Canada has won a battle in an ongoing trade dispute with the United States over meat-labelling laws that have hurt the beef and pork industries.
The World Trade Organization released a ruling Monday that said U.S. country-of-origin labelling (COOL) rules discriminate against exports from Canada and Mexico.
The rules, which went into effect in 2008 and were updated last year, are blamed by the Canadian meat industry for reducing exports to the U.S. by half.
The WTO compliance panel said COOL breaks trade rules because it treats Canadian and Mexican livestock less favourably than U.S. livestock.
The panel said changes the U.S. made to the rules last year made the policy even more detrimental to livestock exporters.
“The compliance panel concluded that the amended COOL measure increases the original COOL measure’s detrimental impact on the competitive opportunities of imported livestock in the U.S. market,” the panel said.
“It necessitates increased segregation of meat and livestock in the U.S. market, entails a higher record-keeping burden and increases the original COOL measure’s incentive to choose domestic over imported livestock.”
The federal government hailed the ruling Monday and called on the United States to comply with the WTO decision.
“Today’s WTO compliance panel’s report reaffirms Canada’s long-standing view that the revised U.S. COOL measure is blatantly protectionist and fails to comply with the WTO’s original ruling against it,” Agriculture Minister Gerry Ritz said in a statement.
“The WTO’s clear and consistent findings in support of Canada’s position effectively supply a clear message to the U.S. — end this protectionist policy that creates economic harm on both sides of the border and comply with your international trade obligations.”
Ritz has said that he expects the U.S. may appeal the ruling before the trade battle is finally resolved.
“I think they will ride this right to the bottom politically,” he said. “It’s a political solution to a problem that doesn’t exist.”
Ritz noted that it’s the third time the WTO has ruled against COOL.
“This is their final strike. They only had three opportunities.”
COOL rules require all packaged meat to identify where the animal was born, raised and slaughtered.
Supporters of the law say it better informs U.S. consumers, while opponents argue that segregating animals and tracking them adds costs and violates free-trade agreements.
International Trade Minister Ed Fast has said the legislation undermines North American supply chains and costs the Canadian pork and beef industries about $1 billion a year.
Some U.S. companies have said they can’t afford to sort, label and store meat from Canada differently than meat from domestic animals.
Ritz has said the federal government would consider imposing retaliatory tariffs measures on some U.S. goods as early as next year if Washington doesn’t comply with WTO COOL rulings.
In June 2013 Ritz said along with beef the list could include cheese, apples, corn, maple syrup, chocolate, pasta, frozen orange juice, wine and spirits, jewelry and mattresses.
“It’s paramount that U.S. legislators act quickly,” he said.
The Canadian Pork Council welcomed Monday’s decision. Past chairman Jurgen Preugschas said there needs to be a legislative solution to end the segregation of Canadian and U.S. livestock.
“It’s high time for Washington to end the stalling,” said Preugschas, who added that the U.S. needs to respect its WTO obligations. “This decision by the compliance panel is very compelling.”
Dave Solverson, president of the Canadian Cattlemen’s Association, praised the WTO report and called on Ottawa to retaliate against the U.S. if Washington doesn’t change it’s policy.
He said the report leaves no shadow of a doubt that the legislation is causing discrimination against live imports of cattle and hogs into the U.S. marketplace.
“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.
American cattle producers were also quick to take note of the report.
Bob McCan, president of the National Cattlemen’s Beef Association, said the COOL policy has hurt some producers in the U.S., including suffering price discounts. He also noted the closure of some feedlots and packing plants.
McCan said the COOL ruling brings the U.S. a step closer to facing retaliatory tariffs. He said COOL is so flawed that it can’t be fixed.
“COOL is a failed program that will soon cost not only the beef industry, but the entire U.S. economy, with no corresponding benefit to consumers or producers,” he said from Texas.
“NCBA has maintained that there is no regulatory fix to bring COOL into compliance with our WTO obligations or that will satisfy our top trading partners.”