Foot-and-Mouth Disease and Argentina's Beef Exports: The WTO's US – Animals Dispute

27 Pages Posted: 26 Oct 2016

See all articles by Chad P. Bown

Chad P. Bown

Peterson Institute for International Economics; Centre for Economic Policy Research (CEPR)

Jennifer Hillman

Georgetown University Law Center

Date Written: October 2016

Abstract

This paper provides a legal-economic assessment of the Panel Report in US – Animals, one of a growing list of WTO disputes arising due to problematic conditions under which an importing country closes and re-opens its market after an infectious-disease outbreak in an exporting country. The US banned imports of beef from Argentina following a 2000 Argentine outbreak of highly contagious foot-and-mouth disease (FMD), a disease not found in the United States since 1929. The US refused to relax its import ban, and Argentina filed a WTO dispute in 2012, more than six years after its last FMD outbreak. Our analysis starts with Argentina’s claim that the gap between its first requests – in 2002 – to restore its trading rights and no action by the US as of 2012 constituted “undue delay.” We rely on simple insights from economic research on asymmetric information problems – moral hazard and adverse selection – to describe the difficulties ultimately confronting the World Organization for Animal Health (OIE) and the WTO’s SPS Agreement in dealing with problems like FMD. Such an environment creates disincentives for socially efficient behavior that were clearly realized in this particular episode. The exporting country has an incentive to hide information on outbreaks and report being disease-free too quickly, and the importing country has no incentive to quickly undertake the costly effort of conducting the necessary inspections to restore the exporter’s market access. Finally, we address the Panel Report’s treatment of alleged discrimination that arose both across different FMD-impacted countries and across FMD-impacted and non-impacted geographic zones within Argentina, and we touch on the Panel Report’s shift in approach regarding the obligation of the US to take into account the special needs of developing countries such as Argentina.

Keywords: WTO, dispute settlement, SPS Agreement, animal disease

JEL Classification: F13

Suggested Citation

Bown, Chad P. and Hillman, Jennifer, Foot-and-Mouth Disease and Argentina's Beef Exports: The WTO's US – Animals Dispute (October 2016). Robert Schuman Centre for Advanced Studies Research Paper No. RSCAS 2016/54, Available at SSRN: https://ssrn.com/abstract=2859433 or http://dx.doi.org/10.2139/ssrn.2859433

Chad P. Bown (Contact Author)

Peterson Institute for International Economics ( email )

1750 Massachusetts Avenue, NW
Washington, DC 20036
United States

Centre for Economic Policy Research (CEPR)

London
United Kingdom

Jennifer Hillman

Georgetown University Law Center ( email )

600 New Jersey Avenue, NW
Washington, DC 20001
United States

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