US buys time over COOL

Thursday, June 18, 2015

by JIM ALGIE

Arbitration in the long dispute over U.S. Country of Origin labels (COOL) could produce active, retaliatory tariffs against selected American exports to Canada and Mexico within two months, predicts John Masswohl, Canadian Cattlemen’s Association government and international relations director.

However, a U.S. request for arbitration during a WTO dispute panel hearing in Geneva, Wednesday, also buys more time for a legislative solution to the problem that could eliminate claims for retribution, Masswohl said in an interview Wednesday.

Canadian Agriculture Minister Gerry Ritz and International Trade Minister Ed Fast expressed disappointment in the U.S. decision they said “is attempting to prolong the WTO process.”  In a joint statement, Wednesday, the ministers defended Canadian estimates of damage to Canadian cattle and hog suppliers to U.S. markets at $3 billion annually.

After seven years of appeals by Canada and Mexico and four separate rulings, all of which have gone against the United States, a WTO compliance panel ruled in May that U.S. law is contrary to international trade agreements because it discriminates unfairly against imported product.  The U.S. House of Representatives has since voted to repeal the labelling law, and a repeal would extinguish retaliation claims. For the move to become law, however, it must obtain similar support in a Senate vote and the signature of President Barack Obama.

Ritz and Fast insist the United States is “out of options” and that “retaliation cannot be avoided by drawing out this process.” Canada’s damage estimate relies on analysis by the distinguished University of California agricultural economist Daniel Sumner.

“Our government’s position remains unchanged,” the Ritz/Fast statement says. “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.”

Mexico recently increased its sanctions request to $713 million, a story this week on the website of the Minneapolis-based farm paper Feedstuffs said. It quotes trade official Ken Smith Ramos of the Mexican embassy to the United States to say Mexican officials will target retaliatory tariffs against American exports from U.S. Congressional districts represented by legislators who favour the existing law.

Masswohl said the U.S. arbitration request came as no surprise.

“We would have been shocked if they had not requested arbitration,” the Canadian cattlemen’s spokesman said. Failure to seek arbitration would have led to immediate authorization of retaliatory tariffs.

Following Wednesday’s hearing, the WTO will appoint a three-person arbitration panel, likely the same three people who issued the ruling in May, Masswohl said. He expects the panel to be formed soon and followed quickly with a date for an arbitration hearing, then, the final decision.

“It should be 60 days,” Masswohl said. “That’s the WTO standard,” he added.

“Once they issue a decision, that’s it; there’s no appeal,” Masswohl said. “If all these steps . . . go the way they should this could be Canada and Mexico being authorized to retaliate sometime in late August.”

However, there were also signs, Wednesday, of further legislative moves for repeal in the U.S. Senate. Pat Roberts, Senate agriculture committee chairman, announced a June 25 hearing “on COOL and trade retaliation: what is at stake for America's farmers, ranchers, businesses and consumers.”

A Republican senator representing Kansas, Roberts has praised the House repeal bill and is known to favour a similar bill for the Senate. The committee chairman also knows Senate approval may be hard to achieve, Masswohl said. Ranking Democrat Debbie Stabenow of Michigan has expressed support for some form of labeling to continue.

“Next week will hopefully help him and the committee figure out what they’re going to do and give folks a chance to get on the record,” Masswohl said of Roberts and his committee. With the WTO process expected to conclude by late August and the Senate’s traditional summer break in August, any legislative solution will have to happen by late July.

“Our view is if we have authorization to retaliate by late August and if it’s inconvenient for the Senate, if they’re not sitting; well, that’s just too bad,” the cattlemen’s spokesman said.

“We’ve waited long enough,” Masswohl said. BF