The World Trade Organization (WTO) has ruled that Canada can retaliate against the U.S.’s discriminatory COOL rules by applying retaliatory surtaxes on $1,054 billion of U.S. exports to Canada.

This decision now must be formally adopted by the WTO’s Dispute Settlement Body before Canada is in a position to retaliate. This will likely occur within a few weeks and is a pro forma step, as the only way it could be blocked is if all WTO Members – including Canada – decided to do so.

Once adopted, Canada could act immediately, subject only to the completion of domestic procedures. Timing is entirely discretionary on the Canadian Government and could range from a matter of days, involving a Treasury Board meeting then publishing in the Canada Gazette Part II at a minimum, to a matter of months or more should the Government decide to pursue further public consultations or take more of a “wait and see” approach should the U.S. Senate take steps towards repealing COOL requirements.

RCC has been working with officials in the Ministries of Finance, Foreign Trade and Agriculture to identify tariff categories and sub-categories that would be particularly punitive to Canadian retailers and consumers should retaliation occur, including beef, pork, cherries, ketchup, orange juice, cookies and crackers. RCC has voiced its opposition to the implementation of tariffs in these categories.

Next steps:

  • RCC will continue to express our serious concerns and aggressively oppose retaliatory tariffs.
  • RCC will be meeting with officials in the Ministries of Finance, Foreign Trade and Agriculture to ensure that negative impacts on retailers and consumers are minimized.

Background:

U.S. Congress introduced COOL labelling requirements for fresh beef, pork and lamb in 2002. COOL was introduced as a consumer information program, but it immediately had the effect of promoting U.S. products as the value and demand of Canadian beef and pork declined. The requirements were expanded in 2008 to include other food items such as poultry. It has been estimated that the requirements cost the Canadian beef and pork industries $1 billion annually.

Canada challenged COOL with the WTO as a barrier to trade in 2008, and the WTO ruled in Canada’s favour in 2011, agreeing they presented technical barriers to trade and were inconsistent with the U.S.’s WTO obligations. The U.S. launched an unsuccessful appeal to this ruling in 2012.

In 2013, the Canadian Minister of Agriculture, the Honourable Gerry Ritz, threatened retaliatory tariffs on a broad range of U.S. imports where there is limited Canadian manufacturing. RCC has been consulting closely with the Government on this issue, including the Ministers of Finance and Agriculture. The U.S launched its final appeal in November 2014. As expected, the WTO ruled on this final appeal in Canada’s favour on May 18, 2015.

On June 4, Canada announced that it will be seeking the authority to launch $3 billion in retaliatory tariffs from the WTO. The new Liberal Government has given no indication that it will back down on the issue.

RCC is participating in a COOL industry coalition expressing our concerns with the implications of retaliatory tariffs.

If you have any questions or concerns, please don’t hesitate to contact: Jason McLinton, Senior Director, Federal Government Relations at: [email protected] or 613-656-7903 or Dave Wilkes, Senior Vice President Government Relations and Grocery Division at [email protected] or 416-467-3767