Supply issues mean America’s COOL attitude is starting to change

After years of trade squabbles and hours spent arguing in front of World Trade Organization tribunals, it looks as if the COOL tide might be starting to shift in the U.S.

Emphasis on “might,” because as Canadians well know our neighbours to the south have a mind of their own, making decisions that are not always expected or easy to predict.

The ongoing dispute over mandatory country-of-origin labelling is no exception.

In place since 2008, the American rule requires all producers and processors to identify where an animal is born, raised and slaughtered. The rules were tightened in 2013 after the WTO ordered the policy amended in July 2012 following a ruling that said the legislation violated international trade rules.

The tougher rules infuriated meat packers, farmers and government officials on both sides of the border, who had been hoping the WTO case would be enough to trigger COOL’s repeal.

Instead, the U.S. Department of Agriculture dug in its heels, insisting the policy as essential in helping to better educate consumers on where their food comes from.

Canada and Mexico disagree, arguing the rule is nothing more than a protectionist measure that discriminates against foreign meat products. Canadian industry estimates the rule is costing it $1 billion in losses annually.

Agriculture minister Gerry Ritz has repeatedly said COOL is “a political solution to a problem that never existed.” Slews of Canadian politicians, lobbyists, farmers and packers have pushed hard for COOL’s end, with little luck.

The spat has landed itself in front of the WTO, twice, with the latest decision expected in September. While the WTO’s latest findings have been turned over to Canadian, Mexican and American officials, it has not been made public.

The ruling is likely to be appealed.

Despite this, in the United States efforts to end COOL appear to be gaining momentum.

In recent weeks, the U.S. Chamber of Commerce, and representatives for the U.S. manufacturing industry have called for the end of COOL. Their voices join those of a growing list of opponents, including the American Meat Institute, the American Association of Meat Processors, the National Beef Cattlemen’s Association and the National Pork Council.

Pressure is also rising on Capitol Hill, where sources say concern over Canadian retaliatory tariff threats and struggling packing plants is starting to creep into the political chatter.

American cattle herd numbers are at historic lows thanks to years of drought and high feed prices. Meanwhile, the U.S. pork industry is still reeling from the ongoing outbreak of porcine epidemic diarrhea that has killed more than eight million piglets since May 2013.

And, while packers in the past would have relied on Canadian and Mexican supply to keep their plants going, the stringent COOL rules are too costly to implement.

The result has been a flurry of closures, including plants in Texas, California, and Wisconsin.

Since January, six major American packing plants (four beef and two pork) have been forced to close their doors because of a lack of supply. More plant closures are likely if COOL isn’t repealed, Ritz warned at a recent meeting with beef producers in Charlottetown.

The policy, Ritz said, is effectively putting Americans out of work, situations U.S. officials are finding harder to ignore. With the U.S. jobs market still fragile, more shutdowns are the last thing American legislators want.

In a recent letter to U.S. agriculture secretary Tom Vilsack, more than a hundred American politicians from both parties warned the U.S. should be prepared to rescind COOL if the WTO finds it to be non-compliant.

The letter was signed by 112 members of Congress, including the chair of the subcommittee on livestock, rural development and credit, Rick Crawford, and the committee’s ranking member, Jim Costa.

If COOL is not repealed, “the resulting consequences could have a detrimental impact on our economy,” the letter warns.

Those consequences, Ritz has repeatedly said, include retaliatory tariffs on more than 30 U.S products like Californian wine, beef, and pork products.

Whether the shift, and the tariff threats, will be enough to change the USDA’s mind remains to be seen.

Still, it’s probably prompted a few more fingers to be tentatively crossed.

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