Congress has only a few days to avert painful sanctions on more than $1 billion worth of U.S. goods in retaliation for the Agriculture Department’s contentious meat labeling regulations.
The World Trade Organization on Monday authorized Canada and Mexico to tax a wide variety of U.S. exports to cover costs they have incurred over years of implementing the country-of-origin labeling (COOL) rule.
{mosads}The decision forces lawmakers to either move quickly to scrap the regulations or put U.S. businesses in jeopardy of paying much more to send their products to two of the nation’s biggest trading partners.
The U.S. Trade Representative’s Office said the tariffs will hurt all three North American economies.
“We are disappointed with this decision and its potential impact on trade among vital North American partners,” said Tim Reif, general counsel for the 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 added. “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.”
Senate Agriculture Committee Chairman Pat Roberts (R-Kan.), who has consistently opposed COOL rules, said that Congress has had plenty of warning and needs to complete a process begun in the House to repeal the rule, which has for years come under intense fire from meat industry groups.
“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,” he said.
For its part, the Canadian government wasted no time is putting the United States on notice that it intends to act.
“If the U.S. Senate does not take immediate action to repeal COOL for beef and pork, Canada will quickly take steps to retaliate,” said Chrystia Freeland, Canada’s minister of international trade and Lawrence MacAulay, Canada’s minister of agriculture and agri-food, said in a statement.
The COOL rule, which requires labels on meat to show where livestock is born, raised and slaughtered, was first authorized in the 2002 and 2008 farm bills. The WTO decision essentially ends a seven-year dispute over the COOL rule that affects beef and pork products.
Canada and Mexico, which have said passage of a repeal would negate the need for retaliatory actions, were each allowed to charge tariffs worth about one-third of what they wanted.
“We have known for some time that the country-of-origin labeling law violates our international trade obligations,” said House Agriculture Committee Chairman Mike Conaway (R-Texas).
The House voted 300-131 on June 10 to repeal COOL rules on beef, pork and chicken.
National Cattlemen’s Beef Association President Philip Ellis said that immediate action is needed by the Senate “before retaliation damages the entire U.S. economy and irreparably harms two of the nation’s strongest trading relationships.
“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,” Ellis said.
He argued that the rule has cost the U.S. livestock industry billions in implementation and has led to the closure of several feedlots and packing facilities while having no effect on the price or demand for U.S. beef.
“The COOL rule has been a failure on all accounts,” Ellis said.
Linda Dempsey, vice president of international economic affairs for the National Association of Manufacturers, said that “in the face of years of congressional inaction, time has run out.”
“At a time of global economic weakness and fierce competition, manufacturers need policies that ensure a level playing field and enhance global opportunities, not ones that create new barriers for our exports,” Dempsey said.
North American Meat Institute President and CEO Barry Carpenter called the COOL rule “one of the most costly and cumbersome rules ever imposed on the agricultural sector.”
“Soon, 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,” Carpenter said.
Canada has said it would slap additional tariffs on not only U.S. beef and pork but on grains and fruits, among other goods.
National Foreign Trade Council President Bill Reinsch said the decision is “a vivid reminder of the costs of not complying with our international obligations.”
“We have had literally years to fix this problem and have not done so, and now we face a billion-dollar penalty,” he said. “The House has acted responsibly by repealing the offending provision, and it is now time for the Senate to do the same thing without delay.”