The World Trade Organization (WTO) announced its decision this week on the dispute brought by Canada and Mexico against the U.S. Country of Origin Labeling (COOL), ruling that the U.S. is in violation of its international trade obligations because COOL has a detrimental impact on the competitive opportunities concerning Canadian and Mexican livestock imported into the U.S.
This ruling is no surprise. The decision, which is the second time WTO has found COOL in violation, means it is time for USTR and USDA to work with the industry and Congress to amend the COOL statute so it complies with our international obligations and brings stability to the market.
We found a comment from an anonymous source from the office of the U.S. Trade Representative notable, telling Reuters “the best way to resolve the issue and end market uncertainty would be through a settlement. ‘A negotiated solution, not further litigation at the WTO, is the most realistic path to getting this issue resolved in the near-term,’ the official said, speaking on condition of anonymity.” Although the Canadians have said there is no room for negotiation, we agree that another WTO appeal is not the way to resolve the issue. The solution must involve Congressional action to resolve COOL once and for all.
What the WTO Ruling Really Means
Reactions to the WTO decision from COOL supporters has been mostly predictable, with many arguing that the WTO should not dictate U.S. policy. Parke Wilde from Tufts University addresses these points well on his U.S. Food Policy blog, pointing out that the WTO can’t rewrite U.S. law. The WTO ruling just says that if the U.S. is going to put up barriers to trade, then Canada and Mexico can too.
The Value of Trade
Of course when a country puts up trade barriers, there are significant consequences. The U.S. has entered into trade agreements with Canada and Mexico because there are many benefits to doing business with our closest neighbors. The U.S. and Canada have the largest trade relationship in the world valued at $707 Billion in 2012, while the U.S. relationship with Mexico isn’t far behind at $536 Billion in 2012. These relationships cover a wide range of goods in a variety of industries, which may now be subject to retaliatory tariffs if the U.S. stays the course with COOL.
Rather than facing these consequences, let’s restore the strong relationships with our largest and most important trading partners. The battle over COOL has gone on long enough and it’s time that Congress steps in to fix it.