COOL comes to a head

Mike Jubinville

Highlights

  • The World Trade Organization is scheduled to release its decision May 18.
  • If the WTO rules in favour of Canada and the U.S. continues trade sanctions on Canadian beef, retaliatory measures by Canada are likely.
  • According to two recent reports by the USDA, American legislators appear to now recognize the economic challenges of COOL on the U.S.
  • Canadian livestock producers stress the importance of retaliatory trade sanctions if the U.S. continues its import ban on Canadian meat products.

Finally, it seems the multi-year trade irritant that is the United States mandatory country of origin labelling program could be resolved next week.

Following many months of bantering between government and industry officials on both sides of the border, the World Trade Organization is scheduled to release its decision May 18. The U.S. is appealing the ruling made by the WTO last fall which was in favour of Canada. Monday's decision is the final step for the United States' objections to the WTO's prior rulings that their mandatory labelling discriminates against imported livestock from Canada and Mexico in violation of American trade obligations.

COOL, which requires retailers to label beef and pork according to where it was born, raised and slaughtered, prompted many U.S. processors to stop using imported product rather than keep it segregated.

"Next week's WTO ruling is expected to again favour Canada and Mexico. It will then be up to the U.S. to show compliance with the ruling or be subject to trade retaliation."

If the WTO issues another ruling next week in favour of Canada and Mexico (the WTO has now ruled in favour of the countries on three previous appeals) and the United States continues its current trade sanctions on beef imports, the door opens for retaliatory tariffs by Canada and Mexico on a range of imported products from the U.S., from steel to California wine.

U.S. legislators, including Secretary of Agriculture Tom Vilsack, finally seem to be coming around on the issue, recognizing the economic hurt this is actually doing. Vilsack has given instructions to his administration to bring forward a piece of legislation that will either look at a new North American Free Trade Agreement label (which would encompass Canadian meat and livestock) or something that would seek to repeal the COOL program altogether.

The USDA released two COOL reports last week. One of the reports, Economic Analysis of Country of Origin Labeling, found the trade distorting regulations cost the beef and pork industry billions of dollars in implementation expenses and loss of sales but offer no economic benefit.

“Based on a review of academic research, we found no evidence that consumer demand for beef or pork has increased because of [mandatory COOL],” the USDA-commissioned report by the Kansas State University and University of Missouri states. “Thus our economic analysis finds no measurable benefits to consumers as a result of [COOL].”

Meanwhile, cattle producers from Manitoba, Saskatchewan and Ontario met with members of Parliament and government staff to ensure they're aware of the opportunities available to move Canada’s beef industry forward.

Next week's WTO ruling is expected to again favour Canada and Mexico. It will then be up to the U.S. to show compliance with the ruling or be subject to trade retaliation. The threat of tariffs on American exports to Canada is an important aspect of getting legislation introduced and passed in Congress and the Senate.

Mike Jubinville of Pro Farmer Canada offers information on commodity markets and marketing strategies. Call 204-654-4290 or visit www.pfcanada.com to find out more about his services.

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