Threat of retaliation brings sense of urgency to Senate hearing on impacts of country-of-origin labeling rule.

WASHINGTON – In light of the imminent threat of retaliatory tariffs imposed by the United States’ North American trading partners, opponents and proponents of federal country-of-origin labeling rules dug in their heels at a hearing of the US Senate Committee on Agriculture, Nutrition and Forestry on June 25.

Witnesses who testified before the committee were Barry Carpenter, CEO of the North American Meat Institute; Craig Hill, president of the Iowa Farm Bureau on behalf of the American Farm Bureau Federation; Leo McDonnell, executive officer and director emeritus of the United States Cattlemen Association; Jaret Moyer, president of the Kansas Livestock Association; Jim Trezise, president of the New York Wine & Grape Foundation; and Chris Cuddy, senior vice president and president of ADM’s corn processing unit.  

US Sen. Pat Roberts

Sen. Pat Roberts (R-Kan.), chairman of the committee, remarked on the urgent need to quickly resolve the debate over COOL. “If you take anything away from my remarks today, I hope it is this: Facts are stubborn things, and whether you support COOL or oppose COOL, the fact is retaliation is coming. And this committee has to fix it,” he said.

Leo McDonnell, who played a role in developing COOL, urged lawmakers not to “cut and run.” McDonnell said in his testimony that the US could go through arbitration which would force Canada and Mexico to do what they couldn’t in US courts — prove economic damage as a result of COOL.

“If for some reason they implement these ‘sky-is-falling’ tariffs, then be ready to move to voluntary (labeling) he said. US trade representatives asked the WTO’s Dispute Settlement Body to assess how much Canada can claim through retaliatory tariffs.

McDonnell also countered claims that COOL amounted to a non-tariff trade barrier. Rather, country-of- origin labels enabled US meat producers to differentiate their products in the market and to combat instances of foreign competitors labeling their beef as being produced in the US. He said that since the late 1980s, US ranchers have been told “we need to compete in the global marketplace.”

“You tell me how we’re supposed to compete if we can’t differentiate,” he added.

Thirty years of this conflict over COOL came to a head in May when, for the fourth time, the Appellate Body of the World Trade Organization rejected country-of-origin labels on meat. The panel found that even an amended COOL regulation failed to comply with US trade obligations because “it accords less favorable treatment to imported livestock than to like products of US origin.”

Agriculture Gerry Ritz issued an ultimatum: Repeal COOL or face retaliation.

Following that ruling, Canada and Mexico asked the WTO for the authority to retaliate against US COOL. Canada intends to impose more than $3 billion in retaliatory tariffs against a broad list of US exports, while Mexico is seeking authorization to impose more than $653 million. Agriculture Minister Gerry Ritz said the immediate repeal of COOL is the only way to avoid retaliation. “We will continue to defend the interests of our cattle and hog sectors while protecting all hardworking Canadians through this process,” Ritz said in May.

“I want to emphasize that I understand completely the concerns of some members of this committee. I have encouraged alternatives to be brought forth,” Roberts said. “But as chairman of this committee I must emphasize to my colleagues and all of agriculture that retaliation is fast approaching and the responsibility sits squarely on our shoulders to avoid it.”

Opponents of COOL echoed Roberts’ concerns — the risk of incurring retaliatory tariffs isn’t worth waiting for the committee to devise a voluntary labeling program. Repeal COOL now, discuss alternatives later.

“It is critical to understand that at this stage in the WTO process, if the US Congress amends the COOL statute, Canada and Mexico must agree that the amendment brings the US law into compliance with our nation’s WTO obligations; otherwise, retaliation will occur,” said Barry Carpenter, president of the North American Meat Institute. The US has run out of opportunities to try to “fix” COOL.

Sen. Debbie Stabenow proposed draft legislation for a voluntary labeling program. Sen. Amy Klobuchar questioned if Canada would object to a voluntary labeling program similar to its own.

“We are no longer talking among ourselves to address COOL, in fact we are talking with the Canadian and Mexican governments,” he added. “To do otherwise is a fool’s errand. Canada and Mexico have said that they support repeal of COOL, making repeal the one, guaranteed path to prevent retaliation.”

Other witnesses expressed concern about the message being sent to trade partners. Jaret Moyer of the Kansas Livestock Association said the vigorous defense of COOL does not send a “pro-trade signal.”

“The WTO keeps telling us that mCOOL violates our trade commitments, but our government keeps saying it doesn’t, even though the majority of the industry regulated does not support the program,” Moyer said. “Future trading partners will look at this closely and use it before they ink any trade deals with us. We would do the same if we saw that behavior from any of our trade partners.

“This anti-trade stance is contrary to the very pro-Trade Promotion Authority rhetoric we are hearing from this Administration and from here in the Senate,” Moyer added.

But proponents of COOL are holding out for alternatives. On June 24, Sen. Debbie Stabenow (D-Mich.) released a draft proposal that removes beef and pork from the mandatory labeling provisions deemed non-compliant by the WTO and establishes a voluntary “Product of US” label for beef and pork which is similar to the voluntary Canadian label. Stabenow acknowledged that inaction by the Senate isn’t an option. But she also noted the importance of labeling to consumers who want to know the source of the foods they buy.

“It empowers consumers to know where their food comes from — and is supported by America’s family farmers and ranchers who proudly raise the world’s safest, most abundant, most affordable food,” she said in her remarks. “This partnership is big reason why COOL has enjoyed broad, bi-partisan support in the Senate.”

The focus of the dispute over COOL has been the meat segment. But the wine industry also risks huge losses if Canada retaliates.

 
When asked if ADM could support voluntary country-of-origin labeling, Chris Cuddy said if it’s compliant with the WTO and keeps Canada from retaliating, then we’re open to those options.”

Moyer said the Kansas Livestock Association couldn’t support voluntary labeling. “It’s time to go ahead and repeal” COOL and allow producers to realize premiums and not realize costs.

“I think a purely voluntary labeling done by industry to realize a premium is a much better way than even one brought up through this body,” he added.

The focus of the COOL debate has been beef and pork, but the conflict isn’t isolated to the meat industry. US winemakers say they have been dragged into the dispute because Canada has targeted the industry for retaliation. Saying the wine industry was neutral on mandatory vs. voluntary COOL, Jim Trezise, president of the New York Wine & Grape Foundation, explained that country of origin is nothing new to winemakers.

“Every bottle of wine that you buy has a country of origin and a region of origin,” he explained. “We obviously don’t have an issue with letting consumers know where our products come from, for sure. The first order of business should be repeal just so we can be sure we don’t get retaliated against.”