Inside US Trade – USDA Official Signals Dept. Will Miss Deadline For COOL Report

Inside U.S. Trade – 03/13/2015

USDA Official Signals Dept. Will Miss Deadline For COOL Report

Posted: March 12, 2015

A U.S. Department of Agriculture (USDA) official indicated last week that the department will not provide Congress on May 1 with recommendations on how to bring the country-of-origin labeling (COOL) regime into compliance with adverse World Trade Organization rulings, the latest of which will be issued no later than May 18.

USDA Undersecretary for Marketing and Regulatory Programs Ed Avalos did not respond directly as to whether the department will meet the deadline when pressed by Rep. Robert Aderholt (R-AL) at a March 3 House Appropriations subcommittee hearing.

"I guess my answer to you would be the request we take serious," Avalos said. "Right now, we don’t have a regulatory fix, as [USDA Secretary Tom Vilsack] mentioned, and Congress really needs to amend the statute in order to move forward should we lose that appeal. … We’re taking the request seriously, and we stand ready to work with you to move forward."

As part of the appropriations package it passed in December, Congress mandated that USDA, in consultation with the Office of the U.S. Trade Representative, submit recommendations for changing COOL to bring it into compliance with adverse WTO rulings. That report is due either within 15 days of the "final resolution" of the case, or on May 1, which ever comes first.

This stipulation is technically not binding because it was part of an explanatory statement that accompanied the appropriations package, not part of the package itself. But failure to provide the recommendations could mean appropriators may subject agencies to further scrutiny in the future or even dock their funding.

The U.S. has appealed an Oct. 20 WTO compliance panel ruling that found the new COOL rule — issued by USDA in 2013 — had a worse impact on Canadian and Mexican livestock producers than its predecessor, and was not based on a "legitimate regulatory distinction" (Inside U.S. Trade, Dec. 5).

A WTO compliance panel in October 2014 faulted the amended COOL regulation as not being any less discriminatory than its predecessor, which is a violation of Article 2.2 of the Agreement on Technical Barriers to Trade (TBT). At the same time, the compliance panel found that the U.S. stated goal of providing consumers with information through origin labeling was a legitimate objective under Article 2.2 of the TBT Agreement, though it found the existing regulation did not meet that goal.

The United States, Canada and Mexico have filed separate appeals to the ruling, which will be released no later than May 18, according to a March 2 notice from the chairman of the WTO Appellate Body.

Vilsack at a Jan. 9 press conference said the department is unable to change the COOL rule with a regulatory fix, and that Congress would have to either repeal or reform the law if the U.S. loses its appeal at the WTO.

Inside U.S. Trade – 03/13/2015 , Vol. 33, No. 10