Canadian officials doubt success of U.S. COOL appeal

Tuesday, February 17, 2015

by JIM ALGIE

Canadian officials remain confident of yet another World Trade Organization win after two days of appeal arguments wrapped up in Geneva, Switzerland, Tuesday, over U.S. Country of Origin labelling (COOL).

Canadian Pork Council chair Rick Bergmann, Agriculture Canada senior media relations officer Patrick Girard as well as Canadian Cattlemen’s Association government relations manager John Masswohl all said, Tuesday, the U.S. appeal won’t likely overturn past findings in the case.

WTO panels have ruled previously that U.S. labelling regulations discriminate unfairly against imported livestock and meat from Mexico and Canada. A decision in this week’s appeal is expected to be made public by late April.

“The blatant protectionism and intransigence of the U.S. position was clear throughout the hearings,” Mr. Bergmann said in a statement released following Tuesday’s hearing. “We believe that the Appellate Body, which asked very penetrating questions to all parties, should now bring this to a final result,” he said.

Agriculture Canada’s Girard expects the panel will allow Canada to “seek authorization from the WTO to impose retaliatory measures” on a range of U.S. imports.

“Canada is confident that it will be successful in the appeal,” Girard said in an emailed statement.  “Our government will . . . take whatever steps may be necessary, including retaliation, to bring this harm to an end,” Girard said.

Masswohl said likewise he “would find it very hard to imagine the compliance panel decision being overturned.” He was referring to a WTO panel decision last fall which ruled against the United States. It was the latest ruling in a lengthy dispute over red meat labelling and the subject of this week’s U.S. appeal.

“The United States has been a three-time loser in defending its COOL measure,” Bergman said. “We have now been to Geneva five times to fight these unfair U.S. labelling regulations. We won nearly three years ago; the United States introduced a new system in May, 2013 which is even worse for Canadian livestock exports. The United States lost again but appealed almost immediately,” Bergmann said.

Canadian Agriculture Minister Gerry Ritz has said U.S. labelling rules cost Canadian beef and pork businesses as much as $1 billion annually in discounts and lost sales. Ritz visited Washington, D. C. in early February to meet with newly appointed Congressional leaders to discuss the continuing conflict. At the time, the minister seemed confident U.S. legislators will find a way to end the dispute before it proceeds to retaliatory tariffs.

Masswohl’s comments, Tuesday, followed brief talks with Canadian Cattlemen’s Association (CCA) executive vice-president Dennis Laycraft who attended this week’s hearing. Laycraft, CCA legal counsel, past-president Martin Unrau as well as representatives of the Canadian Pork Council and the Canadian Meat Council were there when lawyers for the Canadian Department of International Trade presented Canadian arguments.

“A lot of the questions were very procedural in nature,” Masswohl said in an interview from his Ottawa office. Participants are not permitted to introduce new evidence at such late stage appeals, he said. Masswohl described the American position as “absurd.”

“This is an appeal of a compliance panel ruling that already said that they didn’t” comply with WTO rules, Masswohl said of the U.S. position. “The appeal is basically procedural: did the first panel make an error of interpretation in ruling that the Americans have not complied,” he said.

In early January, a report by Auburn University economist Robert Taylor published on the website of the pro-labelling, U.S. National Farmers Union, called into question Canadian evidence of financial harm in the dispute. The Alabama-based economist’s 18-page analysis argues that factors unrelated to COOL were responsible for lower livestock prices and imports after the labelling law came fully into effect in 2009.

However, Masswohl said the WTO appeal panel “would not consider” Taylor’s analysis published only last month. He also dismissed the Taylor report for relying solely on U.S. pricing and cattle supply data and for failing to take account of a period of disrupted trade between the two countries during the mid-1980s.

Taylor’s work relies on U.S. Department of Agriculture “mandatory price reporting” data supplied by meat packers to measure COOL market impact on imports. He said the U.S. reporting data is more reliable than those used in reports by Canadian consultants. Taylor also criticized Canadian analysis for failing to distinguish between forward contracting and “the confounding effects of domestic and imported capture supply of slaughter cattle.”

Research commissioned by Canada at an earlier stage of the dispute supports damage estimates used by the Canadian agriculture minister. Masswohl defended the Canadian research which was led by former U.S.D.A. Chief Economist Dan Sumner, who now teaches agricultural economics at the University of California, Davis.

American officials “didn’t make very many economic arguments at the panel because they knew they would lose,” Masswohl said. Taylor’s paper will more than likely find its way into subsequent arbitration over actual damage estimates, Masswohl added. BF