The COOL labeling scheme was introduced in the US on September 30 last year, and requires origin labeling for a variety of fresh produce. But Canada has said that the labeling scheme hurts its economy.
Canada initially filed a complaint with the WTO over the rules in December, but shelved it to see how the Obama Administration would deal with the issue.
Canada’s Trade Minister Stockwell Day said: “We are concerned with the approach the United States is taking to implement COOL and the negative impact it is having on our exporters. Recent instructions from the US Secretary of Agriculture encouraging the US industry to use very strict labeling practices have removed the flexibility previously envisioned in the legislation and this affects the ability of our cattle and hog exporters to compete fairly in the US market.”
Reduced US imports
According to figures from the US Department of Agriculture, US imports of Canadian cattle fell by 32 percent in the first two months of this year, compared to the same period in 2008, while Canada’s hog exports were down 40 percent.
Part of the reason for this is that the COOL law has reduced the number of US plants that will accept Canadian products due to the effort required for segregation and separate labeling. In addition, Canadian producers have said that the rules have produced a glut on local markets, thereby depressing prices.
But the US government has argued that the rules provide transparency for American consumers. US Secretary of Agriculture Tom Vilsack said in February: "I strongly support country of origin labeling – it's a critical step toward providing consumers with additional information about the origin of their food.”
Moreover, Datamonitor’s consumer survey data has found that the COOL rules are popular with American consumers.
If the dispute is not resolved within 60 days, Canada could request a WTO dispute panel to rule on the issue – and if the panel finds in Canada’s favor, Canada could legally impose retaliatory measures against US imports.
COOL applies to beef, chicken, pork, lamb, goat, wild and farm-raised fish, perishable agricultural commodities, ginseng, macadamias, pecans and peanuts.
Day said: “We are standing up for Canadian producers as we always have, and always will. COOL is having a significant negative impact on the Canadian livestock industry and we are taking the necessary steps to ensure that our producers are treated fairly.”
Meanwhile, Mexico is also in discussion with the WTO about challenging the COOL labeling scheme.