WTO finds US COOL rule still trade distorting

Final WTO decision shows that unless Congress acts, Mexico and Canada will be allowed to impose sanctions on United States.

As expected in previously leaked reports, the World Trade Organization again sided with Canada and Mexico who challenged the United States’ mandatory country of origin labeling rule for beef and pork.

The final ruling is part of an ongoing saga that has continued since the United States first implemented the law after the 2008 Farm Bill. The latest rule revision, which requires additional information on where an animal is born, raised and slaughtered, came in 2013 after the WTO had previously found the rule violated WTO trade laws.

The WTO compliance panel found that the amended COOL measure gives Canadian and Mexican livestock less favorable treatment than that accorded to U.S. livestock. “In particular, the compliance panel concluded that the amended COOL measure increases the original COOL measure's detrimental impact on the competitive opportunities of imported livestock in the U.S. market, because it necessitates increased segregation of meat and livestock according to origin; entails a higher recordkeeping burden; and increases the original COOL measure's incentive to choose domestic over imported livestock,” a summary of the WTO findings stated.

The WTO noted, “The detrimental impact caused by the amended COOL measure's labeling and recordkeeping rules could not be explained by the need to convey to consumers information regarding the countries where livestock were born, raised, and slaughtered.”

Parties now have 60 days to appeal if they decide to challenge the panel’s ruling. Then an appellate body would issue a final WTO ruling on compliance which could take an additional 6 months. If Mexico and Canada win and they should seek compensation – as they’ve threatened – WTO would have to approve the retaliatory levels.

While the U.S. has the option to appeal the ruling, a statement from the American Meat Institute and North American Meat Assn. said they will encourage the U.S. Trade Representative and U.S. Department of Agriculture to instead work together with the industry and Congress to amend the COOL statute so that it complies with international obligations and brings stability to the market. “Such a change would help restore strong relationships with some of our largest and most important trading partners,” they said.

A statement from the National Cattlemen’s Beef Assn. said that announcement brings everyone one step closer to facing retaliatory tariffs.

“NCBA has maintained that there is no regulatory fix to bring the COOL rule into compliance with our WTO obligations or that will satisfy our top trading partners. We look forward to working with Congress to find a permanent solution to this issue, avoiding retaliation against not only beef, but a host of U.S. products,” said NCBA president Bob McCan.

During the farm bill, there was some support to try and include a regulatory fix. However, many leaders, including Senate Agriculture Committee chairwoman Debbie Stabenow (D., Mich.) said it would be better to wait for a final WTO before moving forward on any legislative fix. After hearing the WTO ruling Monday, Stabenow said she is committed to protecting the legitimacy of the COOL program and move beyond the litigation for the benefit of producers, processors, and consumers.

“We can spend decades litigating this issue at the WTO, or we can work together to find a solution that encourages international trade and gives consumers what they need to make choices for their families,” Stabenow said following the announcement.  

Earlier this month a bipartisan Senate letter, drafted by Senators Jon Tester (D-Mont.) and Mike Enzi (R-Wyo.), signed by over 30 senators expressly stated that "the United States government has tools to address the outcome, once the WTO process reaches finality, to ensure labeling remains consistent with our trade obligations."

R-CALF USA CEO Bill Bullard added, "We must take the time to carefully analyze this ruling and then formulate a strategy for preserving our important, pro-competitive COOL law for U.S. citizens who deserve to know where their food is produced."

Since the U.S. if found to be in noncompliance, Canada and Mexico have both indicated that they will retaliate with tariffs on a wide variety of U.S. exports that will result in lost in sales in the billions and put thousands of jobs at risk.  Representatives of a broad spectrum of business, manufacturing, and agriculture will discuss this afternoon the results of the report. 

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