The World Trade Organization (WTO) issued its “Appellate Body’s Compliance Report of the United States’ Country of Origin Labeling” (COOL) requirements on May 18, and the food industry was quick to respond.
According to the report, the U.S.’ mandatory COOL requirements are discriminatory to Canada and Mexico and violate international trade commitments. The report could clear the path for retaliatory tariffs by those countries against U.S. products.
The finding came as no surprise to food industry leaders, including Food Marketing Institute (FMI) President and CEO Leslie G. Sarasin, who called it an “inescapable conclusion.”
“FMI and our partners up and down the supply chain raised many of the concerns addressed in the Compliance Panel’s report as far back as 2002, before COOL became law, and continued to raise them through USDA’s 2013 regulatory revisions,” Sarasin said. “The Appellate Body’s report is the final word on the matter and makes it clear that our country of origin labeling law needs to be changed.”
Sarasin said retaliatory tariffs would not only damage U.S. jobs and companies with no stake in COOL, but also would tarnish the country’s reputation as a leader of the rules-based international trading system.
National Grocers Association (NGA) President and CEO Peter Larkin said he is “encouraged” by recent remarks from House Agriculture Committee Chairman Mike Conaway regarding COOL. NGA will work with the chairman and his colleagues to pass a legislative solution that does not harm meat departments or limit the variety of product available in grocery stores.
“Independent supermarket operators are known for delivering top-notch service in their meat departments and are committed to providing their customers with high quality meats as well as information to help consumers make important food choices; however, the COOL labeling mandate has long imposed excessive burdens and costs with no clear evidence of meaningful consumer benefits,” Larkin said. “In fact, a recent report released by the International Food Information Council (IFIC) Foundation shows that only 15 percent of consumers use COOL labels, which has declined considerably from 26 percent in 2014.”
By contrast, half of consumers look for expiration dates and the nutrition facts panel, said North American Meat Institute (NAMI) President and CEO Barry Carpenter. He also cited IFIC data, “which shows country-of-origin information maintained its ninth-place spot on the list of 11 pieces of labeling information that consumers use when choosing a food product.”
Carpenter said repealing COOL is the only way to move forward, as any other action invites retaliation that could cost the U.S. billions of dollars.
“If there ever was any question that mandatory country-of-origin labeling is a trade barrier that violates our international agreements, the World Trade Organization’s ruling against the United States today should lay those doubts to rest,” Carpenter said. “The WTO has spoken not once, not twice, not three times, but four times in panel and appellate body decisions. All four rulings found against the U.S.”
The Grocery Manufacturers Association (GMA) also urges Congress to take “immediate action to bring U.S. Country of Origin Labeling into compliance with our WTO obligations. This WTO ruling on COOL noncompliance could lead to billions in financial losses to the U.S. food and agricultural sectors when Mexico and Canada impose WTO authorized retaliatory tariffs as early as this summer.
“The fact is that the financial impact of these tariffs will be felt even before they are implemented because the targets of these retaliatory tariffs will begin to experience a substantial drop in export sales almost immediately due to supply chain disruptions,” GMA said.
“The time has come to stop tinkering around the edges of COOL; the WTO dispute settlement process has run its course,” Sarasin said. “Congress must act expeditiously to bring COOL into line with our international trade obligations.”