WTO determines COOL creates unnecessary trade obstacles

Dec 2, 2011

WTO determines COOL creates unnecessary trade obstacles

The World Trade Organization (WTO) announced it has ruled in support of complaints by Canada and Mexico that U.S. Country-of-Origin Labeling (COOL) violates global trade rules.

According to a summary of the report provided by WTO, “The Panel determined that the COOL measure is a technical regulation under the TBT Agreement, and that it is inconsistent with the United States’ WTO obligations.”

The next step in the process is for the reports to be adopted by the WTO Dispute Settlement Body or appealed to the WTO Appellate Body. The U.S. has 60 days to appeal the unanimous decision.

The WTO ruling supports Canada's position that provisions of COOL discriminate against live cattle and hogs imported into the U.S. because it places additional costs on packers to segregate and process Canadian livestock.

The ruling found that:

Canadian products were treated less favorably than U.S. products;

COOL created unnecessary obstacles to international trade; and

COOL did not fulfill a legitimate objective.

National Cattlemen’s Beef Association (NCBA) is hopeful that the U.S. will not appeal the ruling.

“Instead, we urge U.S. Trade Representative Ron Kirk to work with NCBA and other pro-trade organizations to apply pressure on Congress to bring the United States into WTO compliance across the board. We must act quickly before U.S. farmers and ranchers once again face unnecessary and unfortunate retaliatory tariffs on their products,” NCBA Vice President of Government Affairs Colin Woodall said.

“This ruling solidifies our concerns that COOL would have extensive trade implications as NCBA expressed during 2008 farm bill deliberations. U.S. livestock producers have yet to see any financial benefit from COOL provisions. In many cases, ranchers who feed imported cattle have incurred significant discounts, which have not been offset by benefits proponents of COOL claimed would be available. Just as importantly, cattlemen have yet to discern any positive reaction from consumers regarding mandatory origin labeling,” Woodall added.

The chair of the Saskatchewan Cattlemen’s Association (SCA) said COOL was a mistake from the beginning.

“Proponents of COOL have always believed that restricting imports of feeder cattle into the United States would increase the price of U.S. origin feeder cattle,” says SCA Chair Jack Hextall. “In reality, reducing the number of cattle in the marketplace also reduces the infrastructure of the beef industry . . . we all lose.”

According to Canadian officials, during the first year of COOL implementation, exports of slaughter hogs declined 64 percent from the same period in the previous year. Exports of feeder pigs were down 19 percent over the same time frame. Similarly, exports of slaughter and feeder cattle from Manitoba were down 60 and 33 percent.

The U.S. Cattlemen’s Association (USCA) said the WTO COOL decision has some missing pieces.

“Obviously, there are sections of the panel’s findings that we strongly disagree with,” said Danni Beer, Keldron, SD, USCA director. “We are pleased, however, that the panel affirmed the right of the U.S. to label meat for consumers.”

USCA President Jon Wooster, San Lucas, CA, says USCA remains committed to the COOL law. “We support the U.S. Trade Representative’s efforts in defending U.S. rights in this dispute and we look forward to assisting with the appeal process. USCA will be working with our allies in the administration and Congress to ensure that COOL continues.”

The ruling is expected to be WTO’s final say on the complaint, originally brought forth by Canada in 2008 and later joined by Mexico.

In its ruling, WTO said the COOL measure violates a Technical Barriers to Trade (TBT) agreement “by according less [favorable] treatment to imported Canadian cattle and hogs than to like domestic products” and because it doesn’t “[fulfill] is legitimate objective of providing consumers with information on origin…”

WTO also said Agriculture Secretary Tom Vilsack’s letter asking the industry to voluntarily follow additional labeling provisions violated the TBT too.

In Vilsack’s 2009 letter, he expressed concerns about labeling product of mixed origins, labeling processed foods, and time allowances for labeling ground meat products. He specifically asked processors to voluntarily:

!go beyond the current guidelines in defining on labels where an animal was born, raised and slaughtered

!use country-of-origin labeling on processed products that are cured, smoked, broiled, grilled or steamed (these items are currently excluded)

!limit the gap between when a product from a country was not present in a processor’s inventory and when labels are changed to reflect that to 10 days instead of the 60 days allowed by law.

Travis Toews, president of the Canadian Cattlemen’s Association said COOL is still hampering Canadian cattle values by as much as $45 per head.

Exports of slaughter and feeder cattle from Manitoba alone were down 60 and 33 per cent respectively in the first year of COOL, according to reports.

COOL, established in the 2002 farm bill and amended in the 2008 farm bill, requires that all fresh beef, chicken, goat meat, lamb, pork seafood and ground meat marketed in retail stores be labeled with the country or countries of origin of the animal or animals from which the product was produced. It also covers fresh fruits, vegetables and nuts. — Traci Eatherton, WLJ Editor