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Extension > Agricultural Business Management News > Repeal of Country of Origin Labeling – it’s messy

Friday, July 10, 2015

Repeal of Country of Origin Labeling – it’s messy

By Betty Berning, Extension Educator

In May, the World Trade Organization (WTO) found the United States’ County of Origin Labeling, or COOL, discriminated against imported animal products from Canada and Mexico. Canada and Mexico have received permission from the WTO to impose retaliatory tariffs on U.S. products. Industries impacted include meat, wine, chocolate, furniture, and jewelry, along with others. The total amount of tariffs varies, but has been estimated as high as $3.7 billion.
For those not familiar with COOL, it is a United States program that requires all fresh beef, pork, chicken, goat, and lamb to be labeled with its country of origin. It sounds simple, but it gets messy.
Processed and foodservice meat are exempt from COOL. COOL was part of the 2002 Farm Bill and modifications were made in 2008 and 2013. So, for example, if a steer was born in Mexico, finished in the U.S., and processed in the U.S., COOL requires that it is labeled as being a product of Mexico and the U.S. This is where it gets messy – extra labeling, tracking, segregation, etc.
The WTO has been hearing about COOL for several years in a back and forth matter between the United States, Canada, and Mexico. It’s been a messy journey.
Starting in 2008, Canada and Mexico filed complaints with the WTO about COOL. In 2011, a WTO panel found that this was an unfair trade practice. The U.S. appealed this decision and the practice was again found to be unfair.
Modifications to COOL were made in 2013, in the hopes of complying with the WTO’s ruling and maintaining this program. Canada and Mexico requested that a WTO panel investigate if the modifications were truly in compliance with the original ruling. In 2014, the compliance panel found that the updated COOL policy continued to create an unfair trade advantage for the United States.
The U.S. appealed this decision. The WTO issued its final ruling in May 2015 which upheld the compliance panel’s findings.
In June, the House of Representatives voted to repeal COOL. By doing so, the U.S. may avoid the $3.7 billion in retaliatory tariffs from Canada and Mexico. The Senate will vote on this next; at press time, no date was set for this vote. Many are saying COOL must be repealed because the proposed tariffs are too costly and could lead to a trade war.
The issue is messy when one examines the arguments for and against COOL. Consumer and producer groups have been COOL’s main advocates. A Consumer Reports article from June urged Congress not to repeal COOL as consumers have the right to know where their food is coming from. Farmers and ranchers have echoed these sentiments.
The logic is that clothing is labeled as “Made in China,” so why should food be different? At a time when eating locally is on-trend, it would seem as though COOL is necessary for consumers to make informed decisions. These advocates argue that consumers should be able to “buy American” if they choose.
Furthermore, due to diseases like bovine spongiform encephalopathy (BSE), proponents of COOL contend that it is a food safety measure.
On the flip-side of this, the tariffs that are being sought are huge and that is concerning to many parties. $3.7 billion is not a small number. Sources state that the tariffs could be 100 percent of a product’s value and the targeted industries will come from states whose lawmakers’ backed COOL regulations. The WTO has already agreed that Canada and Mexico may take these measures, but has not agreed to the dollar amount of these tariffs.
Critics of COOL say that the program has not had the desired impacts of food safety or consumer value. It has been a marketing measure, more than a food safety measure. For packers and processors, it’s created additional recordkeeping and labeling.
USDA estimated the costs to retailers, packers, and producers at $2.6 billion per year and added that COOL provided little measurable benefit to the consumers.
Additionally, producers in Canada and Mexico believe that fewer of their animals have been imported to the U.S. for growing and/or processing because of the increased paperwork and segregation COOL requires. Canada estimated that COOL cost its hog and beef industries $1 billion per year.
Tyson Foods has publicly shared that the program created additional costs in its supply chain due to the need to segregate meat and, as a result, it would discontinue accepting Canadian beef cattle shipped directly to its U.S. facilities. The food conglomerate also reiterated that the program had little value to its consumers.
The issue is messy with two very strong sides. Some in the middle have suggested that labeling be made optional, rather than mandatory. In this way, consumers still have the opportunity to understand the source of their food. In addition, many companies already have practices in place to support this type of labeling, so it wouldn’t require a change.
Another proposed option is modifying the current COOL policy to satisfy the WTO, Canada, and Mexico. Opponents of this are concerned that this could lead to another lengthy WTO review and during the interim the tariffs described above could be imposed.
Although there is not a clear cut answer, an answer about repealing COOL may come quickly if the Senate votes before its recess. As a beef producer, decide where you stand on the issue and understand both the costs and benefits. Be able to articulate your point by citing facts and let your representatives know your thoughts!

This article appeared in the June 24, 2015 issue of Minnesota Farm Guide.  Please reach out to Betty Berning at bberning@umn.edu or 320-203-6104 for more information.

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