Friday, June 29, 2012

Canada wins COOL decision vs. U.S.

The World Trade Organization has upheld Canada’s challenge against the way the United States implemented mandatory country-of-origin labeling (COOL) in 2008.

There is no avenue of further appeal, so the United States will have to change its COOL regulations.

The Canadian Pork Council estimates COOL cost hog farmers $1.4 billion because the price of Canadian hogs was depressesed.

Packers and farmers in the U.S. were reluctant to buy Canadian hogs and cattle because they would be required to keep track of them separately as they moved through the marketing chain, including through packing plants and supermarkets.

That meant Canadians had to accept lower prices from U.S. buyers. It also kept more hogs and cattle at home in Canada, increasing supplies enough to depress prices here as well.

Analysts determined that the impact was greater on hog than beef farmers.

The decision is “music to our ears,” said Canadian Pork Council President Jean Guy Vincent.

Martin Unrau, president of the Canadian Cattlemen’s Association, said COOL has been costing Canadian cattlemen about $150 million a year.

“This is the result that we have been seeking,” Unrau said.

 The Appellate Body of the World Trade Organization wrote in its 232-page decision that ‘the regulatory distinctions imposed by the COOL measure amount to arbitrary and unjustifiable discrimination against imported livestock, such that they cannot be said to be applied in an even –handed manner’.

Fighting COOL has cost Canadian hog and beef farmers a small fortune in legal and consulting fees.

While the final decision looks like a victory for Canadians, it’s the U.S. beef and hog farmers who reaped close to $2 billion worth of benefits and it has been U.S. packers and consumers who have had to pay higher prices than necessary.

One hopes that the Trans-Pacific Partnership trade negotiations will do away with the U.S. ability to play games such as COOL and countervailing duties.