Canadian cattle exports to the U.S. received a setback recently with the passage of the American Farm Bill by the House of Representatives.
The bill contained no reference to repealing the contentious Country of Origin Legislation (COOL), nor amending it in any way.
That legislation has reduced access to the American market and reduced prices to Canadian cattle producers.
The major American cattle producer and meat processor organizations and their Canadian allies had lobbied vigorously to have COOL radically changed to make it more trade friendly.
The legislation not only discriminates against Canadian cattle and beef imports, but would have a significant negative impact on the viability of the American meat-processing industry. But in the end, it was all to no avail as the issue was barely mentioned in media reports.
Any concern for COOL was overshadowed by the bigger political issues such as domestic food aid programs, crop subsidies and conservation initiatives, all of which are part of the American farm bill.
There also seemed to be urgency to get the much-delayed bill passed. That usually causes minor issues to fall off the table.
The question is was there any real hope that the Farm Bill process would have actually made changes to COOL.
Probably not, but in the somewhat surreal world of trade discussions, there is a fine line between hope and delusion.
Compromise tends to trump common sense, just to get the deal done. One wonders why the recent WTO decision striking down the trade legality of COOL didn’t provide some incentive to change the legislation.
John Masswohl of the Canadian Cattlemen’s Association notes that the WTO decision should have been an incentive, but the WTO process itself may have sabotaged any such momentum.
Another WTO meeting is scheduled for late February to discuss American compliance with the original WTO decision. That may have been just the excuse many legislators needed to push COOL aside and await a positive outcome of the upcoming WTO meeting.
That may have been grasping at straws, but with so many big issues dominating the Farm Bill, punting COOL down the road was politically expedient.
Besides, most of the big general American farm organizations were in favour of the bill without the changes to COOL.
This setback is just another skirmish in the overall trade battle. The COOL focus now will be back to the WTO process.
The next meeting will review U.S. compliance with the original WTO decision.
Most opinion is that proposed American compliance is now worse than the original COOL regulations. That would make the next WTO decision predictable and allow Canada to retaliate with tariffs on U.S. imports. Canada has compiled a list of products for retaliation, but whether Canada will actually carry out the threat is another question.
It’s been a long time since draconian trade action has been taken by Canada against the U.S. Canada has put great faith in the trade resolution mechanism of the North American Free Trade Agreement for resolving issues with the U.S. That approach could make retaliation just an idle threat, something American trade officials would be aware of.
At that point, it becomes a case of who will blink first. What would help is if Mexico, which is party to the WTO decision, would stand fast with Canada and jointly retaliate at the same time.
That would get the attention of American trade officials to perhaps soften the impact of COOL through regulatory and budget amendments without having to revert back to using the almost impossible legislative route.
That’s the compromise route where many of these issues are resolved.
The problem for the ag industry is that the imposition of retaliatory tariffs against U.S. imports has to be done by the Minister of Finance.
Unlike the Ministers of Agriculture and International Trade, who enthusiastically back retaliation, the Finance Minister has to look at the bigger picture.
As much as the industry may not like it, the reality is that agriculture industry issues don’t get much respect or attention in the economy big picture by the federal government.
There is a big job ahead for the anti-COOL lobbyists. The WTO process is very slow, so if nothing else, they have time to continue the battle.
Good luck to them.
Will Verboven is the editor of Alberta Farmer.
— Ahead of the Heard