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U.S. Country-of-Origin Food Labeling Rules Harm Commerce, WTO Judges Rule

U.S. country-of-origin labeling provisions violate global trade rules and unjustly harm agricultural commerce, World Trade Organization judges ruled, backing complaints by Canada and Mexico.

The U.S. requires food processors to identify the nations from which cattle, hogs and some fresh produce originate. Canada and Mexico said the provisions impose unfair costs on their exports, reducing their competitiveness. Judges agreed that the policies meant beef and pork from Canada and Mexico were treated less favorably than the same U.S. products.

Judges recommended in their 215-page report on the Geneva- based WTO’s website that the U.S. be told “to bring the inconsistent measures into conformity with its obligations.”

Today’s ruling may affect as many as 70 other WTO members, including the European Union, that have mandatory labeling requirements. The U.S. has 60 days to appeal and is considering this option, said Andrea Mead, a spokeswoman for the U.S. Trade Representative’s office in Washington.

“We remain committed to providing consumers with accurate and relevant information with respect to the origin of meat products that they buy at the retail level,” Mead said in a statement. “In that regard we are considering all options, including appealing the panel’s decision.”

Costly, Cumbersome

Canada and Mexico lodged their complaints in December 2008, challenging provisions of the U.S. Food, Conservation and Energy Act that impose mandatory country-of-origin labeling for beef, pork, chicken, lamb and goat as well as some perishables sold by U.S. retailers.

The WTO ruling confirms the rules are “discriminatory and inconsistent with U.S. trade obligations,” said Ed Fast, Canada’s trade minister.

“The World Trade Organization clearly has recognized the integrated nature of the North American supply chain” in the livestock production and processing industry, Fast said today on a conference call with reporters.

J. Patrick Boyle, president of the American Meat Institute, said in an e-mailed statement that the Washington-based trade group has lobbied for years to get rid of the “costly and cumbersome” law.

Public Citizen, a non-profit advocacy group based in Washington, said the ruling strikes down an important consumer safeguard.

Extra Costs

The changes would leave companies “free to sell mystery meat in the United States, with neither consumers nor our elected representatives in Congress able to ensure its safety, much less even know where it is from,” said Lori Wallach, director of the group’s Global Trade Watch.

Canada’s trade department has said U.S. processors are forced to segregate Canadian animals and meat, leading some operators to shun those products to avoid the extra costs. Canada and the U.S. traded C$37 billion ($36 billion) of agricultural goods in 2008.

Country of Origin Labeling, known as COOL, has caused many U.S. pork-processing companies to stop buying animals born in Canada and has cost the country’s pork industry millions of dollars, according to the Canadian Pork Council, a federation of nine provincial pork industry associations. The law costs the Canadian cattle industry C$400 million annually, the Canadian Cattlemen’s Association says.

‘Trade War’

Doug Wolf, president of the U.S. National Pork Producers Council and a pork producer from Lancaster, Wisconsin, said the organization opposed COOL when it was being considered by Congress because of the costs, which far outweigh any benefits, and the trade implications. The U.S should comply with the WTO ruling or risk “retaliation from and a trade war with Canada and Mexico,” he said.

Mexico said when it filed its complaint that labeling rule was “significantly” affecting its bovine industry. Most of Mexico’s cattle exports go to its northern neighbor.

In the 27-nation EU, compulsory country-of-origin labeling applies to beef, fruits and vegetables, honey and olive oil. The EU plans to extend the rules to fresh pig, sheep and goat meat as well as poultry.

To contact the reporters on this story: Jennifer M. Freedman in Geneva at jfreedman@bloomberg.net; Eric Martin in Washington at emartin21@bloomberg.net

To contact the editor responsible for this story: James Hertling at jhertling@bloomberg.net

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