Thomas Suber is the president of the U.S. Dairy Export Council. James Mulhern is the president and CEO of the National Milk Producers Federation, and Connie Tipton is the president and CEO of the International Dairy Foods Association. On October 19, they sent a joint letter to U.S. Senators urging them to do something. "It is critical," the three dairy industry leaders said, "that Congress put in place a solution to this WTO dispute that removes the threat of retaliatory tariffs." Some of the elements of this issue are old. Some are new. And, of course, the most important ones are still to be decided. The familiar elements on these.
FAMILIAR ELEMENTS The U.S. country of origin labeling rules - especially those for beef and pork - have been a disruptive irritant to Canada and Mexico since they first went into effect in 2008. Primarily that is because they forced expensive changes onto an otherwise integrated North American market for cattle, hogs and related products, resulting in lost sales for both Canadian and Mexican producers.
Canada and Mexico both took their complaints to the World Trade Organization, and on May 18, 2015, the WTO ruled for the fourth and final time that the U.S. requirements do violate global rules and, further, that, unless the offending measures - the COOL regulations - are changed, Canada and Mexico will have the right to retaliate against some level of U.S. exports.
How much retaliation would be justified? Putting the Canadian and Mexican claims together comes to roughly $3.2 billion in U.S. exports. That's huge, but it is just an estimate. The final figure will come from a WTO arbitration panel. That panel is expected to issue its decision on December 7, 2015, though admittedly that date could slip.
In Congress, the U.S. House of Representative passed legislation that would repeal the COOL requirements for beef, pork, and chicken. If that bill were to become law, presumably that would solve the problem. And, in fact, the chairman of the Senate Committee on Agriculture, Nutrition and Forestry, Senator Pat Roberts (R KS) has also offered legislation to repeal those COOL regulations that have been found to violate WTO rules. The Senate, however, is not of one mind on this issue.
Senators John Hoeven (R ND) and Senator Debbie Stabenow, the Ranking Member of the Senate Agriculture Committee, have also offered legislation to address the problem. Their bill, S.1844, would repeal the mandatory requirements of the current COOL regulations and replace them with a "voluntary" program. Critics of the Hoeven-Stabenow bill, including officials of Canada and Mexico, have argued that it would not address the commercial harm that COOL is causing them. They have said that the only way the United States can avoid retaliation is with a straightforward repeal of the current COOL provisions.
In their October 19 letter to the Senate, the leaders of the three major dairy associations did not expressly state a preference for one Senate approach over another. That said, it is hard not to read their letter as an argument for unalloyed repeal. The association leaders wrote:
"At this advanced stage of the case, .... any resolution can only be successful at avoiding those tariff penalties if Canada and Mexico agree that it sufficiently addresses their concerns."
NEW ELEMENTS If there is a new element in all of this, it is the Canadian election, also an October 19 event. As the world now knows, Canada chose a new prime minister and a new governing party. The question is, will the choices of Justin Trudeau and Liberal Party control change Canada's view of COOL?
There are some who hope it will. One of those is R-CALF, which describes itself as "the largest producer-only cattle trade association in the United States. R-CALF is a strong proponent of the current COOL regulations, and on October 21, two days after Canada's election, R-CALF's CEO, Bill Bullard, wrote to the Obama Administration, urging them to work with the incoming Trudeau government on a new approach to COOL.
In a letter addressed to President Obama, Agriculture Secretary Tom Vilsack, and USTR Michael Froman, Mr. Bullard wrote:
"Canada's election affords the United States with a new and unique opportunity to amicably resolve Canada's dispute in a manner that preserves mandatory COOL for U.S. livestock producers and U.S. consumers."
While he did not - at least not in his letter - get into specifics, Mr. Bullard did suggest the broad outline of a new U.S. approach to Canada, as follow:
"There are numerous, if not unlimited, country to country matters between the United States and Canada that could be used to amicably persuade newly elected Prime Minister Trudeau to cease Canada's sabre rattling against mandatory COOL."
Suggestions like that beg the question, does Canada's Liberal Party have a position on COOL? Apparently, they do. The president of the Liberal Party of Canada is Anna Gainey. On October 9, she wrote to the president of the Canadian Cattlemen's Association, Dave Solverson, with responses to a number of the association's questions on trade. The most pertinent were this question and response:
Question:
"Will your Party move swiftly in the fall of 2015 to impose retaliatory tariffs on the United States if the U.S. Congress does not repeal its discriminatory Country of Origin Labelling legislation that has cost Canadian livestock producers several billions of dollars since 2008?"
Answer: "The Conservatives have already failed with the country of origin labelling with the United States, and it is costing our livestock industry billions. It constitutes nothing more than a trade infringement on a long established liberal trade arrangement.
"A Liberal government will follow through with an aggressive response to ensure that the United States adheres to the ruling of the WTO."
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