U.S. challenging WTO COOL ruling

Mar 30, 2012

The U.S. Trade Representative’s Office (USTR) filed an appeal of a World Trade Organization (WTO) ruling against U.S. Country of Origin Labeling (COOL).

U.S. beef and pork producers opposing the COOL requirement are disappointed that the USTR has decided to appeal last November’s ruling. NCBA Vice President Bob McCann issued a statement saying the appeal “jeopardizes our strong trade relationship with Canada and Mexico, the two largest importers of U.S. beef. An appeal is the wrong answer and a waste of valuable resources.”

NCBA Vice President of Government Affairs Colin Woodall says the appeal is the wrong answer and will ultimately send the wrong signals to Mexico and Canada, which are the top two export markets for U.S. beef.

But some ag organizations were glad to hear of the appeal. National Farmers Union president Roger Johnson believes consumers have made it clear they want to know where their food comes from. And the U.S. Cattlemen’s Association (USCA) President Jon Wooster said in a release that while the Dispute Panel’s findings took issue with certain implementation rules, the panel affirmed the right of the U.S. to label food products with country of origin. “USCA was pleased with this particular aspect of the Dispute Panel’s findings. However, we disagree with the panel´s assessment that the law offers less favorable treatment to meat products imported from Canada and Mexico and USCA membership feels strongly that those aspects of the ruling should be re-examined by a higher authority.”

U.S. Sens. Mike Enzi, R-WY, and Tim Johnson, D-SD, were also relieved to see the decision to appeal. The senators see the move as an effort to ensure that the law is implemented as intended. Enzi and Johnson sent a letter in December 2011 with 17 other senators asking USTR Ron Kirk and Agriculture Secretary Tom Vilsack to appeal the decision.

Late last year, a WTO dispute panel ruled that while the U.S. does have the right to adopt labeling requirements, it determined the mandatory COOL requirements violated provisions of the WTO agreement, and put beef and pork from Canada and Mexico at a disadvantage in the U.S. market.

“Although we were pleased that the COOL panel report ... confirmed that the United States has the right under WTO rules to adopt mandatory COOL requirements to help consumers make informed purchasing decisions about the food products they buy, we were disappointed that the panel disagreed with the way that the United States designed its COOL requirements with regard to beef and pork,” said Andrea Mead, a spokeswoman for the USTR office. “Accordingly, we are challenging the panel’s report before the WTO Appellate Body.”

NCBA had urged USTR not to appeal the ruling and instead work with stakeholders and Congress to rewrite the law so that it complies with WTO treaty obligations.

“We are extremely disappointed that our government has ignored the wishes of cattlemen and pork producers around the country and has chosen instead to waste additional time and money appealing a ruling that most reasonable people believe will stand,” said Texas Cattle Feeders Association Chairman Jim Peters. “I’m amazed, given the economic issues of the day, that the U.S. government would continue to devote human and financial resources in a futile attempt to retain a protectionist policy that continues to harm our domestic economy. Mandatory COOL OL hasn’t done what its proponents roponen ents ts promised. In fact, t, it’s done the complete opposite, posit ite, adding unnecessary ary costs throughout the production chain without a return on investment. Mandatory COOL has cost American, Mexican and Canadian cattle producers millions, confused consumers, mers, and threatened our relations with the two largest est importers of U.S. beef.”

In its Nov. 18 ruling, uling, WTO said the COOL measure violates a Technical ical Barri- ers to Trade (TBT) BT) agreement “by according rding less [favorable] treatment ment to imported Canadian cattle and hogs than to like do domestic products” and because e it doesn’t “[fulfill] its legiti- egitimate objective of providing consumers with information on origin…” COOL meat labels became mandatory in March 2009 after years of debate. Some U.S. consumer and ag groups supported the requirement, saying consumers should have information to distinguish between U.S. and foreign products. But on the opposite side, those opposed to the ruling believed it would unnecessarily boost costs and disrupt trade.

Last November’s ruling was the end of a legal battle brought by Canada and Mexico. In their complaint, Canada and Mexico said cattle and hog shipments to the U.S. declined sharply after the law took effect. They said the U.S. rules were too stringent and put their livestock at a disadvantage.

“The WTO panel decision recognized the integrated nature of the North American supply chain and marked a clear win for our industry,” Canadian Agriculture Minister Gerry Ritz said in a statement expressing disappointment with the U.S. appeal.

“We are confident that the decision will be upheld so trade can move more freely, benefitting producers and processors on both sides of the border,” Ritz said.

The Mexican Ministry of Economy pledged to “continue to defend in the appellate stage the victory obtained … in the World Trade Organization.”

The appeal has been criticized by some trade experts as a delaying technique and a political move. The U.S. is not required to change its policies until the panel’s findings are confirmed by the Appellate Body and adopted by the Dispute Settlement Body, a process that could take another four months, followed by a jointly defined “reasonable period of time” for reform.

While changes in the outcome are doubtful, there could be clarification on some of the issues resulting from the ruling.

According to the International Centre for Trade and Sustainable Development, the dispute is one out of three WTO’s TBT agreement cases that are currently at the appellate stage awaiting a final ruling. It is also the third TBT dispute the U.S. has lost in the space of one year for reasons of implementing its labeling or product regulation measures in a discriminatory or unnecessarily trade restrictive manner.

A final decision in the case is expected by the end of June. — Traci Eatherton, WLJ Editor