Ahead of the Heard
The battle against US Country of Origin Labelling (COOL) legislation recently received a couple of boosts. First was the WTO decision that ruled COOL discriminated against traditional Canadian cattle and hog imports. It was the third such decision and one might assume that the American government would get the message and make the necessary changes to adhere to the WTO ruling. But that is not likely under the existing Obama administration, further appeals and delaying tactics are sure to be made by the USDA.
Federal Ag Minister Ritz, with WTO decision in hand, is demanding that unless the Americans repeal COOL legislation the Canadian government will impose retaliatory tariffs on a billion dollars of American imports. Pending one more appeal Canada will be in a position to impose those tariffs under the WTO process. That could take another year, but its unlikely to happen anyway, and I suspect the Americans know it`s just an idle threat. That`s because it’s not entirely clear that Minister Ritz has the formal sanctioned approval from his cabinet colleagues to impose the retaliatory tariffs on American imports.
Such tariffs would need a cabinet order and involve other government departments like, trade, finance, revenue and the Canada Border Services Agency. None of those folks are looking for more work, and besides retaliatory tariffs goes against the spirit of the North American Free Trade Agreement. Canada as a trading nation has a long history of being a boy scout unwilling to upset its trading partners no matter the impact. The other thing is the political reality of the issue in Canada. Although the issue is critical to the Canadian cattle and hog industries, in the scheme of things, it involves a small sector of the economy and relatively few voters – and that`s the political crux of the matter.
Commentators in urban newspapers have already made reference to the negative impact on consumers of imposing retaliatory tariffs. They imply that it will be Canadian consumers who will end up paying for the COOL issue, which they dismiss as a minor agricultural trade dispute. The reality is that politicians know how to count votes and livestock industry voters don`t matter much in our highly urbanized society. To make the political reality even worse, the present government knows that the industry will vote Conservative anyway, so they can be taken for granted. That makes it tough for Minister Ritz to get the cabinet support he will need to formally impose retaliatory tariffs on American imports.
The best Canada can hope for is that the US will agree to a negotiated settlement. Minister Ritz may be demanding a repeal of COOL but he well knows that governments virtually never repeal legislation that they have passed. That would imply that they made a mistake – and no government anywhere will admit that it ever makes mistakes. The Americans have a number of other administrative avenues that they could use to get around the worse impacts of COOL and not have to actually change the legislation. American politicians have been known to remove funding from a problematic program which in effect puts it into limbo. It’s still intact, but it can`t be actually implemented – that way both sides win.
The other boost that might help COOL is the change to a more trade-friendly American Congress. The recent election will see a Republican Party majority in both houses, and the chairmanships of the standing committees including agriculture. That could see amendments made to COOL go through the legislative process and get passed as part of an omnibus bill. That`s actually how previous changes to COOL were made by the Obama administration.
One does ponder how COOL got this far and what was its purpose. Apparently the vast majority of American cattle producers, feedlot operators and meat processors are opposed to COOL. Analysts state it has little impact on livestock prices. Consumers supposedly support COOL, but only if it doesn’t cost them too much. Its cost the North American cattle, hog and meat processing industry billions of lost dollars. So who was this legislation supposed to benefit? I suspect in a twisted way it supports anti-meat lobby groups, animal rights radicals and the usual cabal of enviro-crazies who want to destroy modern agriculture. That’s because instead of promoting and defending North American meat production and consumption against those dark forces, industry organizations spend time and money fighting each other, fending off senseless government regulations and generally shooting ourselves in the foot. Go figure.