The dairy industry said it is “critical” that Congress solve the trade dispute over country-of-origin labeling to head off damaging new tariffs on U.S. dairy exports by Canada and Mexico.
In a letter to the Senate, the National Milk Producers Federation, U.S. Dairy Export Council and International Dairy Foods Association expressed “growing apprehension” that retaliatory tariffs are drawing closer under a finding that said parts of the U.S. country-of-origin labeling (COOL) law violate World Trade Organization rules.
A WTO arbitration panel final report regarding COOL retaliation was expected on November 27, 2015, although that date has now been pushed back to allow for translation of the report into multiple languages – a normal step in the process. The arbitration panel is expected to announce a new date shortly.
“(We) urge the Senate to pass legislation to bring the U.S. into compliance with its WTO obligations without further delay,” the dairy groups said.
Last spring, the WTO ruled against the U.S. COOL program, saying that Canada and Mexico could retaliate against U.S. exports in response. American dairy products have been on Canada’s target list for retaliatory tariffs resulting from the ruling.
“Retaliation against dairy products would come at a particularly challenging time for our industry, given the currently depressed global dairy market…” said NMPF, USDEC and IDFA. “Multiple cooperatives have already been faced at times this year with oversupplies of milk, causing them to dispose of excess milk at a loss. Retaliatory tariffs would back up exports further onto the U.S. market during this time of overly abundant milk supplies.”
Any congressional solution, the groups added, must satisfy Canada and Mexico because those two countries would retain their right to retaliate against the United States until a lengthy WTO arbitration process is concluded. “U.S. dairy producers and processors cannot risk getting mired down in that drawn-out process,” they said.
This summer the House passed a full repeal of COOL with widespread support. Senate Agriculture Committee chairman Pat Roberts (R., Kan.) supports a full repeal, whereas his counterpart ranking member Debbie Stabenow (D., Mich.) and Sen. John Hoeven (R., N.D.) have introduce a bill which would make COOL voluntary.
The three groups asked the Senate to work together “to put in place an outcome that Canada and Mexico agree resolves this issue.”
Canada and Mexico said they will only accept a full repeal to avoid imposing tariffs on U.S. products.
Canada has requested authorization to impose tariffs on more than C$3.1 billion per year of U.S. exports. Mexico requested authorization for over US$713 million in retaliatory tariffs. The U.S. has estimated the costs related to COOL arbitration at US$91 million.