WTO rules against U.S. Country of Origin Labeling requirements

WTO rules against U.S. Country of Origin Labeling requirements

WTO decision on meat labeling could mean U.S. will face trade retaliation. Divided opinions over COOL requirements. House Agriculture Committee weighs in quickly.

The World Trade Organization has ruled against the United States’ Country of Origin Labeling rule. COOL requires labels on meat in U.S. stores to list where the animals were born, raised, and slaughtered. Both Canada and Mexico, who brought the complaint to the WTO, have been unhappy with COOL, saying the labels increase compliance costs for meatpackers.

Proponents of the rule argue that consumers benefit from knowing where meat is from. Opponents say the rule sets the nation up for trade retaliation, which the WTO decision will usher in.

Shortly after the WTO decision was released on May 18, Agriculture Secretary Tom Vilsack was asked if the Obama administration will address the situation. Vilsack, clearly weary of the topic, said the White House couldn’t act. “I don’t know how many times you guys can ask this question. To be honest, I’m getting a bit tired of answering it.

“COOL was passed to help consumers make informed purchasing decisions. WTO has confirmed we have the right to provide country of origin requirements. But they confirmed that the requirements as written in the statute by Congress are inconsistent with WTO obligations.

“As I’ve said on multiple occasions — multiple occasions — Congress has to fix this problem. They either have to repeal COOL or modify it; amend it to create some sort of generic label. It’s up to Congress. “We’ve tried several ways to do this and each time WTO has indicated we haven’t figured out quite how to get it right. So, Congress will have to respond.”

In the immediate aftermath of the decision, the loudest voices from the House were for a complete repeal of COOL.

Arkansas Rep. Rick Crawford promised to introduce legislation to squash the labeling requirement. “Country of Origin Labeling not only drives up compliance costs for our domestic producers, but the WTO’s ruling against the rule will now allow for billions of dollars in retaliatory tariffs against U.S. exports.”

Further information about that legislation came when Texas Rep. Michael Conaway, chairman of the House Agriculture Committee, introduced H.R. 2393 as “a targeted response that will remove uncertainty, provide stability, and bring us back into compliance.”

“As we have seen time and again, mandatory Country of Origin Labeling is a misguided government policy that has damaged our trading relationships with Canada and Mexico and subjected the United States to trade retaliations,” said California Rep. Jim Costa. “We have the data, studies, and the WTO experience to demonstrate that COOL is detrimental to our state and national economies and hurts our nation’s beef, pork and chicken producers and packers.”

One influential lawmaker urged a less drastic step. While “disappointed’ in the WTO ruling, Minnesota Rep. Collin Peterson, ranking member of the House Agriculture Committee, said he “will oppose efforts to fully repeal COOL. There are still several steps in the WTO process that must be met before any retaliation could go into effect so we should take the time to thoughtfully consider how to move forward.”

Another advocate of COOL, Leo McDonnell of the United States Cattlemen’s Association, brought up the labeling in light of the debate over a Trans-Pacific Partnership agreement. “This past week saw significant movement on Fast Track Authority, and inevitably the TPP agreement. TPP has the potential, if implemented, to increase and broaden the import and export markets for the U.S.

“With a burgeoning international trade arena, it is vital that today’s consumers know where their food products originate. We are asking that consumers have a choice; once the product reaches the store shelves, then it is up to them on where they will lend their buying power.”

NFU

Another proponent of the rule, Roger Johnson, president of National Farmers Union, spoke with Delta Farm Press. He had a simple request for Congress: do nothing for at least the next several months.

“The WTO has made its decision, but a three- or four-month process remains before any right to retaliate is granted,” said Johnson. “And that isn’t a given. Before any country can retaliate, damages must be proven. That’s the phase we’ll enter soon. Canada and Mexico have indicated they intend to enter that phase. If they do, the U.S. Trade Representative has indicated they’ll request arbitration. That takes, as I said, several months.”

Canada and Mexico must prove they suffered economic damages. Regarding that, said Johnson, “the U.S. has at its disposal a very good study by Professor Robert Taylor at Auburn University. It looks at Canadian and Mexican imports of both slaughter animals and feeder cattle as well as price differences between those two countries and the U.S. market. The study concluded, in all three cases, there was no impact on those markets as a result of COOL.”

Johnson admits imports went down shortly after COOL was implemented. But he says that was “a result of the ‘great recession’ and imports went down worldwide. There was no price difference that occurred.

“We argue (Mexico and Canada) will have a difficult time proving damages. Having said that, what normally takes place during this part of the WTO process is the three countries would negotiate something that makes sense to all three. Our request of Congress is, at the end of the day, we want to make sure a label is maintained. We want a ‘100 percent U.S.’ label only if those animals were born, raised and slaughtered in the United States.

“The reason the law was passed is because the large multi-national meat packers were deceiving consumers by leading them to believe all the products in the meat case were from the United States.”

The WTO ruling could “potentially make it more difficult to get TPP passed. There’s a high profile debate between President Obama and (Massachusetts) Sen. Warren in particular where he’s arguing there’s nothing in the deal that will change U.S. law. Sen. Warren is arguing there are a number of examples where U.S. law has changed as a result of trade deals. … I do think it has the potential to affect the TPP debate for the president and GOP in a negative way.”

COOL beliefs aren’t exclusively partisan, says Johnson. “There are Democrats and Republicans on both sides of the issue. However, it’s likely in the House that you’ll see a much larger percentage of Republicans that oppose the law and want to repeal it. A larger share of the Democrats will want to retain it.

“All the activity, so far, on COOL has been in the House. (Texas Rep. Michael Conaway, House Agriculture Committee chairman) has always been opposed to COOL and now he has a megaphone and gavel and is certainly able to move a bill out of committee. So far, the Senate has been less eager to get rid of the label and are leaning towards a fix.

“COOL is a very important law. NFU has fought for it and we strongly believe in the label. Consumers shouldn’t be deceived.”

Update: On May 20, the House Agriculture Committee approved H.R. 2393 on a 38 to 6 vote.

TAGS: Beef Outlook
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