CALGARY – Canada has won the opening round in a long-simmering dispute over an American rule that required the country-of-origin be labelled on all beef and hog exports to the United States.
The Canadian federal government, with the backing of the cattle and hog industry, launched a challenge with the World Trade Organization over the U.S. labelling requirement, known as COOL, which went into effect in 2008. Mexico protested as well.
The two countries argued the U.S. rule created unnecessary paperwork and additional red tape. Industry groups say the rules have cost Canadian ranchers millions with their products being discriminated against in U.S. markets.
In 2009, the Geneva-based WTO opened an investigation. It found that the labelling discourages imports and adds to the cost of exports.
“I can tell you today we were heard. Canada always punches above it’s weight,” said Agriculture Minister Gerry Ritz, “It marks a clear win for Canadian livestock producers across this great country.”
The U.S. will now be required to bring its measures into conformity with its WTO obligations, but the country has 60 days to appeal.
The country of original labelling is required on all meat sold in grocery stores including beef, lamb, chicken, goat and pork. The rule also includes seafood, fresh and frozen fruits and vegetables and pecans.
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There are no rules pertaining to the size or location of the labels, but they must be highly visible and easily understood by the consumer. The tag must include where the product is from. If it is Canadian beef that is processed in the United States both countries must be listed.
Reaction from Canadian industry groups was both positive and cautious.
“COOL has increased costs for U.S. companies that import live cattle, thereby reducing the competitiveness of those Canadian cattle in the U.S. market,” said Travis Toews, president of the Canadian Cattlemen’s Association.
“Since the implementation of COOL in the fall of 2008, the cost to the Canadian cattle producers has been in the hundreds of millions of dollars.”
Canada, whose biggest foreign market for cattle and hogs is the United States, said its exports of cattle dropped 23 per cent and its exports of hogs dropped 36 per cent between 2007 and 2009.
Toews said the battle is likely just beginning.
“While winning this case as soundly as we have is extremely gratifying, it is only a means to an end and not the end in itself,” said Toews.
“The work of obtaining change in U.S. legislation lies ahead and we hope the U.S. will decide that complying with the WTO ruling will be in its best interest also.”
Ritz said he hopes the ruling is the beginning of dismantling the country-of-origin labelling system.
“Of course, the American government has an opportunity to appeal this within 60 days,” said Ritz.
“Then it will take a matter of a few months after that for that second decision to come down. The good news is this was a unanimous decision by the judges on all points that were put forward.”
Fast didn’t think the ruling would have a negative effect on trade between the two countries.
“I don’t want to speculate on whether the Americans are going to appeal,” Fast said.
“As you might expect, we continue to have discussions with the Americans. Obviously, the preferred approach is to reach a negotiated settlement that achieves the goals of both sides.”
The Canadian Federation of Agriculture called the ruling a “significant victory” for beef and pork producers.
“While the CFA has always been confident Canada would prevail in this dispute … this legislation has caused significant losses to our meat sectors for the past several years,” said Ron Bonnett, CFA President.
“We congratulate the government of Canada for vigorously defending the interests of Canadian producers in the international arena, be it at the WTO, or bilateral and regional trade negotiations,” Bonnett remarked.
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