AN arbitrator assigned by the World Trade Organization determined last week that the U.S. has until May 23, 2013, to bring its country-of-origin labeling (COOL) rule into compliance with WTO rules.
The arbitrator's decision represents a compromise between the fast-track fix that the governments of Canada and Mexico had proposed and the longer time frame that the U.S. had wanted. The arbitrator's decision is not subject to appeal.
In a joint statement, Canadian Agriculture Minister Gerry Ritz and Trade Minister Ed Fast called COOL "unfair" and said it has penalized Canadian cattle and hog producers. They said the rule has failed to recognize "the integrated nature of the North American supply chain."
They said they do expect the U.S. "to bring itself into compliance" with its WTO membership obligations "for the benefit of producers on both sides of the border."
The Canadian Cattlemen's Assn. said it will work with its "U.S. allies and counterparts" to develop a solution.
COOL was established in the 2002 farm bill and was implemented in the 2008 farm bill.
COOL requires that all fresh beef, chicken, goat meat, lamb, pork, seafood and ground meat marketed in retail stores be labeled as to the country or countries of origin of the animal or animals from which a product was produced. It also covers fresh fruits and vegetables and certain kinds of nuts.
It specifies that the labels must be affixed to packages or posted on bins or shelves.
It does not apply to processed foods or to foods sold in the foodservice sector.
COOL has decreased demand for Canadian and Mexican livestock in the U.S. because of the need for packers to keep those imported livestock segregated from U.S. livestock, which raised costs for packers to process animals from Canada and Mexico.
When U.S. packers do accept Canadian and Mexican livestock, they do so only at discounts -- often at deep discounts.
The situation has forced Canadian livestock producers to reduce the size of their herds.
The governments of Canada and Mexico brought a complaint to WTO in 2009 arguing that COOL represented a non-tariff, unfair barrier to trade (Feedstuffs, Nov. 23, 2009). WTO named a three-member panel to hear arguments, and the hearings were conducted in 2010 (Feedstuffs, May 17, June 28, Sept. 6 and Nov. 29, 2010).
The WTO panel ruled for Canada and Mexico last year (Feedstuffs, May 30, 2011), after which the U.S. appealed and WTO upheld the panel's ruling (Feedstuffs, March 26 and July 9).
The U.S. then asked for arbitration.
U.S. to comply
A spokesman for the U.S. Trade Representative said the U.S. will bring COOL into compliance with WTO rules by the deadline in May and will work with Congress, the U.S. Department of Agriculture and "interested stakeholders."
He emphasized that the U.S. remains committed to providing consumers with information about the origin of the food products they buy in retail stores.
The National Farmers Union said it will work with the appropriate parties to ensure that COOL is rewritten to fit WTO rules and meet consumer demand for country-of-origin information.
R-CALF USA, noting that the WTO arbitrator is an Italian lawyer, said the U.S. should not be "subservient to foreigners at WTO," and WTO is seeking to force the U.S. to modify or repeal "a constitutionally passed law."
A recent study by economists at Kansas State University concluded that COOL has been more damaging to the meat industry than being a positive source of information for consumers.