Canada Won't Budge on Tariff Threat Until U.S. Repeals Meat Rule

December 17, 2015 06:43 AM
Canada Won't Budge on Tariff Threat Until U.S. Repeals Meat Rule

Canadian trade officials are not taking retaliatory tariffs off the table until the U.S. moves to repeal country-of-origin labeling requirements for meat.

U.S. Congressional negotiators have agreed to a provision that would repeal the label requirements in an attempt to avoid $1 billion in retaliatory tariffs from Canada and Mexico. The label requirements, known by the acronym COOL, requires meat processors to show where an animal was born, raised and slaughtered.

Language rolling back the labeling would be part of a must-pass omnibus spending bill needed to keep the U.S. federal government operating.

When the U.S. legislation is passed and meat label rules are removed for beef and pork, then Canada will withdraw its option to impose retaliatory tariffs, Canadian Agriculture Minister Lawrence MacAulay said Wednesday on a conference call. “What it has to do is repeal COOL. That is the bottom line.”

‘Monitoring Closely’

This is a “fast-moving political situation,” and Canada is keeping in close contact with its U.S. allies, Trade Minister Chrystia Freeland said on a conference call from World Trade Organization meetings in Nairobi. The earliest vote on the U.S. legislation may be as early as Friday, and Canadian lawmakers are “monitoring the situation closely and see how the votes unfold,” she said.

“We’re very encouraged by the progress we’re seeing,” Freeland said. “Our goal is repeal of this legislation, but we are prepared to retaliate if this legislation is not repealed.”

The WTO earlier this month gave Canada authority to seek approval for $780.9 million in retaliatory tariffs and Mexico $227.8 million across a wide range of industries, about a third of what two nations sought.

Canada argued the labeling rules hurt its exports by giving an advantage to U.S. producers. Canada had threatened tariffs on a wide range of U.S. imports, including cows, pigs, apples, chocolate, pasta, potatoes, ketchup, wine, jewelry, furniture and mattresses.

The number of U.S. meat plants that process Canadian cattle has dropped to seven from 16 to cut costs of separating Canadian animals and products, according to the Canadian Cattlemen’s Association. In October 2013, Tyson Foods Inc., the biggest U.S. meat processor, halted purchases of Canadian cattle shipped directly to their beef plants.

©2015 Bloomberg L.P.

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