By JORDAN STRICKLER
WASHINGTON, D.C. — In a Dec. 7 decision, the World Trade Organization (WTO) gave the okay for Canada and Mexico to pursue $1.01 billion per year in retaliatory tariffs against the United States in reaction to country of origin labeling (COOL) for beef and pork.
The decision is less than the full sum Canada and Mexico had initially sought, as the WTO stated export losses for the two countries were less than the $3 billion initially claimed. This decision allows Canada the ability to seek up to $780.9 million and Mexico up to $227.8 million in tariffs.
The new Canadian Liberal government, which took office Nov. 4, applauded the ruling. “If the U.S. Senate does not take immediate action to repeal COOL for beef and pork, Canada will quickly take steps to retaliate,” said International Trade Minister Chrystia Freeland and Agriculture and Agri-Food Minister Lawrence MacAulay in a joint statement.
“Canada continues to work with our partners in the United States, and in the U.S. Senate, to urge the full repeal of the discriminatory COOL policy for beef and pork.”
U.S. Secretary of Agriculture Tom Vilsack said he would work to resolve the matter, but hopes Congress will not throw out the entire program. He is hoping the Senate can focus on the provisions of COOL that created the retaliation, without necessarily eliminating all aspects of the program – some of which consumers approve and that are benefiting producers without violating WTO rules and regulations.
COOL requires beef and pork to be labeled with the country in which the animal was born, raised and harvested. It also applies to fish, shellfish, fresh and frozen fruits and vegetables and certain nuts. The WTO has previously ruled this discriminates against U.S. trading partners whose animals are sent here to be fed out and processed.
In June, the House voted to repeal COOL, but the Senate has yet to act on the measure. COOL has been a divisive issue within the agricultural industry, with several farm groups that favor or oppose the ruling.
American Farm Bureau Federation President Bob Stallman is in favor repealing COOL: “AFBF supports country of origin labeling that meets WTO requirements, and we support the remaining COOL programs, but the risk of retaliation by Canada and Mexico is too great. U.S. farmers and ranchers could suffer a serious blow if Congress does not act quickly.”
A bill cosponsored by Sens. Debbie Stabenow (D-Mich.) and John Hoeven (R-N.D.), introduced in July, calls for voluntary labeling for meat raised and processed in the United States. While some groups believe this compromise skirts the issue, other COOL supporters believe it a viable option given the almost-certainty of retaliatory tariffs.
“The COOL legislation introduced by Senator Hoeven and Senator Stabenow offers a path forward on COOL that ensures truth in labeling and addresses WTO concerns,” said U.S. Cattlemen’s Assoc. President Danni Beer. “The bill maintains the integrity of COOL and identifies products born, raised and harvested in the U.S. Products from Canada and Mexico are provided with a simple, voluntary option to inform consumers of the meat’s origin.
“The Hoeven-Stabenow approach to COOL mandates that any label stating ‘Product of the U.S.’ is exactly that. The program operates on a voluntary basis, just as Canada maintains its voluntary COOL program.”
Harwood Schaffer, a research assistant professor at the University of Tennessee Agricultural Policy Center, said while it’s a nice idea, the Hoeven-Stabenow bill isn’t needed.
“There is nothing stopping companies from putting where their meat comes from,” he explained. “You’re going to see consumers put increasing pressure on the marketplace. They are saying, ‘We want humanely treated animals and we want to know where it comes from.’ The WTO won’t intervene if Walmart and McDonald’s want tracking. And with the technology we have today, tracking an animal can be done at minimal cost.”
Schaffer said market demand in addition to concerns about food safety will most likely lead to a tracing system in the near future. If not, demand for beef will fall even further than it has in the past few years. For now, he puts the WTO decision squarely on the heads of the packers.
“(The WTO decision) is wrongheaded and those against COOL don’t understand that consumers want to know where their food comes from. The packers want an integrated market so they can get the cheapest price. The packers wanted to provoke a response so that COOL would get eliminated. It’s in their own interests,” he said.
Some believe the $1.1 billion authorized by the WTO is grossly overinflated. “The WTO decision is utterly absurd,” said Bill Bullard, CEO of the Ranchers-Cattlemen Action Legal Fund. “The entire value of Canada’s live cattle imports in 2014 was $1.753 billion and this represented an historical high. It is absolutely impossible that Canada could be suffering an annual loss representing 45 percent of Canada’s record high imports.
“Mexico’s live cattle imports in 2014 were valued at $739 million, and it is equally impossible that COOL has caused Mexico to lose 31 percent of the value of its record level of exports.”
Most likely, a repeal would be included in the spending bill needed to fund the federal government. The WTO is the final ruling in a dispute that has waged since COOL was first authorized in the 2002 and 2008 farm bills.