Amendments not made | Congress passed the farm bill retaining COOL which opens the door for Canada to impose tariffs
U.S. livestock groups and manufacturers fear punishing tariffs if the country-of-origin labelling law continues in its present form.
Hopes faded that the law could be changed in the 2014 U.S. farm bill when the House of Representatives passed the Agricultural Act of 2014 with a vote of 251 to 166. The Senate is also expected to pass it.
The National Cattlemen’s Beef Association said it was disappointed that Congress passed the bill without the requested amendments, which would have made the program compliant under World Trade Organization rules.
The NCBA, the National Pork Producers Council (NPPC) and the National Association of Manufacturers were urging politicians not to pass the bill until changes were made.
“We are also concerned the conference report does not address mandatory country-of-origin labelling to find a WTO-compliant resolution so our cattle producers are not left with retaliation from two of our largest export markets for U.S. beef,” NCBA president Scott George said in a statement Jan. 30.
A WTO appeal will be heard the week of Feb. 18 in Geneva to decide if the latest version of the COOL law is compliant. An appeal to that decision is also possible.
Canada and Mexico won the first challenge against the law in 2012 and threatened tariffs if changes were not made.
The U.S. Department of Agriculture did make changes, but the two countries claim they are worse than before.
Canada could be allowed to start imposing retaliatory tariffs by 2015. Mexico is also planning tariffs.
Canada could impose tariffs on U.S. products that include live animals, beef, pork, furniture, alcohol and spirits, baked goods and fruits. An arbiter will decide later in the year what may be included on the list and what level of duty may be applied.
“We have had a negative ruling at the WTO, and we are very concerned about our export markets,” said NPPC president Randy Spronk said in a teleconference call Jan. 28.
“Mexico is our No. 1 volume export market, and if they retaliate against us it will be costly,” he said.
“We are looking for a full repeal of the country-of-origin law.”
A 20 percent tariff that Mexico placed on 99 U.S. pork products when the United States violated trucking regulations cost the industry $2.4 billion.
Exports to Mexico fell ,and Canada filled in the gap.
“If country-of-origin isn’t fixed … pork producers like me will suffer, as will dozens of other U.S. businesses,” said Spronk.
The U.S. National Farmers Union and consumer groups support COOL, saying it offers more choice for consumers.
However, the NCBA worries that producers do not understand the full implications of forcing packers to handle more paperwork and segregate animals from the time they arrive at the plant until the final beef products are packed.
George said those added costs are passed back to cattle producers.
“Unfortunately, we have a number of producers in this country who do not understand the costs coming to them today,” he said.
“Some say it is only a packer problem. It is not a packer problem. It is a producer problem in the beef sector.”
George worries that more costs incurred at the processing level will force more feedlots and packers to close.
The costs come from setting aside scheduled slaughter dates for imported livestock, sorting and segregating carcasses and packages and increasing storage to keep the products separate.
It is estimated that COOL has cost the Canadian cattle industry $1 billion per year since 2008.
A Canadian Pork Council study placed the total export losses at nearly $2 billion by the end of 2012.