Attention is shifting to the Senate at press time as the last best hope for averting a potential estimated $3.7 billion in annual retaliatory tariffs against the U.S. imposed by Canada and Mexico. While the final monetary amount remains to be determined, tariffs have been authorized by the World Trade Organization (WTO) in response to U.S. mandatory country-of-origin labeling (COOL) requirements on retail sales of fresh beef and pork.
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Explore This IssueAugust/September 2015
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In June, the House of Representatives voted to repeal provisions of the U.S. COOL law by a vote of 300-131. The bill (HR 2393) removes COOL labeling requirements not only for beef and pork but also for ground beef and poultry, even though the original complaint did not involve chicken and WTO has ruled that origin labeling for ground beef was permissible. The Senate Agriculture Committee held a hearing on COOL in June but has not taken further action. Whether there are enough votes to pass repeal legislation in the Senate is doubtful, and sentiment seems to favor making COOL provisions voluntary. But unless legislation is enacted soon, the door remains open for retaliatory measures to be imposed as early as summer’s end.
In May, the WTO ruled for the fourth time in as many years that the U.S. COOL law, which requires retail label information specifying the country or countries where an animal was born, raised, and slaughtered, imposes a disproportionate burden on Canadian and Mexican livestock producers and processors. In essence, WTO said that COOL was discriminatory because live cattle and hogs imported from those countries must be segregated from U.S. herds, adding to production costs.
Canada is seeking more than $3 billion in annual compensatory tariffs and Mexico is seeking more than $653 million. Canada has indicated it would impose hefty import fees on a broad array of U.S.-made products. Previously issued lists included items from seemingly every state, including beef, soybeans, chocolate, ketchup, frozen orange juice, wine, apples, cherries, and even manufactured goods such as stainless steel pipes, chairs, and even mattresses. A complete list including tariffs from Canada is said to be forthcoming. Mexico has yet to finalize its list, “but we expect it to be just as damaging,” says Senate Agriculture Committee chairman Pat Roberts (R-KS). “The U.S. economy cannot tolerate such economic injury.”
In June, WTO agreed to a U.S. request for it to arbitrate Canada’s monetary claim based on the U.S. contention that the analysis of economic damages was flawed and excessive. (Mexico’s retaliation request contained technical errors and was to be revised and resubmitted, and the U.S. promised it would make a similar arbitration request to WTO afterwards.) Canada dismissed the U.S. arbitration request as a delaying tactic.
“In all previous rulings, the WTO has found Canada’s economic analysis regarding COOL to be robust,” said Gerry Ritz and Ed Fast, Canada’s ministers of agriculture and international trade, respectively. “The only way for the United States to avoid billions in retaliation by late summer is to ensure legislation repealing COOL passes the Senate and is signed by the President,” they said in a joint statement. WTO’s ruling regarding the economic value of the tariffs is expected by summer’s end.
COOL and Food Safety
Often overshadowed in the debate over high-stakes tariffs and trade retaliation is the extent to which COOL’s labeling requirement actually supports food safety or enhances consumer choice. Those supporting the law’s repeal, including some meat producers, ranchers, produce groups, and others, claim COOL was never intended to foster food safety.
“Everyone knows this is not about food safety. It’s an issue of marketing, and that should be decided in the marketplace,” says Barry Carpenter, president and CEO, North American Meat Institute. “We hope the Senate will move quickly to vote for repeal so the president can sign the bill and put this failed experiment behind us.”