COOL victory at WTO requires more patience

Victory tastes sweet and in international matters, victory over the mighty United States is even sweeter.

Canada’s decisive win in its complaint against the American country-of-origin labelling rules proves the truth of its position that COOL discriminated against Canadian livestock exports, damaged market access and imposed expensive labelling and tracking systems on livestock destined for the U.S.

COOL became, in effect, a non-tariff trade barrier and the World Trade Organization, in its Nov. 18 ruling, recognized it as such.

Essentially, U.S. COOL rules dictate that only animals born, raised and slaughtered in America can carry the product of the U.S. label. That requires American processors to segregate imports from domestic stock, an expensive process that discourages them from buying Canadian product.

In the year after COOL was implemented in 2008, Canadian feeder cattle and hog exports dropped precipitously. Transport costs also increased when only a limited number of U.S. plants would accept Canadian animals.

In terms of hard numbers, U.S. Department of Agriculture figures show a steep drop in Canadian exports of slaughter cattle and hogs after 2008.

Canadian exports of cattle totalled 1,555,209 in 2008, dropped to 1,045,628 in 2009 and rose slightly to 1,055,215 in 2010. Canadian hog exports totalled 9,605,426 in 2008, dropped by more than three million in 2009 to 6,349,253 and dropped still further in 2010 to 5,769,319.

The Canadian Cattlemen’s Association estimates COOL cost producers $80 to $100 per animal at first, though costs dropped slightly later as rules became more flexible. For the hog sector, COOL brought about the demise of many Canadian hog operations.

With that kind of trade reduction and industry damage on record, worth millions of dollars in lost revenue, the WTO ruling is cause for celebration as the next step in a process that may eventually eliminate the damaging effects of COOL to the Canadian cattle and hog industries.

But that celebration must be polite and measured, as is typical of Canadians renowned for their manners, because this country remains reliant on the U.S. as a major export market for livestock and meat. It would be far better to arrive at amicable solutions than to gloat and take an uncompromising stance.

We cannot forget that COOL remains in effect until the U.S. decides a course of action. And it must do something, based on trade rules as well as the fact that Mexico and 12 other WTO member countries joined the challenge as third parties.

Industry watchers say it is likely to appeal the ruling, so relief from COOL may still be months and even years away. If it appeals and loses, Canada will have the option of imposing tariffs on American products. Or, the U.S. could change the rules surrounding COOL to make them acceptable under trade agreements.

The National Cattlemen’s Beef Association, the largest cattle group in the U.S., viewed the WTO ruling as proof that “COOL was not only a disservice to U.S. cattlemen and women but also contained far-reaching implications for two of the most important trade partners for U.S. agriculture.”

It urged the American government not to appeal, but instead to bring the U.S. into compliance with trade rules.

That important lobby group, plus the fact that the jobs of more than eight million Americans depend on trade with Canada, may carry some weight as the U.S. decides on tactics at a time when economic woes consume Americans.

For Canada, the trade dispute and COOL’s continuing damage amply demonstrate the need for this country to diversify its export markets. It is vital to the health of our livestock industries that provincial and national cattle organizations, along with provincial and federal governments, continue to develop more international markets and reduce dependence on our neighbours to the south.

Bruce Dyck, Terry Fries, Barb Glen, D’Arce McMillan and Joanne Paulson collaborate in the writing of Western Producer editorials.

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