UPDATED Monday Oct 22 at 12:00pm
AUSTRALIA’S future access to the high-value, tariff-free 45,000 tonne European Union (EU) 481 high quality grainfed beef quota is under a cloud of uncertainty after it was confirmed that EU countries granted authorisation on Friday for the European Commission to begin negotiations with the United States to review the existing quota arrangements.
Australia is one of several countries including the US that has supplied high quality grainfed beef to the EU under the 481 quota established in 2009.
The EU established the quota after the US successfully mounted a challenge through the World Trade Organisation against the EU’s earlier ban on the use of hormone treatments in beef cattle, including in imported beef.
The quota provide tariff-free access to the EU market for 45,000t on grainfed, hormone-free beef per year. Under WTO rules, the quota had to be made available to all qualifying countries, and could not be limited to a single supplier.
Since its establishment several grainfed beef producing countries including Australia, Argentina, Uruguay and New Zealand have been able to gain an increasing share of the tariff-free 45,000t quota.
The US has long considered the 45,000t tariff as its own and has been pressing the EU to dedicate a large portion of the 45,000t quota to US grainfed beef only.
In early September the EU Commissioner for Agriculture Phil Hogan said the EU was considering devoting a share of the 45,000t quota to the US as a country specific quota.
On Friday, the EU Member States gave the commission the mandate it requires to commence those negotiations with the US.
The quota is now worth over $200 million a year to Australian beef exporters, and losing access to the premium market would be a a significant blow to the thousands of EUCAS accredited producers in Australia.
The big question is whether the EU can indeed grant the US a country-specific quota without breaching WTO free trade rules.
EU Taskforce chair Jason Strong said the Australian Government expects to receive contact from the EU Commission firstly on the process before any the proposed terms are made available.
“To be clear, there is no additional information available at this stage on the terms of any negotiation,” Mr Strong said in a statement issued to industry members on Saturday morning.
He said it was now up to the Commission to provide details of the process that it will follow and the terms that are being negotiated.
It was hard to say if this would take days or weeks, but it was expected that the process would not drag on too long now that the mandate to negotiate has been approved.
In an EU Commission press release announcing the Council decision, Commissioner for Agriculture Phil Hogan said:
“I welcome the strong backing from EU Member States, which is an essential step to move forward on this beef trade matter. Following this approval, we can start negotiating with the United States to address some concerns they raised on the functioning of the quota and contribute to a mutually satisfactory outcome. By engaging in this process without delay, the EU shows its commitment to bring about a new phase in the relationship with the United States, in line with the agreement reached between Presidents Juncker and Trump in July. I also want to reiterate that this negotiation will not entail any changes to the level of the existing quota or the quality of beef imported into the EU. The Commission will of course keep Member States informed all along the negotiating process.”
The Commission, on behalf of the European Union, will engage in negotiations with the United States in the coming days. In due course, the Commission will also be in contact with other countries supplying under the quota, as necessary and in line with the applicable World Trade Organisation (WTO) rules.
Beef Central will provide updates as new developments come to hand.