Canada and Mexico get bullish over COOL meat trade wars with U.S.

15/06/2015

COOL US Canada Mexico

COOL US Canada Mexico

A dispute over meat imports and exports between the U.S. and trading partners Canada and Mexico is starting to heat up, following a decision in late May by the World Trade Organization.

The U.S. passed a law in 2002 which would require all meat sold in the U.S. to carry country-of-origin-labeling (COOL) to indicate where the livestock was born, raised, and slaughtered.

Canada and Mexico contend that this regulation is protectionist, as the regulations impose costs on non-American meat vendors.

The WTO had ruled in favour of Canada and Mexico in 2014, and then again in their favor in May.

Trade penalties against the U.S. proposed

In response to the latest ruling, Mexico and Canada have asked the WTO to authorize sanctions on the U.S. amounting to US$3 billion. Canada is seeking a US$2.4 billion penalty on the U.S., while Mexico would like the WTO to impose a US$653 million penalty.

Canada is also aiming to impose a 100% tariff on the following U.S. products: furniture, liquor, wine, jewelry, prepared food, baked goods, chocolates, pasta, grains, vegetables and fruits.

Canada’s agriculture minister Gerry Ritz is pressuring the U.S. to repeal the COOL legislation.

The only way for the United States to avoid billions [of dollars] in immediate retaliation is to repeal the COOL law,

CBC News quoted Ritz June 4.

The WTO is scheduled to address the request for these penalties in a June 17 meeting.

The U.S. Trade Representative spokesperson hit back, saying: “It is notable that neither Canada nor Mexico provided any justification for the numbers they asserted.”

Food quality organizations have attacked Canada and Mexico, arguing that the U.S. should be able to impose the regulations in the interests of the health and safety of meat customers.

The U.S. is already feeling the costs of COOL

The Canadian consul in Dallas, Texas, Sara Wilshaw, argues that the rules are punitive not only for Canadian and Mexican meat exporters but also for those in the meat-raising and processing industry in the U.S.

“The measures have led to losses of over US$8.5 billion to the U.S. beef industry and US$1.7 billion to the U.S. pork industry over 10 years, according to a 2015 U.S. Department of Agriculture study,” she wrote in The Dallas Morning News on June 5.

An estimated 6,000 American jobs have already been lost due to plant closures associated with the rules.

Should the costly retaliations threatened by Canada and Mexico come into existence, she said, it could have an even larger impact on the sector.

Is the end of COOL near?

Several representatives to the U.S. House of Representatives have quickly put together a bill, HR 2393, that would repeal the COOL measures applying to the labeling of beef, chicken and pork. A vote on the measure is expected on July 11.

The house is expected to vote for bill, in an effort to bypass the billions in punitive measures threatened by Canada and Mexico.

The Product Marketing Association in the U.S. estimates that approximately US$1 billion in annual produce exports could be lost should Congress fail to pass the bill.

Canada and Mexico first voiced their objections to the COOL legislation in December 2008.

Do you think the COOL law is unfair?

 Disclaimer: The opinions expressed in this article are those of the contributing author, and do not necessarily reflect those of the Forum for International Trade Training.

About the author

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Author: Jacqueline Côté

I am a working journalist, with experience as SNL Financial’s Canadian correspondent for its Mining and Metals vertical. I also served as the Managing Editor for Central Asia Newswire – covering daily economic and investment news in the region – as well as Features Editor for the Washington-based Magharebia.com, which covers developments in the North Africa region. I have been published in The Montreal Gazette, The Guardian (UK), The New Statesman (UK), Red Pepper (UK), Geopolitical Monitor and CNN.com.

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