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Each day TFO Canada publishes a sample of trade news on the Canadian import market along with any new, updated or changed regulations and legislations regarding international trade; countries in which TFO Canada offers services and on the export sectors which it promotes.


Labeling Policy Cools Canada-U.S. Relations

Tuesday, May 27, 2014 > 11:04:24

Canada has a big beef with its neighbour to the south.
The gripe over country-oforigin labelling (COOL) in the U.S. has been heating up for a decade. Now it is coming to a head. Canada argues the labelling offers no real value to consumers and violates free trade agreements - and is vowing retaliation if no changes are made.
While Canadians are justifiably proud of the beef raised in this country, and confident that Americans will realize the "Canadian" label is synonymous with quality, it has become apparent that U.S. COOL legislation is really just a thinly disguised trade barrier.
The U.S. law requires meat products sold in that country to be sorted, packaged and labelled separately, depending on where the animal was born, raised and slaughtered. The added cost that entails has prompted some U.S. meat processors to trim the amount of Canadian livestock they buy. The result has been a $1-billion loss to Canadian livestock producers – $629 million a year to the Canadian beef industry alone. Since Alberta produces more than 40% of all cattle in this country, that's an especially big hit to the province.
Federal Agriculture Minister Gerry Ritz ramped up the pressure at a NAFTA agriculture ministers meeting in Mexico last week.
Ritz said he told U.S. Secretary of Agriculture Tom Vilsack that Canada is ready to impose retaliatory tariffs on certain U.S. goods when it receives authorization from the World Trade Organization – which is expected as early as this fall. At the same time, he is urging Mexico, which has also been hammered by COOL, to turn up the pressure by releasing its own list of U.S. products it might target with tariffs.
What is really nuts about this is that although the labelling laws have the backing of some ranchers in border states and the congressmen who count on their votes, broad segments of the U.S. meat industry oppose them because they are driving food prices up in that country. The case is also being heard by 11 judges at the U.S. Court of Appeals in Washington. While government lawyers claim the law merely furthers consumers' ability to act on their own preference, one judge pushed for an explanation of how the rules help consumers and suggested it smacks of traditional protectionism.
As Saskatchewan Premier Brad Wall points out, COOL isn't the only issue irritating the usually dynamic trade relationship between our two countries. Add in the not-so-minor political stalling on a decision on the Keystone XL pipeline and it's apparent that the West – Alberta in particular – is bearing the brunt of what Wall describes as a "low ebb" in trade relations.
For his part, Ritz promises "Canada will not blink" until the COOL issue is resolved.
Some critics argue it is counterproductive to risk starting a trade war over an issue representing $1 billion, which is about half a day's trade between our nations – and that instead, we need to start developing alternative markets.
That's worth pursuing, but it's time to remind our usually friendly, but sometimes belligerent southern neighbour there is a price to pay for turning a blind eye to economic damage done to Canada through unilateral actions motivated solely by politics.
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