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number: 458
mnemonic: Chicken
name: EU/US Slaughterhouse Dispute
I. Identification
The European Union (EU) and
the United States are engaged in a trade dispute regarding equivalency of
slaughterhouse inspection systems. The EU banned poultry imports from the
US due to differences in chilling and decontamination of poultry and poultry
products. The problem stems from fundamentally different approaches to poultry
hygiene. The EU mandates high standards of cleanliness at all stages of
production, while the US approves the use of chlorinated water as a decontaminant
at the end of the production process. In light of the GATT
Agreement on the Application of Sanitary and Phytosanitary Measures,
the two parties entered into negotiations seeking a Veterinary Equivalence
Agreement. When an agreement was not reached by April 30, 1997, the United
States retaliated with a counter ban on all poultry imports from the EU.
The EU appealed the case to the World Trade Organization (WTO) on August
18, 1997 arguing that the US ban is in violation of the Sanitary/Phytosanitary
Agreement of GATT. All negotiations have been put on hold while the two
parties await WTO consultation.
Controversy over meat inspection systems is not a new phenomena between Europe and the United States. Negotiations on slaughterhouse equivalency requirements have been in place since 1985 when the EU adopted its Third Country Directive that prohibited the sale of US pork, beef, and poultry in Europe if US plants were not certified (1). This Directive extended harmonized meat inspection requirements to include sending EU reviewers to third countries to inspect plants according to the exact standards of the Directive. The European inspections in the mid '80s resulted in more than 400 US meat producers being banned from exporting to the European Union.
There are two additional factors that intensified the trade conflict between Europe and the US. They are the European move into a Single Market (1992) and the Sanitary/Phytosanitary agreement (SPS) under the World Trade Organization (WTO). The Single Market initiative introduced import controls on all animal and animal products that became effective in 1993. As a result, a standardized implementation of certification was enacted for all meat products entering into the Single Market. This initiative heightened tensions between Europe and the US due to the disruption it caused in US exports to the EU (2).
The Sanitary/Phytosanitary Agreements (SPS) under the WTO introduced the concept of "veterinary equivalence." The SPS requires countries to recognize the sanitary measures of other countries if that country is able to demonstrate adequate measures of equivalency to the importing country (3). The agreement requires countries to enter into bilateral negotiations in order to establish recognition of equivalency. Countries carefully review each others' sanitary measures to ensure that appropriate levels of protection are maintained.
In accordance with the SPS Agreement, the EU and US entered into bilateral negotiations attempting to establish veterinary equivalency for meat and meat products. Negotiations continued for three years without resolution. During this time, the US unilaterally extended recognition to EU products. However, the EU imposed a deadline of April 1, 1997 for foreign countries to comply with EU requirements for sanitary measures. As of this date, export certification would no longer be issued for any fresh/frozen poultry meat, further processed poultry meat product, or processed red meat product intended for export to the European Union (4). Dan Glickman, US Agriculture Secretary, announced on April 1, 1997 that while it was unfortunate that a mutual recognition of inspection systems for red meat, poultry, eggs, dairy products, fish and other products was not met, the US would respond to EU mandates by requiring that EU products now comply with US inspection requirements (5). It was estimated that retaliation of this nature would adversely affect the $300 million of annual EU meat exports to the US. The stalemate had the potential to create a trade war, yet was tempered by the April 30, 1997 veterinary equivalency for red meat, fish, pork, pet food, dairy, and egg products (6). Despite the progress made with the meat agreement, the EU and US were not able to reconcile their differing sanitary measures for poultry and poultry products.
The fundamental problem in achieving poultry inspection equivalency stems from differing poultry hygiene standards. The EU requires high standards of cleanliness at all stages of poultry production, while the US utilizes chlorinated solution as a decontaminant at the end of the production process (7) The EU considers this decontamination process to be a poor standard of sanitary measure. The US strongly believes that the use of anti-microbial treatments are a safe and effective way to reduce pathogens and food borne diseases that can cause serious health problems (8). Dan Glickman stated that "the EU's insistence that US poultry comply with every prescriptive EU poultry regulation is out-of-skip with the EU's trade obligations. US poultry is the safest and most wholesome in the world, and we [US] refuse to lower our standards in order to ship to the EU (9)."
Glickman is referring to the US creation of the Hazard Analysis and Critical Control Point (HACCP) systems and food safety. HACCP addresses the need to implement preventive approaches to food safety in order to improve hazard identification and prevention. The inspection system is consistent with the GATT agreement which requires countries to ensure that their sanitary and phytosanitary measures are based on scientific principles (10). The US argues against the EU poultry ban on the grounds that it is not founded on scientific evidence. The EU has failed to prove that there is scientific evidence indicating that chlorinated decontamination is an ill suited means of sanitation.
The United States retaliated against the EU poultry ban on April 30, 1997 by delisting European poultry producers. This action prohibits the importation of any poultry or poultry product from the EU into the US. The EU contests the US action because the delisting occurred without appropriate evaluation inspections. According to the EU, the US revoked producer certification without providing EU producers the opportunity to exemplify equivalency measures as required by the SPS Agreement. EU officials argue that the poultry dispute is "a question of protection of consumer health, not a trade question, nor a protectionist disguise (11)." The EU appealed the case to the WTO on August 18, 1997. All bilateral negotiations have been suspended while the two parties await WTO consultation and dispute settlement.
(1)Trade Product= Poultry
(2)Geography= Europe
(3)Environmental problem= Health
II. Legal Clusters
The dispute on the Measures Affecting Imports of Poultry Products between the EU and the US is still pending in the WTO. The EU request to the WTO concerns a ban on imports of poultry and poultry products from the EU by the US Department of Agriculture's Food Safety Inspection Service. The EU contends that although the ban is allegedly on grounds of product safety, the ban does not indicate the basis for the sudden ineligibility of EU products for entrance into US markets.
The EU considers the US ban inconsistent with Articles I, III, X and XI of GATT 1994. In addition, the EU argues that the ban violates articles 2, 3, 4, 5, 8 and Annex C of the Sanitary/Phytosanitary Agreements (SPS). A closer examination of these provisions clarifies the EU case against the US in the WTO (12).
The Agreement on the Application of Sanitary and Phytosanitary Measures was created during the Uruguay Round of GATT. The Agreement was designed to "improve the human health, animal health, and phytosanitary situation in all members." It creates the establishment of a "multilateral framework of rules and disciplines to guide the adoption, development and the enforcement of sanitary and phytosanitary measures in order to minimize their negative effects on trade." The articles and provisions of SPS identified by the EU in the case are as follows:
| Article 2: | For the Purposes of this Agreement, the definitions provided in Annex A shall apply |
| Article 3: | The annexes are an integral part of this Agreement |
| Article 4: | Nothing in this Agreement shall effect the rights of Members under the Agreement on Technical Barriers to Trade with respect to measures not within the scope of this Agreement. |
| Article 5: | Members have the right to take sanitary and phytosanitary measures necessary for the protection of human, animal or plant life or health, provided that such measures are not inconsistent with the provisions of this Agreement. |
| Article 8: | Sanitary or phytosanitary measures which conform to the relevant provisions of this Agreement shall be presumed to be in accordance with the obligations of the Members under the provision of the GATT 1994 which relate to the use of sanitary or phytosanitary measures, in particular provisions of article XX (b). |
Annex C: Control, Inspection and Approval Procedures 1. Members shall ensure, with respect to any procedure to check and ensure the fulfillment of sanitary of phytosanitary measures, that: (a)such procedures are undertaken and completed without undue delay and in no less favorable manner for imported products than for like domestic products; (b)the standard processing period of each procedure is published or that the anticipated processing period is communicated to the applicant upon request; when receiving an application, the competent body promptly examines the completeness of the documentation and informs the applicant in a precise and complete manner of all deficiencies; the competent body transmits as soon as possible the results of the procedure in a precise and complete manner to the applicant so that corrective action may be taken if necessary; even when the application has deficiencies, the competent body proceeds as far as practicable with the procedure if the applicant so requests; and that upon request, the applicant is informed of the stage of the procedure, with any delay being explained; (c)information requirements are limited to what is necessary for appropriate control, inspection and approval procedures, including for approval of the use of additives or for the establishment of tolerances; (d)the confidentiality of information about imported products arising form or supplied in connection with control, inspection and approval is respected in a way no less favorable than for domestic products and in such a manner that legitimate commercial interests are protected; (e)any requirements for control, inspection and approval of individual specimens of a product are limited to what is reasonable and necessary; (f)any fees imposed for the procedures on imported products are equitable in relation to any fees charged on like domestic products or products originating in any other Member and should be no higher than the actual cost of the service; (g) the same criteria should be used in the siting of facilities used in the procedures and the selection of samples of imported products as for domestic products so as to minimize the inconvenience to applicants, importers, exporters, or their agents; (h)whenever specifications of a product are changed subsequent to its control and inspection in light of the applicable regulations, the procedure for the modified product is limited to what is necessary to determine whether adequate confidence exists that the product still meets the regulations concerned; and (i)a procedure exists to review complaints concerning the operation of such procedures and to take corrective action when a complaint is justified.
Where an importing Member operates a system for the approval of the use of food additives or for the establishment of tolerances for contaminants in food, feedstruffs or beverages which prohibits or restricts access to its domestic markets for products based on the absence of an approval, the importing Member shall consider the use of a relevant international standard as the basis for access until a final determination is made.
2. Where a sanitary or phytosanitary measure specifies control at the level of production, the Member in whose territory the production takes place shall provide the necessary assistance to facilitate such control and the work of the controlling authorities.
3. Nothing in this Agreement shall prevent Members from carrying out reasonable inspection within their own territories.
The EU and US attempted bilateral negotiations to achieve a Veterinary Equivalency Agreement. The two parties drafted poultry export requirements in July which were to be effective on October 1, 1997, however, this agreement was not signed as planned (13). Both parties were dissatisfied with the proposal, thus suspending all bilateral negotiations. The EU and US are currently awaiting WTO consultations in response to the EU complaint regarding the US ban on poultry products from the EU.
The current trade dispute includes the United States and the 15 members of the European Union to include Spain, France, Portugal, Italy, Belgium, Netherlands, Luxembourg, Greece, Germany, Sweden, Finland, Austria, Ireland, Denmark, and the United Kingdom. However, the conflict is centered around the Sanitary/Phytosanitary Agreement of GATT. Therefore, all members of the WTO will be impacted by the potential precedent set by the interpretation of this case.
III. Geographic Clusters
a. Geographic Domain: Europe
b. Geographic Site: Eastern North America (ENAMER)
c. Geographic Impact: United States
IV. Trade Clusters
a. Directly Related to Product: YES: Poultry
b. Indirectly Related to Product: NO
c. Not Related to Product: NO
d. Related to Process: YES: Health
"Sanitary or phytosanitary measures include all relevant laws, decrees, regulations, requirements and procedures including, interalia, end product criteria; processes and production methods." In the EU/US poultry dispute, the SPS is applied to the production process of poultry and poultry product in terms of poultry hygiene and inspection (14).
The EU/US dispute over Veterinary Equivalence of Meat Inspection had the potential to create a trade war covering $3 billion of exports (15). The ban instituted by the EU on poultry and poultry products from the US has halted $50 million worth of US exports to Europe (16). In response to the EU ban and the lack of agreement on meat inspection equivalency (to include poultry, red meat, pork, and pet food), the US threatened to ban all meat exports from Europe. A ban of this severity would have excluded $234 million of EU meat and poultry from entering US markets (17). The trade war was averted with the Meat Equivalency Agreement of April 30, 1997.
The disagreement concerning poultry hygiene and inspection remains. the EU and US are unable to reach an agreement. Therefore, the original EU ban on US poultry continues to create a $50 million loss of US poultry exports to Europe. The US, in retaliation, delisted (removed company certification) European poultry producers which prevents entry into US markets. It is estimated that the US ban is halting $1 million worth of European poultry exports to the US (18).
The immediate impact of the poultry trade ban is the loss of export revenue by both the EU and the US as discussed in section 16. The dispute, however, reveals another trade issue that is demanding a great deal of attention in the wake of the Uruguay Round of GATT: non tariff trade barriers. The Technical Barriers to Trade Agreement of GATT 1994 has significantly decreased the use of tariffs in international trade. This removal would seem to indicate an opening of world trade and a decline of protectionism, but this is not necessarily the case. Protectionism is regaining steam in the international market place through non tariff trade barriers.
The poultry trade dispute is an ideal case study for investigating the use of the Sanitary/Phytosanitary Agreement (SPS) as a non tariff trade barrier. The language of the SPS is effective in establishing guidelines for harmonized sanitary and phytosanitary measures, yet allows for liberal interpretation and application. Two specific clauses in the SPS that illustrate the loose language of the Agreement are paragraphs 5 and 11:
5. "Members have the right to take sanitary and phytosanitary measures necessary for the protection of human, animal, or plant life of health, provided that such measures are not inconsistent with the provisions of this Agreement.
11. "Members may introduce maintain sanitary or phytosanitary measures which result in a higher level of sanitary or phytosanitary protection than would be achieved by measures bases on the relevant international standards, guidelines or recommendations, if there is scientific justification, or as a consequence of the level of protection of a Member determines to be appropriate in accordance with the relevant provisions of paragraphs 16 through 23."(19)
It is evident from these paragraphs that there is adequate room for member discretion and interpretations which could hinder fair trade practices. It is estimated that global trade restricted by unjustified SPS barriers is nearly $5 billion annually (20).
In the poultry dispute, the EU claims that the US poultry slaughter and inspection systems are not equivalent or sufficient for entrance into the European market. This claim is justified by the SPS in paragraphs 5, 11, 17, and 22 all of which indicate a Member's right to require higher standards of sanitary and phytosanitary measures. Simply stated, the EU mandates high standards of cleanliness through out the poultry production process. It asserts that US use of chlorinated water as a decontaminate is not consistent with the EU's standards, thus legitimizing the ban on poultry and poultry products from the US.
Consequently, the United State's argument against the EU poultry ban is also supported by clauses in the SPS. Specifically, the US recalls paragraph 17 of SPS which indicates that a Member must take into account "scientific" evidence when establishing higher measures of sanitary and phytosanitary standards. The US argues that the HACCP (Hazard analysis and critical point program) and pathogen reduction rules adopted by the United States are the most stringent of any other country (21). Dan Glickman, US Secretary of Agriculture stated, "The EU's insistence that US poultry comply with every prescriptive EU poultry regulation is out of step with the EU's trade obligations. US poultry is the safest and most wholesome in the world, and we refuse to lower our standards in order to ship to the EU (22)." In addition, Glickman stated before the House of Representative Committee on Agriculture that "some countries are turning to pseudoscientific and other unfair SPS measures to restrict market access (23)."
The ability of both parties to use the SPS agreement to justify their arguments reveals that the application of the Agreement is discretionary. The manipulation of semantics and the identification of different health and regulatory standards has the potential to be used as a non tariff trade barrier in the international market place.
V. Environment Clusters
This case addresses the environmental problem of human health. The decontamination of poultry and meat products continues to be a health factor around the world. With persistent outbreaks of salmonella, e coli, and other food born bacteria, countries are taking measures to protect their citizens from the threat of these harmful diseases. As a result, conflicts arise over differing sanitary and phytosanitary standards and requirements for market access.
Name: chicken, poultry and poultry products
Type: animal
Diversity: N/A
The only solution to the poultry trade dispute is for the EU and the US to reach a Veterinary Equivalence Agreement for poultry and poultry products.
VI. Other Factors
Poultry
European Union
GATT
WTO
Sanitary and Phytosanitary Agreements
Agreement on the Application of Sanitary and Phytosanitary Measures [online]. Available: http://www.ra.irv.uit.no/trade_law/documents/freetrade/gatt/art/iiala4.html (full text).
"Agricultural Trade and Hygiene Standards." The International Center for Trade and Sustainable Development Archive [online] (August 4, 1997). Available: http://www.icst.com/html/digest27.htm#AGRICULTURAL (full text).
"EU/US Discussion On Veterinary Equivalency Agreement." The European Union Press Releases (April 2, 1997): No. 16/97
"EU Complains over US Poultry Import Curbs at WTO." Meat Industry Insights Newsletter [online] (August 21, 1997). Available: http://www.pb.net/spc/mii/970843.htm
"US Considers Retaliation Against EU Meat Exports." IDDA LEGIS-LETTER [online] (April 1997) Available: http://www.iddanet.org/0497leg.htm.
"Export Requirements for the European Union." USDA Export Library. [online] (August 8, 1997) Available: http://www.usda.gov/fsis/euroeqs.htm.
FSIS Speech: "HACCP and Food Safety--Application in a Mandatory Environment" [online] (July 10, 1997) Available: http://www.usda.gov/agency/fsis/world.htm.
Glickman, Dan. "Statement by Dan Glickman of Agriculture Before the House of Representative Committee on Agriculture" [online](March 18, 1997): available: http://www.usda.gov/news/speeches/text1.htm (full text).
Glickman, Dan. "Statement on the Status of US/European Union Veterinary Equivalency Talks." Release No. 0097.97: (April 1, 1997).
"Grassley Seeks Fair treatment for American Agriculture" Chuck Grassley Press Release [online] (March 24, 1997) Available: http://www.senate.gov/~`grassley/pr3-24.htm (full text).
"Poultry Excluded from Meat Pact." Farm Bureau News. [online] (May 5, 1997). Available: http://www.fb.com/fbn/97/05_05/html/poultry.html
"Poultry Trade War breaks out with Europe" American InfoMetrics. (1996). [online] Available: http://www.cpif.org/nletter/april97/war.htm.
Shields, Gerard. "US has a Beef about Meat Trade." Courier Washington Bureau [online] (March 28, 1997) Available: http://www.evansville.net/courier/newsweb/today97/U.S032897.html.
Smyth, Patrick. "EU Hygiene Rules Threaten 3.8m meat exports to US" The Irish Times [online] (April 3, 1997) Available: http://www.Irish-times.com/irish-times/paper/1997/0403/hom5.html.
USDA ECD Notice #97-6--"European Union Exports" (April 1, 1997).
USDA ECD Notice #97-13--"Export Requirements for Meat and/or Poultry to the European Union" (July 16, 1997).
USDA Release No. 0144.97. "United States--European Union Veterinary Equivalence Talks" [online] (April 10, 1997) Available: http://www.usda.gov/news/releases/1997/05/0144.
USDA Release No. 0143.97. "United States and European Union Reach Agreement on Veterinary Equivalency" [online] (April 30, 1997) Available: http://www.usda.gov/news/releases/1997/04/0143.
References
1. "Grassley Seeks Fair treatment for American Agriculture" Chuck Grassley Press Release [online] (March 24, 1997) Available: http://www.senate.gov/~`grassley/pr3-24.htm (full text).
2. Shields, Gerard. "US has a Beef about Meat Trade." Courier Washington Bureau [online] (March 28, 1997) Available: http://www.evansville.net/courier/newsweb/today97/U.S032897.html.
3. USDA Release No. 0144.97. "United States--European Union Veterinary Equivalence Talks" [online] (April 10, 1997) Available: http://www.usda.gov/news/releases/1997/05/0144.
4. USDA ECD Notice #97-6--"European Union Exports" (April 1, 1997).
5. Glickman, Dan. "Statement on the Status of US/European Union Veterinary Equivalency Talks." Release No. 0097.97: (April 1, 1997).
6. USDA Release No. 0143.97. "United States and European Union Reach Agreement on Veterinary Equivalency" [online] (April 30, 1997) Available: http://www.usda.gov/news/releases/1997/04/0143.
7. Smyth, Patrick. "EU Hygiene Rules Threaten 3.8m meat exports to US" The Irish Times [online] (April 3, 1997) Available: http://www.Irish-times.com/Irish-times/paper/1997/0403/hom5.html.
8. USDA Release No. 0144.97. "United States--European Union Veterinary Equivalence Talks" [online] (April 10, 1997) Available: http://www.usda.gov/news/releases/1997/05/0144.
9. USDA Release No. 0143.97. "United States and European Union Reach Agreement on Veterinary Equivalency" [online] (April 30, 1997) Available: http://www.usda.gov/news/releases/1997/04/0143.
10. FSIS Speech: "HACCP and Food Safety--Application in a Mandatory Environment" [online] (July 10, 1997) Available: http://www.usda.gov/agency/fsis/world.htm.
11. "Poultry Trade War breaks out with Europe" American InfoMetrics. (1996). [online] Available: http://www.cpif.org/nletter/april97/war.htm.
12. Agreement on the Application of Sanitary and Phytosanitary Measures [online]. Available: http://www.ra.irv.uit.no/trade_law/documents/freetrade/gatt/art/iiala4.html (full text).
13. "Export Requirements for the European Union." USDA Export Library. [online] (August 8, 1997) Available: http://www.usda.gov/fsis/euroeqs.htm.
14. Agreement on the Application of Sanitary and Phytosanitary Measures [online]. Available: http://www.ra.irv.uit.no/trade_law/documents/freetrade/gatt/art/iiala4.html (full text).
15. "Agricultural Trade and Hygiene Standards." The International Center for Trade and Sustainable Development Archive [online] (August 4, 1997). Available: http://www.icst.com/html/digest27.htm#AGRICULTURAL (full text).
16." EU Complains over US Poultry Import Curbs at WTO." Meat Industry Insights Newsletter [online] (August 21, 1997). Available: http://www.pb.net/spc/mii/970843.htm
17." US Considers Retaliation Against EU Meat Exports." IDDA LEGIS-LETTER [online] (April 1997) Available: http://www.iddanet.org/0497leg.htm.
18. USDA Release No. 0144.97. "United States--European Union Veterinary Equivalence Talks" [online] (April 10, 1997) Available: http://www.usda.gov/news/releases/1997/05/0144.
19. Agreement on the Application of Sanitary and Phytosanitary Measures [online]. Available: http://www.ra.irv.uit.no/trade_law/documents/freetrade/gatt/art/iiala4.html (full text).
20. Glickman, Dan. "Statement on the Status of US/European Union Veterinary Equivalency Talks." Release No. 0097.97: (April 1, 1997).
21. FSIS Speech: "HACCP and Food Safety--Application in a Mandatory Environment" [online] (July 10, 1997) Available: http://www.usda.gov/agency/fsis/world.htm.
22. "Poultry Excluded from Meat Pact." Farm Bureau News. [online] (May 5, 1997). Available: http://www.fb.com/fbn/97/05_05/html/poultry.html
23. Glickman, Dan. "Statement on the Status of US/European Union Veterinary Equivalency Talks." Release No. 0097.97: (April 1, 1997).
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