Exporters of livestock and meat from Canada to the United States can expect to see significant reforms in the next six months to a persistent trade barrier.
A World Trade Organization (WTO) arbitrator, Giorgio Sacerdoti, on Tuesday gave the U.S. government until May 23, 2013 to bring its mandatory country-of-origin labelling (COOL) laws into compliance with its international trade obligations, as per the WTO Appellate Body’s ruling in June.
Sacerdoti’s decision is not subject to appeal, the Canadian government noted Tuesday.
The new deadline was imposed following Canada’s Sept. 13 request for binding arbitration, after the U.S. declared in August it would comply with the Appellate Body’s ruling, but would need a "reasonable period of time" to do so.
Canada’s request called on Sacerdoti to determine a "reasonable period of time." The U.S. had originally asked for 18 months from the adoption of the Appellate Body’s report to make the COOL law WTO-compliant — which would have stretched out the current COOL law’s effectiveness until Jan. 23, 2014.
In giving the U.S. government just 10 months from the adoption of the Appellate Body report, Sacerdoti wrote that the time frame "should allow the United States to implement the recommendations and rulings… regardless of whether it decides to do so by regulatory action alone or by legislative action followed by regulatory action."
Requirements laid out in the WTO’s Agreement on Technical Barriers to Trade (TBT), he wrote, do "not justify granting additional time in this case."
"We expect that the U.S. will bring itself into compliance with its WTO obligations by May 2013 as determined by the arbitrator for the benefit of producers on both sides of the border," Canada’s international trade and ag ministers said Tuesday in a statement.
"We are particularly pleased that the arbitrator determined a reasonable period of time close to that proposed by Canada and Mexico, as opposed to the much longer period suggested by the United States."
"We are looking to work with allies in Canada and Mexico, as well as the United States, to find a timely and effective legislated end to this serious discrimination against Canadian feeder and slaughter hog exports," Jurgen Preugschas, past chairman of the Canadian Pork Council, said Tuesday in a separate release.
"Back to normal"
"The North American hog industry is highly specialized, and was very integrated before COOL. We need to try to get back to normal as soon as possible."
The Canadian Cattlemen’s Association noted Tuesday its representatives were in Washington, D.C. recently to meet with congressional leaders and press for a "timely resolution" and for support to legislative changes to "end the discrimination caused by COOL."
COOL was conceived in Washington’s 2002 Farm Bill and launched in September 2008. It 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.
Between 2008 and 2009, the Canadian government reiterated Tuesday, exports to the U.S. of Canadian feeder cattle declined 49 per cent and exports of slaughter hogs declined 58 per cent.
COOL, by forcing U.S. packers and processors to either segregate Canadian animals and meat at their own cost or curtail their imports from Canada, "led to the disintegration of the North American supply chain, created unpredictability in the market, and imposed additional costs on producers," the Canadian government said.
Canada and Mexico in late 2008 filed for hearings on COOL at the WTO’s Dispute Settlement Body (DSB), which in November 2011 ruled that mandatory COOL has violated parts of the TBT, breached Washington’s WTO obligations and "does not fulfil its legitimate objective" of consumer education.
The Appellate Body in June upheld the DSB’s finding that COOL "has a detrimental impact on imported livestock" and that the U.S. law’s record-keeping and verification requirements "create an incentive for processors to use exclusively domestic livestock, and a disincentive against using like imported livestock."
The Appellate Body went further, however, and ruled COOL "lacks even-handedness" by imposing "a disproportionate burden on upstream producers and processors of livestock, as compared to the information conveyed to consumers through the mandatory labelling requirements for meat sold at the retail level."
COOL requires that a "large amount of information must be tracked and transmitted by upstream producers for purposes of providing consumers with information on origin," the Appellate Body noted, but found that "only a small amount of this information is actually communicated to consumers in an understandable or accurate manner."
On top of that, the Appellate Body ruled, "a considerable proportion of meat sold in the United States is not subject to the COOL measure’s labelling requirements at all."