AIRDRIE, Alta. – The World Trade Organization has ruled in favour of Canada and Mexico in their complaint against the U.S. mandatory country-of-origin labelling legislation.
However, it is just the first step in getting the rule changed.
“While winning this case as soundly as we have is extremely gratifying, it is only a means to an end and not an end in itself,” said Canadian Cattlemen’s Association president Travis Toews.
Added agriculture minister Gerry Ritz: “While our work does not end here, it is a very vital step in the road to recovery.”
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The trade panel was unanimous in its decision, which was released in Geneva, Switzerland, Nov. 18.
The ruling supports Canada’s position that parts of the labelling law discriminate against cattle and hogs imported into the United States from Canada to the detriment of Canadian producers.
The CCA and the Canadian Pork Council argued COOL increased costs for U.S. companies that import Canadian animals and reduced the competiveness of Canadian livestock in the U.S. market. The WTO confirmed that COOL has had this effect.
The U.S. has 60 days to appeal the ruling, although negotiations to change the rule are possible.
The appellate body in Geneva may not be able to hear the case until next spring.
If there is an appeal and Canada wins, the U.S. will be given time to comply. Canada and Mexico could impose tariffs on American products if it doesn’t comply, but international trade minister Ed Fast said it is not expected to go that far.
“We are confident in the long run our relationship will remain sound.”
Toews said the ruling is not binding and tariffs are a last resort.
The three-year-old labelling law would have to be changed in the U.S. Congress, but Toews suggests only parts of the rule need to be adjusted.
“We do not seek the outright (repeal) of COOL. We only seek those regulatory and statutory changes that are necessary to eliminate the discrimination COOL has imposed to the comparative disadvantage of livestock imported into the U.S.,” he said.
A possible change might state that the country of origin would be dictated by where the animal is processed.
“We think the substantial transformation fix would be appropriate, but if there is another fix that removes the requirement to segregate, then we would expect that would be a sufficient solution as well,” said Toews.
The law forced American processors to segregate imported livestock at the plants and keep the meat separate so it could be traced and labelled by country of origin.
The costs were ultimately passed to producers.
Key findings of the panel:
•COOL violates article 2.1 of the Agreement on Technical Barriers to Trade (TBT), by giving less favourable treatment to imported livestock than domestic livestock. The COOL requirement that meat and livestock are segregated according to origin creates an incentive to purchase U.S. livestock as the least expensive route to compliance.
•COOL also violates Article 2.2 of the TBT Agreement. COOL failed to fulfill the U.S. objective to provide consumer information. The panel did not consider whether there were less trade-restrictive means available to fulfill that objective.
•The so called “Vilsack letter” violated GATT Article X:3(a) because by setting out voluntary actions to be taken by interested parties that went beyond the Final Rule, the U.S. failed to administer its laws, regulations and decisions in a uniform, impartial, and reasonable manner. Further, the suggestions in the letter undermined the labelling requirements in the Final Rule and the language of the letter may have caused uncertainty and confusion in the industry.
