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Canada rejects final COOL rule

In 2008, Canada complained to the World Trade Organization that the country of origin labeling (COOL) requirements as contained in the 2008 farm bill violated US trade obligations. A WTO panel agreed that the U.S. has not met its obligations under the WTO Agreement on Technical Barriers to Trade, chiefly the equal treatment of foreign and domestic products.

You can read more about the history of the COOL dispute at the World Trade Organization’s website by clicking here.

On May 23, the last possible day to do so, USDA released its final rule on country of origin labeling. It contained minimal changes and did little to satisfy Canadian Agriculture Minister Gerry Ritz, who said Canada will examine all of its options, including appeals or retaliatory measures. The Canadian problem is significant; in 2012, it was the second largest export market for U.S. pork, valued at $1.13 billion.

The National Pork Producers Council, and the Iowa Pork Producers Association, are opposed to the rule. They say slowing down production under rules like country of origin labeling will come at the expense of meat packers and producers. That’s particularly bad news for producers, who are on the receiving end of higher costs taken on by processors, and who could see declines in prices processors are willing to pay under COOL.

NPPC spokesman Dave Warner says a lack of change in USDA’s final rule from its earlier version could also be bad news for U-S pork exports.

Certainly pork could get hit with a tariff if this new rule doesn’t satisfy our US trade obligations under the World Trade Organization. The WTO would essentially tell the Canadians and the Mexicans that they are allowed to retaliate.

The WTO has not specified a date by which it will make a determination on the new U.S. meat labeling rule, which USDA estimates will add $192 million in domestic industry costs on top of a higher figure outlined in the original rule. If the final rule falls short of the WTO’s standards, NPPC notes the U.S. risks retaliation.

Iowa Senator Chuck Grassley also expressed his doubts that Canada would be happy with any outcome. In a May 28 conference call, Grassley said he suspects Canada’s next step will be an appeal through the World Trade Organization.