BANFF, Alta. — Officials in Canada and the United States are starting to fear a looming trade war if the U.S. fails to make satisfactory changes to its country of origin labelling law.
The U.S. Department of Agriculture submitted a proposal for change to the White House Office of Management and Budget on Feb. 7 but no one knows what it says, said John Masswohl of the Canadian Cattlemen’s Association.
The U.S. has until May 23 to comply with a World Trade Organization ruling to change the law or face retaliation.
“I don’t think there is really much of a chance they will have this thing implemented by May 23,” Masswohl said.
J.D. Alexander, past-president of the U.S.-based National Cattlemen’s Beef Association, said the fear that the U.S. could be hit with retaliatory tariffs if it fails to meet its WTO commitments is real.
“We are hoping it doesn’t come to that, but in reality that may be what is finally going to take place and make our trade representatives realize this isn’t a good deal,” he said in an interview at the Alberta beef industry conference in Banff Feb. 20-22.
He said the NCBA never favoured COOL.
“We didn’t think it was a good program. We recognize our two biggest trading partners for our product are Mexico and Canada so we at no time were in favour of COOL.”
The CCA argued that because country-of-origin labelling was implemented as law, only an amendment to legislation is acceptable.
Canada has long maintained that as long as cattle or hogs are processed in a U.S. federal or state inspected facility, then the meat should be eligible to labelled as product of the U.S.A.
There are a series of steps that must happen in the next three months.
The Office of Management and Budget has 60 days to assess the proposed changes and send them back to the USDA, where they may be reworked or published for public comment.
If the final change is not satisfactory to Canada and Mexico, they can go back to the WTO compliance panel. That meeting could be scheduled within several months to a year.
Or Canada and Mexico can go before the WTO and request authority to retaliate. If Canada and Mexico are allowed to retaliate, an arbitration process is set up to decide the amount of retaliation.
Canada says the impact has been worth $639 million on cattle per year and $500 million on hogs per year.
Proposals for potential targets for tariffs could be created. It is preferable to charge duties on finished products that go straight to consumers rather than raw materials or ingredients that might be further processed in Canada.
“Politically beef and pork are going to have to be on that,” Masswohl said.
He argues that the U.S. has delayed making the necessary changes to appease other groups like the National Farmers Union and R-CALF.
“We all know the true intent of this was to discriminate against Canadian imported livestock,” he said.
U.S. market analyst Steve Kay said the fight could last another year.
“(Mandatory country of origin labeling) supporters will fight tooth and nail to keep it,” he said.