Canada’s cattle sector on guard as beef-labelling talk returns in the U.S.
In the annals of North American trade disputes, the fight over mandatory country-of-origin labelling on beef and pork probably deserves its own chapter
by Tony Seskus – CBC News
When the U.S. wielded the rules early in the last decade, it cost Canadian producers dearly and was blamed for sharp declines in livestock exports south of the border.
Ultimately, it took the World Trade Organization, which ruled the U.S. violated international trade law, and the threat of hefty sanctions for American lawmakers to repeal the regulations in 2015.
“We have to be constantly vigilant with this COOL issue”
But support for the U.S. strategy still lingers and, amid the struggles of American ranchers, efforts to resurrect the regulation in some form appear to be percolating in its farm belt and on Capitol Hill.
Those backing a return of the labelling regime say it’s about transparency and competition, and believe American consumers — given a clear choice to buy beef produced exclusively in the U.S. — will pay to support their farmers and ranchers.
‘We’re going to do it’
“We’re going to do it,” said Bill Bullard of R-CALF USA, an American cattle trade association representing about 5,500 farmers and ranchers across 44 states. “We’re going to bring country-of-origin labelling back for beef.”
Bringing back a trade-compliant version of the American labelling regime would seem to be no mean feat following the previous WTO ruling, and with strong opposition from large cattle industry groups in the U.S.
But politicians brought the subject up twice during confirmation hearings for President Joe Biden’s agriculture secretary in February, with supporters continuing to be buoyed by that discussion.
Canadian producers and trade experts who closely follow the issue are paying attention.
The Canadian cattle industry pegs the annual value of its exports of beef and live cattle to the U.S. at between $2.5 billion and $3 billion.
“We have to be constantly vigilant with this issue,” said Carlo Dade, an expert on North American trade at the Canada West Foundation, a public policy think tank based in Calgary.
“It’s like softwood lumber and other perennial issues with the Americans. It never goes away.”
Old rules had big impact
American use of mandatory country-of-origin regulation, or mandatory COOL, lives long in the memory of producers on both sides of the border. The rule first appeared on the scene in late 2008 and revised in 2013.
The regulation set mandatory labelling for packaged steaks and other cuts of meat, requiring grocery stickers explaining where livestock was born, raised and slaughtered.
At the time, U.S. supporters argued consumers deserve to know where their meat comes from. But the regulations ran into opposition on both sides of the border, with some calling it simple protectionism.
Critics in Canada and the U.S. said the requirements led to costly overhead and logistical problems for the industry.
“The biggest impact was on the flow of live animals, and it was on the segregation that was required,” said Dennis Laycraft, executive vice-president of the Canadian Cattlemen’s Association.
“They were keeping animals separate in the plants. They had to process them separately when they arrived, which is why a number of plants just figured it wasn’t worth the extra work and cost to bring in.”
Prior to the rules taking effect, Laycraft said Canadian producers could export live animals to 16 processors in the U.S. five to six days a week.
“When those new rules came into effect, they were so difficult to meet, that dropped down to six processors — and five of them would only take our cattle one day a week,” he said.
During the trade dispute, Ottawa estimated the U.S. legislation cost the Canadian pork and beef industries about $1 billion a year.
The WTO determined the U.S. violated international trade law with the requirements. Faced with $1 billion in trade duties from Canada, the U.S. repealed mandatory COOL for beef and pork in December 2015.
American sector ‘in crisis’
The regulation was divisive south of the border, but groups such as R-CALF USA think it can help a sector that needs support.
Bullard, a former rancher, said that when mandatory country-of-origin labelling was in full effect between May, 2013, and December, 2015, U.S. cattle producers saw better prices.
“We had those labels in place during that time frame [and that] happened to coincide with the highest nominal prices paid to cattle producers in history during that same period,” he said in an interview from Billings, Mont.
These days, Bullard said, the U.S. uses a voluntary label that allows American meat packers to import beef, repackage it and put a “Product of U.S.A.” label on it.
Bullard said the U.S. industry is in “serious crisis,” with the number of ranching operations, cattle herds and feedlots all on the decline over the last two and half decades. There’s also frustrationthat as retail prices soar for beef, U.S. ranchers are not seeing the benefit.
Supporters of mandatory COOL hope the idea will get some traction.
President Joe Biden rejected the “America First” rhetoric of his predecessor, but he has trumpeted his own “Buy American” policy and made news for continuing old battles before the WTO.
Tom Vilsack is also back as agriculture secretary — a post he held in the Obama administration during the last dispute.
During Vilsack’s confirmation hearing in February, South Dakota Sen. John Thune asked him if he’d be willing to work with him on finding a new path forward for mandatory COOL.
“Happy to work with you and your staff on anything that would allow us to advance the country-of-origin labelling,” Vilsack said. “If there’s a way to get it to be WTO compliant, I would be more than happy to work with you.”
For supporters of mandatory COOL, it was encouraging to hear.
“For the first time in a couple of years, we’re having serious conversations about mandatory COOL — we think that’s a positive,” said Matt Perdue, government relations director for the North Dakota Farmers Union.
But support for country-of-origin labelling is not shared across the U.S. industry. One of its key opponents is the National Cattlemen’s Beef Association, the oldest and largest national association representing U.S. cattle producers.
Kent Bacus, the organization’s senior director of international trade, said mandatory COOL is a “zombie issue” that will continue to be promoted by small segments of the U.S. cattle industry who want more government intervention, protectionism and are “out of touch” with the current economic realities.
“The last thing we want is to get into another trade war with Canada and Mexico, where we could be targeted with $1 billion of retaliatory tariffs for a marketing program that never worked,” Bacus said.
The North American Meat Institute, the largest trade association representing U.S. meat packers and processors, confirmed it also remains opposed to mandatory COOL.
Canada to ‘stand up’ for industry
A spokesperson for Global Affairs Canada said Canada’s view is the issue has been fully litigated at the WTO and it trusts the U.S. will continue to abide by this ruling and its obligations.
“Canada will continue to stand up for Canada’s beef industry … and firmly oppose any new proposals from the U.S. to resurrect mandatory country-of-origin labelling for beef and pork,” said Michel Cimpaye in an email.
Christopher Sands, director of the Wilson Center’s Canada Institute in Washington D.C., said the matter shouldn’t be taken lightly, adding officials should be talking with U.S. industry allies, too.
He cautioned that a better relationship with the White House still isn’t a guarantee of success on trade matters.
“Biden would at least take the call and be more friendly than [Donald] Trump was,” Sands said. “But as we’re seeing with Line 5, the Enbridge pipeline, that isn’t a get-out-of-trade-dispute-free card.”
Laycraft of the Canadian Cattlemen’s Association said that following the WTO ruling, Canada retains the option of imposing huge duties if the U.S. does anything to violate it.
But he hopes efforts to bring back mandatory COOL won’t progress that far.
“I think we’ve got lots of allies lined up to stand between that measure and it moving forward,” Laycraft said. “But we’re on constant guard with it.”
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