Canadian farmers and meat processors were shocked to learn on
May 23, 2013 that the long-awaited U.S. response to the World Trade
Organization (WTO) requirement that it discontinue discriminatory
Country of Origin Labeling (COOL) for cattle and hogs was to
publish a new set of rules that will actually make the situation
for Canadians much worse. The new rule is no more trade-compliant
than its predecessor. This slap in the face to its largest trading
partner is yet another example of a longstanding pattern of trade
protectionism by the country that lectures the rest of the world on
the need for a rules-based free trade system.
From the outset, the original COOL rules put in place in 2008
had a dramatic negative impact on Canadian swine and beef cattle
producers. Canadian cattle shipments to the U.S. were reduced by 50
per cent within a year, and export of slaughter hogs was cut by 58
per cent. Canada took the case to the WTO, arguing that the U.S.
COOL regime violated Article 2.1 of the Technical Barriers to
Trade Agreement (TBT) in that the provisions were a disguised
barrier to trade being "arbitrary or unjustifiable
discrimination between countries." When Canada won the case,
the U.S. appealed and the Appellate Body again confirmed that the
U.S. COOL regime "reflects discrimination in violation of
Article 2.1 of the TBT Agreement." But COOL stayed in
place pending the new rules that have now turned out to be a bitter
The Canadian Pork Council (CPC) has said it was appalled by the
U.S. response, making a "very bad situation of the last four
years much worse." The CPC estimates that the labelling rules
cost Canada about $1 billion annually in beef and pork exports. The
Canadian Cattlemen's Association (CCA) has said that the new
rules will more than double regulatory costs, meaning that there
will be even fewer Canadian cattle exported to the U.S.
Left with no alternative but to proceed to trigger the steps
that allow it to take retaliatory action, on June 8 Canada
announced for comment a long list of products on which it threatens
to impose a 100-per-cent surtax. The list includes U.S. cattle,
pigs, beef, pork, pasta, some fruits and vegetables, milled rice,
cereals, bread, frozen orange juice, meat from spent hens,
chocolate and maple syrup. It also includes some non-food items
such as office furniture and mattresses. Once Canada finalizes the
list, it will seek the approval of the WTO to proceed, a process
that is still likely to take until the end of 2014. Unwilling to
wait, the CPC and CCA and six other Canadian and American trade
associations have sued the U.S. government, arguing that COOL is
Canadian officials have taken a very strategic approach in
developing the list of products for possible retaliation. By
identifying what states may be vulnerable in the 2014 mid-term
elections, and what products these states export to Canada, the
list is designed to punish those states if they persist in
supporting COOL. This is Canada's only real leverage to try to
force the U.S. to live up to its international trade
The Canadian government will have to be very careful how it
winnows the list of products subject to retaliation. Some sectors
will benefit by the reduction of competition from U.S. exporters,
but other companies and whole sectors could be severely harmed if
they have to pay a prohibitive new price for imported products that
they may use, for example, as ingredients in further processing. We
cannot support one industry at the expense of another. It is
incumbent on those companies and sectors that may be adversely
affected to put their case to the government in the strongest terms
before Sept. 30, the deadline for comments.
After what I experienced in the years I was president of the
Canadian Food Inspection Agency, and in the decade since acting for
Canadian agriculture and food companies, I am no longer surprised,
but still deeply disappointed, by the level of American trade
protectionism against Canada.
This article originally appeared in Food in Canada and is
republished with the permission of the publisher
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