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I. Identification 
What, in fact, is genetic engineering? "It is the term applied to techniques that alter the genes or combination of genes to produce desirable new traits in an organism." (World Book '92) Genetically engineered microbes are used to improve the efficiency of food production. Large amounts of a growth hormone found in cows have been obtained from genetically engineered bacteria. When this hormone is used, dairy cows increase their amount of milk, and beef cattle have leaner meat. It is also possible to increase the nutritional value and herbicide resistance of maize with the help of genetic engineering. Ref-3
Hormones
Hormones are chemicals that are produced by all
animals. They affect functions like reproduction, growth, and production
and use of energy. They may be natural or synthetic. Natural ones are also
obtained from the plants that humans eat. Only a few countries in the world
allow the use of growth hormones for the purpose of enhancing growth in
livestock. The main countries involved in this process are USA, Japan and
South Africa. Hormones that banned in Europe have been in use in the United
States for years for the purpose of growth enhancement. The natural hormones
were approved in the 1950s while the synthetic ones were approved in the
1960s and the 1980s. The Food and Drug Administration regulate hormone
use in the United States. They test these hormones to make sure that they
are safe from any hazards. The United States is aiming to lift the ban
on five hormones and a synthetic compound so that they can export beef
to the EU. Three of them are natural and two of them
are synthetic while one is a synthetic compound.
The natural ones are – estradiol, progesterone and testosterone while the
synthetic ones are trenbolone acetate and zeranol (synthetic). The synthetic
compound mentioned is malangstrol acetate. The use of these hormones results
in an 8 to 25 percent increase in the daily weight. Even the feed efficiency
increases by 7 to 15 percent. Eventually, hormone treated animals reach
market weight about 15 percent faster or around 17 days sooner. These
hormones are thus very helpful in decreasing
the cost of producing beef for the producers and also help the customers
since there will be greater availability and lower prices. According to
Gary Smith, an animal science professor at Colorado State University, the
increase in hormones has “no physiological or medical consequence to the
consumer.” Actually, most of the hormones implanted are metabolized or
excreted by the animal. However, since hormones are also produced within
the body,
traces of them are found even when there are
no additional hormones in the body. That is the reason why implanted hormones
are traced in laboratory tests and countries that use them get into trouble.
But, looking at this issue from the trade point of view, hormones are a
resource which, if used in the correct way, will help producers make huge
gains and also allows the consumers to benefit from increased availability
and better beef. Ref-4
European Union against the World Trade Organization
After the EU placed the ban on imports of genetically
developed products, the US took every measure to prove that the hormones
used are completely safe and have no undesirable effect on humans or animals.
The US was quite angered by the import ban placed by the EU because the
US exports of beef were losing $250 million annually. They finally got
confirmation from the Codex Alimentarius Commission, the body that is responsible
for setting food standards. They also got it certified by a
scientific conference that is sponsored by the
European Commission. However, the EU rejected all the pleas of the States
and so the US launched a dispute settlement panel against the EU at the
WTO. The US claimed that EU ban would violate the rules and regulations
set in the 1994 Uruguay Round on world trade. Australia, Canada, New Zealand,
Chile and Argentina were also asked to join the US effort. On August 18,
1997, in the final report of the WTO, the EU ban was ruled as inconsistent
according to the Sanitary and Phytosanitary (SPS)
Agreement. The EU appealed the ruling. Ref-5
On Jan 16, 1998, the Appellate Body released its
report and once again after certain changes the ban was ruled inconsistent.
On February 13, 1998, the WTO Dispute Settlement Body (DSB) adopted the
Panel and Appellate Body reports. However, on March 13, at a DSB meeting
the EU stated that changes would be made as soon as it was possible. A
reasonable time was not set with consensus of the two parties and so the
EU requested for a binding deadline. They requested for 4 years to come
into compliance, 2 years to conduct risk assessment, and 2 years to complete
legislative procedures, which would depend on the outcome of the risk assessment.
But the judges felt that the EU would need only 15 months and that it was
unnecessary to conduct a second risk assessment. The 15 months started
in February 1998 and the deadline was to expire on May 13, 1999.
Ref-5
But the EU declared that they are not yet ready to meet the deadline on May 14th 1999. They stated that they wanted to comply with the rules of the WTO. Hence they felt that the best possible way to achieve a positive result was a dialogue with the United States about compensation. This, however, angered the United States and they asked the WTO for authority to impose 100% tariffs on $ 202 million of the exports of the European Union in retaliation. Ref-6
European Union against the United States of America
The story actually doesn’t actually begin there. The United States already has tariffs on the European Union exports worth $ 191.4 million regarding the banana dispute. If the EU were not going to abide by the rules and regulations of the WTO, then the US could impose more penalty tariffs in retaliation. Above all this, the EU, after losing the banana dispute, placed a ban on all US beef (even hormone free) stating that research showed traces of hormones on beef that was certified as hormone free. This would increase the loss suffered by the US exporters by $ 20 million more. That would total up into the US losing around $ 270 million in exports to the EU. In March, 1999 the US had already drafted a preliminary list of $ 900 million in proposed sanctions against the EU. Items in this list mainly covered agricultural products and a small number of manufactured goods. The agricultural goods included pork, beef and poultry, Roquefort cheese, onions, paprika, Dijon mustard, chewing gum, chocolate and mineral water. The manufactured goods list included Italian moped motor cycles and hair clippers. The US were supposed to trim the list if it planned to hit the sanctions. The new, final list would amount to around $ 202 million. Ref-7 Ref-8 Ref-9Ref-10Ref-11
"Hormone Mafia"
Another problem that has erupted due to the ban imposed by the EU is the growth of a well-organized Mafia, particularly in Belgium. What the black marketeers are interested in is not the cows, but the hormone that enhance meat production. Black marketeers are said to be prepared to go to any distance to sneak through law. Be it murder, bombings, battering down.... they do not fear. The basic reason is that hormone dealing is considered the second most lucrative crime racket in Belgium after drugs. One well-known case is that of Karel Van Noppen, a 43 year old Belgian government vet and chief meat inspector. He was one of those who relentlessly tried to put an end to hormone abuse. He was very close to unmasking the masterminds of an illegal Mafia network that worked in Belgium and Holland and probably even France. He was shot yards away from home. He had also received threats from the Mafia to stop investigating the effects of hormones on cows. This has proved that even though the country and its people are concerned with health and their safety, there are many anti-social elements out there who are involved in practices that can bring no good to the country. Ref-12
II. Legal Clusters This case is basically a disagreement between the two power blocs in today’s world – the United Sates and the European Union. The Dispute Settlement Body of the WTO ruled in favor of the US. But this case is far from over. The EU has not yet agreed to the terms and conditions of the WTO, i.e. to remove the ban on hormone treated beef. On top of all this, the US is placing increasing amounts as tariffs on the exports of the EU so that they can retaliate. On the whole, it is clearly evident that this case still has a long way to go.
The case is being dealt by the WTO and has been going on since the formation of the WTO. Since it involves a number of countries in Europe all pitted against the United States, it can be classified as a multi-national case.
This case is actually regarding the breach of the rules and regulations of the WTO by the European Union. At the moment there are 15 members of the European Union that re involved in this case along with the United States. It is not predictable, but there may be many more nations who may protest against the EU’s policy of not importing hormone treated beef. There are quite a few nations who use hormones for growth enhancement of cattle and they will end up with heavy losses if this ban stays on. So it can be said that this case involves all 132 members of the WTO.
III. Geographic Clusters b. Geographic Site: Western Europe
c. Geographic Impact: European Union
IV. Trade Clusters The European Union has placed a ban on hormone treated beef due to health reasons. Actually the ban has its roots way back in the late 70s. This was the time when babies in Italy developed breasts and enlarged genitals after they were fed with canned baby food. The baby food was made from French veal that had traces of synthetic hormone Diethylstilbestrol (DES). This is a hormone that enhances muscle growth in animals. Many reports began to flash around the continent. School children were said to be passing through abnormal sexual development and the reason behind it was inferred as the school lunch that was being provided. Italy had banned DES about 10 years ago and also stopped imports of veal from other parts of the continent. This gave rise to a huge uproar when consumers wanted to bring an end to the import of hormone treated beef into the continent. Ref-13
This case has many direct impacts as well as indirect ones too. Well mankind is already witnessing the direct impacts. After the EU placed a ban on all beef being imported from the US, the US retaliated by placing huge tariffs on the EU. Already the tariffs by way of the banana dispute existed - $ 191 million. Now after the EU decided not to meet the deadline, the US has made a list of products exported by the EU for placing tariffs. This list is supposed to be amounting around $ 202 million. Such has been the direct impact of this issue.
Regarding the indirect impacts, the EU may stand
to suffer. The main reason is that they are regarded as the ones who are
guilty in this matter. This is because they do not allow free trade of
goods nor do they agree to abide by the rules and regulations of the WTO.
If it goes on in this manner, then many other nations may end up protesting
against the EU and they may end up finding themselves being kept away from
the rest of the world by way of non tariff barriers or even through plain
tariffs.
This ban has blocked the free movement of many goods namely – cattle, poultry, soybean, corn and other agricultural products. Mainly the product involved is a kind of food. Any product that has traces of hormones would not be able to be imported to the European Union.
b. Indirectly Related to Product: No
c. Not Related to Product: No
d. Related to Process:
Yes.
Hormones are used for the growth of the cattle which humans consume as food. So it has to be made sure that these hormones do not give rise to internal or external problems in the human body. Like the case in Italy in the 1970s, it has to be made sure that the hormones that are used do not have any side effects that can be fatal or dangerous to humans. Scientists today make sure of the percentage of each hormone that is being used so that they are aware of how much humans consume of it and they can also check whether it is safe or not.
U.S.
DEPARTMENT OF COMMERCE STATISTICS:
Leading
Markets For U.S. Beef
Plus
Beef Variety Meat Exports
| January - February 1999 | ||||||||||
| Year-to-Date
Quantity (Metric Tons) |
Year-to-Date
Value (U.S. $000) |
February
Quantity (Metric Tons) |
February
Value (U.S. $000) |
|||||||
| Country/Region | 1/98 - 2/98 | 1/99 - 2/99 | % Change | 1/98 - 2/98 | 1/99 - 2/99 | % Change | 1998 | 1999 | 1998 | 1999 |
| Japan |
73,240
|
76,648
|
5%
|
$254,696
|
$249,814
|
-2%
|
36,420
|
38,381
|
$129,693
|
$128,193
|
| Mexico |
25,965
|
30,731
|
18%
|
$62,950
|
$73,286
|
16%
|
13,369
|
15,615
|
$33,674
|
$38,336
|
| Korea, Republic of |
4,557
|
16,298
|
258%
|
$13,788
|
$40,617
|
195%
|
2,340
|
7,967
|
$6,615
|
$21,071
|
| Canada |
14,729
|
16,130
|
10%
|
$45,338
|
$44,484
|
-2%
|
7,487
|
8,504
|
$23,547
|
$22,396
|
| Middle East |
6,640
|
7,119
|
7%
|
$7,654
|
$23,488
|
207%
|
5,404
|
5,826
|
$5,075
|
$19,784
|
| Egypt |
5,648
|
6,428
|
14%
|
$4,893
|
$21,351
|
336%
|
4,908
|
5,510
|
$3,903
|
$18,664
|
| Saudi Arabia |
480
|
257
|
-46%
|
$963
|
$685
|
-29%
|
295
|
112
|
$474
|
$365
|
| Israel |
276
|
107
|
-61%
|
$681
|
$77
|
-89%
|
89
|
42
|
$145
|
$33
|
| European Union |
7,305
|
4,540
|
-38%
|
$5,969
|
$6,327
|
6%
|
3,570
|
2,377
|
$3,276
|
$3,195
|
| Belgium-Luxembourg |
3,018
|
1,712
|
-43%
|
$702
|
$825
|
18%
|
1,023
|
1,271
|
$251
|
$577
|
| Germany |
1,131
|
1,487
|
31%
|
$679
|
$1,582
|
133%
|
781
|
590
|
$519
|
$847
|
| United Kingdom |
1,264
|
561
|
-56%
|
$728
|
$1,692
|
132%
|
904
|
132
|
$374
|
$516
|
| Hong Kong/China |
3,315
|
4,496
|
36%
|
$8,999
|
$11,484
|
28%
|
2,085
|
2,128
|
$5,354
|
$5,492
|
| Hong Kong |
2,615
|
3,925
|
50%
|
$7,535
|
$10,096
|
34%
|
1,624
|
1,815
|
$4,423
|
$4,691
|
| China |
700
|
571
|
-18%
|
$1,463
|
$1,388
|
-5%
|
461
|
313
|
$931
|
$801
|
| Russian Federation |
7,719
|
3,856
|
-50%
|
$8,120
|
$3,057
|
-62%
|
3,928
|
2,314
|
$4,634
|
$1,935
|
| Caribbean |
2,613
|
2,867
|
10%
|
$5,668
|
$6,169
|
9%
|
1,245
|
1,486
|
$2,678
|
$3,160
|
| Dominican Republic |
47
|
1,001
|
2030%
|
$146
|
$1,677
|
1049%
|
27
|
533
|
$95
|
$879
|
| Jamaica & Dep |
536
|
855
|
60%
|
$405
|
$935
|
131%
|
251
|
416
|
$198
|
$499
|
| Cayman Islands |
508
|
321
|
-37%
|
$892
|
$1,032
|
16%
|
244
|
174
|
$491
|
$589
|
| Central and South America |
2,235
|
2,711
|
21%
|
$4,417
|
$4,270
|
-3%
|
1,321
|
1,281
|
$2,559
|
$1,759
|
| Peru |
833
|
769
|
-8%
|
$1,649
|
$652
|
-60%
|
592
|
557
|
$1,214
|
$466
|
| Venezuela |
293
|
465
|
59%
|
$322
|
$480
|
49%
|
197
|
183
|
$146
|
$180
|
| Argentina |
363
|
412
|
13%
|
$527
|
$651
|
24%
|
198
|
97
|
$302
|
$125
|
| Taiwan |
845
|
1,856
|
120%
|
$3,785
|
$7,623
|
101%
|
446
|
1,094
|
$1,962
|
$4,359
|
| Eastern Europe |
1,323
|
1,720
|
30%
|
$1,159
|
$1,933
|
67%
|
884
|
654
|
$791
|
$641
|
| Poland |
1,044
|
1,558
|
49%
|
$865
|
$1,796
|
108%
|
697
|
585
|
$575
|
$586
|
| Romania |
210
|
162
|
-23%
|
$147
|
$138
|
-6%
|
118
|
69
|
$68
|
$55
|
| Latvia |
159
|
1,565
|
884%
|
$144
|
$801
|
456%
|
159
|
1,250
|
$144
|
$602
|
| Cote d'Ivoire |
161
|
401
|
149%
|
$136
|
$512
|
276%
|
102
|
260
|
$81
|
$295
|
| Australia |
7
|
237
|
3286%
|
$3
|
$382
|
12633%
|
7
|
147
|
$3
|
$284
|
| WORLD TOTAL |
152,714
|
172,056
|
13%
|
$427,355
|
$478,689
|
12%
|
79,418
|
89,703
|
$221,798
|
$253,473
|
| Year | General Import Value ($) | Imports for Consumption Value ($) |
| 1992 | 532,664,827,734 | 525,260,193,557 |
| 1993 | 580,659,358,399 | 575,074,716,324 |
| 1994 | 663,255,712,421 | 657,285,999,916 |
| 1995 | 743,542,778,922 | 738,612,855,783 |
| 1996 | 795,289,271,897 | 789,885,803,942 |
| 1997 | 870,670,654,890 | 862,691,228,814 |
| Year | Value of Exports ($) |
| 1992 | 448,163,612,021 |
| 1993 | 465,090,972,324 |
| 1994 | 512,626,476,328 |
| 1995 | 584,742,005,461 |
| 1996 | 625,074,999,447 |
| 1997 | 689,182,431,220 |
| Category | 1992 | 1987 | 1982 |
| Beef cows inventory, (farms) | 803241 | 841178 | 957698 |
| Beef cows inventory, (number) | 32545976 | 31652593 | 34202607 |
| Beef cows inventory 1-9, (farms) | 230154 | 268980 | 330440 |
| Beef cows inventory 1-9, (number) | 1147252 | 1318423 | 1554530 |
| Beef cows inventory 10-19 (farm) | 186759 | 195899 | 216515 |
| Beef cows inventory 10-19, (number) | 2533937 | 2661281 | 2926970 |
| Beef cows inventory 20-49, (farms) | 226595 | 225996 | 247492 |
| Beef cows inventory 20-49, (number) | 6804520 | 6782582 | 7414029 |
| Beef cows inventory 50-99, (farms) | 92015 | 87763 | 96408 |
| Beef cows inventory 50-99, (number) | 6102536 | 5823407 | 6377956 |
| Beef cows inventory 100-199, (farms) | 42406 | 39754 | 42375 |
| Beef cows inventory 100-199, (number) | 5514198 | 5188789 | 5505907 |
| Beef cows inventory 200-499, (farms) | 20326 | 18677 | 19405 |
| Beef cows inventory 200-499, (number) | 5709039 | 5259836 | 5431807 |
| Beef cows inventory 500 or more,(farms) | 4986 | 4709 | 5063 |
| Beef cows inventory 500 or more, (num) | 4734494 | 4618275 | 4991408 |
The impacts of trade restrictions as we see are very intense and direct. When the EU put the ban on genetically modified products, the US responded by appealing to the WTO. Then when the WTO ruled in favor of the US, the EU claimed that they would not be able to meet the deadline. Eventually the tariffs amounting to $ 191 million then increased to $ 202 million since the US didn’t want the exporters from the EU to enter the US markets.
[Food] Food Products which are genetically modified.
Australia $ 135 million annually
Ref-18
USA $20 million annually
Ref-14
Leading Importers (US $):
EU imports $ 20 million annually from the USA
Ref-14
V. Environment Clusters Even though scientists have not found any significant ill effects due to the hormones, one cannot be 100% sure that there will not be such undesirable effects. In the Italian case, it is not known for sure, but the babies started to have enhanced growth in their body after having canned baby food made of veal. Like this, hormones in the food may also lead to adults having problems in their body. Research has not found any problems yet, but care should be taken.
VI. Other Factors 2) Sosland
Publishing Company Milling & Baking News, "Glickman: sound science
over passion; US Secretary of
Agriculture, Dan Glickman on the decision of the European Commission to
label all genetically modified food," June
24, 1997.
3) The World Book, "Genetic engineering," 1992.
4) The Cargill
Bulletin, "Beef hormones: Hormones at work"
http://www.cargill.com/today/bulletin/b10963.html
5) The US Foreign
Agricultural Service, London UK: UK/EU Agricultural Issues
http://www.usembassy.org.uk/ukfas8.html
6) Financial Times, "EU to tell WTO it cannot meet beef import deadline," May 14, 1999.
7) U.S.-EU
banana war shelved for now, but fight over beef still on.
http://www.cnn.com/FOOD/news/9904/26/banana.beef.dispute.ap/
8) Importers
beef about U.S.-planned tariffs.
http://www.cnn.com/FOOD/news/9904/20/beef.fight.ap/
9) The Ottawa
Citizen, "Canada, U.S. seek tariff penalties on Europe: $ 279 million sought
for lost beef exports," May
15, 1999.
10) Financial Times, "EU faces US 100% duty on exports," May 15, 1999.
11) The New York Times, "International Business; U.S. threatens Europe with duties in beef dispute," May 15, 1999.
12) The Independent
(London), "Why the mafia is into your beef; The EU ban on growth hormones
for cows has
created a lucrative black market," Katharine Butler, March 19, 1996.
13) The Cargill Bulletin,
"Beef Hormones: Hormone ban"
http://www.cargill.com/today/bulletin/b10962.html
14) EU considering ban
on US beef, April 22, 1999.
http:// www.tcpalm.com
15) The Times (London), "US draws up hit list in beef war," May 14, 1999.
16) The New York Times, "Miffed at Europe, U.S. raises tariffs for luxury goods," March 4, 1999.
17) US Department
of Commerce Statistics: Leading markets for UB beef plus beef variety meat
exports
http://www.usmef.org/expstat/beef0299.html
18) Prince, Cathryn J.,"Europe bristles at hormone-fed beef," Christian Science Monitor, February 21, 1996.
19) The CIA Fact
Book 1998.
http://www.odci.gov/cia/publications/factbook
20) US imports
of merchandise from all countries
http://govinfo.kerr.orst.edu/cgi-bin/imp-all-country
21) US exports
of merchandise to all countries
http://govinfo.kerr.orst.edu/cgi-bin/exp-all-country
22) USA -
CaCattle and Calves -- Inventory and Sales
http://www.govinfo.kerr.orst.edu/ag-stateis.html
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