COOL critics warn of retaliation, broader trade impacts
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WASHINGTON, March 25, 2015 - While interested parties await a ruling from the World Trade Organization (WTO) on the U.S. country-of-origin labeling rule, lawmakers and industry representatives are already concerned about potential retaliation.
The House Agriculture Committee's livestock and Foreign Agriculture Subcommittee held a hearing today on the potential retaliatory measures in response to COOL, and the hearing did not go well for the embattled legislation.
The WTO is expected to rule by May 18 on a U.S. appeal of a WTO compliance panel decision that the COOL regulations place an unnecessary burden on Canadian and Mexican livestock by requiring born, raised, and slaughtered information on labels of beef and pork muscle cuts. The WTO's rejection of the U.S. appeal -- which most witnesses at today's hearing are expecting -- would allow Canada and Mexico to move forward with retaliatory tariffs to make up for damages they say they've incurred because of COOL.“Mandatory (COOL) was destined not to work for a number of factors,” Rep. Jim Costa, D-Calif., the subcommittee's ranking member, said in his opening statement. “While the supporters have argued the opposite, I think that we have to look at the facts. I think that we've seen an increase in production costs, we've seen impacts in costs to consumers that are factoring in meat purchasing.”
Should the WTO rule against the U.S., the WTO would decide on the dollar figure of allowed sanctions, and estimates are in the billions. In October, Canadian Agriculture Minister Gerry Ritz said Canada doesn't “want to go the retaliatory route, but we certainly will should it be forced on us.” That declaration accompanied a list of potential retaliatory measures hitting, as Ritz put it, anything “from California wine to Minnesota mattresses.” Retaliation is also expected from Mexico.
To avoid retaliation against such a wide variety of businesses, most of the witnesses and lawmakers at the hearing called for full repeal of the COOL law. Costa asked witnesses about a potential North American meat label, but California rancher Mike Smith said with potential retaliation looming so close, now isn't the time to try to make the current COOL law work.
“I don't think we've got the luxury to propose another potential fix. We tried that twice now; it's not working,” Smith said. “The clock's ticking, let's just repeal it.”
Due to the broad spectrum of industries that could be hit by COOL retaliation, a wide range of business sectors joined have together to create the COOL Reform Coalition. The coalition's co-chairs, Christopher Wenk with the U.S. Chamber of Commerce and Linda Dempsey with the National Association of Manufacturers, both testified at the hearing and pointed to broader implications at a time of critical trade negotiations, one with Pacific Rim nations and another with the European Union.
“At a time that we're negotiating two big trade agreements to try to level the playing field, to try to have fair trade so we can get better access to the world's markets, this type of action and our continued lack of compliance with WTO rules is really costing our leadership (in trade agreements),” Dempsey said.
“We helped write the rules of the (WTO), so we ignore those rules at our own peril,” Wenk said. “It just doesn't make sense for us to ask other countries to follow the rules when we don't in fact follow those rules . . . If we expect other countries to abide by these rules, we need to do the same.”
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If the sentiment of the hearing is to be believed, COOL's days are numbered, and full repeal is imminent. Agriculture Secretary Tom Vilsack has said USDA has done all it can to make the current statute WTO compliant while trying to meet congressional intent.
“Clearly, there's no upside to this,” Rep. Vicky Hartzler, R-Mo., said at the hearing. “It's not good for America, it's not good for the producers, the processors, and it's not good for the mom that goes to the grocery store that's having to pay more for products, so we really do need to repeal it.”
In his opening statement, subcommittee Chairman David Rouzer, R-N.C., advised members to be ready to move quickly if their hand is forced by the WTO.
“As a subcommittee, we need to understand the ramifications of inaction and be prepared to move quickly after the WTO decision is announced to avoid retaliation,” Rouzer said.
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