Canada rips USDA’s plan for more specific COOL labels

Canadian officials and U.S. packers warn the U.S. Department of Agriculture’s new proposal for even more specific country-of-origin labelling (COOL) on meat will only make a bad rule worse.

Racing to bring its mandatory COOL law into compliance with critical World Trade Organization rulings before the WTO’s May 23 deadline, USDA on Friday issued a proposed new COOL rule for display in the March 11 edition of the U.S. government’s Federal Register, calling for public comment by April 11.

The proposed rule would change COOL’s labeling provisions for muscle cuts of beef, lamb, chicken, goat, pork and veal — instead requiring a package label’s origin designations to include information about where each of the meat’s production steps occurred.

Thus, where the current COOL regulations would allow “Product of the U.S.” labels only on cuts from animals born, raised, and slaughtered in the U.S., the new rule would allow such cuts’ labels to read “Born, Raised, and Slaughtered in the U.S,”

For example, if an animal is born in Canada, but raised in both Canada and the U.S. before slaughter, the shortest label allowed under the new rule would read “Born in Canada, Raised and Slaughtered in the U.S.”

USDA’s proposed rule also drops the current rule’s allowance for commingling of muscle cuts of different origins, which, for example, now allows a package of cuts from animals from the U.S., Canada and Mexico to read “Product of the U.S., Canada and Mexico.”

The new rule would instead require all origin designations to include “specific information as to the place of birth, raising, and slaughter of the animal from which the meat is derived” — which USDA said will allow consumers “to benefit from more specific labels.”

USDA’s proposal is meant to patch its current rule, which was ruled out of order by the WTO’s Dispute Settlement Body (DSB) in 2011 and WTO Appellate Body in 2012 for discriminating against Canadian and Mexican livestock and meat.

“USDA expects that these changes will improve the overall operation of the program and also bring the current mandatory COOL requirements into compliance with U.S. international trade obligations,” U.S. Agriculture Secretary Tom Vilsack said Friday in a release.

Canada’s Agriculture Minister Gerry Ritz, for one, doesn’t buy it. “We do not believe that the proposed changes will bring the U.S. into compliance with its WTO obligations,” he said in a statement late Friday afternoon.

USDA’s proposed changes, he said, “will increase the discrimination against exports of cattle and hogs from Canada and increase damages to Canadian industry.”

The Canadian Cattlemen’s Association added late Friday that the proposed rule, by adding labeling requirements and “eliminating some of the existing mitigating flexibility,” will “significantly increas(e) the costs of compliance.”

The net result, the CCA said, is “a rule that not only does not comply with the WTO Appellate Body’s findings but will also violate WTO provisions not previously ruled upon.”

USDA appears set to rush the rule through with a relatively quick comment period “in order to implement something, regardless of how ill-conceived,” before the WTO’s May 23 deadline, the CCA said.

“This tactic not only increases the discrimination against imported livestock, but also creates additional process and delay at the WTO.”

Ritz reiterated Friday that the Canadian government “will consider all options, including retaliatory measures, should the U.S. not achieve compliance by May 23.”

“Enormous cost”

Patrick Boyle, president of the American Meat Institute, a U.S. meat packers’ body, said in a separate statement Friday that “only the (U.S.) government could take a costly, cumbersome rule like mandatory (COOL) and make it worse even as it claims to ‘fix it.’”

USDA’s proposed new rule, Boyle said, is “even more onerous, disruptive and expensive than the current regulation implemented in 2009. Complying with this proposal, should it become mandatory, will create more excessive costs that will be passed onto (U.S.) consumers.”

The CCA agreed, noting USDA’s Friday release “sounds very similar to the regulation initially proposed by USDA in 2002 that was never implemented because of the enormous cost to the U.S. packing and livestock production sectors.”

If implemented, the CCA said, the proposed rule “will degrade the competitiveness of the U.S. meat industry and undoubtedly result in the elimination of thousands of American jobs.”

USDA itself estimates 2,808 packing/processing companies, 38 chicken processing firms and 4,335 retailers — 7,181 companies in all — would need to augment a total of 121,350 unique raw meat and poultry labels under the new rule, and estimated those companies’ total cost to change their labels at somewhere between US$16.99 million and $47.33 million.

USDA said Friday it doesn’t believe additional recordkeeping or new systems would be needed to transfer data on origin from one link in the value chain to the next.

“Disincentive”

The November 2011 ruling from the WTO DSB panel found the current COOL law violated parts of the WTO’s Agreement on Technical Barriers to Trade (TBT), breached Washington’s WTO obligations and “does not fulfil its legitimate objective” of consumer education.

The Appellate Body, in June last year, agreed that COOL’s record-keeping and verification requirements “create an incentive for processors to use exclusively domestic livestock, and a disincentive against using like imported livestock.”

The Appellate Body went further to say COOL “lacks even-handedness” by imposing “a disproportionate burden on upstream producers and processors of livestock, as compared to the information conveyed to consumers through the mandatory labelling requirements for meat sold at the retail level.”

COOL as launched in 2009 requires that a “large amount of information must be tracked and transmitted by upstream producers for purposes of providing consumers with information on origin,” the Appellate Body said, finding “only a small amount of this information is actually communicated to consumers in an understandable or accurate manner.”

AMI’s Boyle on Friday ripped the entire idea of mandatory COOL as “conceptually flawed, in our view and in the eyes of our trading partners.”

Further, he said, “the anti-free trade objectives of this labeling scheme’s proponents are no secret. Requiring us now to provide even more information at a greater cost when evidence shows consumers, by and large, are not reading the current country-of-origin information is an ill-conceived public policy option.”

Related stories:
WTO appeal body upholds ruling against COOL, June 29, 2012
WTO gives U.S. until May 23 for COOL compliance, Dec. 4, 2012
U.S. unlikely to comply with WTO COOL ruling by deadline, March 8, 2013

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