WASHINGTON, Dec. 2, 2015 - The World Trade Organization is expected to announce by Monday the amount of retaliatory tariffs Mexico and Canada can impose on U.S. goods in the country-of-origin trade dispute, possibly stirring Congress into action on the issue. Once the figure is set, tariffs could be in place by Dec. 18, which means lawmakers have about two weeks to try to head off the sanctions.
The retaliation is a result of a multiyear trade dispute with Canada and Mexico over the U.S. COOL law mandating disclosure of born, raised, and slaughtered information on meat labels. The two countries contended – and the WTO ultimately agreed – that the U.S., by requiring the information, accorded unfavorable treatment to Canadian and Mexican livestock. That ruling set the course for millions – or potentially billions – in trade retaliation.
When the three countries went before the WTO in September, Canada and Mexico requested retaliatory authorization that topped $3 billion, a number that U.S. negotiators said was overestimating the effects of COOL. The U.S. suggested a figure in the neighborhood of $90 million. While the level of retaliation is still up in the air, it remains to be seen whether Congress will repeal the law in time to halt any potential tariffs.
“Regardless of the number, the fact that retaliation is looming should weigh large in the minds of every U.S. senator,” Nick Giordano, vice president and counsel for global government affairs with the National Pork Producers Council, told Agri-Pulse. “Even if the number is closer to the U.S. number, that’s still going to wreak havoc with U.S. exports and U.S. jobs.”
Giordano cited analysis from Dermot Hayes, an economist with Iowa State University, who projected that a 20 percent tariff on pork products to Canada or Mexico would result in losses of about $10 per animal. Those losses would be especially damaging, Giordano said, because next year, pork producers “(are) going to be doing good just to break even” based on current futures markets that actually suggest losses.
Colin Woodall, vice president of government affairs with the National Cattlemen’s Beef Association, said on NCBA’s Beltway Beef audio program on Tuesday that NCBA expects retaliation “to be very close to what Canada and Mexico have asked for.” He said Canadian calculations show that figure, which could approach $3 billion, would represent losses of about 10 cents per pound for U.S. producers.
Shortly after the WTO ruled against the U.S. for the final time in May, the House passed a bill that would repeal COOL on beef, pork, and poultry, in a sweeping 300-131 vote. Senate Agriculture Committee Chairman Pat Roberts, R-Kansas, has introduced that bill in his chamber, but it is currently competing with a bill introduced by committee ranking member Debbie Stabenow, D-Mich., and North Dakota Republican John Hoeven that would replace the current mandatory COOL with a voluntary program.
“The lower the number comes in, I think the better the chances we have (to keep COOL),” Chandler Goule, National Farmers Union senior vice president of programs, said in an interview with Agri-Pulse. In September, Goule told members of the NFU, which supports COOL, that based on “reading the tea leaves,” he thought the retaliatory figure would come in in the $300 million to $500 million range.
“The higher the number, the more concern, just being blunt, I have of the Senate having a knee-jerk reaction like the House did. I could see Chairman Pat Roberts immediately dropping a repeal bill and trying to find something to attach it to,” he added.
If the Senate COOL action is attached to something, it will likely be the omnibus spending bill – or a continuing resolution (CR) – that needs to clear Congress by Dec. 11 to keep the government running. Roberts recently told Agri-Pulse that it would be “highly desirable” to attach COOL language to the omnibus.
“I think we have the language, if I can just get people together to say, ‘Look, we’ve got to move,’” Roberts said. “I think we have some solutions that (COOL supporters in the Senate) will buy and that could answer . . . the concerns of some of the producers.”
Barry Carpenter, president and CEO of the North American Meat Institute and a 37-year USDA veteran, isn’t quite as optimistic. Last month, he told a group of veteran farmhands in Washington that the industry is likely to face tariffs.
“The question is whether the leadership puts it on the list of things they want in the CR. My best guess is they won’t,” Carpenter said. “I don’t believe they’ll move that fast. They probably will miss the train. I’m of the opinion that we’ll be facing tariffs for some period of time.”
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