As predicted, COOL fight isn’t over yet

Prime Cuts from the June 2015 issue of Canadian Cattlemen

COOL’s ultimate demise is finally at hand. But it might not come as quickly as one might hope for. That’s because COOL’s fate now lies in the hands of American lawmakers. While the U.S. House of Representatives has already acted with commendable speed, the U.S. Senate is likely to drag its feet until the day that retaliatory tariffs are put in place.

The House Agriculture Committee acted just two days after the World Trade Organization released its fourth and final ruling on COOL. The committee immediately passed legislation 38-6 to repeal COOL for beef, pork and poultry. Chair Mike Conaway (R-Texas) says he hopes for a full House vote in early June. But there are currently not enough votes in the U.S. Senate to support repeal. So resolution might be several months away.

It will take at least two months before the level of tariffs is decided. The WTO’s Dispute Settlement Body will adopt the latest ruling at its June 19 meeting. Canada and Mexico at that meeting will request permission to retaliate with tariffs commensurate to the COOL damage to the two countries. The U.S. will then request an arbitration hearing (over at least a 60-day period) to agree on the amount. If the parties cannot agree, the WTO will make its own determinations on the tariff levels. So tariffs might not start being applied until September at the earliest. Only then might the Senate move to repeal part of COOL.

A fall resolution would mean the end of the COOL saga only after nearly seven years from the time the WTO process began. Canada on December 1, 2008 requested consultations with the U.S. concerning certain mandatory COOL provisions in the Agricultural Marketing Act of 1946 as amended by the 2008 Farm Bill and as implemented through an interim final rule.

Implementation of COOL began March 16, 2009. It immediately began to add costs at the feedlot and packing plant levels due to the need to segregate Canadian- and Mexican-born cattle and hogs. Canada and Mexico subsequently claimed this segregation amounted to discrimination and cost their livestock industries many hundreds of millions of dollars in lower prices. The WTO in its four rulings agreed with this view.

Cattle and red meat top Canada’s list of products that would be subject to retaliatory tariffs. That’s another reason why the U.S. meat and livestock industry will be urging Congress to act before tariffs are put in place. The list includes: live bovine animals; live swine; meat of bovine animals, fresh or chilled; meat of bovine animals, frozen; meat of swine, fresh, chilled, or frozen; cuts of offal, fresh or chilled of spent fowl.

COOL opponents in the U.S. all agree that repealing part of the COOL law is the best step forward. COOL supporters disagree but have come up with no solution that would satisfy either Canada and Mexico or the WTO. Canada has consistently said it wants red meat taken out of COOL and won’t accept a “Product of North America” label. Besides, such a label would not provide U.S. consumers with useful information.

COOL opponents will have to reiterate to members of Congress over and over that COOL provides only cost and no benefit to either the industry or American consumers. They will also have to convince them of the economic impact of Canadian and Mexican retaliatory tariffs on dozens of industries and hundreds of companies. Canada’s list of tariffs targets products and goods in all 50 U.S. states and threatens to disrupt a bilateral trade worth $658 billion in 2014. Let’s hope this prospect gets U.S. senators to act.

About the author

Contributor

A North American view of the meat industry. Steve Kay is publisher and editor of Cattle Buyers Weekly.

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