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WTO Ruling On Hormones Is Bittersweet

This week, I couldn’t help but get excited when I read the headlines regarding the World Trade Organization (WTO) ruling on the European hormone ban. After all, the headlines asserted in one way or another that the EU ban on hormones was wrong and was somehow a victory for U.S. beef producers.

The coverage talked about how European consumers deserved and would finally get the right to purchase U.S. beef. Certainly, everyone understands that U.S. beef doesn’t have to take a second seat to anyone from a safety standpoint, and is the clear world leader in terms of taste.
The problem is that the latest WTO finding didn’t really change anything. It just reiterates that Europe’s position is unjustified from a scientific viewpoint and allows the U.S. and others to continue their punitive tariffs. While that may be great news for the U.S. Treasury, which gets to continue to pocket $177 million/year in penalties, it does very little for U.S. beef producers.

While the data on the value of foreign trade might be overwhelming from an economist’s viewpoint, this hormone issue is a prime example of why so many cattleman are lukewarm about participating in a global beef market. The punitive tariffs and the first WTO challenge won by the U.S. on this issue came in 1996. It’s now more than a decade later, and all this latest WTO pronouncement does is maintain the status quo.

This issue for Europe was never about food safety or product quality; it was always about erecting a non-tariff trade barrier. Yes, Europe has had to pay a penalty for that, but obviously they’re willing to pay it. Unless U.S. beef producers can have some degree of certainty that trade agreements will be followed and enforced, then there may be more risk than reward in these trade deals.