On June 10, the U.S. House of Representatives passed a bill to repeal COOL provisions for beef, pork and chicken. While this marks a critical step in ending the trade dispute, the U.S Senate must still approve the repeal.
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 is estimated that the requirements are costing the Canadian beef and pork industries $1 billion annually.
Canada challenged COOL with the World Trade Organization (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 over the summer. There are three potential outcomes at this stage:
- The U.S. repeals its COOL labelling requirements. This remains Canada’s preferred option. On June 10 the House of Representatives passed a bill to do so. While indications are that the Senate may be hesitant to follow suit, they are under pressure from the U.S. Department of Agriculture (USDA) and U.S. industry groups.
- A settlement is agreed to. The settlement could involve the removal or lessening of other tariffs on any number of Canadian products (food or otherwise), certain financial settlements, etc. Though this outcome would present a unique opportunity for RCC and its members to continue to work with Government in order to maximize benefits for Canadian retailers and consumers, indications are that this is the least likely outcome at this stage.
- Canada launches retaliatory tariffs. This is the least desired option for all parties. The earliest tariffs are expected is the fall of 2015 and could affect a number of product categories beyond food, from jewellery to mattresses and swivel chairs.
RCC has met with key officials in the Ministries of Finance and Agriculture to express our concerns and offer our assistance as next steps are being considered.
- RCC is participating in a COOL industry coalition expressing our concerns with the implications of retaliatory tariffs. RCC will continue to work with the coalition and on our own with Government and other industry groups to aggressively oppose retaliatory tariffs and minimize impacts on Canadian retailers and consumers.
- RCC will also be working with members to identify particular tariff categories and sub-categories that officials in the Ministries of Finance, Foreign Trade and Agriculture should avoid as they develop options and as negotiations continue over the summer.
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