A long list of U.S.-manufactured goods and agricultural products are being threatened by a trade dispute about whether U.S. Country of Origin Labeling (COOL) requirements discriminate against our bordering countries’ meat products. Absent quick action to settle the dispute, the governments of Canada and Mexico—currently the two largest markets for U.S. exports—could impose $2 billion in retaliatory tariffs that would endanger thousands of American jobs.
Two years ago, Canada and Mexico succeeded in their World Trade Organization (WTO) case challenging COOL, seeking to end what they view as discriminatory treatment. The final decision is expected shortly.
Recently, the National Farmers Union mischaracterized the position of the COOL Reform Coalition, co-chaired by our organizations, saying we are “pushing to repeal COOL without knowing the full findings of the WTO compliance study.” This is inaccurate. However, we do agree that the United States must comply with its international trade obligations
The COOL Reform Coalition has been urging Congress to authorize immediately and direct the Secretary of Agriculture to suspend indefinitely COOL only upon a final adjudication of noncompliance by the WTO. This position does not assume that the United States will be unsuccessful in the pending WTO litigation or undermine the U.S. position in any way. It simply makes clear that if the final WTO adjudication finds that COOL places the United States in violation of its international trade obligations, the secretary would be required to suspend immediately the noncompliant rule and ensure that billions of dollars in U.S. exports and the jobs that support them are not put at risk.
America’s standing as a nation that keeps its word is at stake. Our commitment to the rule of law must extend to the obligations we have voluntarily undertaken as a signatory to the WTO agreements—agreements that have brought significant benefits to American farmers, ranchers, manufacturers and workers.
In this context, a ruling that the United States has violated its trade obligations would be costly and damaging if not rectified quickly, as Canada and Mexico would surely retaliate. This would severely damage the ability of manufacturers, farmers and ranchers to export, undoubtedly hurting American jobs and economic opportunities. Our competitors in foreign countries would quickly fill the void. Historically, retaliatory tariffs result in halted exports, lost jobs and in some cases, business closures—a high price to pay for breaking the rules we led the world in creating, committed to obey and insisted our trading partners obey.
When a dispute settlement panel sided with Mexico on a dispute with the United States over cross-border trucking in March 2009, it imposed tariffs as high as 45 percent on 99 American products, representing more than $2.5 billion of U.S. exports to that country. This drop meant lost sales and lost jobs. U.S. potato growers, for example, saw their exports to Mexico fall by nearly 50 percent over the 31 months the retaliatory tariffs were in place, at a cost of more than $70 million.
While American exports to Mexico generally have bounced back since the trucking dispute was resolved in the fall of 2011, many U.S. sectors still haven’t regained all of the Mexican market share they lost to foreign competitors during the trade disagreement.
This blow will be dealt to dozens of U.S. industries if the COOL issue isn’t resolved. With jobs on the line, now is the time to work together to avert a costly trade war and promote, not cede, economic opportunities for American farmers, manufacturers and workers.
Dempsey is vice president of international economic affairs at the National Association of Manufacturers. Murphy is senior vice president for international policy at the U.S. Chamber of Commerce.