Final countdown on COOL tariffs

Sunday, December 6, 2015

by SUSAN MANN

The United States has reached the end of the line for its Country of Origin Labelling Law with Canada and Mexico able to slap retaliatory tariffs on American goods by a week from Friday if the American law stays in place.

International Trade Minister Chrystia Freeland and Agriculture and Agri-Food Minister Lawrence MacAulay say in a joint statement Monday the Canadian government is poised to quickly put retaliatory tariffs on American imports if the United States Senate doesn’t immediately act to repeal COOL.

They were responding to a determination by the World Trade Organization (WTO) dispute settlement body arbitration panel also released Monday. The panel determined Canadian livestock producers have suffered annual damages of more than C$1 billion.

The United States cannot appeal the arbitration panel ruling, the ministers say. The House of Representatives repealed COOL for beef and pork on June 10. The Senate, another branch of the American government, has been dragging its heels.

The arbitrator’s findings show Canadian beef and pork losses have been “staggering” during the seven years that COOL has been in effect, says a joint statement issued by the Canadian Cattlemen’s Association, Canadian Pork Council, the Canadian Meat Council and the American National Cattle Feeders Association.

However before the Canadian government can install the tariffs, the WTO has to formally approve the damage estimate released by the arbitration panel, says Ron Davidson, director, international trade, government and media relations for the Canadian Meat Council.  

John Masswohl, Canadian Cattlemen’s Association director of government and international relations, says a requested special meeting of the dispute settlement body, is scheduled for Dec. 18.

At the meeting, the arbitration panel’s damage estimate number will be confirmed, he says. “There’s no more process. There’s no way the Americans have any procedural maneuvers to stop that authorization from happening next Friday.”

Once the damage estimate is confirmed, it’s up to the Canadian and Mexican governments to decide which products to put the tariffs on, how much in tariffs to apply, when they put them on and how long the tariffs are in place, he explains.

UPDATE Wed. Dec. 9 2015: In a Wednesday statement distributed by Agriculture and Agri-Food Canada media relations, Freeland and MacAulay together with Ildefonso Guajardo Villarreal, Mexico’s secretary of economy, say "Canada will be able to retaliate in the amount of C$1.054 billion, while Mexico will be able to retaliate in the amount of US$227.7 million" once WTO authorization is confirmed. END OF UPDATE

The Canadian government published a list two years ago of potential American products that could be targeted for tariffs. The new government elected in October could “choose from that list or if they want to they could choose other products,” Masswohl says. The government could put tariffs on some products for a while “and then rotate them to another group of products after a while,” he says.

The Canadian livestock and meat groups say in their release they’ve run out of patience and they’re not prepared to accept any compromises or further negotiations with the Americans.

Rick Bergmann, Canadian Pork Council chair, says they’re pleased with the damage amount announced by the WTO arbitration panel.

“We’re very pleased with the billion dollars and it’s a big number. We hear that the people in Washington recognize that it’s a very large number,” he says.

Bergmann imagines U.S. officials would be holding “a lot of meetings about now because retaliation will cost them a lot in trade.”

Masswohl, who was on his way to Washington D.C. Monday, says Canadian livestock industry officials will be on Capital Hill during the next two days to ensure “it’s well known that there is a large number, that the clock is ticking and (U.S.) officials are aware of the reaction by the Canadian ministers indicating they’re moving quickly to take steps to retaliate.”

COOL has been in effect since 2008. Since 2011, the WTO has repeatedly ruled COOL discriminates against Canadian and Mexican cattle and hogs and violates the Americans’ trade obligations.

The Canadian government “has made every effort to convince the U.S. to comply with its international trade obligations,” Freeland and MacAulay say. BF