Canada's cattle sector on guard as beef-labelling talk returns in the U.S. - Action News
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Canada's cattle sector on guard as beef-labelling talk returns in the U.S.

Amid the struggles of Americanranchers, some people are trying to bring back controversial rules on country-of-origin labelling on beef. Canadian producers and trade experts who closely follow the issue are taking notice.

'We have to be constantly vigilant with this issue,' trade expert says

There is talk again the United States about resurrecting mandatory country-of-origin labelling for beef, a discussion that has the Canadian sector watching closely. (Jeff McIntosh/The Canadian Press)

In the annals of North Americantrade disputes, the fight over mandatory country-of-origin labelling on beef and pork probably deserves its own chapter.

When the U.S. wielded the rules early in the last decade, it cost Canadian producers dearlyand wasblamedfor sharp declines in livestockexports south of the border.

Ultimately, it took the World Trade Organization, which ruled the U.S. violated international trade law, and the threat of hefty sanctionsfor Americanlawmakers to repeal the regulationsin 2015.

But support for the U.S. strategy still lingersand, amid the struggles of Americanranchers,efforts to resurrect the regulationinsome form appear to bepercolating in itsfarm belt and on Capitol Hill.

Those backinga return of thelabelling regime say it's about transparency and competition, andbelieve American consumers given a clear choice to buy beef produced exclusively in the U.S.will pay to support their farmers and ranchers.

'We're going to do it'

"We're going to do it," said Bill Bullard of R-CALF USA, an American cattle trade association representing about 5,500 farmers and ranchers across 44 states. "We're going to bring country-of-origin labelling back for beef."

Raw steaks sit row by row in a grocery store.
Until the U.S. repealed the rules in 2015, mandatory country-of-origin labelling was in place for packaged steaks and other cuts of meat, requiring grocery stickers explaining where livestock was born, raised and slaughtered. (J. Scott Applewhite/The Associated Press)

Bringing back a trade-compliant version of the American labelling regime would seem to be no mean feat following the previousWTO ruling, andwith strong opposition from largecattle industry groups in the U.S.

But politicians brought thesubject uptwice duringconfirmation hearings for President JoeBiden's agriculture secretary in February, with supporters continuing to bebuoyed by thatdiscussion.

Canadian producers and trade experts who closely follow the issue are paying attention.

The Canadian cattle industry pegs the annual value of its exports of beef and live cattle to the U.S. at between $2.5 billion and $3 billion.

"We have to be constantly vigilant with this issue," said Carlo Dade, an expert on North American trade at the Canada West Foundation, a public policy think tank based in Calgary.

"It's like softwood lumber and other perennial issues with the Americans. It never goes away."

Old rules had big impact

American use of mandatory country-of-origin regulation, or mandatory COOL, lives long in the memoryof producers on both sides of the border. The rule firstappeared on the scenein late 2008 and revisedin 2013.

The regulation set mandatory labelling for packaged steaks and other cuts of meat, requiring grocery stickers explaining where livestock was born, raised and slaughtered.

At the time, U.S. supporters argued consumers deserve to know where their meat comes from. But the regulations ran into opposition on both sides of the border, with some calling it simple protectionism.

Critics in Canada andthe U.S. saidthe requirements led to costly overhead and logistical problems for the industry.

Bill Bullard, CEO of R-CALF USA, an American cattle trade association, believes it's what's needed to protect his country's beef industry. 'We're going to do it,' he said. (R-CALF USA)

"The biggest impact was on the flow of live animals, and it was on the segregation that was required," said Dennis Laycraft, executivevice-president of the Canadian Cattlemen's Association.

"They were keeping animals separate in theplants. They had to process them separately when they arrived, which is why a number of plants just figured it wasn't worth the extra work and cost to bring in."

Prior to the rules taking effect, Laycraft said Canadian producers could export live animals to 16processors inthe U.S.five to six days a week.

"When those new rules came into effect, they were so difficult to meet, that dropped down to six processors and five of them would only take our cattle one day a week," he said.

During the trade dispute, Ottawa estimatedthe U.S. legislation costthe Canadian pork and beef industries about $1 billion a year.

The WTO determined the U.S. violated international trade law with the requirements.Faced with $1 billion intrade duties from Canada, the U.S. repealed mandatory COOLfor beef and pork inDecember2015.

American sector 'in crisis'

The regulation was divisive south of the border, but groups such as R-CALF USA think it can help a sector that needs support.

Bullard, a former rancher,said that when mandatory country-of-origin labelling was in full effect between May,2013, and December, 2015, U.S. cattleproducers saw better prices.

"We had those labels in place during that time frame [and that] happened to coincide with the highest nominal prices paid to cattle producers in history during that same period," he saidin an interview from Billings, Mont.

'I think we've got lots of allies lined up to stand between that measure and it moving forward,' said Dennis Laycraft of the Canadian Cattlemen's Association. 'But we're on constant guard with it.' (Dan McGarvey/CBC)

These days, Bullard said, the U.S. uses a voluntary labelthat allows American meat packers to import beef, repackage it and put a "Product of U.S.A." label on it.

Bullard said the U.S.industry is in"serious crisis," with the number of ranching operations, cattle herds and feedlots all on the declineover the last two and half decades. There's also frustration that as retail prices soar for beef, U.S. ranchers are not seeing the benefit.

Supporters of mandatory COOLhope the idea will get some traction.

President Joe Biden rejected the "America First" rhetoric of his predecessor, but he has trumpeted his own "Buy American" policy and made news for continuingold battles before the WTO.

Tom Vilsack is also back as agriculture secretarya posthe held in the Obama administration during the last dispute.

During Vilsack'sconfirmation hearing in February, South Dakota Sen.John Thune asked him if he'd be willing to work with him on finding a new path forward formandatory COOL.

Tom Vilsack, who was U.S. Secretary of Agriculture during the Obama administration, is back in the same position under President Joe Biden. The issue came up twice during his confirmation hearings. (Larry Downing/Reuters)

"Happy to work with you and your staff on anything that would allow us to advance the country-of-origin labelling," Vilsack said. "If there's a way to get it to be WTO compliant, I would be more than happy to work with you."

For supporters of mandatory COOL, it was encouragingto hear.

"For the first time in a couple of years, we're having serious conversations about mandatory COOL we think that's a positive," said Matt Perdue, government relations director for the North Dakota Farmers Union.

But support for country-of-origin labelling is not shared across the U.S.industry. One of its key opponents is the National Cattlemen's Beef Association, the oldest and largest national association representing U.S. cattle producers.

Kent Bacus, the organization's senior director of international trade, said mandatory COOLis a "zombie issue" that will continue to bepromoted by small segments of the U.S. cattle industry who want more government intervention, protectionismandare "out of touch" with the current economic realities.

"The last thing we want is to get into another trade war with Canada and Mexico, where we could be targeted with $1 billion of retaliatory tariffs for a marketing program that never worked," Bacus said.

The North American Meat Institute, the largest trade association representing U.S. meat packers and processors, confirmedit also remains opposed to mandatory COOL.

Canada to 'stand up' for industry

A spokespersonfor Global Affairs Canada saidCanada's view is the issue has been fully litigated at the WTO and it trusts the U.S. will continue to abide by this ruling and its obligations.

"Canada will continue to stand up for Canada's beef industry and firmly oppose any new proposals from the U.S. to resurrect mandatory country-of-origin labelling for beef and pork," said Michel Cimpaye in an email.

Christopher Sands, director of the Wilson Center's Canada Institute in Washington D.C., said the matter shouldn't be taken lightly, adding officials should be talking with U.S. industry allies, too.

He cautioned that a better relationship with the White House still isn't a guarantee of success on trade matters.

"Biden would at least take the call and be more friendly than [Donald]Trump was," Sands said. "But as we're seeing with Line 5, the Enbridge pipeline, that isn't a get-out-of-trade-dispute-free card."

Laycraft of the Canadian Cattlemen's Association said that following theWTO ruling,Canada retainsthe option of imposing huge duties if the U.S. does anything to violate it.

But he hopes efforts to bring back mandatory COOL won't progress that far.

"I think we've got lots of allies lined up to stand between that measure and it moving forward," Laycraftsaid. "But we're on constant guard with it."

The Canadian cattle industry pegs the value of its exports of beef and live cattle to the U.S. at between $2.5 billion and $3 billion annually. (Reid Southwick/CBC)