Hoeven Defiant on Voluntary COOL Despite Rejection from Trade Groups

August 4, 2015 by Brian Dabbs|Top News

The Senate’s voluntary country-of-origin labeling bill would likely bring the U.S. into compliance with global trade rules, with Canada and Mexico risking a violation of those same rules if the countries were to go through with retaliatory tariffs after the legislation becomes law, said Sen. John Hoeven, R-N.D., in an Aug. 3 interview. Hoeven, the primary sponsor of the legislation, S-1844 (here), included the full repeal measure passed by the House. Both bills would cut COOL requirements for beef, pork and chicken, but would keep them in place for lamb and venison. The latter two meats aren’t part of the long-standing World Trade Organization dispute over COOL.

House lawmakers overwhelmingly approved their bill, HR-2393 (here), in June 1506100067). Simple repeal, however, won’t get the 60 votes necessary to move forward in the Senate, said Hoeven. We don’t change the House bill; we just add a voluntary piece,” said Hoeven. “If you put up the House bill, that doesn’t have enough votes. So I’m trying to find something that we can move so we can repeal mandatory COOL so we don’t have the tariffs. I’m trying to solve the problem.” The voluntary addition in the Senate bill allows meat packers to choose to label products with U.S. country-of-origin. The legislation was also introduced by Senate Appropriations ranking member Debbie Stabenow, D-Mich.

The Office of the U.S. Trade Representative said it considers there to be multiple paths toward WTO compliance. “We believe both options – repealing the mandatory labeling scheme or repealing the mandatory labeling regime and replacing it with a voluntary labeling system – have the potential to constitute compliance with U.S. WTO obligations,” said an agency spokesman. Hoeven said USTR had communicated that position to his office. Hoeven and Stabenow introduced their bill in late July after Stabenow floated a similar measure a month earlier (see 1507240019).

But the voluntary alternative continues to face strong opposition from business and agriculture groups. The Hoeven-Stabenow bill would still cause segregation in the livestock industry, and Canada and Mexico will move forward with imminent retaliation despite a COOL revision, said the U.S. Chamber of Commerce in an Aug. 3 letter (here) to Senate Agriculture Chairman Pat Roberts, R-Kansas and Stabenow.

The WTO rejected the final U.S. appeal in the dispute in May (see 1505180018). “Canada and Mexico are under no obligation to revisit the case at the WTO before imposing retaliatory tariffs on U.S. agriculture and manufactured products. In short, Canada and Mexico have the ‘whip hand’ in this dispute,” said the chamber’s Executive Vice President Bruce Josten. “If the United States introduced this successor program, retaliation would follow swiftly. The U.S. business and agriculture communities regard this outcome as intolerable even in the short term.”

Canadian Agriculture Minister Gerry Ritz said recently the Hoeven-Stabenow bill falls short of bringing the U.S. into WTO compliance (see 1507310017). Ritz, who has threatened retaliation as early as late summer, said Congress must fully repeal COOL to avert retaliation. Josten praised Roberts’ efforts to repeal COOL. Roberts angled unsuccessfully to tack simple COOL repeal onto the Senate’s six-year highway funding bill (see 1507300029). “The proposal advanced by Senator Roberts would bring this trade dispute to a definitive end by repealing the offensive portion of the law and terminating the possibility of WTO-authorized retaliation by Canada and Mexico,” said Josten.

WTO arbitration continues in the dispute (see 1506190023). Ritz has said Canada aims to level roughly $2.5 billion in retaliatory tariffs on U.S. exports. That retaliation will ““target beef, pork, California wines, mattresses, cherries and office furniture, possibly along with other goods,” he recently said (see 1506170045).

Hoeven cautioned Canada to consider the consequences of moving forward with retaliation on shaky ground. “If Canada were to go forward with that and try to impose tariffs, then they’d be subject potentially to WTO action from us, where we could then go after them for damages,” he said. “So they’d have to think about that. We are their market.” Hoeven said the U.S. may be able to seek some type of immediate “injunctive relief” over the retaliatory tariffs at the WTO. The details of such a tactic are still being fleshed out, however, he said.