The document discusses the implications of a May 2013 deadline for the US to comply with a WTO ruling on country-of-origin labeling (COOL) for meat. If the US does not change its COOL rules by the deadline, Canada and Mexico may impose retaliatory trade measures. The ruling was a victory for Canada's livestock industry. US officials face challenges changing the rules to comply while Congress has been ineffective at passing legislation. The COOL rules increased costs for packers and led Canadian and Mexican producers to argue they reduced prices paid for imported animals.

1. Vol. 10, No. 236 December 6, 2012
The clock is finally and officially ticking on U.S. policymak-
ers regarding mandatory country-of-origin labeling. The U.S. has LIVE HOG IMPORTS FROM CANADA
until May of next year to bring the labeling rules on meat into compliance Feeder Pigs Slght Barr's & Gilts Slght Sows & Boars
with the ruling handed down earlier this year by a WTO Dispute Settle- Head/Week
ment Body. The WTO arbitrator stated that 10 months from the July 23, 175,000
2012 adoption of the appellate panel’s report was a reasonable time peri-
150,000
od for the U.S. to meet the requirements. So May 23, 2013 is the date on
which, if the U.S. is not in compliance, Canada and Mexico may com- 125,000
mence taking retaliatory action against the United States. Incorrect data from APHIS
A statement from Canada’s Trade Minister, Ed Fast, and Agri- 100,000
culture Minister, Gerry Ritz said, in part, that “The WTO Appelate Body
75,000
has recognized the integrated nature of the North American supply chain
and marked a clear win for our livestock industry.” Further, they said they 50,000
were “particularly pleased” that the WTO set a compliance period much
closer to the period requested by Canada than the much longer period 25,000
(18 months) that the U.S. had requested.
The challenge for American officials is to figure out just how to -
2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012
change the current U.S. rules to meet the WTO ruling. U.S. Trade Repre-
sentative Ron Kirk was quoted by a MeatPoultry.com article saying that
the U.S. remains committed to providing consumers with country-of-origin LIVE CATTLE IMPORTS FROM CANADA
Feeder Cattle Slaughter Steers & Heifers Slaughter Cows
information about meat and poultry (we have no idea why he threw poul- Head
try into that statement since the U.S. imports practically no poultry prod- 30,000
ucts) but that they would indeed be brought into compliance. Our con-
tacts indicate that federal officials are trying to re-write the rules for 25,000
MCOOL to meet the WTO requirements. Based on our knowledge of the
enabling legislation and the Final Rule which took effect in March 2009, 20,000
we think that will be difficult, meaning that a resolution to this issue would
have to come from Congress in the form of an amended law. And we all 15,000
know how effective Congress is at passing virtually anything these days.
“Small” things like MCOOL — at least they are small in the eyes of DC — 10,000
almost always require some vehicle to carry them through the process.
The Farm Bill would be a logical vehicle for an ag/food issue such as 5,000
MCOOL but action on a Farm Bill does not seem imminent. If a one-year
Farm Bill extension is passed, some other vehicle will have to be found. -
MCOOL’s major impact was on the labeling of product de- 00 01 02 03 04 05 06 07 08 09 10 11 12
rived from imported animals. The differentiation requirements forced
packers to segregate product and, in most cases, handle animals import- LIVE CATTLE IM PORTS FROM M EXICO
ed for direct slaughter and animals born in Canada or Mexico and then Feeder Cattle
fed in the U.S. on specific days. These segregation practices as well as Head
80,000
adding stock-keeping units for the differently labeled product increased
costs. Canadian and Mexican producers have argued that those costs 70,000
were taken out of prices paid for their animals, thus causing economic
harm. 60,000
The charts at right show weekly import data for hogs (we only 50,000
bring pigs in from Canada) and cattle with the vertical red line in each
chart indicating the implementation of MCOOL in 2009. MCOOL is obvi- 40,000
ously not the only factor driving imports. Canada’s competitiveness has 30,000
been harmed by the strength of the Canadian dollar. Drought conditions
in Mexico have forced more cattle to U.S. ranches and feedlots. South- 20,000
ern packers market beef from Mexico-born cattle to largely Hispanic mar-
10,000
kets. A resolution to the WTO case and better relationships with our
neighbors are both positive outcomes but don’t expect any big changes in -
imports come May 23, 2013. 00 01 02 03 04 05 06 07 08 09 10 11 12
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