“One of the great strengths of the U.S.-Canada bilateral relationship is the successful integration of our meat and livestock sectors,” the submission said.

The Canadian government made its submission June 9 as part of U.S. consultations on voluntary country of origin labeling (vCOOL) for U.S. meat, poultry and eggs.

The Biden administration proposed the rule in March in response to lobbying from U.S. ranchers, Reuters reported at the time. The rule would limit “Product of USA” and similar labels to products derived from animals that were born, raised and slaughtered in the U.S. However, it would not require products to carry an origin label.

Under current rules, animal products can be labelled as “Product of USA” if animals were processed in the U.S., even if they were born and raised elsewhere.

In 2022, total U.S.-Canada trade in live cattle, hogs, poults and chicks, hatching eggs, beef and pork was worth more than US$8 billion, according to the recent Canadian submission.

Canada has argued that supply chains operating under the proposed rules will have to segregate Canadian and U.S. animals and products. This would be costly and inefficient and discourage companies from using Canadian inputs.

A similar rationale led to the downfall of vCOOL’s mandatory predecessor, struck down in 2015 following a World Trade Organization challenge that ruled in favour of the complainants, Canada and Mexico.

The new proposed rule could also harm U.S. producers, the Canadian government said.

“For example, in recent years, there has been an increase in live cattle exports from the United States to Canada due to feedlot capacity expansion in Canada, higher processing volumes, and strong demand for beef,” the submission read.

“Under the new proposed rule, if an American rancher sends an animal to a Canadian feedlot, by virtue of availability, proximity, or economics, that is then sent back to the U.S. for slaughter and processing, that product would no longer be allowed to bear a ‘Product of USA’ claim.”

The rule also fails to account for supply-chain integration in border states and provinces, the submission claims. It would put undue pressure on processing facilities, especially small or medium-sized plants, to source American inputs when Canadian inputs are closer at hand.

The Canadian government requested that the U.S. “pauses and reconsiders the proposed rule in order to allow for consultations between Canadian and U.S. officials.” –– Manitoba Co-operator staff

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“While we, of course, support efforts related to truth in labelling for consumers, we are concerned about the potential real-world consequences of the proposed rule on the integrated Canada–U.S. supply chain for meat, livestock and producers of processed products,” Arun Alexander, Canada’s deputy ambassador to the U.S., said April 25.

Why it matters: Voluntary U.S. country of origin labelling rules for meat could be as bad as the former mandatory version was for the Canadian livestock industry, groups say.

The comments were made to members of the North American Agricultural Journalists who visited the Canadian embassy.

U.S.-regulated products from animals born, raised and slaughtered in another country, but which are “minimally processed” in the U.S., can currently be labeled as Product of U.S.A.

However, the U.S. Department of Agriculture says many Americans incorrectly believe those products are from animals born, raised and processed in the U.S.

On March 6, the USDA proposed a rule that would tighten that definition. The rule would see only animals born, raised and slaughtered in the U.S. labelled as a U.S. product, but labelling compliance would be voluntary. The proposal is open to public comment until June.

Canadian livestock industry officials say the rule would discriminate against Canadian hogs, pork, cattle and beef exported to the U.S., just as mandatory country of origin labelling (COOL) did in the mid-2010s. They argue that American processors will buy less Canadian livestock, or discount it, to avoid the expense of segregating non-American livestock.

“For Manitoba Pork, this is a concerning development,” said Cam Dahl, manager of Manitoba’s pork producer group.

“We ship three million weanling pigs to the U.S. every year. If these label changes go forward, we’re really concerned that those exports are going to be discounted.”

Tyler Fulton, past-president of the Manitoba Beef Producers and vice-president of the Canadian Cattle Association, is also worried.

“The fact that it is described as a voluntary rule is kind of beside the point,” he said. “If the implementation of it effectively makes it de facto mandatory because packers have all implemented it, and the effect is the same as the previous damage was to Canadian live cattle exports, then we’d go ahead and press the Canadian government to retaliate and change that.

“But more proactively, the Canadian Cattle Association is more than just watching it closely; we’re putting in comments during the consultation period before the June deadline. In fact, the CCA has meetings with the Americans to hopefully weigh in on the subject.”

The Canadian government estimated COOL cost Canada’s beef and pork industries about $1 billion per year between 2008 and 2015. The mandatory labelling rule was repealed Dec. 18, 2015, in the face of $1.1 billion in Canadian retaliatory tariffs approved by the World Trade Organization.

COOL required American processors to include animal birth and slaughter location on labels.

The CCA and the Canadian Pork Council spent close to $4 billion and $1 million, respectively, in legal fees fighting COOL.

To qualify for a Product of U.S.A. label today, the last major transformation of a package of meat needs to happen in the U.S., Dahl said. That means a young Manitoba pig exported to the U.S., where it’s fed to slaughter weight, processed and packaged, is eligible for the classification.

“That would not be the case if the proposed changes to the label take place,” he said. “If the proposed changes move ahead, the pork from this animal would be disqualified from Product of the U.S.A. because it was born in Canada.”

Part of Canada’s almost $70 billion in bilateral agricultural trade (as of 2022) is in live animals and processed meat and is highly integrated, benefitting farmers, processors and consumers in both Canada and the U.S., Alexander said.

His comments echo those of Marie-Claude Bibeau, federal agriculture minister, and May Ng, minister of international trade, export promotion, small business and economic development. The two issued a joint statement March 7.

Collaboration between the two countries “contributes to the growth and resilience of farmers and processors on both sides of the border,” the ministers said at the time. “It also allows us to ensure a reliable supply of high-quality products.”

Bibeau raised concerns about the proposed rule during an early May trip to Washington D.C.

“Canada will also oppose any mandatory COOL measure proposed by the U.S.,” said Jason Kung, a spokesperson from Global Affairs Canada, in an email May 8. “The WTO ruled in 2015 that mandatory COOL measures in the U.S. discriminated against Canadian exporters, and we expect the U.S. to continue abiding to this ruling and its WTO obligations, particularly during a time when food inflation is a major concern for many Canadian and American households.”

Ninety per cent of Canada’s population lives within two hours of the U.S. border and Canadian livestock play a role in many northern states, Alexander said.

“It also contributes to the administration’s goals around competitiveness for the sector. Small and medium-sized processing facilities are the ones that can least afford to segregate product,” he said.

“They also need to run at full capacity and Canadian inputs help ensure their success.

[Our] integrated supply chain reduces the need to truck live animals long distances. Moving animals a few hundred miles north to south along the Canada-U.S. border, as opposed to thousands of miles across the U.S., is better for the animals, the planet, and our wallets.

“We believe there are ways to work together to achieve the twin goals of improved truth in labelling for consumers, while also ensuring the continued integration of our supply chains to the mutual benefit of both American and Canadian ranchers, farmers, processors, retailers and consumers.”

American reporters asked how voluntary labelling, which many assume will be for niche markets akin to Angus Beef, would disrupt supply chains.

The niche assumption is wrong, according to Dahl. If consumers were willing to pay the extra cost to segregate livestock by country of origin, it would already exist, he said.

Costco is not a niche market and meat sold in Winnipeg Costcos now is labelled Product of the U.S.A., he said.

“So when this change comes forward, what is Costco going to do? Is it going to change its marketing and labelling, or are they just going to go to their suppliers and say ‘comply?’ My belief is it will be the latter… It really quickly doesn’t become voluntary if enough retailers like Costco take that stance,” Dahl said.

The Canadian government must take a stronger attitude, he added.

The North American Meat Institute, a U.S. lobby group representing beef, pork, lamb, veal and turkey packers and processors, also believes the proposed rule will result in discrimination against foreign livestock in the same way as mandatory COOL did.

North American cattle prices are strong, so the timing of the proposed rule is odd, Fulton said.

“That free and open flow [across the border] in the long run is the most efficient way, I think, for the North American industry,” he said. “[It’s] that free and open border that really creates the resilience in the supply chain that supports grassroots producers.

“We know that there are major disruptions regionally from time to time, in particular packing plants or due to extended drought, those types of things, and so, really, an open border allows greater resilience of the supply chain.”

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The U.S. Department of Agriculture and its Food Safety and Inspection Service (FSIS) on Monday announced they plan to publish a new proposed rule on U.S. meat origin labels for a 60-day public comment period.

USDA said in a release the new rule will offer “new regulatory requirements to better align the voluntary ‘Product of USA’ label claim with consumer understanding of what the claim means.”

USDA said Monday it undertook a review starting in July 2021 “to understand what the ‘Product of USA’ claim means to consumers and inform planned rulemaking.”

The department said it found in a related survey of U.S. consumers that “a significant portion believ(es) the claim means that the product was made from animals born, raised, slaughtered and processed in the United States.”

A “Product of USA” label claim would continue to be voluntary under the new rule, and would also still be eligible for “generic label approval” — meaning it would not need FSIS pre-approval before it could be used on regulated product.

However, the new rule would require that supporting documentation for so-labelled products be kept on file for FSIS personnel to verify.

Apart from the “authorized” label claims for ‘Product of USA’ or ‘Made in the USA,’ the rule also proposes to allow other voluntary U.S. origin claims seen on meat, poultry and egg products sold in the marketplace.

However, those other claims would need to include a description on the package of “all preparation and processing steps that occurred in the United States upon which the claim is made.”

Those other label claims are described as “qualified” claims. “Sliced and packaged in the United States, using imported pork” was given as an example of a qualified claim.

Currently, USDA said, FSIS-regulated products coming from animals that may have been born, raised and slaughtered in another country but are “minimally processed” in U.S. facilities may currently be labeled as ‘Product of USA.’

That policy, USDA said, “may be causing false impressions about the origin of FSIS-regulated products in the U.S. marketplace.”

“American consumers expect that when they buy a meat product at the grocery store, the claims they see on the label mean what they say,” U.S. Agriculture Secretary Tom Vilsack said Monday in the department’s release. “These proposed changes are intended to provide consumers with accurate information to make informed purchasing decisions.”

‘No evidence’

However, the North American Meat Institute, a U.S. lobby group representing beef, pork, lamb, veal and turkey packers and processors, said the proposed new rule “uses the same standard” as the mandatory COOL statute Washington repealed in 2015.

Mandatory COOL was first developed during the Clinton administration, passed near the end of the George W. Bush administration in 2008 and put in place during the Obama administration in 2009. It imposed mandatory origin labels for beef, pork, lamb, chicken and goat meat and certain other perishable commodities where sold at retail in the U.S.

Canada and Mexico responded by challenging COOL at the World Trade organization and in U.S. courts, because the COOL rules — as applied by Vilsack as the Obama administration’s ag secretary — called for U.S. processors of meat from imported animals to provide labels that detailed where the specific animals involved in a given package of meat were born, raised and slaughtered.

The costs involved in segregating animals and production lines to follow the COOL law prompted some U.S. packers and processors to restrict or halt their imports or cut the prices they paid for Canadian cattle and hogs. Some estimates at the time pegged Canadian cattle and hog producers’ losses to reduced prices and lost sales at over $8 billion.

Washington-based NAMI said the U.S. government “lost four times” against Canada and Mexico before the WTO in 2015 authorized those countries to levy over US$1 billion in retaliatory tariffs on U.S. goods if the COOL rule wasn’t withdrawn.

By comparison, the new rule announced this week would limit the use of voluntary ‘Product of USA’ claims, so that only products made from livestock born, raised, harvested and processed in the U.S. could be so labelled, NAMI said.

But such a rule, NAMI said, “will have a discriminatory effect, causing meat packers and processors who wish to make the claim to segregate cattle, hogs, and meat from other nations.”

That segregation “was the basis for the WTO finding and is what allows Canada and Mexico to levy tariffs on American goods,” NAMI said.

Canada and Mexico “still retain that (WTO) authorization” for retaliatory tariffs, NAMI said, and any new label law that uses the same standard as mandatory COOL would allow those countries to “initiate retaliation with no further action by the WTO.”

NAMI also claims the proposed new label rule would actually be “broader than mandatory COOL” because it would also cover processed products, and products intended for foodservice, none of which were subject to the COOL rule.

The lobby group emphasized consumer opinion and transparency are “important to the meat and poultry industry” but said “there is no evidence this rule will increase already high consumer demand for meat and poultry products.”

Also, while supporters of the former COOL and the proposed new rule “like to claim” mandatory COOL increased the prices U.S. beef producers received in the years before that rule’s repeal, “this assertion ignores basic supply and demand fundamentals,” NAMI said.

“In 2015, cattle prices saw record highs because there was a limited supply of cattle to harvest increasing demand. And today, without COOL, cattle prices are again approaching record highs, also due to supply and demand.”

The proposed new rule also “does not consider the integrated nature of the North American meat and poultry industry,” NAMI said. “Livestock and meat products from Canada and Mexico are shipped, tariff-free, across the border for slaughter and processing in the United States. Likewise, meat products are shipped from the United States to Canada and Mexico.”

That “integrated competitive market” allows for more affordable beef and pork for U.S. consumers, NAMI said.

“Unfortunately, this proposed rule is problematic for many reasons. USDA should have considered more than public sentiment on an issue that impacts international trade,” NAMI CEO Julie Anna Potts said in a release.

Will review

In a separate statement Tuesday, Canada’s Agriculture Minister Marie-Claude Bibeau and Trade Minister Mary Ng concurred that the Canadian and U.S. meat and livestock sectors are “highly integrated” and that collaboration “contributes to the growth and resilience of farmers and processors on both sides of the border.”

Canada “remains concerned about any measures that may cause disruptions to the integrated North American livestock supply chains,” they said, and will “closely review” the proposed new rules.

The ministers said the federal government will also “participate in the U.S. rule-making process” to make sure the new rules adhere to Washington’s international trade obligations and won’t disrupt supply chains.

Bibeau and Ng also emphasized the Canadian government remains “firmly opposed” to any U.S. proposition that would attempt to revive a mandatory COOL system.

According to Agriculture and Agri-Food Canada, language has also been included in the 2020 Canada-U.S.-Mexico Agreement (CUSMA) requiring that each party to the trade pact ensures any regulations on labeling “accord treatment no less favourable than that accorded to like goods of national origin.”

Any rules on labeling that any of the CUSMA free trade bloc members impose in the future also must “not create unnecessary obstacles to trade between the parties.”

All that said, separate legislation, which if passed would compel the U.S. Trade Representative’s office and USDA to come up with a new and WTO-compliant mandatory COOL system just for beef, has already been before Congress for months or more.

A bill introduced in the U.S. Senate in September 2021 by Senator John Thune of South Dakota was read twice in that chamber and referred to its agriculture, nutrition and forestry committee.

An identical bill introduced in the U.S. House of Representatives in late March last year by Texas Rep. Lance Gooden was referred at that time to the House ag committee, and to the House committee on ways and means. The ag committee last April 18 referred the bill to a House subcommittee on livestock and foreign agriculture. — Glacier FarmMedia Network

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That’s why increasing bipartisan talk on Capitol Hill to resurrect COOL (country-of-origin labelling) for U.S.-sold beef, has Canada’s meat sector on guard.

COOL is back in the headlines, seven years after a lengthy World Trade Organization (WTO) dispute saw the U.S. repeal mandatory COOL Dec. 18, 2015.

Why it matters: Canada’s cattle and hog industries say COOL cost billions in lost revenues between 2008 and 2015 and took years to get removed. The sector doesn’t want to have to fight that battle again.

COOL required American processors to include animal birth and slaughter location on labels and to therefore segregate non-American-born cattle and pigs. Canada and Mexico successfully argued that discriminated against their animals and added costs, contrary to trade rules.

The WTO authorized Canada to impose about $1.1 billion in retaliatory tariffs if the U.S. failed to terminate COOL.

The years-long fight eventually cost the Canadian Cattlemen’s Association and Canadian Pork Council close to $4 million and $1 million, respectively, in legal fees.

“To hear those discussions on COOL comeback is worrying,” Manitoba Pork Council general manager Cam Dahl said May 3. “I know right now the only term being talked about is beef, but I am hearing ‘beef’ and seeing ‘meat.’ I think, as livestock producers in Canada, we’re in the same boat on this and we need to take it very seriously. I am concerned. It’s something we need to be paying attention to and it’s something our government needs to be paying attention to.”

In addition to an attempted COOL revival, the Americans are fighting to get more access to Canada’s dairy market.

Back on the table

Tom Vilsack, U.S. President Joe Biden’s pick for agriculture secretary, brought COOL back into the limelight during his Senate confirmation hearing, Feb. 2, 2021.

“I’m happy to work with you and your staff on anything that would allow us to advance country-of-origin labelling,” he said during a back and forth with a Republican senator. “If there is a way to get WTO compliant, I would be more than happy to work with you, and look forward to that.

“I’m absolutely willing to listen to anybody and everybody who has an idea on how we can circumvent or get to a point where the WTO doesn’t slap it down, that creates retaliatory impacts on American agriculture.”

Last fall, the U.S. Senate introduced a bipartisan bill, S. 2716, to restore the word “beef” into labelling law under the U.S. Agricultural Marketing Act.

In March of this year, a similar bill, H.R. 7291, was introduced in the House of Representatives.

If enacted, it would give Vilsack and U.S. Trade Representative Katherine Tai up to 180 days to “determine a means of reinstating” mandatory COOL for beef in a way that’s “in compliance with all applicable rules of the World Trade Organization (WTO).”

Speaking at the North American Agricultural Journalists’ (NAAJ) meeting April 25, Vilsack acknowledged the WTO found in Canada’s favour on COOL. What’s being considered now is voluntary labelling for products of the United States, he said, adding that a survey will first see if consumers understand what “Product of U.S.A.” means.

Do consumers think it means everything connected to a pork chop or hamburger was done in the U.S.?

“We’re interested in knowing if individual consumers attach a value to that proposition,” Vilsack said. “In other words, are they interested in considering the possibility of paying a penny or a few more if they know the product is a product of the U.S.?”

Vilsack hopes survey results will be in by year’s end.

Consumers want to know where their food is from, Republican Glenn “GT” Thompson, the U.S. representative for Pennsylvania’s 15th congressional district and ranking member of the House agriculture committee, told the NAAJ meeting.

“And I don’t think there is anything in international, national or local law that prevents a producer from promoting where their meat or their milk or anything else comes from,” he said.

“Countries… have certain limitation rules that we have to live in, but if you’re a producer you take whatever marketing opportunity,” he said.

U.S. farmers are frustrated their products aren’t labelled, Republican Sen. John Boozman, the ranking member of the Senate agriculture committee, told the NAAJ meeting. He added, however, that labelling must be WTO compliant.

“I understand their (farmers’) concerns,” he said. “They want to make sure that their product is labelled accurately.”

From the other side of the political aisle, New Jersey Sen. Cory Booker, a Democrat and sponsor of S. 2716, said Americans ought to know where their food originates. His comments came during an April 26 Senate agriculture committee hearing on a bill to increase competition and price discovery among cattle packing plants.

“It is utter deception for American consumers that we don’t label products of the U.S.A. as Products of the U.S.A.,” he said. “You let Mexican cattle come into our country, be processed by these big multinational corporations as we label this as ‘Products of the United States of America.’ That is outrageous. That is lying to consumers. That is deceptive practices and it should end because it’s ultimately hurting American ranchers.”

Canadian response

Voluntary labelling is permitted under WTO rules, Dahl said.

“If it was something that was practical and demanded by consumers, we would be seeing more of it on store shelves, but we’re not because it is very costly,” he said. “That was our argument to the WTO — it was imposing significant restrictions and discriminating against Canada and Mexico. I think those costs are very real and that’s why you’re not seeing voluntary labelling adopted more than it is.”

Al Mussell, an agricultural economist with Agri-Food Economic Systems, is skeptical about voluntary labelling.

“It’s hard to see how this could achieve the objectives of the proponents of the bill and not be distorting,” he said. “The whole deal is to find a way to treat or position product of the U.S. better than product of somewhere else, including Canada. Fundamentally that violates GATT Article III, which deals with ‘like’ treatment. I am not sure how they engineer that (voluntary label).”

GATT (General Agreement on Tariffs and Trade) underpins many of the WTO’s rulings on international trade.

While COOL talk grows louder, Manitoba Beef Producers president Tyler Fulton said he’s relieved, since Canada has the right to retaliate with WTO-approved tariffs if a non-WTO-compliant COOL returns.

“It gives me comfort that there is no timeline for which our right to retaliate expires,” Fulton, also a farmer near Birtle, Man., said. “I think we are all better off if there is not conflict and we work together to ensure open and free trade of animals.”

The North American cattle, beef, hog and pork markets are integrated, he added.

“It is that open and free trade that allows for more efficiency allocation of available supplies, which at the end of the day makes our product more affordable to consumers,” he said.

Like Fulton, the Canadian Cattlemen’s Association (CCA) believes the WTO ruling, remains a deterrent.

“We continue to closely monitor any developments related to COOL,” said Fawn Jackson, director of CCA’s policy and international affairs. “We do remain concerned about any measures that may cause disruptions in the integrated North American meat industry…

“I think there is a large understanding of the value of trade between our two nations and the importance of that being able to continue.”

Warning signs

Some experts saw the possibility of COOL 2.0 before Vilsack’s return as agriculture secretary, a position he held during much of the Obama administration.

In a prescient paper published in December 2020, agricultural economists Ryan Cardwell of the University of Manitoba and William A. Kerr of the University of Saskatchewan wrote that candidate Biden’s “made in all of America” policy pledges could disrupt agri-food trade.

“There remains broad bipartisan support for resurrecting mandatory country-of-origin labelling (MCOOL) requirements for meat imports into the United States, which is the type of policy that a new administration could position under the ‘buy American’ banner,” the paper read. “Reviving MCOOL as a ‘buy American’ policy would be even more nakedly protectionist than the last time it was introduced, making such a move unlikely to hold up in a WTO dispute.”

But the paper also notes that it took more than seven years to get COOL repealed the first time, during which time Canadian exporters were injured.

“Further, the paralyzed state of dispute settlement at the WTO makes it unclear that future disputes will even be pursued,” the report said.

Mussell agrees.

“Without a functioning (WTO) appeals panel, the U.S. could potentially enact something, but it’s hard for me to see, particularly given the precedent and just the reality of GATT Article III, how it survives,” he said. “But then they (U.S.) could just turn around and appeal it to a body that doesn’t exist and just more or less carry on with it.”

Given all the other issues facing American legislators — high food prices, inflation and international food security — Mussell wonders if COOL might lose momentum.

Then again, he said, there’s not much political downside in the U.S. for supporting it.

“This is one of those weird issues where progressive Democrats and the Trump Republican types can agree,” he said. “Protectionism plays well with both audiences, and the dangerous place right now to be is in the middle.”

— With files from Alex Binkley, Dave Bedard and D.C. Fraser

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We might love them, most days. But sometimes we watch their antics, scratch our heads, and wonder what the heck they’re thinking.

And there aren’t a lot of issues being pursued through their political system that make less sense than the perennial push for mandatory country-of-origin labelling (COOL) on meat.

Right now, U.S. meat packers are allowed to import live cattle, process them and label the resulting meat a U.S. product. That’s in line with labelling laws in many other jurisdictions, including Canada. A 2013 WTO ruling struck down the original mandatory country-of-origin labelling as non-compliant with the U.S.’s trade obligations — eventually. It went a couple of rounds under the trade authority and was finally repealed in 2015.

But COOL is the thing that won’t die. Like Arnold Schwarzenegger’s cyborg-assassin Terminator character of cinema fame, you can shoot it, run a car over it, blow it up — you could probably even land a grand piano on its head — and it would still come back for more.

The answer to why it won’t die lays with the peculiar nature of U.S. politics, with its populist bent and outsized power granted to farm states through the Senate.

The chief proponents of COOL have been the members of R-CALF USA (Ranchers-Cattlemen Action Legal Fund United Stockgrowers of America), which bills itself as “Fighting for the independent U.S. cattle producer.” However, they appear to be largely a fringe group, with just 5,000 or so members, out of a total of more than 750,000 operations in the U.S. with beef cattle.

It doesn’t seem like anyone else in the cattle business wants it on the south side of the 49th. Prior to COOL being repealed to comply with the WTO ruling, everyone from the American Meat Institute to the U.S. National Cattlemen’s Beef Association (NCBA) were lined up against it. Those same groups continue to voice their opposition.

NCBA vice-president of government affairs, Ethan Lane, told U.S. media recently that COOL “… was not successful in generating additional revenues for producers… “ and he added that he doubted there was a way to make the proposed new regulations trade compliant.

So how can a small but vocal group throw a monkey wrench – repeatedly — into the inner workings of a continental beef market that features trade, flowing both directions, worth billions of dollars a year?

The answer to that question requires some pondering of the collective U.S. psyche and the myths they appear to believe about themselves.

One of the central tropes of their popular culture is the Old West, with cattle drives, land barons and gunfights on Main Street at high noon.

That makes the cattlemen of today the inheritors of a powerful pile of public goodwill, and they’re seen as sympathetic characters.

Then you have a general public that, like our own, is now very distanced from the country’s agrarian past. That makes them susceptible to pitches about hard-pressed small cattle operators going up against those nasty multinational meat companies bringing in foreign cattle.

And then, of course, there’s the appeal that “people have a right to know what they’re eating, and where it comes from.”

On its face, that seems like a reasonable argument. After all, who would argue that more information is a bad thing? The entire idea of a marketplace is that, ideally, an informed buyer meets an informed seller and a fair deal is struck.

But that assumes anyone actually wants this information, and it’s pretty clear nobody in the U.S. is truly crying out for it. Country-of-origin labelling is possible under the existing rules. But it appears not enough people want it that any of the major packers are interested in taking the plunge.

What’s important to most people, including U.S. consumers, seems to be a product that’s safe, healthy and was raised humanely and processed in a way that ensures food safety. Whether the animal was raised outside Medora, Man. or Medora, N.D., seems to largely be a non-issue for most consumers.

In fact, the status quo may provide a ready-made market niche for something many Americans have expressed interest in — more independent meat packers.

In a lot of ways, COOL seems like a solution in search of a problem. But that’s never stopped an enterprising politician from attempting to make some electoral hay.

Which means Canadian livestock producers may well find themselves, once again, side-swiped by U.S. politics.

Making sure that doesn’t happen is going to be a tall order, and a big part of Canada’s response should be getting ready for that day to come.

The NCBA spokesperson is probably right that making any mandatory COOL program trade compliant is a tall order.

We need to be ready to drop a WTO challenge the day it comes into effect.

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Rep. Lance Gooden, a Republican from Texas, and Rep. Ro Khanna, a Democrat from California, on Wednesday introduced H.R. 7291, proposing to restore the word “beef” into existing labeling law under the U.S. Agricultural Marketing Act.

The bill, if passed and enacted, would give U.S. Trade Representative Katherine Tai and U.S. Agriculture Secretary Tom Vilsack up to 180 days to “determine a means of reinstating” mandatory COOL for beef in a way that’s “in compliance with all applicable rules of the World Trade Organization (WTO).”

Tai and Vilsack would have up to a year from the date when the bill is enacted to “implement the means” to do so.

“American cattle ranchers are being undercut by foreign competition because current labeling standards allow imported beef to be marked as made in the United States if it is only packaged here,” Gooden said in a release Wednesday. “Our trade policies should promote American-made beef and put the hard-working cattle ranchers in the United States first.”

“It is critical that American consumers are able to make informed decisions about the meat they buy,” Khanna said in the same release. “Consumers should be able to know that they are truly supporting American farmers and ranchers from labels at the store.”

Groups including the U.S. Cattlemen’s Association and R-CALF USA also stated their support for the bill in Gooden’s release on Wednesday.

After its introduction Wednesday in the House of Representatives, the bill was referred to both the House agriculture committee and the House Ways and Means committee.

A nearly identical bipartisan bill, S. 2716, was introduced last fall in the U.S. Senate by Sen. John Thune, a Republican from South Dakota, and Sen. Cory Booker, a Democrat from New Jersey, among others.

That bill was introduced Sept. 13, read twice and referred that day to the Senate committee on agriculture, nutrition, and forestry and has yet to return.

Both of the bills specify restoring COOL for beef must be WTO-compliant, because beef was pulled from the relevant labeling legislation in 2015 after the WTO ruled that COOL violated the United States’ international trade obligations.

COOL was first developed during the Clinton administration, passed near the end of the George W. Bush administration in 2008 and implemented during the Obama administration in 2009. It imposed mandatory origin labels for beef, pork, lamb, chicken and goat meat and certain other perishable commodities where sold at retail in the U.S.

Canada and Mexico responded by challenging COOL at the WTO and in U.S. courts, because the COOL rules — as applied by Vilsack as the Obama administration’s ag secretary — called for U.S. processors of meat from imported animals to provide labels that detailed where the specific animals involved in a given package of meat were born, raised and slaughtered.

The costs involved in segregating animals and production lines to follow that label law prompted some U.S. packers and processors to restrict or halt their imports or cut the prices they paid for Canadian cattle and hogs. Some estimates pegged Canadian cattle and hog producers’ losses to reduced prices and lost sales at over $8 billion.

After the WTO’s 2015 ruling against COOL, the Obama administration repealed the label rules on beef and pork rather than face retaliatory tariffs from Canada and Mexico on U.S. goods.

Since then, according to Agriculture and Agri-Food Canada, language has also been included in the 2020 Canada-U.S.-Mexico Agreement (CUSMA) to require that each party ensures any regulations on labeling “accord treatment no less favourable than that accorded to like goods of national origin.”

Any rules on labeling that any of the CUSMA free trade bloc members impose in the future also must “not create unnecessary obstacles to trade between the parties.” — Glacier FarmMedia Network

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“It’s still hugely on our radar,” said Alberta Beef Producers chair Melanie Wowk. “When COOL was first instituted in 2003, it was costing us about $600 million a year, so I think you could say it strikes fear into the producers… ”

But six years ago, the World Trade Organization (WTO) ruled it was discriminatory and said Canada could impose retaliatory tariffs of $1.1 billion if the U.S. continued to demand mandatory country-of-origin labelling for beef and pork. Washington then repealed its labelling law, a move hailed by larger U.S. cattle organizations such as the National Cattlemen’s Beef Association, which said it hurt ranchers on both sides of the border.

But the fight rages on, with groups like R-CALF USA trying to bring back COOL, an effort that got some mild encouragement from Tom Vilsack when he was confirmed as U.S. agriculture secretary.

“I am absolutely willing to listen to anybody and everybody who’s got an idea about how we can circumvent or get to a point where the WTO doesn’t necessarily slap it down, creating retaliatory impacts on American agriculture,” said Vilsack, who held the same post in former president Barack Obama’s administration.

But while Canadian beef industry officials are keeping a close eye on these rumblings from south of the border, so far, they don’t see anything to worry about.

“It’s something that we work on in partnership with our counterparts in the U.S., and the conversations down there have been reflective of the fact that if country-of-origin labelling were to come back, it would have to be WTO compliant,” said Fawn Jackson, director of policy and international affairs for the Canadian Cattlemen’s Association.

Despite that, the conversation around mandatory COOL seems to re-emerge every few years. That is, in part, because country-of-origin labelling doesn’t seem so bad until you dig a little deeper.

“Consumers want to know more about their food, and perhaps this is a way to do that,” said Jackson. “But when you really dig into the complexities of COOL, you really understand that the implications that mandatory labelling would have would be significantly negative for North American farmers and ranchers.”

That’s because it requires American and Canadian cattle be segregated at processing plants with lots of followup paperwork. (The American Meat Institute pegged that cost at $2.5 billion annually.) When COOL was in force, processors opted to buy American cattle instead, making it harder for some small U.S. packers to source cattle and pushing down prices here.

“Half of our cattle goes south, and when that happened, it really reduced the amount of packer capacity for Canadian cattle,” said Wowk, who farms near Beauvallon.

“Prior to 2003, there were 16 processors in the U.S. that were accepting Canadian cattle five to six days a week. When COOL came in, that dropped down to just six processors, and five of them would only take Canadian cattle once a week.

“So our numbers dropped significantly, which meant our exports dropped, and it ended up costing us a lot of money.”

If the fight were to resume, it would be waged by the cattlemen’s association but funded by provincial checkoffs.

“It cost us close to $4 million in legal fees for this COOL fight that we won in 2015,” said Wowk.

But Jackson doesn’t anticipate a repeat.

“I think it’s well understood that Canada won the WTO case and that we’ve retained our retaliation rights, so I’m hopeful that we won’t have to walk down that road again,” she said. “But the impact was significant when it was in place, so we’ll continue to monitor it and have discussions to avoid that.”

That said, building more awareness of the benefits of international trade is needed, especially in a post-pandemic, shop-local world.

“We need to make sure that it’s not something only Canadians are aware of, but everyone around the globe, particularly post-COVID-19,” Jackson said. “There was this interest in looking at local food systems, but we really have to remember that there’s benefits to having a mix of local and international trade.”

But as a cattle producer, Wowk isn’t as convinced that mandatory country-of-origin labelling will stay on the shelf where it belongs.

“Never say never,” she said. “The U.S. is a big, powerful country with a lot of money and a lot of backing. We’re a smaller country. We don’t have the power that they do. We depend on them a lot for trade.

“COOL is making a lot of noise in the U.S. right now. If somehow, some way, they are able to get around the WTO ruling, it’s going to hit us hard again.”

Jennifer Blair is a reporter with the Alberta Farmer Express. Her article appeared in the June 28, 2021 issue.

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The new clause would, in theory, checkmate a move made last summer by some Democrat members of the U.S. House of Representatives to have a new North American free trade pact revive the COOL meat-labeling program the Obama administration halted in 2015.

The three countries signed off on revisions made to the 2018 CUSMA pact at a Dec. 10, 2019 ceremony in Mexico City. The House of Representatives on Dec. 19 passed the revised version of CUSMA by a 385-41 vote. The deal is now before the U.S. Senate for consideration.

The revised CUSMA, as passed in the House, does include several other changes that had been sought by the House’s Democrat majority in the year since the Trump administration reopened and secured changes to the 36-year-old NAFTA pact.

Mexico’s Senate has already approved the revised pact, which still must also pass Canada’s Parliament.

In a statement via email on Dec. 19, an Agriculture and Agri-Food Canada spokesperson said Ottawa “will continue to defend Canadian agricultural producers against any discriminatory labelling requirements that may contravene international trade obligations.”

That said, the AAFC spokesperson also noted the new CUSMA pact as approved by the House of Representatives “contains language that prohibits discriminatory labelling requirements.”

The revised pact’s text requires each party to the CUSMA deal to ensure regulations on labels “accord treatment no less favourable than that accorded to like goods of national origin.”

Any rules on labeling that the CUSMA nations impose in the future also must “not create unnecessary obstacles to trade between the parties.”

The revised CUSMA pact specifies that the language on labeling is included “in order to avoid disrupting North American trade” and is in keeping with the three countries’ obligations on technical barriers to trade (TBT).

The chance of a COOL law turning up in CUSMA appeared last summer when a group of House Democrats — among them high-profile rookie members such as Ilhan Omar, Rashida Tlaib , Conor Lamb and Alexandria Ocasio-Cortez — wrote jointly to U.S. Trade Representative Robert Lighthizer about CUSMA in June.

Their letter sought COOL’s revival as part of CUSMA, along with other changes to the pact’s labour, environment and pharmaceutical provisions.

Lost sales

COOL wasn’t part of the original NAFTA but was developed during the Clinton administration, passed near the end of the George W. Bush administration in 2008 and implemented during the Obama administration in 2009.

COOL imposed mandatory origin labels for beef, pork, lamb, chicken and goat meat and certain other perishable commodities where sold at retail in the U.S.

Canada and Mexico challenged COOL through U.S. courts and the World Trade Organization, because its rules, strictly applied, called for U.S. processors of meat from imported animals to provide labels that detailed where the specific animals involved were born, raised and slaughtered.

The costs involved in segregating animals and production lines to follow the label law prompted some U.S. packers and processors to restrict or halt their imports or cut the prices they paid for Canadian cattle and hogs.

Some estimates pegged Canadian cattle and hog producers’ losses to reduced prices and lost sales at over $8 billion.

After the WTO ruled in 2015 that COOL violated the United States’ international trade obligations, the Obama administration opted to repeal the label rules on beef and pork rather than face retaliatory tariffs from Canada and Mexico on U.S. goods. — Glacier FarmMedia Network

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A letter to U.S. Trade Representative Robert Lighthizer, dated Tuesday and signed by 27 freshman House Democrats, “reaffirm(s) our interest in working with you to improve the revised NAFTA deal” to which the U.S., Canada and Mexico agreed in November.

The letter repeats points made previously by House Democrats on labour and environmental standards and calls for elimination of “the new monopoly rights added to NAFTA 2.0 for pharmaceutical firms” which they said would “lock in high U.S. drug prices.”

The changes listed in the letter “are necessary for a renegotiated NAFTA to obtain the broad support it needs to pass” for its ratification in the House, the representatives wrote.

But the letter includes a new demand: “A final NAFTA package must restore the country-of-origin (COOL) meat-labeling program passed by Congress and affirmed by U.S. courts.”

The letter goes on to allege Canada and Mexico “already have used trade rules to undermine the food labeling that America’s farmers and ranchers support and the transparency that consumers demand.”

COOL was not part of the original NAFTA but was developed during the Clinton administration, passed near the end of the George W. Bush administration in 2008 and implemented during the Obama administration in 2009.

COOL imposed mandatory origin labels for beef, pork, lamb, chicken and goat meat and certain other perishable commodities where sold at retail in the U.S.

Canada and Mexico challenged COOL through U.S. courts and the World Trade Organization, because its rules, strictly applied, called for U.S. processors of meat from imported animals to provide labels that detailed where the specific animals involved were born, raised and slaughtered.

The added costs of segregating animals and production lines to produce the information for such labels prompted some U.S. processors to restrict or halt their imports or cut the prices they paid for Canadian cattle and hogs. Some estimates pegged Canadian cattle and hog producers’ losses to reduced prices and lost sales at over $8 billion.

After the WTO ruled in 2015 that COOL violated the United States’ international trade obligations, the U.S. opted to repeal the label rules rather than face retaliatory tariffs from Canada and Mexico on U.S. goods.

Signatories on Tuesday’s letter include high-profile Democrats such as Ilhan Omar (Minnesota), Rashida Tlaib (Michigan), Conor Lamb (Pennsylvania) and Alexandria Ocasio-Cortez (New York), among others.

The Alberta government, in a statement Friday, responded to the House Democrats’ letter with “strong opposition.”

Federal and provincial governments, along with industry in both the U.S. and Canada “spent nearly a decade fighting for the repeal of COOL on beef and pork products,” the province said.

“The members of Congress pushing this need to realize it isn’t something industry in Canada or the U.S. want to revisit,” provincial Agriculture Minister Devin Dreeshen said Friday in the province’s release.

“It isn’t consistent with American trade obligations, and it isn’t good for farmers in either country who want a fair and predictable trade relationship.”

The Alberta government called for “quick adoption” of the revised Canada-U.S.-Mexico agreement (CUSMA) “as negotiated,” describing it as “fundamental to the Canada-U.S. trade relationship.” Mexico’s government has already ratified the deal and Ottawa has pledged to follow suit.

The “failed” mandatory COOL law would add “billions in additional costs for both Canadian and U.S. industries, with no measurable consumer benefit,” the province said. “As a result, U.S. consumers would pay higher prices for their beef and pork.” — Glacier FarmMedia Network

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In recent years cattle price data has become thin on the ground, something that has big implications for insurance programs, trade disputes and day-to-day decisions that rely on accurate market information.

Canada’s reporting system is voluntary, said Brenna Grant, manager of Canfax Research Services, the organization responsible for collecting cattle price data in Western Canada.

“It’s always a challenge and we’re always encouraging producers to report,” she said. “We have confidentiality rules that we comply with in order to have a certain number of different sources reporting, but we also have to see repeatability in the prices reported. If you don’t meet those criteria, then we can’t publish prices.”

Many producers, she noted, either forget or neglect to call Canfax with their prices.

Brian Lemon, Manitoba Beef Producers general manager, pointed to the impact on insurance programs, which use market prices to establish compensation, as well as price data’s role in the country-of-origin labelling (COOL) dispute between Canada and the U.S.

The law required pork and beef to be marked with which country an animal passed through at various stages of production, causing Canadian cows and pigs to be segregated and, it was argued, less attractive to U.S. processors. The issue went through multiple dispute settlement rounds and appeals before the World Trade Organization ruled that Canada and Mexico could impose over $1 billion in retaliatory tariffs in December 2015. COOL was repealed soon after.

“The price reporting that we had in the past was a big part of us being able to show the damage that the U.S.’s mandatory country-of-origin labelling had done to our industry here in Canada and it was a big part of our World Trade Organization fight against the COOL policies in the U.S., so it’s important that we have that information as an industry,” Lemon said.

At this point, it is unclear if that same trade dispute role will come back into the forefront now that the North American Free Trade Agreement renegotiation has opened.

Lemon said the conversation on fed cattle price reporting is “not about preparing for NAFTA or any changes that might be coming,” although he added that price reporting will be critical if the U.S. and Canada clash on cattle in the future.

Grant, however, noted a different, more immediate tie-in with NAFTA talks.

“Going into any trade agreement or a renegotiation of something like NAFTA, the first thing you’re going to do is evaluate where you’re seeing value in trade and live cattle trade is very important for the Canadian beef industry because with a free trade agreement, prices are arbitraged in the larger U.S. cattle market. By having price discovery here in Canada, we’re then able to see how prices are changing relative in relationship to the U.S.,” she said.

Asking for feedback

This summer, the Canadian Cattlemen’s Association (CCA) asked for member feedback on seven possible courses of action, and the pros and cons of each, on fed cattle price reporting:

• Do nothing;
• Communicate with government and producers on thin market reporting impact;
• Study the risks of low reporting to each beef sector;
• Upgrade reporting agencies’ systems for automatic (and therefore easier) data downloads;
• Delay price reporting;
• Pay producers to report; and
• Explore mandatory price reporting.

The online survey ran from June 5 to July 14 and results were presented to the Price Discovery Task Force and during CCA meetings in early August.

“We want to see which options float to the top,” Lemon said. “I don’t know that there’s any of them that we want to say ‘this’ is our preferred option or not. I think at this point we’ll let the survey do its work and let the folks around the table have their debates.”

Sector-specific risk assessment would fill a gap left by the 2014 Price Discovery Task Force, but critics say the importance of robust data on pricing mechanisms is already well established and that such a sector-by-sector risk study would be of limited value.

Likewise, upgraded systems may lower the effort it takes for producers to report, but may prove costly.

“It becomes very expensive very quickly for a couple of reasons,” Grant said. “First, there are a lot of different programs out there that feedlots use and so you have to provide interoperability with a lot of different programs. Second is that not all of the feedlots use all of the functions within those programs, so they maybe use them for performance data collection, but not their prices. Their prices might be kept separately in a spreadsheet, so trying to get something that actually works in terms of making automatic data downloads from producers very easy for them to do has the potential to be quite expensive.”

More communication, however, may be more feasible, she added.

“In a voluntary system we always have to be communicating the reason why producers are doing this and recognizing the fact that producers have been doing this voluntarily for over 40 years and have been able to successfully have very robust cash reporting,” she said.

The survey noted, however, that Canfax has already attempted reaching out to producers.

“An information-only approach has had limited success,” the survey reads. “The value of this approach assumes that this topic is not well understood at this point.”

Fewer cash sales

The thinning cash market has added to price discovery concerns. Reporting agencies in both the U.S. and Canada have noted smaller volumes passing through cash markets as more and more producers turn to formula pricing and forward contracts.

“We need to recognize that’s a change that’s happened across the North American industry and be accommodating and adjusting to those marketing realities and also continually encouraging those producers to continually report,” Grant said.

The survey argues that the thin cash market may mean data is insufficient even if producers are paid to report.

In a 2014 paper published by the Canadian Cattlemen’s Association, Ted Schroeder of Kansas State University noted that weekly data sets were including fewer transactions as the cash market thinned, to the point that prices reported by Canfax or the U.S. Department of Agriculture were questionable in some weeks.

“In such situations, relatively small numbers of transactions that are not representative can have economically important influences on reported prices,” he wrote.

In fall 2014, Canfax introduced enhanced price reporting, which covers the expanding forward contract and net formula prices as well as the cash and grid markets. By 2016, Grant noted that cash volumes had over doubled, although part of that increase was due to marketing incentives making cash more attractive. Formula and contract volumes had also increased, although enhanced price reporting is still thin in those areas.

“That comes down to the consolidation within the industry,” she said. “You might have large volumes, but it’s still a struggle to meet those confidentiality requirements and the robustness in terms of repeatability.”

Ongoing issue

It’s not the first time the Canadian Cattlemen’s Association has wrestled with price discovery and scarcity of market data.

In 2013, Canfax had four weeks where no fed steer prices were reported in Alberta and three weeks without fed heifer prices. The next year, those numbers increased to nine weeks without steer prices and 25 weeks when no heifer prices were reported.

The lack of data raised concern about the Western Livestock Price Insurance Program, which requires weekly prices to operate.

In 2014, the CCA made a concerted effort to bolster reporting, passing a motion that “fed cattle price reporting to a third party (e.g. Canfax, BFO, FPBQ) become a program requirement for all federal/provincial programs that require fed cattle price data to operate.”

The motion hit an obstacle, however, when it was brought before the federal government. The government was concerned that reporting as a program requirement would be hard to enforce, cause logistical and administrative problems, might affect different beef sectors unequally and might lower participation in business risk management programs.

Two and a half years after the motion was tabled, government asked industry to revisit the issue.

“In part, I think it’s as much about logistics,” Lemon said. “You know, who collects the data? Who owns the data? Making sure that privacy rights and commercial sensitivities are maintained, proprietary information is not shared unwittingly. It’s about doing it the right way, I think, as much as anything else, but I think that everybody accepts that this kind of information is important to our industry.”

The Canadian Cattlemen’s Association is still meeting with provincial and federal governments on the issue, Grant said.

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