USDA’s COOL Rule Surprises No One, Distresses Many

Last week, USDA issued its rule on mandatory country-of-origin labeling (COOL). Of course, no one was surprised by the final version, but I think most were amazed. Besides small changes like using the word “harvested,” the only real surprise was that USDA essentially did nothing to address the concerns cited by last year’s World Trade Organization (WTO) ruling.

As you might recall, WTO ruled against the U.S. in a complaint filed by Canada and Mexico regarding the fairness of mandatory COOL. WTO ruled that the law violated provisions of the WTO’s agreement on Technical Barriers to Trade, and gave the U.S. a May 23 deadline for bringing mandatory COOL into WTO compliance.

I love the fact that USDA actually had the nerve to defy WTO, while presumably also recognizing that the U.S. must belong to WTO, and that fair trade and a level playing field benefits everyone. Now, it appears that it will just be a matter of time before we learn what the penalties will be, and how damaging they will be to the industry.

USDA Secretary Tom Vilsack said this: “USDA remains confident that these changes will improve the overall operation of the program and also bring the mandatory COOL requirements into compliance with U.S. international trade obligations.” But meat industry groups and Canada’s Ag Minister Gerry Ritz disagreed.

“These changes will not bring the U.S. into compliance with its WTO obligations. These changes will increase discrimination against Canadian cattle and hogs and increase damages to industry on both sides of the border,” Ritz said in a statement.

Canada and Mexico likely now will move aggressively to impose penalties for our failure to live up to our agreements. And it’s expected that beef and pork imports will be the targets for Canada and Mexico as we move into the retaliation phase. In fact, the Canadian Cattlemen’s Association reported that Ritz and Canada’s International Trade Minister Ed Fast have indicated that Canada would consider retaliatory tariffs in the neighborhood of $1.1 billion.

I still believe that there has to be a way of implementing a workable COOL program that achieves the goals of producers, as well as the needs of consumers, without costing livestock producers hundreds of millions of dollars. Sadly, however, the final rule from USDA makes it clear that the agency either was unable to create a workable solution, or felt the current legislation restricted it from making the positive changes needed.

It appears the U.S. strategy now is to do nothing until the penalty phase begins, and then let Congress work it out. Meanwhile, what we have is a law that has failed to accomplish what was intended and has caused widespread disappointment from everyone involved.

However, the pain, like the gain, from mandatory COOL has been fairly minimal so far, but that is going to change. Hopefully, as the industry losses begin to mount up, Congress will take action to address the real issues.

TAGS: Regulatory
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