EU relaxes ban on Canadian beef -- sort of

"In no way, shape or form would I characterize this as some sort of revelation or breakthrough," Gregg Doud, chief economist of the U.S. National Cattlemen's Beef Association, told Reuters. "I would characterize it more as a good first step, an ability for the EU and the U.S. on agricultural trade issues to make progress."

The deal between the United States and the European Union last week, which Canadians hope to match, will allow small volumes of American beef into Europe's markets after a 20-year hiatus -- provided it is hormone-free.

OK, so we won't call it a breakthrough. But it does mark a significant turning point.

North Americans are finally clueing in to the fact that winning at the international trade game takes more finesse than a rule book and stack of scientific studies. Even having a sympathetic referee at the World Trade Organization onside wasn't enough to force the EU to take North American beef that is produced using growth hormones.

North American feedlots use growth-hormone implants to reduce costs. It's a scientifically supported practice that increases the animal's rate of gain by up to 15 per cent and feed efficiency by three per cent.

Europeans don't use the implants and are adamant they pose a risk to human health. North Americans say that's hogwash and maintain the level of hormone left in the meat is far lower than hormones found naturally in other foods. For example, a person would need to eat more than six kilograms of beef from animals treated with these hormones to equal the amount of hormones in one egg, an industry fact sheet says.

Nevertheless, Europe began banning meat produced with hormones in the late 1980s, effectively shutting out Canadian and U.S. beef.

Armed with science, the North Americans appealed to the WTO. Ten years later, it ruled in their favour -- giving them to right to impose retaliatory import duties worth US$116 million and C$11.3 million on European imports. The problem was, the tariffs did nothing to help cattle producers gain market access. They saw no benefit from the 100 per cent duties imposed on a list of imported goods.

Interestingly, it was American and Canadian consumers who have paid the price if they have a hankering for gourmet food. Earlier this year, the U.S. Trade Representative announced it was upping the ante, adding more products such as Jamon Iberico -- a $96-dollar-a-pound (before duties) Spanish ham, lingonberry jam, Irish oatmeal, truffles, goose livers and foliage used in floral bouquets to the 100 per cent duty list. Ouch.

The import duty on Roquefort cheese was slated to rise to 300 per cent from 100 per cent. The reason? Even at a 100 per cent markup, sales of the stinky cheese had only dropped 50 per cent. "One-hundred per cent duty was not deterring trade. These are trade sanctions. The idea is to deter that trade. We're trying to get parties to comply with the WTO ruling," lamented a U.S. government official in the Gourmet News food industry blog.

What's more, the U.S. served notice it would start changing the list every six months.

Maybe it was the prospect of widely fluctuating lingonberry jam prices or a sudden stockpile of truffles, but the Europeans decided to sit down and talk turkey with the Americans.

The result was a truce, of sorts.

The U.S. won't throw its rotating list of sanctions and 300 per cent Roquefort markup into play, although it will maintain existing sanctions. In exchange, the Europeans will allow the U.S. to ship 20,000 tonnes of non-hormone beef into its markets duty-free over the next three years. That quota will be upped to 45,000 tonnes in the fourth year of the agreement.

The existing 11,500 quota shared between Canada and the U.S., provided it is hormone-free, is subject to a 20 per cent tariff.

Canada has been watching this with interest. It has embarked on its own trade talks with the EU. After standing side by side with the Americans for two decades on this front, cattle producers north of the border are hoping they won't be left on the sidelines.

Many hope such negotiations will result in improved relationships with Europe. But it is likely any lasting agreements will be built on trust and delivering what the customer wants, rather than what we have to sell.

Rules and science have their place, but in the end, pragmatism rules the day.

Laura Rance is editor of the Manitoba Co-operator. She can be reached at 792-4382 or by email: laura@fbcpublishing.com.

Republished from the Winnipeg Free Press print edition May 16, 2009 B8