The World Trade Organization is expected to issue a final ruling soon on Mexico and Canada’s challenge of the U.S. Country-of-Origin Labeling (COOL) regulations for red meat. The WTO has ruled against the United States three separate times. The first couple of times were in regards to the 2009 COOL rule. When the U.S. was found noncompliant, the rule was rewritten. Since then, the WTO has also ruled against the updated rule. The U.S. is down to its last appeal and a WTO ruling is expected any day.
Both Canada and Mexico have stated they are ready to retaliate against the United States, if the WTO finds the U.S. noncompliant. U.S. Meat Export Federation regional director for Mexico, Central America and the Dominican Republic Chad Russell said they have meet with government officials in Mexico.
“Mexicans reserve the right to retaliate, if that right were given to them from the WTO,” Russell said. “There would be a period of time where the Mexicans and the Canadians would have to demonstrate to the WTO the damage that they incurred because of the U.S. policy. So it probably wouldn’t be until sometime in September where by Mexico and Canada might be given the right to retaliate.”
If the WTO rules against the United States, that starts the clock. Russell believes Mexico will pursue their rights at least to retaliate, then make their decision down the road, depending on how the U.S. responds to the final ruling by the WTO. USMEF believes there is potential for U.S. pork and beef to be included on the list of products affected by retaliatory tariffs.
A similar situation took place with the North American Free Trade Agreement (NAFTA). In that trade dispute, Russell said the U.S. would not allow Mexican trucks into the U.S. territory. He said the Mexicans were very patient in exercising their right to retaliate, but this time around he doesn’t think they will be nearly as patient. He isn’t sure what products will be targeted, but with the NAFTA trucking issue pork products were included.
“There’s political pressures in Mexico by the pork producers, historically at least, to try mitigate imports from the United States, which creates competition for them,” Russell said. “Canada is their primary third party competitor. In the case of the NAFTA trucking issue, duties were put on U.S. product and not on Canadian product. Canada took share from the United States.”
Studies have found retaliation could cost a $1 billion dollars annually for each country. However, a National Farmers Union study suggests no retaliation is justified, because they suggest there is no harm to the Canadian or Mexican livestock industry because of COOL.
In 2014, U.S. pork exports to Mexico were 680,843 metric tons valued at $1.55 billion. First-quarter 2015 exports topped last year’s record pace by 7 percent in volume, reaching 179,507 metric tons. Last year’s beef exports to Mexico totaled 242,566 metric tons valued at $1.17 billion. First-quarter exports were slightly below last year’s pace in volume but 4 percent higher in value at $285 million.
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