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THE WTO DISPUTE BETWEEN THE UNITED STATES AND THE EUROPEAN UNION INVOLVING GROWTH-PROMOTING HORMONES:

Leonard W. CondonVice President, International Trade, AMERICAN MEAT INSTITUTE, June 24, 1998

I. Introduction

Using the dispute settlement procedures of the year-old World Trade Organization (WTO), the United States in early 1996 challenged the European Union (EU) ban on imports of meat from animals which had been administered any of six growth-promoting hormones. This was the eighth matter brought before a WTO dispute settlement panel since the WTO came into effect on January 1, 1995. It was the first challenge which alleged violations of the new WTO Agreement on the Application of Sanitary and Phytosanitary Measures (the SPS Agreement).

II. WTO Legal Process

A. Panel Finding

At the request of the United States, the WTO Dispute Settlement Body established a panel on May 20, 1996. (Canada also requested a panel. That panel was established October 16, 1996. The same panelists decided both cases.) The final report, released on August 18, 1997, found that the EU ban violates EU obligations under the SPS Agreement. Specifically, the panel found that the EU ban is not based on scientific evidence and is not based on a risk assessment or on the relevant international standards. On September 24, 1997, the EU appealed the panel's findings.

B. Appellate Body Decision

The appellate report was issued on January 16, 1998. The Appellate Body (AB) found that the EU ban on importation of beef from cattle treated with growth promoting hormones is inconsistent with the EU's obligations under the SPS Agreement. The AB upheld the panel's core finding that the EU measure fails to satisfy the requirements of the SPS Agreement because the risk assessments that had been performed did not support the ban. The AB found that while a country has broad discretion in establishing its level of protection, it must fulfill the requirements of the SPS Agreement. Specifically, it must base its measure on a risk assessment.

C. Arbitrator's Award

At its February 13, 1998, meeting, the WTO's Dispute Settlement Body (DSB) adopted the Appellate Body and panel reports. The EU indicated at the DSB meeting on March 13 that it intended to comply with its WTO obligations. WTO dispute settlement rules provide that if it is "impracticable" for a WTO Member to comply immediately with the recommendations of the DSB, the Member shall be permitted a reasonable period of time within which to implement. The EU proposed that it be given 2 years to conduct a risk assessment and 2 additional years to change its legislation, should that be necessary (It later modified this to 2 years plus 15 months.) The U.S. and Canada indicated that no more than 10 months would be acceptable. When it became clear no agreement was possible, the EU requested that an arbitrator make this decision. On May 27, 1998, the arbitrator determined that 15 months is the appropriate period of time for the EU to comply with the panel findings. His determination was fully consistent with the period of time suggested in the Dispute Settlement Understanding, and his conclusion mirrored the two previous arbitrator awards.

III. The Political Evolution of the Hormone Directive

A. 1980 European Veal Scandal

Prior to 1981, the EC had no common policy on the use of growth promoting hormones in meat animals. Member States had varying policies. For example, Belgium and Greece had never permitted the use of hormones for fattening purposes. The use of hormones has been banned in Italy since 1961, Denmark since 1963, and Germany since 1977. Ireland banned the use of growth promoting hormones since July 1985. France, Spain, the United Kingdom and the Netherlands permitted the use of the hormones at issue, except melengestrol acetate (MGA).

In 1980, European consumer organizations called for a boycott of veal, as a result of widespread publicity involving illegal use of diethylstilbestrol - a known carcinogen - in European veal production. The boycott severely affected the market for veal. In response, EC agriculture ministers agreed on October 1, 1980 to ban the use of hormones for raising livestock.

On October 31, 1980, the Commission proposed banning use of all hormone products, except those used for therapeutic purposes. On January 6, 1981, the Commission revised its proposal to provide for controlled use of the three natural hormones, which are subjects of this dispute. During February 1981, discussion in the European Parliament showed that while a majority supported a ban on all hormones, Ireland and the United Kingdom favored use of hormones for growth promotion in meat animals.

B. Directive 81/602/EEC

The EC Council adopted the Commission's proposal as Directive 81/602/EEC July 13, 1981. In that directive, the Council recognized that five of the hormones at issue here (all but MGA) were of a different status than the other banned hormones. The Council directed the Commission to provide, by July 1 1984, "a report on the experience acquired and scientific developments, accompanied, if necessary, by proposals which take these developments into account," and resolved to decide as soon as possible on the use of the five hormones for growth promotion. In the meantime, the individual Member State regulations would continue to apply to the use of these five hormones.

C. The Lamming Committee

Accordingly, the Commission set up a Scientific Group on Anabolic Agents in Animal Production, which was composed of 22 notable European scientists and chaired by Professor G. E. Lamming of the United Kingdom. The Commission's Scientific Working Group was asked to determine whether the use of 5 growth-promoting hormones (estradiol-17B, testosterone, progesterone, trenbolone and zeranol) in meat animals produced harmful health effects.

In 1989 the Commission's Scientific Working Group issued an interim report concluding as follows:

"The Scientific Working Group is of the opinion that the use of oestradiol 17B, testosterone and progesterone and those derivatives which readily yield the parent compound on hydrolysis after absorption from the site of application, would not present any harmful effects to the health of the consumer when used under the appropriate conditions as growth promoters in farm animals." In the case of the two synthetic hormones -tenbolone and zeranol- the Scientific Working Group reported that some data were missing and further inquiries were necessary.

The EC Scientific Veterinary Committee approved the interim report on November 9, 1982, by the EC Scientific Committee for Food on December 9, 1982, and by the EC Scientific Committee for Animal Nutrition on February 4, 1983. During 1983 and 1984, the Scientific Working Group continued to collect and evaluate information concerning trenbolone and zeranol.

The Commission, based on the Scientific Working Group's report, concluded that estradiol 17B, testosterone and progesterone are not a danger to public health. On June 13, 1984, the Commission proposed amending Directive 81/602/EEC to permit Member States to allow the use for growth promotion of these three hormones and proposed revisiting the ban on trenbolone and zeranol after the Scientific Working Group had finished its work on those substances.

However, the Economic and Social Committee of the European Community rejected this approach. It insisted on a ban on all of the hormones, without pointing to any particular basis for its concern, other than a generalized belief that the Commission should more thoroughly consider the health, economic and quality aspects that justified amending the basic directive.

In October 1985, the Scientific Working Group completed its review of trenbolone and zeranol. Chairman Lamming submitted a draft report concluding that the hormones were safe for use as growth-promoting agents when used according to good veterinary practices.

The European Parliament rejected the Commission's amended proposal. It claimed that "scientific information about these substances is far from complete and that considerable doubt therefore exists about the desirability of their use and of their effect on human health. It noted at the same time that "there is overproduction of meat and meat products in the European Community which adds considerably to the cost of the CAP [the EC's Common Agricultural Policy." The Parliament insisted on a complete ban on all five of the hormones the Scientific Working Group had found to be safe.

D. Directive 85/649/EEC

The Commission yielded and canceled the meeting of the Scientific Working Group that was scheduled to review and finalize the Committee's report on trenbolone and zeranol. The Commission then dutifully submitted a proposal to extend the ban to all the hormones. The Council accepted this proposal and on December 31, 1985, it adopted Directive 85/649/EEC which banned the use of all these hormones, except when used for certain therapeutic purposes.

E. GATT Standards Code Challenge

The United States then became seriously concerned about the effects of the directive on U.S. trade. After a series of informal bilateral discussions, the United States in 1987 invoked dispute settlement under the Tokyo Round Agreement on Technical Barriers to Trade. Two formal bilateral consultations were held without a satisfactory conclusion. The U.S. then requested that the matter be referred to a group of technical experts. The EC blocked formation of the technical experts group, effectively ending further multilateral review until new rules were established in the Uruguay Round.

F. Codex Alimentarius

During this same period, a scientific review of the same five hormonal substances by the Codex Alimentarius Commission, an international body of scientific experts on food and food additives, was concluding that these substances are safe to use as growth promotants. In December 1987, the Codex Committee on Residues of Veterinary Drugs in Food (CC/RVDF) agreed on maximum residue levels (MRLs) for trenbolone and zeranol, and agreed that no MRLs were necessary for the three endogenous hormones Because of opposition by the European Commission, the Codex did not finally act on these hormones until June 1995. Then, it adopted standards for the five hormonal substances (by this time, trenbolone was also at the 8th-stage endpoint) recommended by the CC/RVDF.

G. EU 1995 Scientific Conference on Hormones

Another group of scientific experts and other interested parties, called together by the EC for a conference in late 1995, concluded that there was no evidence of possible health risks to the consumer due to the use of natural sex hormones for growth promotion. The conference furthermore concluded that at the doses needed for growth promotion, residue levels [of trenbolone and zeranol] were well below the levels regarded as safe.

IV. Characteristics of the Hormones that are the Subject of this Dispute

Hormones are chemicals secreted into the blood stream by specialized cells within the body. They travel throughout the body and exert a biological action on different specific target tissues. Hormones function in four broad areas: reproduction; growth and development; maintenance of the internal environment; and production, utilization and storage of energy.

A. Natural vs. Synthetic

All animals produce hormones. Hormones produced in the body are called endogenous or natural, while compounds that are chemically synthesized to mimic the effect of natural hormones are called synthetic or xenobiotic. Of the various hormones involved in this dispute: estradiol, progesterone and testosterone are naturally occurring hormones. These three hormones are produced throughout the lifetime of every man, woman and child, and are required for normal physiological functioning and maturation.

The other three substances, trenbolone, zeranol and MGA, are synthetic hormones that mimic the biological activity of the natural hormones: trenbolone mimics testosterone, zeranol mimics estradiol, and MGA mimics progesterone. All, except MGA, are formulated as pellets with approved and fixed amounts of compound. These are implanted in the ear of the animal.

B. Approvals Based on Scientific Risk Assessments

In the United States, as in other countries, hormones are regulated as animal drugs when they are intended for use in animals for either therapeutic or production purposes. The use of hormones as growth-promoters has been approved by more than 20 countries, including the United States, Canada, Australia New Zealand, Japan, Korea. The Philippines, South Africa. Mexico, and most Latin American countries.

As noted previously, the Codex Alimentarius Commission has also reviewed these hormones and concluded that they can be safely used to promote growth in cattle. The Codex Alimentarius Commission is recognized by the WTO as the source of international standards for food safety for purposes. The Codex standard for estradiol 17B, progesterone, and testosterone in foods of bovine origin is that there is no need to set any maximum residue limit or any acceptable daily intake level (ADI). Codex has established acceptable daily intake levels and maximum residue levels for the two synthetic hormones, zeranol and trenbolone.

The U.S. Food and Drug Administration (FDA) has also approved estradiol, progesterone, testosterone, trenbolone and zeranol for use as ear implants to promote growth in cattle. In addition, FDA has approved MGA for use as a feed additive for increased weight gain, improved feed efficiency and suppression of estrus. Estradiol, progesterone, and testosterone were approved in the 1950's, zeranol was approved in 1969, trenbolone in 1987, and MGA in l968.

C. Natural Production

The safety of these substances may be better appreciated by considering their ubiquitous presence: Estradiol, progesterone and testosterone occur naturally in all mammals. The amount produced daily varies widely among species and among animals of the same species, and is influenced by factors such as age and breed.

Endogenous hormonal substances are also found in a variety of non-meat foods that form a part of the normal human diet. For example, there are over 300 species of plants that are used for food that are recognized as having estrogenic substances, including soybeans, cherries, apples, green beans, alfalfa, palms, and licorice.

These hormones occur at much higher levels in some of these other foods. For example, a hen's egg has a higher concentration of estradiol equivalents than meat from an implant-treated steer. The relative concentration in an egg is more than one thousand times higher than that in a steer. However, the total amount ingested by consuming a hen's egg - considering the difference in quantity consumed - is slightly greater than 600 times that from consuming meat from a treated steer.

Wide variations occur in the production of estradiol, progesterone and testosterone in humans and at amounts considerably greater than amounts of these hormones in meat from treated animals. While human production of estradiol, progesterone, and testosterone is measured in micrograms per day, ingestion of these hormones is measured in nanograms or picograms (one thousand to one million times less, respectively, than a microgram).

In addition, the residues of the natural hormones have very low biological activity when ingested because more than 90 percent of the residues pass through an individual and are rapidly excreted. Thus, over 90 percent of residues are not absorbed by consumers. Finally, any residues of the natural hormones in meat from animals to which one of these hormones has been administered cannot be distinguished from the residues resulting from the endogenous production.

IV. Conclusion

The evolution of the European Union's ban on these growth-promoting hormones is a classic example of the results obtained when decisions that should be based on science are relegated to politicians. The culprit in this case is clear: European and other competent scientific bodies have consistently upheld the safety of these substances, while the European Parliament has continuously ignored that advice. The evidence suggests that European technocrats have attempted to follow the scientific advice that they requested and received. However, the Parliament has continued to intervene.

As a result, a WTO panel and Appellate Body have found the European Union to be clearly in breech of its obligations under the SPS Agreement. In endorsing that Agreement, the European Union and each of its 15 Member States committed to base its sanitary measures on scientific principles.

In addition to ignoring international commitments, the EU hormone ban represents a blatant misrepresentation by EU officials to EU consumers, with the obvious objective of gaining undeserved political credit. EU officials have (1.) repeatedly warned consumers that these substances represent a health risk, despite the fact that there is absolutely no scientific support for such statements, and (2.) EU officials have assured consumers that they can protect them from these substances when there is no need and no practical means for doing so.