Canadian livestock producers are hailing a World Trade Organization ruling against United States country of origin food labelling regulations as a major win for their industry.
A WTO dispute panel last week said COOL unfairly discriminates against Canadian live cattle and hogs sold into the U.S.
In a decision released Nov. 18, the panel unanimously found that COOL "is inconsistent with the United States' WTO obligations" by according "less favourable treatment to imported Canadian cattle and hogs than to like domestic products."
Dennis Laycraft, Canadian Cattlemen's Association executive vice-president, calls it a landmark ruling.
"It certainly puts a mark in the ground that you cannot unfairly treat animals imported into your country," Laycraft says.
The panel was responding to a challenge to COOL by Canada and Mexico.
The ruling does not actually strike down COOL itself. But it will require the U.S. to rework the rule in such a way so as not to discriminate against Canadian cattle and hogs, says Laycraft.
Jurgen Preugschas, Canadian Pork Council chair, described the ruling as a victory which "vindicates our objections."
Implemented in 2008, the rule requires U.S. retailers to label beef, pork and other foods according to their country of origin.
The measure forces U.S. packers and wholesalers to segregate animals and meat in order to comply with the rule, thus increasing their costs. Many packing plants simply refuse to import Canadian hogs and cattle. Those who do often discount prices to compensate for their higher costs.
As a result, Canada's hog and cattle farmers have lost hundreds of millions of dollars in lost sales and lower prices.
Laycraft says the negative impact on cattle prices has been anywhere between $30 and $120 a head, depending on market conditions.
The Canadian Pork Council says weanling exports between 2007 and 2010 declined by 30 per cent in volume and at least $5 to $10 per animal in value. In Ontario alone, live hog exports to the U.S. fell by nearly 60 per cent during that time.
The trade restrictions resulting from COOL have added to the problems of a livestock industry already suffering from a combination of depressed markets, rising costs, a strong Canadian dollar and, in the case of cattle producers, the after-effects of BSE.
The panel ruling marks an important step on the road to recovery for a troubled industry, says federal agriculture minister Gerry Ritz.
The U.S. has 60 days to appeal the ruling. A statement from the office of the U.S. Trade Representative says the agency is "considering all options, including appealing the panel's decision."
If there is an appeal, a final outcome could occur in late 2012, Laycraft says.