In 2002, Congress enacted mandatory country-of-origin labeling (COOL) provisions requiring retailers of certain meat products to inform consumers of a product's country-of-origin. Controversial aspects of COOL prompted Congress to revisit the law in the 2008 Farm Bill, which included several amendments to the 2002 statute.
Less than five months after the COOL implementing rule was published in 2008, Canada and Mexico challenged the rule at the WTO, arguing that it had a trade-distorting impact by reducing the value and number of cattle and hogs shipped to the U.S. market.
The process has since progressed through the dispute settlement panel phase (report issued November 2011), and a U.S. appeal to the WTO's Appellate Body (report issued June 2012). In both instances, the WTO found that the way U.S. COOL regulations were implemented violated U.S. WTO obligations by discriminating against imported livestock.
The United States was given until May 2013 to bring its COOL regulations into compliance with the findings of the dispute settlement panel, as modified by the Appellate Body. In response, USDA issued a revised COOL rule in May 2013 which required that production steps--born, raised, and slaughtered, by origin country--be included on meat labels. The revised rule also prohibited the commingling of meat from imported and domestic livestock. Canada and Mexico claimed the revised rule did not bring the United States into compliance, and furthermore they said the revised rule, especially the prohibition on commingling, was more onerous than the original rule. A key criterion of current COOL implementation is that it requires `segregation' of animals by country of origin, which raises the cost of utilizing imported livestock.
At the request of Canada and Mexico, the WTO established a compliance panel to determine if the revised rule brought the United States into compliance with previous rulings. The compliance panel report, released October 20, 2014, upheld the earlier findings of discrimination.
The United States filed to appeal the compliance panel report on November 28, 2014. On May 18, 2015, the WTO rejected the United States' appeal and found for the fourth and final time that the U.S. COOL requirements for beef and pork are unavoidably discriminatory. The final ruling kick-starts the WTO process to determine the level of retaliatory tariffs Canada and Mexico can now impose of the U.S., which has widely been predicted to have effects in the billions of dollars.
On Wednesday, March 25, the House Agriculture Committee's Livestock and Foreign Agriculture Subcommittee held a public hearing to examine the implications of potential retaliation against the U.S. Witnesses at the hearing testified as follows:
Canada and Mexico are by far the United States' largest export markets, and purchased a record $485 billion in manufactured goods in 2014. Those exports support millions of U.S. jobs. WTO-authorized retaliation by two of the largest U.S. trading partners could result in billions in tariffs affecting multiple sectors of the U.S. economy, threatening the livelihoods of American families.
With the threat of retaliation looming for our nation's manufacturers, time has run out. The NAM and the COOL Reform Coalition urge Congress to bring the United States back into compliance with its WTO obligations fully and quickly through the repeal of these WTO inconsistent provisions.
