Canada poised for retaliatory action after WTO COOL decision

By Spencer Chase

© Copyright Agri-Pulse Communications, Inc.



WASHINGTON, Oct. 21, 2014 - Canadian officials appear ready to follow through on threats to issue economic retaliations if the U.S. doesn't fix a country-of-origin labeling law found to be in violation of World Trade Organization standards.

Canadian Minister of Agriculture and Agri-Food Gerry Ritz told reporters Monday afternoon that Canada will begin retaliation measures as soon as possible in response to the favorable WTO ruling.

“We don't want to go the retaliatory route, but we certainly will should it be forced upon us,” Ritz said.

While certain retaliatory steps can't be taken during an appeals process, should there be one, Ritz said preparations for those steps can begin at any time. , and the Canadian government will begin work towards retaliatory action during the time frame allotted to the U.S. to either appeal the decision or take the corrective action called for in the WTO ruling.

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“We'll start the work towards retaliation during that same window of opportunity [for U.S. corrective action],” Ritz said. “If they don't take advantage to correct this, then we will use that same window of opportunity to get that retaliatory list in place.”

That retaliatory list contains a wide array of products on which tariffs could be levied to the tune of about $1 billion, Ritz said, which is what COOL has been costing his country's livestock industry. He said the Canadian government will target many businesses including, but not limited to, American agriculture. As Ritz put it, Canada plans to issue tariffs on anything “from California wine to Minnesota mattresses.”

In the WTO ruling, a compliance panel found that the U.S. regulations requiring meat labels to specify where an animal was born, raised, and slaughtered violated global trade rules because Canadian and Mexican livestock received “less favorable treatment than that accorded to like U.S. livestock.”

The panel also ruled that action from USDA to bring rules into WTO compliance last year increased the original COOL rule's “detrimental impact on the competitive opportunities of imported livestock in the U.S. market.” The ruling went on to say the updated COOL rule “necessitates increased segregation of meat and livestock according to origin; entails a higher recordkeeping burden; and increases the original COOL measures incentive to choose domestic over imported livestock.”

Within WTO rules, the U.S. has an opportunity to appeal the decision. In the meantime, Canada is calling on Congress to repeal COOL's beef and pork provisions completely.

“WTO has been clear. COOL must go. Our government encourages American legislators to listen to the WTO panel, do what's right for our economies, and end this discriminatory process once and for all,” Ritz said.

“It is time that the illegality of COOL is recognized,” Canadian Pork Council past chairman Jurgen Preugschas said. “It's high time for Washington to end the stalling. We need a legislative solution which ends the need to segregate Canadian-born livestock from American.”

John Murphy, senior vice president for international policy with the U.S. Chamber of Commerce, agrees. On a conference call hosted by the COOL Reform Coalition, which is made up of a broad swath or agricultural and food organizations, Murphy said Congress needs to act - and fast.

 “We are urging Congress to act expeditiously to act in legislation to immediately authorize and direct the Secretary of Agriculture so he can take the action necessary to bring the United States into compliance (with the ruling).” Murphy said. “We'd love to see that taken up sooner rather than later, and we will be continuing to make that case in the weeks ahead.”

USDA said it was disappointed with the WTO ruling, but noted that the WTO did reaffirm the U.S. right to provide consumers with information about where their food comes from. A spokesman said the department plans to continue working with the Office of the U.S. Trade Representative “as we consider all options for responding to this split decision while complying with the labeling law Congress enacted.” 

Jessica Lemos, the National Association of Manufacturers' director of international trade policy, said retaliatory actions taken by Canada or Mexico could affect businesses that have little to do with agriculture. 

“Manufacturers are already making business decisions for mid-to-late next year, and so any delay in addressing this issue is only going to complicate those issues and worsen them,” Lemos said.

During the Ritz's call, a reporter used a statement from National Farmers Union attributed to Roger Johnson, the organization's president, to pose a question about whether or not Congressional action is needed or if necessary changes could be made administratively, as NFU contends. Ritz reiterated that the Canadian government will be working towards Congressional action in pursuit of a full repeal, but also took a shot at Johnson in his response.

“Roger Johnson is one of the authors of this misfortune, so whatever he's bringing forward, I would really want to run through a lie detector,” Ritz said.

When reached by Agri-Pulse, Johnson offered a surprised “Did he really say that?” adding that he has “no idea” where those remarks came from. Johnson said he'd never met Ritz and wouldn't recognize Ritz if he were walking next to him on the street.

“That kind of rhetoric is not helpful and a little unbecoming of an official,” Johnson told Agri-Pulse. “You just don't talk about people like that.”

Johnson said he doesn't know why Ritz thinks this is simply his issue and pointed out that he is simply doing his job by working on a policy voted on by NFU members before Johnson was even on staff. Johnson said if Ritz wanted to sit down and discuss their opposing viewpoints, he would be open to it.

The WTO had ruled earlier that further U.S. action was needed to bring COOL into compliance. For that reason, Ritz said Canada isn't interested in further negotiations.

“I don't see any need to negotiate,” Ritz said. “Basically, the appellate body has told them three times now to get rid of mandatory country-of-origin labeling. I don't see any negotiation other than ‘How long is it going to take to make that happen?'”

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