U.S. government steps closer towards COOL repeal

Thursday, June 11, 2015

by JIM ALGIE

The U.S. House of Representatives voted with a strong, bipartisan majority, Wednesday, to repeal that country’s controversial County of Origin Labelling (COOL) law, but legislative hurdles remain.

Canada and Mexico have long objected to the law they say adds unfair costs to the use of imported livestock in U.S. markets contrary to World Trade Organization rules. In May, the WTO ruled in their favour. Now, the two countries expect to press a case for retaliation at a special meeting of the WTO’s dispute resolution body on June 17.

Wednesday’s move by the House would block retaliation, but repeal also requires support from the Senate and President Barack Obama.

Canadian Agriculture Minister Gerry Ritz welcomed the House move in a statement issued by his office late Wednesday night. Both Congress and the Obama administration “know that COOL is costing thousands of American jobs and billions in economic harm to our highly integrated North American livestock industry,” Ritz said.

“While this marks a positive step, the only way for the United States to avoid billions in retaliation by late summer is to ensure legislation repealing COOL passes the Senate and is signed by the President,” Ritz’s statement said.

Canadian Pork Council chair Rick Bergmann and vice-chair Bill Wymenga, who was part of a Canadian delegation to Washington to lobby legislators on this subject, also welcomed the strong House vote for repeal of 300 to 131 votes. Bergmann said retaliation rights would help restore Canada’s competitive opportunities in the United States but “we want to resolve the problem now and thus avoid escalation.”

“The House has acted,” said Wymenga, who farms near Blenheim. “Now the focus is the Senate ... we have their attention. Hopefully, their hearts and minds will soon follow.”

John Masswohl, Canadian Cattlemen’s Association government and international relations director predicted the Senate will be a harder nut to crack than the House on repealing COOL. Masswohl was also among Canadian lobbyists in Washington last week.

“I’m glad to see it passed with a strong majority; it didn’t just squeak by,” Masswohl said in a phone interview from his office in Ottawa today. “219 would have been a majority, we got 300; that’s pretty strong support for repeal.”

As well, Pat Roberts, Senate Agriculture Committee chairman, has endorsed the House vote and urged his colleagues to follow suit. However, some senators  notably ranking Democrat Debbie Stabenow of Michigan  have expressed support for some form of labelling in the aftermath of last month’s WTO ruling against the American law.

“We’ve always felt that the Senate was possibly going to be the bigger challenge,” Masswohl said. Last week’s Washington visit specifically targeted pro-labelling senators, who seem to understand “they need to do something but they seem to think there’ll probably just be a bit of a tweak,” Masswohl said.

Under the 100-member Senate’s unique, consensus rules, a single objection forces 60 per cent vote support in order to pass proposed legislation. Although Roberts’ support for repeal is “really important” and “helpful” it may not be enough, Masswohl said.

“We have Sen. Roberts and we know we have a few others; but it’s hard to count up to 60,” he said. “In fact, we need 11 on the Agriculture Committee and I’m not sure we have 11 on the Ag Committee.”

Full repeal of the labelling law would end Canada’s retaliation claim. WTO rules don’t allow for retroactive damages and Ritz has said repeal would end Canada’s claim for reparations estimated at about $3 billion, the minister’s press secretary Jeffrey English said today by email.

Repeal would also likely boost Canadian cattle prices, Masswohl said. He estimated the cost of tracking and accounting for Canadian cattle in the U.S. marketplace under existing law adds as much as $100 per head in costs.

Repeal of COOL by both the House and Senate along with presidential approval would add upward pressure on already high prices for Canadian cattle, Masswohl said.

“If the Senate does the exact same thing as the House, repeals COOL, and the president then signs it then immediately that cost is gone out of the system,” he said.

“Our view is that you’ll see an immediate price impact,” Masswohl said. Even the anticipation of repeal could have market consequences, he added.

“There’s such a shortage of cattle in the system, whether you’re a feed lot buyer or a packer buyer, everyone wants more cattle which is why the prices are so high,” Masswohl said. “If they can get these costs out of the system the competition to buy them will be fierce,” he said. “It’s already fierce but it’ll be even better.” BF