[Federal Register Volume 76, Number 103 (Friday, May 27, 2011)]
[Notices]
[Pages 30987-30989]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2011-13282]


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OFFICE OF THE UNITED STATES TRADE REPRESENTATIVE


Termination of Action and Further Monitoring in Connection With 
the EC-Beef Hormones Dispute

AGENCY: Office of the United States Trade Representative.

ACTION: Notice, termination of action, and further monitoring.

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SUMMARY: In July 1999, pursuant to authority under Section 301 of the 
Trade Act of 1974, as amended (the Trade Act), and as authorized by the 
Dispute Settlement Body (DSB) of the World Trade Organization (WTO), 
the United States Trade Representative (Trade Representative) imposed 
additional duties on certain products of member states of the European 
Union (EU) as a result of the EU's failure to comply with the 
recommendations and rulings of the DSB in the EC-Beef Hormones dispute. 
In January 2009, the Trade Representative announced a determination to 
modify the list of products subject to additional duties by removing 
some products from the list of products subject to additional duties, 
and by adding replacement products. The January modification had an 
initial effective date of March 23, 2009. The Trade Representative 
subsequently delayed the additional duties on the replacement products 
in order to promote negotiations with the EU. The removal of products 
was not delayed. As a result, as of March 23, 2009, the additional 
duties applied only to a reduced list of products, consisting of those 
products covered in the original 1999 list that had not been subject to 
replacement. On May 13, 2009, the United States and the EU announced 
the signing of a Memorandum of Understanding (MOU) in the EC-Beef 
Hormones dispute. The MOU provides for the EU to make phased increases 
in market access by adopting a tariff-rate quota (TRQ) for certain beef 
products, in return for the United States making phased reductions in 
the additional duties. Under the first phase of the MOU, in August 2009 
the EU opened up a TRQ in the amount of 20,000 metric tons, and the 
Trade Representative terminated the additional duties on the 
replacement products. (Those additional duties had been announced in 
January 2009 but had never entered into force.) The Trade 
Representative's action left in place a reduced list of products 
subject to additional duties. The MOU provides for the possibility of 
the United States and the EU to enter into a second phase starting in 
August 2012, in which the EU would increase the TRQ to 45,000 metric 
tons, and the United States would lift the remaining additional duties. 
As a result of a decision of the United States Court of Appeals for the 
Federal Circuit, the Trade Representative has determined to terminate 
the remaining additional duties in advance of the August 2012 start 
date of the possible second phase

[[Page 30988]]

of the MOU. The United States continues to have an authorization from 
the WTO DSB, and the right under the MOU, to suspend concessions on EU 
products. At this time, however, the MOU is operating successfully by 
providing increased market access to U.S. beef producers. In light of 
the currently successful implementation of the MOU, the fact that all 
additional duties would have to be removed in August 2012 under a 
possible second phase of the MOU, and to encourage continued 
cooperation under the MOU, the Trade Representative has determined not 
to take steps at this time to exercise U.S. rights to impose additional 
duties on EU products in connection with the EC-Beef Hormones dispute. 
The Trade Representative will continue to monitor EU implementation of 
the MOU and other developments affecting market access for U.S. beef 
products. If EU implementation and other developments do not proceed as 
contemplated, the Trade Representative will consider additional actions 
under Section 301 of the Trade Act.

DATES: Effective Date: The remaining additional duties imposed in 
connection with the EC-Beef Hormones dispute are terminated with 
respect to (a) Products that are entered, or withdrawn from warehouse, 
for consumption on or after the date of publication of this notice, (b) 
unliquidated entries made prior to the date of publication of this 
notice that were entered, or withdrawn from warehouse, for consumption 
after July 29, 2007, and (c) products that were entered, or withdrawn 
from warehouse, for consumption after July 29, 2007, where the 
liquidation of the entry is not final.

FOR FURTHER INFORMATION CONTACT: Roger Wentzel, Director, Agricultural 
Affairs, (202) 395-6127, or David Weiner, Deputy Assistant USTR for 
Europe, (202) 395-9679, for questions concerning the EC-Beef Hormones 
dispute or the MOU; or William Busis, Deputy Assistant USTR for 
Monitoring and Enforcement and Chair of the Section 301 Committee, 
(202) 395-3150, for questions concerning procedures under Section 301. 
Questions concerning customs matters may be directed to Laurie Dempsey, 
Branch Chief, Entry, Summary, and Drawback, Office of International 
Trade, U.S. Customs and Border Protection, 202-863-6509.

SUPPLEMENTARY INFORMATION: 

A. Background

    In 1998, the WTO DSB found that the EU's ban on beef produced from 
animals to which certain hormones have been administered was 
inconsistent with the EU's obligations under the WTO Agreement. The DSB 
recommended that the EU bring its measures into compliance. In July 
1999, WTO arbitrators determined that the level of nullification or 
impairment suffered by the United States as a result of the EU's WTO-
inconsistent hormone ban was $116.8 million per year. The WTO DSB 
authorized the United States to suspend the application to the EU and 
its member states of tariff concessions and related obligations under 
the GATT covering trade up to this amount. In a notice published on 
July 27, 1999, the Trade Representative announced that the United 
States was exercising this authorization by imposing 100 percent ad 
valorem duties on a list of certain products of certain EU member 
states.
    Section 307(c) of the Trade Act provides for the Trade 
Representative to conduct a review of a Section 301 action four years 
after the action was taken. During 2008, the U.S. Court of 
International Trade held that the Trade Representative must also 
conduct a Section 307(c) review eight years after the action was taken. 
See Gilda Industries v. United States, 556 F. Supp. 2d 1366 (Ct. Int'l 
Trade 2008).
    The first step in a Section 307(c) review is for USTR to request 
that the U.S. industry benefitting from the action submit a written 
confirmation that the action should be continued. If the U.S. industry 
requests continuation, the statute provides for USTR to review the 
effectiveness of the action. On remand from the U.S. Court of 
International Trade, USTR requested and received from the U.S. beef 
industry a written confirmation that it wanted the July 1999 action to 
continue, and USTR proceeded to conduct a review of the effectiveness 
of the July 1999 action.
    In January 2009, USTR announced, and reported to the U.S. Court of 
International Trade, the results of the Section 307(c) review 
undertaken in the remand proceeding. The Trade Representative decided 
to modify the action taken in July 1999 by: (1) Removing some products 
from the list of products subject to 100 percent ad valorem duties 
since July 1999; (2) imposing 100 percent ad valorem duties on some new 
products from certain EU member States; (3) modifying the coverage with 
respect to particular EU member States; and (4) raising the level of 
duties on one of the products that was being maintained on the product 
list. The effective date of the modifications was to be March 23, 2009.
    In March 2009, the Trade Representative decided to delay the 
effective date of the additional duties (items two through four above) 
imposed under the January 2009 modifications in order to allow 
additional time for reaching an agreement with the EU that would 
provide benefits to the U.S. beef industry. The effective date of the 
removal of duties under the January modifications remained March 23, 
2009. Accordingly, after March 23, 2009, the additional duties imposed 
in July 1999 remained in place on a reduced list of products. That 
reduced list of products subsequently was reprinted in the Annex of the 
notice published on September 24, 2009. See 74 FR 48808 (September 24, 
2009).
    In May 2009, the United States and the EU announced the signing of 
an MOU in the EC-Beef Hormones dispute. In the first phase of the MOU, 
the EU is obligated to open a new TRQ in the amount of 20,000 metric 
tons at zero rate of duty for beef not produced with certain growth-
promoting hormones. The United States in turn is obligated not to 
increase additional duties above those in effect as of March 23, 2009.
    Under the terms of the MOU, the MOU's first phase concludes on 
August 3, 2012. Should the United States and the EU enter into the 
second phase of the MOU, the EU would be required to increase the beef 
TRQ to 45,000 metric tons, and the United States would be required to 
suspend all of the additional duties imposed in connection with the EC-
Beef Hormones dispute.
    In June 2009, the U.S. Court of International Trade rejected the 
results of the Section 307(c) review undertaken in the remand 
proceeding. The court found that the July 1999 action under Section 301 
terminated as a matter of law after eight years (on July 29, 2007) 
because representatives of the U.S. beef industry did not submit a 
written request for a continuation of the action prior to July 29, 
2007. See Gilda Industries v. United States, 625 F. Supp. 2d 1377 (Ct. 
Int'l Trade 2009). The United States appealed the decision to the U.S. 
Court of Appeals for the Federal Circuit.
    In August 2009, the EU opened the new beef TRQ in accordance with 
the terms of the MOU. In September 2009, the Trade Representative 
implemented U.S. obligations under the first phase of the MOU by 
terminating the additional duties that were announced in January 2009 
but had been delayed up to that time and had never entered into force. 
The September 2009 action left in place the additional duties that had 
been in effect since March 23, 2009 on a reduced list of products.
    In October 2010, the U.S. Court of Appeals for the Federal Circuit 
affirmed the June 2009 decision of the U.S. Court

[[Page 30989]]

of International Trade that the July 1999 action terminated as a matter 
of law on July 29, 2007. See Gilda Industries, Inc. v. United States, 
622 F.3d 1358 (Fed. Cir. 2010).
    In March 2011, Canada and the EU entered into an MOU in connection 
with the EC-Beef Hormones dispute, in which Canada was a co-complainant 
with the United States. The Canada-EU MOU provides for additional 
amounts in the TRQ specified in the U.S.-EU MOU: 1,500 metric tons in 
the first phase, and 3,200 metric tons in a possible second phase 
starting in August 2012.
    For additional background concerning the EC-Beef Hormones WTO 
dispute, the additional duties imposed in connection with the dispute, 
and the May 2009 MOU, see 64 FR 40638 (July 27, 1999), 73 FR 66066 
(Nov. 6, 2008); 74 FR 4265 (Jan. 23, 2009), 74 FR 11613 (March 18, 
2009), 74 FR 12402 (March 24, 2009), 74 FR 19263 (April 28, 2009), 74 
FR 22626 (May 13, 2009), 74 FR 40864 (August 13, 2009); and 74 FR 48808 
(September 24, 2009), as well as the WTO Web site (http://www.wto.org) 
under dispute numbers DS26 and DS48.

B. Termination of the Remaining Additional Duties

    As a result of the decision of the U.S. Court of Appeals for the 
Federal Circuit, the Trade Representative has decided to terminate the 
additional duties imposed in connection with the EC-Beef Hormones 
dispute, effective with respect to (a) products that are entered, or 
withdrawn from warehouse, for consumption on or after the date of 
publication of this notice, (b) products that were entered, or 
withdrawn from warehouse, for consumption after July 29, 2007 where the 
entry is unliquidated on the date of publication of this notice, and 
(c) products that were entered, or withdrawn from warehouse, for 
consumption after July 29, 2007, where the liquidation of the entry is 
not final. In particular:
    (i) The imposition of 100 percent ad valorem duties as provided in 
subheadings 9903.02.21, 9903.02.22, 9903.02.23, 9903.02.24, 9903.02.25, 
9903.02.26, 9903.02.27, 9903.02.28, 9903.02.29, 9903.02.30, 9903.02.32, 
9903.02.34, 9903.02.43, 9903.02.44, 9903.02.45, and 9903.02.46 of the 
Harmonized Tariff Schedule of the United States (HTSUS) is terminated 
with respect to (a) Products that are entered, or withdrawn from 
warehouse, for consumption on or after the date of publication of this 
notice, (b) unliquidated entries made prior to the date of publication 
of this notice that were entered, or withdrawn from warehouse, for 
consumption after July 29, 2007, and (c) products that were entered, or 
withdrawn from warehouse, for consumption after July 29, 2007, where 
the liquidation of the entry is not final;
    (ii) The imposition of 100 percent ad valorem duties as provided in 
subheading 9903.02.83 of the HTSUS is terminated with respect to (a) 
products that are entered, or withdrawn from warehouse, for consumption 
on or after the date of publication of this notice, (b) unliquidated 
entries made prior to the date of publication of this notice that were 
entered, or withdrawn from warehouse, for consumption on or after March 
23, 2009, and (c) products that were entered, or withdrawn from 
warehouse, for consumption on or after March 23, 2009, where the 
liquidation of the entry is not final;
    (iii) The imposition of 100 percent ad valorem duties as provided 
in subheadings 9903.02.31, 9903.02.33, 9903.02.35, 9903.02.36, 
9903.02.37, 9903.02.38, 9903.02.39, 9903.02.40, 9903.02.41, 9903.02.42, 
and 9903.02.47 of the HTSUS is terminated with respect to (a) 
unliquidated entries made after July 29, 2007 and before March 23, 
2009, and (b) products that were entered, or withdrawn from warehouse, 
for consumption after July 29, 2007 and before March 23, 2009 where the 
liquidation of the entry is not final;
    (iv) The above-listed subheadings, along with any associated 
superior headings or subheadings, are deleted from the HTSUS, effective 
on the date of publication of this notice; and
    (v) As of the date of publication of this notice, products in 
subheadings 9903.02.21, 9903.02.22, 9903.02.23, 9903.02.24, 9903.02.25, 
9903.02.26, 9903.02.27, 9903.02.28, 9903.02.29, 9903.02.30, 9903.02.32, 
9903.02.34, 9903.02.43, 9903.02.44, 9903.02.45, 9903.02.46 and 
9903.02.83 of the HTSUS that are entered into a Foreign Trade Zone no 
longer must be admitted in ``privileged foreign status,'' as defined in 
19 C.F.R. 146.41.

C. Continued Monitoring and Implementation of the MOU

    Until the entry into force of the possible second phase of the MOU 
in August 2012, the United States retains the right under the MOU to 
impose additional duties on the reduced list of products subject to 
additional duties after March 23, 2009 (reprinted in the Annex of the 
notice published on September 24, 2009). The United States also 
continues to have an authorization from the WTO DSB to suspend 
concessions on EU products in the amount of $116.8 million per year. At 
this time, however, the MOU is operating successfully by providing 
increased market access to U.S. beef producers. In light of the 
currently successful implementation of the MOU, the fact that all 
additional duties would have to be removed in August 2012 under a 
possible second phase of the MOU, and to encourage continued 
cooperation under the MOU, the Trade Representative has determined not 
to take steps at this time to exercise U.S. rights to impose additional 
duties on EU products in connection with the EC-Beef Hormones dispute.
    The Trade Representative will continue to monitor EU implementation 
of the MOU and other developments affecting market access for U.S. beef 
products. If implementation of the MOU and other developments do not 
proceed as contemplated, the Trade Representative will proceed to 
consider additional actions under Section 301 of the Trade Act.

William Busis,
Chair, Section 301 Committee.
[FR Doc. 2011-13282 Filed 5-26-11; 8:45 am]
BILLING CODE 3190-W1-P