Canada files challenge with WTO against COOL

Cattle Market & Farm Reports, Editorials
Dec 12, 2008
Canada files challenge with WTO against COOL

Now that Country of Origin Labeling (COOL) has been implemented in the U.S. after years of discussion, it seems that the only challengers to the law don’t exist within U.S. borders.

On Monday, Dec. 1, the Canadian government filed a complaint against the U.S. with the World Trade Organization (WTO), headquartered in Geneva, Switzerland.

Canadian officials allege that COOL is discriminatory of Canadian cattle and is causing heavy losses to the country’s cattle industry.

“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,” said Stockwell Day, Canada’s minister of International Trade. “Under these circumstances, Canada has no choice but to assert its WTO rights in the defense of our exporters.”

With the filing of the complaint comes a WTO consultation period when the two governments have an opportunity to resolve the dispute through formal discussions.

If the consultations fail, the matter can then be referred to a WTO dispute settlement panel. Such cases generally require about 18 months or more before a ruling is issued. If the U.S. were to lose the dispute, WTO could require major changes in the wording of the COOL law, or that it be abandoned entirely. If the U.S. were unwilling to make such changes, WTO would allow for Canada to place retaliatory tariffs on U.S. products.

“We’ll always be optimistic and hope that during the consultation phase we can get things resolved,” Day said. “But we’re showing how serious we are about this proceeding to the full mechanism. The meter is running as of now.” Minister of Agriculture Gerry Ritz echoed Day’s comments by saying Canada was willing to use any means available to make COOL more Canadian-friendly.

“This government continues to take a strong stand for Canadian producers on the issue of country of origin legislation,” said Ritz. “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. 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.” With Canadian cattle producers already claiming that COOL has had a negative impact on their livestock and meat exports, Ritz also announced that a government-industry working group would be monitoring COOL to collect information on its economic impact on Canadian livestock and meat industries.

Under the North American Free Trade Agreement, bilateral trade between Canada and the U.S. has grown significantly, reaching $32.3 billion in bilateral agriculture trade alone in 2007. Members of the Canadian Cattlemen’s Association (CCA) gave the news of the WTO dispute a warm welcome, as CCA has been pushing the Canadian government for quite some time to challenge COOL on a formal level. The government of Canada had previously submitted comments on COOL to USDA on a number of occasions, but had not announced trade action until Dec. 1. “We have been working with the federal government to prepare a possible trade challenge for some time now,” said CCA President Brad Wildeman. “We congratulate federal Agriculture Minister Gerry Ritz, and Stockwell Day, minister of International Trade, for initiating this process to stand up for Canadian cattle producers. This is the first formal step that must be undertaken before a trade dispute settlement panel can be established under WTO rules.”

CCA claims that since U.S. packers must sort cattle by origin, they are less likely to accept Canadian cattle at full market price, given the cost of segregation and changes in slaughter days. Canadian packers, too, are discounting the cattle as they mirror the prices paid by their U.S. competitors. As a result, CCA says COOL is costing Canadian producers an estimated $90 per head, which they say translates into a $400 million annual loss for the Canadian cattle industry.

South of the border, Canada’s challenge to COOL hasn’t been received favorably by all U.S. cattle organizations. U.S. Cattlemen’s Association President Jon Wooster said USDA is still actively seeking comments on how to change COOL, and that the final wording on how the law should be implemented won’t be issued for some time. This, he explained, is why he views Canada’s challenge as unnecessary and premature.

“The U.S. Cattlemen’s Association has received word that Canada has filed a trade complaint against the U.S. over COOL with the WTO. This appears to be a premature move by the Canadian government since the Final Rule for COOL implementation has not yet been published,” he said. “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.”

Wildeman simply said that he wants COOL to work for both countries, and for Canadian cattle to compete at the same market prices as U.S. cattle do. “We hope that the initiation of this formal process will encourage the U.S. to adopt greater flexibility in how COOL is administered,” he said. “Ultimately, we want the U.S. to abide by our trade agreements that require Canadian cattle to be treated as favorably as U.S. cattle.” — Tait Berlier, WLJ Editor