* Exporting states see U.S.-EU deal as discriminatory
* Fear it will favour U.S. beef and shut out others
* EU says new quota will be open to all
By Jonathan Lynn
GENEVA, June 19 (Reuters) - Beef-producing states told the World Trade Organisation on Friday they feared a deal between the United States and the European Union to open up European markets to high quality beef would hit their exports.
The complaints, highlighting commercial sensitivities in the financial crisis, could lead to a new trade dispute over a deal hailed by Washington and Brussels as a breakthrough in their own often fraught economic ties.
The United States and the European Union reached a provisional agreement on May 6 to end a two-decades-long row over an EU ban on hormone-treated beef by increasing the European import quota for other beef.
Brussels says the new quota, whose details are still being worked out, is open to all WTO members.
Some beef exporters, mainly from Latin America, fear it has been designed to let in U.S. beef at their expense.
"The Memorandum of Understanding in question ... defined high-quality meat solely as those of the type exported by the USA," Uruguay said in a statement to the WTO's dispute settlement body.
Beef accounts for 25 percent of Uruguay's exports and the EU is its biggest market, according to Montevideo.
Under the deal reached with the United States, the EU will provide additional duty-free access for 20,000 tonnes of non-hormone-treated beef a year for three years, rising to 45,000 tonnes in the fourth year.
EQUAL ACCESS
This is in addition to the current import quota of 60,000 tonnes, on which exporters pay duty of 20 percent. Imports outside the quota pay 100 percent.
Within the existing quota, the United States has a share of 11,500 tonnes. Uruguay said it feared the United States would capture all the new quota.
"In a word, the USA would move from having 19 percent of the quota for high-quality meat to 54 percent, and Uruguay and all other producers would now face a competitor with a unique and exclusive zero-duty tariff," Uruguay said.
Australia, Argentina, Brazil, India, New Zealand, Nicaragua and Paraguay voiced their concern at the deal.
"We are keen to ensure that the quota is not discriminatory in its treatment of beef exporters, is consistent with the European Communities' WTO obligations and will provide equal access for all beef exporters including Australian beef exporters of high quality beef," Australia said.
The United States and European Union praised their deal as a pragmatic way of dealing with trade problems. As a result, the United States dropped its plans to impose $116.8 million in retaliatory duties on European products, which it was entitled to do because the WTO had found the EU's ban on hormone-treated beef to be in breach of the rules.
Uruguay also argued that, under WTO rules, compensation for trade restrictions should be only temporary and compliance with the rules was preferable.
The EU said it would notify WTO members in early August of the details of the new quota. It would cover beef from cattle with a special diet, and other objective characteristics.
"Beef meeting the definition of high-quality beef will be able to qualify for the quota, irrespective of its country of origin, provided it also complies with our general food law," the EU said in a statement to the dispute settlement body. (Editing by Andrew Dobbie)