Canadian and Mexican trade officials are moving forward with plans to retaliate against the United States if Washington fails to respond quickly to a recent World Trade Organization (WTO) ruling that upholds complaints that U.S. Country-of-Origin Labeling (COOL) requirements are unfair and burdensome to foreign exporters.

Last month's WTO decision puts the pressure on U.S. trade officials to make additional revisions in labeling requirements to eliminate what the two North American trading partners claim are measures that will significantly increase production costs for Canadian and Mexican beef and poultry industries and create an unfair marketing advantage for U.S. producers. WTO's decision charges current COOL requirements are not in line with international fair trading rules.

October's decision marks the second time in less than two years the WTO ruled against U.S. labeling plans. Last year a WTO panel directed trade officials in Washington to revise the wording of COOL requirements to eliminate discrimination, but Canadian and Mexican officials complained the resulting revisions only added more requirements and greater labeling burdens.

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Trade officials in Canada reported last week that U.S. rules requiring retailers to list the country of origin on meat labels will cost its farmers and processors an estimated $1 billion a year in lost sales and lower prices. Mexican trade officials say they are still trying to estimate the economic impact to its farmers and processors but say the damage would "run into the millions."

Since the latest WTO ruling in late October, Washington trade officials have said they were exploring their options. But one U.S. official says those options include another appeal over the latest WTO decision.

But Canadian officials say any delays in conforming to WTO's decision are not acceptable and indicated last week they are already formulating an appropriate response if the U.S. does not move quickly to make changes to labeling requirements. They indicated last week those changes should include provisions that would either eliminate labeling requirements altogether or would at least alter the required wording on labels.

Under the latest U.S. COOL requirements, Canadian and Mexican meat packing labels must include information about where the product originated and where it was slaughtered and processed. Canada and Mexico say they would recommend that label wording be simplified. For example, they suggest a more generic designation such as "Made in North America" as the place of origin.

Informed decisions

USDA officials say COOL requirements are intended to protect and inform consumers by making them aware where meat products originate and where they are processed. Such labeling, they claim, helps consumers to make informed decisions when selecting food products and are not intended to penalize foreign meat imports.

A week before the Oct. 31 decision from WTO, the United States Cattlemen’s Association (USCA) reiterated their continued strong support for country-of-origin labeling, despite what they called "a disappointing decision from the World Trade Organization that COOL regulations are in some respects inconsistent with U.S. trade obligations."

"The WTO has never said we cannot require country-of-origin labeling," said USCA President Danni Beer. "The WTO has only explained that COOL has to be implemented in a way that conveys sufficient origin information to the consumer. USCA strongly supported the revised COOL regulations issued in response to that original WTO decision, and we continue to believe those rules are WTO consistent."

Not everyone agrees. U.S. pork producers urged Congress and the administration to fix the rules and avoid “financially devastating” retaliation, and the U.S. Chamber of Commerce, National Association of Manufacturers, farmer cooperatives and corn refiners said the offending sections should be immediately repealed. Many beef producers, including officials at the National Cattlemen’s Beef Association, said the whole policy should be scrapped.

"The recent announcement by the WTO dispute panel on the U.S. Country of Origin Labeling rule brings us all one step closer to facing retaliatory tariffs from two of our largest trading partners," said National Cattlemen’s Beef Association President Bob McCan.

According to Canadian officials, U.S. imports that could face tariffs include a host of produce such as cheese, beef and pork, but also tomato ketchup, Californian wines, cereal, chocolate and frozen orange juice.

Mexican trade officials say they have not yet finalized their list of U.S. imports that might be subject to tariffs, but said it would result in "millions of dollars in losses" to offset additional costs Mexican producers will be penalized for trading with the United States.