The World Trade Organization ruled on Monday that Canada and Mexico have the right to levy retaliatory taxes worth over $1 billion in total on U.S. goods due to what it deemed to be unfair product labeling.
The U.S. has country-of-origin labeling rules (COOL) that require meat products sold in the country to disclose where the livestock had been born, raised, and slaughtered. The WTO decided that the law, passed in 2009, discriminates against Canadian and Mexican livestock, the Wall Street Journal reports.
Both countries’ governments claim that the law has resulted in decreased livestock exports to the U.S., and they have requested that the WTO authorize about $3 billion in retaliatory tariffs, though the final ruling fell short of that amount. Fortune reported earlier this year that, according to a study, COOL had a negligible impact on imports and those supposed losses by the two countries were actually due to “turbulent economic times.”
The decision has seen support from some U.S. groups. Philip Ellis, president of the National Cattlemen’s Beef Association said in a statement:
The COOL rule has been a failure on all accounts; it has cost our livestock industry billions in implementation, it has violated our trade agreements with two of our largest export markets, it has resulted in the closure of several U.S. feedlots and packing facilities and it has had no effect on the price or demand for U.S. beef.
U.S. consumer groups have criticized the ruling, arguing that COOL helps consumers avoid products from countries with more lenient safety regulations. President of the National Farmers Union, Roger Johnson, told WSJ that it “undermined U.S. sovereignty and the right of American consumers to know the origin of their food.”
U.S. Senator Debbie Stabenow proposed a bill back in June that would repeal the law. She suggests getting rid of mandatory disclosure in favor of voluntary labeling, which she believes is a “common-sense compromise.”
Though Tim Reif, general counsel for the Office of the U.S. Trade Representative, didn’t comment on the fairness of COOL, he told WSJ that the ruling can only stand to harm the three trading partners if Canada and Mexico choose to follow through with retaliation.
