Home Audio COOL trade retaliation unlikely until late summer, says Grassley

COOL trade retaliation unlikely until late summer, says Grassley

WASHINGTON and AMES, Iowa – On Monday the World Trade Organization decided against the United States in its fourth and final appeal regarding USDA’s country of origin labeling rule for meat products.

Country of origin labeling, often shortened to COOL, requires some meat products to show, on a label, where the contributing animal was born, raised and slaughtered. Supporters of COOL say consumers have a right to know where their food comes from, while opponents argue against the costs of segregating meat throughout the production chain.

Iowa Cattlemen’s Association CEO Matt Deppe says mandatory COOL labels tend to be inconsistent for consumers.

”The challenge is, if you study many of the labels in the grocery market, the label is on the actual label you think of normally with the different food ingredient pieces on it, [or] sometimes it’s ink-jetted onto the cellophane,” Deppe explains, “So it’s really hard to nail that down. And actually some research from K-State indicated that it doesn’t necessarily cause increased demand for the product.“

That research was conducted by Kansas State University economist Glynn Tonsor and others in 2012; it found that country of origin labeling goes largely unnoticed by consumers, and has not increased demand for products labeled as such.

The Iowa Cattlemen’s Association supports a voluntary country of origin label; Deppe says they’ve got a proven track record. “Certified Angus Beef would be a voluntary label that’s very recognizable,” he says. “It’s not mandated by the government so to speak but an entity came together, and put it together.“

Canada and Mexico originally brought the case against the U.S. in the WTO, and Monday’s ruling will allow both countries to levy retaliatory tariffs on U.S. products exported to those countries. For Iowa, those tariffs threaten about $1.3 billion in exports such as pork, alcohol, corn and corn syrup, and soybeans.

Iowa Senator Chuck Grassley says there is still time to make changes to the COOL rule itself, considering that the retaliation won’t happen overnight.

“First, the United States will likely object to the amount of damages Mexico and Canada will request, which will send that case, then, to arbitration,” says Grassley. “That process usually takes 60 days, which then means it will be almost August, when we have a recess, before the amount of damages from this case will be settled. It’s only at that point that Canada and Mexico can retaliate.”

At the root of the issue are U.S. trade obligations as a member of the World Trade Organization. For example, Section 2.1 of the Agreement on Technical Barriers to Trade requires that no WTO member treat imported products less favorably than domestic versions of the same products. The WTO ruled on Monday that, under the country of origin labeling rule, the American livestock sector has an incentive to use exclusively domestic animals so as to avoid the costs associated with segregated animals of different origins throughout the production chain.

According to Grassley, a number of alternatives have been discussed to bring COOL into compliance with those WTO member obligations.

“Representatives from the Canadian government and several meatpacking companies have told me that a generic North-American label, as opposed to just a ‘Made in America’ label, would solve the problems, from their perspective,” Grasley says. “There are also some people who would like to see full repeal of the COOL legislation. At a minimum, it’s likely we’ll end up with a voluntary COOL program. Canada already has such a voluntary ‘Made in Canada’ program, so I imagine that they will have no issues with the United States having what they have.”

To hear more about the future of USDA’s country of origin meat labels, click the audio player above this story.

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