USTR FILES FOR WTO CONSULTATIONS WITH EU ON

UNCLAS SECTION 01 OF 05 STATE 004882 SIPDIS E.O. 12958: N/A TAGS: ECON ETRD EUN EAGR SUBJECT: USTR FILES FOR WTO CONSULTATIONS WITH EU ON POULTRY TREATED WITH PRTS 1 ¶1. (U) Summary: On January 16, 2009, the United States Trade Representative (USTR) announced that the United States is seeking World Trade Organization (WTO) consultations regarding the EU,s prohibition on the import of poultry meat and poultry meat products that have been processed with pathogen reduction treatments (PRTs). PRTs are used to reduce the amount of pathogenic microorganisms on poultry meat. Post may use the following talking points and Q and As to respond to inquiries on this decision. End summary. ¶2. (U) On January 16, 2009, USTR announced that the United States is seeking WTO consultations regarding the EU,s prohibition on the import of poultry meat and poultry meat products that have been processed with pathogen reduction treatments. PRTs are used to reduce the amount of pathogenic microorganisms on poultry meat. In the event consultations do not resolve the issue, the Administration will decide what, if any, further steps to take. ¶3. (U) In 1997, the EU prohibited the use of PRTs to treat poultry sold in the EU, effectively prohibiting the shipment of virtually all U.S. poultry to the EU. Since 1997, only small quantities of organic and processed poultry products have been exported from the United States to the EU. ¶4. (U) PRTs have been approved for use by the FDA and USDA on poultry in the United States, as they are safe and effective at reducing levels of salmonella and other pathogens that may be present on poultry. PRTs are commonly used in the United States and in countries outside the EU. In addition, at least one of the PRTs banned for use on poultry in the EU are permitted for use in the EU in preparation of other food products. ¶5. (U) On December 18, 2008, the European Agriculture and Fisheries Council, comprised of the agriculture ministers of all EU Member States, rejected a European Commission proposal to allow the use of four PRTs, despite the fact that the European Food Safety Authority (EFSA) has concluded that poultry treated with any of these four PRT poses no health risk to consumers. Given the data available on the safety of PRTs, including the EFSA scientific reports, the EU,s maintenance of its import ban against poultry treated with PRTs appears to be inconsistent with the WTO SPS Agreement and the GATT 1994. In view of the lack of a scientific basis for continuation of the EU,s ban on imports of poultry treated with any of the four PRTs, and after consulting with the U.S. poultry industry, the USG determined that it would be helpful to seek WTO consultations on this matter. ¶6. (U) Following are talking points and Q and As on U.S. poultry consultations. Questions on this issue should be referred to David Weiner (202-395-9679, david weiner@ustr.eop.gov) or J. Sloane Strickler (202-395-6164, John Strickler@ustr.eop.gov) at USTR; to Ann Ryan, Office of Agricultural Trade, at State (202-647-3424, RyanAM@state.gov); or to Tanya Menchi at USDA (202-720-6777, Tanya.menchi@fas.usda.gov). ¶6. (U) All of the talking points and Q&A that follow may be used to respond to inquiries regarding WTO consultations on the use of PRTs. The Q&A should be used only on an "if asked" basis, however. In addition, all press inquiries should be directed to USTR. BEGIN TALKING POINTS: On January 16, 2009, the United States requested WTO dispute settlement consultations with the EU regarding the EU,s prohibition on the import of poultry meat and poultry meat products that have been processed with pathogen reduction treatments, or PRTs. PRTs are used to reduce the amount of pathogenic microorganisms on the surface of poultry meat. In 1997, the EU prohibited the use of PRTs to treat poultry sold in the EU, effectively prohibiting the shipment of virtually all U.S. poultry to the EU. Since 1997, only small quantities of organic and processed poultry products have been exported from the United States to the EU. In 2002, USDA requested that the EU approve the use of four PRTs in the production of poultry intended for export to the EU. Those four PRTs are chlorine dioxide, acidified sodium chlorite, trisodium phosphate, and peroxyacids. STATE 00004882 002 OF 005 Since 2002, the European Food Safety Authority (EFSA), among other EU bodies, has produced several scientific studies regarding the safety, efficacy, and environmental aspects of the use of these four PRTs. None of the seven reports support the import ban, and several explicitly find that the use of these PRTs does not pose a risk to human health. In May 2008, the European Commission proposed approval of the use of the four PRTs in the processing of poultry meat subject to certain requirements. On December 18, 2008, the European Agriculture and Fisheries Council rejected the Commission,s proposal. Because we have been unable to resolve our differences since 1997, we believe WTO dispute settlement consultations are the appropriate next step to address the matter. Q&A on the U.S. Request for WTO Consultations on EU Restrictions on Imports of PRT Poultry ¶Q. What is this case about? ¶A. The European Union (EU) prohibits the import of poultry meat and poultry meat products (primarily chicken and turkey) that have been processed with chemical treatments designed to reduce harmful microorganisms on the surface of the poultry meat, unless each such pathogen reduction treatment (PRT) has been specifically approved by the EU. The EU further maintains a measure regarding the marketing standards for poultry meat, which excludes from the definition of "poultry meat" meat processed with PRTs. In 2002, the United States requested the approval by the EU of four PRTs that are used by U.S. processors: chlorine dioxide, acidified sodium chlorite, trisodium phosphate, and peroxyacids. The FDA and USDA have approved each PRT for use in the processing of poultry. In December 2008, the EU formally rejected the request for permission to use any of these four PRTs, despite the fact that EU scientists have repeatedly concluded that poultry treated with any of the four substances poses no health risk to consumers. Given the scientific record, the EU,s maintenance of a ban on imports of poultry processed with these four PRTs appears to be inconsistent with, at least, the WTO Agreement on the Application of Sanitary and Phytosanitary Measures (SPS Agreement) and the General Agreement on Tariffs and Trade 1994 (GATT 1994). ¶Q. Has the United States attempted to address the issue without resort to dispute settlement? ¶A. Yes. The United States has attempted ) without success ) to resolve this issue without resorting to litigation for more than 11 years. After several years of discussions, U.S. and EU leaders agreed to "work to expeditiously resolve" regulatory issues hindering U.S.-EU trade, including trade in poultry, in the "Positive Economic Agenda" that was adopted during the May 2002 U.S.-EU summit. Five years later, with the issue still unresolved, the United States and EU added poultry to the agenda of the Transatlantic Economic Council (TEC),holding discussions on the issue during the TEC meetings in November 2007 and May and December 2008. Although the European Commission committed in the TEC to resolve the issue, it informed the United States at the December 2008 TEC meeting that it would not be taking any further steps in this regard, notwithstanding the fact that the EU measures remained unchanged. Shortly after the TEC meeting, EU agriculture ministers unanimously rejected a proposal to approve the four PRTs. Accordingly, the United States does not believe this issue can be resolved through further bilateral dialogue at this time. ¶Q. Why is the United States bringing this case now? ¶A. On December 18, 2008, EU agriculture ministers rejected a deeply flawed European Commission proposal to approve of the import of poultry treated with these four PRTs, bringing to a close U.S. efforts to obtain EU approval for these four PRTs. Based on this vote, as well as discussions with EU officials, the United States has concluded that this issue cannot be resolved through further negotiation at this time. ¶Q. Does the U.S. action violate the G20 pledge to "refrain STATE 00004882 003 OF 005 from raising new barriers to trade?" ¶A. No. The United States is turning to the dispute settlement mechanism of the WTO in order to resolve a trade matter between the United States and the EU. Having recourse to that mechanism in no way implicates the G20 pledge. Indeed, far from raising a new barrier to trade, the U.S. action seeks to eliminate a long-standing barrier ) that is, the EU,s ban. ¶Q. What will happen to this case when the Obama Administration comes into office? ¶A. As we have said, at this point we are only seeking consultations to try to resolve our differences. In the event we cannot resolve the issue at this stage in the dispute settlement process, it will be up to the incoming Administration to decide what to do next. ¶Q. Why does the United States insist on obtaining access to the EU market for PRT poultry? ¶A. The EU currently imports large amounts of poultry every year from Brazil, Thailand, and other countries. The U.S. poultry industry is competitive internationally, and its high-quality products would do well in the EU market. This ban unfairly denies U.S. poultry producers access to that market. U.S. poultry is required to meet some of the strictest sanitary standards in the world. The use of PRTs, applied in combination with other methods and in compliance with U.S. regulations, is a safe and effective way of meeting such standards. USDA standards apply to all poultry produced in the United States, whether for domestic consumption or export. ¶Q. How much market access does the United States expect to get as a result of this case? ¶A. It is not possible to estimate with any precision the amount of market access that the United States would achieve if it were to initiate panel proceedings and then succeed on the merits of the case. With annual poultry imports of $1.7 billion, the EU represents a potentially large market for U.S. exporters. The United States will export more than $4 billion worth of poultry globally in 2008. ¶Q. Why does the United States consultation request not cover chlorine, which is used by many U.S. poultry processors? ¶A. EU law prohibits the import of poultry processed with PRTs unless the PRTs have been approved. In 2002, the United States submitted a formal request for approval for four specific PRTs (chlorine dioxide, acidified sodium chlorite, trisodium phosphate, and peroxyacids). The EU has now refused to approve those four PRTs, without an apparent basis in science. This failure to approve those four treatments is the reason why the United States has chosen to request WTO dispute settlement consultations at this point, and that does not relate to the U.S. industry,s use of chlorine. ¶Q. How will this case affect our ongoing relationship with the EU on other important issues? ¶A. The United States has decided to request WTO consultations in order to try to resolve a trade matter with the EU. We will now have an opportunity to address U.S. concerns with these specific EU measures against the backdrop of the EU,s WTO commitments. Recourse to the WTO dispute settlement mechanism is a routine part of the U.S.-EU economic relationship. We are confident that we will be able to sustain the good working relationship we have with the EU on a wide range of bilateral and multilateral issues of common concern. The United States and the EU have each challenged measures of the other in the WTO on a number of occasions, and those disputes have not prevented us from cooperating in many other areas. It is also important to recall that transatlantic trade and investment flows are enormous, and the overwhelming majority of this commerce proceeds without conflict. ¶Q. Do other countries have access to the EU poultry market? ¶A. Yes, but under EU law, only those poultry processors that STATE 00004882 004 OF 005 do not use PRTs and that are otherwise approved to ship to the EU may export poultry to the EU. ¶Q. If Brazilian and other producers can meet EU standards, why can,t U.S. producers? ¶A. The issue is not whether producers would be able to meet EU standards. The issue is whether trade rules permit a WTO member to ban particular production processes when there is no scientific basis for doing so. The rules do not permit such action. ¶Q. Does the United States expect support from other WTO Members? ¶A. We cannot speak for other WTO Members, although we suspect that this case may be of interest to a number of other Members. ¶Q. What are the next steps in this dispute? ¶A. The first step in WTO proceedings is a period of formal consultations. If after 60 days the United States and the EU are unable to resolve the matter, the United States has the right to request that the WTO Dispute Settlement Body establish a panel to make findings on whether the EU,s measures are inconsistent with WTO rules. ¶Q. How long would a WTO case take? ¶A. If the United States chose to request a panel, it could take approximately one year to complete the panel process; 18 months if there is an appeal. ¶Q. Why did the outgoing Administration decide to take action in two disputes with the EU in its final days? Why didn,t the Administration leave decisions on these issues to the incoming Administration? ¶A. The focus should not be on when these decisions were made, but on the extraordinarily long period of time during which the United States sought to resolve these issues through dialogue. In the case of poultry, a ban on PRTs that the EU,s own scientific authorities have found to be safe has locked U.S. poultry out of the EU market for 11 years. In December, EU Member States rejected a proposal to approve PRTs, and the European Commission essentially told us it had taken the issue as far as it could go. With respect to beef hormones, the EU,s unjustified ban has kept U.S. beef out of the EU market for almost two decades. WTO-authorized import duties had been in place for nine years, without modification, and the United States had tried for several years to achieve a negotiated solution to this dispute. But the talks stalled last year after the EU refused to negotiate a market access figure even for so-called "hormone-free" beef. These decisions will in any case position the new Administration well to resolve both disputes. Each decision has given the incoming team additional tools with which to promote an amicable solution. ¶Q. If needed (beef hormones): ¶A. The timing of the beef announcement was also influenced by factors unrelated to our frustration with the EU,s decades-long ban and its recent refusal to negotiate a market access solution. USTR announced the initiation of the review on October 31, shortly after the WTO Appellate Body, on October 16, confirmed that the U.S. authorization to impose duties in the beef hormones dispute remained in effect. Upon initiating the review, we said we hoped to complete the process by the end of the year. We missed that target by two weeks because of the large number of comments we received (over 600). The timing was also influenced by a domestic court proceeding. On October 15, 2008, the U.S. Court of International Trade ordered the USTR to conduct a review of the effectiveness of the current list. USTR was required to report the results of its review to the court on January 14, ¶2009. STATE 00004882 005 OF 005 ¶Q. Did the outgoing Administration discuss these decisions with the incoming Administration? ¶A. USTR Schwab and USTR-designate Kirk have spoken a number of times, but they have not discussed any specific cases or potential cases. RICE