U.S. backs down on trade dispute

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FA Note: This article exemplifies the use of international law and trade agreements to nullify U.S. sovereignty and consumer protections.

Facing threatened retaliation from Canada over “country of origin” meat labelling ruled unlawful by the World Trade Organization, the U.S. Congress moved quickly on Wednesday to start to repeal the requirement.

“In light of the World Trade Organization’s decision and the certainty that we face significant retaliation by Canada and Mexico, we cannot afford to delay action,” said Texas Republican Mike Conaway, chairman of the House of Representatives agriculture committee.

The committee overwhelming approved legislation to repeal the labelling, voting 38-6 in favour on Wednesday and sending the measure to the full House of Representatives. Both Republicans and Democrats backed the repeal.

“It’s an important first step,” said Dennis Laycraft, vice-president of the Canadian Cattlemen’s Association.

The labelling rules were intended to protect the U.S. meat industry from foreign competition and offer consumers more information about where their food came from. But the mandatory labels brought added costs to the U.S. meat industry.

“In a recently released congressionally mandated study, the U.S. Department of Agriculture estimated it would cost approximately $2.6-billion for the livestock and meat industry to comply with COOL [country of origin labelling] rules,” the House agriculture committee said in background documents released earlier this week.

Cattle born in Canada has to be labelled as such, even if the animals were fattened at U.S. feedlots and slaughtered at U.S. facilities. And U.S.-born cattle fattened in Canada but slaughtered in the United States had to be labelled in a different way. This meant that U.S. ranchers, food makers and others in the supply chain had to segregate or mark Canadian or Mexican animals from the time they cross the border to the time they hit the supermarket shelves.

For the U.S. beef and pork industry, foreign livestock became too expensive to handle. For Canadian farmers raising cattle or pigs, this meant billions in lost sales.

Canadian hog producers have lost more than $3-billion in exports and many farmers have quit the business, said Rick Bergmann, chairman of the Canadian Pork Council. “It’s created a lot of financial and economic damage as well as personal hardship. I can drive you by empty farmyards because of this,” said Mr. Bergmann, who raises pigs near Steinbach, Man.

U.S. Agriculture Secretary Tom Vilsack has made it clear that, although he believes that Canada is exaggerating the losses its beef industry has suffered, the U.S. government has run out of ways to fight for COOL.

However, some U.S. ranchers have demanded that Congress not give up, claiming consumers have a right to know where their food comes from.

“When a popular, common-sense law like COOL is declared trade illegal by an anonymous tribunal of the World Trade Organization, you have to wonder what U.S. law is next,” said Gilles Stockton, a Montana rancher and a member of the Western Organization of Resource Councils.

“We ask that Congress make no changes to COOL. … Canada’s claim of damages has been shown to be non-existent by honest independent researchers. Congress and the Obama administration should stand in solidarity with the American people, and independent cattle producers, and not back down.”

But there was bipartisan support to scrap the contentious labelling.

“Time and again, mandatory country of origin labelling is a misguided government policy that has damaged our trading relationships with Canada and Mexico and subjected the United States to trade retaliations,” said Representative Jim Costa, a California Democrat and the ranking member of the livestock and foreign agriculture subcommittee.

Even if the mandatory COOL is repealed, there may be an effort to introduce voluntary country of origin labels indicating cattle born, raised and slaughtered in the United States.

But “it won’t be a mandated or mandatory requirement,” Mr. Vilsack said.

The National Cattlemen’s Beef Association, which speaks for 30,000 U.S. ranchers, said complying with COOL cost beef producers more than $1-billion (U.S.) and led to the closing of slaughterhouses and feedlots.

The group says higher costs associated with labelling have been passed along to its ranchers in the form of lower prices for cattle.

“COOL is a violation of NAFTA and Canada is one of our biggest trading partners, good cattlemen like we are, and it is important to me as a fifth-generation cattleman that we honour our trade deals. It is huge, in my mind, that we play by the rules,” said Philip Ellis, president of the association and a rancher in Chugwater, Wyo.

Cattle ranchers in Manitoba and Saskatchewan were told by their buyers in Nebraska that it could no longer take their livestock. And ranchers across the Prairies faced delays at the border and higher transportation costs.

“We saw quite a number of U.S. plants that restricted the number of Canadian animals at their operations … and then most of those operations restricted the number of days they would take those animals, so we ended up having to move animals greater distances to other plant. And then we’d face congestion at the border and difficulty lining up the trucks,” said Mr. Laycraft of the Canadian Cattlemen’s Association. “All of those things led to lower prices and sales.”

Gerry Ritz, Canadian Minister of Agriculture, said Washington’s move to back away from the “wrong-headed policy” was a “step in the right direction.” But he said the only way the U.S. can avoid facing punitive tariffs on a list of 38 goods that includes meat and wine is to pass the bill and repeal the labelling requirement.