Meeting in Washington, D.C., in early June, Canadian officials began preparations to request that a panel from the World Trade Organization judge whether the U.S.’s mandatory country-of-origin labeling rule, which went into effect in March, violates WTO rules by unfairly disrupting trade for Canada’s meat and livestock sectors.
According to Jim Laws, executive director of the Canadian Meat Council, the major point Canada wants to emphasize to the WTO is that "the meat markets of Canada and the U.S., and even Mexico, have been very integrated for quite a while, and that the mandatory COOL legislation has a severe impact on some sectors of that integrated market, which is counter to the WTO."
Mandatory COOL, or mCOOL, requires that meat sold in U.S. retail markets be labeled with the country of origin of that meat. Processors have complained that keeping track of the sources of livestock that are processed for mixed products such as ground beef is costly and difficult, and that mCOOL is little more than a trade barrier erected by livestock producers in the U.S. who want to keep Canadian livestock out of the U.S. in order to keep prices high. mCOOL’s supporters argue that since bovine spongiform encephalopathy continues to show up in the Canadian cattle herd, albeit sporadically, mCOOL comprises a food- and livestock-safety protection.
The Canadian interest in pursuing a WTO panel comes at a time when the Canadian livestock sector, particularly the pork segment, continues to suffer big losses. The emergence of the H1N1 epidemic -- "swine flu" – has devastated Canada’s pork exports, and that follows a period when the U.S.-Canada dollar exchange was very unfavorable for Canada’s livestock industry.
But U.S. meat companies are also worried about the impacts of mCOOL. On June 18, Patrick Boyle, president of the American Meat Institute, testified in Canada before the House of Commons Standing Committee on Agriculture and Agri-Food and made similar points. "That mandatory COOL is costly and burdensome is without dispute. Indeed, in the preamble to the final rule published just last January, USDA reiterated the conclusions about the benefits of the rule that it had put forth five years ago in the proposed rule and last September when it published the interim final rule.
Specifically, USDA stated that the ‘expected benefits from implementation of this rule are difficult to quantify’ but that USDA’s ‘conclusion remains unchanged, which is that the economic benefits will be small and will accrue mainly to those consumers who desire country of origin information,’" Boyle told the committee.
He continued: "On the other hand, USDA cost estimates were fairly specific. For example, USDA’s first year implementation cost estimates alone are $299 million for the pork industry and $1.25 billion for the beef industry. Moreover, USDA estimated a loss in productivity after a 10-year period of adjustment in excess of $211 million. These numbers are particularly noteworthy when one considers that they are being incurred during a time of almost unprecedented economic challenges and hardship not only in Canada and the United States, but throughout North America and the rest of the world. We also are aware from press reports and other anecdotal information about the economic hardships being incurred in certain sectors, particularly in the cattle and hog sectors. AMI is unaware, however, of any formal or structured economic work underway to analyze systematically the impact that mandatory COOL is having on livestock producers, the meat packing and processing sector, and retailers."
In comments filed two years ago by the government of Canada, when COOL was still in the proposal stage, the Canadians stated: "COOL will cost at least US$3.9 billion with no benefits: The analysis by the Food Marketing Institute of the implementation costs for fish and seafood indicated that the costs to industry of implementation were more than ten times higher than estimated by… USDA, with no increased sales of U.S. seafood. The complexities added at all levels of the U.S. food distribution system to implement the proposed final rule with no off-setting benefits make it clear that the rule should be withdrawn. The USDA’s estimate of a $3.9 [billion] implementation cost to U.S. industry also does not include costs it will incur in other markets such as the Canadian one, where the first year impact of COOL would bring the total cost of the COOL legislation much higher, through lost exports and added costs to industry to comply with the tracking requirements. It remains unclear whether these statistics take on board all impacts of this law including funding for increased enforcement and surveillance requirements by USDA under the proposed legislation. Most importantly, USDA’s own cost-benefit analysis indicates that for all covered commodities, the volume of U.S. exports will decline. If neither U.S. consumers, nor U.S. industry as a whole, are expected to gain from mandatory COOL, then who is?"
Laws told MEATPOULTRY.com that "the start of a WTO panel can be quick, but it’s my understanding that once the panel is started, these things take a long time." Asked whether he was optimistic or pessimistic whether a WTO decision would ultimately benefit Canada’s meat and livestock industry, he responded: "I think the effects on our livestock sector, especially on our pork producers, who have been so hard hit lately, would be small by the time of a WTO ruling."