WTO rules against US country of origin labeling

The World Trade Organization (WTO) on Monday ruled against the United States’ revised rule in a country-of-origin-labeling (COOL) dispute with Mexico and Canada over meat imports.

In the ruling, a win for Canada and Mexico, the WTO raised concerns that the modified U.S. regulations still created a "technical barrier" to trade because it discriminated against meat imports, such as beef and pork.

Sen. Debbie StabenowDebbie StabenowGreat Lakes senators seek boost for maritime system Podesta floated Bill Gates, Bloomberg as possible Clinton VPs Dems to McConnell: Pass 'clean' extension of Iran sanctions MORE (D-Mich.), chairwoman of the Senate Agriculture Committee, said there may still be a way to comply with the COOL rule without weakening it. 

“We can spend decades litigating this issue at the WTO, or we can work together to find a solution that encourages international trade and gives consumers what they need to make choices for their families," Stabenow said.

The regulation, last revised in May 2013 in response to a prior ruling, was strengthened by the U.S. Department of Agriculture (USDA) to provide more precise information on where the animal was born, raised and slaughtered.

The law has proven popular in polling with an overwhelming majority of Americans expressing support.

Canada and Mexico have argued that the labeling rule put their meat exports at a disadvantage in the U.S. market.

The WTO panel said that the requirements provide “treatment less favorable” than that for U.S. livestock and that the amended rule “increases the original COOL measure's detrimental impact on the competitive opportunities of imported livestock,” in the U.S. market.

Canada has said that its exports of pork and beef to the U.S. have declined sharply in the past five years, since the requirements first went into place.

Without changes or the elimination of the popular policy, Mexico and Canada have threatened indefinite trade sanctions on a wide variety of U.S. products.

Canada has said it would sanction products ranging from apples to wooden furniture. Mexico has yet to release a list.

Agricultural business groups urged Congress to work on those changes to avoid any retaliation on a wide range of U.S. products.

National Cattlemen's Beef Association President Bob McCan said the decision brings U.S. beef producers “one step closer to facing retaliatory tariffs from two of our largest trading partners."

The group has maintained that there is no regulatory fix to bring the COOL rule into compliance with WTO obligations that will satisfy Canada and Mexico.

“COOL is a failed program that will soon cost not only the beef industry, but the entire U.S. economy, with no corresponding benefit to consumers or producers,” McCan said.

“We look forward to working with Congress to find a permanent solution to this issue, avoiding retaliation against not only beef, but a host of U.S. products,” he said. 

The Consumer Federation of America expressed strong disappointment with the decision and urged the Obama administration to appeal the ruling.  

“Today’s decision flies in the face of the overwhelming numbers of U.S. consumers who want more information about the origin of their food,” said Chris Waldrop, director of CFA’s Food Policy Institute.

“Basic information about the origin of our food should not be considered a barrier to trade,” Waldrop said. 

In August, a bipartisan group of more than 100 lawmakers suggested that Agriculture Department Secretary Tom Vilsack nix the labeling law if WTO ruled against it again.

“Congress must be prepared to act and find a solution that maintains a healthy relationship with our trading partners and protects the American economy," they said at the time.

Public Citizen also urged U.S. trade officials to appeal the decision and argued that weakening the requirements would deprive the U.S. consumer of access to origin information with demand for it spiking.

“Many Americans will be shocked that the WTO can order our government to deny U.S. consumers the basic information about where their food comes from and that if the information policy is not gutted, we could face millions in sanctions every year,” said Lori Wallach, director of Public Citizen’s Global Trade Watch.

Meawhile, the American Meat Institute and North American Meat Association encouraged the Obama administration to work together with the industry and Congress to amend the statute so that it complies with international obligations.

"Such a change would help restore strong relationships with some of our largest and most important trading partners,” they said in a joint statement.

“USDA’s mandatory COOL rule is not only onerous and burdensome on livestock producers and meat packers and processors, it does not bring the U.S. into compliance with its WTO obligations,” they said.

“By being out of compliance, the U.S. is subject to retaliation from Canada and Mexico that could cost the U.S. economy billions of dollars.”

Meanwhile, Canada’s government hailed the ruling and called on the United States to comply.

"Today's WTO compliance panel's report reaffirms Canada's long-standing view that the revised U.S. COOL measure is blatantly protectionist and fails to comply with the WTO's original ruling against it," Agriculture Minister Gerry Ritz said in a statement.

Ritz expects the United States to appeal the decision. 

Canadian International Trade Minister Ed Fast has said the requirements cost the Canadian pork and beef industries about $1 billion a year.