The House sent a strong message for the need to avoid retaliatory tariffs as it passed a repeal of mandatory country-of-origin labeling for beef, pork and chicken by a vote of 300-131.
The COOL law has been on the books since the 2002 Farm Bill and requires information detailing where livestock was born, raised and slaughtered. It has been found trade distorting by the World Trade Organization (WTO) in four challenges. The latest ruling came in May and has led Canada and Mexico to move forward in asking the WTO for a special Dispute Settlement Body to request retaliation rights against the United States to take place on June 17.
Canada has sought authorization for $3 billion (Canadian dollars, or $2.4 billion U.S. dollars) in retaliatory sanctions and Mexico plans to seek $653 million. While it remains to be seen on which U.S. products Canada and Mexico place tariffs, a preliminary Canadian retaliation list included fresh pork and beef, bakery goods, rice, apples, wine, maple syrup and furniture.
The COOL Reform Coalition had urged lawmakers that it would be intolerable for the United States to maintain, even briefly, requirements that have been deemed non-compliant by the WTO - rules that the U.S. was instrumental in writing.
“This is especially true because experience has shown that once such export sales are lost, it takes years to recover market share,” the coalition wrote in a letter ahead of the vote. “Retaliatory tariffs against the U.S. would leave exports punished, farm prices depressed, businesses hurt and jobs lost.”
During his closing comments on the House floor, House Agriculture Committee chairman Michael Conaway (R., Texas) said commerce is already being affected. For instance a wine distributor in Canada is already no longer arranging long-term deals with the U.S. in fear retaliatory tariffs will kick in.
U.S. wine producers export more than $500 million of wine to Canada and Mexico annually and Canada is now the single largest export market for U.S. wine. The retail value of California wine sales in Canada tops $1 billion annually. “Retaliation by Canada and Mexico would do hundreds of millions of dollars in damage to the U.S. wine industry virtually overnight and it would take years to reclaim this lost market share," said Robert P. (Bobby) Koch, president and chief executive officer of Wine Institute.
However, those who were opposed to the repeal said the action is premature. House Agriculture Committee ranking member Collin Peterson (D., Minn.) said the retaliation process will likely take several months, far longer than the 60 day window laid out by the Arbitration Panel. And Canada and Mexico must prove economic harm caused by COOL. “The Canadian claim of $3 billion in economic losses due to COOL is ridiculous and based on unsubstantiated and not publicly available data. U.S. studies, using USDA data, have found little if any economic harm,” Peterson said.
Conaway said the arguments that the repeal action is premature “falls on deaf ears” as the labeling law has been in the world court for four years, leaving “ample time” to find some type of conclusion. “We have no leverage to get some sort of deal to fix this without repeal,” Conaway warned.
The Senate has been less supportive of a full repeal. Senate Agriculture Committee chairman Pat Roberts (R., Kan.) said he’s continuing to take suggestions from his colleagues for alternatives that meet trade obligations. “However, almost a month has passed since the WTO ruling was announced, and repeal remains the surest way to protect the American economy from retaliatory tariffs,” he said.
The week prior Canadian Agriculture and Agri-Food Minister Gerry Ritz had been joined in D.C. with Canadian Cattlemen’s Association (CCA) president Dave Solverson and vice president Dan Darling and reaffirmed with senators and Secretary of Agriculture Tom Vilsack that repeal is the “quickest and cleanest option to fix COOL.”
“The latest WTO ruling has convinced all the Senators we met that it's time to bring COOL into compliance,” Solverson said. “There are a few who do not believe repeal is the only option. CCA’s position is that the only solution we can accept is one that eliminates segregation. Our government's strong message that Canada will retaliate has had the desired effect, and I'm confident COOL will soon be behind us.”
Supporters of COOL urged the Senate to quickly vote. Peterson said in his closing comments on the House floor that “we feel repeal is not where we’re going to end up or where we should end up.” He said as it heads over to the Senate he hopes there’s a way to work through the ruling without needing retaliation.
Roberts added, “We can sit here and let this happen. Or we can move. Let’s get a move on.”