U.S. loses COOL WTO challenge

Sources says final WTO country-of-origin labeling ruling will go in favor of Canada and Mexico.

The United States has lost its latest attempt to defend the mandatory country-of-origin labeling law, according to individuals familiar with the World Trade Organization final ruling on the case, which was brought by Mexico and Canada.

The two previously won a challenge in the WTO court in 2012 so the U.S. Department of Agriculture updated the labeling requirements in May 2013 in hopes of making the law compliant with international trade rules.

In July, the WTO decision was provided to the governments, but will not be made public until it’s translated which could be weeks, possibly months. The Wall Street Journal reported that three sources familiar with the WTO ruling said the final ruling “will be in favor of Canada and Mexico.”

James Hodges, American Meat Institute interim president and chief executive officer, said if the reports are correct, the final ruling “comes as no surprise.”

“USDA’s mandatory COOL rule is not only onerous and burdensome on livestock producers and meat packers and processors, it does not bring the U.S. into compliance with its WTO obligations,” Hodges added.

It’s anticipated that the WTO compliance panel decision, once made public, will be followed by an appeal. If this process must continue fully to its conclusion, Canada could be authorized to impose retaliatory tariffs on U.S. exports sometime in mid-2015. (Here is a full list of proposed products including many agricultural products Canada plans to target).

Hodges said while the U.S. will have the option to appeal the ruling once it is final, AMI encourages USDA to instead work together with the industry and Congress to amend the COOL statute so that it complies with international obligations. “Such a change would help restore strong relationships with some of our largest and most important trading partners.”

The U.S. Chamber leads a COOL Reform Coalition along with the National Association of Manufacturers.

“The U.S. must comply with its international trade obligations,” said Jodi Bond, vice president for the Americas at the U.S. Chamber of Commerce.  “Together Canada, Mexico and the United States make up one of the most competitive and successful regional economic platforms in the world.  The disruption of that partnership by WTO noncompliance would have a devastating economic impact on industries including food production, agriculture, and manufacturing.

The coalition has asked Agriculture Secretary Tom Vilsack "rescind the final rule while Congress works to permanently resolve the issue.” A total of 110 members of Congress asked for the same in a letter to USDA and U.S. Trade Representative.

Chairman of the House Agriculture subcommittee on livestock, rural development and credit Rep. Rick Crawford, (R., Ark.), said if the ruling shows the U.S. isn’t in compliance, he would work with his ranking member Rep. Jim Costa (D., Calif.) to ensure he U.S. is not unduly burdened by increased tariffs on American exports.

“Congress must be prepared to act and find a solution that maintains a healthy relationship with our trading partners and protects the American economy,” Costa said.

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