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Beef Deal A Gleam Of Hope For U. S.-EU Trade Tensions

The United States and European Union have agreed to temporarily put aside a 20-year fight over beef and do some business – a new pragmatic stage in a testy trade relationship that experts say could bode well for other bilateral fights.

The four-year provisional deal on beef does not solve the fundamental divide over food safety regulations that has kept most U. S. beef out of the EU market since the late 1980s.

But it shows a willingness on both sides to try to start to find ways to work through thorny food issues, observers said.

“The significance of this deal is the fact that it is an attempt by both sides to see if we can overcome the lack of trust,” said Gregg Doud, chief economist of the U. S. National Cattlemen’s Beef Association, in an interview.

“There is such a low level of trust between the two sides on trade issues at the moment, in particular on agriculture.”

The battle began when Brussels, citing cancer fears, banned beef from cattle raised with growth hormones, widely used in U. S. cattle feed rations.

It is the oldest of several food science debates. The EU also bans genetically modified grain crops, commonly grown in U. S. fields, and meat treated with chlorine washes, a routine practice U. S. processors use to kill pathogens.

In the beef fight, the World Trade Organizat ion ruled the ban was unjustified, and allowed the United States to apply steep tariffs on European goods.

But cattle producers did not directly benefit from the tariffs, which went into U. S. Treasury coffers.

Several years ago, the beef industry started exploring a different idea: converting the sanctions into more market access for high-end beef raised without hormones, currently a tiny niche in the $3.6 billion of U. S. beef exports.

In 2008, the United States shipped a total of almost 5,000 tonnes of the niche beef to the EU, worth about $51.5 million – more than double the previous year’s volume, but less than half of an existing quota, which has a 20 per cent duty.

The deal will allow an additional 20,000 tonnes of U. S. beef to enter the European Union duty free for three years, fol lowed by 45,000 tonnes for the fourth year of the deal.

“In no way, shape or form would I characterize this as some sort of revelation or breakthrough,” Doud said. “I would characterize it more as a good first step, an ability for the EU and the U. S. on agricultural trade issues to make progress.”

How much of the quota will be filled depends on prices. Producers face added costs producing beef without hormones.

It’s unlikely the U. S. industry would be able to ship the full 45,000-tonne quota unless the EU changed its policy on antimicrobial washes, an industry source said.

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