Country of Origin Labeling (COOL) has been a hot policy topic for the past two decades, with voluntary and mandatory labeling being debated and discussed by Farm Bureaus at both the state and national levels. In the 2002 farm bill, the issue jumped to international debate when Congress included provisions mandating COOL for all U.S. commodities. Simply put, Country of Origin Labeling law meant just that: the label Product of The U.S.A. should be stamped on agricultural commodities and products raised and processed in the U.S. However, complications with beef and pork labeling raised by Canada and Mexico came before the World Trade Organization that claimed the U.S. labeling law and regulations for beef and pork were not compliant with WTO rules. After nearly six years of fighting, the WTO has made it clear that the international trade body agrees, effectively forcing the United States to make changes or face sanctioned retaliation by Canada and Mexico.
While discussions on how to address the problem began during the most recent farm bill debate, it was in the past few months that the House Agriculture Committee completed action to repeal those particular sections of COOL. The debate in the Senate continues.
“Right now we are watching for the white smoke to come out of the chimney at the WTO to see what they have decided about the level of trade retaliation,” said Dale Moore, executive director of Public Policy. “Canada filed retaliation, which, along with Mexico, means those countries have a combined $7.2 billion in retaliation. That means they can impose tariffs on up to $7 billion dollars, though we expect the WTO will determine a hopefully much lower number.” Moore, who was speaking at the workshop during the Montana Farm Bureau Convention in Missoula, said the real problem with retaliation by Canada and Mexico is that it won’t be just against beef and pork products, but they will retaliate against poultry, wine, other commodities and even non-agricultural items that are traded among the countries. “This creates a mess,” Moore said. “ This will put a big rift into the agricultural machine. Producers of other traded goods are not going to be happy with our beef and pork industries by trying to keep COOL in place even when it’s non-compliant.”
He says the WTO will make the determination in early December on what the figure for damage from COOL is. “They’re [Canada and Mexico] saying it should be higher than $6.5 billion. The United States is saying it should be a lot less. At some point, likely in mid to late December, Canada will start their retaliation.”
To stop retaliation, the House Agriculture Committee moved legislation through its chamber to repeal mandatory COOL for beef and pork. Moore noted the American Farm Bureau Federation supports this legislation because grassroots policy directs that U.S. COOL laws and regulations be in compliance with WTO rules. “The Senate hasn’t yet acted on the language and there is a bi-partisan pushback to a full repeal approach. Some of the northern central plains, along with northern tier senators from the Pacific to the Lakes oppose a full repeal, preferring a change to voluntary, but the structure and acceptance of a voluntary approach is not yet clear.”
Moore noted that a big part of the challenge is finding a solution other than repeal that Canada and Mexico will accept, adding that the United States has exhausted every appeal option to overturn the WTO rulings. “We’ve lost at every turn, including on a revised regulation issued by the USDA, a revision that the WTO said was a worse rule than before.”
Moore says that the U.S doesn’t have the leverage to make the Canadians work with them. “Keep in mind that what has been ruled out of compliance are the strict rules the USDA put in place to segregate live cattle and hogs, and beef and pork, from the countries of origin. Effectively, the segregation requirements suggested that some packers would need to have extensive procedures in place and even separate infrastructure, such as coolers, for U.S. and Canadian beef and entirely clean production lines when switching from processing U.S. to Canadian beef.”
Moore wanted to make sure Montana ranchers and farmers understood that American Farm Bureau supports COOL for all commodities, but reminded the grassroots members had also directed it has to be compliant with WTO rules. “Our goal is to get the current law in compliance and stop retaliation against U.S. farm and ranch commodities and products. Once we get that done, once we get Canada and Mexico pushed back in their chairs, we can begin work on how to best provide a voluntary COOL labeling program that works for our beef and pork producers,” he said.
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