Don’t hold your breath in hopes Washington will amend its country-of-origin labelling law (COOL) by the May 23 deadline ordered by the World Trade Organization, says the Canadian Cattlemen’s Association.
“The U.S. government could still pull a rabbit out of its hat and actually change the COOL regulations, but I don’t think it will,” said John Masswohl, the association’s director of government and international relations.
The WTO ruling, which found the law discriminatory, was hailed as an important victory for Canadian cattle producers, but American lawmakers have been been preoccupied with issues such as the ‘fiscal cliff,’ he said.
“As far as we are concerned, the only way the U.S. government can comply with the WTO ruling is if it removes this legislation,” said Masswohl, noting that no such legislation is currently in the process of being passed.
“Essentially the polarized politics in Washington has blocked needed work on that country’s effort to comply with the WTO ruling.”
Individuals and groups that like COOL the way it is are arguing a regulatory change is all that’s needed, he said.
“However, some of the proposals from these individuals would actually increase the burden of discrimination that already exists on imported livestock to the U.S.,” said Masswohl.
Agriculture Minister Gerry Ritz issued a statement March 8 saying the proposed changes will not bring the U.S. into compliance with its WTO obligations.
“Our government is extremely disappointed with the proposed regulatory changes put forward by the United States today with respect to country-of-origin labelling,” he said.
“The proposed changes will increase the discrimination against exports of cattle and hogs from Canada and increase damages to Canadian industry,” Ritz said.
“Our government will consider all options, including retaliatory measures, should the U.S. not achieve compliance by May 23, 2013, as mandated by the WTO.”
Trade expert Peter Clark said the U.S. proposal focuses on consumer information on meat cuts while barely acknowledging the WTO ruling in favour of Canada and Mexico. “It doesn’t begin to deal with the discrimination our producers are suffering. The U.S. is just trying to buy time and dodge complying with the WTO decision.” Even if the proposal is given the green light, it couldn’t be implemented by May 23 because of the steps involved in the U.S. rule-making process.
Maaswohl outlined two likely scenarios if the WTO deadline isn’t met.
“There is one in which the U.S. government does something that is not good enough to comply with the WTO compliance ruling and the other is that the U.S. government does nothing,” he said.
The latter is more likely, he said, which would force Canada and Mexico to go back to the WTO and request authority to slap retaliatory tariffs on U.S. products. That will raise the question of what level of retaliatory tariffs can be charged and on what products.
“I think beef and pork would have to be part of the process, given that those are the affected items,” Masswohl said. “I think there would also be a good chance of U.S. fruit and vegetables ending up on the list as well as non-agricultural products.”
Ottawa could also consider products from states that are home to senators and congressmen most opposed to complying with the WTO ruling.
But there are also American groups, including packers grappling with excess capacity, who have been hurt by the labelling law and want it gone, he said.
“When you make it more difficult for U.S. packing plants to acquire cattle, it is also more difficult for the U.S. feedlot sector to acquire feeder cattle,” Masswohl said.
Jobs at risk
An analysis commissioned by the cattlemen’s association and prepared by a leading American economist estimated 10,000 jobs would be at risk in the U.S. packing sector if Washington doesn’t comply with the WTO order.
“I think the split was about 6,200 jobs on the cattle side, and 3,800 on the pork side,” said Masswohl. “And that is not taking into account, people whose job it is to drive trucks, and all the affiliated services.
A third alternative would be for Washington to write a cheque to both Canada and Mexico to cover their losses, something it did with Brazil after losing a cotton dispute, he said.
Masswohl said his organization estimates COOL is costing Canadian cattle producers US$639 million a year and hog producers US$500 million annually.
But Martin Rice, executive director of the Canadian Pork Council, said the U.S. move would also anger that country’s livestock and meat industry because it will burden them with extra costs through extra record-keeping on the origin of any animals they purchase.
“If implemented, this proposal will degrade the competitiveness of the U.S. meat industry and undoubtedly result in the elimination of thousands of American jobs,” he added. It would only change meat-labelling rules and the definition of a retailer.
The pork and beef groups have been pushing Ottawa to be ready to retaliate if the U.S. doesn’t comply with the WTO decision by May 23.
They say Canada could impose tariffs on up to $1 billion in annual exports from the United States.