With mandatory country of origin labeling (MCOOL), the U.S. could not have upset its neighbors at a more critical time.
After being implemented seven months ago, MCOOL took full effect in March. Even before that, it was impacting the marketing of Canadian- and Mexican-born cattle and Canadian hogs into the U.S. Now both countries have vowed to do something about it. Hence Canada's filing of a new complaint against MCOOL with the World Trade Organization (WTO).
MCOOL always looked disruptive to the North American market. The previous orderly flow of cattle between the three countries still hasn't recovered from 2003's BSE cases in the U.S. and Canada. And, as BEEF reported in its March 2009 issue, there's still no trade in U.S. breeding cattle to Mexico.
Add MCOOL and discounts on Mexican feeder cattle entering the U.S. and it's no wonder Mexican patience is wearing thin. Add MCOOL discounts for Canadian cattle and hogs and Canadian patience has been exhausted.
MCOOL's implementation is especially unfortunate because the two countries are the largest importers of U.S. agricultural products, including beef and pork. Given the weakness in global demand for U.S. meat, the U.S. needs Canada and Mexico to keep taking as much U.S. beef and pork as possible. The two bought a combined $27.1 billion of U.S. agricultural products in 2007 (Canada $14.2 billion, or $429/person, and Mexico $12.9 billion, or $119/person).
Not only does the U.S. need those markets, feedlots and beef packers need Canadian cattle, and hog farmers and pork packers need Canadian feeder pigs. Yet imports of cattle are down 24% so far this year while hog imports are down 40%.
Canada and Mexico say MCOOL is still a big problem for them. Groups from the two countries met March 23-24 to discuss issues facing various industries. A livestock and meat working group then issued a joint declaration with four points:
MCOOL negatively impacts the Mexican and Canadian livestock and meat industries and the competitiveness of the entire North American industry.
The Mexican and Canadian industries urge their respective governments to pursue their rights to the WTO fully and without delay.
The two countries plan to establish a working group to analyze and document MCOOL's impacts.
The industries of both countries will meet in Washington. The first meeting was May 13.
Two weeks before this, Canada gave notice it was filing a new WTO complaint against the U.S. over MCOOL. The notice came after an April 27 meeting between Canadian International Trade Minister Stockwell Day and U.S. Trade Representative Ron Kirk. One can only conjecture whether Day asked Kirk about a request made in February by USDA Secretary Tom Vilsack. But for that request, Canada would not have filed a new complaint.
Vilsack in February told packers he wanted them to voluntarily (his word) follow even stricter rules than in USDA's final rule, notably over where animals are born, raised and slaughtered. He wants this put on a retail label and threatened to impose new mandatory rules if the industry does not comply.
In late April, Day said Canada had asked the Obama administration to clarify its position because Vilsack's request is causing uncertainty among Canadian farmers whose business already has declined amid the implementation of MCOOL. But the U.S. hasn't defined its position, he said. Ironically, Canada thought the MCOOL final rule was flexible and seemed to address Canadian concerns.
Regrettably, Vilsack has kept the MCOOL saga going by making pronouncements about a highly complicated food labeling program he knows little about. Even worse, it shows he listened more to the ardent supporters of MCOOL than anyone else, including USDA's own specialists on the subject. The best action he can take now is to unequivocally declare that MCOOL won't be changed and that the final rule stands. End of saga.