Canada is taking the United States to the World Trade Organization’s (WTO’s) Dispute Settlement Body on Oct. 23rd over country of origin labeling.

Country of origin labeling (COOL) in the U.S. is an unfair trade practice, according to Canada.  The country blames a 31.7 percent decline in cattle exports to the U.S., and a 34.6 percent decline in hog exports to the U.S. on COOL.  

It costs U.S. meatpackers extra to segregate and label products from Canada, resulting in a loss of income to Canadians from fewer exports.

Country of origin labeling was called for in both the 2002 and 2008 Farm Bills.  It imposes a burden on retailers to display COOL signs and labeling or face fine of up to $10,000 per infraction.

Many meat counters display signs that say products are from the “USA and Canada” and even “USA, Canada, and Argentina.”  Such signage has been mandatory since late 2004.

U.S. livestock groups wanted COOL put into the Farm Bill because they thought the requirements would quickly end low commodity prices.  Senator Tim Johnson, D-SD, championed the idea.

“The U.S. country-of-origin labeling requirements are so onerous that they affect the ability of our cattle and hog exporters to compete fairly in the U.S. market,” said Canadian Trade Minister Stockwell Day.  

Canada opted to end talks with the U.S. and go to WTO.  WTO’s Dispute Settlement Body has seven members from China, South

Africa, Italy, Japan, Mexico, The Philippines and the United States.  WTO says members “are not affiliated with any government” and serve

only the trade group itself.

The U.S. does not like going up against its closest neighbor in the WTO.

“We believe that our implementation of COOL provides information to consumers in a manner consistent with our World Trade Organization commitments,” said Tom Vilsack, Secretary of the U.S. Department of Agriculture.

“Countries have agreed since long before the existence of the WTO that country of origin labeling is a legitimate policy. It is common for other countries to require that goods be labeled as to their origin.”

The Food, Conservation and Energy Act of 2008 (the 2008 Farm Bill) mandates country-of-origin labeling (COOL) at the retail level for beef, lamb, pork, chicken, goat, perishable agricultural commodities, and certain nuts as of September 30, 2008.

The statute sets out four categories of country of origin for meat: A) exclusively U.S. origin; B) multiple countries of origin; C) animals imported for immediate slaughter; and D) exclusively foreign origin.

On August 1, 2008, USDA published an Interim Final Rule to implement the COOL statutory requirements.

On December 1, 2008, Canada requested WTO dispute settlement consultation on the COOL interim rule, and Mexico similarly requested consultations on December 17, 2008.

Pursuant to a January 7, 2009 procedural agreement, Canada committed not to pursue WTO dispute settlement until September 2009 if the Final Rule contained certain flexibilities in meat labeling. On January 15, 2009, USDA published the Final Rule on COOL.

On February 20, 2009, Secretary Vilsack announced that the Final Rule would take effect as originally scheduled on March 16, 2009. Canada and Mexico sent a new consultation request regarding the Final Rule to the United States on May 7, 2009.

“COOL doesn’t recognize the integration of the North American livestock market,” says Canada’s Agriculture Minister Gerry Ritz.

See USDA Addresses Canadian COOL Concerns, Oct. 11.