July 9 (Bloomberg) -- U.S. meat industry groups, joined by Canadian counterparts, sued the Agriculture Department seeking to block rules requiring meat producers to increase the amount of information about countries of origin on their products.
Regulations adopted in May require producers to specify where an animal was born, raised and slaughtered. Retail packages can’t mix muscle cuts from different countries under a general label, the groups said yesterday in a federal court complaint in Washington.
"Imported livestock are a critical supply for American processing plants, particularly those near the Canadian and Mexican borders," lawyers for groups including the American Meat Institute and the Canadian Cattlemen’s Association said in the complaint. "Labels will require the transmission of extensive detail and paperwork," and "defendants concede that there is no health or safety reason" not to commingle meats, they said.
Meat producers asked for a ruling that the new regulations are unconstitutional, an order to stop their enforcement, and an award of legal fees.
The original rules came into effect in 2009 in response to the discovery of bovine spongiform encephalopathy, also known as mad cow disease, in a Canadian animal in 2003. Canada and Mexico told the World Trade Organization that the rules discriminated against their products.
The Canadian livestock industry has lost an estimated $C650 million ($617 million) annually since 2009, and losses will increase if the revised rules come into full effect, Travis Toews, a past-president of the Canadian Cattlemen’s Association, said in a telephone interview. The vast majority of U.S. meat- packers who process Canadian cattle will probably stop because the "draconian" regulations that ban comingling will make it too onerous to segregate animals in the supply chain, he said.
"It takes county-of-origin labeling and puts it on steroids, so to speak," Toews said of the revised rules. "It’s going to be much tougher."
The industry groups allege the revised rules violate the U.S. Constitution by compelling speech "in the form of costly and detailed labels on meat products" that will confuse consumers, raise prices and put some producers out of business, according to a meat institute press release.
The "USDA remains confident that these changes will improve the overall operation of the program," spokeswoman Michelle Saghafi said in an e-mail. The changes will bring requirements "into compliance with U.S. international trade obligations."
The lawsuit means the U.S. will be more likely to address the dispute, Canadian Agriculture Minister Gerry Ritz said in a telephone interview.
The producers contend that new labeling equipment alone might cost the industry more than $192 million.
The Canadian government released a list of products imported from the U.S that may be targeted in retaliation for the label rules in June, including corn, cheese and beef.
"This is not a trade war, this is American industry suing their administration for putting in place rules and a description of the rule that is counter to common sense and counter to business being done," Ritz said. "We welcome this next shot across the bow."
The case is American Meat Institute v. U.S. Department of Agriculture, 13-cv-01033, U.S. District Court, District of Columbia (Washington).
--With assistance from Tom Schoenberg in Washington. Editors: Millie Munshi, Michael Hytha
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