WTO sides with Canada

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Canadian hog and beef producers have suffered financially due to U.S. labelling rules imposed in 2008. Producers hope the U.S. won't appeal Friday's WTO ruling.

Manitoba livestock producers are relieved after the World Trade Organization ruled Friday country-of-origin-labelling rules discriminate against Canadian beef and hog exports to the United States.

The rules, known as COOL, have had a devastating impact on Manitoba beef and hog exports to the U.S. since they were enacted in 2008.

Canada, along with Mexico, launched a challenge to the rules with the WTO, arguing they create unnecessary obstacles to international trade and treat imported meat products less favourably than U.S. products. On Friday, a WTO panel agreed.

"This is very good news. We absolutely welcome it," Manitoba Beef Producers general manager Cam Dahl said. "I think it's an indication of the integrated nature of the North American beef market and that's something we absolutely depend on."

Manitoba Pork Council general manager Andrew Dickson and Manitoba Agriculture Minister Stan Struthers also hailed the decision as a major victory.

But Dickson and other industry officials warned it may be months, or even years, before the final chapter in the COOL saga is written.

Dickson noted the U.S. government has 60 days to decide if it will appeal the WTO ruling. If it does, it will likely be next spring before the appeal is decided, he said. And if its rejected, the United States will still have a year to determine how it will revamp its regulations. If Canada doesn't feel the changes go far enough, the matter could wind up back before the WTO.

Canadian Cattlemen's Association president Travis Toews said he also suspects the COOL battle is far from over. "While winning this case as soundly as we have is extremely gratifying, it is only a means to an end and not the end in itself," he said. "The work of obtaining change in U.S. legislation lies ahead and we hope the U.S. will decide that complying with the WTO ruling will be in its best interest also."

But the BPM's Dahl said he's cautiously optimistic the United States won't appeal. He said the U.S. meat industry depends on an open border as much as Canada does and the COOL rules have created added costs and hassle for U.S. meat processors. So he's hoping that with elections pending next year, U.S. politicians will want to settle the issue quickly.

Dickson and MPC chairman Karl Kynoch said Manitoba's weanling-pig producers were the hardest hit by the 2008 rule changes. Dickson estimated about 40 per cent of the province's 200-plus weanling barns closed after U.S. hog processors slashed their imports of Canadian piglets.

"U.S. feeders had to cope with extra record keeping and administrative costs when using Canadian piglets and feeder animals," Kynoch said. "(That), combined with retailer decisions to sell only pork from animals born, bred and slaughtered in the U.S.A., had a devastating impact on Manitoba hog producers."

Dickson said Manitoba exports of finished hogs all but dried up. The only thing that saved those producers was Maple Leaf Foods' move to add a second shift at its Brandon plant, so all of the hogs they had going to the United States were diverted there.

"So it worked out for them. It was just a stroke of good luck."

The Manitoba government also offered some insight Friday into the impact the COOL regulations have had on Manitoba's beef and hog sectors.

It said that in the year before the new rules came into effect, Manitoba producers exported 4.5 million feeder pigs, valued at $191 million, and 1.6 million slaughter pigs, valued at $178 million, to the United States. And Manitoba beef producers exported 280,912 head of feeder and slaughter cattle, valued at $277 million.

In the first year after COOL came into effect, Manitoba exports of slaughter hogs plunged by 64 per cent, feeder-pig exports fell 19 per cent, and exports of slaughter and feeder cattle were down 60 and 33 per cent respectively, the government said.

"They hurt our producers and businesses and have dramatically altered business practice in the formerly integrated North American market," Struthers said.

He and federal Agriculture Minister Gerry Ritz both urged the U.S. to abide by the WTO ruling and to begin dismantling the COOL system.

Dickson said it's unlikely producers will ramp up their production until they know the final outcome.

murray.mcneill@freepress.mb.ca

Republished from the Winnipeg Free Press print edition November 19, 2011 B5