CALGARY, ALTA. — Much has been written about the U.S. Country of Origin Labelling (COOL) legislation and its impact on the Canadian livestock industry. Millions of dollars have been spent on lobbyists fighting this protectionist scheme. Bureaucrats and politicians on both sides have engaged in strategic gamesmanship to win the case. But after 10 years of wrestling with the issue, one does wonder what was this was supposed to be all about - particularly for the Americans.
Recent events give hope that the issue may be resolved, but that will depend on further political tactics and which country blinks first. The first event was the World Trade Organization (WTO) decision on COOL that, for the third time, confirmed the economic harm done to traditional Canadian cattle and hog exports to the U.S. That's caused Federal Ag Minister Gerry Ritz to threaten high retaliatory tariffs on American imports if the U.S. does not rescind the offending COOL legislation.
More power to him. He'll need it, as it's not entirely clear whether the Minister actually has the unfettered support of his cabinet colleagues to impose such retaliatory tariffs because Canada tends to be a paper tiger when it comes to pulling any retaliatory trigger. The usual Canadian approach is to avoid upsetting our trading partners, even when Canada is in the right. Remember the softwood lumber issue.
Imposing retaliatory tariffs would involve departments like Trade, Revenue, External Affairs and the Canada Border Services Agency. None of those folks are looking for more work, and their respective ministers probably see no political upside to an issue that they consider a minor rural concern and there are more city consumers that vote than cattle producers. Urban media comments are circulating that retaliatory high tariffs will end up being paid for by Canadian consumers. That's bad political optics with a federal election within the next two years.
Interestingly, what could cause the Canadian government to actually retaliate against the Americans on COOL might be a rejection of the Keystone XL pipeline by the Obama administration. It would be a sort of tit for tat reaction - everything is possible if push comes to shove and political egos are bruised. Another event that could change the political manoeuvering was the American mid-term election, which saw a more trade-friendly U.S. congress elected. That might provide for a smoother avenue to introduce amendments to COOL that could neutralize its worst impacts on the Canadian livestock industry.
Canadian cattle and meat industry organizations understand the political reality of COOL and what can be achieved. The best that can be hoped for is that the Americans offer a negotiated suspension of the worst impacts of COOL, which is what the Canadian industry asked for in the first place. It's also something the Americans can offer without having to repeal the legislation.
However, to get to that point, American trade bureaucrats will have to change their uncompromising approach to COOL. That's going to take a lot more lobbying in Washington by the Canadian cattle industry and their American allies. Meanwhile, back in Fort Ottawa, the industry at every level will have to keep the Canadian government's feet to the fire and keep up the pressure to support Ritz and his need to wield a big stick with retaliatory tariffs.
Proponents of COOL maintain that it's the American consumers right to know where their food comes from. No one disputes that right, including the WTO decision. But interestingly, despite consumers' patriotic musings about buying locally produced food studies have shown that it's only worth about a 10 per cent premium at the most. Any higher and consumers will buy a similar but cheaper product from anywhere else in the world.
In the end you have to wonder how COOL got this far and why the American government so doggedly pursues this cause. As it turns out, the majority of American cattle producers, feedlot operators and meat processors are opposed to COOL, has caused a significant trade dispute between the U.S. and its major trading partner and has cost the North American cattle, hog and meat processing industries billions of lost dollars.
My point is: who was this legislation supposed to benefit anyway?
— Will Verboven covers rural issues for Troy Media.
www.troymedia.com
