Dairy industry could see ‘sizable’ retaliation from WTO decision

By Hal Conick contact

- Last updated on GMT

Dairy industry organizations want to see Congress make changes to COOL to avoid retaliation tariffs. Picture: istock.
Dairy industry organizations want to see Congress make changes to COOL to avoid retaliation tariffs. Picture: istock.

Related tags: International trade, Us

Congress must act fast to address a decision from the World Trade Organization that would allow Canada and Mexico more than $1bn in retaliatory tariffs, according to two dairy industry representative organizations.

National Milk Producers Federation and the US Dairy Export Council jointly sent a letter to the US House and Senate last week to ask Congress to resolve the WTO’s problem with the US Country of Origin Labeling (COOL) law in the year-end spending bill currently under negotiation.

In 2014, the WTO found that COOL discriminates against meat exports, giving advantages to US domestic meats. COOL requires most retailers to provide consumers with the origin of meat, dairy, fresh fruit, vegetables and other types of food.

The COOL Reform Coalition​ said the issue with this law started when Mexico and Canada challenged to rule for muscle cuts of meat with the WTO, “arguing that COOL gives the US an unfair advantage by reducing the value and number of cattle and hogs shipped to the US market.”

A letter to stop tariffs

USDEC president Thomas Suber and NMPF president and CEO James Mulhern said in a letter to Congress​ that it is “critical that Congress resolve this challenge in the end of year spending legislation in a way that Canada and Mexico agree sufficiently addresses their concerns​” to remove the chance of these tariffs hurting dairy trade flow.

“US dairy producers and processors cannot risk losing this opportunity to avoid considerable damage to the export markets our industry has so painstakingly developed,”​ the letter stated.

Suber said in a statement that any retaliatory tariffs have the potential to harm the market during a time of overly abundant milk supplies. US dairy producers can’t currently afford to suffer damages to the export market, he added.  

The cost of retaliation

Shawna Morris, vice president of trade policy at NMPF, told DairyReporter that the specific negative effect this could have on the dairy industry will depend on the tariffs Canada and Mexico include on the retaliation list.

“Given that we ship over $1bn to Mexico and $100s of millions to Canada, our exposure to retaliation is quite considerable,”​ she said, adding that the retaliation could be “sizable” ​for the dairy industry.

The total numbers approved by the WTO for retaliation are $781m for Canada and $227m for Mexico, according to Morris. She said they would get final authorization to start applying for retaliatory tariffs with the WTO as of December 18.

“What we’ve been working very much toward is working to ensure congress resolves this issue before we get to that point before we see retaliation take effect,”​ she said. “We’re [trying to ensure] the US passes legislation to bring us into compliance with what we need to do to head off the tariff threat.” 

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