A World Trade Organization arbitrator has ordered the United States to change its country-of-origin labelling rules by May 23, or else.
However, since few expect the Americans to comply in time, what “or else” means becomes a key question.
The likely outcome is months more of WTO compliance hearings after May 23.
More than a year ago, a WTO trade dispute panel initiated by Canada with the support of 14 other countries, ruled that COOL was a protectionist policy and not consumer education as the U.S. claimed.
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With no movement on the issue from the United States, Canada requested arbitration and on Dec. 4, the WTO ordered May 23 implementation of changes.
“We expect that the U.S. will bring itself into compliance with its WTO obligations by May 2013 as determined by the arbitrator for the benefit of producers on both sides of the border,” Canadian agriculture minister Gerry Ritz and trade minister Ed Fast said in a Dec. 4 statement.
Canadian Cattlemen’s Association president Martin Unrau from Manitoba said the CCA would continue to work with “its U.S. allies and counterparts to develop a solution that eliminates the discrimination of Canadian cattle in the U.S. market.”
But with some American cattle lobbyists pushing Congress for regulatory changes rather than a change to designate all animals processed in a federal U.S. plant as a “product of the U.S.A.” no matter where the animal came from, there was skepticism on both sides of the border that real change is in the works.
In Calgary, CCA executive vice-president Dennis Laycraft said a portion of the American agricultural lobby wants “a regulatory fix that would make the rules more difficult versus the mainstream groups that would like to get rid of the discrimination.”
The new U.S. Congress does not convene until January and its political divisions signal that any agreement on contentious issues such as COOL will be difficult.
President Barack Obama has yet to indicate whether it is an issue the White House is willing to take on.
However, if the U.S. fails to comply on time, Canada’s option is to take it to a compliance panel that would drag out the already lengthy WTO process. If Canada can convince the panel that the U.S. is not in compliance with a ruling, “that is the path that ends up in retaliation and duties,” said Laycraft.
In Ottawa, Liberal trade critic Wayne Easter, a veteran of Canada-U.S. trade disputes, said there is little chance Washington will comply.
“I’m very doubtful,” he said. “It doesn’t look like they will fully comply and then what do we do? Applying tariffs is an option we would have to seriously consider.”
However, trade watchers warned against triggering a trade war even though COOL has been blamed for causing Canadian livestock and pork industries hundreds of millions of dollars in lost revenue because many U.S. slaughter and processing plants do not want to take Canadian animals or if they do, discount their price because of added labelling costs and consumer reaction.
Still, Canadian officials called the ruling by arbitrator Giorgio Sacerdoti a win because the U.S. had argued for a much longer compliance period.
