Inside U.S. Trade – 01/18/2013
U.S. Leans Toward Regulatory Approach In Weighing COOL Compliance
Posted: January 17, 2013
The administration is consulting internally and with Congress and private-sector stakeholders on which actions it will take ahead of a May 23 deadline to comply with an adverse World Trade Organization ruling that faulted the U.S. country-of-origin labeling (COOL) system for livestock. At this point, the administration appears to be leaning toward taking regulatory measures rather than pushing for legislative changes, sources said.
According to two sources familiar with the issue, the Office of the U.S. Trade Representative and the U.S. Department of Agriculture (USDA) appear to prefer the regulatory route, which would fall short of the legislative amendments that Canada and Mexico – the complainants in the WTO case – are calling for.
"My sense is that the strong preference is for a regulatory approach," said Patrick Woodall, research director at Food and Water Watch, a Washington consumer rights group. "[Agriculture Secretary Tom] Vilsack and even USTR have been pretty forceful on this, that they do not want to do this through legislation."
An agriculture industry source also said he had received similar signals. "I get positive indications from the administration that they believe this can be done through a regulatory fix," this source said. Still, Woodall noted that the agencies were "playing it very close to the vest," and have given no clear indication of what specifically they might seek to do in order to claim compliance with the WTO ruling.
In closed-door briefings last month with Senate staffers, USTR officials said they are considering both legislative and regulatory changes in order to comply. They left open which specific changes they might seek, though, and said they would consult staffers again in early 2013, according to a Senate aide.
Up until this point, the administration has not made any concrete legislative proposals to the congressional agriculture committees, which have jurisdiction over USDA, according to staffers. "The administration has not submitted any legislative proposals, nor have they indicated that one would be forthcoming," a House aide said.
Many observers believe that if the administration were to opt for a legislative fix, the best chance for passing legislation would be to include provisions in a revised farm bill. However, the timing there could be difficult, as the deadline for compliance is May 23 and a new farm bill is not expected to pass until summer at the earliest.
This lack of a legislative vehicle in the near term is one reason why the administration will likely opt for a regulatory approach, sources said. In addition, a legislative fix would be hugely controversial among COOL’s proponents.
The National Farmers Union, a U.S. group that has been a proponent of COOL, is among the groups that believes the administration can take a more limited approach by adjusting its labeling regulations and still be in full compliance with the WTO ruling, the group’s president, Roger Johnson, said in an interview.
Johnson said his organization is in the process of formulating a specific recommendation for what the U.S. government should do and will submit it prior to the deadline. He also stressed that his group would oppose any attempt to comply with the WTO ruling through legislative means. "We will certainly fight that every step of the way," he said.
The Canadian livestock industry, by contrast, has publicly taken the position that in order for the United States to fully comply with the June WTO Appellate Body decision, it must amend the COOL law in order to allow all live animals slaughtered in the U.S. to be eligible for a U.S.-origin label.
"To determine our next steps, we are working with our colleagues at USDA and consulting with relevant stakeholders, including Congress," Andrea Mead, a spokeswoman for the Office of the U.S. Trade Representative, said in an e-mail this week.
"The United States remains committed to ensuring that consumers are provided with information about the origin of the beef and pork products they buy at the retail level," she added, while not providing specific details about what type of approach the administration is considering. USDA deferred an inquiry on the topic to USTR.
In the regulatory sphere, there are at least a few possible changes that the administration could put forward to address the criticisms of the COOL measure by the WTO Appellate Body. In essence, the WTO found the measure placed a record-keeping burden on meat packers buying Canadian and Mexican livestock that was disproportionate to the amount of information that the labels conveyed to U.S. consumers (Inside U.S. Trade, July 6).
One idea for reducing this burden has already been considered by USTR. Early last year, it floated a proposal to stakeholders that envisioned widening the window during which packers are allowed to "commingle" animals from different countries and then apply a mixed-origin label. Current USDA rules allow for such commingling during only one processing day (Inside U.S. Trade, Feb. 3).
At the time, that proposal was panned by COOL’s proponents and detractors alike. The law’s supporters argued that such a step would further muddle the information given to consumers and decrease the premium packers currently pay for meat from animals born, raised and slaughtered in the U.S. Meat packers, meanwhile, said that kind of system would still be excessively complicated.
Still, sources said, the administration could put forward a proposed rule along those lines and arguably claim compliance with the WTO ruling – even though it would likely be challenged by Canada and Mexico. Depending on how wide the window was opened, such a step may prove acceptable to COOL’s supporters.
Another proposal that could be adopted by the administration is one that was submitted to USDA and USTR last year by the Ranchers-Cattlemen Action Legal Fund (R-CALF), which supports the COOL law. This would entail removing the current requirement that ranchers and feedlot operators maintain affidavits certifying the origin of U.S. cattle, and instead allow a presumption of U.S. origin for all cattle not branded and tagged otherwise.
As a condition of entry into the U.S., cattle from Canada and Mexico that are not imported for immediate slaughter are currently required to be permanently identified with an official foreign marking that denotes their respective country of origin, according to the Aug. 22 R-CALF letter. Those imported for immediate slaughter are brought in sealed trucks, also making them immediately distinguishable, Bill Bullard, CEO of R-CALF, said.
"Thus, no record keeping is needed from any upstream supplier to distinguish domestic cattle from imported cattle, other than from the meat packer that would remove foreign markings from the carcass after the live cattle are visually inspected and slaughtered," the group said in its letter.
It acknowledges that except for Canada and Mexico, however, livestock are not always required to bear permanent origin markings – although most imported livestock comes from those two countries. For consistency purposes, this would require a change to a Treasury Department rule that generally exempts livestock from the requirement that all imported products bear origin markings as a pre-condition to entry into the U.S., according to the letter.