Will Trade Negotiations with EU Deliver Better Access for U.S. Red Meat?

Negotiations on a U.S.-EU trade agreement are expected to begin in June 2013

by Thad Lively, USMEF senior vice president for trade access

The Obama Administration has officially notified Congress that it will soon begin negotiations on a comprehensive trade agreement with the European Union, with June 2013 as the target date for opening formal negotiating sessions. But the groundwork for these negotiations actually began more than a year ago, with the Administration seeking input from affected industries. The Office of U.S. Trade Representative is also accepting comments on a potential trade agreement through May 10. So this announcement is the end result of extensive deliberation and consultation with industries that have an interest in such an agreement, and USMEF has had several opportunities to provide input on issues surrounding red meat trade.

U.S. beef exports to the EU have a troubled history, mostly centered around Europe’s insistence that beef comes strictly from non-hormone treated (NHTC) cattle. Despite a WTO ruling in the United States’ favor, this restriction has remained in place. An agreement allowing a limited quantity of high-quality beef into the EU market at zero duty was struck in 2009. Europe’s in-quota duty on imported, high-quality beef is generally 20 percent, so this lowered the cost of entry for beef from NHTC cattle and offset some of the higher production and documentation costs for U.S. producers. The results have been positive for the U.S. beef industry, as high-quality, grain-fed product has been well-received in the EU. But the cost of serving this market and Europe’s sluggish economy have made it difficult to achieve substantial growth.

Access for U.S. pork is an issue that has gained far less attention over the years, but also must be addressed. Europe has historically been self-sufficient in pork production and is one of the world’s leading pork exporters. But high feed prices and increased regulatory burdens have put a strain on EU pork producers – to the point at which many have begun to question their ability to satisfy domestic demand and compete in the global marketplace.

The EU’s complex import quotas and high duty rates also limit access for U.S. pork. Similar to our NHTC program, the Pork for the European Union (PFEU) Program provides some opportunity for U.S. suppliers who do not use ractopamine to serve this market. But the program’s regulatory burdens are significant and add heavily to production costs.

The EU is completely closed to U.S. lamb, regardless of how it is raised or processed. USMEF has been working with U.S. trade officials to gain access to the EU for U.S. lamb, but progress on this issue has been slow.

Could a U.S.-EU trade agreement bring significant improvements in access for U.S. red meat? That won’t be easy, but the upcoming negotiations certainly represent a rare opportunity. Both sides have committed upfront to dealing with all issues, even aspects of agricultural trade that have proven so difficult in the past. So with everything on the table, this gives U.S. agricultural interests a possible avenue for progress.

With European leaders anxious to reach an accord that will provide a boost for the region’s unsteady economy, USMEF expects the EU will be prepared to offer some agricultural concessions in exchange for improved access to the U.S. market for its non-agricultural sectors. Whether these concessions will result in significant growth for U.S. meat exports to the EU, however, is much less certain. The key question is really whether we will gain access for the beef, pork and lamb that is being produced across the United States today, or if access will remain limited to what are essentially specialty products. The U.S. industry currently ships some NHTC beef and a small quantity of pork to Europe, but this is a niche business and it is difficult to envision it becoming anything more than that under the current sanitary and phytosanitary restrictions. It remains to be seen whether Europe will be willing to address some of the long-standing obstacles that have limited our ability to serve this market.

Some are skeptical that European consumers would purchase non-NHTC beef even if it was allowed in their market, or purchase U.S. pork or lamb if it became more widely available. While this is a legitimate question, it is a consumer preference issue that should not prevent the market from fully opening. We are not able to answer the basic question of what consumers in Europe really want as long as U.S. products are excluded from the market based on regulations that are not adequately supported by science.

A better system is one that opens the market to all products that are deemed safe, then allows consumers to decide which products they prefer. U.S. consumers do that every day, and the market responds accordingly. Retailers, restaurants and even fast-food establishments are able to differentiate their product according to certain attributes. But consumers decide which items to purchase, rather than having the government make that decision for them.

USMEF members with questions about U.S.-EU trade negotiations or exporting to the EU can contact Thad Lively at tlively@usmef.org or 303-623-6328.