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U.S. Labeling Law Distorts Global Livestock Trade, WTO Panel Finds

Long-disputed country-of-origin labeling, or COOL, gives U.S.-produced livestock a competitive advantage over its imported equivalent, according to a ruling handed down Monday at the World Trade Organization (WTO).

Country-of-origin labeling, originally enacted in 2009 and revised in 2013, creates an environment in which livestock imported to the U.S. from Mexico and Canada faces a "detrimental impact" when it comes to "competitive opportunities" in the U.S. marketplace, for a number of reasons, according to WTO's Monday ruling.

"[COOL] necessitates increased segregation of meat and livestock according to origin; entails a higher recordkeeping burden; and increases the original COOL measure's incentive to choose domestic over imported livestock," according to the findings of a WTO compliance panel that found COOL to be in violation of the "Technical Barriers to Trade" (TBT) Agreement among the 3 nations.

The decision handed down Monday -- one that now opens the U.S. to retaliation from Mexico and Canada in the cross-border trade of a list of ag products ranging from cattle to chocolate -- also affirms previous decisions in citing "increased record-keeping burden, new potential for label inaccuracy, and continued exemption of a large proportion of relevant products" for part of the reason COOL creates an environment favoring U.S.-produced livestock over animals raised in Canada or Mexico.

"These considerations confirmed that, as with the original COOL measure, the detrimental impact caused by the amended COOL measure's labeling and record-keeping rules could not be explained by the need to convey to consumers information regarding the countries where livestock was born, raised, and slaughtered," according to a WTO statement summarizing the body's ruling.

Monday's ruling could open the door to retaliatory trade action from Canada and Mexico, something some U.S. livestock organizations want to avoid to prevent any erosion in the footing under current U.S. marketshare among the three nations and beyond.

"The United States must avoid retaliation from Canada and Mexico," National Pork Producers Council (NPPC) president Howard Hill says in an NPPC report. "Retaliatory tariffs on pork would be financially devastating to U.S. pork producers."

Adds National Cattlemens' Beef Association (NCBA) president Bob McCan: "The announcement today by the WTO dispute panel on the U.S. Country of Origin Labeling rule brings us all one step closer to facing retaliatory tariffs from two of our largest trading partners. Our producers have already suffered discounts and faced the closure of a number of feedlots and packing plants due to the effects of this short-sighted regulation. COOL is a failed program that will soon cost not only the beef industry, but the entire U.S. economy, with no corresponding benefit to consumers or producers."

Live cattle and hogs, beef and pork, corn, and some processed foods including pasta, corn syrup, prepared meat cuts and cheese are among the products that Canadian officials say could be targeted by any retaliatory trade action if COOL is not modified.

Monday's ruling has accomplished something that's seemingly been impossible in the livestock industry, riling groups on opposite sides of the industry to a similar extent. One group, R-CALF USA, has long been a proponent of COOL and opponent of much of the work and action of NCBA. And while the group's leaders are still confident that COOL -- which they've long supported -- is necessary and justified, their reaction to Monday's action is similar in tone to that from NCBA.

"Congress must weigh this WTO ruling against our U.S. Constitution and our U.S. sovereignty very carefully and not engage in a knee-jerk reaction, which is precisely what the multinational meatpackers that do not have any particular loyalties to the United States, are asking Congress to do through their request that funding for COOL be stricken from the 2015 appropriations bill," according to R-CALF CEO Bill Bullard. "On the one hand, our U.S. courts have found COOL to be in full compliance with the United States' chosen form of government. On the other hand, the so-called world government, comprised of unelected and unappointed WTO officials, is now trying to supersede U.S. citizens' right of self-governance."

Then there's the consumer side of the equation. This sector of the industry has long supported country-of-origin labeling as a way to keep the food consumer more informed. And WTO's action, according to some, threatens that consumer awareness.

"People have the right to know where the food they feed their families comes from. It is nonsensical that a label that lets consumers know the origin of their food is a trade barrier," according to Food & Water Watch Executive Director Wenonah Hauter. "Congress and USDA must stand up to the WTO and maintain the existing requirements for country of origin labeling. The WTO's continued assault against commonsense food labels is just another example of how corporate-controlled trade policy undermines the basic protections that U.S. consumers deserve. The United States should appeal the ruling and continue to fight for sensible consumer safeguards at the supermarket.”

Moving forward, many groups are echoing the call from Hauter and Bullard to reexamine COOL and make changes to bring it into WTO compliance before retaliation can happen.

"Under the guidance of USDA, any changes to COOL to ensure full compliance with today’s decision should be able to be made administratively, while maintaining the integrity of COOL labels,” says National Farmers Union President Roger Johnson.

Senator Charles Grassley (R-IA) said Monday afternoon he agrees that COOL needs revamped, but it should be Congress' job to bring the policy back into compliance with WTO.

"I’m a supporter of Country of Origin Labeling. It’s likely time for Congress to go back to the drawing board," Grassley says. "Country-of-origin labeling needs to be written and implemented clear of any trade distorting principles. As a member of the world trading community, we have an obligation to be trade compliant, even if we disagree with the rulings.

Aside from any potential revisions taken up by federal officials or lawmakers in the near future, Monday's WTO ruling doesn't mean much yet. It's likely to be appealed, a process that could take years. The 2005 WTO case filed by Brazil that alleged the U.S. cotton program violated WTO rules and unfairly distorted the global marketplace for that crop was dropped recently after the two governments reached an agreement to terminate the case by the end of the month.

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