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Canada to take U.S. COOL to WTO talks

Livestock producers’ groups are hailing Ottawa’s decision to take the U.S. government into World Trade Organization talks over Washington’s mandatory country-of-origin labelling (COOL) laws on imports of meat and other foods.

The Canadian government said Monday it will seek formal consultations with the U.S. on COOL under the WTO dispute settlement process.

“We are committed to a respectful working relationship with our American neighbours, but have always made it clear that these new regulations must not discriminate against Canadian producers,” federal Agriculture Minister Gerry Ritz said in a release Monday.

“This consultation is a formal opportunity for us to work with the U.S. to resolve this issue, as well as a strong signal that we will stand up for Canadian producers and exert our rights if necessary.”

“U.S. COOL will drive some Canadian producers out of business, reduce livestock herds and cost the pork industry millions” said Canadian Pork Council president and Alberta hog producer Jurgen Preugschas in a separate release.

“Today’s announcement is a clear signal that our government understands the adverse impact U.S. COOL already is having and the grave threat its continued application poses to our producers.”

The proposal for mandatory U.S. COOL dates as far back as the 2002 U.S. Farm Bill. Despite opposition from President George W. Bush, who favoured voluntary COOL, the proposal created new mandatory labelling requirements for certain beef, lamb, pork, fish and shellfish, fruit and vegetables, and peanut products sold at U.S. retail outlets. Retailers are required to provide label information to the consumer on the country of origin of the commodity.

Implementation of mandatory COOL for most affected products was stalled by legislative wrangling in the U.S. Congress before the law finally took effect Sept. 30 this year, with a six-month non-enforcement “education” period built in for affected industries to adjust to the new requirements. COOL’s provisions for fish and shellfish have already been in place for three years.

“No choice”

The Canadian government said it has submitted its concerns regarding COOL during comment periods on related legislation in 2003, 2005, 2007 and 2008

“While Canada is firmly committed to a co-operative trading relationship, we believe that (COOL) is creating undue trade restrictions to the detriment of
Canadian exporters,” said International Trade Minister Stockwell Day in the same announcement. “Under these circumstances, Canada has no choice but to assert its WTO rights in the defence of our exporters.”

“We have asked the federal government to initiate a trade challenge and I applaud their step today to stand up for the Canadian livestock industry,” Saskatchewan’s agriculture minister Bob Bjornerud said in a separate release Monday.

COOL appears to be inconsistent with U.S. international trade obligations and is already disrupting trade flows between Canada and the U.S., Bjornerud said, noting the extra record-keeping and segregation requirements of COOL are also costly.

WTO consultations of this type give the two countries the opportunity to resolve the dispute through formal discussions. If consultations fail to resolve the issue, the government said, the matter can then be referred to a WTO dispute settlement panel.

A government-industry working group, set up in October, is already monitoring the implementation of COOL to collect information on its economic impact on Canadian livestock and meat industries, Ritz said. “Canadian producers have already indicated that COOL is having a negative impact on livestock and meat exports,” the government said.

Specifically, Canada is concerned that COOL’s requirement to separate products into three categories, based on the country or countries where they were produced, will impose additional costs at each stage of the process, such as in feedlots, processing plants, packing plants and retail outlets.

Processors, for instance, may need to segregate animals at their facilities, which will generate additional costs. These additional costs could create a disincentive to purchasing Canadian animals. Processors may choose not to buy Canadian animals or may buy them at a discounted price.

“Further changes”

More specifically, CanFax, the market monitoring wing of the Canadian Cattlemen’s Association, said it is already seeing seeing segregation of plants and shifts with U.S. packing plants.

Several are taking only animals born and raised in the U.S. for ease of reporting, or are slaughtering Canadian-born or Canadian-born-and-fed cattle on certain days in order to separate labels, CanFax reported.

Despite the six-month education period, CanFax said last week, several packers have already said separation of lines will take effect in January, at which time “further changes are expected.” U.S. feedlots feeding Canadian cattle have been told that Canadian-born feeders will be taken until the end of the year.

Similarly, since COOL was implemented, U.S. hog buyers have announced that they will curb, or in some cases, “cease altogether” the purchase of animals born outside of the U.S., the Canadian Pork Council said Monday.

“There is little evidence that mandatory COOL will bring tangible benefits to (U.S.) consumers as a retail labelling program,” the Canadian government said Monday. “In addition, it is unlikely consumers will
willingly absorb the costs associated with its implementation.”

Some proponents of COOL have attempted to link the law to food safety and to animal and human health issues, Ottawa noted Monday, but “the stated intent of this legislation is not to address food safety or animal health concerns, but to provide consumers with additional information on which to base their purchasing decisions.”

At an international level, Ritz and Day’s departments warned Monday, “the the potential exists for mandatory COOL to lead to more extensive and restrictive process-oriented labelling programs by other countries.”

That, in turn, could “significantly restrict” international trade flows of agricultural products if other countries implement measures, “ostensibly to benefit their domestic industries, that are more trade-restrictive than necessary.”

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