WTO allows $1B in COOL tariffs
December 10, 2015
The World Trade Organization today said Canada and Mexico could impose $1.01 billion per year in retaliatory tariffs over the U.S. country-of-origin labeling program for beef and pork if it stays in place, and Senate Agriculture Committee Chairman Pat Roberts, R-Kan., called for repeal of the program.
The House has already passed a repeal bill, and Roberts said today that the Senate should follow.
Sen. Debbie Stabenow, D-Mich.
“The only way to remove this lump of coal in the United States’ Christmas stocking is a swift repeal of mandatory COOL.” Barry Carpenter, North American Meat Institute president and CEO
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Senate Agriculture Committee ranking member Debbie Stabenow, D-Mich., who has written a bill with Sen. John Hoeven, R-N.D., that would repeal COOL and establish a voluntary labeling program, said a solution must be found before the end of the year.
"For months we have had a bipartisan solution that would have prevented retaliation while also protecting the right of consumers to know where their food comes from," Stabenow said.
"It's disappointing that this common-sense compromise was blocked in the Senate. However, I have always said I would not allow retaliation to take effect. It is critical that we work together to find a solution before the end of the year."
A Hoeven spokesman said the senator was traveling and could not be reached for comment.
The Office of the U.S. Trade Representative expressed disappointment and said it would consult with Congress, but discouraged Canada and Mexico from imposing punitive tariffs.
"We are disappointed with this decision and its potential impact on trade among vital North American partners," said Tim Reif, general counsel for USTR.
"We will continue to consult with members of Congress as they consider options to replace the current COOL law and additional next steps," Reif said. "In the meantime, if Canada and Mexico take steps to raise import duties on U.S. exports, it will only harm the economies of all three trading partners."
The ruling does not appear to have had any impact on the views of the organizations with an interest in labeling. All the statements issued today were in line with statements that have been made for several years.
But the U.S. Cattlemen's Association, a pro-labeling group, noted that the $1.01 billion figure was lower than the amount Canada and Mexico requested and said it could be "a starting point for discussions."
USCA Presdent Danni Beer, a South Dakota producer, said that Mexico and Canada are not suffering $1.01 billion in harm, "especially given the stable and even increased beef imports from Canada to the U.S."
"While still an inaccurate representation of the market, today's announcement and reduction of initially inflated figures provides a starting point for discussions," Beer said.
"Today's announcement does not set an immediate tariff on any goods," she noted. "Canada and Mexico must now request authorization from the Dispute Settlement Body to allow any retaliatory actions to occur. This is not an overnight process and USCA will continue to work with Congress and the Office of the U.S. Trade Representative to achieve a workable solution to COOL."
"As I've said time and time again, whether you support or oppose COOL, the fact is, retaliation is coming," said Roberts.
"Today, the WTO announced just how much that retaliation will cost the U.S. economy. With the WTO announcement, farmers, ranchers and small businesses will soon be smacked with over $1 billion in tariffs."
"How much longer are we going to keep pretending retaliation isn't happening?," Roberts said. "Does it happen when a cattle rancher, or even a furniture maker, is forced out of business? We must prevent retaliation, and we must do it now before these sanctions take effect. I will continue to look for all legislative opportunities to repeal COOL."
"The WTO has warned us multiple times, and Congress has ignored the warning. This is no longer a warning. Retaliation is real. Now more than ever, we need to repeal COOL."
House Agriculture Committee Chairman Michael Conaway, R-Texas, said, "We have known for some time that the country-of-origin labeling law violates our international trade obligations. The WTO has ruled that we face over $1 billion in annual retaliation if the Congress doesn't act immediately to repeal this law."
Canada has urged Congress to repeal the law, and repeated that request today.
Canadian Trade Minister Chrystia Freeland and Canadian Agriculture and Agri-Food Minister Lawrence MacAulay said "The government of Canada has made every effort to convince the United States to comply with its international trade obligations. If the U.S. Senate does not take immediate action to repeal COOL for beef and pork, Canada will quickly take steps to retaliate."
"Canada continues to work with our partners in the United States, and in the U.S. Senate, to urge the full repeal of the discriminatory COOL policy for beef and pork." they added.
The National Pork Producers Council and the National Cattlemen's Beef Association called for immediate repeal.
"America's pork producers need congressional lawmakers to recognize the imminent harm our economy faces," said NPPC President Ron Prestage, a veterinarian and pork producer from Camden, S.C.
"Retaliation has been authorized, and our exports to the No. 1 and No. 2 markets will suffer and so will U.S. farmers, business people and consumers," Prestage added. "We need Congress to repeal the labeling provision for beef, pork and poultry now."
National Cattlemen's Beef Association President Philip Ellis says that immediate action is needed by the Senate or retaliation against U.S. exports will soon follow.
"The WTO today ruled that the U.S. COOL rule has cost Canadian and Mexican livestock producers in excess of $1 billion over the past seven years, and has authorized that amount in retaliatory tariffs," said Ellis. "If the Senate does not act, U.S. beef exports will face a 100 percent tariff in these countries, severely diminishing about $2 billion of beef exports annually."
North American Meat Institute President and CEO Barry Carpenter called the WTO decision "a lump of coal" and said that "a host of industries, ranging from cherry producers to maple syrup processors to wooden furniture and mattress makers, could pay the penalties for this debacle created by some anti-trade organizations who fought for the law."
"As the Canadian and Mexican governments prepare to impose these tariffs we are reminded of the sage prophet, Pogo, who said, 'We have met the enemy and he is us,' " referring to the long-running comic strip that often engaged in political satire.
"The only way to remove this lump of coal in the United States' Christmas stocking is swift repeal of mandatory COOL."
The National Farmers Union, which supports labeling, denounced the WTO process and called for the establishment of the voluntary COOL labeling program.
"Today's decision to allow Canada and Mexico to impose $1.01 billion in retaliatory tariffs is yet another symptom of the inefficiencies and ineffectiveness of the WTO," said NFU President Johnson.
"Time and again the WTO process has undermined U.S. sovereignty and the right of American consumers to know the origin of their food," Johnson said. "Congress now only has one clear path forward for ensuring U.S. regulations are in compliance with the WTO while preserving a meat label with integrity, and that solution is voluntary COOL."
"Voluntary COOL will solve the trade dispute once and for all, while protecting the integrity of the COOL label by defining what a 'product of the U.S.' is," Johnson said.
Food and Water Watch, an environmental group which also favors labeling, also denounced the WTO, but said it does not favor voluntary labeling.
"Today's ruling demonstrates how unaccountable foreign trade tribunals are trumping U.S. laws to benefit global agribusinesses," the group said.
"The WTO ruling is being used to justify immediate repeal of the COOL statute, but the Senate should reject efforts to repeal or weaken COOL, including meaningless attempts to make labeling voluntary. Congress must require the [President Barack] Obama administration to live up to its original campaign promise to protect mandatory COOL," Food and Water Watch said.
–The Hagstrom Report