U.S. beef and pork sector at ‘grave risk’ if 
Canada and Mexico choose to retaliate
An analyst thinks there’s a chance Canada’s dispute with the United States over country-of-origin labelling could end sooner than many expect.
As well, alarm is growing south of the border about Canadian trade retaliation if COOL problems are not fixed.
“It could be far closer to the back-end (of the dispute). You’re almost done, perhaps,” said Al Mussell of the George Morris Centre in Guelph, Ont.
Mussell said the U.S. Department of Agriculture’s proposed amendments to COOL rules seem provocatively discriminatory against Canadian and Mexican livestock, but this might simply be the U.S. “playing for time” as a new U.S. trade representative is appointed. As well, the amendments may never be enacted if enough U.S. interests complain.
Read Also
Mail strike disrupts grain sample delivery
The Canadian Grain Commission has asked farmers to consider delivering harvest samples directly to CGC offices, services centres or approved drop offs as Canada Post strike delays mail.
He said it’s too early to assume the COOL situation will get worse, that Canada won’t eventually win its battle and that the industry has a poor future.
“We don’t know what’s really going on in the U.S.,” Mussell said.
The amendments to the COOL labelling rules have to be in place by May 23 for the U.S. to be able to claim it has altered COOL to comply with the World Trade Organization. If the U.S. does not alter COOL by then, Canada and Mexico can immediately apply to the WTO to approve retaliatory measures against U.S. products.
However, the amendments themselves would bring even more WTO action and dispute because almost everyone sees them as even more trade discriminatory.
“Nobody believes that what they propose is truly in compliance,” said Mussell.
The U.S. has much to lose if Canada receives permission to hit U.S. meat sales to Canada. Canada is the U.S.’s biggest buyer of beef, importing 467.2 million pounds worth $1.148 billion, or 21.2 percent of the overall value of U.S. beef exports in 2012, according to U.S. analysts Steve Meyer and Len Steiner.
Canada is the fourth-largest buyer of U.S. pork, with steadily rising imports hitting almost 600 million pounds in 2012. Many analysts and industry officials say that shows why the U.S. should desire a free flow of livestock and meat.
“Regardless of your opinion of the value or need for origin labelling, the goal here must be to avoid retaliatory tariffs on U.S. products,” Meyer and Steiner said in a March 13 commentary.
“Should the U.S. actions be deemed insufficient, Canada and Mexico will have great latitude in picking the retaliation targets, and U.S. beef and pork are logical choices,” they said.
“Any way you cut it, Canada and Mexico are critical for U.S. beef and pork shipments and in spite of, or perhaps because of, USDA’s proposed rule change, are at grave risk.”
Manitoba Pork Council general manager Andrew Dickson said U.S. pork sales to Canada are substantial, drawing farmer ire and making them a likely target.
“What’s really annoying is that the Americans have captured almost a third of the Canadian market,” said Dickson. “That’s because we have few barriers.”
The COOL dispute could last for months or years longer if the USDA digs in its heels and forces Mexico and Canada to fight their way through the entire process.
However, Mussell said he’s hopeful the department might fold as soon as the WTO rules that the U.S. has not complied with its demands. That hope is based on Canada’s response to a dairy dispute a few years ago.
In that situation, the U.S. complained about Canada protecting its domestic dairy market but allowing exports into foreign markets. The U.S. won an appeal to the WTO, but Canada responded by modifying its rules in a way that further annoyed the Americans.
Mussell said Canada quickly folded and abandoned its questionable actions when it was found to have failed to deal adequately with the original WTO ruling.
The same could happen here, and in general the U.S. administration likely understands that it doesn’t want to be playing too much into protectionist sentiments.
“It’s in their own interests that they comply. They’re a major exporter of a wide array of products,” he said.
“If everybody starts ignoring the WTO rules, the Americans will be the worst hit.”
