Canada is gearing up to retaliate against the United States after its third victory in the ongoing country-of-origin labelling dispute.
“We will target everything from California wine to Minnesota mattresses, not to mention the over $2 billion in U.S. beef and pork sales to Canada,” said federal agriculture minister Gerry Ritz.
The World Trade Organization ruled that U.S. amendments to the COOL regulation continue to discriminate against live imports of cattle and hogs into the U.S. marketplace.
COOL was implemented in 2008. On May 23, 2013, the U.S. revised the regulation in an attempt to come into compliance with the WTO.
Canadian livestock and meat producers said the amendments only made matters worse and the WTO agreed.
The third WTO victory for Canada paves the way for retaliation against the U.S., although that will not happen immediately.
The U.S. has 30 days to appeal the decision, during which Canada will be very vocal about how it intends to punish the U.S. for its transgressions.
“We will use the same time frame to completely lay out, state-by-state, legislator-by-legislator, what it’s going to cost them as they move into their next election cycle,” Ritz told reporters.
Canada has identified 32 products that could face retaliatory measures, but it can’t take action until the appeal process has run its course.
“While we fully expect the Americans to appeal again, they must be fully aware that Canada will not blink on COOL,” said Ritz.
Dave Solverson, president of the Canadian Cattlemen’s Association, said COOL is costing the Canadian cattle and hog sectors an estimated $1.1 billion annually.
“Until COOL comes into compliance with the WTO, the CCA will continue to insist that the Government of Canada prepare to impose prohibitively high tariffs on key U.S. exports to Canada, including beef,” he said.
Solverson applauded Ritz and his colleagues in Ottawa for standing up to the Americans.
“We’re very appreciative of the fact that you’re not about to blink,” he said.
Jurgen Preugschas, past-chair of the Canadian Pork Council, said his industry has been fighting the punitive regulation at the WTO since 2009.
“The costs and damage to Canadian hog producers since then have been over $2.5 billion,” he said.
“That doesn’t include the personal hardships that outweigh the financial damage.”
The hog industry has downsized by an estimated 25 percent as the basis between U.S. and Canadian hog prices has widened.
Preugschas said it is time Washington stopped stalling and came up with a legislated solution to the problem.
“Enough is enough. Further delays would be in bad faith, a very poor way to treat a friend and a neighbour,” he said.
However, like Ritz, he fully expects the Americans to appeal the WTO compliance panel ruling.
“When they lose that, which they will, then we can move the process further if they don’t fix it,” he said.
The WTO needs to determine the value of retaliation before Canada and Mexico can take action.
“We’re probably just about a year away,” said Preugschas.
Ritz said the U.S. could avoid retaliatory measures by scrapping the COOL legislation. That is the preferred course of action.
“We want to see a full repeal. We’re not going to wait, looking over our shoulder in the years to come for the next shoes to drop,” he said.
“We don’t want to go the retaliatory route, but we certainly will should it be forced upon us.”
Ritz said there are signs that the political winds are changing south of the border, noting that 120 U.S. senators and members of the House of Representatives recently signed a COOL appeal that the U.S. livestock industry is pushing through the U.S. court system.
“There is a growing awakening, if you will, across party lines that this is not good trade policy,” he said.
The chair of the U.S. House committee on appropriations has expressed his willingness to work with Canada on finding a solution to the problem. He is a member of Congress from Kentucky and is worried about Canadian reprisals against bourbon.
“These folks are taking it personally now and we expect to see some of that pressure come to bear very soon,” said Ritz.