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‘Zero’ chance U.S. will comply on COOL by deadline

Exporters of Canadian meat and livestock are waiting to see exactly how the U.S. government will wind up not complying with international trade law on its regulations for mandatory country-of-origin labeling (COOL).

“There is zero possibility that the U.S. will be in compliance” by Thursday, May 23, the Canadian Cattlemen’s Association said in a statement.

“The question is, will they be maintaining the current status quo level of non-compliance or will they make it worse by implementing (the U.S. Department of Agriculture’s) proposed regulatory amendment?”

Panned by U.S. packers and Canadian and Mexican exporters since its launch in 2008, Washington’s COOL rule was substantially shot down by the World Trade Organization’s Dispute Settlement Body and Appellate Body in 2011 and 2012 respectively.

The WTO has given the U.S. until Thursday to either bring COOL into compliance or face the possibility of retaliatory tariffs on U.S. exports to Canada and Mexico.

COOL orders U.S. retailers to notify their customers, by way of labeling, on the sources of foods such as beef, veal, pork, lamb, goat, fish, fruits, vegetables, peanuts, pecans and macadamia nuts.

In the wake of the WTO bodies’ rulings, the U.S. government in March proposed revisions to COOL which, if passed, will require even more specific labels for meat according to individual steps of production.

The regulatory proposal moved “a step closer to implementation” on May 10 when USDA submitted it to the White House Office of Management and Budget (OMB) for approval to publish as a final rule, the CCA said.

USDA’s March proposal, the CCA noted, is now designated as “economically significant,” which means the department now acknowledges the cost of the proposal will affect over US$100 million of commerce.

“Such a designation should mean that the rule is subject to a more rigorous inter-agency review process and that there must be a mandatory 60-day delay following final publication before the rule can come into force,” the CCA said.

“We will see whether USDA finds a way around these additional requirements or if the earliest the rule could come into force is late July.”

If the latter, the CCA said, the U.S. would have “no counter-argument” if Canada were then to assert at the WTO that the U.S. has failed to comply on COOL. Canada, the CCA said, would then be able to “immediately request compensation or authority to retaliate.”

“Potential targets”

It’s now possible, however, that the U.S. Senate and House of Representatives may also consider addressing COOL, as both houses of Congress are expected to consider a new U.S. Farm Bill within the next couple of weeks.

However, the CCA believes U.S. lawmakers will only deal with COOL in the Farm Bill “if they believe that retaliatory tariffs on U.S. exports are being considered by Canada and Mexico.”

Canada’s International Trade Minister Ed Fast and Agriculture Minister Gerry Ritz were are reported to be working toward having the Canadian government publish a list of U.S. products that would be “potential targets,” the CCA said.

The association said it expects “products made in areas represented by U.S. lawmakers opposing a resolution of the COOL dispute would find their way onto such a list.” Retaliatory tariffs from Canada are expected to run up to about $1.1 billion.

CCA president Martin Unrau said in a release Tuesday that a CCA delegation “had the opportunity to meet directly this morning with Mexican Agriculture Secretary Enrique Martinez and I asked him to work with (Ritz) on this important matter.”

Martinez, Unrau said, “indicated that he was already coordinating closely with Minister Ritz and that we could expect a strong Mexican response to U.S. non-compliance.”

Related story:
COOL changes expected to worsen financial damage, April 12, 2013

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