On June 25th, the Senate Committee on Agriculture, Nutrition and Forestry held a hearing on “Country of Origin Labeling and Trade Retaliation: What’s at stake for
Farmers, Ranchers, Businesses and Consumers.” The hearing was scheduled to
discuss possible solutions to the recent World Trade Organization (WTO) ruling
against the U.S. Country of Origin Labeling (COOL) requirements. In the WTO
hearing, both America Canada and Mexico sued the United
States for its mandatory COOL laws and regulations, and
lost its case in the WTO Dispute Settlement Body for the fourth time since
The hearing followed House action on June 10th when the House passed H.R. 2393, which provided for “repeal [of] country of origin labeling requirements with respect to beef, pork, and chicken.” With the Senate taking up COOL, Senator Debbie Stabenow (D-MI) has proposed a voluntary labeling system instead of the outright repeal proposed in H.R. 2393. Her proposal unfortunately continues to pose the risk of retaliatory tariffs being implemented by
the potential costs of which could be as much as $3.2 billion. Senator Stabenow
proposes a COOL regime with a voluntary system in which companies can opt in or
out, but the Mexico U.S. statutes
for COOL which define “made in ”
would remain in place. While this proposal seems like an appealing solution, it
carries risk for America
businesses for a number of reasons. U.S.
As a result of the WTO ruling,
Mexico and Canada are permitted to impose retaliatory
tariffs against the
as soon as mid-August. If the U.S. U.S.
enacts the Stabenow proposal and Mexico
deem it noncompliant with WTO rules, they could impose retaliation. If the Canada U.S. appealed their actions, it would take as
long as two years for the appeal to wind its way through the WTO Dispute
Settlement Body with
companies having to cope with the retaliation throughout the period. U.S.
Supporters of COOL have been quick to point out that both
use a voluntary system of country of origin labeling. They argue if the Mexico were to
implement a system similar to theirs, it could avoid retaliatory tariffs. The
risk in this assumption lies in the details of the U.S. COOL statute, including
transportation clauses, which differ from both the Canadian and Mexican
statutes. This could result in a scenario under which U.S. Canada, Mexico
all have voluntary systems for COOL, but have different legal definitions for
what defines a product’s country of origin. If U.S. Mexico
and Canada disagreed with
the language of the
statute, it could result in retaliatory tariffs even though all three countries
would have voluntary COOL laws. U.S.
Canadian and Mexican officials have stated on multiple occasions that the only way for the
U.S. to avoid retaliation is for the to repeal
its COOL requirements. One other possible alternative is for the U.S. U.S. to repeal COOL before the August 16
deadline when Canada and Mexico can begin to implement retaliatory
tariffs and then subsequently create a voluntary COOL program in consultation
with Mexico and .
Ultimately, the goals of the Canada U.S.
should be to comply with WTO rules and obligations and avoid any sanctions that
businesses. Repealing COOL before the August deadline is the best way to
achieve those objectives. Subsequently creating a voluntary program with
Mexican and Canadian input would allow businesses to simultaneously
differentiate their products on the global market, avoid potential losses from
retaliatory tariffs and maintain a labeling regime that can give consumers
information on the products they are buying. The Stabenow proposal points us in
that direction, but does not fully do the job. U.S.