The proposed rule would also eliminate the allowance for any commingling of muscle cut covered commodities of different origins.  Under the current regulations, muscle cuts from animals born, raised, and slaughtered in the U.S. can be commingled during a production day with muscle cuts from animals born in Canada and raised and slaughtered in the U.S. and labeled as “Product of the U.S., and Canada”.  Commingling is eliminated to provide more specific labels to consumers.

Imported muscle cut commodities would continue to have their origin as declared at time of import.  They could have more detailed information about production steps if records are maintained to substantiate the claims.

The issue most talked about by Canadian and Mexican producers and U.S. processors, the cost of separating animals of different origins at slaughter, was not addressed in the new proposed rule.  This was made more of an issue by elimination of the commingling option.

Also raised by some groups was only labeling products for retail sale as required by U.S. law.  There is no requirement to label for restaurants and institutional uses.  Consumers are not getting information for a substantial part of their consumption.  That would require action by Congress.

Canadian Agriculture Minister Gerry Ritz has been vocal in recent weeks about the failure of the proposed rule to resolve the issues.  He is reported to be “very disappointed” with the proposed rule from AMS because it did not address Canada’s biggest concern of live cattle and hogs shipped to the U.S. for slaughter and feeder animals sent to the U.S. for finishing.  He has said that their calculations show about $1 billion per year in lost trade due to COOL, and they will request that much in annual retaliation from the U.S.  The actual level will be set by the WTO.

Losing a trade case at the WTO is important, and not settling it quickly after it is lost is even more important.  We should have learned that from the Brazilian cotton and export credit case.  WTO panel members often look at U.S. programs much differently than the industry in the U.S.  When the original panel concluded that the U.S. was not meeting its commitments and the Appellate Body agreed, the U.S. government had to strike a deal or accept the retaliation.

That is an important point.  The WTO cannot force a country to change trade policies.  The worst that can happen is the U.S. loses an equivalent amount of trade access to Canada.  That is what the EU did when they lost the beef hormone case to the U.S.

In this circumstance, the U.S. has more to lose than some access to Canadian markets.  Perennial problem countries like Russia are watching what we do.  If the U.S. does not respect WTO commitments on meat trade, why should they?  With the U.S. pork and young chicken industries about 20 percent trade dependent and beef 10 percent, we cannot ignore the trade implications of the situation.

At this time, the differences will not be easily overcome.  The American Meat Institute, which is opposed to any type of mandatory COOL, suggested that if AMS promulgates the final rule as proposed or a similar one, AMS should not make the rule effective until the WTO has had an opportunity to determine whether the new rule satisfies U.S. WTO obligations.  The Canadian and Mexican governments will undoubtedly respond at the WTO.  Letting the dust settle a little rather than bulling ahead, looks like a reasonable option.

Ross Korves is a Trade and Economic Policy Analyst with Truth About Trade & Technology (www.truthabouttrade.org).

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