Within the next month a ruling is expected on the U.S. appeal of the outcome of the WTO case brought by Canada against the U.S. mandatory country of origin labeling law (MCOOL) for beef and pork.  The U.S. is expected to lose as it did in the original ruling.  An analysis by the Competitive Enterprise Institute (CEI) in Washington, DC and the Fraser Institute in Vancouver, B.C., Canada, MCOOL and the Politics of Country-Of-Origin Labeling proposes “establishing ‘mutual recognition’ of their regulatory regimes for cattle, beef, and pork, instituting a label that would state ‘Produced in the US and Canada,’ and creation of a bi-national group that would work to ensure that any future standards or regulations were negotiated jointly.”

In December of 2008 the Canadian government, and separately the Mexican government, requested consultations with the U.S. regarding implementation of MCOOL for pork and beef at the consumer level.  USDA had published an interim final rule on MCOOL in August 2008 and a final rule in January 2009 effective March 16, 2009.  The final rule requires retailers to use one of four types of labels based on the country of origin of the animal, where it was raised, and the country where it was slaughtered and processed.

Consultations did not resolve the dispute, and in October 2009 Canada asked that a WTO dispute settlement panel be formed.  In November of 2011, the panel found that MCOOL as implemented was in violation of the WTO Technical Barriers to Trade Agreement by providing less favorable treatment to imported Canadian cattle and hogs than for U.S. domestic products and not meeting its legitimate objective of providing consumers with information on the origins of meat.  In April of this year the U.S. government appealed the decision.

While MCOOL has a 10 year political and legislative history, the only relevant points for trade policy at this time are the WTO panel findings of unequal treatment of products and failure to inform consumer of the origin of meat.  The Canadian government has a right to demand increased tariffs on other items, but has made clear it has little interest in retaliation against the U.S.  Canada seeks a way to resolve the dispute.  Brazil took the same position after winning the WTO cotton and export credit case against the U.S.  The U.S. had a similar stance after winning a beef hormone case against the EU and imposing higher tariffs against EU products which resulted in no change in market access for U.S. beef.  WTO cases are not about retaliation; they are about gaining market access, as they should be.

The CEI/Fraser analysis proposes a plan that would provide market access that the WTO panel said Canada should have, while having a label that serves the two countries interests without discriminating against Mexico and other countries.  According to the analysis, WTO issues will likely be avoided because this plan applies to live animals, not packaged meat.  The plan would fulfill the U.S. obligation to change policies that are harming the trade interests of Canada.  The plan would be similar to broader talks by the U.S. and Canada to remove differences in regulations that impede trade and raise costs for consumers.