Long road to COOL resolution

Wednesday, April 29, 2009

© AgMedia Inc.

by BETTER FARMING STAFF

Canadian and Ontario livestock commodity organizations applaud the federal government’s intention to take concerns about the United States’ country of origin labelling regulations to the World Trade Organization but warn it could be months, if not years, before the action is resolved.

In the meantime the regulations, which went into effect March 16, and U.S. Agriculture Secretary Tom Vilsack’s related voluntary requirements, are costing Canada’s hog industry at least $4 million a week, says Martin Rice, executive director of the Canadian Pork Council.

Feeder exports to the United States have dropped 40 per cent and slaughter hogs exports 70 per cent, he says, with the regulations responsible for about half of the decline in an industry shrinking because of low prices. All of the major U.S. hog processors, with the exception of Tyson, plan to eliminate Canadian hogs from their operations.

Rice projects steep declines in Canadian exports: feeder pigs plummeting to 4 million and slaughter hogs to 700,000 in 2009 compared to 7 million and 2.3 million, respectively, in 2008.

Ontario’s producers generate a “sizable amount” of feeder pigs for export and are experiencing sale losses, he says, adding the back up animals on this side of the border and Canada’s lack of slaughter capacity is weakening the domestic market.

Rice says the industry knew the U.S. regulations would affect export numbers. Vilsack’s voluntary requirements are causing more problems. They call for stricter and more detailed country of origin labelling than required by the regulations, including applying these to processed meats, and compliance audits.

John Masswohl, Canadian Cattlemen’s Association director of government and international trade relations, says the two U.S. processors Ontario producers most often deal with have accepted Canadian cattle since the final regulations came into effect. One of the plants had previously refused the cattle for a short period of time.

But the voluntary requirements are generating confusion in the industry, he says, pointing out that Vilsack’s letter, issued in February, extends labelling protocols to the process meat trade, which is exempt under the regulations.
 
Masswohl says Canada’s first steps in a World Trade Organization challenge - consultations with the United States - may help to clarify the letter’s terms and ultimately resolve the situation. If not, it could take at least a year to obtain a ruling and the federal government has yet to launch a formal action.

Canada launched an action in December but suspended it after the United States revised the regulations. On Monday, after meeting with U.S. Trade Representative Ron Kirk, International Trade Minister Stockwell Day announced Canada’s intentions to resume a trade action.

Rice calls the federal action “necessary” but emphasizes the regulations need fixing now. He says U.S. processors facing problems with sustaining production volumes could provide their government with the incentive to make change.

“There is some speculation by U.S. analysts that COOL will result in one or more plants having to close,” he says. BF