By: Sarah Rashid, University of Windsor law student
After much anticipation from Canada in regards to the issue, Canada has won the trade dispute at the World Trade Organization (WTO) pertaining to the country-of-origin labeling (COOL) requirements on beef and pork imposed by the United States. Canada launched a challenge with the WTO in 2008 regarding the U.S.’s mandatory country-of-origin labeling requirements (COOL) outlined in the Agricultural Marketing Act of 1946 as amended by the 2008 Farm Bill. This law requires retailers to provide country-of-origin labeling for certain commodities including beef and pork. Commodities considered to be of U.S. origin are only those animals that are exclusively born, raised and slaughtered in the United States. Any livestock that is exported to the U.S. is thus not considered to be of U.S. origin. Canada argued that the mandatory COOL provisions were inconsistent with the United States’ obligations under the WTO Agreement and that the COOL provisions were having a detrimental impact on the meat industry on both sides of the border by increasing costs, lowering processing efficiency and creating a barrier to trade between Canada and the United States.
On December 1 2008, Canada requested consultations with the United States regarding the COOL provisions and on October 7 2009, requested the establishment of a panel. The Dispute Settlement Body of the WTO set up a single panel pursuant to Article 9.1 of the Dispute Settlement Understanding (DSU) to which a host of countries some of which include Mexico, China, Peru, New Zealand and the European communities, were third parties. The Panel found that the COOL measure was in violation of Article 2.1 of the Technical Barriers to Trade (TBT) Agreement by according less favourable treatment to imported Canadian cattle and hogs than to like domestic products. The Panel also found that the COOL measure did not fulfill its legitimate objective of providing consumers with information related to origin and therefore violated Article 2.2 of the TBT Agreement.
The 2008 U.S. labeling provisions were instated at a time when the Canadian meat industry was trying to recover from losses that it incurred as a result of a closing of U.S. borders to beef cattle after a case of spongiform encephalopathy (BSE) was discovered in Canada in 2003. The pork industry was also suffering due to the consumer concern over the 2009 H1N1 ‘swine flu’ epidemic. Agriculture Minister Gerry Ritz noted that from 2008-2009 Canadian feeder cattle exports declined 49% while pork exports declined 58%. Canada and U.S. livestock sectors are highly integrated where many live animals are shipped from Canada to U.S. processing facilities. With COOL, processors had to separate Canadian animals and process, package and label them separately than identical U.S. born animals. These additional costs were felt by livestock farmers in Canada. President of the Canadian Cattleman’s Association stated that the COOL requirements cost the Canadian beef industry “hundreds of millions of dollars in reduced prices and increased transportation and handling costs.” Trade Minister Ed Fast stated that “as our economies continued to gather strength following the global recession, COOL was a step in the wrong direction.” The WTO ruling was unanimous on all points in the case but the U.S. can still appeal the decision within 60 days.
This ruling has opened up some questions related to policy issues. Some question whether a federal labeling program in the U.S. is actually needed. It may provide the U.S. with a competitive advantage compared to foreign products based on the fact that American consumers may prefer fresh domestic foods to imported foods thereby strengthening domestic product demand and price. Another argument centres on the right of consumers to know where their food is coming from especially when it comes to health and safety issues. Moreover, such proponents of COOL argue that meat products should not be excluded from country-of-origin labeling requirements where other imported consumer products already comply with such requirements and due to the fact that foreign countries also have their own country-of-origin labeling.
The other side of the argument looks at whether U.S. consumers actually want such labeling. Moreover, opponents of COOL view the labeling requirements as a significant trade barrier which increases importers’ costs. They also argue that food health and safety issues are overstated as food imports already must meet equivalent U.S. safety standards which are enforced by U.S. officials at borders and overseas. Moreover, it is argued that such requirements offset any economic benefits ensuing from cross-border trade. Consequently, Canadian Agriculture Minister Ritz and Trade Minister Fast are engaging in the task of diversifying markets for Canadian meats around the world especially in Asia.