Industry groups and top U.S. trading partners are pushing back against legislation to redesign an Agriculture Department meat-labeling rule found to violate international standards, arguing the regulations should be scrapped altogether.
In May, the World Trade Organization’s (WTO) appellate body weighed in on the long-running dispute, siding with Canada and Mexico and ruling that the U.S. regulations put those countries at an unfair disadvantage in the U.S. marketplace.
{mosads}The two nations are now threatening to impose a total of $3 billion in retaliatory tariffs on U.S. food, agriculture and manufacturing if the country-of-origin labeling (COOL) rule is not fully repealed.
“In talking to Canada and Mexico, the only way to ensure we will never see retaliation is full repeal,” said Colin Woodall, vice president of government affairs at the National Cattlemen’s Beef Association.
Legislation aiming to replace the mandatory labeling rule with a voluntary program, introduced last week by Sens. Debbie Stabenow (D-Mich.) and John Hoeven (R-N.D.), doesn’t fix the problem, Woodall said.
The Voluntary Country of Origin Labeling and Trade Enhancement Act would allow processors to voluntarily label their meat products as “born, raised and slaughtered in the U.S.”
In a joint statement, Canadian Agriculture Minister Gerry Ritz and International Trade Minister Ed Fast said Stabenow’s COOL rule would continue to undermine Canada’s integrated North American supply chains.
“By continuing the segregation of and discrimination against Canadian cattle and hogs, Senator Stabenow’s measure will harm farmers, ranchers, packers, retailers and consumers on both sides of the border,” they said. “This is contrary to successive WTO decisions that have clearly ruled in Canada’s favour.”
Mexico has also been firm on its plans to retaliate against the U.S. with an estimated $713 million in sanctions, according to documents sent to the WTO in June.
A WTO panel will determine the amount of retaliation the countries will be allowed to impose against U.S. products.
“The proposal in the U.S. Senate does not resolve the concerns of Mexico, it includes the requirement to indicate the place of birth, fattening and slaughtering of livestock, which would continue encouraging segregation in the supply chain,” Mexico’s Department of Social Communication said in a news release.
Industry groups, meanwhile, say they’re already feeling the effects of the retaliatory tariffs.
“Even threat of retaliation on our products starts drying up orders,” said Linda Dempsey, vice president of international economic affairs at the National Association of Manufacturers (NAM). “At this point, repeal is the only option to alleviate the threat of retaliation.”
Manufactured goods that are likely to get tariffs tacked on to them include pipe, wood and furniture products. With other competing countries happy to step in as suppliers, Dempsey said her members could lose customers for good.
“Exports have been a reason we’ve been able to grow coming out of the recession,” she said. “This year has been slow overall. We really don’t need one more strike against us.”
NAM is instead advocating for the Senate to take up House-passed legislation from Rep. Mike Conaway (R-Texas) that fully repeals the rule. Dempsey said if lawmakers want to develop a new labeling bill after that, they should do so in a manner consistent with WTO trade obligations.
But Stabenow argues that’s exactly what her legislation will do.
“In suggesting the United States use a voluntary program, the Canadians said to the WTO in 2012 that ‘voluntary labeling can provide as much consumer information on origin to interested consumers as the COOL measure,’ ” she said in a statement to The Hill. “Mexico also had similar comments about the use of a voluntary program. If neither country had a problem then, they shouldn’t now.”
Stabenow claims Mexico and Canada are only using this argument as leverage because they know how competitive U.S. products are.
Hoeven, the Senate bill’s co-sponsor, said the measure is the same as the House version.
“We didn’t take anything out of Rep. Conaway’s bill that passed in the House. We took that bill and we’re trying to pass it here to address the issue of mandatory food labeling ” he said on the Senate floor Monday. “ But we also added a voluntary program just as Canada has a product-of-Canada voluntary program.”
There are people in the country, Hoeven said, who want a voluntary program. The U.S. Cattlemen’s Association (USCA) is one.
“We want to be able to differentiate our product in the marketplace and allow the consumer to know where their product is from,” said Jess Peterson, USCA’s executive vice president. “The Stabenow and Hoeven bill is a pathway forward that works for both parties.”
The National Cattlemen’s Beef Association disagrees. Country-of-origin labels aren’t driving sales, Woodall said; instead, labels that mark meats as antibiotic-free or having no hormones added are what consumers pay for.
The industry, he said, has figured out which labels are successful and provide consumers with the information they want to know.
“We want the federal government out of the business of marketing our meat,” he said.
In a blog post, John Murphy, senior vice president of international policy for the Chamber of Commerce, said any successor program to the current COOL rule would have to win the approval of Mexico and Canada, which reach $1.3 trillion annually in exports and support nearly 14 million U.S. jobs.
“America has been down this road before, and it’s painful,” he said. “Once retaliation begins, it could take years for American farmers, ranchers and companies to recover lost market share.”