IV. MEAT POLICY DEVELOPMENTS

Over the 1998-2000 period, some countries reduced government intervention in the meat sector, while improving market access. Low prices over the review period, however, have revealed the tendency of countries to increase market support to meat sectors, particularly those in developed regions. This support took the form of price support schemes and income safety net programmes. Some governments also heightened their reliance on trade policy measures to restrict market access with the goals of maintaining support to domestic producers. In addition to tariff hikes, there has been increasing implementation of counter-veiling duties, tariff-rate quotas and increased recourse to URAA special safeguard clauses.

In addition, the recurring incidence of animal diseases have led countries to impose import bans and stricter sanitary requirements as well as other technical barriers, such as requirements on labelling and animal traceability schemes. Animal disease outbreaks in developing countries have also resulted in increases in support to livestock sectors, both for disease containment/eradication and to facilitate the ability of developing country exporters to adhere to tighter technical restrictions by developed countries. Low prices and animal disease outbreaks have also put pressure on regional trade agreements as countries struggled to respond to greater regional market competition.

PRODUCTION POLICIES

Progress towards restructuring and privatising the livestock sector in many developing countries continued in the 1998-2000 period as reflected in a general movement to reduce government involvement in livestock and meat markets. This trend was disrupted, however, in many developed and transitional economies as low livestock prices and animal disease outbreaks prompted governments to increase market support to producers and expand expenditures on disease containment. Support was provided through a variety of mechanisms, including higher direct payments, the provision of emergency disaster assistance and government procurement programmes.

The trend of moving away from price support toward direct payments to livestock and meat producers continued over the period, particularly in Western Europe. The European Community (EC) beef reform measures as implemented under Agenda 2000 in July 2000 (see Table IV-1 and Box IV-1) are prime examples. In other Western European countries, the transition to direct income support has been accompanied by animal headage payments and animal density requirements that support the transition towards a more extensive animal production system. Countries moving to direct producer payments include Iceland where direct payments for sheepmeat were based on historical entitlements, pushing up payments by 7.2 percent in 1999. In Norway, sheepmeat producers' returns were strengthened as the support price of sheepmeat was increased by 11 percent in 1999 and marketing levies were also reduced by a third. Meanwhile, a new regional deficiency payment for poultry was introduced while animal headage payments were increased for most species, mainly ruminants.

Table IV-1: EC support to the beef sector

			2000 1/	2000/2001	2001/2002	From 2002/2003
			Euro/tonne
INTERVENTION PRICE 4/ 5/	Announced		3475	3242	3013	n.a.
	Effective (84%) 2/		2919	2723	2531	1560 5/
	Safety net (78%) 3/		2711	2529	2350	n.a.
PRIVATE STORAGE AID 6/	Basic price		n.a.	n.a.	n.a.	2224
PREMIA 7/			1999	2000	2001	From 2002
			Euro/head
Special premium 8/	Young bulls	Total, maximum EC National (maximum)	n.a. 135 n.a.	205 160 45	270 185 85	285 150 135
	Steers	Total, maximum	n.a.	244	272	420
		EC, 9 months old	108.7	122	136	210
		EC, 19 months old	108.7	122	136	210
Suckler cow premium 8/		Total, maximum	n.a.	205	220	230
		EC	145	155	170	180
		National	n.a.	50	50	50
Slaughter premium 9/		Adult (<8 months)	n.a.	27	53	80
		Calves (>7 months)	n.a.	17	33	50

n.a.  not available
1/ From January 1-June 30, 2000
2/ Two separate conditions have to be met: EU market prices below 84% of intervention prices, and prices within a member state must be below 80% of intervention price.
3/ Two separate conditions have to be met: EU market prices below 78% of intervention prices, and prices within a member state must be below 60% of intervention price.
4/ The above intervention procedures will cease to exist from 1 July 2002, replaced with private storage aid scheme.
5/ Only recourse to intervention buying after 30 June 2002 will be under extreme market conditions.
6/ From 1 July 2002, private storage aid only operates subject to meeting of certain market requirements.
7/ Rights to premia are subject to national and per farm ceilings.
8/ Payment of the special and suckler cow premiums subject to a combined maximum of two livestock units per hectare, per year. If the density does not exceed 1.4 livestock units per hectare and if animals are grass-fed, an additional 100 Euros per head premium will be granted.
9/ New program, introduced in 2000. Additional member state payments can be made on a headage or area payment. These cannot exceed 210 Euros per head in 2000, 280 Euros in 2001 and 350 Euros in 2002.

Structural adjustments continued to characterise the livestock sectors in Eastern Europe and the Baltics, with prospects of EC accession prompting a general movement to reduce Government involvement in livestock/meat sectors while moving towards harmonising national regulations with those of the EC. However, overall support for the livestock sector, particularly the pigmeat sector, increased in 1999 and 2000 in response to low meat prices, partially caused by the collapse of the region's traditional export market, Russia. The Czech Republic increased market price support for pigmeat; however, support for the cattle sector declined with subsidies focused on promoting extensive production systems. In Poland, the Government tried to maintain prices through the purchase and subsequent sale of 123 000 tonnes of pork for export; these interventions continued through June 2000. Pig farmers and slaughterhouses in Hungary received additional support from the Government through direct payments for quality bonuses, intervention purchase payments and interest write-offs for investment. In Lithuania, a subsidy from the Rural Support Fund was paid for every pig sold in 1999; this contrasts, however, with declining support to the cattle sector. Since the beginning of 2000, subsidies for cattle in Lithuania were reduced and on 4 April 2000 they were eliminated. In Slovakia and Romania, most agricultural producer support was concentrated in the livestock sectors, with producers receiving over 70 percent of total transfers in those countries. An emergency temporary plan to stabilise pork prices in Cyprus was introduced in 1999. The plan provided for export subsidies of pig meat for a certain number of animals with a total of Cpounds 450 000 (US$ 230,000) paid as subsidies to pig farmers through the Pig Producer Association.

In Asia, the Government of Japan has slowly reduced livestock support prices; in 1999/2000 the floor price of the pigmeat price stabilisation band was reduced by 2.6 percent while most administered prices for calves were frozen at their 1998 levels. In late 1999, however, a pork storage programme was established aimed to bolster wholesale prices. The Government, which maintains deficiency payments for feeder calves, broadened the coverage in 2000 to include two separate breed types: dairy breeds (for beef) and cross breeds (Wagyu-Holstein). Similarly, in June 2000, the Republic of Korea introduced a new quality beef production programme which replaced the previous slaughter bonus of several won/cwt with a payment of 100 000-150 000 won ($83-125) for each Hanwoo bull calf at time of neutering. Furthermore, to encourage retention of cows, the Government is awarding farmers 200 000 won (US$ 167) per head for cows giving birth to their third/fourth calf and 300 000 won/head (US$ 250) for cows giving birth to their firth or more calves. The funding is shared equally between central and regional governments. In addition, a stabilisation programme using deficiency payments to support calf-breeding was put into place in 2000, with an upper limit on the deficiency payment of 200 000 won/calf (US$ 170). This upper limit increased to 250,000 won (US$ 208) in January 2001. Farmers wishing to participate in the scheme must pay a levy of 10 000 won/calf (US$8.3).

In North America, low commodity prices prompted supplemental legislative support to the agricultural sector through the provision of emergency and disaster relief. In Canada, the Agricultural Income Disaster Assistance (AIDA) was introduced in 1998. This two-year programme, with original national funding of US$ 606 million, was available for those whose farm gross margin dropped below a certain level. In the United States, livestock producers benefited from legislation to fund a US$ 5.9-8.7 billion multi-year emergency supplemental programme. Of this, some US$ 500 million was authorised for a Livestock Indemnity program and for emergency livestock assistance; a cost-share assistance for livestock growers who lost feed in natural disasters. Meanwhile, approximately US$ 150 million was spent under the Small Hog Operation Payment Program to provide US$ 10 per marketed pig to producers who sold no more than 2500 pigs during the second half of 1998. Payments were limited to a maximum of 500 hogs or US$ 5,000/producer. In addition, US$ 80 million was allocated to a special fund used to dispose of animals infected with the swine disease and pseudo-rabies. Meanwhile, compensation to the US lamb industry, in response to implied damage to the industry through increased imports, was provided through assistance totalling US$ 130 million. In May 2000, USDA began accepting proposals to fund up to US$ 4 million in competitive marketing and promotion projects designed to increase sales of US lamb.

Support to the livestock sector increased in many countries in 2000 due to animal disease outbreaks. The outbreaks spread through countries in Asia, Africa, Latin America and Europe, with many countries incurring significant costs to contain and eradicate the diseases. These diseases included Foot and Mouth Disease (FMD), African Swine Fever, Hog Cholera, Nipan Virus, Rift Valley Fever, and Bovine Spongiform Encephalopathy (BSE). The support was not restricted to those countries where disease outbreaks were registered, but also extended to others where precautionary actions were taken to minimise disease risks, particularly those related to BSE and FMD.

In the EC, since the re-emergence of BSE concerns in late 2000, the European Commission instituted several BSE-related measures which include the temporary ban on feeding meat-and-bone meal (MBM), mandatory testing on slaughtered cattle over 30 months of age, and the purchase and destruction of all positively-tested animals. Additional EC expenditures would result from schemes designed to support the sector by compensating producers for the slaughter of cattle not tested for BSE (Table IV-2).

The Government of the Republic of Korea extended support to the livestock industries in the wake of an FMD crisis in March 2000. Approximately Won 476.6 billion (approximately US$ 433 million) was allocated to mitigate the effect of the disease on the industry. Some Won 440 billion (US$ 365 million) was obtained from the Livestock Development Fund and allocated as follows:

• US$ 257 million--livestock procurement of export quality swine and animal within the quarantine area (approximately 262,000 head). The programme terminated on 18 July 2000.
• US$ 78 million--support for the operation costs of the farms within the movement restricted area.
• US$ 32 million--support for emergency fumigation costs.
• An additional US$ 32 million came from the Government's emergency budget to compensate for the slaughtered animals as a quarantine measure against FMD and to pay for the procurement of disinfectant.

In Japan, 4 cases of FMD in April 2000 led to the culling of 740 head of cattle with approximately Yen 332 million (US$ 3.1 million) paid to producers in compensation for destroyed cattle. In addition, serological surveillance measures were put into place for 28 114 farms and for 52 994 animals, while at the same time reforming the Livestock Infectious Disease Control Law, which promotes more thorough inspection measures.

Other countries not directly affected by disease outbreaks have been adopting policies to minimise, in particular, the risk of BSE and FMD. For example, Bulgaria implemented special programmes for testing of cattle at risk for BSE. Additional costs will stem from actions taken to monitor the collection and disposal of high risk materials to prevent the spread of BSE, increased surveillance of live animals, testing of imported cattle, banning MBM, additional measures for internal and border veterinary control, as well as restrictions on livestock, meat and feed imports from EC countries.

Table IV-2: European Agricultural Guidance and Guarantee Fund, expenditure on livestock and meat

	1994	1995	1996	1997		1998	1999	2000	2000 1/
	Million euros 4/
TOTAL MEAT	6095	6610	8730	10292	7936		6892	6702	8012
Export refunds	2181	2051	1787	1642	926		963	996	719
Intervention 2/	3914	4559	6943	8650	7010		5929	5706	7293
BOVINE MEAT	3532	4091	6796	6675	5160		4578	4539	6245
Export refunds	1708	1761	1559	1499	774		595	661	572
Intervention 2/	1824	2330	5237	5176	4386		3983	3878	5673
Of which:
Private and Public storage	-209	-215	620	749	145		-37	-83	237
Suckler cow premium	955	1126	1632	1522	1653		1658	1628	1838
Special Bovine premium	657	957	1407	1238	1341		1297	1299	1619
Extensification premium	389	438	507	569	706		714	715	757
Slaughter premium	n.a.	n.a.	n.a.	n.a.	n.a.		n.a.	n.a.	716
Other	32	24	1071	1098	541		351	319	506
OVINE MEAT	1933	2204	1682	1425	1534		1894	1736	1620
Private storage	2		2				3	4	1
Ewe and goat premium	1628	1781	1321	1067	1171		1536	1365	1251
LFA premium	303	423	360	359	364		356	369	369
Other	n.a.	n.a.	-1	-1	-1		-1	-2	-1
PIG MEAT	416	143	125	479	239		327	354	88
Export refunds	259	118	101	72	75		275	262	88
Private storage	22	18	18	n.a.	n.a.		46	92	0
Exceptional market support	135	7	6	407	164		6	0	0
POULTRY MEAT	214	172	127	71	77		93	73	59
Export refunds	214	172	127	71	77		93	73	59

1/ Budgeted (Supplementary and Amending Budget no1/2001)
2/ All expenditure other than export refunds
3/ Prior to 1999, the budget was in ECUs.
Source: European Commission

Many countries have adopted measures towards enhancing the productivity of the livestock sector, through improvements in livestock genetics, management practices and infrastructure. Turkey announced a revised Livestock Development Project (allocated about US$ 70 million) which was to start in 2000. Indonesia, in its efforts to help farmers improve cattle breeds, imported 110 head in 2000 that will be used to support artificial insemination technology and embryo transfer. In December 2000, the Vietnamese Government approved a new project to improve animal breeding systems in the country. In 2000, 24 projects were proposed at the national level, which will concentrate on researching and generating new breeds of animals. China acquired nearly $ 200 million in World Bank loans in support of a 4-province cattle infrastructure project in east central China. The emphasis is on meeting the rising demand for quality beef. In addition to new feeding lots and processing facilities, the project will spend heavily to improve beef herds, particularly through the use of imported genetics, i.e. animals, semen and embryos.

CONSUMPTION AND MARKETING POLICIES

Heightened concerns regarding food safety and animal disease issues have escalated the trend for countries to enact legislation to improve meat quality standards. Many countries moved towards implementing food safety regulations and increased labelling requirements to ensure more strict food quality standards. In many developing countries, this was accompanied by the development of live animal and meat grading standards, the enhancement of certification systems for animal health, increased regulation of domestic meat industries and more strict veterinary and sanitary standards. In addition, the development and implementation of new systems of animal identification and registration has expanded with traceability schemes, originally instituted in response to importer requirements, being increasingly recognised as beneficial to managing animal disease outbreaks.

In Ethiopia, the Livestock and Marketing Authority has developed live animal and meat grading standards. Meanwhile, severe drought and animal disease concerns in the East Africa region prompted the development of a common certification system for animal health. This certification scheme, while aiming at improving animal health, will also eventually facilitate the movement of livestock through Kenya, Ethiopia and Somalia, all of which are expected to sign a protocol for the free movement of animals and livestock products across borders. South Africa approved an Animal Identification bill in 2000, while in Botswana a computer chip animal identification system was institutionalised in January 2000. In Lithuania, a 1999 decree of the Minister of Agriculture established grading standards for cattle and pig carcasses. Meanwhile, Lithuania also set up a traceability system, with animal passports introduced in 2000. In June 2000, Turkey announced a regulation requiring all large ruminants to have identification certificates and ear tags. Many countries in eastern Europe, including the Czech Republic, are moving towards a new system of identification and registration of animals, compatible with those in the EC. In July 2000, the Canadian Food Inspection Agency amended the Livestock and Poultry Carcass Grading Regulations to permit the application of Canadian grade names to imported beef carcasses. This amendment makes Canadian grade names available to domestic and imported products alike and harmonises Canadian and US grading standards for imports of cattle and carcasses. In addition, a mandatory bovine tagging system was put in place by end of 2000.

Many countries, as a measure to reinforce traceability and address food safety concerns, are implementing labelling regulations. In the EC, as of 1 September 2000, member states had to indicate on beef product labels the country of slaughter, country of cutting/de-boning and the reference code of the animal. As of 1 January 2002, the labels would have to indicate the animal's country of birth, and where it was fattened and slaughtered. Third country products would be labelled "non-EC beef" and would mention the country of slaughter. Meanwhile, in Switzerland, new labelling regulations applied from January 2000 require that imports of fresh meat and eggs produced with methods that are not allowed in Switzerland to be labelled as such. In particular, the use of hormones or antibacterial growth stimulators in meat production has to be clearly indicated.

Governments are also implementing legislation providing for increased regulation of domestic meat industries. In Hong Kong, SAR, increased regulation of the domestic meat industry, under its new Feed and Environmental Hygiene Department, is expected to create stronger growth in trade. In many central and eastern European (CEE) and Baltic countries, governments are funding investment in slaughter houses and processing facilities, in part funded by the EC's Structural Adjustment Programme and Agricultural Rural Development (SAPARD). In Lithuania, slaughter houses and meat enterprises which wish to implement EC veterinary and sanitary standards would be allotted state assistance from the SAPARD programme. Meanwhile, the Government, as of 12 July 2000, implemented a new law establishing food standards.

Despite increased government legislation to address food safety concerns, the tendency has continued over the period, particularly in developing countries, towards increased privatisation of slaughter and processing facilities, as well as veterinary services. This is particularly true in Africa; for example, the Central African Republic elaborated an Agricultural Plan, which would privatise veterinary services and other services, while Rwanda and Burkina Faso are instituting similar legislation. In Turkey, the privatising process of the Meat and Fish Authority is underway and some of its meat and fish processing plants have already been privatised. Meanwhile, deregulation of statutory boards continued in late 1999 with the New Zealand Pork Industry Board ceasing all activities of pig breeding and selling.

OTHER RELATED DOMESTIC POLICIES

Concern for the negative environmental impact of intensive livestock production has lead to measures to curtail some practices. The Hog Environmental Management Strategy introduced in Canada in 1997 was replaced in early 2000 by the Livestock Environmental Initiative, a one year programme which allocated US$ 1 million for research and development, assessment and transfer of technology to the livestock industry, and US$ 300 000 for an assessment of possible environmental certification systems for the hog industry. In the Chinese Province of Taiwan, a four-year Sustainable Management Plan was imposed with the following provisions: after 31 December 2000, strict limits on standards for water discharged from pig farms with more than 20 pigs would apply in the watershed of rivers used as sources of drinking water.

In Lithuania, new manure management principles, similar to those established in the EC, have been adopted which, combined with animal density regulations as well as the ecological farm certification program, promotes a more extensive animal production system. The Government of the Netherlands has developed a system to reduce the country's manure surplus, called the "minerals accounting system", or MINAS. All farmers will be required to participate in the programme beginning in 2001. In addition, the programme allows pig and poultry farmers to sell their farms to the Government. In November 2000, the first round of the buy-up programme was ended and the Government, at that time, bought a number of farms producing the equivalent of 2.7 million tons of phosphate. The average price paid to the farmers was Euro 84 per square meter (US$ 76), with the total amount available for purchases totalling Euros 305 million (US$ 294 million).

Increasingly, countries are introducing legislation, which establish animal welfare standards and regulate the use of animals in research. Most of these regulations are enacted in developed countries; however, some developing countries are also planning similar legislation to ensure compliance with developed country standards. In New Zealand, an Animal Products Act was introduced in November 1999. Part 4 of the Act provides for the setting of animal welfare standards that must be met by any animal product intended for trade. A new Animal Welfare Act came into force in January 2000 which establishes welfare standards, regulates use of animals in research and establishes a National Animal Ethics Advisory Committee. In Botswana, draft legislation was approved which ensures compliance with EC regulations on animal welfare.

INTERNATIONAL TRADE POLICIES

Import Measures

The Uruguay Round Agreement on Agriculture (URAA) negotiated declines in tariffs, domestic supports and export subsidies. However, meat markets during the 1998-2000 period witnessed a series of tariff hikes, increases in anti-dumping cases, the imposition of countervailing duties and increased recourse to URAA safeguard clauses. These policy changes, in most cases, were enacted to protect domestic producers in a time of extremely low meat prices but did not violate URAA commitments, particularly bound tariff levels. Further sanitary and phyto-sanitary restrictions on market access resulted from the proliferation of animal disease outbreaks around the world in 2000.

In many CEE countries, a series of tariff increases were instituted in 1999 in response to low pork prices and the increased movement of subsidised EC products into these markets. In the Slovak Republic, as of 1 June 1999, an additional import fee of 7 percent was applied on meat imports, declining to 5 percent as of 1 January 2000 and being eliminated by the end of 2000. Slovakia also imposed quotas on imports of pigs from the Czech Republic between May and November 1999. In 1999, Poland, invoking the URAA special agricultural safeguard clause, applied additional tariffs on pigmeat and poultry meat. Out-of-quota imports were subject to an additional levy. Moreover, first-quarter 1999 preferential tariff rates on pigmeat and poultry meat imports from some CEFTA countries ³² were suspended and, in mid-1999, import tariffs for pigmeat were raised to maximum URAA bound levels. Romania applied a safeguard duty of 45 percent for pork and poultry imports (normally 15 percent) from Hungary; this expired on 2 July 2000. In May 1999, Switzerland resorted to the URAA special agricultural safeguard clause and increased tariffs on pigmeat imports.

In Vietnam, the Government, in 1999, raised the preferential import rate charged on the importation of pigmeat to 30 percent from 20 percent, reflecting the policy to protect the local swine sector. India agreed in 2000 to open up its market to imported poultry meat, replacing import license requirements with a 100 percent tariff. Since August 1999, India has banned imports of live cattle, buffalo, sheep and goats from countries where incidences of TSE (transmissible spongiform encephalopathy) diseases have been reported. The scientific basis of this notification has been questioned by the US and Canada under the auspices of the WTO-SPS committee. In April 2000, China, in an effort to safeguard official trading channels, issued a regulation on minimum import prices for poultry meat, which were changed in October 2000 from an ad valorem tariff to a specific duty (based on weight).

The Dominican Republic is reported to have required all meat imports to be approved by the Secretary of Agriculture, while legislation was passed to increase import duties on meat products from 25 percent to the URAA maximum allowable bound rate of 40 percent. Protection for the meat sector in El Salvador was raised with an increase in tariffs for meat products; duties of bovine meat reportedly were raised from 15 to 40 percent, as were those for pigmeat and sausages. Similarly, in Suriname, tariffs on chicken meat were raised from 10 to 20 percent. In Argentina, minimum import prices for chicken meat were placed on imports from Brazil as of July 2000, because of an anti-dumping case filed by the local chamber of poultry processors. The previous quota on Brazilian whole chickens (not parts) was replaced by minimum import prices of US$ .92-.98/kilo. Meanwhile, in October 1999, the Jamaican cabinet approved a plan to amend the Stamp Duty Act to impose aggregate duties of 86 percent on fresh brisket, mince and boneless beef trimmings, replacing the previously imposed 40 percent tariff.

The use of counter-veiling duties increased over the review period as a means to restrict trade. In South Africa, as of July 2000, the Government imposed provisional anti-dumping payments on imports of chicken leg quarters from the United States, varying from rand 2.25 to rand 7.25/kg (US$ 316-US$ 1,020/tonne). This charge was imposed on top of the import duty of $ 316/tonne. Current ad valorem equivalent duties now range from 70-150 percent. Mexico took additional anti-dumping actions in October 1999, with compensatory duties imposed on imports of US live pigs for slaughter. The Mexican Government made a final decision on the antidumping case against US exporters of beef and edible beef offal in April 2000 which imposed a complex set of specific import duties on most beef carcasses and cuts with different compensatory duties, depending on product type and US exporter. The final ruling, however, removes the earlier duties on tongues, livers and other edible offal. The United States, in 1999, after imposing counter-veiling duties on live cattle from Canada, reversed the decision and eliminated the duties after an investigation found no justification for the earlier decision. Also, in 1999, the US government imposed safeguard measures on lamb imports.³³ A tariff-rate quota was imposed on 31 851 tonnes (product weight. equivalent), with a 9 percent tariff on in-quota imports, and 40 percent for out-of-quota imports. The quota increased by 857 tons in 2000, with tariffs reduced to 6 percent for in-quota and 32 percent for out-of-quota duties. Meanwhile, the EC, despite the WTO panel ruling in 1999 that the import ban on hormone-treated beef was not based on scientific evidence, has maintained import restrictions, with the United States and Canada imposing retaliatory duties.

Other measures were applied which also affected market access. For example, the Philippines on 19 May 2000 established new meat inspection requirements on imported meat that generated delays in issuance of import licenses for all meats coming into the Philippines. In Nigeria, while the import ban on poultry was lifted in 2000, duties on poultry imports were raised from 55 to 75 percent.

There were, however, measures to increase market access opportunities as well. For example, in October 2000, Hungary officially opened a special duty-free quota for 50 tonnes of high quality North American beef that could expand to 200 tonnes in 2001. Meanwhile, in mid-2000, Latvia lifted its pork import restrictions that consisted of a minimum customs duty of 0.5 lati/kg (US$ 1,000/ton). Compensation will be given to the industry by subsidising the pig-breeding sector through funding of one million lati (US$ 600 000). In Latin America, Guatemala, as of February 2001, increased its TRQ for poultry meat from 7 000 tons to 39 452 tons, while the in-quota tariff and out-of-quota duty (15 percent and 45 percent respectively) were both reduced to 5 percent. Meanwhile, Argentina, in late 2000, lifted a ban, previously imposed for sanitary reasons, on imports of US fresh bone-in pork for further processing. However, this move was linked to an increase in duties for frozen boneless pork to 35 percent (the maximum bound URAA tariff ceiling), up from 13 percent for all types of pork, except fat and bacon which were assessed a 9 percent duty.

In Asia, Turkey ended a three-year import ban on breeder cattle in August 2000, but only for farms that raise at least 100 head. However, the ban is maintained on meat and slaughter cattle. Meanwhile, on 1 January 2001, the Republic of Korea liberalised its cattle and product markets, replacing a previous system of quotas with tariffs that would decline over the next three years. Reduced government involvement in the market is likely to be accompanied by changing retail practices as a result of a WTO Dispute Settlement Board ruling in 2000 that the operation of a separate beef retail distribution system for imported beef violated its URAA commitments. The Chinese Province of Taiwan expanded market access for meat products as a result of bilateral WTO pre-accession agreements with numerous countries. Originally only with the United States, the agreement expanded, as of 1 July 1999, to establish a global quota for 1 160 tonnes of pork bellies, 2 500 tonnes of pork offal, 10 000 tonnes of beef offal and 19 163 tonnes of chicken. In Bahrain, import duties were eliminated in 2000 on bovine and ovine meat. In Nepal, import duties on meat products are now reimbursed if value-added products are exported within 6 months of importing the required raw product.

Export Measures

The 1998-2000 period marked a sharp increase and then declines in the use of export subsidies, mainly by the EC, but also by some other smaller meat exporters. Low pig prices in late 1998 and restricted purchases by Russia prompted the EC to escalate the amount of pigmeat products exported under subsidy. In addition, the use of the roll-over provision under the URAA, which allowed for the carry over of unused portions of subsidy commitments from the previous year (until July 2000), facilitated the EC shipment of an additional 200 000 tonnes of subsidised pigmeat products above the URAA authorised levels in the WTO 1998-1999 year (July-June). Higher EC domestic prices, the weak value of the Euro, amidst concerns about adhering to the URAA subsidised export limit, prompted the EC Commission to lower export refunds for subsidised pigmeat and beef in 2000 (Table IV-1). However, the emergence of the BSE crisis in late-2000, resulting in stalled beef exports and plummeting prices, led to increased export restitution levels.

In the United States, export subsidies for poultry meat, after the resumption of the programme in May 1998, continued with nearly 2 500 tonnes shipped in both Financial Year 99 (October-September) and Financial Year 2000 (around 1 percent of total exports). Approximately US$ 3 million was spent to subsidise poultry exports in 1999 and 2000, with per unit subsidies estimated at approximately $US 650/tonne. Additional support to US meat exports was provided through increased funding for the GSM-102 credit guarantee programme. The GSM-102 funding encourages importing countries to expand purchases of livestock and meat from the United States. In 2000, the Czech Republic did not subsidise pork exports through the State Fund for Market Regulation. This contrasts to the US$1.6 million that were used to export 3 400 tonnes of pigmeat in 1999. In Poland, the Government, through the Agricultural Marketing Authority (AMA), subsidised the exports of 128 000 tons of pigmeat in 1999. Meanwhile, the Government of Hungary overspent its 1999 meat export subsidy budget and used the total 2000 allotment by June 2000.

The Brazilian Poultry Exporters Association and the Brazilian Agency for Export Promotion (APEX) implemented in 2000 a new export marketing programme valued at real 4.5 million (US$ 2.5 million) for promotion of Brazilian broiler exports.

Bilateral and multilateral trading arrangements

Numerous bilateral and regional trading agreements were put in place during the period under review with the goal of enhanced trade flows. These arrangements included the Double-Zero Agreements between the EC and candidate countries for accession (see Box IV-2),³⁴ bilateral agreements between China and other countries which recognise national meat inspection systems, and the strengthening of regional trade agreements.

The strengthening of regional trade agreements has led to some regional policy changes affecting market access as well as the comparative competitiveness of individual country's livestock industries. For example, since January 2000, the West African Economic and Monetary Union (Unione Economique et Monetaire d'Afrique de l'Ouest - UEMOA) has imposed a common external tariff on imported products coming into the eight member states: Senegal, Burkina Faso, Benin, Togo, Mali, Niger, Guinee Bissau and the Cote d'Ivoire. The tariffs vary from 0-20 percent, with meat being charged 20 percent duty and live animals only 5 percent. To further the objectives of establishing a common market, there is also a move to harmonise value-added taxes (VAT) in all member states around a flat rate of 20 percent for agricultural products and inputs. In some cases, these tariffs and VAT are higher than existing individual country rates and governments are trying to compensate producers by exempting agricultural inputs from the VAT.

Additional bilateral agreements on equivalency in veterinary inspection requirements have been signed to facilitate trade. These agreements allow veterinary inspection requirements to differ from country to country and ensure individual countries the right to establish their own level of public health protection. To date, the EC has concluded veterinary equivalency agreements with Canada, the Czech Republic and New Zealand, and discussions are on going with Australia, Argentina, Uruguay and Chile. Meanwhile, Brazil's Meat Inspection Service has implemented new procedures for registration of foreign beef plants to export to that country.

In April 2000, the United States and China signed a bilateral agreement in which the Chinese recognised the US meat certification of meat and poultry, thus permitting imports into China from all USDA-approved plants. This agreement allowed US meat and poultry exports to be sold in normal retail and wholesale channels. On 15 August 2000, China and Denmark signed a veterinary agreement allowing direct exports of Danish pork to China. China and Canada signed a Pork Protocol that should result in better access for Canada to the Chinese market, while at the same time Canadian beef plants were approved for export to China. Meanwhile, in 2001 the trade agreement on agriculture between Switzerland and the EC comes into force, covering speciality meats.

While some strengthening of regional trading links has occurred over the review period, increasing conflicts within existing regional trade agreements have also been witnessed. In particular, MERCOSUR countries have had difficulties as a result of financial shocks leading to divergent macro-economic outlooks. This, combined with low prices and livestock industries which are competing in extra-regional markets, have resulted in some trade disputes regarding meat products; for example, counterveiling duties on Brazilian chicken going into Argentina. In addition, regional problems in containing animal disease outbreaks have aggrevated already existing tension in the region. Low livestock prices have also pressured meat industries in the NAFTA trading block as witnessed by increased numbers of cases of counterveiling duties and anti-dumping cases for livestock and meat products (see trade section).

CONCLUSIONS AND ISSUES

Over the review period, some countries reduced government intervention in the livestock and meat sectors, while improving market access. However, in a period characterised by low meat prices and the proliferation of animal disease outbreaks around the global, the following policy developments have been observed:

• Low prices over the review period revealed the tendency of developed countries to increase support to meat sectors, taking the form of price support schemes and income safety net programmes, accompanied by measures to expand border protection with the goal of protecting domestic producers.
• Animal disease outbreaks in developing countries have also resulted in increases in support to livestock sectors, both for disease containment/eradication and to enhance the ability of developing country exporters to adhere to tighter technical restrictions used in developed countries.
• Governments have heightened their reliance on trade policy measures to restrict market access with the goal of stabilising domestic markets. In addition to tariff hikes, there has been increasing resort to counterveiling duties and URAA safeguards. Recurring animal diseases have led countries to impose import bans and tightened sanitary requirements as well as other technical barriers, such as requirements on labelling and animal traceability schemes in order to better respond to food safety concerns.
• Increasing conflicts within regional trade agreements were witnessed. The growing initiatives, on a regional level, to promote trade through strengthening or expansion of inter-regional trade agreements and the harmonisation of trade policies or regional certification systems for animal health, has come under pressure as low prices result in heightened competition for markets.

32 CEFTA members are Bulgaria, the Czech Republic, Hungary, Poland, Romania, Slovenia, and Slovakia.

33 These restrictions in late-2000 were found to violate URAA safeguard rules. The United States, however, appealed this decision, but the Appellate Body of the WTO which released its findings on 1 May 2001 did not uphold the appeal.

34 This initiative, which went into effect on 1 July 2000, allows for increased trade flows, especially for pork products, through higher quotas and zero in-quota tariffs while eliminating the use of export subsidies between participating countries.