U.S. trade office: Canada overstated COOL losses
August 5, 2015
Billings, Mont. – Data compiled by attorneys for the Office of the U.S. Trade Representative (USTR) reveal that accusations by Canada and Mexico that the United States' mandatory country of origin labeling (COOL) law cost their combined livestock industries $3.6 billion is much more than an over exaggeration.
"It was a calculated and deceptive hoax perpetrated on the American people," said R-CALF USA CEO Bill Bullard.
Canada and Mexico have persistently claimed that together they are suffering $3.6 billion in annual economic damages as a result of the U.S. COOL law. Over the past couple months Canadian Agriculture Minister Gerry Ritz issued several threats to America, "The only acceptable outcome remains for the United States to repeal COOL or face $3B in annual retaliation," he quipped in a press statement. "Should the U.S. move forward with their short-sighted proposal, Canada will have no choice but to impose billions of dollars of retaliatory tariffs on U.S. exports,'' he said in another.
Under World Trade Organization (WTO) dispute settlement rules, a prevailing country in a WTO dispute is entitled to recover from the losing country a monetary amount equivalent to any loss or impairment of benefits arising from the measure in dispute. The prevailing country, however, must first prove the amount of its loss in a WTO arbitration proceeding. Because the U.S. lost its COOL case before the WTO, Canada and Mexico must now prove what level of losses, if any, they suffered as a direct result of the implementation of mandatory COOL. The WTO has scheduled an arbitration hearing to consider this matter on September 15-16 in Geneva.
The USTR data submitted to the WTO show that most of the exceedingly high, $3 billion-plus losses touted by Canada and Mexico were not based on a legitimate estimate of benefits actually lost or impaired. Instead, the countries based their damage claim on the unrealistic and unsupported prophecy that if COOL were repealed, each country would experience massive growth in exports. Canada claims the value of its livestock exports would be 92 percent higher without COOL and Mexico claims that without COOL the value of its livestock exports would be 70 percent higher. The USTR states that these claims of massive growth would result in an expansion of U.S. livestock imports from Canada and Mexico by 74 percent.
"This prophetic claim is both deceptive and ridiculous on its face," Bullard remarked.
Recommended Stories For You
The USTR data further reveals that Canada and Mexico are attempting to blame the U.S. COOL law for price declines of livestock sold within their own domestic markets, such as the decline in the domestic price of Mexican feeder cattle experienced by Mexico during the 2008 recession. But, as USTR points out, these are not 'trade effects' and therefore are inappropriate considerations for determining losses or impairment of benefits resulting from the U.S. COOL law.
The USTR data also reveals that Canada attempts to blame COOL for export fluctuations that occurred from 2005 forward, which is the period that encompasses the peak of Canada's multi-year bovine spongiform encephalopathy (BSE or mad cow disease) outbreaks.
"Canada detected 17 new cases of mad cow disease since 2005 and exports of Canadian cattle were severely curtailed for several years due to Canada's inability to contain its disease outbreaks. The curtailment of exports had absolutely nothing to do with COOL," asserted Bullard.
After correcting Canada and Mexico's erroneous and deceptive calculations, the USTR determined that the maximum losses that Canada and Mexico can possibly claim are $90.77 million per year, which Bullard said is an amount that does not justify Congress' knee-jerk reaction of trying to repeal or weaken mandatory COOL. Bullard contends that the USTR's data reveal that Canada and Mexico are neither telling the truth nor playing fair. He called their hyped damage claims disingenuous at best.
"Minister Ritz and other officials in Canada and Mexico knew they were lying to the American people; knew their damage calculations were based on erroneous and deceptive data; and they knew, or at least they thought they knew, that they would not be held accountable for their dishonest conduct.
"Alarmingly, they were actually rewarded for their deception by unsuspecting members of Congress and unsuspecting farm groups that couldn't act quickly enough to eliminate mandatory COOL before Canada and Mexico were even asked to justify their false claims," said Bullard.
Bullard said the letter sent to the U.S. Senate last week by 142 ranch, consumer, manufacturing and other groups is most likely the only reason mandatory COOL was not prematurely repealed before Congress' August recess.
He said American consumers and producers alike should be thankful that those 142 groups stood steadfast in support of mandatory COOL and urged Congress not to repeal COOL or weaken it by making it voluntary.
"Americans, and Congress in particular, should not tolerate Canada and Mexico's shameful conduct and should act decisively to rebuke their deceptive claims by immediately reaffirming their resolve to maintain and defend our mandatory COOL law," Bullard concluded.