Audio: U.S. Beef Exports to EU Face New Obstacle

U.S. exports of high-quality beef to the European Union have been growing steadily over the past five years, but now face a significant new obstacle. Under an agreement negotiated with the U.S. in 2009, the EU opened a duty-free import quota for beef produced from non-hormone-treated cattle (NHTC) raised under specific feeding and grading conditions. EU imports of U.S. beef were previously subject to a 20 percent duty, so removal of this duty helped spark a steady increase in U.S. shipments. EU imports from the U.S. under the duty-free quota reached 17,664 metric tons (mt) during the most recently concluded quota year (July 1, 2013 through June 30, 2014).

With a total duty-free quota capacity of 48,200 mt, the U.S. industry would seem to have plenty of room for further growth – but unfortunately, this is not the case. Although the quota was created as a result of the United States’ successful challenge of the EU’s beef hormone ban at the World Trade Organization, some other beef-exporting countries have also been granted access to the quota (Australia, Canada, New Zealand and Uruguay have access, and Argentina may soon be added). Shipments from Australia and Uruguay have been expanding at an especially rapid pace, pushing quota utilization toward its maximum capacity.

While the current quota year doesn’t end until June 30, this is an issue of immediate concern. The quota is administered on a quarterly basis, with an allocation of 12,050 mt reserved for each quarter. With expanding volumes from the U.S., Australia and Uruguay, the allocation for this quarter has already reached the “critical” phase – meaning that it is more than 90 percent filled, and European importers must now post a bank guarantee for the full duty in order to clear new shipments prior to October 1.

In the attached audio report, Thad Lively, USMEF senior vice president for trade access, further explains the ramifications of this issue and how it could slow momentum for U.S. beef exports to Europe.

TRANSCRIPT:

Joe Schuele: In this U.S. Meat Export Federation Report, we look at an issue that could slow U.S. beef exports to Europe. While U.S. beef entering Europe must be from non–hormone treated cattle (NHTC), exports have been increasing in recent years under a duty-free quota. But now that quota’s capacity is putting further growth in jeopardy, as explained by USMEF Senior Vice President Thad Lively.

Thad Lively: In 2009 the Europeans agreed to create a new quota which would have no duty, that quota would be for a product that met a very specific definition very similar to the product that we produce here in the United States. We started shipping under that quota and saw good growth in our exports; but, over the years since then the EU has permitted other countries to also ship under the quota. So not surprisingly the volumes have increased dramatically; and, even though we have seen increases in U.S. beef exports under the quota each year, Australia and Uruguay in particular have really ramped up their shipments. The end result of all that is that in the quota year that we are in now, that began on July 1st, it looks very likely that the quota is going to be filled, the first quarter’s piece of the total quota has been nearly filled, so that tells us already that as we go through the year the pressure on the quota is only going to grow.

Joe Schuele: this is especially frustrating for the U.S. industry because the quota was created as a result of the U.S.’ successful challenge of the EU Hormone ban at the World Trade Organization.

Thad Lively: I think that there are a lot of people in the industry who are struggling to understand why we are sharing this quota with other countries, and I think that they are also very concerned that the growth we’ve seen in the exports of beef to Europe could come to an end if we don’t find a way to get things back to the way it should be.

Joe Schuele: For more on this and other trade issues please visit USMEF.org. For the U.S. Meat Export Federation, I’m Joe Schuele.