Meat packers say Obama administration labeling rules will cripple industry

The U.S. meat industry is joining with the Canadian government in opposing proposed labeling regulations that they say would shutter beef packing plants and cripple the industry across North America.

The proposed country-of-origin (COOL) labeling requirements from the Obama administration are meant to address a finding by the World Trade Organization that the United States' current meat and poultry labeling rules violate international standards.

But a leading meat industry trade group described the proposed fix as a "bad sequel” to the original regulations.

“Usually, the sequel gets bad reviews and that is certainly the case here,” said Mark Dopp, senior vice president of regulatory affairs at the American Meat Institute. “Reading this proposed rule is like watching ‘Godzilla 13’, but sadly, it’s not fantasy. It’s a real, bureaucratic proposal that will give consumers information they aren’t truly seeking for a higher price and put companies out of business in the process.”

The labeling rules, enacted in 2009 after years of debate, are designed to give consumers more information about the origins of the food they buy. As currently written, the regulations require grocery stores and other retailers to notify their customers about the source of certain foods, including meat products.

The World Trade Organization (WTO) last year ruled that the country-of-origin rules give American meat products an unfair advantage over those from Canada and Mexico. If the WTO violation is not remedied by May 23, America’s top two meat-trading partners could impose retaliatory tariffs against U.S. meat producers and packers.

Industry groups, who never liked the labeling regulations in the first place, say the WTO finding shows that they should be scrapped altogether. In their first year alone, the labeling requirements cost U.S. meat packers as much as $500 million as they implemented new livestock segregation, record-keeping and packaging practices.

But the proposed revision goes in the opposite direction, adding new requirements for separate labels indicating where meat products are born, raised and slaughtered.

“USDA expects that these changes will improve the overall operation of the program and also bring the current mandatory COOL requirements into compliance with U.S. international trade obligations,” Agriculture Secretary Tom Vilsack said upon issuance of the proposed rule last month.

In formal comments filed Wednesday, the American Meat Institute argued that the proposed rule is unlikely to satisfy the WTO.

“If the existing mandatory country of origin labeling (COOL) rules are amended as provided by the proposal there is a virtual certainty that several meat packing establishments will ultimately close because of the costs they will be forced to incur in order to implement the proposal’s requirements,” the institute argued. “In effect, the agency is picking winners and losers in the marketplace in order to provide information to consumers that recent research shows they care little about and do not wish to pay for.”

In total, the agency received more than 800 submissions from groups and consumers on both sides of the debate during a 30-day comment period that closed Thursday.

Proponents of the policy — farm and cattle industry groups, along with consumer watchdogs — argue the WTO ruling does not altogether ban labeling. Rather, they contend that the adjustments to the current regulation would remedy the issue, while allowing COOL to continue.

All of the comments would be considered before the agency issues a final deadline.

But time is short. The WTO ruling gives the United States until May 23 to brings its policy in line with international standards. After that, Canada and Mexico could begin imposing costly tariffs that could hurt American meat producers and packers.

Canadian Agriculture Minister Gerry Ritz warned of an aggressive response if the United States fails to comply. Ritz said the proposed changes would not satisfy the WTO.

"Our government will consider all options, including extensive retaliatory measures, should the U.S. not achieve compliance by (next month’s deadline),” Ritz said Tuesday following a trade mission to Washington, where he discussed the issue with Vilsack.

It is unclear how much money would be involved in the trade sanctions, but industry groups have said the result could be devastating.