US Beef Industry Expresses Support for Tariffs on EU Products, While Others Cry Foul

Members of the U.S. beef industry pleaded to the interagency Section 301 Committee on Feb. 15 to assess proposed retaliatory tariffs in response to its allegations of EU discrimination against U.S. beef exports, while representatives of the motorcycle, rayon fiber, and confectionery industries cautioned against the move. The Office of the U.S. Trade Representative in December issued a list of 85 headings and subheadings from the EU that the U.S. is considering for retaliatory tariffs, including food and a smattering of other products (see 1612270025).

Among the items considered for retaliation is “viscose rayon staple fibers, not carded, combed or otherwise processed for spinning.” There is no U.S. production of viscose rayon, so Lenzing Fibers mostly imports the products from areas like the EU and China, Lenzing director John Patterson said during the hearing. But viscose rayon produced in China is not as clean and sustainable as the fiber produced by Lenzing in Austria, as China doesn’t have a sufficient medical sector to meet sanitary standards for the product, which is used in tampons, Lenzing general counsel Florian Wirth said during the hearing.

“There’s no real replacement from China for this category,” he said. It would also take awhile to reorient supply chains to source viscose rayon for U.S. sale from outside the EU, Lenzing Director of Business Development for Denim Tricia Carey said during the hearing. Procter & Gamble (P&G) Associate Director for Global Government Relations and Public Policy Sean Mulvaney during the hearing echoed Lenzing’s cleanliness concerns, adding that the viscose rayon made in the EU is patent-protected, and that P&G couldn’t source the product outside the EU at least in the short term. P&G is a relatively small, “but important,” user of viscose rayon fiber, which is mostly used for textile production, Mulvaney said.

American Motorcyclist Association CEO Rob Dingman accused the government of using the motorcycle industry for “leverage” in gaining access for an unrelated product, U.S. beef. Other items considered for retaliation against the EU for alleged discrimination against U.S. beef are motorcycles (including mopeds) and cycles in two separate tariff lines under HTS Heading 8711. “We understand that the beef industry doesn’t have a grassroots network that they can bring to bear on this issue,” Dingman said. But “for us to be leveraged in this manner is wholly inappropriate.”

Laws and competitor arrangements generally prohibit motorcycle dealers from substituting products for any reason, said Squire Patton Boggs attorney Iain McPhie, a motorcycle industry representative. Motorcycle Industry Council CEO Tim Buche during the hearing said that raising tariffs on EU motorcycles could result in subsequent EU retaliation against U.S. motorcycle brands. MX Sports owner Tim Cotter called mixing products in a retaliatory trade dispute “bad trade policy.”

At the center of the U.S. meat industry’s complaint is that the European Commission has not seriously engaged it regarding concerns associated with a 45,000-megaton tariff-rate quota the EU has maintained since August 2012 for imports of U.S. beef not fed with growth-producing hormones, U.S. Meat Export Federation Senior Vice President Thad Lively said during the hearing. In its December notice of the proposed tariff raises, USTR said the quota hasn’t provided benefits to the U.S. beef industry sufficient to compensate for the EU’s ban on U.S. hormone-fed beef. Additionally, a 2009 memorandum of understanding signed by U.S. and EU officials promised “new and lasting opportunities” for U.S. beef in the EU, Lively said. Since then, EU imports of beef from places like Australia, Canada, New Zealand and Uruguay have “crowded out” U.S. beef from the European market, Lively said.

Section 301 Committee Chairman Bill Busis during the hearing frankly stated that EU’s beef export market to the U.S. is too narrow to inflict enough burden to influence the EU to open its market to U.S. beef products. He said that, while the European Commission decision-making process remains "somewhat of a mystery,” EU member state representatives can influence the body. Busis recommended that hearing witnesses engage with EU suppliers and suggest to them that they relay to their national governments U.S. importers’ specific concerns about the potential of U.S. tariffs on certain EU products.

Busis encouraged the witnesses to detail any such efforts in their post-hearing rebuttals. "In our experience, the way trade disputes get resolved is that stakeholders within Europe talk to their member governments, and then their member governments talk to the Commission. And then there's enough ... input that the Commission then decides, 'Oh, yes, maybe I should resolve this dispute,'" Busis said. "If one believes that the EU beef industry is behind or supports this ban on U.S. beef, then ... just putting duties on EU beef is not going to resolve this dispute."