THE TTALK QUOTES 

On Global Trade & Investment

 

Published Three Times a Week By

The Global Business Dialogue, Inc.

Washington, DC   Tel: 202-463-5074

Email: [email protected]

 

No. 34 of 2015 

THURSDAY, MAY 21, 2015      

 

   

Filed from Portland, Oregon  

     

Click here for the May 6 TPA quote from Richard Trumka.
COOL: CORRECTION OR CONSEQUENCES

"The WTO has ruled for the fourth and final time that the Canadian and Mexican industries are right and it's time to repeal COOL."

Gerry Ritz
May 19, 2015 (Publication date)

CONTEXT
Gerry Ritz is Canada's Minister for Agriculture and Agri-Food.  Today's quote was a comment he made in an interview following Monday's WTO decision on America's country of origin labeling requirements for beef, pork, and chicken, known as COOL.  Mr. Ritz's assessment that COOL should be repealed came with the clear threat of retaliation if it is not.  "When we start to attach tariffs to $400-million of California wine," he said, "it gets their attention."

The View from Canada and Mexico.
The same thought was conveyed more formally in a statement on COOL issued jointly by Mexican and Canadian officials, immediately following the announcement from the WTO's Appellate Body.  The officials said:

"Once again, the WTO has confirmed Canada and Mexico's long-standing position that the United States' mandatory COOL requirements for beef and pork are blatantly protectionist and are a violation of the United States' international trade obligations.

"The amended COOL measure, which causes Canadian and Mexican livestock and meat to be segregated from those of U.S. origin, is damaging to North America's supply chain and is harmful to producers and processors in all three countries.

"In light of the WTO's final decision, and due to the fact that this discriminatory measure remains in place, our governments will be seeking authorization from the WTO to take retaliatory measures against U.S. exports.

"We call on the United States to repeal COOL legislation and comply with its international obligations.

"The Canadian and Mexican governments will continue to work closely to resolve this important trade issue with the United States in order to protect our farmers and ranchers and maintain jobs and economic prosperity throughout North America."

That statement was issued by the following four ministers: Ed Fast, Canada's Minister for International Trade, Gerry Ritz, Canada's Minister for Agriculture and Agri-Food, Ildefonso Guajardo Villereal, Mexico's Secretary of Economy, and Enrique Martinez y Martinez, Mexico's Secretary of Agriculture, Livestock, Rural Development, Fisheries and Food. 

House Ag. Approves Repeal
The call by Mexico and Canada for a repeal of COOL has not gone unnoticed in the U.S. Congress, at least not in the House Agriculture Committee.  Yesterday, May 20, the Committee approved legislation to roll back the problematic elements of COOL by a wide, bipartisan margin - 38 to 6.

The bill at issue, H.R. 2393, was introduced by the chairman of the House Agriculture Committee, Rep. K. Michael Conaway (R-Tx) on Monday.  In setting the bill before the House Agriculture Committee yesterday, Chairman Conaway said:

"This bill is narrowly drafted to eliminate the requirement for country of origin labeling for meat products from cattle and hogs for which the WTO ruled against the program.  We also eliminate the requirement for chicken, which faced high costs and little if any quantifiable benefits."

As for the impetus and urgency of the bill, Chairman Conaway explained:

"We know we face retaliatory sanctions that could have effects in the billions of dollars.  Regardless of the amount, we cannot sit back and let American businesses be held hostage to the desire of a small minority who refuse to acknowledge that the battle is lost."

In between those two explanatory comments of his own, Chairman Conaway included some noteworthy elements of the report issued by the WTO's Appellate Body, including this one:

"[T]he panel had noted that between 57.7% and 66.7% of beef and between 83.5% and 84.1% of pork muscle cuts consumed in the US convey no consumer information on origin despite imposing an upstream recordkeeping burden on producers and processors that has a detrimental impact on competitive opportunities for imported livestock."


COMMENT
Our guess is that, before too long, the full House will approve the repeal legislation that got such a strong endorsement from the House Agriculture Committee yesterday.  That is only a guess, however.  We are not close enough to the issue to have a real feel for how this matter will play out in either the House or the Senate.  And certainly, as Chairman Conaway indicated, there are those who want to continue the fight, to hold on to the current regulations.  Public Citizen, R-Calf, and the Ohio Farmers Union are all in that camp, to name but three.

Our own preference is for repeal, not simply because of the WTO ruling but because the COOL regulations themselves seemed to have largely ignored the realities of the relevant markets.  The Globe and Mail story with today's featured quote summed up the problem this way:

"[T]he U.S. meat industry opposes the labelling rules, which force slaughterhouses, feedlots and ranchers to segregate imported animals and their meat.  The labelling rules also interrupt what had been an integrated North American cattle market, in which livestock were often sent to feedlots across the border before returning to be slaughtered."

We realize that today's big news relates to TPA's difficult - but so far successful - march toward final approval in the Senate.  To some, the COOL issue may seem far removed from TPA and TPP.  For others, they are closely linked.  In a nutshell, policies that ignore reality are doomed to fail, and every failure has its costs.  In the case of COOL, the regulations seem not to have paid much attention to how the key markets actually worked, and now other U.S. industries are threatened as a result.  

We shall save the parallel TPA, TPP discussion for another day.  Suffice it to say that the U.S. has been holding out the promise of a major, negotiated Trans-Pacific Partnership agreement for very long time now, and a failure in that effort - including the failure to approve Trade Promotion Authority - would carry a high price.
RELATED EVENT

COOL, the WTO, and America's Options.  That may not be the precise title, but it will be the topic at the next GBD colloquium. This event will be held at the National Press Club on Tuesday, June 16, from 9 to 10:30 a.m.   Watch your inbox for the usual notice or sign up now by sending an email to [email protected].  

EDITOR'S NOTE

It has been two weeks since the last TTALK Quote, and we apologize for the hiatus.  This past week was something of a vacation for your editor, who, with the aid of his lifelong navigator, made his way by car from Portland, Oregon, to Torrance, California.  Early on we drove past Mt. Shasta in northern California:

 


 

                      Mt. Shasta from a roadside rest stop.  May 14, 2015


and then down Route 395 through Reno, the various Sierras and the Mojave Desert, into Reno (jokes but no divorce) and then west to the land of the stars and grandchildren.   


Along the way, we passed miles and miles of grazing cows, all blissfully ignorant (we hope) of either the COOL regulations or the deeper meaning of the McDonald's and Burger King signs that dotted our route. 


It was all quite wonderful, but we are happy to be back in this familiar hillside setting in Portland, between the Cascades and the Coast Range.

 

SOURCES & LINKS

Ottawa Threatens is a link to The Global and Mail story on COOL that was the source for today's featured quote. 


From Four Officials is a link to the joint statement by Mexican and Canadian ministers, quoted above in its entirety.   


COOL Repeal in the House is a link to information on the bill to do this, namely, H.R. 2393. 


The Chairman's Statement takes you to the opening statement by Chairman Mike Conaway at yesterday's meeting of the House Agriculture Committee. 


Trade War Looms is a Reuters article on the recent COOL developments, which includes references to the positions of Public Citizen and R-Calf.


In Ohio takes you to a WKSU News story that highlights the views of the Ohio Farmers Union. 


About COOL is a link to the Wikipedia discussion of these country of origin labeling regulations and


USDA on COOL takes you to information on COOL as published by the U.S. Department of Agriculture.  

 

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