Financial Times
February 10, 1999

Beef ruling puts pressure on Brussels
By Guy de Jonquières in London and Neil Buckley in Brussels

 The European Commission will today take the first steps towards deciding how to respond to a World Trade Organisation ruling against the European Union's 12-year-old ban on hormone-treated beef.

Commission members are expected to approve a paper which sets out options for meeting the EU's WTO obligations and averting the threat of a bruising trade confrontation with the US.

The EU has until May 13 to comply with a World Trade Organisation ruling upholding a US complaint that the ban violates multilateral trade rules, because it is not supported by adequate scientific evidence.

The US has warned the EU that, if it ignores the ruling, it will face the risk of trade retaliation and a confrontation which could dwarf the two sides' recent conflict in the WTO over bananas.

Washington wants the hormones ban lifted as soon as possible. However, US officials have indicated that they recognise that could arouse fierce political controversy in the EU and are prepared to consider other ways of resolving the dispute.

Sir Leon Brittan, trade commissioner, is keen to open talks with the US soon. But he needs a broad mandate from the EU Council of Ministers, several of whose members face strong domestic opposition to sales of hormone-treated beef.

The Commission's option paper is intended to make the Council and the European Parliament aware of the need to resolve the issue. It was drawn up under the authority of Jacques Santer, its president, in co-operation with Sir Leon, Franz Fischler, agriculture commissioner, and Emma Bonino, responsible for consumer safety.

The EU has commissioned several scientific risk assessments, to determine whether hormone-treated beef endangers health. However, the results will not be complete until early next year.

One option suggested in the Commission's paper is to keep the ban in place and negotiate with the US compensation for loss of trade, in the form of lower barriers to other agricultural exports.

Another possibility would be to pay temporary compensation until the results of the risk assessments were known, and reinstate the ban permanently if it was shown to be scientifically justified.

If the ban were found to have no scientific base, the third option would be to lift it, possibly subject to a scheme for labelling hormone-treated beef. The US, which would have to agree to such a scheme, says it is ready in principle to discuss the idea.

A spokesman for the US trade representative cautiously welcomed today's Commission debate. However, he said the EU still had to show it was serious about resolving the dispute and warned that the US had not ruled out sanctions.