COOL Jeopardizes Relationships with Key Trading Partners

On October 20, the World Trade Organization (WTO) released its compliance panel report regarding the revised U.S. Country of Origin Labeling (COOL) rule. The results from the report found COOL to indeed be in violation of global trade rules that require imports to be treated no less favorably than domestic products. Canada and Mexico had originally argued that the amended rule had a trade-distorting impact, citing that it discriminates against livestock exports from their countries—reducing the number of their cattle and hogs shipped into the U.S.

In response to WTO’s recent decision, the COOL Reform Coalition is calling on Congress to immediately authorize and direct the Secretary of Agriculture to rescind elements of COOL that have been determined to be noncompliant with international trade obligations.

“Canada and Mexico are the two largest markets for U.S. exports,” said U.S. Chamber of Commerce senior vice president for international policy John Murphy. “The disruption of these trade ties by WTO noncompliance and the resulting retaliation by our North American neighbors will have a devastating economic impact on U.S. industries including food production, agriculture, and manufacturing.”

“The United States helped create the WTO to ensure that all countries play by the rules,” added Linda Dempsey, vice president of international economic affairs at the National Association of Manufacturers. “U.S. leadership in complying with our own obligations is critical to the United States’ ability to address effectively unfair and WTO-violative trade barriers by our trading partners around the world.”

The food industry is also speaking out about its concerns.

“By being out of compliance [with WTO], the U.S. is subject to retaliation from Canada and Mexico that could cost the U.S. economy billions of dollars,” the American Meat Institute and North American Meat Association said in a joint statement.

American Soybean Association president Ray Gaesser agrees, stating that COOL in its current state is an unworkable burden on the animal agriculture industry—soybean farmers’ largest customers.

“As producers of the nation’s leading farm export, we have a huge stake in ensuring that our trading relationships are robust and mutually beneficial,” said Gaesser in a recent statement. “In the case of COOL, it is incumbent on us to ensure that our own nation’s policies are conducive to that goal.”

On October 30, the COOL Reform Coalition sent a letter to Congress that was signed by 109 organizations, requesting that Congress immediately permit the Secretary of Agriculture to withdraw elements of COOL found to be noncompliant.

The letter states the following:

• The undersigned stakeholders are gravely concerned about the negative impact that the existing U.S. Mandatory COOL rule for muscle cuts of meat will have on the U.S. economy.
• Canada has already issued a preliminary retaliation list targeting a broad spectrum of commodities and manufactured products that will affect every state in the country. Mexico has not yet announced a preliminary retaliation list, but has implemented retaliatory tariffs in the past which may be indicative of future tariff opportunities. It is expected that U.S. industries would suffer billions in lost sales if retaliation is allowed.
• Given the negative impact on the U.S. manufacturing and agriculture economy, we respectfully submit that it would be intolerable for the U.S. to maintain, even briefly, a rule that has been deemed non-compliant by the WTO. With little potential for quick Congressional action after a WTO final adjudication, we request that Congress immediately authorize and direct the Secretary of Agriculture to rescind elements of COOL that have been determined to be noncompliant with international trade obligations by a final WTO adjudication. Such action by Congress would not undermine COOL to the extent COOL is consistent with international trade obligations nor would it weaken the U.S. defense of COOL in WTO litigation.

Most recently, on October 31, the U.S. Court of Appeals for the District of Columbia Circuit denied request to rehear motion for preliminary injunction blocking implementation of COOL.