erous hormones consist of testosterone, progesterone, zeranol, trenbolone, and meglangestrol acetate. (Birchard 1999) So Europe states that by imposing this ban they were actually trying to protect their country by imposing food safety standards.Each country had a validity to hold the opinions that they did, the US felt that the ban was harming their economy and Europe felt that there was a negative externality to consuming the beef. In graph 1, you can what happened after Europe refused to settle an agreement with the US, WTO said the United States is entitled to suspend tariff concessions covering EU trade in the amount of $116.8 million per year (The United States Mission to the European Union 2000). The tariffs that the US placed on Europe raise the world price plus the amount of the tariff to a new price. The new price harms not only the US citizens, but also the exporting country, since less of the good is bought, and they lose revenue. What happens to the European economy is represented in graph 2, since the tariff increases the price the good is sold for, so less people buy this good, making Europe lose revenue. In the 3rd graph you can see the social value of the hormone treated beef, since if it is truly dangerous to ones health, a substitute for it could easily be non-hormone treated beef. This would eliminate the problem of the carcinogens, making the social value and public cost equal.The dispute was not totally resolved as of yet, since the dispute is so complicated and unique in nature. The WTO has made some agreements to both sides such as entitling the United States to suspend tariff concessions covering EU trade in the amount of $116.8 million per year. On July 19, 1999, the United States announced revealed the final list of products that they will levy a duty on, but there has not been a final decision in this case (The United States Mission to the European Union. 2000). There were threats of retaliation fr...
