EXPLANATORY MEMORANDUM

1.CONTEXT OF THE PROPOSAL

•Reasons for and objectives of the proposal

Pursuant to Council Regulation (EC) No 617/2009, the European Union opened an annual tariff rate quota for High Quality Beef in compliance with the Memorandum of Understanding between the European Commission and the United States and its revised version, the Revised Memorandum of Understanding with the United States of America Regarding the Importation of Beef from Animals Not Treated with Certain Growth-Promoting Hormones and Increased Duties applied by the United States to Certain Products of the European Union of 21 October 2013 (the "TRQ "). The revised Memorandum of Understanding was communicated by the Union and the United States to the WTO Dispute Settlement Body on 14 April 2014 and it sets out a roadmap aimed at settling the WTO dispute EC – Measures concerning Meat and Meat Products (Hormones) (DS26) ("EC-Hormones").

In December 2016, the United States took steps to reinstate increased duties on certain EU products in connection with the dispute in DS26. The procedure for the reinstatement of duties was opened upon the request of the US beef industry who raised concerns about the implementation of the TRQ.

With a view to avoid the reinstatement of increased duties on certain EU products, the European Union and the United States conducted consultations regarding the operation of the revised Memorandum of Understanding pursuant to Article IV.1(b) thereof, whereby the United States requested the allocation of a share of the tariff rate quota opened pursuant to the revised Memorandum of Understanding.

It is in the interest of the Union to allocate a share of the TRQ to the United States so that both Parties may eventually reach a mutually agreed solution to the WTO dispute in case DS26 to be notified to the WTO Dispute Settlement Body.

On 19 October 2018, the Council authorised the Commission to open negotiations on behalf of the Union with the United States of America, concerning the operation of the TRQ, with a view to allocate a share in the TRQ to the United States, with a view to a definitive resolution of the WTO dispute in case DS26. These negotiations were successfully concluded.

In addition, the Council authorised the Commission to seek the agreement of the other substantial supplying countries under the TRQ as regards the country-allocation of the TRQ, in line with the applicable WTO rules, to the extent necessary. Indeed, in order to comply with Article XIII:2 of the GATT, when a tariff quota is allocated among supplying countries, the party allocating the tariff quota should seek agreement with respect to the allocation of shares in the tariff quota with all substantial suppliers. In order to make sure that the country allocation of the TRQ complies with the EU WTO obligations, the EU therefore has to seek the agreement of the other substantial suppliers under the TRQ (Australia, Uruguay and Argentina). Accordingly, the Commission sought the accord of the substantial supplying countries and obtained their written consent with the allocation of a share of the TRQ to the United States in the form of letters of acceptance received on 10, 20 and 31 May 2019.