On June 7th, Canada released a list of 38 U.S. commodities that could be subject to retaliation in the ongoing dispute over U.S. country-of-origin labeling (“COOL”) regulations for meat. This announcement by the Canadian government follows the U.S. Department of Agriculture’s issuance of a final rule on May 23rd, which revised the meat labeling regulations in response to an adverse ruling by the World Trade Organization (“WTO”) in June 2012.
Under the revised COOL rule, the country-of-origin designations on muscle cuts of meat must identify the country where each of the production steps occurred, such as where the animal was born, raised and slaughtered. In addition, meat packers may no longer commingle U.S.-origin meat with meat from other countries, unless it is labeled as such.
In a joint statement, Canada’s Ministers for trade and agriculture have alleged that the new rule continues to uphold a “protectionist policy” that is “severely damaging to Canadian industry and jobs.” Canada stated that it will consult with its stakeholders and “pursue a fair resolution of the issue through the WTO over the next 18 to 24 months.”
The list of U.S. commodities being considered for possible retaliation by Canada includes live bovine or swine, meat of bovine or swine, cheese, cherries, rice, potatoes, produce, syrups, frozen orange juice, tomato ketchup and other tomato sauces, chocolate, pasta, cereals, wines, ethyl alcohol, certain sugars, as well as jewelry, welded stainless pipe and tubes, and certain furniture items (i.e., swivel seats, wood office furniture, and mattresses). According to a notice published by Canada’s Department of Finance on June 15th, the retaliatory measure will take place in the form of a 100-percent surtax on selected U.S. products. No retaliatory action, however, will be taken unless and until Canada is authorized to proceed by the WTO, which could require up to two years.
Canada is currently seeking comments regarding the possible retaliatory measures from Canadian stakeholders, which are due by September 30, 2013. The official list of the U.S. commodities is available here. U.S. companies that export goods to Canada should review the list to determine if their exports could be affected and consider working with Canadian importers to ensure that their exports are not affected.
In addition, Mexico is also threatening to impose higher tariffs on U.S. goods in retaliation for the new meat labeling regulations. Specifically, Mexico’s Economic Ministry announced on June 7th that it is considering suspending U.S. trade preferences on a broad variety of products, such as fruit and vegetables, juice, meat, dairy products, machinery, furniture, household goods, among others, but no formal list has yet been published.
For more information about the contents of this newsletter, or about Kelley Drye's International Trade Practice, please contact practice group chair Kathleen Cannon or partner Paul Rosenthal, who acts as editor of this publication.