USDA's proposed COOL rule re-opens heated debates

News
Mar 15, 2013

Despite hopes that there may be an end to an 11-year battle, the newly proposed Country-of-Origin Labeling (COOL) document has created a wave of new controversy. On March 8, USDA announced its proposed new rules for labeling muscle cuts of meat, including a requirement to specify where the source animal was born, raised and slaughtered.

The changes follow a World Trade Organization (WTO) ruling last year that U.S. meat labeling discriminated against Canadian and Mexican meat products.

According to J. Patrick Boyle, American Meat Institute president, the new COOL would make current costly, cumbersome requirements for meat processors even more problematic.

“Complying with this proposal, should it become mandatory, will create more excessive costs that will be passed onto consumers,” said Boyle in a statement. “An absurd example of one of the proposed changes is this: a plant or grocery retailer that currently labels its product ‘Product of the U.S.’ would now have to change the labels on its packages to read, ‘Born, raised and slaughtered in the U.S.’” The National Cattlemen’s Beef Association (NCBA) continues to point out flaws in the proposal, and supports voluntary labeling.

“The proposed amendments will only further hinder our trading relationships with our partners, raise the cost of beef for consumers, and result in retaliatory tariffs being placed on our export products,” warns NCBA President Scott George.

“The requirement that all products sold at retail be labeled with information noting the birth, raising and slaughter will place additional recordkeeping burdens on processors and retailers, contrary to the administration’s assertion. Moreover, this, combined with the elimination of the ability to comingle muscle cuts, will only further add to the costs of processing non- U.S. born, raised and slaughtered products,” NCBA’s George said.

“NCBA has maintained that there is no regulatory fix that can be put in place to bring the current COOL rule into compliance with our World Trade Organization obligation or that will satisfy our top two trading partners, Mexico and Canada. With the amended rule, the USDA has proven that to be true.”

According to the Canadian Cattlemen’s Association’s (CCA) director of government and international relations, John Masswohl, the proposed modifications do not meet the requirements of the WTO ruling. Masswohl says USDA is moving much too quickly on this proposal and needs to look at the potential consequences.

According to CCA, US- DA’s proposed rule, if adopted, will in fact increase the discrimination against imported cattle by adding labeling requirements and eliminating some of the existing mitigating flexibility, thereby significantly increasing the costs of compliance.

The net result is a rule that not only does not comply with the WTO Appellate Body’s findings but will also violate WTO provisions not previously ruled upon, CCA wrote in a press release.

“It appears the USDA is pushing this rule through with a shortened comment period in order to implement something, regardless of how ill conceived, before the WTO May 23 deadline for compliance. This tactic not only increases the discrimination against imported livestock, but also creates additional process and delay at the WTO,” CCA wrote.

According to their release, USDA’s proposal is very similar to the regulation initially proposed in 2002 that was never implemented because of the enormous cost to the U.S. packing and livestock production sectors.

With 2012’s record drought, and the possibility of it continuing into 2013, the proposal ads uncertainty and volatility to the market.

“Right now, with the tight supplies, I don’t think they could bring a rule like this in at a worse time,” CCA Executive Vice President Dennis Laycraft told WLJ.

Laycraft says USDA was not even able to show a benefit in their document. “[The proposal] hurts everybody,” he added.

“If implemented, this proposal will degrade the competitiveness of the U.S. meat industry and undoubtedly result in the elimination of thousands of American jobs,” CCA predicts.

According to Laycraft, the current direction COOL is heading in will likely result in another trip to WTO and possible retaliation from U.S. trade neighbors.

CME Group also voiced concerns in their daily report, predicting further appeals by Canada and Mexico and more negotiations, perhaps as part of the Trans- Pacific Partnership talks.

“The proposed changes are NOT what Canada and Mexico had in mind when they challenged the MCOOL program. In fact, the changes may be about the farthest thing from what Canada and Mexico expected and there will be more protests before the issue is settled,” according to the CME report.

“No comingling of muscle meat products will be allowed, meaning that product from all Canada– and Mexico-sourced animals will have to be completely segregated and labeled. This is exactly what MCOOL supporters have wanted since the beginning. Curiously, USDA let stand the rule that allows ground meat to be co-mingled and carry a multi-country label,” CME reporters shared.

Despite the concerns, USDA seems confident that it has solved the WTO compliance issue.

“USDA expects that these changes will improve the overall operation of the program and also bring the current mandatory COOL requirements into compliance with U.S. international trade obligations,” said Agriculture Secretary Tom Vilsack.

The proposed rule would modify the labeling provisions for muscle cut covered commodities to require the origin designations to include information about where each of the production steps (i.e., born, raised, slaughtered) occurred and would remove the allowance for commingling of muscle cuts.

In June 2012, the Appellate Body of WTO affirmed an earlier WTO Panel decision finding that the U.S.’ COOL requirements for certain meat commodities discriminated against Canadian and Mexican livestock imports and thus were inconsistent with the WTO Agreement on Technical Barriers to Trade. The U.S. has until May 23, 2013, to come into compliance with the WTO ruling in COOL.

The United States Cattlemen’s Association (USCA) is on the other side of the fence, approving of USDA’s proposed rule. USCA says the proposed rule modifies the labeling provisions to require origin information about where each of the production steps occur and would remove the allowance for the commingling of muscle cuts.

“This is very positive news,” said Danni Beer, USCA director and COOL Committee chairwoman.

“We are very grateful to the Department of Agriculture for bringing the COOL rules into compliance with the WTO ruling and for recognizing and supporting our right to label U.S. products.”

The National Farmers Union (NFU) and R-CALF also praised USDA’s changes to the current rule.

“By requiring further clarity in labels and stronger recordkeeping, the set of rules released today are a win-win for farmers, ranchers and consumers,” said NFU President Roger Johnson.

“The proposed rule is consistent with the legal analysis commissioned by NFU and other producer and consumer allies. Our members have worked tirelessly on this issue and will continue to support providing consumers with information on where their food comes from. NFU will offer supportive comments and I urge our members and the general public to do the same,” he added.

In November 2012, R- CALF filed a lawsuit alleging that certain provisions in the COOL rule were illegal.

“If the secretary finalizes this proposed COOL rule, many of our concerns expressed in our lawsuit will be addressed,” said R-CALF CEO Bill Bullard. “It’s just too bad the secretary allowed Canada, Mexico and the domestic meatpacking and meat retailing industry to prevent him from doing what he knew was the right thing to do four years ago.”

The proposed rule, aimed at bringing the 2009 law into compliance with U.S. obligations under WTO, was published March 11 in the Federal Register and has a 30-day comment period.

Notice of the proposed rule can be viewed at http:// www.federalregister.gov/public-inspection. Comments must be received by April 11, 2013. The Agricultural Marketing Service (AMS) will consider all timely comments that are submitted regarding the proposed rule. Comments should be submitted electronically at http://www.regulations.gov or to Julie Henderson, Director; US- DA, AMS, LPS, COOL Division; 1400 Independence Ave., SW, Room 2620-S; Washington, D.C. 20250; telephone number 202/720- 4486; or fax 202/260-4486. — Traci Eatherton, WLJ Editor

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