By now, those following Canada and Mexico’s ongoing campaign for fair trade in the North American cattle and beef industry will have seen that the “two amigos” have won yet another battle in the trade dispute with the United States regarding its meat-labeling regulations. On October 20, 2014, a World Trade Organization (WTO) Compliance Panel found that U.S. meat labeling regulations, as set out in its revised Country of Origin Labeling (COOL) measure, violated WTO provisions by according less favourable treatment to Canadian and Mexican livestock than that accorded to “like” U.S. livestock. COOL violated these agreements by detrimentally affecting the competitive opportunities available to imported livestock from both Canada and Mexico. For details see http://www.wto.org/english/tratop_e/dispu_e/cases_e/ds384_e.htm#bkmk384rw.
That’s the good news for the Canadian and Mexican cattle industry. What’s not so good is that this is the third time that COOL has been referred to the WTO Dispute Settlement Process and the third time that the U.S. rules have been declared offside. Canada first took the original COOL measures to the WTO in 2008. Since then, there have been a lot of trips back and forth to Geneva, but with each loss, U.S. legislators have actually managed to make the successive “reformed” regulations even more trade restrictive. In fact, the trade dispute over beef, cattle and pork goes back to 2003 when the United States closed the Canada-U.S. border after a single case of bovine spongiform encephalopathy (BSE), otherwise known as mad cow disease. Gordon LaFortune, managing partner at Woods, LaFortune LLP, and I represented a group of 109 feedlot operators from Alberta and Saskatchewan in the fight to re-open the trade border. Among other things, we argued that free trade and the North American Free Trade Agreement (NAFTA) led to a fully integrated North American market and made the border closing both absurd and a violation of the letter and the spirit of free trade. Fortunately, the border was re-opened, but only after a four and a half year batter that represent important economic losses to those in the cattle industry.
COOL has now introduced a new attack on the letter and spirit of free trade. While the WTO has vindicated those fighting for free and fair trade three times since 2008, there is a growing sense of frustration. In fact, it seems ironic that on the same day that the latest WTO ruling was released, Barrie McKenna of the Globe and Mail wrote about the frustration of seeing the world’s great trading nations “backsliding” into protectionism and he called for the need for a “wake-up call” and a new global rule book (http://www.theglobeandmail.com/report-on-business/international-business/the-world-trade-organization-needs-a-new-rule-book-backbone/article21157222).
As a first step, countries should look beyond the narrow expedience of one sector or issue. Perhaps COOL is a bell weather, continued intransigence by U.S. legislators will lead to the potential for billions in dollars of retaliatory trade measures and continue the cynical cycle that may make protectionist measures the rule rather than the exception.
