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CME Daily Livestock Report

by 5m Editor
27 May 2011, at 8:32am

US - Reuters reported late Thursday (26 May) that the World Trade Organization has ruled against the US country-of-origin labelling (COOL) law that applies to, among other things, meat and chicken sold in retail stores, report Steve Meyer and Len Steiner.

The decision comes in response to a challenge filed in 2009 by Canada and Mexico that claimed that mandatory country-of-origin labeling (known as MCOOL) discriminates against foreign suppliers. The ruling was called “confidential” in the Reuters story which went on to state that a complete ruling would be issued later this year. The ruling may open the door to many more challenges of origin labeling laws around the world.

This ruling in no way means that MCOOL is dead. MCOOL is still the law of the land in the US and the WTO ruling does not change that law. It does, however, open the door for the complainants, Canada and Mexico, to eventually put punitive tariffs on US imports much the same way Mexico applied tariffs to a number of products coming from the US when a NAFTA panel found in its favor over US restrictions on Mexican trucks operating inside the US

MCOOL was originally passed as part of the 2002 Farm Bill. It was something of a consolation prize for a few Midwestern Senators who failed in their efforts to include a ban on packer ownership of livestock more than 14 days before slaughter in that piece of legislation. MCOOL was originally pushed by upper-Midwest cattle and beef groups who were upset about the number of cattle being imported from Canada and the practice of bringing Canadian beef carcasses into US processing plants and getting them graded with USDA quality and yield grades. MCOOL was generally supported by farm “activist” groups and those representing small farms. R-CALF USA was a leading proponent of MCOOL from the beginning. MCOOL was opposed by the National Cattleman’s Beef Association (NCBA) and the National Pork Producers Council (NPPC) as well as several other mainstream farm groups and virtually all packer and processor groups. Therein lies a bit of irony regarding potential punitive tariffs — US beef and pork are likely targets even though the primary groups representing US beef and pork production vehemently opposed MCOOL at virtually every turn.

After several delays and several changes, additions and clarifications in the 2008 Farm Bill, MCOOL was officially implemented on September 30, 2008. Imports of pigs from Canada have fallen from about 700,000 per month at that time to 450,000 to 500,000 per month now. Cattle imports from Canada have declined from around 150,000 per month in early 2008 to about 70,000 per month this year. The stronger Canadian dollar is also a key factor in these declines. Cattle imports from Mexico vary greatly from month to month but have shown no down-trend since MCOOL’s implementation. A chart of the monthly data appears on page 2.