Brussels, 8 November 2004
EU-US: EU requests WTO to confirm that there is no justification for US/Canada to continue to apply sanctions
Today, the EU has initiated a dispute against Canada and the United States in the World Trade Organization (WTO). The EU challenges Canada’s and the United States’ continued imposition of sanctions against EU exports because of the EU’s ban on hormone beef. The EU believes these sanctions are illegal since the EU has removed the measures found to be WTO-inconsistent in the WTO dispute on hormone beef dating from 1998. Canada and the United States have maintained their sanctions in place, while refusing to challenge the Directive adopted by the EU to comply with the WTO ruling.
EU Trade Commissioner Pascal Lamy stated: “There is no reason why European companies should continue to be targeted by sanctions when they export to Canada and the United States. The EU ban on certain growth promoting hormones is now in full respect of our international obligations. We have put in place revised legislation based on a thorough and independent scientific risk assessment”.
He added: “Our move to get the sanctions lifted shows our respect for the WTO as the proper forum to resolve trade disputes instead of the unilateral maintenance of sanctions. If Canada and the United States disagree with the EU measures, they should suspend their sanctions and refer their apparent disagreement to the WTO as the EU has done recently in the FSC case.”
The EU has launched today’s dispute by requesting formal consultations with Canada and the United States within the dispute settlement system of the WTO. Sixty days are foreseen for such consultations before the case can be taken to a panel for obtaining a binding ruling on the contentious question.
The US and Canadian sanctions against the EU consist of an increase in tariffs for a selected list of products in the amount of respectively 116.8 million USD and 11.3 million CDN$. Sanctions have been in place since July 1999.
On 13 February 1998, the WTO Dispute Settlement Body (“DSB”) adopted the panel and Appellate Body reports in EC - Hormones. The EU lost the Hormones dispute because, according to the WTO Appellate Body, the previous EU legislation was not based on a proper scientific risk assessment and because the supporting scientific evidence was insufficient.
The EU has eliminated those deficiencies by basing the new EU Hormones Directive of 22 September 2003 on a full scientific risk assessment that was conducted over the years 1999-2002. The independent Scientific Committee on Veterinary Measures relating to Public Health conducted this risk assessment and specifically re-evaluated the potential risks to human health from hormone residues in bovine meat. The results of this evaluation substantiated the case for the prohibition on the use of the hormones in question for growth promotion.
Accordingly, the new Directive maintains the permanent prohibition on oestradiol 17ß and imposes a provisional ban on the other five hormones (testosterone, progesterone, trenbolone acetate, zeranol and melengestrol acetate). The provisional prohibition will apply while the EU seeks more complete scientific information to clarify the present state of knowledge of these substances. The Commission will regularly review scientific information that may become available in the future. The new Directive was published and entered into force on 14 October 2003. The EU Member States were given one year for implementation, a time-period that has now expired.
On 27 October 2003, the EU notified to the WTO that it has implemented the WTO ruling of 1998 and that, as a consequence, the United States’ and Canada’s sanctions vis-à-vis the EU are no longer justified. The United States and Canada disagreed and since then refuse to lift their sanctions.
Canada and the United States also refused to initiate a compliance dispute in the WTO, as it is foreseen for such situations in the WTO’s Dispute Settlement Understanding. The EU has tried to convince Canada and the United States to bring their case to the WTO and has offered to agree on a procedure to resolve the disagreement over compliance. Regrettably, these efforts remained without success.
The WTO Agreement does not allow Canada and the United States to simply continue to apply sanctions, since it amounts to a prohibited unilateral determination of alleged non-compliance by the EU. The situation is equivalent to that now faced in the dispute regarding Foreign Sales Corporations, where the United States has recently adopted a law which the EU does not consider to be fully WTO-compatible. In this case, however, the EU has (unlike Canada and the United States) initiated compliance proceedings in the WTO and has indicated its readiness to suspend sanctions while dispute settlement proceedings are ongoing.
See also: IP/03/1393
 Directive 2003/74/EC of the European Parliament and of the Council of 22 September 2003 amending Council Directive 96/22/EC concerning the prohibition on the use in stockfarming of certain substances having a hormonal or thyrostatic action and of beta-agonists