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The Issue
Consumers want to know where their food comes from and American producers want to tell them. That’s why in 2008, Congress passed Country-of-Origin Labeling (COOL), which says muscle cuts of meat, and fruits and vegetables, must be labeled with the country’s name where they were produced. COOL has been challenged at the World Trade Organization (WTO) by Canada and Mexico. The WTO has repeatedly taken issue with the way COOL has been implemented and arbitration is currently underway. While NFU remains steadfast in its support of COOL, Congress is needs to take action in order to meet our obligations at the WTO. Responding to the threat of retaliatory tariffs, the U.S. House of Representatives voted to repeal COOL, and the issue is now before the U.S. Senate.
The COOL Compromise
A bi-partisan Senate compromise bill – known as the Voluntary COOL and Trade Enhancement Act and sponsored by Senators Stabenow, D-Michigan, and Hoeven, R-North Dakota – completely repeals mandatory COOL, thus putting to rest the complaint by Canada and Mexico, and puts in its place a voluntary labeling system that will allow consumers to know the origin of their food.
What does the United States Trade Representative (USTR) think?
“We believe both options — repealing the mandatory labeling scheme or repealing the mandatory labeling regime and replacing it with a voluntary labeling system — have the potential to constitute compliance with U.S. WTO obligations,” Andrew Bates, a spokesman for the Office of the U.S. Trade Representative, told POLITICO in an email. (Politico, 7/23/15)
How would the legislation affect the ongoing WTO arbitration process?
“Given that the provisions of law that were the basis for the WTO inconsistency would no longer exist, Canada and Mexico could opt to suspend or terminate the arbitration. Were Canada and Mexico to nonetheless proceed with the arbitration, the arbitrator would be permitted to consider the new legislation in determining the amount of the award, and this could eliminate the amount of retaliation they are permitted to take. In at least one previous case, WTO arbitrators have taken into account changes to a measure in their findings and recommendations. Additionally, in some cases, arbitrators have developed formulas for damages awards that ensure that the amount of retaliation authorized accounts for changes in how a measure is applied in the future. Even if retaliation is authorized without regard to the new measure, WTO rules clearly state that retaliation is “temporary” and a “last resort”. WTO rules require that Members only apply retaliation until the WTO-inconsistency has been removed. Canada and Mexico are prohibited under WTO rules from exercising retaliation based on mere political objections to the new legislation. Retaliation is permissible only if Canada and Mexico disagree with the United States as to whether the new law constitutes compliance. In the event of a disagreement, the United States could ask for a WTO proceeding to terminate their retaliation rights.”
~Senator Ron Wyden, D-Oregon