The Senate Committee on Agriculture, Nutrition and Forestry held a hearing yesterday on Country of Origin Labeling and Trade Retaliation. The chairman of the committee, Senator
Pat Roberts (R KS), asked each of the six witnesses the question quoted above. Mr.
Jaret Moyer, the president of the Kansas Livestock Association, was one of those witnesses. A portion of his response is the second of today's two featured quotes. We shall return to Senator Roberts' questions and the replies he got in a moment. First, and with apologies for going over old ground, here is some background.
In 2009, the U.S. Department of Agriculture began enforcing rules on country of origin labeling, which, in effect, forced U.S. livestock producers to keep animals imported from Canada and Mexico separate from those raised entirely in the United States.
"Born, raised, and slaughtered" is the magic phrase and legal requirement associated with those country-of-origin or COOL labeling requirements.
Almost immediately, Canada and Mexico challenged the COOL regulations - and their 2013 revision - in the WTO, arguing that the U.S. rules were a non-tariff trade barrier that injured Canadian and Mexican producers of livestock.
On May 18, 2015, the WTO issued a fourth and final ruling against the United States on the issue, giving the green light to Canada and Mexico to raise tariffs against some amount of U.S. trade. Canada and Mexico believe they should be able to go after roughly $3.2 billion in U.S. exports. The U.S. has challenged that number. Arbiters will decide the final number or numbers later this summer. After that, Canada and Mexico will be free to raise tariffs on some level of U.S. exports into their markets.
On June 10, 2015, the House of Representatives passed H.R. 2939, the
"Country of Origin Labeling Amendment Act of 2015" by a vote of 300 to 131. Authored by Rep.
Mike Conaway (R-TX), the chairman of the House Agriculture Committee, the bill would repeal the COOL requirements for beef, pork, and chicken. The goal of Mr. Conaway's bill is to forestall retaliation, and it would. Both Canada and Mexico have said as much. They have also said that repeal is the only action the U.S. can take to get their fingers off the retaliatory trigger. Could they be bluffing? They might be. They might not be. At the very least, they are strongly encouraging the Senate to follow the lead of the House.
On July 24, 2015, Senator
Debbie Stabenow (D-MI), the Ranking Member of the Senate Committee on Agriculture, Nutrition and Forestry, released a draft proposal for addressing the COOL challenge and, hopefully, avoiding retaliation. A press release on Senator Stabenow's proposal describes it this way:
"Stabenow's draft proposal would remove beef and pork mandatory labeling provisions under COOL and put in its place a completely voluntary Product of the U.S. label."
The question is, would Senator Stabenow's proposal be enough to keep Canada and Mexico from retaliating? Some believe it would. Others are skeptical, and certainty is not on offer. Against that background, Chairman Roberts put his question to the panel. Here is a more complete statement of it, together with further responses:
SENATOR ROBERTS:
"This is for the entire panel. ... Canada and Mexico will soon be authorized by the WTO to retaliate against the United States. Once that happens, it doesn't matter if the Congress, the USTR, and the Department of Agriculture all agree that a certain labeling approach satisfies the WTO rules, not to mention members of the Senate. If Canada and Mexico disagree, they can keep any authorized retaliation in place until we get a ruling from the WTO. During this time, we expose our farmers, our ranchers, our businesses and consumers to pay the price.
"Are you willing to risk any period of retaliation so we can test whether another approach to labeling works?
One witness was willing to run that risk. He was
Leo McDonnell, the Owner/Operator of McDonnell Angus and Midland Bull Test, based in both Rhame, North Dakota, and Columbus, Montana. He was testifying not only for himself but also on behalf of the United States Cattlemen's Association.
A supporter of the COOL system, Mr. McDonnell expressed doubts about just how big retaliation from Canada and Mexico might be. We won't know that, he said, until the arbiters announce their decisions. Still, he seemed to accept that some change may be necessary, and the change he proposed was a voluntary labeling program to replace the current one, a solution that is very much in line with what Senator Stabenow has proposed. In his written testimony, he put it this way:
"I come to you to propose a common sense compromise. U.S. cattle producers want the integrity behind the 'A' label to remain intact. In no circumstances should a product not born, raised and harvested in the U.S. be granted 'U.S. label'. Through a voluntary program, we ask that this program be maintained and not comingled with other product originating in Canada and Mexico."
As for
the other five, they each said they would be unwilling to risk retaliation and urged a straightforward repeal of the COOL labeling requirements for beef and pork. Briefly:
Mr. Barry Carpenter of the North American Meat Institute:
"No. We're already incurring tremendous costs to implement the program and lost market opportunities. To put on top of that additional tariffs is totally unacceptable."
Mr. Craig Hill of the Iowa Farm Bureau Federation for the American Farm Bureau Federation:
"The short answer is unwilling, Senator. American farmers are committed to fair trade, rules-based practices, and there is an issue of good faith here. North American partners need to be treated fairly."
Mr. Jaret Moyer of the Kansas Livestock Association:
"Full repeal would be the best answer, Sir."
Mr. Jim Trezise of the New York Wine and Grape Foundation:
"No. We would not want to see any period where the tariffs would be in effect, because it would basically unravel the whole wine market system that we have worked so hard to develop in Canada. Once it starts going, it's gone."
Mr. Chris Cuddy of Archer Daniels Midland Company:
"It's time to respect our obligations as a WTO member; so the answer is no."