The Fight
Over COOL:
Catching up on the CanadaU.S. food labelling debate
The U.S. is in a major, long running dispute with Canada
and Mexico over country of origin labeling (COOL) on meat
products. The argument was brought to the WTO, for the
second time, with the Organization once again ruling in favor
of Canada and Mexico in October 2014.
The U.S. first introduced COOL in 2008, with the stated aim
of providing consumers with information on where the meat
they were purchasing came from. At that time meat suppliers
were required to label their product as coming from Canada,
Mexico and the U.S.; Canada and Mexico saw this as an unfair
trade practice and brought an appeal on COOL to the WTO,
saying it discriminated against foreign livestock.
A violation of trade rules
In July of 2012, the WTO found that COOL did violate
international trade rules and that the 2008 requirement
discriminated against Mexico and Canada. The U.S. was
ordered to change its legislation to ensure that it was
compliant with international trade laws.
In 2013, the U.S. revised COOL by tightening the
requirements. The changes required the label to now follow
Learn how country of origin
labelling requirements could impact
food importers and exporters across
North America.
1 Product: Export Process
the life of the cow, identifying where it was born, raised and
slaughtered. Canada and Mexico fought back, arguing that
the changes were even more restrictive and onerous than the
original requirements.
“The label has to identify where the cow came from and if
it’s considered mixed origin, even if it is shipped right after
birth. It’s a problematic issue,” said Candace Sider, director,
regulatory affairs, Livingston International. This means that
the label has to be specific stating, for example, that the
animal that produced the meat was “born in Canada, raised
and slaughtered in the United States” or “born, raised and
slaughtered in the United States”.
Many U.S. meat industry trade groups are also at odds with
the implementation of COOL. The revised 2013 COOL
regulations mean increased costs for both meat processors
and packers, including those in the U.S. In fact, packers in
the U.S. have argued for the repeal of COOL in concert with
Canada and Mexico. The labelling requirements also make it
extremely difficult for Canadian and Mexican cattle to be sold
in the U.S., and both countries are saying that COOL has done
significant damage to their cattle industry.
Canada and Mexico’s arguments are not unfounded. In
October 2013, Tyson Foods Inc. said that it would no longer
buy slaughter-ready Canadian beef due to the high costs
incurred when complying with COOL regulations, including
the segregation of Canadian cattle prior to slaughter. The
Canadian Cattlemens’ Association estimates that COOL has
cost Canadian cattle producers over $3 billion since 2008.
The impact of COOL:
The Wall Street Journal estimates that
the combined retaliatory actions of
U.S. farm bill prompts WTO action
Canada and Mexico had hoped to avoid another WTO battle;
they were hopeful that COOL would be addressed in the
2014 farm bill when it passed by the U.S. Congress. However,
the bill was passed with no changes, despite appeals from
American meat producers and processors. Once the bill was
passed, COOL was firmly entrenched leaving Canada and
Mexico with only one option – to again bring COOL before
the WTO.
both Canada and Mexico could cost
the U.S. economy $2 billion.
The appeal has worked its way through the WTO. In October
2014, WTO again ruled in favor of Canada and Mexico,
finding that the U.S. has not done enough to change its
labelling rules. The U.S. now has the option to appeal the
ruling, or comply.
If the U.S. does not make the necessary amendments to
COOL, Canada has threatened to take action in the form of
trade retaliation, including placing increased tariffs of over $1
billion on various U.S. products imported into Canada. The list
Labelling requirements are making
it extremely difficult for Canadian
and Mexican cattle to be sold in
the U.S.
of products potentially affected, as compiled by the Canadian
government, includes beef, pork, cereals, baked goods,
fresh fruit and other items. It is estimated that the combined
retaliatory actions of both Canada and Mexico could cost the
U.S. economy $2 billion1.
“The Canadian retaliation is broader,” said Sider. “They’re
looking at retaliatory tariffs on 30 U.S. products if COOL is not
repealed.”
Canada is not expected to implement retaliatory tariffs until
the U.S. has exhausted all legislative and legal options, and
the WTO provides authorization for the tariffs. “Canada is
waiting for the WTO to run its course before retaliating,” said
Sider.
1
Wall Street Journal – Feb. 28
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2 The Fight Over COOL