Canada threatens $1B trade sanctions over COOL

Published on: Apr 12, 2013

This week Canadian Agricultural Minister Gerry Ritz held a trade mission in the United States and talked extensively with Secretary of Agriculture Tom Vilsack regarding the United States' actions regarding country-of-origin labeling. The two remain at odds over whether or not the law meets the "spirit of free trade" and if Canada feels it does not, it can impose up to $1 billion in trade sanctions.

Vilsack in speaking with agricultural journalists ahead of the meeting with Ritz said a World Trade Organization panel said it was allowed for labels to be fixed to products and for consumers to be informed, but didn't like the way the rule proposed that was to be carried out. Vilsack said the rule is "consistent with the spirit and legal requirements" of what the WTO panel required and believes the proposed rule answers any questions about where something may have been raised, processed or slaughtered.

The proposed rule, which had its comment period closed this week, would require that instead of stating in a label something is a "Product of the USA" the label actually would require it go into further detail of explaining where it is born, raised and slaughtered.

Ritz underlined that the proposed changes will not bring the U.S. into compliance with its WTO obligations and will further increase discrimination against exports of cattle and hogs from Canada, increasing damages to the Canadian industry.

"COOL continues to have a negative economic impact on the Canadian livestock industry and we are standing with Canadian cattle and hog producers against unfair mandatory Country-of-Origin Labeling in the U.S.," said Ritz. "Our Government will consider all options, including extensive retaliatory measures, should the U.S. not achieve compliance by May 23, 2013, as mandated by the WTO."

Canadian Cattlemen’s Association (CCA) representatives worked alongside Ritz in Washington, D.C. advocating for the legislative amendments required for the U.S. to come into compliance Ritz also met with key decision-makers on the Senate Agriculture Committee and with congressional representatives, to convey Canada's strong position to stand up for Canadian cattle and hog producers against the unfair mandatory COOL.

Ritz also met with the American Meat Institute and livestock industry stakeholders who expressed their support for Canada's position and are advocating for changes to the U.S. mandatory COOL that hurts their industry.

CCA President Martin Unrau said, "USDA’s proposal has put the U.S. on a path toward Canada implementing retaliatory tariffs on U.S. exports.” Canada's beef and pork sectors have identified a $1 billion a year in losses since COOL became mandatory. Ritz said the government is looking for comparative levels of dollars in retaliatory action which can expand from multiple sectors to meet the billion dollar per year shortfall.

In comments from the National Pork Producers Council on the rule, the group said it support an approach to labeling that will treat "U.S. origin" hogs, pork and other meat products that have value added at federal inspected facilities. The requirement that producers gather and maintain information on where livestock was born and raised should be eliminated, NPPC said.

At a minimum, NPPC said in its comments that if USDA moves forward with the proposed regulations it should establish an effective date that is 180 days after the latter of issuance of final regulations, or of a determination by the WTO that the final regulations are consistent with U.S. international trade obligations.

In comments to USDA, the National Cattlemen's Beef Assn. (NCBA) stated that the proposed rule changing MCOOL will not satisfy the World Trade Organization (WTO) or the beef industry’s largest trading partners, Canada and Mexico, who originally brought the WTO complaint. In 2012, Canada and Mexico accounted for nearly $2 billion in beef exports, or 36% of total beef exports by value.

“We have long advocated that MCOOL is a marketing tool and while cattlemen and women are proud of the products they produce, a mandatory labeling program does not provide a value to our industry or our customers,” said NCBA President Scott George, a cattleman from Cody, Wyo. “We support and see value in voluntary labeling programs like Certified Angus Beef, where there is a genuine effort to distinguish and market the product. The proposed rule will not meet those ends and will only serve to increase the discriminatory treatment of non-U.S. product and will doubtlessly end in retaliatory tariffs on a wide range of our products and significant cost to our members.”

Groups such as the National Farmers Union and R-CALF and a coalition of consumer groups have voiced support for the rule change.