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WTO rips U.S. COOL law in win for Canada

An international body has ruled the United States’ laws requiring mandatory country-of-origin labels on beef, pork and produce violate its commitments to global trade rules.

The ruling, coming Friday from a panel of the World Trade Organization’s Dispute Settlement Body (DSB), is seen as a clear win for Canada, which has fought the law through diplomatic and WTO channels for years before and after it was imposed.

The law, dubbed COOL, was conceived in Washington’s 2002 Farm Bill but not launched until September 2008. It orders U.S. retailers to notify their customers, by way of labeling, on the sources of foods such as beef, veal, pork, lamb, goat, fish, fruits, vegetables, peanuts, pecans and macadamia nuts.

Both Canada and Mexico have long contended that COOL violates international trade laws, restricts market access and is a technical trade barrier. Canada in late 2008 formally challenged COOL at the WTO, which convened this DSB panel on the case in November 2009.

Canadian livestock groups add that the law has forced unnecessary costs on U.S. meat processors, who currently must either segregate Canadian animals and meat for labelling purposes, or limit their imports from Canada.

"Inconsistent"

The DSB panel ruling on Friday — which classifies COOL as a "technical regulation" under the WTO’s Agreement on Technical Barriers to Trade (TBT) — ruled the label law is "inconsistent with the United States’ WTO obligations."

Specifically, the DSB said, COOL breaks the TBT Agreement by "according less favourable treatment to imported Canadian cattle and hogs than to like domestic products."

The panel went on to say COOL — which the U.S. government has previously touted as a way of educating and informing U.S. consumers — "does not fulfil its legitimate objective of providing consumers with information on origin" and also breaches the TBT Agreement in that respect.

The TBT Agreement was set up following the Tokyo Round of GATT negotiations in 1979, with the goal of preventing governments from imposing non-tariff trade barriers dressed up as "technical regulations and standards."

"Unreasonable"

Apart from the TBT violations, the DSB panel also condemned an open letter sent to U.S. food processors by U.S. President Barack Obama’s agriculture secretary Tom Vilsack in February 2009.

Vilsack in the letter had urged processors to apply stricter and broader labelling practices, or else he would review the COOL law’s language with an eye on tightening restrictions even further.

The DSB on Friday ruled the "suggestions for voluntary action" in Vilsack’s letter went "beyond certain obligations under the COOL measure, and that the letter therefore constitutes unreasonable administration of the COOL measure" under Washington’s obligations to the 1994 GATT (General Agreement on Tariffs and Trade).

Vilsack’s letter, when released, was seen as a blow to Canada, which had previously gone so far as to put its December 2008 WTO challenge of COOL on hold.

Until his letter’s release, it had appeared that the previous interpretation of the COOL rule, near the end of the administration of then-president George W. Bush, wouldn’t seriously hinder imports from Canada.

U.S. eyes "all options"

The U.S. will now be required to bring COOL "into conformity with its WTO obligations," the Canadian government said Friday. However, Ottawa warned, if Washington decides to file an appeal at the DSB, "it could delay the outcome."

The U.S. Trade Representative’s office suggested as much Friday in its reaction to the DSB decision.

"We are pleased that the panel affirmed the right of the United States to require country-of-origin labeling for meat products," Andrea Mead, press secretary for the USTR, said in a statement.

"Although the (DSB) panel disagreed with the specifics of how the U.S. designed those requirements, we remain committed to providing consumers with accurate and relevant information with respect to the origin of meat products that they buy at the retail level," she wrote.

"In that regard we are considering all options, including appealing the panel’s decision."

The Canadian Cattlemen’s Association noted in a separate release that Washington, in theory, could also just ignore the DSB panel’s decision. Doing so, however, could eventually put Canada in a position to apply "retaliatory options," such as new or higher tariffs on imports from the U.S.

All that said, "we hope the U.S. will decide that complying with the WTO ruling will be in its best interest," the CCA said Friday.

In its talks with U.S. lawmakers, the CCA said, "we do not ask for the outright repeal of COOL, but seek only those regulatory and statutory changes necessary to eliminate the discrimination that COOL has imposed."

Among others weighing in Friday, Manitoba Beef Producers president Ray Armbruster said his group is "hopeful that the U.S. government has come to appreciate the integrated nature of the North American beef industry and now understands that COOL hurt U.S. producers and consumers, as well as those north of the border."

"Clear win"

"This decision recognizes the integrated nature of the North American supply chain in this vitally important industry," Canada’s International Trade Minister Ed Fast said Friday. "Removing onerous labelling measures and unfair, unnecessary costs will improve competitiveness, boost growth and help strengthen the prosperity of Canadian and American producers alike." 

Federal Ag Minister Gerry Ritz called the DSB ruling "a clear win for our industry… This day has been a long time coming but, by working closely with our cattlemen and pork producers, we have paved the way for a stronger and more profitable livestock industry."

Related stories:

WTO seen putting chill on U.S. COOL, May 26, 2011

Canada asks for WTO panel on COOL, Oct. 7, 2009

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