U.S. beef industry hopeful for more business opportunity in Europe, as negotiations on a comprehensive trade pact get underway in June.
The Obama administration has officially notified Congress that it will soon begin negotiations on a comprehensive trade agreement with the European Union (EU), 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.
“This announcement is the end result of more than a year of deliberation and consultation with industries that have an interest in a potential EU trade agreement,” says Thad Lively, senior vice president for trade access with the U.S. Meat Export Federation (USMEF). “We have had several opportunities to provide input on issues surrounding red meat trade, and that will continue to be the case as this process unfolds.”
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 cattle (NHTC). Despite a World Trade Organization (WTO) ruling in favor of the U.S., 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%, so this lowered the cost of entry for NHTC beef 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.
Could a U.S.-EU trade agreement bring significant change? Lively says that won’t be easy, but the upcoming negotiations certainly represent a rare opportunity for progress.
“Both sides have committed upfront to dealing with all issues, even the aspects of agricultural trade that have proven so difficult in the past,” he explains. “Everything’s on the table, which gives those of us in agriculture a possible avenue for progress – which has frankly been very difficult to achieve when dealing with difficult issues like the EU hormone ban in isolation.”
With European leaders anxious to reach an accord that will provide a boost for the region’s unsteady economy, Lively expects the EU to offer some level of improved access for U.S. beef. Whether this additional access results in significant export growth, however, is much less certain.
“For me, the key question is whether we will gain access for the beef that’s being produced across the U.S. today, or if access will remain limited to what is essentially a specialty product,” he said. “We ship some NHTC beef to Europe today, and this is a nice business. But frankly, it’s a small business and it’s difficult to envision it becoming anything more than that under the current restrictions. It remains to be seen whether Europe is willing to address some of the long-standing issues that have limited trade, such as the hormone ban.”
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Some are skeptical that European consumers would purchase non-NHTC beef even if it was available in their market. While this is a legitimate question, Lively says this is a consumer preference issue that shouldn’t prevent the market from opening.
“Currently we’re not able to answer the basic question of what consumers in Europe really want,” he says. “We can’t really make that determination as long as U.S. products are excluded from the market based on regulations that we feel – and the WTO agrees – are not adequately supported by science.”
A better system is one that opens the market to all products that are deemed safe, and then allows consumers to decide which products they prefer.
“U.S. consumers do that every day, and the market responds accordingly,” Lively says. “Retailers, restaurants and even fast-food establishments are able to differentiate their product according to certain attributes, but it’s consumers who decide which items to purchase rather than having the government make that decision for them.”
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