Trade War Looms over US COOL

A major battle appears to be brewing in the World Trade Organization over the US bid to introduce Country of Origin Labelling.

A few weeks ago several major meat industry organisations started legal proceedings in a bid to change the detail of the legislation, which they claim is restricting trade.

The National Farmers’ Union in the US, however, is backing the new interpretation of the regulation, which was issued on 23 May.

However, now the Mexican and the Canadian governments, who at the time the new rules were published expressed their opposition to the wording, has called on the WTO to set up a compliance panel to judge whether the new interpretation of the rules by the US meets the WTO criteria.

The two governments claim that the new regulations are more restrictive and hit cattle and livestock exports from the two countries.

“Canada considers that the United States has failed to bring its COOL measure into conformity with its WTO obligations. We believe that the recent amendments to the COOL measure will further hinder the ability of Canadian cattle and hog producers to freely compete in the US market,” said Canada’s Minister of International Trade, Ed Fast and Agriculture Secretary Gerry Ritz.

However, the move by the two governments has brought divisions among the agricultural and meat industry organisations in the US and Canada.

The US National Farmers Union President Roger Johnson said: "The issues raised by the Canadian government to the WTO are issues between two sovereign countries.

“While Canada has the right to seek a determination on whether the United States’ action is consistent with the US obligations, NFU and our allies have long believed that the revised regulations are, in fact, consistent with WTO obligations.”

However, the provincial government in Manitoba is cheering the Canadian and Mexican governments’ action.

Manitoba Agriculture, Food and Rural Initiatives Minister Ron Kostyshyn said: "The bottom line is that COOL is hurting the agriculture industry in Manitoba and across Canada, and that needs to change.

“The WTO ruled last June that COOL discriminates against exports of Canadian livestock.”

A decision from the WTO is not expected until next year, but if it goes in favour of Canada and Mexico, and the US does not change the regulations, punitive sanctions could be taken against the US.

If the decision goes in favour of the US, there is going to be a bitter taste in the mouths of the Mexican and Canadian agriculture sectors and retaliation might still not be ruled out.