WASHINGTON, June 29, 2012 - The World Trade Organization (WTO) issued its final ruling on Country of Origin Labeling (COOL) today, upholding much of the initial ruling from November 2011, which the U.S. Trade Representative appealed in March 2012. Today's ruling did confirm the right to require labeling, but agreed that U.S. COOL provides "less favourable treatment to imported Canadian cattle and hogs."
"Much of this ruling is good news for U.S. cattle producers," said U.S. Cattlemen’s Association President Jon Wooster. "The WTO has affirmed the right of the U.S. to require country of origin labeling for meat and has reversed the dispute panel's findings that COOL violates Article 2.2 of the Technical Barriers to Trade (TBT) Agreement.”
He said the appellate panel took issue with specific implementation measures regarding how Canadian cattle are segregated and the burden this may impose.
“The findings relate only to technical details of the COOL implementation details,” Wooster said, noting that he is pleased the issues can be resolved without congressional action.
However, the Appellate Body of the WTO upheld some of the decision of WTO's Dispute Settlement Body (DSB) today, stating that “the COOL measure has a detrimental impact on imported livestock.”
“This most recent decision is very similar to the initial ruling made three months ago,” said National Cattlemen’s Beef Association (NCBA) Vice President Bob McCan. “Instead of working diligently to bring the United States into WTO compliance, we wasted three months and taxpayer dollars on an appeal process.”
“This did nothing more than jeopardize our strong trade relationship with Canada and Mexico, the two largest importers of U.S. beef,” McCan continued. “The Obama Administration prolonged an issue that could have been resolved quickly.”
The COOL measure, launched in the 2008 Farm Bill, requires country of origin labeling for beef and pork, among other products. Canada and Mexico challenged the measure in 2008, claiming it is discriminatory.
“The Appellate Body agreed with the Panel that the COOL measure has a detrimental impact on imported livestock because its recordkeeping and verification requirements create an incentive for processors to use exclusively domestic livestock, and a disincentive against using like imported livestock,” stated today’s final ruling.
The Appellate Body found that the COOL measure “lacks even-handedness because its recordkeeping and verification requirements impose a disproportionate burden on upstream producers and processors of livestock as compared to the information conveyed to consumers through the mandatory labelling requirements for meat sold at the retail level.”
However, the ruling stated that “only a small amount of this information is actually communicated to consumers in an understandable or accurate manner, including because a considerable proportion of meat sold in the United States is not subject to the COOL measure's labelling requirements at all.”
The Appellate Body did affirm that the U.S. and all WTO members have the right to require country of origin labeling.
“We are also pleased that the Appellate Body overturned the initial finding that COOL is more trade restrictive than necessary to provide consumers with valuable information on the food they buy,” said U.S. Trade Representative Ambassador Ron Kirk. “In doing so, the Appellate Body agreed with the United States and declined to accept any of the alternatives that Canada and Mexico claimed we should have used instead.”
While overturning some of the Panel’s key findings against the United States, however, the Appellate Body continued to find fault with certain aspects of COOL’s design, the U.S Trade Representative noted. Due to COOL’s recordkeeping and verification requirements, it upheld the Panel’s finding that COOL provides less favorable treatment to Canadian and Mexican cattle and hogs than American livestock.
McCan noted in his statement today that the WTO “has been extremely clear” that mandatory labeling is a WTO violation and emphasized that “it is absolutely critical that the United States leads by example.”
“We need a government that not only demands WTO compliance of our trade partners but one that ensures the United States is abiding by these same guidelines,” he said.
The National Pork Producers Council (NPPC) today said it will urge the Obama administration to comply with the decision. NPPC President R.C. Hunt pointed out that the United States risks retaliation from Canada and Mexico, both of which filed complaints with the WTO over the U.S. labeling law, if it refuses to comply with the COOL ruling.
“We have maintained that belief consistently from the outset, and we will be working to achieve U.S. compliance with today’s WTO decision,” he said.
Additionally, NPPC asked the Canadian government to recognize the U.S. swine herd health status as equivalent to Canada’s. This recognition will facilitate pork trade between the countries and reform its hog subsidy programs, which the NPPC said distorts the North American hog and pork market and limits the growth of U.S. pork production.
“As we work with our government to reform the U.S. labeling regime for meat, we hope the Canadian government will recognize the negative effects its programs have on our producers,” Hunt said.
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