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Country of Origin Labelling has been at the centre of the global meat and agricultural sector over the last week.
Not only has there been a ruling against the US over its interpretation of the Country of Origin Labelling rules, but two reports to the European Commission have poured cold water on plans in Europe for country of origin labelling on dairy products and some minor meat products.
For the US, the World Trade Organization said the interpretation of the regulations was unfair.
In Europe, the new reports said that consumers would not be willing to pay for teh added cost of country of origin labelling.
As soon as the World Trade Organization threw out the US appeal against its ruling over mandatory country of origin labelling, the repercussions were going to be felt across the whole of North America.
The dispute that has now been running for years concerned the extra burden of record keeping imposed on exporters of meat and livestock to the US, which Canada and Mexico, who were leading the fight against the regulation of mandatory COOL, said gave the US an unfair advantage in the market.
The WTO had ruled that the US was placing too much of a burden on exporting countries.
The US, however said, after the WTO had rejected the US interpretation of the rules that the latest set of changes it had made had made them fairer.
The Appellate Body of the WTO disagreed and rejected the US arguments against the panel’s findings.
The Appellate Body maintained the panel’s conclusions that the amended COOL measure increases the record-keeping burden for imported livestock entailed by the original COOL measure.
The Appellate Body rejected US arguments that the panel’s conclusions were based on “incorrect hypothetical” scenarios that were not based on actual, or the most common, trade situations.
The Appellate Body also maintained the panel’s conclusions regarding the potential for labelling inaccuracy under the amended COOL measure and the exemptions prescribed by the amended measure.
The Appellate Body agreed with the panel that the recordkeeping and verification requirements of the amended COOL measure impose a disproportionate burden on producers and processors of livestock that cannot be explained by the need to provide origin information to consumers, and that the exemptions under the amended COOL measure support a conclusion that the detrimental impact of that measure on imported livestock does not stem exclusively from legitimate regulatory distinctions.
The panel had said that between 57.7 per cent and 66.7 per cent of beef and between 83.5 per cent and 84.1 per cent of pork muscle cuts consumed in the US convey no consumer information on origin despite imposing an upstream record keeping burden on producers and processors that has a detrimental impact on competitive opportunities for imported livestock.
The Appellate Body agreed with Canada and Mexico that the panel made several errors in concluding that the two countries failed to make a prima facie case that the amended COOL measure is more trade restrictive than necessary.
Ed Fast, the Canadian Minister of International Trade, and Gerry Ritz, Minister of Agriculture and Agri-Food, jointly with Ildefonso Guajardo Villarreal, Mexico’s Secretary of Economy, and Enrique Martínez y Martínez, Mexico’s Secretary of Agriculture, Livestock, Rural Development, Fisheries and Food, said in a statement: “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 US 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 authorisation from the WTO to take retaliatory measures against US 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.”
Canadian Cattlemen’s Association President Dave Solverson said: “Today is an incredibly important and historic day for Canada’s cattle industry.
“With a final ruling from the WTO affirming the Canadian beef industry’s right to fair market access firmly in hand, the CCA urges the US Congress to finally repeal COOL on red meat.” he said.
He said the CCA had spent C$3.25 million fighting COOL since 2007 but Mr Solverson added that the cost to fight COOL was minor in comparison to the cost COOL has inflicted in the overall industry.
“On behalf of the people who operate Canada’s 68,500 beef farms, I thank the Government of Canada for standing firm against the unfair discrimination of US COOL and ensuring that the US meets its international trade obligations,” he said.
In 2013, the Government of Canada announced a list of commodities being targeted for potential retaliation in the amount of C$1.1 billion. That figure was based on the annual impairment suffered to that point under the 2009 final COOL rule. The amount has grown significantly following the 23 May 2013 COOL amendment
The amount of US exports that Canada will be seeking WTO authorisation to apply retaliatory tariffs upon is expected to be made known shortly.
US National Farmers Union President Roger Johnson said there was still ample opportunity for the administration, Mexico and Canada to negotiate an acceptable path forward.
“As we have seen in other disputes, once decisions are handed down, WTO members often work together to find a solution that will work for them,” said Mr Johnson.
“In this case, such a solution must involve continuation of a meaningful country-of-origin labelling requirement.”
He added: “While those who have opposed giving consumers more information on where their meat products are from have focused on potential retaliation, retaliation is relevant only if the parties cannot reach an agreement on how to move forward and then only after an arbitration process.
“And the amount of any retaliation is by definition speculative at best and aimed to raise alarm where none is warranted.”
The North American Meat Institute has welcomed the WTO Appellate Body ruling.
North American Meat Institute President and CEO Barry Carpenter said: “If there ever was any question that that mandatory country-of-origin labelling is a trade barrier that violates our international agreements, the World Trade Organization’s (WTO) ruling against the United States today should lay those doubts to rest.
“The WTO has spoken not once, not twice, not three times, but four times in panel and appellate body decisions. All four rulings found against the US.
“Now, after years of grappling with this costly and onerous rule – a rule that USDA’s own economic analysis says is a burden on livestock producers, meat packers and processors with no consumer benefit – it is clear that repealing the statute is the best step forward.”
In Europe, the two reports from the European Commission conclude that the benefits from new mandatory country of origin labelling requirements on food do not clearly outweigh the costs.
The reports say that voluntary labelling rules seem to be the most suitable solution.
The first report looks at the feasibility of different options for mandatory origin labelling for dairy products and for minor meats, notably horse meat, rabbit meat and meat from game and birds (farmed and wild).
Labelling rules are already in place for beef meat, pig meat, poultry meat, sheep meat and goat meat.
The report says that considering consumer attitudes towards additional information and potential extra costs, as well as any technical and administrative requirements arising for businesses and public authorities, for dairy products there would be an uneven impact on producers, making it more burdensome for some than for others.
It says it also seems that consumers are not willing to pay more for the additional information.
The report suggests that the existing options for voluntary labelling could address some consumer demands while retaining flexibility for Member States and food operators.
Commenting on the European Commission report on Country of Origin Labelling, Dr Judith Bryans, Chief Executive of Dairy UK, said she was disappointed to see that the Commission report found that voluntary Country of Origin Labelling may be a more suitable option for dairy products than a mandatory system.
“There is obvious consumer demand for clearer information on the country of origin of food products as illustrated by the existing rules for fresh meat within the Food Information to Consumers Regulation. Therefore, it makes sense to take the next step and introduce these requirements for milk and milk used as an ingredient in dairy products,” she said.
“A mandatory labelling system would help the UK dairy industry showcase its products and reassure consumers on their provenance. Our milk, our cheeses, our yoghurts and all our great British dairy products are a staple of the UK diet and we should be proud of what we produce.
“Country of Origin Labelling should be more than just an option but a strong recognition of the British dairy industry’s hard work to deliver nutritious and wholesome products to consumers.”
For the “minor meats”, the report similarly concludes that compulsory origin labelling would imply operational costs which would not outweigh the benefits.
The second report explores the need for consumers to be informed on the origin of unprocessed foods, single ingredient products and ingredients that represent more than 50 per cent of a food.
It concludes that consumers are interested in origin labelling for all these food categories, but less so for food categories such as meat, meat products and dairy products.
The report also looks at the costs and benefits of labelling rules, including the impact on the internal market and on international trade, and concludes that voluntary origin labelling, combined with existing mandatory origin labelling regimes for specific foods or categories of food, is the most suitable way forward.
The report recommends the introduction mandatory country of origin labelling for unprocessed prepacked minor meats if the cost is within the consumers’ range of willingness to pay.