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In January of 1996, the United States requested consultations with the European Union under the WTO Dispute Settlement Understanding in relation to the EU’s ban on the use of certain hormonal growth promotants in livestock farming. The ban seriously restricted US exports of beef to the EU, since the hormones in question are widely used by US farmers. The US claimed that the ban was inconsistent with a variety of WTO rules, and in particular with the provisions of the Agreement on the Application of Sanitary and Phytosanitary Measures (the SPS Agreement).
In February of 1996, New Zealand, Australia and Canada requested to be joined in the consultations. Joint consultations were held in March of 1996, but failed to reach a mutually satisfactory solution. The US requested that an adjudicative WTO Panel be established in April 1996, and one was duly established in May of that year. New Zealand, Australia, Canada and Norway reserved their rights to participate in the Panel proceedings as third parties. New Zealand lodged a written submission to the Panel, and together with the other third parties met with the Panel in October of 1996. New Zealand, like the US, Australia and Canada, argued that the EU was in breach of its commitments under the SPS Agreement, since it had put in place a trade restriction on hormone-treated meat that was not based on any scientific risk assessment.
The Panel issued its Report in August of 1997. The Panel found that the European Union, by maintaining sanitary measures (bans on meat sourced from hormone-treated livestock) which were not based on a risk assessment or on any international standard, and which were discriminatory in their application, had acted inconsistently with the requirements of the SPS Agreement.
The EU appealed the Panel’s findings in September. The WTO Appellate Body, in its Report issued in January of 1998, upheld the Panel’s key findings.
To date, the EU has not removed its ban. The WTO DSU provides a mechanism for compensation or retaliation where a country has failed to bring itself back into conformity with the WTO rules following a ruling of a Panel or the Appellate Body. Based on these provisions, the US and Canada have obtained the permission of the WTO Dispute Settlement Body to increase tariffs on imports of products from the EU. The annual value of the increases is US$116.8 million for the US, and C$11.3 million for Canada. These values were determined by a WTO arbitration to be equivalent to the level of harm suffered by the US and Canada as a result of the EU’s ban.
