Analyzing The Trade Dispute Of HormoneTreated Beef

Essay, Research Paper

Analyzing the Trade Dispute of Hormone-treated Beef

John Forys

As technology progresses, many issues arise about ethics, between progress and the repercussions society faces from that progress. In 1989, a trade conflict arose, that not only affected the economies of the world, but also arose health issues, that were neglected by the law as well as the World Trade Organization. The trade conflict that I am referring to is Europe’s ban of hormone-treated beef and the World Trade Organization ruling of this being in violation of its international obligations (Earth Justice 1997).

The original trade agreement was that hormone-treated beef was safe and therefore, allowing trade of this product. Then the European Union banned all trading of this type of beef internally throughout Europe as well as throughout the world. The United States and Canada mounted a challenge against this restriction, since 90% of all beef that is produced in the US uses a combination of up to six growth hormones. The ban of this type of beef has cost the US approximately five million dollars annually. (Birchard 1999)

The United States felt that banning hormone treated beef was unfair, since there was no scientific proof that it was a danger to a person’s health. So the US went to the WTO to eliminate this ban on an export that the US values. So the World Trade Organization imposed a committee to test whether the beef was harmful or not to the consumers, which they found no solid evidence that the beef caused any harm (Seidman 2000). Therefore WTO ruled in favor of the US that Europe’s ban was unfair international trade policy. Europe than appealed the WTO decision. Then a study released by the European Union on May 1st, 1999 stated that the six growth hormones in the US cattle pose health threats of differing severity, putting children at the highest risk. According to the European Union the worst hormone, is oestradiol-17B, a natural hormone, but some of the lesser dangerous hormones consist of testosterone, progesterone, zeranol, trenbolone, and meglangestrol acetate. (Birchard 1999) So Europe states that by imposing this ban they were actually trying to protect their country by imposing food safety standards.

Each country had a validity to hold the opinions that they did, the US felt that the ban was harming their economy and Europe felt that there was a negative externality to consuming the beef. In graph 1, you can what happened after Europe refused to settle an agreement with the US, WTO said the United States is entitled to suspend tariff concessions covering EU trade in the amount of $116.8 million per year (The United States Mission to the European Union 2000). The tariffs that the US placed on Europe raise the world price plus the amount of the tariff to a new price. The new price harms not only the US citizens, but also the exporting country, since less of the good is bought, and they lose revenue. What happens to the European economy is represented in graph 2, since the tariff increases the price the good is sold for, so less people buy this good, making Europe lose revenue. In the 3rd graph you can see the social value of the hormone treated beef, since if it is truly dangerous to ones health, a substitute for it could easily be non-hormone treated beef. This would eliminate the problem of the carcinogens, making the social value and public cost equal.

The dispute was not totally resolved as of yet, since the dispute is so complicated and unique in nature. The WTO has made some agreements to both sides such as entitling the United States to suspend tariff concessions covering EU trade in the amount of $116.8 million per year. On July 19, 1999, the United States announced revealed the final list of products that they will levy a duty on, but there has not been a final decision in this case (The United States Mission to the European Union. 2000). There were threats of retaliation from the US if the ban was not removed as stated above, but the threats were more severe than what actually is and will happen, because of the involvement of a third negation committee such as the World Trade Organization. The welfare losses is that United State’s beef producers have a smaller market to sell too, making them have less revenue as well as less overall profit, allowing them to employ less.

In summary, as technology progresses, many issues arise about ethics, between progress and the repercussions society faces from that progress. Sometimes the fact of what is better for the economy holds a stronger vote than what is important for the consumers. The larger point to consider is one of the externalities of consuming beef if Europe’s views are found out to be correct, since the United States consumes almost all beef using these hormones. The result of this consumption could be devastating. Another thing to consider is the fact that Europe was trying to regulate food quality and maintain the health of its country, while the WTO is trying to stop them from what they feel is right in the name of money. The unsettling question that remains at hand is how do you morally decide between what is right for the economy and what in proportion to that is the value of a human life.

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Birchard, K. (1999, May 29). EU and USA Hold Firm Over Importing Homrone-treated Beef. Lancet. Available: http://www.findarticles.com/cf_0/m0833/9167_353/54825199/p1/article.jhtml [2000, Nov. 1].

Earth Justice. (1997, Aug. 26). Euopean Ban on Hormone Treated Beef Violates World Trade Organization. Available: http://www.earthjustice.org/news/pr082697.html

[2000, Oct. 30]

Seidman, G. (2000, Nov. 29). Jabs and Jolts Greet WTO Delegates.

MSNBC [Online]. Available: http://www.msnbc.com/new/340308.asp [2000, Oct. 30].

The United States Mission to the European Union. The U.S.-EU Dispute on EU Hormone Ban. Available: http://www.useu.be/AGRI/ban.html#background [2000, Oct 30].