There’s so much activity and discussion re PED virus and the new Pig Code that it’s easy to forget the long term effects of the M-COOL in the United States. There are those who believe that packers in Canada actually prefer if the restrictive legislation now ensconced in the U.S. Farm Bill stays as is.
However, while the latest Farm Bill passed in January 2014, is in place for the next five years some still place hope in World Trade Organization panel that is reviewing the appeal put forward by Canadian and Mexican livestock representatives and their lawyers.
Peter Clark of Ottawa, ON. an international trade consultant remains hopeful the parties involved in the dispute over U.S. M-COOL will resolve the issue without the need to resort to retaliatory tariffs.
Last May, in response to a WTO order to bring M-COOL into compliance with its international trading obligations, the U.S. added new labelling requirements for red meats and banned the mixing of products from different countries. This prompted Canada and Mexico to return to the WTO to request authority to impose retaliatory tariffs on imported U.S. products.
In late February, WTO panel handling the complaint met in Geneva for an open hearing on the issue.
Clark, with Grey, Clark, Shih and Associates, says M-COOL forces U.S. processors to segregate imported livestock from domestic livestock increasing production costs Since its introduction in 2008, it has dramatically impacted cattle and hog exports from Canada while suppressing prices.
He says the WTO panel found the Americans inconsistent once and they didn’t comply.
“If they are found to be still in breach of the WTO rules which I think is likely because, in effect, they admitted they hadn’t removed the detrimental effects of the previous measure then their choice is to bring it into compliance,” said Clark. “Hopefully the panel will give them more direction on that. If they don’t, well, ag minister Gerry says Canada can and will retaliate. We really hope it doesn’t come to retaliation because we want to sell livestock. That’s what our interest is.”
As far options go, Clark thinks there are some available to ensure consumer access to information on the foods they purchase without restricting international trade.
“The WTO rules in effect say you can regulate but you shouldn’t arbitrarily or unnecessarily inhibit trade and that’s what the dispute’s about,” he said.
“The Americans claim their consumers have a right to know where their meat comes from. We haven’t essentially disagreed with that but we suggest that the way they’re doing it, is causing an unnecessary trade burden.”
Clark says the changes made by the U.S. may improve the type of information they provide to their consumers but as a practical matter they’ve made the situation worse for Canada’s livestock producers.
“We would hope the WTO doesn’t basically allow people to stifle trade in the name of regulation or in the name of consumer information,” he said. “There’s lots of ways to provide consumer information without making it unattractive to import weanlings, hogs and beef cattle from Canada.’
In the event the WTO panel finds the U.S. has failed to comply with the order to bring the labelling law into compliance, Canada and Mexico will have the legal right to impose retaliatory tariffs on imported U.S. products.
Clark expects a decision from the panel sometime this summer. It doesn’t seem to matter who comes out on top in these things, the other side will appeal, so the parties are looking at a process through into the middle of next year.
The side that loses can be expected to appeal so a final decision is unlikely until mid-2015. •
— By Harry Siemens