U.S. exports of high-quality beef to the European Union have been growing steadily over the past five years, but now face a significant new obstacle, the U.S. Meat Export Federation says.
Under an agreement negotiated with the U.S. in 2009, the EU opened a duty-free import quota for beef produced from non-hormone-treated cattle raised under specific feeding and grading conditions.
EU imports of U.S. beef were previously subject to a 20% duty, so removal of this duty helped spark a steady increase in U.S. shipments. EU imports from the U.S. under the duty-free quota reached 17,664 metric tons during the most recently concluded quota year (July 1, 2013 through June 30, 2014).
With a total duty-free quota capacity of 48,200 mt, the U.S. industry would seem to have plenty of room for further growth – but unfortunately, this is not the case.
Although the quota was created as a result of the United States' successful challenge of the EU's beef hormone ban at the World Trade Organization, some other beef-exporting countries have also been granted access to the quota, including Australia, Canada, New Zealand and Uruguay. Argentina may soon be added.
Shipments from Australia and Uruguay have been expanding at an especially rapid pace, pushing quota utilization toward its maximum capacity.
While the current quota year doesn't end until June 30, this is an issue of immediate concern, USMEF says. The quota is administered on a quarterly basis, with an allocation of 12,050 mt reserved for each quarter.
"It looks very likely that the quota is going to be filled," said Thad Lively, U.S. Meat Export Federation senior vice president for trade access.
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With expanding volumes from the U.S., Australia and Uruguay, the allocation for this quarter has already reached the "critical" phase – meaning that it is more than 90% filled, and European importers must now post a bank guarantee for the full duty in order to clear new shipments prior to Oct. 1.
"As we go through the year the pressure on the quota is only going to grow," Lively said, which is particularly frustrating to U.S. meat exporters because the quota was created as a result of the U.S. WTO challenge.
"I think there are a lot of people in the industry who are struggling to understand why we are sharing this quota with other countries and I think they are also very concerned that the growth we've seen in our exports of beef to Europe could come to an end if we don't find a way to get things back to the way they should be."