The meetings to consider Canada and Mexico’s proposed retaliatory tariffs against the United States for its country-of-origin-labeling (COOL) policy will be held Sept. 15-16. The meetings will be held by World Trade Organization’s (WTO) Dispute Settlement Body in Geneva, Switzerland. Canada and Mexico are seeking more than $3 billion in retaliatory tariffs on U.S. goods, following a May decision by the WTO Appellate Body, which ruled that the mandatory COOL law and regulations violate U.S. international trade obligations and illegally discriminate against imported livestock from Canada and Mexico.
The Office of the U.S. Trade Representative filed a legal brief disputing the level of retaliation sought by Canada and Mexico, calling it a “dramatic overestimation of damages.” The U.S. requested that the WTO Arbitrator reject the amounts proposed by Canada and Mexico, and instead set the totals at no more than $43.22 million and $47.55 million, respectively.
The Canadian Cattlemen’s Assn. noted that the U.S. estimate ignores any valuation related to segregation of cattle, transportation issues or price suppression in the Canadian market. “Given that the WTO has already found these issues to be at the core of the COOL violation, the CCA feels confident that our calculations will be strongly considered by the arbitrators,” CCA said.
In a column from Daryll Ray and Harwood Schaffer of the University of Tennessee’s Agricultural Policy Analysis Center, they point out that the U.S. accuses Canada of using a “results-driven methodology” to determine its losses which makes it bias and severely overestimates the trade effects.
“Unless the arbitrator completely throws out the argument made by the U.S., it would appear that the final level of damages will come in well below the $3.8 billion Canada and Mexico is asking for,” they write. “Whether or not that will make a different in the halls of Congress is another matter.”
The House has already approved a measure to fully repeal COOL as a way to avoid any retaliation before WTO approves it. Earlier this summer Sen. Pat Roberts (R., Kan.) introduced a measure that also provides a COOL repeal. In late July, Sen. Debbie Stabenow (D., Mich.) and Sen. John Hoeven (R., N.D.) introduced a bill that would repeal the COOL legislation and replace it with a voluntary COOL provision. The proposal was swiftly rejected by the governments of Canada and Mexico because the Stabenow proposal is “voluntary in name only and maintains many of the segregation provisions struck down by the WTO,” CCA said.
The Mexican cattlemen’s association - CNOG - legal representation Alejandro Gomez said Mexico wants nothing short of full repeal. Mexico is prepared to retaliate and will defend the US$713M year figure at the WTO, he said.
Instead of publicizing a list of possible retaliation targets, CNOG and Mexican officials have approached individual U.S. Congressional leaders and hand delivered lists of items for retaliation.