The long-running dispute began in 2008, when Canada requested to consult with the US on certain mandatory country of origin labelling (COOL) provisions in the Agricultural Marketing Act of 1946, as amended by the 2008 Farm Bill. It stated that only animals which had been raised, born and slaughtered in the US, could be given the label of US origin.
Canada and Mexico challenged the treatment accorded to its imported livestock and, in its report circulated on 20 October, the WTO’s compliance panel agreed they had received less favourable treatment.
The report also criticised the amended COOL measures for imposing a detrimental effect on the opportunities for imported livestock on the US market, and increasing the administrative burden on businesses.
"These considerations confirmed that, as with the original COOL measure, the detrimental impact caused by the amended COOL measure’s labelling and record-keeping rules could not be explained by the need to convey to consumers information regarding the countries where livestock were born, raised, and slaughtered," read the summary of the report.
Bob McCan, president of the National Cattlemen’s Beef Association (NCBA) in the US, said the announcement by the WTO "brings us all one step closer to facing retaliatory tariffs from two of our largest trading partners".
"Our producers have already suffered discounts and faced the closure of a number of feedlots and packing plants due to the effects of this short-sighted regulation. COOL is a failed program that will soon cost not only the beef industry, but the entire US economy, with no corresponding benefit to consumers or producers."
He said the NCBA maintained there was no regulatory fix which could bring the COOL rule into compliance with its WTO obligations.
"We look forward to working with Congress to find a permanent solution to this issue, avoiding retaliation against not only beef, but a host of US products," he added.
The Canadian Cattlemen’s Association said it welcomed the publication of the report which "unequivocally supports Canada’s position that the US amendments to the COOL regulation continue the discrimination against live imports of cattle and hogs into the US marketplace".
It said it was calling on the US Congress to "immediately repeal the red meat requirements of the COOL legislation or revise the legislation in a manner that eliminates the need for US cattle buyers to segregate imported from US-born livestock".
Dave Solverson, president of the CCA, said: "Until COOL comes into compliance with the WTO, the CCA will continue to insist that the Government of Canada prepares to impose prohibitively high tariffs on key US exports to Canada, including beef."
The report will now be adopted at a meeting of the Dispute Settlement Body. This process, which can be delayed only by a US appeal, would trigger Canada’s rights to compensation or retaliation. "If the US files an appeal and Canada once again wins, Canada would be authorised to impose retaliatory tariffs on US exports," said the CCA.
Canada announced a list of products for possible trade retaliation in June last year, but Mexico is yet to release its list, according to the NCBA.