October 25, 2014

WTO Rules Against U.S. Country of Origin Labeling

The World Trade Organization has again ruled against Country of Origin Labeling. The WTO compliance panel decided the rule was less favorable to meat imports from Canada and Mexico and more favorable to domestically produced meats. The ruling was announced Monday. The panel concluded the amended COOL measure “increases the original COOL measure’s detrimental impact on the competitive opportunities of imported livestock in the US market,” according to the reports released by the WTO. The panel pointed to the incentive to choose domestic over imported livestock and a higher recordkeeping burden contributed to the ruling. The United States can appeal the ruling.

Canada’s Agriculture Minister Gerry Ritz told Canada Today he expected the U.S. to appeal. A U.S. Trade office spokesperson told the Hagstrom report  “we are considering all options, including appealing the panels’ reports.” Earlier this year, Canadian agriculture officials said retaliations are likely if the rule is implemented. Ritz said Canada calls upon the U.S. to enact legislative change to eliminate COOL’s discriminatory treatment against Canadian hogs and cattle.”

Response to Ruling

As groups respond to the recent ruling by the World Trade Organization against Country of Origin Labeling, two messages are clear. Groups opposed to the measure are calling on congress to help stop potential tariffs or bring the rule to compliance. Groups in favor of the measure vow to continue fighting for the measure, noting the WTO simply needs the rule to be in compliance with world trade rules. National Catlemen’s Beef Association President Bob McCan stated the announcement “brings us all one step closer to facing retaliatory tariffs from two of our largest trading partners.” Further, he said there is no regulatory fix to bring COOL into compliance.”  

The National Pork Producers Council President Howard Hill said “Congress and the White House need to address this now.” American Soybean Association President Ray Gaesser said the decision “ only solidifies what we in the industry already knew to be true: that mandatory country of origin labeling in its current state is an unworkable burden on soybean farmers’ largest customers—the animal agriculture industry.”

The United States Cattlemen’s Association reiterated strong support for the rule. USCA President Danni Beer said “The WTO has never said we cannot require country-of-origin labeling” but rather it needs to be sufficient.” He said this action by the WTO provided “no basis for false alarms about repealing the COOL statute itself.  The National Farmers Union called the ruling positive that the problem is not the rule, but rather how it is to be implemented.

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Senators Sign Letter Supporting Country of Origin Labeling Law

32 Senators have signed onto a letter supporting U.S. Country of Origin Labeling laws. The law is again in the courts and faces World Trade Organization scrutiny. The U.S. Cattlemen’s Association commended the Senators who have pledged their support for the law. The letter urges the Senate Appropriations Committee leadership to reject any efforts to weaken or suspend COOL through upcoming legislation. The letter states “The Senate should not undermine the United States’ position by inserting a legislative rider into an appropriations bill before with U.S. trade obligations. 

USCA officials say they, along with a coalition representing a large number of producer and consumer groups will continue to defend COOL via the legislative, regulatory and judicial process. USCA President Danni Beer, Keldron, SD stated, “This is exactly the message that U.S. producers want to convey to Congress.  USCA encourages this bipartisan group of policy-makers to stay engaged in defending COOL.”

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U.S. Government To Impose Tariff On Mexican Sugar

The U.S. government, through the Commerce Department, on Tuesday announced that they will be looking to tax Mexican sugar imports at a rate as high as 17.01% as soon as next week. The move follows a host of rhetoric and litigation that began in March as U.S. sugar producers lodged a complaint with the Commerce Department alleging that Mexican sugar was flooding the U.S. market.  The tariff could attach as soon as next week, although duties won’t be final until early winter after the Commerce Department has time to fully investigate the dumping claims.

The news has already served to widen the gap between U.S. and world sugar contracts.  U.S. ICE futures finished at an almost two year high of 26.35 cents while world prices extended losses to 15.71 cents on the same ICE exchange.  The U.S. typically produces around 70% of its total annual consumption with the rest filled by imports primarily from Mexico.  Under NAFTA rules, Mexico is one of the few countries with unlimited access to U.S. sugar markets and is projected to ship a whopping 1.9 mmt of sugar into the U.S for the crop year which ends in September.  The shipments came at the same time that U.S. prices plunged, sparking sugar processor loan defaults of more than $250 million.

U.S. and Mexican authorities have been in talks to resolve this issue and reach some sort of compromise.  The Mexican Sugar Chamber on Tuesday appeared set to accept an export cap instead of an all encompassing tariff.  American Sugar Alliance spokesman Phillip Hayes was quoted as saying the Commerce Departments decision “validates our claim that the flood of Mexican sugar, which is harming America’s sugar producers and workers, is subsidized by the Mexican government”.  Many Mexican sugar mills are ultimately state owned following economic issues in the 1990’s that forced the Mexican government to bail them out by assuming at least partial ownership.

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