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CCA REPORTS – for Nov. 9, 2009

Brad Wildeman is president of the Canadian Cattlemen’s Association

In my last column, I talked about increasing the competitiveness of our beef and cattle industry to be, at minimum, on par with the United States (U.S.). Early in October, we welcomed the Government of Canada’s announced intention to request that the World Trade Organization (WTO) create a dispute settlement panel to rule on mandatory country-of-origin labelling (mCOOL).

Announced by Canada’s Minister of Agriculture Gerry Ritz, and Minister of International Trade Stockwell Day, the CCA greatly appreciates Canada’s continued efforts to push back on this legislation.

What has mCOOL done to our industry?

Canadian cattle producers have lost over a quarter of a billion in lower cattle prices and increased costs since mCOOL came into effect.

It’s important to note that U.S. consumers haven’t demonstrated an aversion to Canadian beef. Rather, the main impact experienced arises from large commercial meat purchasers and cattle buyers adopting strategies to avoid incurring the extra costs that result with separately managing meat from Canadian-born cattle versus U.S.-born cattle. Those U.S. companies that continued to purchase Canadian cattle have reduced their price to cover the extra cost of managing the different inventories.

Once our Canadian beef gets to U.S. store shelves, it sells just fine. But mCOOL ensures that beef from Canadian cattle faces difficulties just making it to those shelves.

What is the trade violation inherent in mCOOL?

This rule doesn’t comply with the U.S. trade obligations under the WTO or NAFTA (North American Free Trade Agreement). The main gist is mCOOL’s failure to recognize that a transformation of an imported good (i. e. a live animal) into a substantially new good (meat), results in that new good acquiring the origin of the country where the transformation occurs. The WTO and NAFTA both allow origin labelling of meat, but the label must indicate the country where it became meat, not where the animal was born or raised.

How does the WTO dispute settlement process work?

On October 23, the WTO Dispute Settlement Body (DSB) met in Geneva — which at the time of writing my column had yet to take place. At that meeting, Canada requested that a panel be created to rule on mCOOL. The U. S. has the ability to block the first request for a panel and in all likelihood, it will do so.

Canada can then make a second request at the next DSB meeting — scheduled for November 20 (the DSB meets once per month). The second request cannot be blocked and the panel would be automatically established at the November meeting.

Next, there is a period for administrative requirements — such as other countries joining as third parties or observers, establishing terms of reference and selecting panellists. Once fulfilled, Canada has a number of weeks to present its first submission. Then the U. S. presents its defence and rebuttal several weeks after that — possibly February 2010 to get to this point, if the panel is established at the November DSB meeting.

If it’s a straightforward case, we may receive a first draft of the panel’s report by early April, an interim report by late April, followed by the final report in late May/early June. Of course, each stage of this process could take longer than anticipated.

Once the final report is made, the DSB has 60 days to adopt it — bringing us to August 2010. With the possibility for an appeal, which would take about three months to receive a decision and another month for adoption by the DSB — it would move this into December 2010.

At this point, assuming the ruling is in favour of Canada, the U. S. would have a month to inform the DSB of its intentions regarding compliance. It would likely begin to negotiate for a “reasonable period of time.” If the U. S. does not indicate its intention to comply, Canada would have recourse to a retaliation process.

So if this process plays out on schedule and the U. S. takes action to comply expeditiously, the best-case scenario could result in compliance by the middle of 2011.

Russia expands access for Canadian beef

In mid-October, Russia announced that it will expand access for Canadian beef to include all beef from cattle under 30 months old, plus boneless beef from cattle over 30 months of age. Russia also agreed to continue a process aimed at achieving access for beef offal products by the end of 2009.

The Canada Beef Export Federation estimates that Canadian beef exports to Russia could reach $32 million annually, plus a further $10 million in exports of beef offals. This is a significant jump from the roughly $4 million we exported to Russia in 2002.

Staying on top of the issues…

These are only a few highlights of the major issues that the CCA works on for our industry. For more information on mCOOL or the announcement from Russia, including the CCA’s efforts to move these initiatives and others forward, please visit our website at www.cattle.ca.If you haven’t already signed up for our “Action News Service,” take time to sign up now. We want to keep you up to date on the latest industry developments. Let us know what you think. We look forward to hearing from you.

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