Ag Policy Blog

Canada Threatens Tariffs Over U.S. COOL

By Chris Clayton , DTN Ag Policy Editor

Agriculture Secretary Tom Vilsack met Tuesday with Canadian Ag Minister Gerry Ritz about issues such as the U.S. country-of-origin labeling law, or COOL, as well as issues of moving goods across the border. Initial press reports from Canada reflected that those talks didn't go the way Ritz would have liked.

Canadian press reported the Canadian government now is prepared to impose $984 million a year in punitive tariffs over the COOL issue. Ritz said he was "extremely disappointed" with the U.S. actions on COOL and considered the Obama administration's labeling approach to be "wrong-headed."

The $984 million a year, ($1 billion in Canadian dollars) in damages comes from the Canadian argument that the country's producers have lost that much in value since the COOL rule went into effect in late 2008. No one has yet to challenge those arguments, despite the fact that the year also happens to coincide with the collapse of the global economy, a sharp decline in global trade and a spike in U.S. unemployment to more than 10% that would have also seemed to have had at least an equal effect on Canada's livestock markets compared to a law that tells people where their meat is produced.

Canada has been willing to pay for lawyers at the World Trade Organization to challenge COOL. Funds for marketing Canadian livestock and meat products in the U.S. have yet to materialize.

Canada and Mexico took the U.S. to task over its COOL rule, which led to a ruling from the trade body that the U.S. labels do discriminate against livestock from neighboring countries.

Meeting with members of the North American Agricultural Journalists on Monday, a Canadian reporter asked why the U.S. is unwilling to comply with the spirit of the trade ruling. Vilsack responded that USDA's proposed changes to the COOL rule provide an answer to the problem posed by the WTO ruling without eliminating the labels.

"Well, it's solving the problem the WTO presented to us," Vilsack said. "The WTO said that, 'It's OK for labeled to be affixed and it's OK for consumers to be informed, we just didn't like the way you did it.' And so we're going to try to do it in a way that answers any questions about where something may have been raised, where something may have been processed or slaughtered. In doing so, we're providing consumers information. And we think it's very consistent, not just with the spirit, but also with the legal requirements the WTO panel presented us. That's the reason we did it because we want to have good relations with everyone."

USDA stated the rule would modify labeling provisions for muscle cuts to require more information on where each of the production steps --- born, raised and slaughtered --- occurred. For instance, a steer born in Canada, but raised and slaughtered in the U.S. would be labeled effectively in that manner, "Born in Canada, Raised and Slaughtered in the United States."

For all domestic animals, the label would change from "Product of the U.S." to "Born, Raised and Slaughtered in the U.S."

Retailers and meatpackers also would be prevented from co-mingling muscle cuts from different countries in packaging. Currently, a label for multiple cuts of meat may state "Product of the United States, Mexico and Canada." Now, meat from animals from different countries will have to be segregated during processing to provide more accurate information.

The U.S. must have its new COOL rule in place by May 23 to meet the legal responsibilities handed down by the WTO. The comment period for the proposed changes ends Thursday.

National Farmers Union, a major advocate for COOL, issued a news release Tuesday citing a petition with more than 35,600 signatures backing USDA's changes to the COOL proposal. “The outpouring of support for COOL makes it clear that USDA is doing the right thing by proposing strengthened and more informative labels,” said Roger Johnson, president of NFU.

I can be found on Twitter @ChrisClaytonDTN.

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Philip Shaw 4/12/2013 | 5:59 AM CDT
Interesting re R Calf. In all my 27 years writing my column, R Calf never hesitates to write me regarding anything to do with Canadian cattle or beef going into the United States. However, I know there are many Americans that appreciate the supply of Canadian cattle that come into US feedlots and processors.
unknown writer 4/11/2013 | 7:22 PM CDT
I fed thousands of Canadian cattle and have been always pleased with performance and health. I wish R Calf would just back off and let us feed some cattle.
Philip Shaw 4/11/2013 | 10:02 AM CDT
Generally in Canada going to the WTO is a last resort, because we know we cannot win in any negotiations. In the case of COOL, our efforts fell on deaf ears from our American friends, which was not a surprise, the list is endless among a whole host of items which make up the largest trading relationship on earth. Of course this is a big issue on both sides of our border, Canadian cattle add capacity to many US processing plants and of course are seen as the enemy from some others. I disagree with the implications that the global slowdown and US economic issues had something to do with Canadian livestock slumping sales to the US. In my home community livestock is shipped to the US and was stopped cold, in many cases, other restraints were used at processor plants, and COOL was the flashpoint.
Minister Ritz will never impose punitive tariffs on our American friends. That's an end game, which makes no sense. He's simply trying to get noticed, but its not working as usual. In Canada we love our American friends, and these issues are common trade irritants among friends. At the end of the day, I'd be very surprised if the problems of COOL change for us. However, Canadians always will keep trying, and this one was a very big deal.