EU-US trade spat looms over foot-and-mouth:
Edward Alden examines claims that US farmers have lobbied for a ban on some dairy imports simply to protect their market

May 4, 2001 Financial Times (London) by Edward Alden

When the foot-and-mouth virus threatened to sweep into the European continent in March, the US and the European Union worked closely to halt the spread of the contagion.

Almost two months later, the disease appears largely under control, even in the UK. But the US and the EU are now facing a potentially explosive dispute over what steps are justified to stamp the virus out for good.

The US is seriously weighing new import restrictions aimed at preventing foot-and-mouth disease from crossing the Atlantic and infecting US livestock. Under pressure from US dairy farmers, the US Department of Agriculture has drafted a proposed emergency rule that would block a wide variety of European cheeses and casein, a milk protein concentrate, on the grounds that they might carry the virus.

If imposed on a Europe-wide basis, the restrictions would bar more than Dollars 600m in annual imports. More likely, the measures would be accompanied by a scaling back of the overall restrictions to focus just on those regions in Europe that have had outbreaks, namely the UK, Ireland, France and the Netherlands.

Alfonso Torres, USDA's top veterinarian, said yesterday the risk to the US had dropped considerably over the past month, and it is prepared to consider such "regionalisation".

That has made the possibility of new restrictions on dairy products all the more puzzling to EU officials.

The measures were originally to have been imposed on 7 May.

After complaints from European officials, the proposed date has been pushed back to May 21.

"We're constantly reviewing the programme, looking at what we need to do to strengthen it," said Kevin Herglotz, the USDA spokesman. "But we're not any closer to a decision than we were two weeks ago."

The scientific basis for such a move appears highly questionable.

France's ambassador to the US, Francois Bujon de l'Estang, told Ann Veneman, US agriculture secretary, this week that the measures would be "contrary to sound science" and warned they would be "a blatant violation" of US obligations in the World Trade Organisation.

In order to support the theory that foot-and-mouth disease can be transmitted through cheeses and casein, the dairy industry and agriculture officials have had to dig up studies that are at least two decades old.

"In the absence of better data, you have to go with what you've got," said Rob Byrne, vice-president of regulatory affairs for the National Milk Producers Federation (NMPF). "The goal is to make sure we don't have the virus in this country." But the motive may be more suspect, according to EU officials.

The US dairy industry has been urging the Bush administration to slap tariffs on casein imports. US dairy farmers, who rely on government price support programmes to boost the price of milk, say that imports have risen six-fold since 1995 as a result of a loophole in the Uruguay Round world trade agreement, which allows it to enter the US virtually duty-free.

The EU is the largest exporter of casein to the US, selling about Dollars 240m worth of the concentrate last year. Germany and Ireland are the largest sellers, followed by the Netherlands. Two of those three have had foot-and-mouth outbreaks.

The US dairy industry argues that restricting imports to current levels could save the US government Dollars 900m over the next six years, and increase income for US farmers by almost Dollars 700m.

"There are folks who are trying to make a trade war out of something that isn't a trade war," said one US official. "It doesn't make any sense for us to inflame the situation unnecessarily."

But the EU fears that the US dairy industry, which has powerful allies in the US Congress, is sufficiently influential that new restrictions are likely to be imposed, regardless of the genuine risks to animal health.

One EU official said: "It has the appearance of a political move for domestic reasons."

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