Canadian beef industry on guard as beef labeling rhetoric returns to the United States
In the annals of North American trade disputes, the fight for mandatory country-of-origin labeling on beef and pork probably deserves its own chapter.
When the United States enforced the rules early in the last decade, it cost Canadian producers dearly and was blamed for the sharp decline in cattle exports south of the border.
In the end, it took the World Trade Organization, which ruled that the United States violated international trade law, and the threat of heavy sanctions for American lawmakers to repeal the regulations in 2015.
But support for the US strategy persists and, in the midst of the struggles of American ranchers, efforts to resurrect regulation in one form or another appear to be spreading through its farm belt and on Capitol Hill.
Those who support the return of the labeling regime say it is about transparency and competition, and believe that American consumers – with a clear choice to buy beef produced exclusively in the United States – will pay to support their farmers and their ranchers.
‘We are going to do it’
“We’re going to do it,” said Bill Bullard of R-CALF USA, an American livestock trade association representing approximately 5,500 farmers and ranchers in 44 states. “We will reinstate country of origin labeling for beef.”
Bringing back a trade-compliant version of the US labeling regime does not appear to be an easy task following the previous WTO ruling, and with strong opposition from major beef industry groups in the United States.
But politicians broached the subject twice during confirmation hearings for President Joe Biden’s Agriculture Secretary in February, with supporters continuing to be supported by the discussion.
Canadian producers and trade experts who follow the issue are paying attention.
The Canadian beef industry estimates the annual value of its beef and live cattle exports to the United States at $ 2.5 billion to $ 3 billion.
“We need to be constantly vigilant about this issue,” said Carlo Dade, a North American trade expert at the Canada West Foundation, a Calgary-based public policy think tank.
“It is like softwood lumber and other lingering problems with the Americans. It never goes away. “
The old rules had a big impact
The US use of mandatory home country regulation, or mandatory COOL, lives on long in the memory of growers on both sides of the border. The rule first appeared on the scene in late 2008 and revised in 2013.
The regulations established mandatory labeling for packaged steaks and other cuts of meat, requiring grocery store stickers explaining where livestock were born, raised and slaughtered.
Back then, American supporters argued that consumers deserved to know where their meat came from. But the regulations met with opposition from both sides of the border, with some calling it mere protectionism.
Critics in Canada and the United States said the requirements resulted in costly overhead and logistical problems for the industry.
“The biggest impact was on the flow of live animals, and it was on the segregation that was needed,” said Dennis Laycraft, executive vice president of the Canadian Cattlemen’s Association.
“They kept the animals segregated in the factories. They had to treat them separately when they arrived, which is why a number of the plants just thought it wasn’t worth the extra work and cost involved.”
Before the rules came into effect, Laycraft said Canadian producers could export live animals to 16 processors in the United States five to six days a week.
“When these new rules came into effect they were so hard to follow, which fell to six processors – and five of them were only taking our cattle one day a week,” he said. .
During the trade dispute, Ottawa estimated that US legislation cost Canada’s pork and beef industries about $ 1 billion a year.
The WTO determined that the United States had violated international trade law with the requirements. Faced with $ 1 billion in trade rights from Canada, the United States repealed mandatory COOL for beef and pork in December 2015.
American sector “ in crisis ”
The settlement has caused discord south of the border, but groups such as R-CALF USA believe it can help an industry in need of support.
Bullard, a former rancher, said when mandatory country-of-origin labeling was fully in effect between May 2013 and December 2015, U.S. cattle producers saw better prices.
“We had these labels in place during this time [and that] happened to coincide with the highest nominal prices paid to cattle ranchers in history over the same period, ”he said in an interview with Billings, Mt.
These days, Bullard said, the United States uses a voluntary label that allows American meat packers to import beef, repackage it, and label it “Product of the United States.”
Bullard said the US industry was in “serious crisis”, with the number of ranching operations, cattle herds and feedlots all declining over the past two and a half decades. There is also frustration that while retail prices for beef skyrocket, US ranchers are not seeing the benefit.
Supporters of Mandatory COOL hope the idea will be successful.
Tom Vilsack is also back as secretary of agriculture – a post he held in the Obama administration during the last conflict.
During Vilsack confirmation hearing in February, South Dakota Senator John Thune asked him if he would be willing to work with him to find a new way forward for mandatory COOL.
“Glad to be working with you and your staff on anything that would allow us to advance country of origin labeling,” said Vilsack. “If there is a way to make it WTO compliant, I would be more than happy to work with you.”
For supporters of Mandatory COOL, it was heartening to hear.
“For the first time in a few years, we’re having serious conversations about mandatory COOL – we think that’s a positive,” said Matt Perdue, director of government relations for the North Dakota Farmers Union.
But support for country-of-origin labeling is not shared across the US industry. One of its main opponents is the National Cattlemen’s Beef Association, the oldest and largest national association representing American cattle producers.
Kent Bacus, the organization’s senior director of international trade, said mandatory COOL is a “zombie problem” that will continue to be promoted by small segments of the US beef industry who want more government intervention, protectionism and who are “disconnected” from current economic realities.
“The last thing we want is to enter another trade war with Canada and Mexico, where we could be targeted with $ 1 billion in retaliatory tariffs for a marketing program that never worked.” , said Bacus.
The North American Meat Institute, the largest trade association representing US meat packers and processors, has confirmed that it also remains opposed to mandatory COOL.
Canada must ‘defend’ the industry
A spokesperson for Global Affairs Canada said Canada believes the issue has been fully debated at the WTO and hopes the United States will continue to honor this decision and its obligations.
“Canada will continue to stand up for the Canadian beef industry … and will strongly oppose any new US proposal to reinstate mandatory country of origin labeling for beef and pork,” said Michel Cimpaye in an email.
Christopher Sands, director of the Canadian Institute at the Wilson Center in Washington DC, said the issue should not be taken lightly, adding that officials should also discuss with allies in US industry.
He warned that a better relationship with the White House was still not a guarantee of success on trade issues.
“Biden would at least take the call and be friendlier than [Donald] Trump was, “Sands said.” But as we see with line 5, the Enbridge pipeline, this is not a trade conflict free card. “
Laycraft of the Canadian Cattlemen’s Association said that following the WTO ruling, Canada retains the ability to impose huge tariffs if the US does anything to violate it.
But he hopes efforts to bring back mandatory COOL don’t progress that far.
“I think we have many allies lined up to stand between this measure and its evolution,” Laycraft said. “But we are constantly on our guard.”