UPDATED: US loses final WTO COOL appeal

Meat groups and House Agriculture Committee leaders call for quick fix to avoid retaliatory tariffs.

The World Trade Organization again sided with Canada and Mexico in their challenge of the United States’ mandatory country-of-origin labeling law. Those who have been opposed to the law have called for a quick remedy to avoid retaliatory tariffs that could impact billions of other U.S. agricultural products.

The ruling represents the fourth time a panel or appellate body has decided against the rule that was first written into the 2002 Farm Bill and implemented after the 2008 Farm Bill.

The latest move from the WTO rejects an appeal by the United States of the international trade body’s October 2014 ruling that the COOL law discriminates against Canadian cattle and pigs and Mexican cattle. COOL requires meat to be labeled with the country where the animal from which it was derived was born, raised and harvested. Canada and Mexico send livestock to the United States to be fed out and processed.

The WTO decision paves the way for those countries to place tariffs on U.S. imports. Canada and Mexico are expected to quickly request authorization from the WTO to retaliate against U.S. products. The level of retaliation will be equivalent to the economic harm incurred by the countries from COOL. Canada and Mexico are expected to claim billions of dollars in damages. The WTO likely will authorize retaliation sometime this summer.

Secretary of Agriculture Tom Vilsack had said the only remedy for fixing COOL was for a legislative change to make it WTO compliant. Some COOL supporters have called for a more generic North American label. However, a handful of House Agriculture Committee leaders, including chairman Michael Conaway (R., Texas), have called for a full repeal, saying the North American label would not appease Canada and Mexico and prevent retaliatory tariffs.

North American Meat Institute president and chief executive officer Barry Carpenter said, “Any action other than repeal invites retaliation from Canada and Mexico that could cost the U.S. economy billions of dollars.”

National Pork Producers Council president Ron Prestage, a pork producer from Camden S.C. and veterinarian, said he knows tariffs would be financially devastating for the pork industry. “And I’m sure they’ll have a negative impact on a host of other agricultural and non-agricultural sectors.”

Prestage continued, “Unless Congress acts now, Canada and Mexico will put tariffs on dozens of U.S. products. That’s a death sentence for U.S. jobs and exports. The United States economy can’t afford to have its products restricted, through tariffs, to its No. 1 and 2 export markets.”

Conaway said he has asked his colleagues on the House Agriculture Committee to weigh in on resolving the issue and plans to hold a business meeting Wednesday morning in a “targeted effort to remove ongoing uncertainty and to provide stability.” He said as tariffs become a reality, “it is more important now than ever to act quickly to avoid a protracted trade war with our two largest partners.”

However, Conaway’s counterpart, ranking member Collin Peterson (D., Minn.) said he will oppose efforts to fully repeal COOL. “There are still several steps in the WTO process that must be met before any retaliation could go into effect so we should take the time to thoughtfully consider how to move forward,” Peterson said.

Senate Agriculture Committee chairman Pat Roberts (R., Kan.) also said he is working with his Senate colleagues on a solution and he would consider any solution – including repeal – to avoid retaliation. ““I have serious concerns that potential remedies suggested, such as the generic label, will not satisfy the Canadians and Mexicans and fail to halt impending retaliation,” Roberts admitted.

A joint statement from Ed Fast, minister of international trade, and Gerry Ritz, minister of agriculture and agri-food, jointly with Ildefonso Guajardo Villarreal, Mexico’s secretary of economy, and Enrique Martínez y Martínez, Mexico’s secretary of agriculture, called on the United States to repeal the COOL legislation.

““In light of the WTO’s final decision, and due to the fact that this discriminatory measure remains in place, our governments will be seeking authorization from the WTO to take retaliatory measures against U.S. exports,” the statement added. In a separate statement Fast and Ritz said in June 2013 Canada released a proposed list of targeted U.S. imports for retaliatory tariffs and they are now preparing its request to retaliate.

Carpenter from the NAMI also cited new research from the International Food Information Council (IFIC) Foundation which shows country-of-origin information maintained its ninth place spot on the list of 11 pieces of labeling information that consumers use when choosing a food product.  Perhaps more importantly, the percentage of consumers saying they use COOL labels has declined markedly from 29% in 2013, to 26% in 2014 to 15% in 2015.  By contrast, half of consumers look for expiration dates and the nutrition facts panel.

*This file has been updated with additional information from the Mexican and Canadian government as well as comment from Senate Agriculture Committee chariman Pat Roberts.

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