VZCZCXRO1531
RR RUEHAG RUEHDF RUEHIK RUEHLZ RUEHROV RUEHSR
DE RUEHTC #0075/01 0341005
ZNR UUUUU ZZH
R 031005Z FEB 09
FM AMEMBASSY THE HAGUE
TO RUEHC/SECSTATE WASHDC 2479
RUEHRC/USDA FAS WASHDC
INFO RUEHAT/AMCONSUL AMSTERDAM 4118
RUCNMEM/EU MEMBER STATES COLLECTIVE
RUCPDOC/DEPT OF COMMERCE WASHDC

UNCLAS SECTION 01 OF 02 THE HAGUE 000075 
 
SIPDIS 
 
STATE PASS USTR FOR BILL BUSIS, DAVID WEINER, ROGER WENTZEL 
 
USDA FAS FOR ONA/AILEEN MANNIX, OCRA/SHARYNNE NENON AND BETSY 
BAYSINGER 
 
COMMERCE FOR 4212/USFCS/MAC/EURA/OWE/DCALVERT 
 
E.O. 12958: N/A 
TAGS: EAGR ETRD ECON EUN NL
SUBJECT: NETHERLANDS: MIXED REACTION TO USG RETALIATION IN WTO BEEF 
HORMONES CASE 
 
Ref: STATE 4100 
 
THE HAGUE 00000075  001.2 OF 002 
 
 
¶1. SUMMARY:  Government of the Netherlands (GONL) officials 
cautioned that some EU Member States may push for more protectionist 
measures in response to the USTR's decision to increase tariffs 
(reftel), rather than finalizing the U.S.-EU "negotiated solution." 
The GONL will push the Commission and other EU Member States to 
support free trade and open markets as they considered next steps. 
Dutch meat industry reps believe that the Netherlands is being 
disproportionately penalized by the revised list and question why 
the U.S. would penalize a trade partner that has been supportive of 
U.S. positions before the European Commission.  End summary. 
 
¶2. Agricultural Counselor and Economic Officer met January 28 with 
officials from the Trade Policy and Globalization Department 
(responsible for WTO issues) of the Ministry of Economic Affairs to 
solicit official reaction to increased U.S. import tariffs on 
certain categories of Dutch frozen pork.  Frozen pork in tariff code 
02032940, "MEAT OF SWINE, NESOI, EXCEPT PROCESSED, FROZEN," is the 
only Dutch export significantly affected by the increased tariffs on 
EU products in retaliation for continued EU intransigence in the WTO 
beef hormones dispute.  The Netherlands exported approximately 2,018 
tons of frozen pork worth $8.9 million to the U.S. in FY 2008, or 5 
percent of the EU-27 total. 
 
------------------------------ 
REACTION FROM DUTCH GOVERNMENT 
------------------------------ 
 
¶3. Ministry officials expressed the GONL's disappointment and 
surprise at USTR's decision to include frozen pork on its tariff 
list, describing it as a "serious blow" to Dutch meat producers. 
Dutch government and industry believe that they are 
disproportionately affected by our decision, as the Netherlands is a 
major pork exporter, and pork products feature prominently on USTR's 
list.  The GONL asserted that, although it had joined other Member 
States in voting against allowing imports of hormone-treated U.S. 
beef, it remained committed to a science-based approach to all 
agricultural trade decisions.  Dutch officials noted in particular 
their consistent support for allowing GMOs into the EU market if 
they had been scientifically proven to be safe.  The GONL had not 
supported U.S. beef imports not because of the competition it posed 
to Dutch beef producers, but because Dutch public opinion remained 
largely opposed to the use of growth hormones and genetic 
modifications in food products.  Ministry officials added, however, 
that public attitudes on GMOs had begun to shift, particularly as 
the bulk of scientific evidence supports the safety of GMOs.  As 
strong proponents of development assistance to third countries, the 
Dutch also support GMOs' potential to provide sustainable food 
security. 
 
¶4. Our GONL interlocutors expressed concern that USTR's decision 
could produce a backlash in the EU.  Instead of the desired effect 
of prompting Member States toward a negotiated solution to the beef 
hormone case, the new tariffs could be seen as more protectionism - 
something that the U.S. had said it would not endorse at home or 
abroad as a valid reaction to the global economic slowdown.  EU 
Member States could opt in favor of their own protectionist measures 
- a natural reaction in times of financial crisis - thus escalating 
Q- a natural reaction in times of financial crisis - thus escalating 
the cycle of retaliation rather than moving toward resolution. 
 
 
¶5. Despite these concerns, Ministry officials reiterated the 
Netherlands' strong commitment to free trade and open markets.  They 
said the GONL would push the Commission and other EU Member States 
in this direction as they considered next steps, and away from 
retaliatory or protectionist stance.  They added that finalizing the 
existing negotiated solution in the beef hormones case could be the 
most constructive outcome. 
 
¶6. Ministry officials said the Netherlands, as a major food and 
flower producer, has a strong voice on agricultural trade issues 
within the EU.  Dutch officials enjoy a close working relationship 
with EU Commissioner for Agriculture and Development Mariann Fischer 
Boel and her staff, and the GONL has formal and informal contact on 
agricultural issues at all levels with the Commission and Member 
States. 
 
---------------------------- 
REACTION FROM DUTCH INDUSTRY 
---------------------------- 
 
 
THE HAGUE 00000075  002.2 OF 002 
 
 
¶7. On January 26, Charge d'Affaires met with representatives of the 
Dutch meat processing industry who expressed concerns about the 
revised retaliation list.  The Dutch reps believe that the 
Netherlands is being unfairly singled out and is suffering more than 
other countries.  They noted that Dutch veal has been effectively 
banned from the U.S. market since the initial retaliation list. 
Now, the reps say, Dutch pork is effectively banned as well.  The 
reps asserted that Dutch meat exports to the U.S. had been hampered 
over the past 10 years due to "political" reasons, and now, just as 
exports have begun to increase again, the U.S. is hampering them 
again.  They asserted that this is particularly unfair because the 
Dutch have been supportive of the U.S. in finding a resolution to 
the beef hormone problem.  (Comment:  The U.S. did not ban Dutch 
pork for "political" reasons, but rather due to the presence of 
Swine Fever and, later, the introduction by the Netherlands' largest 
meat packing company of an unapproved inspection system.  Actual 
Dutch exports over the last 5 years have been minimally affected. 
Despite the reps' claim to the contrary, the Dutch voting record in 
Brussels on meat trade issues has been more unsupportive of the U.S. 
than not.  End comment.) 
 
¶8. Charge emphasized to the Dutch that the real problem is that the 
European Commission (EC) has been dragging its feet on resolving the 
beef hormone issue, and that industry should urge the GONL to push 
Brussels to come to an agreement.  Negotiations on increased access 
for U.S. hormone-free beef were going well until they stalled in the 
EC 7 months ago; if the EC were to return to the table and complete 
negotiations, the U.S. would lift its tariffs. 
 
¶9. The Dutch reps asked if it would be possible for the new 
Administration to delay implementation of the revised list.  This 
would give industry and government some negotiating space.  The 
Charge said we would relay the request, but a delay was unlikely. 
 
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COMMENT 
------- 
 
 
¶10. In our meetings, Emboffs assured the GONL and Dutch meat 
producers that the USG's retaliation list was not designed to target 
the Netherlands or any other EU Member State, but rather to prompt 
movement by the EU in the beef hormone case.  We urged the GONL and 
industry to use the Netherlands' strong voice in the EU to encourage 
the conclusion of a negotiated solution in the WTO case, as this 
would be the fastest and most efficient means of reducing the USG's 
retaliatory tariffs on EU products.  GONL and industry reps said 
they would take USG points under consideration as they discussed 
next steps with the European Commission and other Member States. 
 
 
GALLAGHER