WASHINGTON, Oct. 20, 2014 – A World Trade Organization compliance panel has ruled against the United States and its amended country-of-origin labeling (COOL) rules, raising the specter of retaliatory tariffs from Canada and Mexico.
The WTO panel found that the U.S. regulations, which require meat labels to specify where an animal was born, raised and slaughtered, violate global trade rules because they accord Canada and Mexican livestock “less favorable treatment than that accorded to like U.S. livestock.”
In addition, the panel found that USDA’s attempt to bring its rules into WTO compliance last year, “increases the original COOL measure’s detrimental impact on the competitive opportunities of imported livestock in the U.S. market, because it 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.”
The USDA said it is disappointed with the WTO finding that the labeling methods called for in COOL do not comply with international trade obligations. However, a spokesman noted that the WTO did reaffirm the U.S. right to provide consumers with information about where their food comes from.
The agency promised 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.”
The National Cattlemen’s Beef Association, which has long campaigned against COOL, warned that the WTO announcement “brings us all one step closer to facing retaliatory tariffs from two of our largest trading partners.”
NCBA President Bob McCan repeated his organization’s position that there is no regulatory fix to bring the COOL rule into compliance with WTO obligations or that will satisfy Canada and Mexico.
“We look forward to working with Congress to find a permanent solution to this issue, avoiding retaliation not only against beef, but a host of U.S. products.”
The U.S. Chamber of Commerce said if WTO ruling stand up after a possible appeal, Canada and Mexico “will have the opportunity to retaliate against U.S. goods resulting resulting in lost sales in the billions and put thousands of jobs at risk.”
According to the Canadian government, products that could be targeted include beef and pork, cheese, cherries, rice chocolate and even non-agricultural products such as jewelry and some furniture.
The National Pork Producers Council also called for the Obama administration and Congress to fix the law, saying the U.S. must avoid retaliation from Canada and Mexico.
“Retaliatory tariffs on pork would be financially devastating to U.S. pork producers,” NPPC President Howard Hill said in a news release.
The American Farm Bureau Federation, the largest U.S. farmers group, said it supports a COOL labeling program that “conforms to appropriate parameters and meets WTO requirements,” noting that “Americans prefer to buy food products that they know were grown and
“Farm Bureau will carefully review the decision and then determine further recommended actions,” Bob Stallman, AFBF president, said in a release. “We will work with the Office of the U.S. Trade Representative and USDA to reach the goal of an effective COOL program for meats that conforms to international trade rules.”
The National Farmers Union, meanwhile, sought to remind lawmakers of what it said was the strong support by the public for COOL, and said USDA should handle changes to the regulations, and not Congress.
“This most recent challenge to COOL, filed by Canada and Mexico, challenges the final rule put forward by USDA and comes on the heels of an earlier WTO ruling that found the U.S. has the right to require labeling of meat products, but found fault with how the rule was implemented,” NFU President Roger Johnson said.
“Under the guidance of USDA, any changes to COOL to ensure full compliance with today’s decision should be able to be made administratively, while maintaining the integrity of COOL labels,” Johnson said.
The NFU cited a May 2013 public opinion poll found that more than 90 percent of consumers support COOL.
“We are confident that given that level of support, Congress will reject all heavy-handed attempts to make legislative changes to this important labeling law,” said Johnson, who suggested patience in what will likely be a lengthy appeals process.
A release from Senate Agriculture Chairwoman Debbie Stabenow, D-Mich., said while the WTO ruling confirms the “fundamental legitimacy” of laws like COOL, “it also raised concerns about the structure of the COOL program.” The release said Stabenow “is committed to protecting the legitimacy of the COOL program and move beyond the litigation for the benefit of producers, processors, and consumers.”
“We can spend decades litigating this issue at the WTO, or we can work together to find a solution that encourages international trade and gives consumers what they need to make choices for their families,” Stabenow said in the release.
The Consumer Federation of America said it was disappointed with the WTO panel’s ruling.
“Today’s decision flies in the face of the overwhelming numbers of U.S. consumers who want more information about the origin of their food,” said Chris Waldrop, director of CFA’s Food Policy Institute.
The WTO had alerted the governments of the U.S., Canada and Mexico to its ruling in earlier this year. The ruling was made public today.
(This story was updated at 1:40 p.m. Eastern time.)
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