Canada Wins WTO Ruling Against U.S. In Victory for Livestock Producers | FBC, Canada's Farm & Small Business Tax Specialist

Canada Wins WTO Ruling Against U.S. In Victory for Livestock Producers

Canada took a positive step forward in an ongoing international legal dispute over country-of-origin labeling measures, called COOL regulations.  

Canada threatened trade sanctions against the United States following a World Trade Organization ruling that dealt a blow to U.S. COOL regulations and served as a victory for Canadian meat producers. The U.S. lost an earlier challenge to it's COOL standards, and was required to change them, but failed to do so. The rules, which require grocers to label the country of origin on meat products, are still not compliant with international trading standards, according to the WTO ruling. 

Canada Threatens Trade Sanctions Against The U.S.

Following the ruling, Canada is prepared to begin targeting U.S. products with trade sanctions in an effort to force the country into adjusting its COOL regulations, which have negatively affected agribusiness in the country.  

"We will target everything from California wine to Minnesota mattresses, not to mention the over $2 billion in U.S. beef and pork sales to Canada," Gerry Ritz, Canada's federal agriculture minister, said according to The Western Producer. 

The WTO ruled specifically that U.S. COOL regulations discriminate against live cattle and hog imports into the country, the publication explained. The last time revisions were made was in May 2013. Canada responded by saying the changes only complicated matters more - to which the WTO agreed.

In 2012 the WTO also ruled against the American labeling policies, according to Reuters. The organization stated that the labels gave unfair treatment to meat originating from Canada and Mexico. The policies have resulted in a drop in Canadian pig and cattle exports since 2009. 

Yet another victory against the U.S., and Canada is confident that it has a means for retaliation, though any action won't be taken immediately, The Western Producer noted. The U.S. has been given 30 days to repeal the ruling, during which Canada will decide punishments should the COOL regulations not be changed.

"We will use the same time frame to completely lay out, state-by-state, legislator-by-legislator, what it's going to cost them as they move into their next election cycle," said Ritz, according to the news source.

He continued that he expects the Americans to repeal again, and added that Canada will not falter in it's decision to retaliate should the U.S. not make changes to labeling standards. 

Pork producers in the U.S. have pressed lawmakers to make changes to the regulations in order to avoid financially destructive sanctions from both Canada and Mexico, also negatively affected by the U.S. labeling standards, Reuters explained. The countries issued a joint statement condemning the labeling standards, stating that the nations will remain vigilant in their stand against the harmful policies until they are reversed. 

The U.S. Chamber of Commerce, the National Association of Manufacturers, farmer cooperatives and corn refiners have all stated that the sections of the regulations in violation of international trading standards should be repealed, while beef producers have urged that the COOL measures be removed completely, the news outlet reported. 

Jurgen Preugschas, past-chair of the Canadian Pork Council, whose organization has fought the regulations since 2009, told The Western Producer that COOL regulations have cost his industry more than $2.5 billion. The hog industry in Canada has shrunk by 25 percent as price differences between U.S. and Canadian pork have grown. 

Ritz acknowledged the momentum of support building in the U.S. behind a change to COOL regulations, the publication explained. He mentioned that 120 U.S. lawmakers had recently signed an appeal to the standards. The U.S. livestock industry is currently attempting to push the bid for change through the U.S. court system. 

"There is a growing awakening, if you will, across party lines that this is not good trade policy," Ritz stated. 

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