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Potential COOL tariff targets shortlisted

Tariffs eyed on imports of U.S. goods, from meat to mattresses, juice to jewellery

U.S. exports of livestock, meats, foods and even furniture to Canada could be slapped with tariffs at the end of next year or later, in retaliation for Washington's answer to international trade rulings against U.S. country-of-origin label laws on food.

Canada's Agriculture Minister Gerry Ritz and Trade Minister Ed Fast on Friday shortlisted Canada's potential targets for retaliatory tariffs if the U.S. doesn't bring its mandatory country-of-origin labelling (COOL) into compliance with world trade obligations.

Mandatory COOL, in force in the U.S. since 2008, was ruled out of order by the World Trade Organization's Dispute Settlement Body (DSB) in 2011 and WTO Appellate Body in 2012, with both panels finding COOL to be a discriminatory practice against Canadian and Mexican livestock and meat.

Washington responded to the WTO rulings last month by publishing revisions to its COOL regulations, which will require the origin designations on the labels for muscle cuts of meat to include even more specific information about where each of the production steps (born, raised, slaughtered) occurred -- and will remove the previous rule's allowance for commingling of muscle cuts.

COOL supporters such as U.S. producer group R-CALF USA have said the revised rule is meant to deal with a key point in the WTO's previous criticisms, as the revision now requires all information collected from livestock and meat suppliers to be directly conveyed to U.S. consumers.

But Ottawa has said that by forcing U.S. meat packers and processors to further segregate imported animals from domestic livestock at their own expense, Washington's revised COOL rules "will increase discrimination against Canadian cattle and hogs and increase damages to industry on both sides of the border."

For example, Canadian cattle producers' losses to COOL since 2008 have been estimated at about $25 to $40 per head, or about $640 million a year. The Canadian Cattlemen's Association (CCA) has estimated USDA's amended rule will increase the impact of COOL to about $90 to $100 per head.

The CCA thus asked Ottawa to immediately publish its list of retaliatory options for public comment, rather than wait an estimated nine to 12 months for the WTO to authorize retaliatory tariffs.

Targeted commodities

Friday's list of Canada's proposed retaliatory tariffs begins with the most obvious targets: U.S. live cattle and hogs and fresh and frozen beef and pork products.

However, it adds other significant foods and ingredients, such as U.S. cereal, bread and other baked goods, pasta, frozen potatoes, frozen orange juice, wine, cheese, chocolate, cocoa, apples, cherries, maize, rice, fowl, maple sugar, maple syrup, ketchup, tomato sauces, sugars, glucose and fructose.

The list also extends beyond foods into U.S.-made jewellery, stainless steel, parts for non-electric heating appliances, iron and steel grinding balls for milling, adjustable swivel seats, wooden office furniture and certain types of mattresses.

The ministers on Friday said Canada will respect its obligations as a WTO member and thus will "not act on these retaliatory measures until the WTO authorizes us to do so."

Such tariffs, if needed and authorized, wouldn't be in force for another 18 to 24 months, but "the whole point is to leap between that 18 to 24 months and put enough pressure on the American administration to react to this within weeks, as opposed to dragging it all the way through the WTO process," Ritz said on a conference call with reporters Friday.

Ottawa is now preparing to launch the next phase of the WTO dispute settlement process against the new U.S. rule, a process "which we had hoped to avoid by the United States living up to its trade obligations," the ministers said in a statement.

The list of targeted goods is to be published "as soon as possible" in the Canada Gazette, as a way to formally launch the consultation process, the ministers said.

The list is being published now "for the purposes of consulting with interested Canadians," the government added.

"Incentive"

Canadian Pork Council chairman Jean-Guy Vincent on Friday hailed Ottawa's release of the list of potential targets as "a clear indication of how determined Canada is to see COOL fixed."

U.S. federal lawmakers "who were content to do nothing while we suffered will now have an incentive to legislate a solution, hopefully in their next Farm Bill," he said.

John Masswohl, the CCA's director of government and international relations, noted to the Reuters news service on Friday that some of the listed goods are targeted specifically at U.S. senators and representatives in certain districts.

"I think the Americans find themselves in a political box," Ritz told reporters Friday. "They have nailed the lid on themselves and we're more than happy to start smashing that box apart with them."

The pork council's own past analysis has estimated COOL's impact on the Canadian hog sector from lost exports alone at $500 million per year -- not counting COOL-related pressure on Canadian domestic hog pricing, nor any new effects from last month's revisions to COOL.

The CCA will continue in the meantime to work "closely" with the federal government "and our allies in the U.S., to achieve a resolution that genuinely eliminates the discrimination caused by COOL," CCA vice-president Dave Solverson said.

-- AGCanada.com Network, with files from Victoria Paterson of Alberta Farmer Express.

Related stories:
Last-minute COOL changes a burn for Canada,
May 24, 2013
WTO appeal body upholds ruling against COOL,
June 29, 2012



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