VZCZCXRO7835
OO RUEHAG RUEHDF RUEHIK RUEHLZ RUEHROV RUEHSR
DE RUEHC #4100/01 0151546
ZNR UUUUU ZZH
O P 151534Z JAN 09
FM SECSTATE WASHDC
TO EU MEMBER STATES COLLECTIVE IMMEDIATE
INFO RUEHAK/AMEMBASSY ANKARA PRIORITY 6831
RUEHBJ/AMEMBASSY BEIJING PRIORITY 5226
RUEHSW/AMEMBASSY BERN PRIORITY 5283
RUEHBR/AMEMBASSY BRASILIA PRIORITY 1242
RUEHBU/AMEMBASSY BUENOS AIRES PRIORITY 5780
RUEHBY/AMEMBASSY CANBERRA PRIORITY 3346
RUEHJA/AMEMBASSY JAKARTA PRIORITY 2376
RUEHME/AMEMBASSY MEXICO PRIORITY 8040
RUEHMO/AMEMBASSY MOSCOW PRIORITY 7088
RUEHNE/AMEMBASSY NEW DELHI PRIORITY 2312
RUEHOT/AMEMBASSY OTTAWA PRIORITY 3612
RUEHSA/AMEMBASSY PRETORIA PRIORITY 2506
RUEHRH/AMEMBASSY RIYADH PRIORITY 0306
RUEHUL/AMEMBASSY SEOUL PRIORITY 9713
RUEHKO/AMEMBASSY TOKYO PRIORITY 7469
RUEHWL/AMEMBASSY WELLINGTON PRIORITY 6552

UNCLAS SECTION 01 OF 08 STATE 004100 
 
SIPDIS 
 
E.O. 12958: N/A 
TAGS: ECON ETRD EUN EAGR
SUBJECT: USTR ANNOUNCES REVISIONS TO HORMONE BEEF 
SANCTIONED PRODUCTS 
 
¶1.  (U) Summary:  On January 14, 2009, the United States 
Trade Representative (USTR) announced a revised list of 
products subject to retaliatory duties in connection with the 
long-standing EU ban on beef from cattle raised with growth 
hormones.  The changes to the retaliation list are intended 
to promote a market-opening resolution to the dispute. USTR 
recently led an interagency review of the retaliation list 
and decided to change the list of products and to apply 
retaliatory duties to products of all EU Member States except 
the United Kingdom, which alone opposed the original ban. 
The revised list will be available on the USTR website 
immediately and will be published in the Federal Register in 
several days.  Customs and Border Protection will begin 
collecting increased duties on products that will be added to 
the revised list on March 23, 2009.  The changes to the list 
are likely to arouse keen host country and press interest in 
the EU, and may also attract the interest of governments or 
press in other G20 countries.  Post may use the following 
talking points and, if asked, Q and As when responding to 
inquiries. End summary. 
 
¶2.  (U) On January 14, 2009, USTR announced revisions to the 
list of products subject to retaliatory duties in connection 
with the long-standing EU ban on beef from cattle raised with 
growth hormones.  The revised list is available on the USTR 
website at www.ustr.gov.  USTR has been working with State, 
USDA, Commerce and other agencies on these revisions.  The 
changes are intended to promote a market-opening resolution 
to the World Trade Organization (WTO) dispute over the EU 
ban.  The length of time the increased duties remain in 
effect will depend on the willingness of the European 
Commission and EU Member States to conclude a market-opening 
resolution to the dispute. 
 
¶3. (U) For approximately 20 years, the EU has banned imports 
of beef and beef products produced with growth-promoting 
hormones.  In 1998, the WTO Dispute Settlement Body found 
this ban inconsistent with WTO rules and determined that it 
was causing over $100 million in trade harm annually to U.S. 
beef producers.  The WTO authorized the United States in 1999 
to suspend tariff concessions and impose increased duties on 
certain EU products.  Acting on the basis of that 
authorization, the United States imposed increased duties on 
certain products of countries that were then members of the 
EU (except the United Kingdom).  The  products and Member 
States subject to those duties have remained unchanged since 
1999, even as new countries have joined the EU.  U.S. beef 
producers, meanwhile, have suffered substantial trade damage 
since the 1998 WTO findings. 
 
¶4. (U) The USG recently reviewed whether the long-standing 
duties were effectively encouraging a resolution of the 
dispute.  After receiving more than 600 public comments and 
interagency input, USTR decided to change the list of 
products and to apply duties to products of all current EU 
Member States except the UK.  USTR also increased the rate of 
duty on one product, Roquefort cheese. 
 
¶5. (U) USTR announced the revised list on January 14; it will 
appear in the Federal Register in several days, and U.S. 
Customs and Border Protection will begin collecting duties on 
products that have been added to the revised list on March 
23, 2009. 
 
¶6. (U) The EU is now seeking a finding that it has come into 
compliance with its WTO obligations and that, therefore, 
increased U.S. duties on EU products are no longer warranted. 
 
¶7. (U) USTR and other agencies believe changing the list of 
products subject to retaliatory duties will provide impetus 
to the EU to seek a WTO-consistent resolution of the dispute. 
 
 
STATE 00004100  002 OF 008 
 
 
¶8. (U) On a separate track, U.S. and EU negotiators had tried 
to negotiate an interim agreement, whereby the EU would 
provide increased access to U.S. beef produced without the 
aid of growth hormones and the United States would suspend 
the action imposing increased duties on certain EU products. 
Negotiations on this proposal, now underway for more than 
five years, have stalled. 
 
¶9. (U) Following are talking points and Qs and As on 
revisions to the beef hormones retaliation list.  Posts can 
draw on the talking points as needed, but Q and As should be 
used only if asked.  Questions on this issue should be 
addressed to Bill Busis (202-395-3058, 
William Busis@ustr.eop.gov), David Weiner (202-395-9679, 
david weiner@ustr.eop.gov) or Roger Wentzel (202-395-5124, 
roger wentzel@ustr.eop.gov) at USTR or Jenna Purl, Office of 
European Regional Affairs, (202-647-1605, purljk@state.gov). 
Questions about domestic litigation on the 1999 retaliation 
list should be directed to Bill Busis. 
 
 
Talking Points on Revision of Beef List 
--------------------------------------- 
 
Talking points to be used with representatives of the 
European Commission and of EU Member States regarding the 
modified list of products against which retaliatory import 
duties will be imposed in the WTO Beef Hormones case. 
 
-- On January 14, 2009, the United States announced that - 
after nearly 10 years - it is modifying the list of products 
in connection with the WTO dispute settlement case on the 
EU's ban on beef and beef products from animals that have 
been administered any of six specific growth-promoting 
hormones. 
 
-- Nearly 11 years ago, in 1998, the WTO Dispute Settlement 
Body adopted findings in favor of the United States, stating 
that the EU's ban was not scientifically justified and thus 
inconsistent with the WTO Agreement on the Application of 
Sanitary and Phytosanitary Measures (SPS Agreement). 
 
-- When the EU chose not to comply with the WTO rulings, the 
WTO authorized the United States to impose increased duties 
on EU products with a comparable annual trade value in the 
amount of $116.8 million.  The increased duties went into 
effect in July 1999 and the list of products subject to those 
duties has remained unchanged since that time. 
 
-- Despite the WTO findings and nearly a decade of import 
duties, U.S. beef producers remain shut out of the EU market 
in one of the longest-running unresolved trade disputes in 
the history of the WTO. 
 
-- Given these circumstances, the United States has concluded 
that the 1999 duties have not been effective in encouraging 
the EU to resolve the dispute and that modifications to the 
list were needed to try to change the dynamic in the EU and 
to address the economic effects of the duties in the United 
States. 
 
-- Following an intensive review, during which a U.S. 
government team reviewed more than 600 public submissions, we 
decided to revise the existing list of products against which 
duties were initially imposed in 1999.  In addition to 
imposing duties on a number of products that were not covered 
by the original list, the revised list covers products 
imported from Member States that joined the EU after 1999. 
The rate of duty will also be increased for one product that 
will remain on the list from 1999. 
 
-- Our hope is that the modification of the list will promote 
a WTO-consistent resolution to the dispute. One possible 
resolution that the United States and EU have been exploring 
for five years is a negotiated solution.  Under this 
scenario, the EU would provide increased access to U.S. beef 
 
STATE 00004100  003 OF 008 
 
 
produced without the aid of growth hormones.  The United 
States would in turn suspend the increased duties on certain 
EU products.  (NB: This and the points below describing the 
status of the market access negotiations with the European 
Commission should only be used in discussions with European 
Commission or EU Member State officials.) 
 
-- This interim solution would provide benefits to both 
parties: the EU would obtain a lifting of the increased 
tariffs, and EU consumers would gain access to high quality, 
"hormone-free" U.S. beef.  The United States would finally 
obtain market access for U.S. beef producers, who have 
suffered substantial trade damage since the ban first went 
into effect over 20 years ago. 
 
-- The United States and the Commission have reached 
agreement on some elements of this interim solution, but the 
negotiations have been stalled for the past five months 
because the European Commission has refused to negotiate a 
tonnage figure for U.S. "hormone-free" beef. 
 
-- The duration of the WTO-authorized tariff action is 
entirely within the hands of the Commission and EU Member 
States.  We urge your government to instruct the Commission 
to move forward on concluding an interim agreement in the 
beef dispute. 
 
 
Qs and As 
--------- 
 
 
¶Q. The EU claims its 2003 beef ban is WTO-consistent, the 
Appellate Body advised the parties to initiate an Article 
21.5 proceeding to examine this issue, and the EU has now 
requested consultations.  Does it make sense to change the 
list in these circumstances? 
 
¶A. Yes.  The Appellate Body was explicit that it was not 
making a finding on whether the EU's new ban has brought it 
into compliance, and that the United States is entitled to 
maintain the duties until the WTO does make a finding that 
the EU has come into compliance. 
 
The 1996 WTO dispute remains unresolved more than ten years 
later.  Our beef producers have been suffering economic harm 
for this entire period.  And those depending on imports of 
the products subject to the duties have been suffering the 
economic consequences for almost 10 years.  The WTO does not 
require the United States to maintain that economic burden on 
the same people indefinitely. 
 
Until there is a new WTO ruling or a resolution of the 
dispute, the United States will continue to exercise its WTO 
rights. 
 
 
¶Q. (To be used if someone argues that it is WTO-inconsistent 
to revise the 1999 action.) 
 
¶A. In 1999, the WTO authorized the United States to suspend 
tariff concessions and to increase duties on EU products with 
an annual trade value of $116.8 million.  The revised list, 
like the original 1999 list, is drawn from the list of 
WTO-authorized products and is within the WTO-authorized 
amount.  It is fully within U.S. rights under the WTO 
Agreement to change the composition of the product list.  We 
would also note that the Commission has in the past several 
years itself changed lists of products subject to 
WTO-authorized increased duties. 
 
¶Q. In 2000 Congress amended Section 301 to require 
semi-annual changes to the list of products subject to 
increased duties.  But the list hasn't changed until now. 
Will USTR now start changing the list every six months? 
 
¶A. The statute allows flexibility for USTR to consider 
 
STATE 00004100  004 OF 008 
 
 
relevant circumstances, including the status of settlement 
negotiations, in deciding on when and how to modify an action 
taken under Section 301.  It would not be productive or 
appropriate to try to predict when and if circumstances might 
call for future modifications to the list of products subject 
to increased duties.  Rather, the goal of this modification 
is to encourage a resolution of the dispute, which, if 
successful, would allow for USTR to lift the duties 
altogether. 
 
¶Q. Given that nearly 10 years have passed since the original 
retaliation list was adopted, what was the methodology that 
the United States used to calculate trade values of the list? 
 
 
¶A. In developing the revised list, the United States drew 
upon the list of items and associated trade values that were 
the basis for the original WTO authorization to suspend 
concessions. 
 
 
¶Q. What relationship does the October 16 WTO Appellate Body 
Report have to USTR's decision to announce possible changes 
to the list just two weeks later? 
 
¶A. On October 16, the Appellate Body rejected the 
Commission's claims that the United States had to terminate 
the action taken with respect to EU products in 1999, and the 
Appellate Body confirmed that the WTO authorization to the 
United States to suspend WTO tariff concessions to the EU 
remains in effect.  The Appellate Body decision was not 
determinative, but it was certainly a factor that we 
considered. 
 
 
¶Q. Could you provide more information on the domestic court 
proceeding referenced in press reports, and how it influenced 
USTR's action? 
 
¶A. A domestic importer of one of the products on the current 
list brought a case in the U.S. Court of International Trade 
claiming that domestic law required USTR to review the 
effectiveness of the current list of products subject to 
increased duties.  The court upheld the claim that a review 
needed to be conducted, and on October 15, 2008, the court 
issued an order that required USTR to conduct a review.  USTR 
had to report the results of the review to the court by no 
later than January 14, 2009. 
 
 
¶Q. Why was this decision made so close to the end of the 
Administration? 
 
¶A. The timing was not determined by any political factor, but 
rather by the date we started the review, and by the progress 
of the review. 
 
USTR announced the initiation of the review on October 31, 
shortly after the WTO Appellate Body, on October 16, 
confirmed that the U.S. authorization to suspend concessions 
remained in effect.  Upon initiating the review, we explained 
that we hoped to complete the process by the end of the year. 
 
The timing was also influenced by a domestic court 
proceeding.  On October 15, 2008, the U.S. Court of 
International Trade ordered the USTR to conduct a review of 
the effectiveness of the current list.  USTR was required to 
report the results of its review to the court on January 14, 
¶2009. 
 
As part of the review, USTR issued a request for comments. 
Because of the large number of comments received (over 600), 
the review could not be completed by the end of 2008.  We 
needed an additional extra two weeks to finish the work. 
 
The United States initiated action to enforce its rights in 
the WTO more than ten years ago, so it would be difficult to 
 
STATE 00004100  005 OF 008 
 
 
suggest that we've rushed a decision to modify the 
retaliation list. 
 
 
¶Q. How did you decide which products to add to/remove from 
the list? 
 
¶A. An interagency team of economists and trade policy experts 
reviewed the public comments submitted in response to the 
November 6 Federal Register notice.  In making adjustments to 
the list, our goal was to select a combination of products 
that we believed would be most effective in terms of 
encouraging a resolution of the dispute, while at the same 
time not causing disproportionate harm to U.S. economic 
interests. 
 
 
¶Q. As in 1999, you exclude the UK from any retaliation under 
the revised list.  Why has the UK received such preferential 
treatment? 
 
¶A. The UK has opposed the EU's ban on U.S. meat and meat 
products since the inception of this dispute.  Accordingly, 
the United States excluded UK products from the 1999 list. 
We understand that the UK continues to oppose the ban, and 
for this reason we are maintaining our 1999 decision to 
exclude UK products. 
 
 
¶Q. Why were products from X country, or why was a particular 
product, included on the retaliation list? 
 
¶A. In constructing the revised list, we chose from the list 
of potential products and trade values authorized by the WTO 
in 1999. 
 
We made a case-by-case examination of each product on the 
WTO-authorized list, and we were principally guided by two 
considerations: potential effectiveness in promoting a 
resolution of the dispute and avoiding disproportionate 
economic harm to U.S. interests. 
 
We cannot provide detailed comments on why any particular 
product from any particular country was included or excluded 
from the new list.  Every decision was based on full 
consideration of all available information, including the 
public comments received in response to the notice. 
 
If any member State is unhappy with the composition of the 
modified list, they have a clear recourse: They should urge 
the Commission to promptly move forward on concluding a 
WTO-consistent resolution of the dispute. 
 
 
¶Q. Why does Italy account for a significant portion of the 
retaliation? 
 
¶A. In constructing the revised list, we chose from the list 
of potential products and trade values authorized by the WTO 
in 1999. 
 
We made a case-by-case examination of each product on the 
WTO-authorized list, and we were principally guided by two 
considerations: potential effectiveness in promoting a 
resolution of the dispute and avoiding disproportionate 
economic harm to U.S. interests. 
 
We cannot provide detailed comments on why any particular 
product from any particular country was included or excluded 
from the new list.  Every decision was based on full 
consideration of all available information, including the 
public comments received in response to the notice. 
 
If Italy or any other member State is unhappy with the 
composition of the modified list, they have a clear recourse: 
They should urge the Commission to promptly move forward on 
concluding a WTO-consistent resolution of the dispute. 
 
STATE 00004100  006 OF 008 
 
 
 
¶Q. Why does Denmark account for a significant portion of the 
retaliation? 
 
¶A. In constructing the revised list, we chose from the list 
of potential products and trade values authorized by the WTO 
in 1999. 
 
We made a case-by-case examination of each product on the 
WTO-authorized list, and we were principally guided by two 
considerations: potential effectiveness in promoting a 
resolution of the dispute and avoiding disproportionate 
economic harm to U.S. interests. 
 
We cannot provide detailed comments on why particular 
products were included or excluded from the new list.  Every 
decision was based on full consideration of all available 
information, including the public comments received in 
response to the notice. 
 
If Denmark or any other member State is unhappy with the 
composition of the modified list, they have a clear recourse: 
They should urge the Commission to promptly move forward on 
concluding a WTO-consistent resolution of the dispute. 
 
 
¶Q. Why did you impose 300% retaliatory duties on Roquefort 
cheese? 
 
¶A. The purpose of these duties is to have an impact on 
particular constituencies to generate support for a change in 
the EU's approach to this dispute.  Imports of Roquefort 
cheese have continued since 1999, notwithstanding the 
imposition of 100% duties.  We expect that a 300% duty will 
help to achieve the desired effect. 
 
 
¶Q. Why did you impose retaliatory duties on the imports of 
almost all EU members? 
 
¶A. The Commission and EU Member States imposed the ban on 
U.S. beef, and the Commission and EU Member States each have 
a role in deciding whether to reach agreement on an interim 
resolution.  The only Member State we excluded was the UK, 
because it opposed the ban on U.S. beef from the outset. 
 
 
¶Q. Why did you impose retaliatory duties on the Member States 
who joined the EU after 2003, when the beef hormones ban was 
last voted on? 
 
¶A. The Commission and all EU member States are applying the 
ban to U.S. products and have a role in deciding whether to 
reach agreement on an interim solution. 
 
 
¶Q. We heard that U.S. pork producers put considerable 
pressure on you to retain pork items on the list.  Did the 
pork industry influence the outcome of the list? 
 
¶A. We received a broad range of public comments, including 
from the U.S. pork industry.  Each decision was made on a 
case-by-case basis. 
 
 
¶Q. Do you plan to implement the 100 percent tariffs 
retroactively? 
 
¶A. The increased duties will apply to imports on or after 
March 23, 2009, approximately 60 days after the revised list 
is expected to be published in the Federal Register.  With 
respect to products that will no longer be subject to this 
action, the additional duties currently being applied will 
not apply to imports on or after March 23, 2009. 
 
¶Q. When will the increased duties go into effect? 
 
STATE 00004100  007 OF 008 
 
 
¶A. The increased duties will apply to imports on or after 
March 23, 2009, approximately 60 days after the revised list 
is expected to be published in the Federal Register.  With 
respect to products that will no longer be subject to this 
action, the additional duties currently being applied will 
not apply to imports on or after March 23, 2009. 
 
 
¶Q. Could you describe the basic outline of the interim 
agreement you have been discussing with the EU? 
 
¶A. We have been trying to reach an agreement with the 
Commission in which U.S. livestock producers would achieve 
increased access for U.S. beef from cattle not treated with 
growth hormones in exchange for a U.S. suspension of the 
action imposing increased duties on certain EU products. 
 
This interim solution would provide benefits to both parties: 
the EU would obtain a lifting of the increased tariffs, and 
EU consumers would gain access to high quality, 
"hormone-free" U.S. beef.  The United States would finally 
obtain market access for U.S. beef producers, who have 
suffered substantial trade damage since the 1998 WTO findings 
alone. 
 
The United States and the Commission have reached agreement 
on some elements of this interim solution, but the 
negotiations have been stalled for the past five months 
because the European Commission has refused to negotiate a 
tonnage figure for U.S. "hormone-free" beef. (NB: This and 
other points describing the status of the market access 
negotiations with the European Commission should only be used 
in discussions with European Commission or EU Member State 
officials.) 
 
¶Q. Won't this revision of the list have a negative effect on 
the ongoing negotiations between the United States and the EU 
to reach an interim settlement on the beef hormone issue? 
 
¶A. We believe that the modification of the product list will 
promote a resolution.  The United States has been attempting 
to resolve this dispute for many years.  The negotiations are 
now stalled because the Commission will not negotiate on the 
market access issue at the core of a potential interim 
settlement.  It is hard to see how the current negotiating 
situation could get worse.  The U.S. interim goal remains a 
market-opening agreement that benefits both parties.  (NB: 
This and other points describing the status of the market 
access negotiations with the European Commission should only 
be used in discussions with European Commission or EU Member 
State officials.) 
 
¶Q. By imposing prohibitive import duties on previously 
unaffected products, is the United States acting consistently 
with the spirit of the November G20 commitment on a year-long 
standstill on protectionist trade measures? 
 
¶A. (NB: This question refers to the November 15, 2008 
Declaration of the G20 Summit on Financial Markets and the 
World Economy, in which G20 members pledged to observe a 
one-year standstill on new trade restrictions.  The relevant 
text follows: "We underscore the critical importance of 
rejecting protectionism and not turning inward in times of 
financial uncertainty.  In this regard, within the next 12 
months, we will refrain from raising new barriers to 
investment or to trade in goods and services, imposing new 
export restrictions, or implementing World Trade Organization 
(WTO) inconsistent measures to stimulate exports.") 
 
The U.S. decision to modify the list of EU imports subject to 
increased duties in the beef hormones dispute is not 
inconsistent with the G20 Declaration. 
 
The United States is modifying a long-standing response to a 
trade barrier, not imposing a new barrier.  By changing the 
composition of the retaliation list, the United States is 
 
STATE 00004100  008 OF 008 
 
 
seeking to promote the removal of a trade barrier that has 
existed for almost two decades.  The United States goal is 
not to shelter domestic industries. 
 
The right of the United States to impose increased duties, 
and the trade value of the action, were established by the 
WTO in 1999.  As recently as October 2008, a WTO Appellate 
Body panel reaffirmed the U.S. right to take trade action 
relating to this dispute. 
 
Under the modification, the United States is merely changing 
the composition of the product list. 
 
¶Q. Is there any doubt about the safety of these hormones? 
Presumably the EU wouldn't take this position if there were 
not some reason for consumers to be concerned about hormones. 
 
¶A. Scientific reviews of these hormones, established 
international standards pertaining to their use, and a 
longstanding history of their administration for growth 
promotion purposes all support the conclusion that the proper 
use of these hormones as growth promoters in animals for 
human consumption is safe.  In fact, the natural hormones 
that are subject to the EU's ban also occur naturally in 
every human as well as in foods such as eggs, butter and 
milk, often in concentrations substantially greater than in 
meat from cattle treated with these hormones. 
RICE