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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: Comments@gbdinc.org
No. 38 of 2015
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FRIDAY, JUNE 5, 2015
Filed from Portland, Oregon
Click here for Wednesday's Ex-Im quote from Senator Heitkamp.
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A COOL $3 BILLIION
"Canada will request authorization from the WTO to impose over C$3 billion in retaliatory measures against the U.S., while Mexico will seek authorization for over $653 million."
Ed Fast
Canada's Minister of International Trade Gerry Ritz Canada's Minister of Agriculture and Agri-Food Ildefonso Guajardo Villarreal Mexico's Secretary of Economy, and Enrique Martinez y Martinez Mexico's Secretary of Agriculture
June 4, 2015
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CONTEXT
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Things happen in a rush. On Monday, May 18, the WTO issued its fourth and final ruling against America's country of origin labeling (COOL) requirements for various meat products, including beef and pork. The injured parties are Canada and Mexico. They are the ones who challenged the U.S. regulations in the WTO, and they have now asked for a special meeting of the WTO's Dispute Settlement Body to decide how much retaliation is justified. That meeting will take place in Geneva on Wednesday, June 17. Today's quote is from a statement issued yesterday by the Canadian and Mexican officials responsible for this matter. The U.S. dollar is riding high these days, so $3 billion Canadian is only about $2.41 billion U.S. "Only" in this case is still an awful lot of money and an awful lot of trade, and who knows what the exchange rate will be by the time retaliation is authorized and implemented. In any event, considering Mexico's retaliation request of $653, the total request is for more than $3 billion. The WTO may authorize less, but the final numbers are bound to be large and painful. As for the harm behind the retaliation, yesterday's joint statement from Canada and Mexico summed that up fairly succinctly. It said: "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."
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COMMENT
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We expect to run several TTALK Quotes on this topic over the next few weeks; so we shall keep this one short. As we noted last month, the House Agriculture Committee has already approved legislation to repeal the COOL regulations that violate the rules of the WTO. This is H.R. 2393, the "Country of Origin Labeling Amendment Act of 2015." We are not sure when the U.S. House of Representatives as a whole will vote on the matter, but even those who oppose that legislation seem to believe that it has a good chance of passage in the House. The Senate is another matter. The idea that Congress should make one more stab at fixing COOL rather than repealing it has its supporters in the House. Rep. Collin Peterson (D-MN), the Ranking Member of the House Agriculture Committee, is one of them. In an interview with Agri-Pulse recently, Mr. Peterson said he didn't think a simple repeal bill could get through the Senate, which is why he favored a different approach. Time will tell. In the meantime, the threat of retaliation from Canada and Mexico has more than focused the minds of those who are working for repeal. One of those is the president of the National Pork Producers Council, Ron Prestage. A veterinarian and pork producer from South Carolina, Mr. Prestage described the looming punitive tariffs from Canada and Mexico as "a death sentence for U.S. jobs and exports."Dairy is another U.S. sector working to avoid retaliation. Mexico is the industry's largest export market and Canada is important. The president of the National Milk Producers Federation, Jim Mulhern, talked about the situation this way: "America's dairy farmers should not suffer collateral damage as a consequence of our COOL policy. The U.S. government needs to rectify this situation before we lose any export customers."
In this case, the U.S. government means Congress. And they have two problems. The first is that they don't have a lot of time. Retaliation is likely to kick in by September if not sooner. The second is that repeal is the only option that can predictably forestall the injury of retaliation. Almost any other fix would simply mean more argument at the WTO, but that would be against the background of in-place, export-blocking retaliation from both Canada and Mexico.
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RELATED EVENT
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On June 16, GBD and the National Pork Producers Council will host a discussion on this issue:
The Next Shoe to Drop: COOL and The Threat of Trade Retaliation.
This event will include speakers from the U.S., Canada, and Mexico. And it will be held at the National Press Club in Washington from 9:00 to 10:30 a.m. on June 16. Click the title link for registration options and other details.
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SOURCES & LINKS
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A Joint Statement is a link to the joint statement issued in Ottawa yesterday by the governments of Canada and Mexico, outlining the amount of retaliation authority those two countries will be seeking from the WTO. This statement was the source for today's quote.
A Final Determination takes you to the TTALK Quote for May 21, which highlighted a Canadian reaction to the WTO latest, May 18, decision in the COOL case.
A Collin Peterson Interview is a link to this Agri Pulse Open Mike interview with the Ranking Member and former Chairman of the House Agriculture Committee.
NPPC Urges Fix is a link to the press release from the National Pork Producers Council with the quote above from Ron Prestage.
Dairy Under Threat takes you to the page from the website of the National Milk Producers Federation with the article on COOL retaliation quoted above, including the comments from Jim Mulhern.
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© 2015 The Global Business Dialogue, Inc.
1140 Connecticut Ave., NW, Suite 950
Washington, DC 20036
Tel: (202) 463-5074
R. K. Morris, Editor
www.gbdinc.org
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