The World Trade Organization's Appellate Body on Monday found the U.S. Country-of-origin labeling rule for meats noncompliant with trade rules, affirming a previous ruling by the WTO compliance panel and striking down the U.S. Trade Representative's November, 2014, appeal.
Canada and Mexico had brought the WTO complaint against the U.S. because the countries felt it created an unfair advantage for U.S. meats, violating a technical barrier to trade. The rule specifically requires that certain meat products be labeled with the country where the animal was born, raised and slaughtered.
The U.S. had revised COOL in 2013 after a previous version of the rule also was found non-compliant by the WTO.
Meat and farm groups were split on COOL – some said it added to costs for producers and processors, while others said it improved the market for U.S.-grown beef.
National Cattlemen's Beef Association President Philip Ellis said in a statement that the next step for Canada and Mexico is retaliation.
"We have long said that COOL is not just burdensome and costly to cattle producers, it is generally ignored by consumers and violates our international trade obligations," Ellis said. "Now that the WTO has ruled for a fourth time that this rule discriminates against Canadian and Mexican livestock, the next step is retaliation by Canada and Mexico."
Ellis said retaliation will "irreparably harm" the U.S. economy and trading relationships, while sending a signal to the world that the U.S. "doesn't play by the rules," he said. "It is long past time that Congress repeal this broken regulation."
According to the U.S. Cattlemen's Association, which supports COOL, Canada and Mexico must first file notification of their intent to retaliate, which will specify the retaliation amounts they believe are warranted.
The U.S. may request arbitration on any requested levels of retaliation and the process to conduct all necessary protocol will take approximately 60 days, USCA said.
The group noted it was disappointed by the ruling, and underscored the policy's ability to give consumers more information about the products they buy. The group also says that it offers U.S. cattlemen a way to differentiate their product.
The National Pork Producers Council also weighed in. NPPC President Ron Prestage was particularly concerned with retaliation and its impact on U.S. jobs and exports.
"I know tariffs [from Canada and Mexico] would be financially devastating for the U.S. pork industry, and I'm sure they'll have a negative impact on a host of other agricultural and non-agricultural sectors," he said. NPPC does not support COOL.
There's also a split among legislators. House Ag Committee Chairman Mike Conaway, R-Texas, said in a released statement that the decision was "fully expected" and legislators must work quickly to rectify the situation before retaliation from Canada and Mexico.
Meanwhile, House Ag Committee Ranking Member Collin Peterson, D-Minn., continued to support COOL and indicated he would oppose efforts to repeal it. "There are still several steps in the WTO process that must be met before any retaliation could go into effect so we should take the time to thoughtfully consider how to move forward," he said in a statement.
The Ag Committee will hold a meeting on Wednesday to discuss the latest COOL development, Conaway said.