US beef generates new interests in Europe

US beef generates new interests in Europe

Helping to enhance that image, U.S. beef was featured prominently at Anuga, a biennial event that is considered the world’s largest food show, attracting 165,000 visitors to Cologne, Germany, in early October. Nearly 7,500 exhibitors participated, including the USMEF and 12 of its member companies. USMEF’s participation in Anuga was supported by the USDA Market Access Program.

Discussions with European importers and distributors at Anuga revealed that demand for U.S. beef remains high, but availability is limited by the growth in imports from other supplying countries under the European Union’s duty-free high-quality beef quota.

In 1999, the World Trade Organization (WTO) ruled that the EU’s ban on beef produced with synthetic growth hormones had no scientific basis and authorized the U.S. to impose retaliatory duties on certain products imported from the EU unless the ban was lifted. Ten years later, the U.S. and the EU agreed to replace U.S. retaliation with a 45,000 mt duty-free quota for beef that met a very strict product definition. The EU agreed to limit imports to countries that it determined had controls in place to ensure that beef shipped under the quota met this definition. The EU sought to include in the 2009 agreement a provision for resolving the hormone dispute in the WTO. The beef industry took the position that as long as the hormone ban remains on the EU’s books, it will not be possible to resolve the dispute.

This has continued to be the U.S. industry’s position, but recently Canada, as part of its bilateral trade agreement with the EU, took the opposite view and notified the WTO that it was giving up its rights to compensation in the hormone case, even though the EU has taken no action to come into compliance with the WTO’s 1999 ruling. Prior to the 2009 agreement, U.S. beef entering the EU was subject to a 20% duty, making it uncompetitive except in a tiny niche at the very top of the market. The duty-free quota opened up a wider range of opportunities by somewhat offsetting the higher cost of producing beef from hormone-free cattle.

In the past few years, the quota has been completely filled, but beef from the other supplying countries has accounted for the majority of the business, leaving the U.S. with a small and shrinking share of the market. This situation has been compounded by the fact that the EU only makes the quota available on a quarterly basis, and the quota amount is used up well before the end of each 12-week period, creating gaps of as many as seven weeks when no beef is imported under the quota. This uneven flow of product has created bottlenecks in the production and marketing chain and made it nearly impossible for companies to build long-term relationships with buyers who demand a consistent supply.

Source: USMEF