Livestock industry debates US response to WTO ruling on country of origin labeling
In December 2008, Canada initiated a dispute process with the World Trade Organization (WTO), objecting that mandatory country of origin labeling (COOL) was not WTO compliant.
The dispute settlement panel proceedings were initiated in 2008, when Canada and Mexico filed a complaint with the WTO alleging that U.S. COOL requirements were designed to achieve a protectionist objective, and argued that COOL requirements breached WTO obligations by discriminating against Canadian and Mexican livestock exports to the U.S.
The countries alleged in their WTO complaint that their respective livestock industries were at a competitive disadvantage by COOL because of higher segregation costs at the point of harvest for foreign cattle.
Panel rules on COOL
The dispute panel’s extensive report affirmed the right of the U.S. to require country of origin labeling for meat products, but disagreed with specific implementation measures.
In November 2011, WTO ruled largely in favor of Canada, Mexico and other countries that joined in to file the complaint, and the U.S. has until March 23 to respond, either by adopting COOL to become WTO compliant or by appealing to the WTO panel.
On Feb. 17 the U.S. Cattlemen’s Association (USCA)said it supports a “vigorous appeal” of the WTO dispute settlement panel’s ruling. USCA President Jon Wooster of San Lucas, Calif. says his organization is actively engaged in the matter, and will continue working with the Obama administration as the appeals process unfolds.
Truth in labeling
“Contrary to the misinformation some groups insist on spreading, the dispute settlement panel affirmed the right of the United States to require country of origin labeling for meat,” says USCA Director Emeritus Leo McDonnell in a statement from USCA. “The bottom line is that our foreign competitors and the packing industry want to weaken the eligibility requirements for the ‘A’ label, ensuring their meat supply is a generic product that can be marketed under the guise of the U.S. born, raised and processed label. Their argument is that feeding or processing a live animal is substantial transformation and that the meat derived from that carcass qualifies for the ‘A’ label. The ‘A’ label meat is the most desired category by consumers, packers and retailers, and it provides price discovery for all categories of meat. Differentiation of product and branding of product provides for a more competitive pricing structure that ultimately benefits all producers.”
“What gets entirely lost in this argument is the consumer’s right to truth in labeling and U.S. cattle producers who have a right to differentiate their product in the retail case,” continues McDonnell. “Following the dispute panel’s ruling, some U.S. cattle groups have urged the administration not to appeal, and have stated publicly that the solutions lie in making statutory changes to, or weakening, the COOL law. This fractured message undermines U.S. cattle producers.”
Nineteen U.S. Senators, led by Tim Johnson (D-SD) and Mike Enzi (R-WY), sent a letter to the Obama administration urging it to maintain its support and defense of COOL at the WTO level.
Careful response
However, Kansas State University ag economist Glynn Tonsor cautions that Canada and Mexico are important beef export markets for the U.S., and he says that international response to the COOL debate in general may not necessarily be meat retaliation.
“If the U.S. chooses to fight the ruling, Mexico could put additional tariffs on pork exports, which wouldn’t be good, because that makes pork more expensive for the U.S. to export into Mexico, and that would adversely hurt beef, as well,” says Tonsor, adding that tariffs could also be put on non-agriculture products. “There might be a commodity more politically sensitive than a meat product that would still be within the WTO response allowances that Canada and Mexico would be allowed to put a tariff on that might force the U.S. meat industry to answer to a non-meat segment in the U.S. – it may not be just a meat-oriented discussion as we go forward.”
Perception is reality
In a statement from USCA, USCA Director and COOL Committee Chairwoman Danni Beer says, “Perception is reality. Go to your local grocery store and take a look at the meat labels in the retail case. You’ll discover that retailers are demanding meat labeled as U.S. origin, and that’s because consumers are demanding it and purchasing it. Whether consumers prefer a product of the U.S. over one from Canada is their decision to make, and the ability to identify the difference in origin should be readily available to consumers so they can make informed purchases.”
“I am optimistic that the WTO appeals process will ultimately keep the consumers’ best interests in mind. I applaud the amount of resources and attention the Obama administration has devoted to this issue, and I am confident the administration will mount a vigorous appeal to the dispute panel’s flawed decision,” continues Beer.
‘Reasonable’ objections
Tonsor says his opinion is that Canada and its accompanying countries are being reasonable.
“The WTO ruling was highly expected, and going forward I would encourage the U.S. to recognize that fighting it is probably unwise,” he says. “I think the free market can address the issue of providing information such as origin. I don’t think we need to do it in a way that’s non-WTO compliant.”
“I think Canada and the others are not only reasonable in filing the complaint, but even reasonable in what they’re expecting in terms of changes going forward,” adds Tonsor.
Christy Martinez is managing editor of the Wyoming Livestock Roundup and can be reached at christy@wylr.net.
Report: consumers correlate origin and quality
A newly released study titled Navigating the Product Mindset: Food Industry Report analyzes the differences between consumer and manufacturer perceptions regarding the make-up of today’s food industry.
The study found that the vast majority of manufacturers that were polled believe there is a distinct correlation between the perceived quality of unprocessed food products and the country of origin. The study also finds that more than 50 percent of consumers also believe the country of origin of food products will become more important over the next five years.
Origin labels explained
Under COOL, there are four categories of country of origin labels to be applied to muscle cuts, and a fifth label is reserved for ground meat.
Label “A” is reserved for “U.S. Origin” meat and is applied to meat derived only from animals born, raised and slaughtered in the U.S. Label “B,” or the “Multiple Countries of Origin” label, is used on meat derived from animals not exclusively born, raised and slaughtered in the U.S. Label “C” is used for meat derived from animals imported into the U.S. just prior to slaughter. Label “D” is used for foreign country of origin meat. The ground meat labels list all “reasonably possible” countries of origin of the animals from which the meat is derived.
