Memorandum on Imports From the European Economic Community

December 24, 1987

Memorandum for the United States Trade Representative

Subject: Determination under Section 301 of the Trade Act of 1974

I have determined, pursuant to section 301(a) of the Trade Act of 1974, as amended (the Act) (19 U.S.C. 2411), that the ``Council Directive Prohibiting the Use in Livestock Farming of Certain Substances Having a Hormonal Action'' (the Directive), adopted in December 1985 by the European Community (EC), is inconsistent with the provisions of, or otherwise denies benefits to the United States under, a trade agreement; or is unjustifiable or unreasonable and constitutes a burden or restriction on United States commerce. I have also determined, pursuant to subsections 301(a), (b), and (d)(1) of the Act, to increase U.S. customs duties on certain products of the European Community. I am taking this action to enforce United States rights under a trade agreement and to respond to unjustifiable or unreasonable acts, policies, and practices of the European Community that burden or restrict United States commerce. However, I have determined to suspend the application of increased duties so long as the EC permits its member states to continue their present importation practices with respect to United States exports of relevant meat products.

Statement of Reasons

The European Community adopted the Hormone Directive in December 1985. It is scheduled to become effective with respect to imports on January 1, 1988. Unless EC member states are allowed derogations to continue their present importation practices, implementation of the Directive will prohibit imports into the European Community of any meat produced from animals treated with growth hormones, thereby severely disrupting exports of U.S. meat to the European Community. Such a prohibition is not supported by valid scientific evidence. Accordingly, the United States considers that the imposition of import restrictions under the Directive constitutes a disguised restriction on international trade.

The United States has repeatedly protested the Directive both bilaterally and within the framework of the Agreement on Technical Barriers to Trade (``Standards Code'') of the General Agreement on Tariffs and Trade (GATT). In January 1987, the United States requested consultations with the EC under Article 14.1 of the Standards Code. These consultations were held in February and April without satisfactory results. On April 29, 1987, the United States requested the GATT Committee on Technical Barriers to Trade to investigate the matter. The Committee met in May, June, July, and September. That investigation failed to yield a solution because of EC insistence, against the weight of scientific evidence, that consumption of meat from animals treated with growth hormones is dangerous to human health. On July 15, 1987, the United States asked for the formation of a Technical Experts Group (TEG) under Article 14.9 of the Standards Code, in order to examine the scientific basis, if any, for the EC claim. The EC blocked, and continues to block, the formation of such a group of experts. Additional consultations have failed to yield meaningful progress on the underlying issue. Accordingly, it is appropriate to proclaim countermeasures.

However, the European Community has provided assurances that all member states will be permitted to continue, and will continue, their present practices with regard to the importation of U.S. meat products for an additional 12 months. Therefore, I am suspending the application of those measures so long as the EC member states continue their present importation practices with respect to United States exports of relevant meat products. I expect the European Community to allow appropriate dispute settlement procedures to proceed expeditiously.

On November 25, 1987, I announced my intention to raise customs duties to a level of 100 percent ad valorem on as much as $100 million in EC exports to the United States in response to the implementation of the Directive. I also announced that the products against which retaliatory action would be taken would be selected after a comment period ending on December 11, 1987. Finally, I announced that the sanctions would be effective soon after January 1, 1988, unless the EC had acted by that time to ensure that the Directive does not impede United States meat exports.

This determination shall be published in the Federal Register.

Ronald Reagan

[Filed with the Office of the Federal Register, 3:10 p.m., December 28, 1987]

Note: The memorandum was printed in the ``Federal Register'' of December 30.