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Obama warns on “Buy America,” gives hope for COOL

(Resource News International) — While the new U.S. administration decides whether it will re-open the debate on country-of-origin-labelling (COOL) legislation, Canadian livestock groups hope President Barack Obama’s recent warnings on “Buy America” provisions show a commitment to pragmatism, not ideology.

COOL legislation was thrown into limbo Jan. 22 when Obama put a hold on all last-minute legislation passed by the outgoing Bush administration, pending review and approval by an Obama appointee.

The final regulations of the controversial labelling law had just been published Jan. 15 and were to come into effect March 16, 60 days after publication in the U.S. Federal Register.

Now it’s up to U.S. Secretary of Agriculture Tom Vilsack, a Democrat from Iowa, to decide whether to move ahead with the March enforcement of the rule as it stands, or to re-open the debate on COOL. Canadian livestock groups are concerned that re-visiting the legislation would allow recent improvements to be undone, opening the door for a more restrictive implementation of COOL.

In October 2008, the Canadian Cattlemen’s Association (CCA) said it was “particularly concerned that a new (U.S.) administration in 2009 might take the opportunity to make COOL even more trade-restricting.”

But with campaign rhetoric behind them and a slowing economy before them, there are signs that Obama and his appointees may not be as protectionist as some had feared.

Both the U.S. House of Representatives and U.S. Senate included “Buy America” provisions in their versions of the multi-billion dollar U.S. stimulus package. The Senate, whose stricter version would have applied to all manufactured goods rather than just iron and steel, agreed to water down its provision after White House officials urged Congress not to include provisions that would spark an international trade war.

“Valuable and credible”

“Their stance on the ‘Buy America’ issue was definitely encouraging, because the issue of protectionism crosses all industries,” said CCA foreign trade committee chairman Travis Toews.

“So the administration messaging that they did not want to violate trade agreements, the NAFTA (North American Free Trade Agreement) in particular, was very positive. It’s an indication that this administration sees those agreements as valuable and credible.”

Further encouragement came last week after House agriculture committee chairman Collin Peterson, who had originally been involved in moving COOL through the U.S. legislature, submitted a letter to Vilsack asking him to finalize the rule as is.

“We see that as really important but we know there are other pressures from the other side of the political spectrum as well,” said Toews, a rancher from Beaverlodge, Alta.

President Obama’s administration is beginning to face the reality that its goal of rebuilding ties with allies does not work well with a protectionist trade stance, Toews added.

But for all that, COOL is still up in the air, with no concrete indication as to which way Vilsack will decide.

From what the CCA understands, the original March enforcement date for COOL still stands. That presumably leaves more than a month before the future of the labelling rule must be decided, but Toews said the CCA hopes it is days and at worst weeks before the uncertainty is cleared, rather than a month or more.

“We hear from (U.S.) packers that they are also very uncertain — that until this rule is finalized, they will not finalize their plans. There is a real need for some of this uncertainty to be dissolved so that U.S. and Canadian packers, feeders and producers are able to know what the rules are and are able to make plans accordingly,” he said.

Martin Rice, executive director of the Canadian Pork Council in Ottawa, offered similar sentiments on the possibility that COOL legislation could be re-opened.

“The ‘Buy America’ issue makes us hopeful, though, that President Obama will take a pragmatic approach rather than an ideological approach, which is what was always behind COOL,” he said, before also pointing out Peterson’s recommendation that COOL be implemented as is.

Thinking carefully

A more rigid enforcement of the labelling law would force some American businesses to cut back their processing activity and, as a result, their pork imports, Rice said.

At a time when the U.S. economy is already slumping, the Obama administration is likely thinking carefully about measures that would further cut back U.S. business, he said.

“We hope they will decide soon so that we can have this uncertainty clarified and put behind us. Of course we’re hopeful that they will not re-open it for various reasons,” Rice said. “The recently gained improvements under the final rule enables American businesses enough flexibility to continue processing Canadian pigs and cattle.”

Following the January release of the labelling law’s final rules, the Canadian government announced its formal consultations with the U.S. via the World Trade Organization (WTO) dispute settlement process were on hold, until the Canadian government has an opportunity to assess COOL’s impact on the Canadian livestock industry once it’s fully implemented and enforced.

COOL requires beef, lamb, pork, fish, chicken, perishable ag commodities, peanuts, goat meat, ginseng, pecans and macadamia nuts to be labelled with their country of origin.

The contested rule was first introduced in the 2002 U.S. Farm Bill and again in the 2008 U.S. Farm Bill following numerous implementation delays.

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