The bill would set out processor fines of US$5,000 per pound of beef that doesn’t meet label standards.

COOL, or country-of-origin labelling, surged back into the headlines this year, eight years after the U.S.’s mandatory COOL system was repealed in 2015 after a bitter trade dispute between the U.S., Canada and Mexico.

Why it matters: Canada’s livestock sectors do not want to repeat the years-long fight against country-of-origin labelling.

In March, the U.S. proposed a regulation that would require animals to be born, raised, slaughtered and processed in the U.S. (as opposed to just processed), in order for beef to be labelled as U.S.-made. Labels would be voluntary rather than mandatory.

The Canadian meat sector argued the differences would be largely semantic and, in practice, the results would be much the same as mandatory COOL.

In January, proposed legislation was also introduced in the U.S. Senate, which sought to re-instate mandatory COOL rules on beef. It relied on the Office of the U.S. Trade Representative to bring back the requirements without prompting a trade dispute. That bill was read twice before being shifted to the body’s ag committee.

The recent proposal reportedly dovetails with that January legal effort.

Skepticism

Canadian experts say the newest proposal is unlikely to be supported among U.S. lawmakers.

University of Guelph associate professor Rakhal Sarker, who researches the economics of agri-food trade, noted similar policy has previously failed.

“You know what happened to the previous COOL, right? It didn’t succeed, and WTO (World Trade Organization) authorized Canada and Mexico to impose duties on U.S. products so they can recover the damage,” he said.

He expects U.S. politicians will keep that track record in mind when assessing the new proposal.

Canadian Cattle Association executive vice-president Dennis Laycraft similarly suggested the recent push is not unprecedented.

“There’s been a number of different senators who have been trying to bring some language to bring back mandatory country of origin labeling,” he said.

“The [Biden] administration … are still saying anything that is done has to be compliant with the World Trade Organization and their international obligations… What’s being proposed clearly, in this particular bill, would not be, so they don’t believe it’s likely to go anywhere, but we follow it closely anyway.”

Laycraft said previous rules with similar goals proved financially inefficient.

“The irony in that is, when those goals were in, that were eventually overturned at the WTO, their own analysis showed … the previous measure would have cost the U.S. industry over $8 billion,” he said.

“It led to segregation within the system. Cattle that we exported either as feeder or animals that were ready to go to processing were discounted about $45 an animal on average.”

A similar labelling plan in Canada has little traction, he added.

“For the most part, that’s been fairly well addressed on our side. We have a trademark label that many retailers use.”

Sarker said that even if this particular American proposal were to pass, it would likely pose no major threat to the Canadian ag sector.

“It will reduce the progress of e-commerce and probably that would have a ripple effect in Canada,” Sarker said. “But I don’t think the e-commerce is so big that it will have any significant damage to our major sectors.”

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Regulatory agencies and policy makers think so.

The ‘cover’ in this case is not the company branding on the product packaging, but the labels used to inform consumers where a food originated, or what it contains or doesn’t contain.

Last July Health Canada published final guidelines for its contentious Front-of-Package (FOP) labelling in the Canada Gazette. FOP labelling requires most prepackaged products containing nutrients of public health concern (saturated fat, sugars and sodium) at or above specified thresholds be listed in a black and white label on the front of the product package.

Health Canada wrote in the Canada Gazette that the label “will help Canadians to more easily identify foods high in these nutrients. Avoiding excess consumption of these nutrients can help reduce associated health risks.”

If you are diabetic or have high blood pressure, for example, then having FOP labelling listing the sodium and sugar content can be helpful. You’re likely not going to purchase or consume the product if those values are too high and you care about your health.

FOP labelling can be a useful tool to reduce consumption of further processed foods, which fall into the prepackaged category and tend to be high in the ingredients of concern.

But when FOP labelling was first proposed, the Canadian dairy processing industry quickly realized that cheese and yogurt products would be subject to warning labels due to saturated fat content, which could deter consumption.

Nutritionists also worried that consumers would overlook an important source of calcium, as well as other minerals, vitamins and protein, thinking dairy products were bad for them.

Fluid milk was not in question because it is not considered prepackaged or further processed.

Fortunately, industry rallied and convinced Health Canada to make many dairy products exempt from FOP labelling rules. As “foods that are important sources of calcium, a shortfall nutrient that is not readily available in other foods”, Health Canada offers exemptions to the label requirements for saturated fats and sugars if they contain a specified amount of calcium per daily serving and have no added sugars (sugars naturally present in milk and added fruits are OK).

I understand the thought process from Health Canada to achieve its public health goals. But it’s an example of proposed labelling that could have caused significant injury to an agricultural sector, and perhaps to some consumers as well.

That’s why having a period of time for industry and consumer input on proposed regulations is so important, as is having a regulatory body capable of ensuring new regulations don’t cause negative consequences.

There’s a new labelling challenge on the horizon that could affect Canadian agriculture, in particular the red meat sector.

Those in the Canadian meat industry may have experienced a déjà vu moment on March 6 when U.S. President Biden’s administration proposed a new rule reminiscent of the Country of Origin Labelling (COOL) dispute of the past.

The Biden administration proposed that all mmeat, poultry and eggs labelled as a U.S. product must come from animals raised and slaughtered within the United States.

Currently, rules for the ‘Product of USA’ or ‘Made in the USA’ label permit its use for meat derived from animals that were born and raised abroad and only processed in the United States. This was a hard-won battle by Canada and Mexico when COOL was first proposed in 2009. It took six years and a World Trade Organization challenge to end the COOL debate.

In a statement, the USDA said it undertook a review on the label in July 2021 “to understand what the ‘Product of USA’ claim means to consumers and inform planned rulemaking.”

The department said it found in a related survey of U.S. consumers that “a significant portion believ(es) the claim means that the product was made from animals born, raised, slaughtered and processed in the United States.” Their worry is that U.S. consumers will lose faith in their food regulatory system.

“If it says ‘Made in the USA,’ then it should be from cattle that have only known U.S.A. soil. Consumers have the right to know where their food comes from, full stop,” U.S. Cattlemen’s Association president Justin Tupper said in separate statement.

But not all groups that will be affected by a new rule agree with Tupper. Several U.S. meat industry lobbyists say the proposed rule is essentially COOL 2.0 – and will only frustrate U.S. packers who import Canadian meat or livestock, just like COOL 1.0 did.

The North American meat industry is highly integrated, so if the new rule passes, it will result in increased costs for U.S. packers and processors and lower prices for Canadian producers, as seen when COOL was in effect.

In a separate statement March 7, federal Agriculture Minister Marie-Claude Bibeau and Trade Minister Mary Ng said Canada “remains concerned about any measures that may cause disruptions to the integrated North American livestock supply chains,” and will “closely review” the proposed new rules.

Let’s hope they do. According to Agriculture and Agri-Food Canada, language within the Canada-U.S.-Mexico Agreement requires that each party to the trade pact ensures any regulations on labeling “accord treatment no less favourable than that accorded to like goods of national origin.”

Strong leadership from Canada and Mexico will be needed on this file. With the World Trade Organization essentially defunct and protectionism on the rise, the threat this rule could pass is real.

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President Joe Biden and Agriculture Secretary Tom Vilsack seem determined to clear up confusion over the voluntary labeling program and make it easier to understand.

In the first week of July, the U.S. Department of Agriculture announced a “top to bottom” review of the Product of USA label.

Several days later the White House made a similar announcement, asking the USDA to take action on the label.

Why it matters: The Canadian and American beef and hog markets are integrated with animals moving back and forth across the border. Any change in labelling could make that movement more difficult and be costly for Canadian farmers.

“Under current labeling rules, meat can be labelled ‘Product of USA’ if it is only processed here — including when meat is raised overseas and then merely processed into cuts of meat here,” the White House said in a July 9 executive order.

“Most grass-fed beef labelled ‘Product of USA’ is actually imported. That makes it hard or impossible for consumers to know where their food comes from and to choose to support American farmers and ranchers.”

For years, American cattle ranchers have asked Congress and federal regulators to strengthen the label so the voluntary standard is meaningful.

Cattle producers and farmer organizations have complained that companies can put the label on a package of beef and other meat, even if the animal was born and raised in another country.

Now that the White House is publicly in support of change, the USDA will make the review a priority.

“We’re optimistic the process will get underway and be completed rather quickly,” said Matt Perdue, government relations director with the North Dakota Farmers Union.

“When you have an agency that announces a review … and a week later the White House saying you absolutely need to review this, that creates a sense of urgency.”

The National Farmers Union and the U.S. Cattlemen’s Association both want the Product of USA label to apply only to meat that comes from animals that are born, raised, fed and slaughtered in America.

If they get their way, it could be a significant blow for cattle, hog and bison producers in Canada who ship live animals to the U.S. for feeding. It will also impact Canadian processing plants that export meat to the U.S.

The Product of USA program is voluntary but it could create a two-tiered market in America’s meat sector, where pork, beef and bison labelled with a U.S. flag is sold at a higher price.

“There are consumers who want to buy local, buy regionally and support U.S. ranchers,” Perdue said. “That (market) segment inevitably leads to higher returns for U.S. producers. It adds value to their product.”

However, since the label is voluntary, companies within America’s meat industry may choose not to use it on their products and Canadian exporters could continue to supply those firms with beef, pork or live animals.

The final USDA decision will affect Canada’s red meat sector because it’s highly likely that the review will result in changes to the labelling program, said an agriculture journalist who works in Washington, D.C.

It’s uncertain how far the USDA will go and where the National Cattlemen’s Beef Association will stand on the changes. The NCBA is a powerful lobby group and usually gets what it wants, the journalist said.

The NCBA supports an integrated beef market in North America but has also said the Product of USA label is flawed.

“It not only misleads consumers, it is yet another barrier to producers gaining leverage and distinguishing their product in the marketplace,” said NCBA president Jerry Bohn.

“NCBA members have voiced concerns about the potentially misleading use of the label…. We look forward to working with USDA to find labeling solutions that represent investments made by producers to continually improve their product and meet consumer demand.”

The NCBA opposed mandatory country of origin labeling (COOL) for meat in America. COOL was in place in the U.S. from 2009 to 2015, until Congress was forced to repeal the law to comply with World Trade Organization rules. The WTO ruled, several times, that the law discriminated against Canadian and Mexican livestock producers.

Support for COOL remains strong in America, especially with cow-calf producers. But it’s unlikely Congress will pass mandatory COOL legislation, the ag journalist said.

Farm groups are lobbying for a stringent Product of USA label because a return of COOL would probably violate the
U.S.-Mexico-Canada Agreement and is not politically viable.

This article was originally published at The Western Producer.

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They’re not ignoring the possibility of trade disruptions in the U.S., said Ryder Lee, CEO of the Saskatchewan Cattlemen’s Association — “but neither are we lighting our hair on fire yet at each proposal you catch wind of.”

Lee expects to hear plenty of proposals between now and the Jan. 20 inauguration, and even through the next year. “And a lot of the things we’ll hear now are kind of spitballs. They’re waiting to see what sticks and what doesn’t.”

It’s certainly not the beef industry’s first rodeo. The sector has worked for years to reopen borders shut since the first case of BSE was found in an Alberta cow in 2003. And Canada only recently had mandatory country-of-origin labelling (COOL) struck down by the World Trade Organization.

“It’s a garden that needs tending all the time,” Lee said of trade issues such as COOL. But Canada has many staffers in Ottawa and D.C. who learned the ropes during BSE, he said.

Some newly elected officials and their staff also likely have some catching up to do, he acknowledged.

The SCA, however, sends money to the Canadian Cattlemen’s Association “to have those people on the ground, to have those relationships so that they’re not making it up as they go. They don’t have to. Cattle producers’ voices are heard there and understood.”

Those staffers are already talking to members of Congress and administration officials in D.C., Lee said, as well as people connected to Trump’s transition team.  In fact, firing up COOL again might already have proved to be “a bit of a lead balloon,” he said.

Lee’s basing that hope on a recent article from MeatingPlace.com, which reported Trump’s agricultural advisory committee has already talked the transition team out of reinstating COOL.

The push for COOL was coming from beef producers at a recent meeting organized by R-CALF, the South Dakota Stockgrowers’ Association and the Independent Beef Association of North Dakota, MeatingPlace reported.

Trade actions such as COOL are always a risk, Lee said. “But the nice thing about that one is it’s fresh enough everybody knows what happened at the WTO, what our retaliation list is.”

Bilateral deals

It looks like “the sun is setting” on the Trans-Pacific Partnership (TPP), said Lee. A Canadian government official has said Canada has until February 2018 to make a final decision on walking away from the deal, the Toronto Star reports.

Trump, however, has promised to drop the multilateral deal between 12 Pacific Rim nations, effectively killing it.

Canada could follow New Zealand’s lead, passing TPP at home to send a signal that we’re not talking protectionism, Lee said.

“The jewel of TPP for us was catching up on access to Japan,” said Lee. Canada had started negotiating a bilateral agreement with Japan, and TPP’s demise could add “a little more fuel to it,” he added.

Ultimately, Lee would like to see better access to Japan’s high-value market for Canadian beef. “Australia has about an 11 per cent advantage into Japan for beef exports. That’s more than your profit a lot of the time.”

Mexico is also an important market for Canadian beef, and China has “exploded” for the industry as Canada has gotten better access, Lee said.

Beyond that, markets depend on cuts, what kind of value chains are set up, which processor is involved, and how they’ll be supplying that business throughout the year.

But while Canada’s beef industry supplies other markets, the U.S. remains an important trading partner.

“A lot of the time it’s our home market that’s most important,” Lee said. “And the U.S., we can service it fresh and on a truck. So those two are always the biggest ones.”

— Lisa Guenther is a field editor for Grainews and Country Guide based at Livelong, Sask. Follow her at @LtoG on Twitter.

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U.S. news network CNN reported on Tuesday that a memo drafted by President-elect Donald Trump’s transition team, which it obtained, said the new administration would immediately initiate changes to the North American Free Trade Agreement (NAFTA) with Canada and Mexico. Those changes could include measures on country-of-origin labelling (COOL), CNN reported.

The U.S. COOL program required as of 2009 that retail outlets label food according to its origin. Canada and Mexico argued that COOL, repealed in December, led to fewer of their cattle and pigs being slaughtered in the U.S.

“We’re watching… and if we think it discriminates against our cattle, our recommendation is going to be that tariffs go into place immediately” on U.S. products, said John Masswohl, director of government and international relations for the Canadian Cattlemen’s Association, which represents Canada’s 68,500 beef farms and feedlots.

The World Trade Organization last year authorized Canada to retaliate against the U.S. over COOL, setting the annual level at $1.055 billion.

Canada’s previous Conservative government listed in 2013 three dozen U.S. product categories that could be subject to a 100 per cent surtax, including pork, beef, cherries, appliance parts, chocolate, wine and office furniture, but none were imposed.

Alex Lawrence, spokesman for Canada’s Trade Minister Chrystia Freeland, would not say if Canada is inclined to retaliate, adding Ottawa looks forward “to working very closely with the new administration and with the United States Congress, including on trade and investment.”

Until it’s clear how Trump might approach COOL, no action is necessary, Masswohl said.

“I don’t go around chasing ghosts,” Masswohl said. “If anything starts to become real, we’ll know well in advance.”

The Canadian Pork Council, which represents the country’s hog farmers, is taking a wait-and-see approach until it knows what changes, if any, the next U.S. government will make, said executive director John Ross.

— Rod Nickel is a Reuters correspondent covering the agriculture and mining sectors from Winnipeg.

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Mexico had announced earlier this month it would start internal procedures to strip benefits from some U.S. agricultural and industrial imports, including apples, dairy items, alcoholic drinks and personal hygiene products.

The measures would have gone into effect on Dec. 22, the government official said, speaking on condition of anonymity.

The proposed move came after the World Trade Organization (WTO) authorized the retaliation against the United States’ country-of-origin labeling (COOL) rules on meat and certain other foods.

The U.S. Congress on Friday passed a broad 2016 spending package that includes the repeal of the rules in question, in order to avoid more than US$1 billion in trade retaliation by Mexico and Canada.

In a statement Saturday, Mexico’s economy ministry said both the Canadian and Mexican governments welcomed the repeal, but did not specifically comment on the proposed retaliatory measures.

— Reporting for Reuters by Ana Isabel Martinez; writing by Alexandra Alper.

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Tucked into an omnibus appropriations bill put before Congress Friday, the repeal shuts the door on a major irritant in North American trade relations and is expected to curb U.S. processors’ COOL-related discounts on imported Canadian cattle, hogs, beef and pork.

The bill now goes to President Barack Obama for his signature, and Canadian officials said Friday he plans to sign it.

Canada’s Trade Minister Chrystia Freeland, on a conference call Friday from unrelated World Trade Organization (WTO) ministerial meetings in Nairobi, described the repeal as “a great day for the Canada/U.S. relationship, and a great day for the Three Amigos of NAFTA.”

The repeal follows six years of COOL challenges and U.S. appeals at the WTO, which pitted the U.S. against the other Two Amigos of the North American Free Trade Agreement, Canada and Mexico, and ended earlier this month with a WTO panel approving set levels of retaliatory tariffs that Canada and Mexico could impose on U.S. goods.

Canada will still go to the WTO Monday to seek approval to levy retaliatory tariffs, Freeland said, describing the move as “an important procedural step in the WTO process.”

Retaliation approval from the WTO had been expected earlier but was delayed, due mainly to the Nairobi ministerial meetings, she said.

While Canada is glad for the repeal, the “actual (trade) obstacles, as of the moment we are speaking, haven’t been removed… we think it is prudent of us to take the process to its final, technical conclusion, and that’s what we’re going to do.”

Canada’s Agriculture Minister Lawrence MacAulay said Friday the government will still “actively monitor to ensure that the incentives to discriminate against Canadian cattle and hogs are quickly removed from the marketplace.”

However, he added, he expects the repeal to restore normal cross-border beef, pork and livestock trade “quite shortly.”

Asked on the call whether the repeal would also remove COOL on Canadian sheep and lamb, Freeland said the WTO complaint specifically applied to the beef and pork sectors, where Canada “had a very significant trading case to make.”

MacAulay said his understanding was that the repeal applies to beef and pork, and any remaining COOL issues on Canadian product would be dealt with later. COOL since 2009 has also applied to imports of fish, shellfish, fresh and frozen fruits and vegetables and certain nuts.

Challenging COOL “has been a long and expensive fight for Canadian producers,” Canadian Pork Council chair Rick Bergmann said in a separate release Friday. “We look forward to (Obama) signing the bill to avoid retaliatory action and closing the book on this dispute.”

U.S. Vice-President Joe Biden on Friday hailed the overall bill, saying it “averts another unnecessary government shutdown, and lays a path forward to the type of governing by consensus that the American people deserve and expect.”

Philip Ellis, president of the U.S. National Cattlemen’s Beef Association, said Friday that COOL has “plagued our industry for many years now, costing us millions and driving us to the brink of retaliation from two of our largest trading partners. Cattle producers have had to bear the cost of this failed program for far too long.”

The NCBA and National Pork Producers Council noted the Republican chairs of the U.S. Senate and House agriculture committees, Sen. Pat Roberts and Rep. Michael Conaway, and California Democrat Rep. Jim Costa were key in getting COOL repeal language added to the omnibus spending bill.

“America’s pork producers are grateful that lawmakers, particularly Chairman Roberts and Chairman Conaway, recognized the economic harm we faced from retaliation because of the WTO-illegal COOL law,” NPPC president Ron Prestage said in a separate release.

“I know tariffs on U.S. pork would have been devastating to me and other pork producers.”

Before the bill’s passage, Bill Bullard, CEO of U.S. ranchers’ group R-CALF USA, a long-time proponent of COOL, urged Congress to pull the COOL language or, failing that, for Obama to veto the bill.

U.S. cattle producers, he said, “cannot compete in the global marketplace if consumers cannot distinguish their beef from the beef imported by multinational meatpackers from the 14 countries that currently ship beef into the United States.”

COOL, in place in the U.S. since 2009, was ruled out of order by the WTO’s Dispute Settlement Body (DSB) in 2011 and WTO Appellate Body in 2012 for discriminating against Canadian and Mexican livestock and meat.

The U.S. in 2013 revised the COOL law, tightening its requirements for information on where animals were born, raised and slaughtered, in response to the WTO’s criticism that the law “does not fulfil its legitimate objective” of consumer education.

A WTO compliance panel last year ruled the U.S. changes didn’t make COOL WTO-compliant, leading to hearings over the allowable level of retaliatory tariffs Canada and Mexico could impose without a repeal. — AGCanada.com Network

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The World Trade Organization on Monday authorized Canada and Mexico, the biggest markets for exported U.S. goods, to retaliate against the United States’ country-of-origin labelling (COOL) rules on meat, setting the annual tariff level at C$1.055 billion for Canada and US$228 million for Mexico.

However, the U.S. took a step toward defusing the row on Wednesday when the U.S. Congress approved a spending bill that includes the repeal of federal laws mandating meatpackers identify where animals are raised and slaughtered.

“It’s causing a lot of angst and anxiety,” said Candace Sider, vice-president of Canadian regulatory affairs for customs brokerage and trade consultant Livingston International.

A trade war may force importers in Canada and Mexico to find alternative suppliers, Sider said — but the biggest unknown element is which products may be affected.

The U.S. in 2014 shipped goods worth $312 billion to Canada and $240 billion to Mexico, according to U.S. Department of Commerce.

Canada’s previous Conservative government listed in 2013 three dozen U.S. product categories that could be subject to a 100 per cent surtax, including pork, beef, cherries, appliance parts, chocolate, wine and office furniture.

The new Liberal government has not clarified which products it may target.

The COOL dispute stems from a 2009 U.S. requirement that retail outlets label food with information about its origin. Canada and Mexico argued that COOL led to fewer of their cattle and pigs being slaughtered in the U.S.

“Why our industry? This is (about) beef and pork,” said Wayne Morris, a vice-president with the Association of Home Appliance Manufacturers, whose members include General Electric. “It’s a bit unfair.”

Oregon winemaker A to Z Wineworks, which sells to both Canada and Mexico, is likely to focus sales next year on offshore markets a little more than usual, given the uncertainty around Canada, said founder Sam Tannahill.

Canada remains a key market, he said.

Trade retaliation may also inadvertently hurt Canadian importers.

An official at a Canadian company that imports U.S. meat to sell to processors, including Cargill and Maple Leaf Foods, said it would have to find supplies domestically if Canada strikes back. The official was not authorized to comment publicly.

If Canada’s final tariff list includes pork, in a North American market where U.S. packers are already slaughtering at capacity, “unfortunately it probably will have negative implications” for Canadian hog farmers, said Perry Mohr of marketing agency H@ms Marketing Services.

The best-case scenario for all, he said, is if the U.S. Congress repeals COOL before any tariffs are imposed.

“Right now we’ve seen U.S. processors killing at capacity,” Mohr said Friday on the Prairie hog industry program Farmscape, and “we know, based on past experience, that they have to export about 25 per cent of what they produce in order to clear the market.”

If U.S. pork starts backing up into the U.S. behind a Canadian tariff wall, he said, “it will in effect lower U.S. hog prices — which will in effect lower Canadian hog prices, because we use those U.S. markets as our pricing point.”

Mexico may target U.S. apples, dairy, alcohol and personal hygiene products.

“It will have an import cost and obviously the final price of the product will go up,” said Arturo Behr, president of the Mexican association of importers and exporters.

The association supports retaliatory measures, despite the impact on importers, because it protects Mexican exports, Behr said.

A trade war could even affect internal supply chains. A company that ships products from the U.S. to Canada for further manufacturing could face the surtax, Sider said.

COOL has already added costs throughout North America’s beef supply chain, said Cargill vice-president of corporate affairs Chantelle Donahue.

“We believe this mandatory labeling law must be repealed before any damaging tariffs are implemented,” said Gary Mickelson, spokesman for U.S. beef packer Tyson Foods.

To be sure, in only six of the previous 18 cases in which the WTO has authorized sanctions did countries actually apply them, since most cases were settled first.

If Canada and Mexico slap surtaxes on U.S. products, shoppers in those countries will pay more, said Bruce Cran, president of Consumers’ Association of Canada.

“It would be a disaster. We’ll be in a trade war, and consumers are always called upon to pay the penalty.”

U.S. Senator Pat Roberts, chair of the Senate agriculture committee, hailed the omnibus bill in a release Wednesday, adding he hoped the Senate “can pass this legislation in time to avoid devastating tariffs.”

If the repeal passes, he said, U.S. farmers, ranchers and small businesses “will finally get the certainty they deserve from unnecessary trade retaliation.”

— Rod Nickel is a Reuters correspondent covering the agriculture and mining sectors from Winnipeg. Additional reporting for Reuters by Joanna Bernstein in Mexico City. Includes files from AGCanada.com Network staff.

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Earlier this week, the World Trade Organization authorized an annual retaliation level of $1.055 billion for Canada, though that was considerably less than what Canada had sought.

The dispute, fought at the WTO since late 2008, stems from the U.S. requirement that retail outlets label meat with information about its origin. Canada has argued that country-of-origin labeling (COOL) has led to fewer of its cattle and pigs being slaughtered in the U.S., or bought at discounts to U.S.-born and -raised livestock.

“We would rather not have to engage in retaliatory measures, but we certainly will, to stand up for our farmers, to stand up for Canadians who have been unfairly addressed and affected by this legislation,” Trudeau told reporters.

“We will continue to make sure that this gets fixed and we’re going to work with Americans, or against them, to make sure that it happens.”

Asked what impact retaliation might have on the relationship between the neighbouring countries, Trudeau said, “The (U.S.) president understands that the relationship between Canada and the U.S. is far greater than any one issue.”

Passed by the U.S. government in 2008 and implemented in 2009, mandatory COOL requires country-of-origin labelling for beef, pork, lamb, chicken and goat meat, and certain perishable commodities sold at retail outlets in the U.S.

Canada’s opposition Conservatives, who while in government spearheaded the country’s challenges of COOL at the WTO, on Wednesday urged the Liberal government to maintain pressure on U.S. lawmakers, some of whom may soon see a bill to repeal COOL.

The Tories’ international trade critic, former agriculture minister Gerry Ritz, noted Wednesday each member of the U.S. Senate has received a letter from about 250 U.S. companies and trade associations supporting Canada’s stance on COOL.

Ritz urged Trade Minister Chrystia Freeland to “immediately identify the first U.S. goods Canada intends to impose retaliatory measure on, and keep pressure on the U.S. Senate until they repeal COOL.”

The Tories, while in government, drafted Canada’s shortlist of proposed retaliatory tariffs, aimed mainly at U.S. live cattle and hogs and fresh and frozen beef and pork products.

The list also called for tariffs on U.S. cereal, bread, pasta, frozen potatoes, frozen orange juice, wine, cheese, cocoa, apples, cherries, fowl, maple syrup, ketchup, sugars, glucose and fructose and some other food- and non-food-related wares.

The U.S. House of Representatives in June passed a bill calling for COOL to be repealed.

The Tories’ agriculture critic Chris Warkentin on Wednesday also called on Agriculture Minister Lawrence MacAulay to “stop waiting for U.S. inaction and start taking action on behalf of Canadian farmers and ranchers to end these blatantly protectionist rules.”

— Reporting for Reuters by Leah Schnurr in Ottawa. Includes files from AGCanada.com Network staff.

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An arbitration panel of the WTO’s Dispute Settlement Body (DSB) ruled Monday that Canada and Mexico may now ask the DSB to authorize annual retaliatory tariffs, worth C$1.055 billion and US$227.76 million respectively, against specified U.S. goods.

The DSB’s arbitrators ruled those amounts to equal the “annual level of nullification or impairment of benefits accruing” to Canada and Mexico as a result of the COOL measure’s impacts on Canadian and Mexican livestock and meat exports to the U.S.

The amount comes in well below the C$3.068 billion and US$653 million Canada and Mexico had originally sought in annual retaliation — amounts the U.S. government disputed at an arbitration panel hearing in September.

The U.S. government had challenged Canada’s and Mexico’s inclusion of “domestic price suppression” in the two countries’ calculations of COOL-related losses.

The panel disagreed with Canada’s and Mexico’s suggestions that “nullification or impairment of benefits” refer to “any adverse effects resulting from the violation of the national treatment obligations at issue.”

“As we see it, the right in question is for imported products not to receive less favourable treatment than domestic products; the extent to which the advantage flowing from the right has been diminished is a separate question from what that right is,” the panel wrote Monday.

Furthermore, the panel said, the WTO’s Subsidies and Countervailing Measures (SCM) Agreement “explicitly distinguishes such domestic price suppression effects from nullification or impairment” laid out in the 1994 General Agreement on Tariffs and Trade (GATT) on which the WTO rules are based.

Also, the panel wrote, while it’s “readily conceivable” that trade losses from a violation such as COOL would have corresponding domestic market impacts, that doesn’t not mean all such losses could or should be rebalanced via suspension of trade concessions.

Besides, the panel said, allowing those losses when determining the “net loss” suffered in the domestic market would raise a whole other question: How would one account for suppressed prices’ benefits to “downstream consumers” in the domestic market?

“No compromise”

All that said, Canada’s livestock and meat sector groups said Monday they welcome the arbitation panel’s ruling “with great satisfaction.”

“Our patience is exhausted,” the groups, including the Canadian Cattlemen’s Association, Canadian Pork Council, National Cattle Feeders’ Association and Canadian Meat Council, said in a joint statement Monday. “There is no further negotiation to be done and no compromise is acceptable.”

Canada’s producers and processors, they said, “expect the U.S. to do nothing less than repeal COOL or face the immediate imposition of retaliatory tariffs on U.S. goods to the same extent as the damage we have endured.”

Federal Agriculture Minister Lawrence MacAulay and Trade Minister Chrystia Freeland, in a separate statement Monday, said if the U.S. Senate doesn’t take “immediate action” to repeal COOL for beef and pork, following the lead of the U.S. House of Representatives in June, Canada “will quickly take steps to retaliate.”

In the meantime, they said, Canada “continues to work with our partners in the U.S., and in the U.S. Senate, to urge the full repeal of the discriminatory COOL policy for beef and pork.”

The U.S. National Grain and Feed Association (NGFA) on Monday reiterated its call for a “full repeal” of COOL in the U.S. Congress, as the “most direct, certain and expeditious way to prevent the adverse economic impact that imposition of Canadian and Mexican sanctions would have on other segments of the U.S. economy, including many grain- and animal-based products.”

The Washington-based NGFA on Monday noted its support of the bill passed in the House of Representatives in June, and of “identical” legislation now being sought by Sen. Pat Roberts, chair of the U.S. Senate’s agriculture committee.

“It is important that the U.S. adhere to its WTO obligations and set an example for the rest of the world, particularly as it pursues significant new trade accords under the Trans-Pacific Partnership and other initiatives,” NGFA president Randy Gordon said.

“A full repeal of COOL is the only policy option available that unquestionably would prevent imposition of sanctions and the economic damage that would result.”

At a U.S. Senate ag committee hearing on COOL retaliation in June, Roberts, a Kansas Republican, warned that “I must emphasize to my colleagues and all of agriculture that retaliation is fast approaching and the responsibility sits squarely on our shoulders to avoid it.”

Targets

Passed by the U.S. government in 2008 and implemented in 2009, mandatory COOL requires country-of-origin labelling for beef, pork, lamb, chicken and goat meat, and certain perishable commodities sold at retail outlets in the U.S.

Since then, the Canadian livestock and meat groups said Monday, cumulative losses for Canada’s beef and pork sectors have been “staggering” as U.S. buyers discount the Canadian product to recover the cost of segregating imports, or reject the Canadian product entirely.

In every challenge Canada and Mexico has since mounted at the WTO, the international trade body’s dispute panels and appeal panels have “repeatedly found that the U.S. is in breach of its WTO obligations,” the Canadian groups said.

The only revision the U.S. made, after losing at the WTO Apellate Body in 2013, “increased the negative impact on Canadian farmers and meat processors,” by requiring even more specific information on the labels, they noted.

Canada’s shortlist of proposed retaliatory tariffs, drafted by the previous Conservative government, targets U.S. live cattle and hogs and fresh and frozen beef and pork products.

It also calls for tariffs on U.S. cereal, bread, pasta, frozen potatoes, frozen orange juice, wine, cheese, cocoa, apples, cherries, fowl, maple syrup, ketchup, sugars, glucose and fructose and some other food- and non-food-related wares.

The products on Canada’s retaliation list target the constituents of U.S. legislators who support mandatory COOL, Saskatchewan Agriculture Minister Lyle Stewart noted in a separate release Monday.

“We are confident that these retaliatory tariffs will demonstrate to the U.S. that Canada is not backing down when it comes to discriminatory COOL requirements,” he said. “COOL benefits neither U.S. producers nor consumers and it costs the Canadian and U.S. economies billions of dollars every year. It needs to be immediately repealed.” — AGCanada.com Network

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