Canada, Mexico Challenge COOL in WTO Complaint

By Sarah Young Livestock Editor
Sunday, December 28, 2008 9:09 PM CST

The USDA marketing program COOL, country-of-origin labeling, has come under fire lately as Canada and Mexico have filed complaints with the World Trade Organization saying the rule discriminates Canadian and Mexican agriculture exports.

Canadian Trade Minister Stockwell Day issued a written statement announcing the filing saying, "The country of origin legislation is creating undue trade restrictions to the detriment of Canadian exporters."

The complaint alleges that COOL will impose unnecessary costs on meat packers using Canadian animals and that the law could lead to more extensive and restrictive labeling requirements in other countries.

The filing triggers a period of consultations between the two governments during which a resolution to the dispute is sought. If the two governments cannot resolve the dispute, a panel of WTO judges will be convened to consider the case and issue a ruling. Typically, a WTO case takes about 18 months or more to resolve. If the U.S. loses, it will be forced to either alter the language of the COOL law significantly or scrap the law entirely in the face of retaliatory tariffs.

Minister Day added, "While Canada is firmly committed to a cooperative trading relationship; we believe that the country-of-origin legislation is creating undue trade restrictions to the detriment of Canadian exporters. Under these circumstances, Canada has no choice but to assert its WTO rights in the defense of our exporters."

"This government continues to take a strong stand for Canadian producers on the issue of country-of-origin legislation,” said Gerry Ritz, Minister of Agriculture and Agri-Food in a statement released earlier this month. “We are committed to a respectful working relationship with our American neighbors, but have always made it clear that these new regulations must not discriminate against Canadian producers. This consultation is a formal opportunity for us to work with the U.S. to resolve this issue, as well as a strong signal that we will stand up for Canadian producers and exert our rights if necessary.”

Mexico’s complaint

The Mexican government filed a complaint on Dec. 18. A WTO official said they received Mexico's official complaint, which starts a 60-day consultation period between Mexican and U.S. authorities. After that, Mexico can ask the WTO to set up an investigative panel. Such trade disputes can result in punitive sanctions, but usually after years of litigation.

Response

No formal statement has come from the U.S. government regarding the complaint. However, several ag organizations say the complaints are premature and haven’t give COOL a proper timeframe.

"U.S. consumers have consistently demanded information concerning the source of the food products they purchase. COOL provides this information in a way that is truthful without distorting or creating barriers to trade," NFU President Tom Buis said. "I believe Canada is 'jumping the gun' in this complaint about mandatory country of origin labeling."

The law will not be fully implemented for six months and the rules and regulations have not been finalized.

NFU said COOL does not discriminate against Canada; it does not require Canadian producers, or those in any other country, to do anything that those in the United States will not also be required to do. In fact, according to the Government Accountability Office (GAO), 48 out of 57 U.S. trading partners, including Canada, require COOL on one or more of the U.S. covered commodities.

"I believe the U.S. is in a strong position to defend the law and that it will pass muster with our global trade commitments," Buis said.

The United States Cattlemen’s Association feels the same. This appears to be a premature move by the Canadian government since the Final Rule for COOL implementation has not yet been published, the organization said in a statement also released earlier this month.

"The U.S. Congress very carefully included a ‘mixed origin’ category in the COOL law to accommodate international trade agreements. It is puzzling that the Canadian government would seek to challenge the law before a Final Rule has been made public, particularly when the U.S. Congress worked to accommodate international trading partners.

"Producers can rest assured that USCA will be reviewing the case as more information becomes available and that we will be consulting with trade law experts on the matter to better understand a course of action ensuring a vigorous defense of U.S. cattle producers,” said Jon Wooster, USCA president.

The National Cattlemen’s Beef Association hopes the U.S. and Canadian governments can work together and resolve this issue in a way that doesn't hurt the business climate for U.S. beef producers.

NCBA said it will closely monitor this situation, and as COOL is implemented in the U.S. “We will continue to monitor the effect of COOL on domestic demand for beef. If we determine that COOL is negatively affecting beef producers, we've pledged to work with Congress to alter the law as necessary.”

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