Hormones), will be available for copying in USTR's public reading room on January 16 as well. Background On January 1, 1989, the EC imposed a ban on imports of animals and meat from animals treated with hormones to promote more rapid growth -- cutting off U.S. beef exports to the Community valued then at approximately $100 million annually. The United States sought to challenge the EC measures under the dispute settlement procedures of the General Agreement on Tariffs and Trade (GATT), but the EC refused to allow a technical experts group to review the case. In response to the EC's blockage of dispute settlement procedures, the United States increased duties on certain products of the EC, pursuant to section 301 of the Trade Act of 1974. The increased U.S. duties remained in effect until the United States succeeded in having a WTO panel established to examine the EC hormone ban. After the World Trade Organization (WTO) was created, the United States invoked the new WTO dispute settlement procedures to challenge the EC measures. Specifically the United States challenged the EC ban on the use of 6 specific hormones, all approved for use in the United States and some other countries, and 5 of which have been reviewed by the experts of the Codex Alimentarius Commission ("Codex") and determined to be safe. The United States requested consultations with the EC in late January 1996, and in May 1996 the WTO Dispute Settlement Body established a panel to hear the case in response to a U.S. request. Canada later brought a parallel action to challenge the EC ban, and the same panelists were assigned to hear the Canadian case. The panel then decided to extend its work to seek the advice of scientific experts. The panel issued its final reports in both cases in August 1997. The U.S. challenge was based primarily on arguments that the EC import ban breaches provisions of the WTO Agreement on the Application of Sanitary and Phytosanitary Measures ("SPS Agreement"). The SPS Agreement clearly preserves the right of governments to apply food safety measures to protect human life and health, but at the same time it requires that such measures must in fact be for that purpose and not for protectionist purposes, and must be based on scientific evidence. The SPS Agreement establishes rules for determining whether import bans and other trade-restrictive actions that governments may characterize as food safety measures protect public health or provide a competitive advantage for domestic producers. In particular, the SPS Agreement relies on science to distinguish legitimate food safety measures from disguised protectionism. The SPS Agreement provides dispute settlement panels with clear guideposts for their review. It provides that measures must be based on scientific principles, must not be maintained without sufficient scientific evidence, must be based on an assessment of the risks to human life or health, must not be more trade-restrictive than required to achieve the appropriate level of protection, and must be based on international standards, guidelines or recommendations, where they exist, except where a more stringent standard is deemed appropriate in order to achieve a different level of protection or where there is a scientific justification. At issue in this case is an EC import ban based on the claim that eating meat from animals that have been given any of six veterinary drugs poses a health risk. The EC's ban ignores a vast body of scientific evidence -- including evidence produced by the EC's own reviews -- that it is safe to consume meat from animals to which these drugs have been administered in accordance with good animal husbandry practice. During the WTO legal proceedings the EC claimed that its ban is based on health concerns. The United States argued that U.S. meat treated with these 6 growth promoting hormones is safe and that the EC's attempt to protect domestic production from more competitive imports (and intra-EC competition) is trade protectionism, not protection of health and safety. The panel's final report found that the EC has acted inconsistently with the SPS Agreement by maintaining sanitary measures which are not based on a risk assessment; by adopting arbitrary or unjustifiable distinctions in the levels of sanitary protection it considers to be appropriate in different situations which result in discrimination or a disguised restriction on international trade; and by maintaining sanitary measures which are not based on existing international standards without the justification required by the SPS Agreement. The Appellate Body's Report affirms the legal findings of the dispute settlement panel that the EC ban on hormones for growth promotion is not based on a risk assessment. Additionally, the Appellate Body rejected several of the procedural challenges raised in the EC appeal. The Appellate Body sustained the dispute settlement panel's use of independent experts and rejected the EC's argument that the dispute settlement understanding required the panel to rely instead on the advice of an expert review group. Importantly, the Appellate Body Report refused the EC request to find that the Panel had not properly considered the facts of the dispute. The Appellate Body also sustained the panel's discretionary control over its own procedures, including its decision to provide for a joint meeting with the expert witnesses in the disputes separately initiated by the United States and Canada with respect to the same EC hormone ban. # NOTE: USDA news releases and media advisories are available on the Internet. Access the USDA Home Page on the World Wide Web at http://www.usda.gov