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EU agrees to nearly triple annual duty-free US beef purchases

A reeling agriculture industry got some welcome news Aug. 2, as the White House said it had reached a deal that would nearly triple annual duty-free exports of hormone-free American beef to the European Union.

The Office of the U.S. Trade Representative said U.S. duty-free beef exports will eventually rise to $420 million from the current $150 million level once the agreement, subject to approval by the EU Parliament, is fully implemented.

The agreement would initially establish a duty-free tariff rate quota of 18,500 metric tons annually, worth roughly $220 million. That quota would rise to 35,000 metric tons, or $420 million annually, after seven years.

Speaking at a signing ceremony Aug. 2 at the White House, President Donald Trump said the move is "one more step toward a level playing field" for U.S. farmers. Also present at the signing were U.S. Trade Representative Robert Lighthizer, Deputy Head of Mission for the Finnish Presidency of the Council of the EU Jani Raappana, and EU Ambassador to the U.S. Stavros Lambrinidis.

"We've been in negotiations for a while," Trump said at the signing. "But the EU stepped up and we appreciate it. This is a tremendous victory for American farmers and ranchers and European consumers."

Although the U.S. exported $13.5 billion worth of agricultural goods to the EU in 2018, beef did not crack the top five of those goods, according to the U.S. trade representative.

The EU has long maintained concerns over the quality of U.S. agricultural goods, including the use of hormones, analysts have previously told S&P Global Market Intelligence. And beef producers and trade groups have lamented the tariff and nontariff barriers that have stifled access.

U.S. agriculture, including beef, has borne the brunt of retaliatory tariffs from various trade spats initiated by the Trump administration, including those from Mexico and Canada as well as China. Farmers and ranchers, a key cog of Trump's voting base, have received a series of bailout packages meant to patch up what some analysts have called self-inflicted wounds.

"They are always targeted by other countries first," Trump said. "They are the first to be targeted but we are taking that target off their back."

The agreement was spurred by a 2016 request from the National Cattlemen's Beef Association, U.S. Meat Export Federation and the North American Meat Institute seeking the USTR to take tariff action against the EU for its ban on the use of hormones in cattle production. Several years of negotiations resulted in the agreement, which was first approved by the European Council on July 15.

The USTR said it expects the agreement to be approved by the European Parliament this fall.

The announcement also comes as both sides seek a bilateral trade deal. The oft-frayed trading relationship between the Atlantic partners has been inconsistent as Trump also dangles the possibility of 25% automobile tariffs over the EU.