On September 13, the EU provided the WTO with a list of products that could be subject to retaliatory duties in accordance with the Dispute Settlement Body panel’s decision that the U.S. tax treatment of Foreign Sales Corporations amounts to an export that is inconsistent with WTO obligations. Five types of planting seeds are on the list: Sugar beet seed, clover seed (with the exception of red clover seed), meadow fescue seed, timothy grass seed and forest tree seeds. The EU is an important market (representing greater than 20 percent of total U.S. exports) for each of these except timothy grass seed. All of these seeds currently enter the EU duty-free. In CY 2001, the EU imported a total of $2.25 million or 685 tons of sugar beet seed. Chile, Croatia, the Czech Republic, Hungary, Poland and Turkey were the major foreign sources in 2001. The U.S. is not a top supplier of sugar beet seed to the EU. However, the EU’s importance as a market for U.S. sugar beet seed is growing. Although, total U.S. sugar beet exports in MY 2001 were down by about 90 percent, the share of U.S. sugar beet exports to the EU increased to over 50 percent.

The U.S. accounted for about 7 percent of EU clover seed (excluding red clover seed) imports in CY 2001. New Zealand, Australia and Canada were the primary suppliers and market shares appear to be stable. The U.S. shipped $573,000 worth of this type of seed, or 179 tons, to the EU in CY 2001 out of $2.058 million total, or 819 tons. Shipments to the EU and elsewhere fell in MY 2001/02, but the EU’s importance stayed roughly the same at around a 28-percent share.

In meadow fescue seed, the U.S. has been a top supplier, behind the Czech Republic and Canada, but has lost market share to its competitors over the past three years. According to EU external import statistics, U.S. market share was about 11 percent in CY 2001, down from 25 percent in 1999 and 19 percent in 2000. According to U.S. export statistics; the share of total meadow fescue seed exports going to the EU was 78 percent in CY 2001, up from 10 percent in CY 2000 and 0 percent in CY 1999.

The EU is not an important destination for U.S. timothy grass seed exports, accounting for less than 1 percent of the total. Over 80 percent of EU timothy grass seed imports are from Canada. U.S. MY 2001/02 timothy grass seed exports to the EU were valued at $8,000 out of $1.45 million total exports.

Regarding forest tree seed, the U.S. is neck-and-neck with Australia as the top supplier in value terms at 20 percent market share each. Australia is by far the leading supplier in volume, suggesting that U.S. tree seed exports to the EU are in a relatively higher-end market. U.S. trade statistics do not specify forest tree seeds, but over the past two marketing years, about 25 percent of tree and shrub seed exports have gone to the EU. Tree and shrub seed exports to the EU amounted to $540,000 in MY 2001/02, 23 percent of total U.S. tree and shrub seed exports.