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COOL Retaliation Amounts Decided

08 December 2015

GLOBAL - The World Trade Organisation (WTO) has reached a decision on the amount that Canada and Mexico are allowed to claim from the US in retaliatory tariffs, due to Country of Origin Labelling (COOL).

The dispute dates back for years, but the WTO decided this year that mandatory COOL violated international trade rules, because it disadvantaged companies importing meat and livestock into the US.

Now the WTO has said that Canada can suspend tariff concessions and other trade obligations to the US to the value of CA $1,054.729 million, whilst Mexico can do so to the value of US $227.758 million. The two countries must ask the WTO again for approval before the new tariffs can be activated, however.

Beef producers expected to lose 10 cents per pound

The US' National Cattlemen’s Beef Association (NCBA) President Philip Ellis said that immediate action is needed, or retaliation against US exports will soon follow. 

“If the Senate does not act, US beef exports will face a 100 per cent tariff in these countries, severely diminishing about $2 billion of beef exports annually,” said Mr Ellis.

The loss of the Canadian and Mexican markets is expected to cost US beef producers 10 cents per pound immediately, the NCBA estimated.

“The COOL rule has been a failure on all accounts; it has cost our livestock industry billions in implementation, it has violated our trade agreements with two of our largest export markets, it has resulted in the closure of several US feedlots and packing facilities and it has had no effect on the price or demand for US beef,” said Mr Ellis.

Dairy industry concern

Prior to the announcement, dairy producers and exporters urged Congress to eliminate the threat of these damaging new tariffs on dairy exports to Canada and Mexico by solving the trade dispute in the massive year-end spending bill currently being negotiated on Capitol Hill, which will be one the last moves for Congress before the end of the year.

In a letter sent on Thursday to House and Senate leaders, the National Milk Producers Federation and the US Dairy Export Council expressed increasing alarm that new tariffs targeted at US dairy exports to the two neighbouring nations are potentially only weeks away.

The two organisations said that American dairy products have been on Canada’s target list for retaliatory tariffs resulting from the ruling and Mexico has targeted dairy exports in prior retaliatory actions.

“It is critical that Congress resolve this challenge in the end-of-year spending legislation in a way that Canada and Mexico agree sufficiently addresses their concerns in order to remove the threat of retaliation tariffs,” the joint NMPF-USDEC letter said. 

“Retaliation against dairy products would come at a particularly harmful time for our industry, given the depressed global dairy market,” said NMPF President and CEO Jim Mulhern. “Multiple cooperatives have already faced an oversupply of milk this year.”

“Retaliatory tariffs would back up exports further onto the US market during a time of overly abundant milk supplies,” added USDEC President Tom Suber. “US dairy producers and processors cannot lose this chance to avoid considerable damage to the export markets they have invested so heavily in developing in recent years.”

Canada and Mexico are two of the largest US export markets. Together, they import more than $2 billion in US dairy products annually.

TheCattleSite News Desk

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