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WTO shows U.S. COOL another chilly reception

 
By MATTHEW D. ERNST
Missouri Correspondent

WASHINGTON, D.C. — The World Trade Organization (WTO) announced May 18 its fourth ruling since 2002 against the U.S. country of origin labeling (COOL) law. The announcement stoked efforts last week by House Republicans to eviscerate USDA COOL regulations; the outlook for that legislative effort remains uncertain.
The WTO ruled on a complaint filed by Canada. Under COOL regulations, meat labels in the United States must indicate if the animal had lived in another country. Canada filed a number of objections to COOL, based on trade agreement guidelines, and a six-page WTO ruling summarized rulings mostly in favor of Canada.
“The WTO has been clear – the United States administration must end its discriminatory COOL policy that is causing hurt to beef and pork industries on both sides of the border,” said Gerry Ritz, Canada’s Agriculture Minister.
The largest trade groups in the U.S. meat industry and the National Pork Producers Council (NPPC) and the National Cattlemen’s Beef Assoc. (NCBA) have opposed COOL. Meat processors incur costs to track and label products. Some pig and beef finishers, who source feeder animals from Canada and Mexico, may incur added recordkeeping expense.
Under WTO rules, Canada can take retaliatory trade action if the United States does not adjust its COOL policy within 20-30 days of the May 18 ruling. “Our government is now seeking authority from the WTO to impose retaliatory measures against United States exports,” said Ritz.
House Republicans introduced H.R. 2393, which would eliminate COOL. “This bill is narrowly drafted to eliminate the requirement for country of origin labeling for meat products from cattle and hogs for which the WTO ruled against the program,” said House Agriculture Committee Chair Michael Conaway (R-Texas).
“We also eliminate the requirement for chicken, which faced high costs and little if any quantifiable benefits, and asked to have this mandate repealed. No other products are affected.”
His committee approved H.R. 2393 by a 38-6 vote on May 20. Ranking Member Collin Peterson (D-Minn.) said the bill was premature. “Given what we have seen in the past – it took 15 months for the Arbitration Panel to issue a ruling in the U.S.-Brazil cotton case – it’s unlikely the panel will rule on COOL retaliation within their 60-day window,” he said, in an opening statement.
“I think we should take a serious look at the mandatory labeling requirements that are in place in more than 60 other countries.”
A full-blown COOL repeal is less likely to pass in the Senate than in the House. During farm bill legislation, the Senate did not agree to a House attempt to strike down COOL. Sen. Heidi Heitkamp (D-N.D.), a vocal critic of COOL, joined with some Republicans that included Iowa’s Chuck Grassley to keep the House language out of farm bill appropriations.
Heitkamp said she will continue bipartisan efforts in the Senate toward a USDA “fix” for COOL. “As I continue to review this ruling, I’ll work to find a bipartisan path forward in the Senate that supports North Dakota ranchers and producers and makes sure this law continues to help families throughout America, while meeting our international trade obligations,” she said.
In Canadian press reports last week, Ritz said Canada did not want to issue retaliatory tariffs and hoped for the U.S. Congress to repeal COOL. It is unclear how Canada would respond to any “fix” Congress or USDA might devise for COOL in place of repeal.
Actual impact unclear
Both the NCBA and the NPPC called for Congress to repeal COOL upon the WTO announcement, citing possible retaliatory tariffs that Canada could eventually levy under WTO procedure.
“Unless Congress acts now, Canada and Mexico will put tariffs on dozens of U.S. products,” said NPPC President Ron Prestage.
Philip Ellis, NCBA President, said COOL should not be mandated. “We support voluntary labeling efforts, efforts that give consumers the information they are looking for and reward producers all along the supply chain for meeting specifications,” he added.
Not all farm interests oppose COOL. The United States Cattlemen’s Assoc. and National Farmers Union are vocal supporters. “COOL provides consumers a choice at the grocery store and the ability for U.S. cattle producers to differentiate their product,” said Leo McDonnell, USCA director emeritus.
Some studies have shown U.S. consumers are apparently willing to pay less when meat is labeled as originating outside the country. University researchers from Kentucky and Alberta found consumers less willing to pay less for beef strip steak from Australia and Canada.
“Origin of beef plays a deciding factor for more than one-third of the sample,” wrote the researchers in 2011. “We found that consumers’ perception of the food safety level of beef is directly associated with country of origin.”
But a study released this year by Bob Taylor, Auburn University emeritus professor of agricultural economics, showed COOL had not impacted prices received or paid for foreign beef.
“Our study shows that COOL has not directly caused the declines in Canadian and Mexican livestock exports to the U.S., nor has it negatively affected the price paid for imported slaughter cattle relative to comparable domestic cattle,” he said in February, when the study was released.
Taylor hoped the study would help convince the WTO COOL was not having the impact feared by Canada. “Our detailed analysis indicates that cattle export opportunities from Canada and Mexico to the U.S. are subject to a number of variables that are completely independent of COOL implementation,” he said.
“I’m optimistic that the WTO will take our findings into consideration in making its ruling.”
The lack of those actual price impacts did not sway the WTO’s decision that current COOL label requirements inhibit free trade. Meanwhile, U.S. consumers have continued to show willingness to pay higher beef prices for both imported and domestic product, as lower U.S. cattle supplies have tightened the global beef supply.
5/28/2015