The Meat Labeling debate has been an issue between the NAFTA countries (U.S., Canada, Mexico) for several years. Most recently, in October of 2014, the World Trade Organization (WTO) ruled in Canada’s favor addressing the controversial U.S. country-of-origin meat-labeling scheme (COOL) which has been found in violation of free trade agreements by the WTO.
The U.S. Meat Labeling Background
Effective in 2013, the latest U.S. labeling rules require meat labels to indicate the country (or countries) where the animal was born, raised, and then slaughtered.
Originally, the U.S. Department of Agriculture allowed the labels to say “Product of U.S.” or “Product of U.S. and Canada.” When the WTO rejected this approach, the USDA made the labels more specific. For example, the new labels would state that the animal was “born in Mexico, raised and slaughtered in the United States” or “born, raised and slaughtered in the United States.” However, the WTO also rejected these revised rules.
Canada’s WTO Win
A WTO report released on October 20th states that the U.S. labeling rules give an unfair advantage to domestic meat products. For Canada (and Mexico), COOL is a non-tariff trade barrier designed to make it more costly to handle beef and swine born or raised in Canada. Because of these trade-barriers, Canada has seen a lower demand for their livestock and higher handling costs – costs that exceed $1 billion per year.
Ed Fast, Canada’s Minister of International Trade, and Gerry Ritz, Canadian Minister of Agriculture and Agri-Food, responded to the U.S. appeal with a promise to keep retaliation on the table. The U.S. could face trade retaliation from Canada in the way of meat tariffs on U.S. meat, as well as chocolate, cereal, wine, and other food products.
Their joint statement stated, “Canada is deeply disappointed with the U.S. decision to appeal the WTO ruling on COOL. Canada fully expected the United States to live up to its international trade obligations and comply with the WTO ruling, which reaffirms Canada’s long-standing view that the revised U.S. COOL measure is blatantly protectionist and fails to comply with the WTO’s original ruling against it.”
Still, the WTO found that the labels serve their intended purpose of supplying consumer information – Canada and Mexico claimed the labels did not.
The U.S. Appeal
The WTO announced that the U.S. was appealing the ruling for a 3rd time within the allotted 60-day appeal period. Although few details have been released, the WTO says that appeals have to be based on points of law, such as legal interpretation. They cannot reopen factual findings made by the decision-making panel.
This is the U.S.’s third loss on the COOL issue, but it does mean the U.S. puts off the time when its economy might be forced to pay punitive tariffs on some of the $52 billion in sales Americans make to Canada.
The U.S. Divide
U.S. business groups are divided on the labeling rule. Some large meatpackers oppose the regulation, saying it drives up costs and hurts trade with Canada and Mexico. Other agricultural groups, however, back the appeal, saying it could help give consumers more information. With all the changes to GMO labeling, gluten-free labeling, and stricter guidelines for other food product, it’s clear that consumers want more information. Still, with rising beef prices, less regulation could mean lower prices.
Many U.S. farmers who compete with Mexican and Canadian ranchers welcome the appeal. The feel it is the right thing for the American people to know where there meat is coming from. National Farmers Union President Roger Johnson on Friday called it “the right thing to do for American family farmers, ranchers and consumers.”