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.