Canada loses only $43.2 million and Mexico $47.6 million from the U.S. law that requires packages of beef and pork to say where the meat was born, raised and slaughtered. That’s what the United States argued in asking the WTO to reject massive penalties against it. Canada and Mexico, who fought the mandatory country-of-origin label (COOL) law for years, won a final WTO ruling in May that said it distorts cross-border trade in livestock. Canada asked WTO for permission to impose the equivalent of $2.4 billion (Canadian $3.1 billion) annually on U.S. goods ranging from wine and meat to mattresses and office furniture. Mexico asked for authority for $713 million in tariffs.
In a filing, the U.S. trade representative’s office says the requests are undermined by “fundamental legal errors” and “numerous flaws and erroneous assumptions” that result in “grossly inflated estimates” of the impact of COOL on them. For example, the U.S. says Canada and Mexico “each claim the potential for massive growth which, taken together, would expand U.S. livestock imports by 74 percent” if COOL was not in place.
U.S. calculations put the impact at much smaller amounts. Canadian exports of feeder pigs, slaughter hogs, feed calves and slaughter cattle would have been $43.2 million higher in 2014, and Mexico’s shipments of feeder calves would been $47.6 million larger, it said.
WTO has to determine the scope of damage as part of deciding what retaliation is appropriate.
U.S. meatpackers and grocers, joined by the largest U.S. cattle and hog groups, are pressing for immediate repeal of COOL for beef, pork and chicken to avert retaliation, but Congress cannot complete work on repeal before fall because of the August recess. Chicken was not part of the WTO case but the industry asked to be included in the repeal package.
The groups opposed COOL from the start as an expensive and time-consuming headache that would require extraordinary bookkeeping to document the source of every meat package in every supermarket. The WTO ruling was the best chance in years for opponents to eliminate COOL, which took effect in 2008.
While the House overwhelmingly passed a repeal package and Senate Agriculture chairman Pat Roberts has proposed outright repeal, a band of senators wants to combine repeal of mandatory labeling with creation of a voluntary label system for beef, pork and chicken. The senators say they control a majority of votes in the Agriculture Committee, which has jurisdiction over COOL.
“Canada and Mexico have been bullying Congress with their over-inflated claims of damages, but USTR’s latest filing proves that this trade intimidation is all bluster,” said Food and Water Watch, one of the consumer groups that say COOL satisfies a “right to know” the origin of food. Ranchers from the northern Plains support COOL as a way to distinguish U.S. meat from imports. The National Farmers Union says the Senate bill for voluntary labeling is a compromise and “the only path forward for food labeling.”
Beef and pork were lightning rods for Canada and Mexico, the two largest U.S. trading partners. But COOL applies to a large part of the U.S. diet – fruits and vegetables, seafood, lamb, goat, venison, peanuts, pecans, macadamia nuts and ginseng – without controversy.
The 47-page submission by USTR is available here.
The WTO page on COOL is available here.
The USDA homepage on COOL is available here.