Meat producers win COOL victory

Thursday, November 17, 2011

by BETTER FARMING STAFF

You can lead a horse to water, but you can't make it drink.

That's the adage summoned by Canadian politicians' celebration of the World Trade Organization’s decision to support Canada’s claim that U.S. mandatory Country of Origin Labelling, universally known as COOL, is unfair. The trade organization released its decision Friday.

The U.S. legislation requires retailers to inform consumers about the country of origin of a number of different foods, including beef, pork, lamb, chicken and goat. Under the legislation, animals designated as U.S. Origin must have been born, raised and slaughtered in that country. A World Trade Organization panel, requested by Canada in 2009 concluded:

* COOL is inconsistent with the United States’ WTO obligations and accords less favourable treatment to imported Canadian cattle and hogs than to like domestic products.

* Parts of the COOL measure does not fulfill its objective of providing consumers with information on origin.

* A letter issued by U.S. Secretary of Agriculture Tom Vilsack that provided suggestions for voluntary action by processors “went beyond certain obligations under the COOL measure and the letter therefore constitutes unreasonable administration of the COOL measure.”


While Canadian federal politicians and industry representatives touted the victory at Sodergien Ranches Ltd., Canada’s largest purebred seed stock cattle ranch near Red Deer, Alta, there was no sense of whether the United States would actually comply with the decision.

The United States has 60 days to appeal. As of Friday afternoon, there was no indication on the United States Department of Agriculture website about the approach the American government would take.

“I don’t want to speculate whether the Americans are going to appeal,” says Ed Fast, Canada’s minister of international trade. “Obviously the preferred approach is to reach a negotiated settlement that achieves the goals of both sides.”

If the United States appeals and loses, it will be given a period of time to come into compliance. “If they don’t come into compliance, then there are remedies beyond that that Canada can apply for to assert their judgment they will have received under the WTO process,” he says.

Gerry Ritz, Canada’s minister of agriculture, describes the decision as the beginning of “getting back to normalcy.”

Both politicians touched on the two countries’ close trade relationship. Fast characterized the COOL dispute as “one of these little trade irritants that comes up from time to time” and stressed joint efforts of the two countries to tackle red tape at the border as well as the positive impact of the large volume of trade between the two countries on Canada’s prosperity. “We’re confident that in the long run our relationship will remain sound and that the beef and pork industries will remain healthy in Canada,” he says.

Ritz notes that the U.S. industry is not happy with COOL and is “very much in our camp.” No one has considered compensation at this point, he adds.

For producers, COOL was more than an “irritant.”

Jurgen Preugschas, chair of the Canadian Pork Council, says Ontario and Manitoba shared the brunt of the impact from the legislation and Canada’s live hog exports shrank by five million because of the U.S. legislation. “That’s a tremendous amount of production,” he says. “Those are families. Those are homes, those are employees that have lost their farms and their jobs.”

Travis Toews, president of the Canadian Cattlemen’s Association, says COOL has cost his industry hundreds of millions of dollars because of of higher handling costs and reduced prices. “We do not require the outright repeal of COOL; we only seek those regulatory and statutory changes necessary to eliminate the discrimination that COOL has imposed to the comparative disadvantage of livestock imported into the United States,” he says.

Wilma Jeffray, chair of Ontario Pork, says Ontario producers will immediately feel the effects if the laws are amended. “It’s another market that we would have access to and therefore create demand for the product that we are producing,” she says. “It would have an effect on the pricing of hogs and weanlings, absolutely.”

She notes that Ontario's market hog exports to the United States dropped nearly 60 per cent between 2007 and 2010.
 
Curtis Royal, president of the Ontario Cattlemen’s Association, says a lot of the plants in the United States that quit taking cattle from Canadian producers will be able to buy from Ontario again if the COOL laws are changed. COOL deflated cattle prices in Ontario by $60 to $80 per head.

The price for cattle would “arbitrage fairly quickly,” he says, pointing out that the two countries really form an integrated North American market. “Once you get through the legalities, it should be a good thing for us," Royal says. BF