Ag groups split in opinions toward World Trade Organization’s recent COOL rulingWritten by Saige Albert
On Oct. 20, the World Trade Organization (WTO) released its latest decision concerning mandatory Country of Original Labeling (COOL).
CME Group reported, “While COOL supporters such as Senate Agriculture Committee Chairperson Deb Stabinow tried to trumpet WTO’s allowance that providing country of origin information to consumers is a legitimate policy goal, this was another resounding defeat for this method of doing so.”
In their report, the WTO cited increased segregation and detrimental impacts, as well as increased burdens on a number of segments of the livestock industry.
“In particular, the compliance panel concluded that the amended COOL measure increases the original COOL measure’s detrimental impact on the competitive opportunities of imported livestock in the U.S. market because it necessitates increased segregation of meat and livestock according to origin; entails a higher recordkeeping burden; and increases the original COOL measure’s incentive to choose domestic over imported livestock,” stated WTO.
They further continued, “The detrimental impact caused by the amended COOL measure’s labeling and recordkeeping rules could not be explained by the need to convey to consumers information regarding the countries where livestock were born, raised and slaughtered.”
National Farmers Union President Roger Johnson said, “We were instrumental, as an organization, in having COOL be a part of the 2002 Farm Bill and having it adopted again in the 2008 Farm Bill.”
“This is an issue for us for two reasons,” he continued. “First, consumers are more and more concerned about where their food comes from. Secondly, producers are proud of what they produce.”
COOL helps to provide that information, Johnson continued.
“This issue has faced numerous legal, legislative and WTO challenges in the last four or five years since 2009,” Johnson said. “In the legal arena, we have won three straight court decisions.”
Johnson also marked success in keeping COOL in the most recent farm bill, despite efforts to remove the language.
“That leaves us with the WTO – the third of the big challenges we have been faced with,” he said. “We want the USDA and U.S. Trade Representative to appeal this decision on COOL. Every decision that was initially rendered was modified on appeal, and we have no reason to expect anything other than that.”
“I think there is a strong conviction that the COOL statute needs to remain in place,” Johnson added. “We are willing to talk about details and how it is implemented, but in all of the decisions rendered on this case, and they have always said the law is ok.”
Annie Bier of the U.S. Cattlemen’s Association (USCA) added, “The biggest thing that we thought, as cattle producers, is the WTO still said we can do this. We are grateful for that.”
Bier noted that it is important for consumers to have access to the information that is available.
“We know that packers sort over 100 brand names. We sort for maturity, quality, grade and more,” she said. “We don’t think the addition of keeping track of country of origin is costly, either.”
“It was never the intent of the law to be protectionist,” Bier said. “We just want our consumers to have full information and let the free market system work.”
Concerns with the ruling
Patrick Woodall of Food and Water Watch noted that the key information that can be gleaned from the ruling deal with the issue of benefits.
“The ruling significantly overstates the costs and understates the benefits of COOL,” Woodall said. “This is the grounds for appeal. New COOL represents a clear improvement on the information and accuracy on what is provided to consumers.”
At the same time, Woodall also believes segregation costs are “massively overstated” by considering labeling combinations that are both impractical and unlikely.
“There are a host of hypothetical examples of multi-country schemes to justify the wide variety of potential labels, but many are hypothetical and silly,” he explained. “For example, one scenario has Canada exporting livestock to Mexico where they would be raised and imported to the U.S. for slaughter.”
Woodall continued, “Canada estimated fewer than 20 live cattle per year being exported to Mexico.”
Johnson added that the presumption that cattle are “globe trotters” is not the case in practice.
“We can work through this in any number of ways,” Johnson said. “Undoubtedly, the result of the appeal is going to be at least somewhat different than the current decision. It is foolish to talk about repealing laws and denying consumers information when we believe there is legal standing for appeal.”
After the ruling, American Farm Bureau (AFBF) President Bob Stallman commented, “Americans prefer to buy food products that they know were grown and raised by America’s farmers and ranchers, and AFBF supports a COOL program that conforms to appropriate parameters and meets WTO requirements.”
However, Stallman added, “A World Trade Organization compliance panel ruling that U.S. COOL regulations are not in compliance with previous WTO decisions means that there must be further work to craft an accepted COOL program.”
Farm Bureau will carefully review the decision and then determine further recommended actions, he said, adding, “We will work with the Office of the U.S. Trade Representative and USDA to reach the goal of an effective COOL program for meats that conforms to international trade rules.”
Those agriculture groups that have expressed opposition to a mandatory COOL program for quite some time have noted that the retaliatory measures possible will impact producers.
“The announcement by the WTO dispute panel on the U.S. Country of Origin Labeling rule brings us all one step closer to facing retaliatory tariffs from two of our largest trading partners,” said Bob McCan, president of the National Cattlemen’s Beef Association (NCBA). “Our producers have already suffered discounts and faced the closure of a number of feedlots and packing plants due to the effects of this short-sighted regulation.”
McCan called COOL a “failed program” and cited potential to cost the beef industry and the U.S. economy with no benefit for producers.
“NCBA has maintained that there is no regulatory fix to bring the COOL rule into compliance with our WTO obligations or that will satisfy our top trading partners,” he continued. “We look forward to working with Congress to find a permanent solution to this issue, avoiding retaliation against not only beef but a host of U.S. products.”
At this point, the U.S. has 60 days to appeal the WTO decision, and Agriculture Secretary Tom Vilsack told DTN on Oct. 27 that the Obama administration likely won’t appeal the ruling until sometime in January.
“We’ve received indications from the WTO that we probably should wait until January to make that decision because they are not capable of processing any additional appeals, based on the level of work at the WTO that is currently in the queue,” Vilsack said in an interview. “We have some time in which to make that decision.”
The appeal will be subject to expedited review and decision process, meaning a decision could be made by as soon as spring 2015.
Should the appeal find in favor of the Canada and Mexico again, CME Group noted that the retaliatory tariffs could be into effect by late 2015 or early 2016.