The World Trade Organization (WTO) on October 20, as expected, ruled on the side of Canada and Mexico in the ongoing battle over the U.S. mandatory Country-of-Origin-Labeling (COOL) law, saying some COOL requirements treat Canadian and Mexican livestock less favorable than U.S. livestock.
Originally included in the 2002 farm bill, amended in the 2008 farm bill and initially implemented in 2009, COOL has been the focus of a WTO lawsuit for nearly five years. Shortly after being implemented, Canada and Mexico established a case against the United States in November 2009. The WTO ruled that certain COOL requirements discriminate against foreign livestock and gave the United States a May 2013 deadline to comply with its findings.
The U.S. government responded by revising the law to require covered meat products to detail each production step, including where the animal is born, raised and slaughtered on the label. Canada and Mexico objected to this response, and the latest WTO ruling once again sides with the United States’ largest trade partner.
(For a more detailed background on COOL, read The MCOOL Saga in the March issue of Drovers CattleNetwork).
Specifically, the October 20 ruling says the “compliance panel concluded that the amended COOL measure increases the original COOL measure’s detrimental impact on the competitive opportunities of imported livestock in the U.S. market, because it necessitates increased segregation of meat and livestock according to origin; entails a higher recordkeeping burden; and increases the original COOL measure's incentive to choose domestic over imported livestock.”
Further, the panel decision summary says the “detrimental impact caused by the amended COOL measure's labeling and recordkeeping rules could not be explained by the need to convey to consumers information regarding the countries where livestock were born, raised, and slaughtered.”
Canada and Mexico have threatened to retaliate in the form of tariffs being placed on U.S. products headed to their countries. While Mexico has not yet released its list of products, the targeted list from Canada includes not only live cattle and hogs and meat products but also fresh fruits, grains, pasta, bread and other pastries, wine, ketchup, certain metals, jewelry, mattresses and more.
According to the Canadian Cattlemen’s Association (CCA), the impact of COOL on the Canadian cattle and hog industries was estimated in 2012 to be about $1.1 billion per year. CCA says the economic toll has increased since the 2013 amendments to the law.
The United States will have the option to appeal this ruling, and according to Reuters, the office of the U.S. Trade Representative “is disappointed” and is considering all options.
The other potential fix would require an act of Congress. The National Cattlemen’s Beef Association, The American Meat Institute, the North American Meat Association and the National Pork Producers Council used the WTO ruling to urge Congress to pass a permanent fix to the law.
“COOL is a failed program that will soon cost not only the beef industry, but the entire U.S. economy, with no corresponding benefit to consumers or producers,” says Bob McCan, NCBA president. “NCBA has maintained that there is no regulatory fix to bring the COOL rule into compliance with our WTO obligations or that will satisfy our top trading partners. We look forward to working with Congress to find a permanent solution to this issue, avoiding retaliation against not only beef, but a host of U.S. products.”
AMI and NAMA are urging USTR and USDA to work with industry and Congress to amend the statute so it “complies with our international obligations and brings stability to the market.” They say changing the law “would help restore strong relationships with some of our largest and most important trading partners.”
CCA immediately welcomed the WTO decision and joined the call for the United States’ Congress to act by repealing COOL. Additionally, CCA encouraged the Canadian government to continue working on potential retaliation if the United States does not comply with its trade obligations.
“The compliance panel report leaves no shadow of a doubt that the U.S. COOL legislation is causing discrimination against live imports of cattle and hogs into the U.S. marketplace,” says CCA President Dave Solverson. “Until COOL comes into compliance with the WTO, the CCA will continue to insist that the Government of Canada prepare to impose prohibitively high tariffs on key U.S. exports to Canada, including beef.”
“Under the guidance of USDA, any changes to COOL to ensure full compliance with today’s decision should be able to be made administratively, while maintaining the integrity of COOL labels,” says Roger Johnson, NFU president. “We are confident that given that level of support, Congress will reject all heavy-handed attempts to make legislative changes to this important labeling law.”
R-CALF agrees and is urging the United States to appeal the decision.
“Congress should not capitulate to the WTO’s and the multinational meatpackers’ efforts to weaken our COOL law,” says Bill Bullard CEO. He added the U.S. “must take the time to carefully analyze this ruling and then formulate a strategy for preserving our important, pro-competitive COOL law.”
According to WTO rules, parties have 60 days to appeal following the public announcement. Should the United States appeal, an additional decision and subsequent publication of that decision will follow. Sources close to the issue say any decision on potential retaliation by Canada and Mexico could be made by mid- to late 2015.