View metadata, citation and similar papers at core.ac.uk brought to you by CORE provided by PennState, The Dickinson School of Law: Penn State Law eLibrary Penn State International Law Review Volume 25 Article 12 Number 2 Penn State International Law Review 9-1-2006 Beef Hormones Foster Animosity and Not Growth: An Analysis of the World Trade Organization Solving the United States' and European Communities Beef Hormone Dispute Nicole C. Lloyd Follow this and additional works at: http://elibrary.law.psu.edu/psilr Recommended Citation Lloyd, Nicole C. (2006) "Beef Hormones Foster Animosity and Not Growth: An Analysis of the World Trade Organization Solving the United States' and European Communities Beef Hormone Dispute," Penn State International Law Review: Vol. 25: No. 2, Article 12. Available at: http://elibrary.law.psu.edu/psilr/vol25/iss2/12 This Comment is brought to you for free and open access by Penn State Law eLibrary. It has been accepted for inclusion in Penn State International Law Review by an authorized administrator of Penn State Law eLibrary. For more information, please contact [email protected]. Beef Hormones Foster Animosity and Not Growth: An Analysis of the World Trade Organization Solving the United States' and European Communities' Beef Hormone Dispute Nicole C. Lloyd* This article is current as of January 2006. The ultimate decision by the World Trade Organization is scheduled to be released in October of 2006.' I. Introduction The United States ("U.S.") and the European Communities 2 ("EC") are at odds regarding European legislation banning American beef imports because of potential ill effects of natural and synthetic hormones used for growth promotion purposes.3 The U.S. was, and continues to be, angered that its meats cannot be exported to Europe because of the EC's ban against hormones used for growth promotion purposes among * J.D. Candidate, The Dickinson School of Law of the Pennsylvania State University, 2007; B.A., University of California, San Diego (UCSD), 2004. 1. Communication from the Chairman of the Panel, United States-Continued Suspension of Obligations in the European Communities-Hormones Dispute, WT/DS/320/9 (Jan. 23, 2006). 2. The European Communities is the legal name of the European Union in the World Trade Organization. The countries under the European Communities umbrella are: Austria, Belgium, Cyprus, Czech Republic, Denmark, Estonia, Finland, France, Germany, Greece, Hungary, Ireland, Italy, Latvia, Lithuania, Luxembourg, Malta, Netherlands, Poland, Portugal, Slovak Republic, Slovenia, Spain, Sweden, and the United Kingdom. See The World Trade Organization, Member Information: The European Communities and the WTO, http://www.wto.org/english/thewtoe/countries-e/ european communitiese.htm (last visited Oct. 21, 2006). 3. See Panel Report, European Communities-Measures Concerning Meats and Meat Products (Hormones), 3.1-.6, WT/DS26/R/USA (Aug. 18, 1997) (adopted Feb. 13, 1998) [hereinafter Panel Report]. PENN STATE INTERNATIONAL LAW REVIEW [Vol. 25:2 cattle.4 As a result, the U.S. has lost millions of dollars due to the unavailability of the European market for U.S. beef and beef byproducts. The EC's directive banning hormones did not conform to sanitary policies to which World Trade Organization ("WTO") Members must adhere, thereby violating WTO policy.6 After a Panel Report,7 an Appellate Body Report,8 and Binding Arbitration,9 the WTO's Dispute Settlement Body' ° gave the EC fifteen months to repeal the legislation that violated WTO policy.' The EC, however, did not repeal its legislation in the fifteen-month timeframe.12 In 1999, the WTO granted the U.S. the ability to suspend concessions, which allowed the U.S. to 4. See generally First Written Submission of the United States of America, United States-Continued Suspension of Obligations in the EC-Hormones Dispute, WT/DS320, (Aug. 8, 2005), available at http://www.ustr.gov/assets/Trade_Agreements/Monitoring_ Enforcement/DisputeSettlement/WTO/Dispute_SettlementListings/asset upload file3 317903.pdf [hereinafter U.S. Submission]. 5. The EC's legislation was found to impair the U.S. at a rate of $116.8 million per year. See Recourse to Arbitration, European Communities-MeasuresConcerning Meats and Meat Products (Hormones), 83, WT/DS26/ARB, (July 12, 1999) [hereinafter Recourse to Arbitration]. 6. WTO Members must follow the guidelines of the WTO Agreement on Application of Sanitary and Phytosanitary Measures. See The World Trade Organization, The WTO Agreement on Application of Sanitary and Phytosanitary Measures, http://www.wto.org/english/tratop e/spse/spsagre.htm [hereinafter SPS Agreement] (last visited Oct. 21, 2006). Not adhering to the guidelines means that a Member is violating WTO policy, including the SPS Agreement. See id. 7. See Panel Report, supra note 3. 8. See Appellate Body Report, European Communities-Measures Concerning Meat and Meat Products, WT/DS26/AB/R, WT/DS48/AB/R (Jan. 16, 1998) (adopted Feb. 13, 1998) [hereinafter Appellate Body Report]. 9. See Arbitration Report, European Communities-Measures Concerning Meats and Meat Products (Hormones), WT/DS26/15, WT/DS48/13 (May 29, 1998) [hereinafter Arbitration Report]. 10. Settling disputes is the responsibility of the Dispute Settlement Body (the General Council in another guise), which consists of all WTO members. The Dispute Settlement Body has the sole authority to establish "panels" of experts to consider the case, and to accept or reject the panels' findings or the results of an appeal. It monitors the implementation of the rulings and recommendations, and has the power to authorize retaliation when a country does not comply with a ruling. The World Trade Organization, Understanding the WTO: Settling Disputes, http://www.wto.org/english/thewtoe/whatis e/tif e/displ1e.htm (last visited Oct. 21, 2006) [hereinafter Understandingthe WTO]. 11. See Arbitration Report, supra note 9, XLVIII. The Appellate Body and Panel Reports were formally adopted on February 13, 1998. Id. 12. The U.S. was granted the suspension of concessions because the EC did not repeal its legislation in the fifteen month time frame. See Recourse to Arbitration, supra note 5, 1; see Understanding on Rules and Procedures Governing the Settlement of Disputes, Article 22, Apr. 15, 1994, Marrakesh Agreement Establishing the World Trade Organization, Annex 2, Legal Instruments-Results of the Uruguay Round, 33 I.L.M. 1125 (1994) [hereinafter Dispute Settlement Understanding]. 20061 BEEF HORMONES FOSTER ANIMOSITY AND NOT GROWTH 559 implement retaliatory sanctions.1 3 Those sanctions counteracted the 4 impairment the U.S. experienced due to the EC's hormone legislation.' The U.S.'s retaliatory sanctions will remain in effect until the disputed measures are repealed or modified to conform to WTO policy.15 After more than five years of such sanctions, however, the EC requested consultations with the U.S. in which it asserted that the U.S. "should have removed its retaliatory measures since the EC has removed the measures found to be WTO-inconsistent[.]"' 16 The EC, the U.S., and third party countries17 had their first Panel meeting in September 2005.18 This meeting was historic because it was the first time the WTO allowed 19 the general public to witness proceedings. This current issue can be reviewed in two ways: either by focusing on how the EC scientifically justifies its new measure, or by examining the procedural steps to ascertain which party in a dispute determines when an offending party complies with WTO policies and procedures. There is no straightforward WTO regulation that specifically establishes who decides if a previously violating Member2° has repealed improper legislation, thereby making revocation of the suspension of concessions necessary. 2' Not only is this topic important to future WTO cases because it will likely spark an amendment to rules of dispute settlement, but it also demonstrates to the public how the WTO operates. This Comment analyzes the procedural measures that may be available to the U.S. and EC based on various interpretations of the Understanding on Rules and Procedures Governing the Settlement of Disputes22 ("Dispute Settlement Understanding") while incorporating the 13. See Recourse to Arbitration, supra note 5, 84 14. See id. 83. 15. See id. 39. 16. See Request for Consultations by the European Communities, United States- Continued Suspension of Obligations in the European Communities-HormonesDispute, WT/DS320/1 (Nov. 8, 2004) [hereinafter EC Request for Consultations]. This is a self- asserted claim by the EC and has not been examined by a Panel. See id. 17. Relevant third parties are: Australia, Brazil, Canada, China, Chinese Taipei, India, Mexico, New Zealand, and Norway. See infra notes 135-148. 18. See The World Trade Organization, United States-Continued Suspension of Obligations in the EC-Hormones Dispute, http://www.wto.org/english/tratope/dispu_e/ cases e/ds320_e.htm (last visited Sept. 11, 2006). 19. See Communication from the Chairman of the Panels, United States-Continued Suspension of Obligations in the European Communities-Hormones Dispute, WT/DS/320/8 (Aug. 2, 2005). 20. A violating Member is the Member who has breached WTO policy. In this Comment, the violating Member is the EC. 21. See First Written Submission by the European Communities, United States- Continued Suspension of Obligations in the EC-Hormones Dispute, 85, WT/DS320, (July 11, 2005) available at http://trade-info.cec.eu.int/doclib/docs/2005/september/ tradoc 124677.pdf [hereinafter EC Submission]; see U.S. Submission, supra note 4, 6. 22. See Dispute Settlement Understanding, supra note 12. PENN STATE INTERNATIONAL LAW REVIEW [Vol. 25:2 doctrine of good faith. This Comment emphasizes that good faith is an important element of the WTO foundation even after the harshest punishment 23 has been set forth. Part II describes the history of this dispute, which dates back over a decade. Part II also identifies why the U.S.