WASHINGTON, June 17, 2015 – Trade officials from Mexico and Canada and representatives of the U.S. meat industry are escalating pressure on the Senate to follow the House by repealing a 2008 country-of-origin labeling (COOL) bill that has been found to violate World Trade Organization (WTO) agreements. The House last Wednesday passed a COOL repeal bill by a bipartisan 300-131 vote.
Canada and Mexico have asked a WTO arbitration panel to authorize retaliatory tariffs on more than $3 billion worth of imports from the United States to compensate for losses caused by the requirement that meat labels show where animals were born, raised and slaughtered.
Prospects for early action in the Senate are uncertain. Senate Agriculture Committee Chairman Pat Roberts, R-Kan., said last week that “repeal remains the surest way to protect the American economy from retaliatory tariffs.” But Sen. Debbie Stabenow, D-Mich., the committee’s ranking minority member, says she hopes to “find a bipartisan path forward that both protects the interests of consumers and encourages international trade.”
Nothing short of repeal will prevent the governments of Canada and Mexico from imposing retaliation on a wide variety of U.S. agricultural and non-agricultural products, according to spokesmen for both countries who appeared Tuesday at a forum organized by the trade-friendly Global Business Dialogue. The forum was held as the WTO’s Dispute Settlement Body prepared to meet Wednesday to go over the two countries’ requests for retaliatory tariffs.
The spokesmen and U.S. and Canadian livestock groups said it is essential to do away with the costly COOL requirement for segregating every imported animal so that it can be traced through the supply chain to permit retail labels.
“The segregation of imported livestock has to end,” said John Masswohl, director of government and international relations for the Canadian Cattlemen’s Association. “This rule has created a lot of burden and a lot of cost. For us it’s over $100 per head. We can’t see there’s any way out short of repeal. If the Senate thinks there is a middle path, that is a very risky strategy. We’re expecting that by the end of this summer we will be authorized to put tariffs on.”
The “broad list” of products on Canada’s list for retaliatory tariffs includes meat, wine, distilled spirits, cakes, cookies, furniture and steel tubing, Masswohl said. “It’s a list that was designed to get some attention. We’ve looked at where are the congressional districts and where are the states where senators and congressmen have tended to support COOL and we’ve looked at products made in those areas.”
Continued U.S. failure to comply with rules that it helped write is threatening exports of manufactured goods, said Ken Monahan, director for international trade policy at the National Association of Manufacturers. “The stakes are huge. Mexico and Canada are, by far, our largest export markets, with $485 billion of manufactured goods and millions of U.S. jobs in 2014.”
The economic cost of segregating animals is “the heart and soul the COOL case rests on,” said Randy Russell, whose Russell Group represents several U.S. meat and other farm-related businesses. “Tracking and segregating livestock and meat and managing the supply chain throughout the system places enormous costs on U.S. livestock producers and U.S. meat processors,” he said. “Compliance will require segregation and economic costs of segregation to be addressed head on. There is no silver bullet. There is no magical solution. There is no third way. There doesn’t appear to be any other option to resolve this case.” Suggested changes, to require a North American label with an option for U.S. origin label, would require continued segregation costs, he said. “Neither approach resolves the WTO compliance problem.”
Canada’s Masswohl said the United States has allowed voluntary origin labels for meat products in the past and could do so again. “If people in the business wanted to label and consumers felt it had value, some companies were doing that, small, regional meat companies,” he said. “Once this (mandatory) COOL law is repealed, they will revert back to that.”
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