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COOL – It’s Heating Up

Written by Dennis Sun

  Next month, the World Trade Organization (WTO) is expected to issue a final ruling in the Country of Origin Labeling (COOL) dispute. The fight has been going on since early 2009, and the discussions will not likely stop next month. 

COOL now mandates labeling for beef muscle cuts and ground beef, veal, lamb, pork, goat, chicken, farm-raised and wild fish, shellfish, fresh and frozen fruits and vegetables, peanuts, macadamia nuts and ginseng. Labels are required to specify the country of origin of the product. In the case of imported products, the food label indicates where it started, was grown or raised and processed. The item that has caused the most discussion is beef – you already know that, of course, unless you have been living under a rock. 

Concerning beef, the issue has two or three different sides in the U.S. but only one side in Mexico and Canada. This topic has split livestock organizations, families and politicians. That split has ruined friendships and fractured the U.S. livestock industry like almost no other issue and put America at odds with its two best trading partners – Canada and Mexico.

The WTO has agreed more than once with Canada and Mexico that the labels on fresh meat sold in the U.S. give the U.S. livestock industry an unfair edge. In a recent ruling, the organization said the labeling requirement forced meatpackers to keep detailed records on imported livestock, a burdensome process that gave them an incentive to favor U.S-sourced products. Canada and Mexico have said COOL has contributed to higher meat prices because U.S. packers aren’t importing as much beef and pork from those countries.

A decade of consumer polling has showed that 90 percent of the general public wants country of origin labeling. It would be interesting to see if those same consumers would be interested in a label if they knew meat prices would go down without the requirement. I suspect they would, as we see more and more consumers look for organic, natural or local labels. When most get to the meat counter, however, it is the price that seems to makes the difference. 

Canadian and Mexican beef cowherds are both down. Is this drop caused by COOL and the strong dollar? There are arguments on both sides, but could these declines just be supply and demand working in both countries? 

We also have to remember what brought COOL in the first place. U.S. packers were bringing in cheaper live cattle from Mexico and Canada and wouldn’t even send a buyer down the road from the packing house to buy some finished cattle, but Interstate 25 was filled with Canadian cattle trucks headed south.

There was a study that says COOL hasn’t harmed Canadian cattle, but the Canadians don’t believe it. Congress held hearings over the issue and may change the law. If the ruling in May favors the Canadians and our rule is found to be “non-compliant” with international trade policy, then Mexico and Canada would be authorized to retaliate by placing tariffs on U.S. agricultural and manufactured goods and food. They would likely select products from areas of the U.S. where their Congressional members voted for COOL. Canadian Federal Agriculture Minister Gerry Ritz looked a group of us in the eye last summer and said they were serious. I believe him.

So is COOL worth it? That may be the issue now.