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COOL effective against trade: U.S. analysts

The U.S. government’s mandatory country-of-origin labelling (COOL) for meat has so far been “quite effective” in squelching cross-border cattle trade, according to two well-known U.S. market analysts.

Steve Meyer and Len Steiner, authors of the Chicago Mercantile Exchange’s (CME) Daily Livestock Report, said in their commentary Wednesday that for the period from July 14 to Dec. 27, 2008, total U.S. imports of Canadian feeder cattle were 187,866 head, 38 per cent lower than the same period the previous year.

Imports of slaughter Canadian steers and heifers during the same period were 262,929 head, 35 per cent lower than a year ago. “As for Canadian cow imports, it is hard to make any good year to year comparisons because imports only started in November of 2007,” Meyer and Steiner wrote.

Most imports from Mexico, meanwhile, were feeder cattle going to southern U.S. feedlots, they noted. For the period July 14 to Dec. 20, imports of Mexican feeder cattle were 323,105 head, 39 per cent lower than year-ago levels.

“Ironically, the reductions in imports from both countries came at a time when a significant devaluation in the value of the peso and Canadian dollar normally would have been conducive of increased imports from these two countries,” Meyer and Steiner wrote.

“Under normal circumstances, one would expect cattle imports to actually increase rather than be cut by almost 40 per cent.”

In other words, charting the decline in imports shows that “so far the legislation has been quite effective, if you measure effectiveness by the degree to which it has been able to stifle cattle trade in North America.”

At a time when demand for cattle is down, they wrote, “it will be hard to quickly reverse current trends.”

Further, they said, it’s important to note not just the date mandatory COOL became effective (Sept. 30, 2008), but also the provision in the last U.S. Farm Bill that all cattle imported in the U.S. before July 15 would be considered of U.S. origin, while those imported after that date would be considered of foreign origin.

Therefore, that Farm Bill provision impacts the terms under which the cattle designated as “foreign” were sold to packing plants.

“This ‘grandfather clause’ naturally had the most impact on feeder cattle imports,” they wrote, “since by the time those animals came out of feedlots they would be considered of non-U.S. origin and be treated as such by packing plants.”

Cross-border trade in live hogs has been impacted “just as severely,” they wrote, and “one can understand the action Canada and Mexico took by referring the matter to the World Trade Organization.”

Ottawa said Dec. 1 it would seek formal consultations with the U.S. on COOL under the WTO dispute settlement process. The Mexican government followed suit later last month.

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