Protectionist: WTO hands down decision three on U.S. COOL legislation

Sunday, October 19, 2014

by SUSAN MANN

The World Trade Organization has hammered another nail in the coffin of the United States mandatory Country of Origin Labelling legislation after it again condemned the law in a ruling released today.

In an Oct. 20 prepared statement, Canadian government officials say the WTO Compliance Panel report confirms Canada’s long-standing view that the revised COOL law the Americans implemented last year after losing an earlier WTO panel decision is blatantly protectionist. It also fails to comply with the original WTO ruling against the American legislation, first introduced in 2008.

During a press conference today at the Beef Research Station in Saskatoon, Agriculture Minister Gerry Ritz says Canada and Mexico have challenged the American legislation at the WTO twice and “in both cases the panel found COOL to be off side. Today you can make that strike three.”

The Compliance Panel ruling “states in no uncertain terms that mandatory COOL even as amended unfairly discriminates against Canadian products,” Ritz notes. “We once again have a ruling from the highest trade court in the world that the Americans are in violation of their obligations as a member of the World Trade Organization.”

The Canadian beef and pork industries have a farmgate value of $11 billion annually while exports of those two products are worth more than $6 billion a year. But the American mandatory COOL “continues to put a significant dent in that performance. COOL is costing our beef and pork industries an industry-estimated $1 billion a year in price discounts, lost sales and added costs,” Ritz says. “COOL is a political solution to a problem that does not exist.”

Jurgen Preugschas, past chair of the Canadian Pork Council, says at the press conference the damage estimates don’t include the personal hardship for farmers that “outweigh the financial damage. That’s people that have lost their homes, lost their farms and gone into bankruptcy.”

Ritz says by refusing to address COOL, the United States administration is harming livestock producers and processors on both sides of the border.

The billion dollar a year estimate of damages is before the United States announced changes to COOL that Canadian livestock industry officials say is causing even more damage than the original COOL legislation. Dennis Laycraft, Canadian Cattlemen’s Association executive vice president, says in an interview they’re working on updating the damage numbers.

The WTO decision is “a very strong ruling in Canada’s and Mexico’s favour and we believe it certainly sets up the stage that hopefully U.S. law makers will start to look at this seriously,” Laycraft says.

The way to fix COOL is for American legislators to repeal the requirements for U.S. cattle and hog buyers to segregate imported livestock from U.S.-born animals. The law is “so prescriptive it really requires Congress to address it,” he notes.

Ritz says after losing a WTO decision for the third time, American legislators must act quickly “to remove the discrimination and costly segregation of our Canadian livestock.”

The Canadian government and its livestock industries have been clear in their resolve to ensure the situation is fixed using “any and all means at our disposal,” he says. The government has already drawn up and publicly released a list of retaliatory measures “intended to compensate for the damages caused by COOL.” The list includes everything from California wine to Minnesota mattresses along with the more than $2 billion in annual U.S. beef and pork sales in Canada.

The next step in the WTO process is the adoption of the Compliance Panel report at a meeting of the Dispute Settlement Body. Laycraft says the next meeting this would on the agenda is Nov. 18. The Canadian or Mexican government could ask for the report to be adopted at that November meeting or in December. When the report is adopted, the country that lost the ruling will typically ask for an appeal, he says, adding Canadian Cattlemen’s expects the United States will appeal the Compliance Panel’s ruling.

The appeal is the last step in the process before compensation would be offered or retaliatory duties would come into effect, Laycraft says. It would be late summer or early fall of 2015 before Canada and Mexico would be in a position to impose the retaliatory tariffs.

Ritz says their preference is for COOL to be resolved before retaliatory tariffs are implemented. BF