The United States could face retaliatory measures from Canada, the top destination for California agricultural exports, if the U.S. government does not change its mandatory country-of-origin labeling requirements for beef and pork.
Canada initiated the trade challenges last month by releasing a list of U.S. commodities being targeted for retaliation, including California farm products such as wine, cherries, cheese, rice, apples, live cattle and meat. The country will still need authorization from the World Trade Organization before it can retaliate, and that could take 18 to 24 months.
Canadian Consulate General Cassie Doyle, joined by Mary-Jane Ginsberg, the country’s trade commissioner and senior agri-food specialist, met with California Farm Bureau Federation First Vice President Kenny Watkins and CFBF staff in Sacramento last week to discuss possible solutions to the ongoing dispute and Canada’s potential retaliatory measures.
Canadian officials have been making similar visits in the last several weeks to talk about the issue with other state Farm Bureaus, including Michigan, Pennsylvania, Missouri and Kentucky, as well as other agricultural groups.
Doyle said while the Canadian government “is interested in a fair resolution” to country-of-origin labeling, or COOL, it “has begun to work on a list of products on which it could raise tariffs, and this would have a significant impact on California.”
“We don’t want to see this happen, as Canada is the No. 1 export market for California’s rich agricultural goods and we want to grow this relationship,” she said.
Of the products being considered for retaliatory duties, California’s share of those exports totaled some $843.6 million last year—more than $766.4 million of which were California agricultural and food exports, according to trade data from the U.S. Census Bureau.
The Canadian government announced its intention to retaliate after the U.S. Department of Agriculture released an amended rule on country-of-origin labeling in May. The original rule, which requires meat and fresh produce in the U.S. to carry labels to show which country the products come from, has been in effect since 2009 but was challenged in the WTO by Canada and Mexico. The two nations alleged the labeling requirements for meat products discriminate against Canadian and Mexican livestock imports and violate WTO trade agreements. So far, Mexico has not announced any plans to retaliate.
“We were glad to have the chance to talk about this with the Canadian officials,” Watkins said. “We explained that the California Farm Bureau supports country-of-origin labeling that complies with WTO rules.”
CFBF also supports language in the agricultural spending bill for fiscal year 2014 that encourages the USDA to delay implementation and enforcement of the amended COOL rule until trade challenges in the WTO have been resolved, Watkins said.
Josh Rolph of the CFBF Federal Policy Division noted that Canadian tariffs could affect a variety of California-grown products and that “this is an issue we are taking very seriously.”
The labeling of meat has been controversial because the North American livestock market is highly integrated, with both Canada and Mexico exporting cattle and hogs to the U.S. that are eventually processed here. In their WTO challenge, the two countries claim that the labeling practice forces U.S. meat processors to constantly segregate Canadian and Mexican livestock and meat, leading some of them to reject the foreign products due to extra costs.
The WTO twice ruled in favor of Canada and Mexico—first in 2011 and then affirming its decision in 2012. The ruling said that while the U.S. had a right to adopt labeling requirements, the COOL program treats imported Canadian and Mexican livestock less favorably than domestic livestock. The United States was given until May of this year to comply with the WTO findings.
In its amended rule, USDA redefined the labels that may be used on beef, pork and other meat products. It eliminated the use of multi-country or mixed-origin labels and now requires the labels to show where each production step occurred, for example, “Born, Raised and Slaughtered in the United States,” or “Born in Canada, Raised and Slaughtered in the United States.”
Canada and Mexico expressed disappointment with the changes, saying that they do not bring the United States into compliance with its WTO obligations. U.S. livestock groups that have opposed mandatory COOL requirements also criticized the amended rule, saying it is even more onerous, disruptive and expensive than what was implemented in 2009.
Meanwhile, several groups representing U.S. and Canadian meat producers and processors have filed a lawsuit seeking to block the meat-labeling rules.
During the meeting with California Farm Bureau representatives, Doyle said Canada’s preference is for the United States to fully eliminate the entire labeling program but realizes that may not be possible. Canada has suggested alternatives, including following the labeling rules of the North American Free Trade Agreement, which specifies labeling according to the country where the product is processed. Another option offered by the Canadian officials would be to label products as “Product of North America,” or simply allow COOL to be a voluntary program.
(Ching Lee is an assistant editor of Ag Alert. She may be contacted at firstname.lastname@example.org.)