Changes to EU Duty-Free Quota Would Expand Opportunities for U.S. Beef

The European Commission recently announced in a news release that it intends to discuss with the United States a review of the functioning of the European Union's duty-free high-quality beef quota. The Commission suggests that part of the existing 45,000 metric ton (mt) quota that is also available to exporters from other countries be allocated to the United States in a manner that is consistent with World Trade Organization (WTO) requirements.

U.S. Meat Export Federation (USMEF) Economist Erin Borror explains that because of aggressive growth from other suppliers (mainly Argentina and Uruguay), the duty-free quota lacks sufficient capacity for meeting Europe's current level of demand for U.S. beef. The quota’s 11,250 mt quarterly allocations are fully utilized within the first two weeks of opening, meaning U.S. beef can only enter the EU at zero duty during the first few days of each quarter, creating tremendous challenges for U.S. exporters and European importers.

Borror notes that while the Commission’s announcement is a very encouraging development, it is only the first of several necessary steps remaining to reach agreement on how the quota will be administered in the future. But if proper changes to the quota can be negotiated, she projects excellent growth opportunities for U.S. beef exports to Europe.

TRANSCRIPT:

Joe Schuele: Officials from the U.S. and the European Union are expected to begin working soon on changes to the EU's duty-free beef import quota, which currently makes it difficult for the U.S. industry to export beef to Europe. In this U.S. Meat Export Federation report, USMEF Economist Erin Borror explains why changes are sorely needed:

Erin Borror: It's very encouraging to see the European Commission asking for the ability to negotiate with the U.S. Then the agreement needs to be adopted and obviously we can't put a time line on this but we continue to convey the urgency given the critical situation that exporters and the whole trade are up against because the duty-free quota is operated on a quarterly basis and first-come, first served so at the start of each quarter there's 11,250 metric tons available for all eligible suppliers and with the heavy utilization of the quota over the past couple of years, it's become a race to clear product in the first couple of days of each quarter. So there are many challenges from the end-user side of wanting to be able to have access to chilled high quality U.S. beef on a consistent basis and to not have the risk of having products land once the quota is fully used for that quarter.

Joe Schuele: If the proper changes are made to the quota, Borror sees excellent opportunity for U.S. export growth:

Erin Borror: For the last 20 years, Europe bought $190 million worth of U.S. beef — that was about 15,000 tonnes. Most of that came in under the duty-free quota but we did see more than 2,000 tonnes going in under the Hilton Quota subject to 20 percent tariff so it obviously takes time to get NHTC cattle into the supply chain but depending on what agreement is reached we foresee demand in Europe being strong enough to easily double that value from the $200 million mark to $400 million and so we need to implement a fix because our business needs to not only be able to survive but also to grow.

Joe Schuele: For more information, please visit USMEF.org. For the U.S. Meat Export Federation, I’m Joe Schuele. # # #

The U.S. Meat Export Federation (www.USMEF.org) is the trade association responsible for developing international markets for the U.S. red meat industry. It is funded by USDA; the beef, pork, lamb, corn and soybean checkoff programs, as well as its members representing nine industry sectors: beef/veal producing & feeding, pork producing & feeding, lamb producing & feeding, packing & processing, purveying & trading, oilseeds producing, feedgrains producing, farm organizations and supply & service organizations.