Tuesday, 12 April 2011

The Sweet Smell of Bull****

A quick read of the headline to this story, and the first paragraph makes it sound like Canada has scored some kind of trade victory  with the European Union. In fact it's quite opposite. The news release in black, a little more information in red.


23,500 ton beef quota gets green light

CANADIAN Agriculture Minister Gerry Ritz confirmed earlier this week that the government has reached an agreement with the European Commission settling the long running trade dispute over beef from hormone-treated cattle.
"Canada and the European Commission have signed a memorandum of understanding that sets a path toward the resolution of the long-standing World Trade Organization dispute on beef hormones,” Ritz said in a statement emailed to Feedstuffs this afternoon.
The agreement was first announced last Friday by the European Commission. Ritz’s statement is the first confirmation of the deal from the Canadian government.

This trade fight began in the early 1980's when Europe banned the importation of beef  raised with growth promoting hormones. Both Canada and the United States said this ban was not scientifically sound, and took a trade dispute to the World Trade Organization. The WTO agreed with Canada and the U.S., and allowed both countries to impose 100% duties on certain European products as retaliation. This week's news is that Canada is dropping these duties, while Europe retains its ban on hormone treated beef.

Canada will end trade sanctions on $11 million worth of imports from the European Union, in return for increased access to the European market. European governments retain their restrictions on the use of hormones in cattle.
"The arrangement signed adds 3,200 tonnes to an existing 20,000-tonne duty-free quota that is open to all WTO Members that can meet the European Union’s import requirements. In return, Canada will remove the World Trade Organization-authorized duties imposed against certain European Union imports,” the Canadian minister continued.

What Europe has done is retain its ban on hormone treated beef, but increase the amount of hormone-free beef that can be imported duty-free.  All countries in the  WTO can take advantage of  this new quota, and no doubt Canadian cattle farmers will increase their shipments, something they could have done twenty-five years ago. 

Ritz said the accord will benefit Canada’s beef producers. Since January, Canada’s beef industry has exported more than 120 metric tonnes of beef with a value of about $1.5 million (Cdn) into the EU market.
"Producers are already shipping several tonnes of Canadian hormone-free beef to the European Union. It is estimated that duty-free access for beef could be worth more than $10 million a year for Canada," the Canadian minister said.

A more honest headline would have been "Canada Ends Trade Fight to Ship Hormone Treated Beef  to Europe". It's not a bad deal for Canada, but it's interesting that whatever leverage Canada had, has been given up, and all countries in the WTO have benefited. We can expect that Australia and others will quickly try to fill the duty-free quota.  And something that gets imported from Europe will now be a whole lot cheaper in Canada.

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