Washington Insider -- Monday

By DTN's Washington Insider

Here’s a quick monitor of Washington farm and trade policy issues from DTN’s well-placed observer.

White House, USDA Pressured by Pro-COOL Groups to Appeal WTO Ruling and Reject Congressional Fix

Supporters of country of origin labeling (COOL) have 60 days from Oct. 20 to appeal a recent WTO ruling against USDA’s May 24, 2013 rule on meat labeling. Supporters say any problems with current COOL rules can be dealt with administratively – a position not taken by Canada and Mexico, the two countries that won the case against USDA’s rule.

Meanwhile, WTO ruling naysayers continue to push for an appeal. National Farmers Union President Roger Johnson, Public Citizen Global Trade Watch Director Lori Wallach, US Cattlemen’s Association President Danni Beer and Food & Water Watch Research Director and Senior Policy Advocate Patrick Woodall made their comments in a teleconference.

The revised 2013 COOL regulations at issue require meat producers to specify on retail packaging where each animal was born, raised and slaughtered. The rules, which implement provisions of the 2008 Farm Bill, also bar the mixing of muscle cuts from different countries under a general label. In 2012, the WTO Appellate Body said US COOL rules discriminated against Canada and Mexico because they provided less favorable treatment to imported cattle and hogs than to domestic products, in violation of US trade obligations. The 2013 revision was an attempt by the US to come into compliance but it still failed to pass WTO muster. But in compliance panel reports released Oct. 20, the WTO faulted USDA’s revised COOL rules and backed claims by Canada and Mexico that the rules violate international trade obligations. The 200-plus page ruling also found that the regulatory goal of the COOL statute — to provide consumers with information — was permissible under WTO rules.

Canada has threatened to retaliate with a price tag of $2 billion. Mexico has yet to release its retaliation list.

A coalition of US industries has urged that Congress immediately authorize and direct USDA Secretary Tom Vilsack to revoke parts of COOL that have been determined to be noncompliant with WTO obligations.

For more perspective on COOL please see today’s Washington Insider article.

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GOP Charges ‘Misinformation’ on Water Rule

Senate Republicans are again challenging the Obama administration’s proposal to delineate the reach of the Clean Water Act via the so-called Waters of the United States (WOTUS) rule. In an Oct. 24 letter to EPA Administrator Gina McCarthy and Secretary of the Army John McHugh, 24 Republicans cite “several examples of bias against the proposed rule’s critics,” including:

“The Obama Administration insinuating that opposition to the proposed rule is equivalent to opposition to clean water.”

EPA’s attempt to delegitimize questions and concerns surrounding the proposed rule.”

EPA and the Corps blatant misrepresentation of the impacts of increased Clean Water Act jurisdiction.”

EPA’s social media advocacy in favor of the proposed ‘Waters of the United States’ rule prejudices the rulemaking process.”

Meanwhile, the EPA’s Science Advisory Board noted in a peer review of the rule that there is “strong scientific support” for the agency’s proposed WOTUS rule. The EPA proposed the rule in April. The advisory board said it is “grounded in current science,” but offered several recommendations to clarify the rule and improve transparency. Earlier this month, EPA extended the comment period on the proposed water rule through November 14.

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Washington Insider: What to Do About COOL

Now that yet another WTO ruling against the US Country of Origin Labeling policy has been released and its details digested, there is something of a new brouhaha building about how to proceed.

The issue arises since the United States has 60 days from Oct. 20 to appeal and supporters have mounted a full-court press to prevent Congress or the administration from making significant changes. Supporters say any problems with current COOL rules can be dealt with administratively, a position opposed by Canada and Mexico, the two countries that won the case against USDA’s rule.

Three of the main supporters of the policy, the National Farmers Union, Public Citizen Global Trade Watch and the US Cattlemen’s Association, say there are good reasons to appeal the decision. Other groups across the meat industry disagree.

The revised 2013 COOL regulations were developed following a 2012 WTO Appellate Body decision that the rules discriminated against Canada and Mexico by providing less favorable treatment to imported cattle and hogs than to domestic products--and, that this violated US trade obligations. The 2013 revision was billed as an effort to come into compliance but critics suggested all along that it was more discriminatory than the original rules.

COOL basically requires meat producers to specify on retail packages where each animal was born, raised and slaughtered as required in the 2008 Farm Bill. The policy also barred the mixing of muscle cuts from different countries under a general label.

Once again, a compliance panel report released Oct. 20 faulted USDA’s approach and backed claims by Canada and Mexico that it violated US trade obligations. The 200-plus page ruling observed that the stated goal of the COOL statute, additional consumer information, was permissible under WTO rules but that the current policies provided little meaningful information.

Canada has threatened to retaliate with a price tag of $2 billion. Mexico has yet to release its retaliation list. In response, and given the fact that USDA has failed twice to meet the WTO requirement, a coalition of US industries has urged that Congress immediately authorize and direct USDA Secretary Tom Vilsack to revoke the parts of COOL found to be noncompliant with WTO obligations.

Still, the NFU argues that the ruling gives USDA “the opportunity to redefine the rule without the need for Congress to get involved.” Johnson also thinks there may be a clearer way “to define ‘born, raised, slaughtered’ such that it cleans up the confusion which was in the decision.”

The inclusion of value-added meat in the rule is another option, NFU president Roger Johnson said. “The WTO decision says that essentially the costs side that the producers have to bear are more than the benefit side that the consumers get,” he remarked. “To the extent that you can increase the amount of the product that is labeled, you nullify that argument.” However, critics argue such an approach could make the compliance panel’s argument stronger rather than weaker.

Johnson characterized calls to repeal the COOL statute as “premature” and “foolish” and thinks “there is strong legal standing to resolve the dispute. “There is a lot of hysteria right now about preemptively altering the policy rather than appeal, the Public Citizen Global Trade Watch claims. The US Cattlemen’s Association argues that the numbers being used are wrong--and that the segregation costs were “massively overstated.” In its view, the WTO ruling significantly overstates the cost of the labeling scheme and underestimates the benefit to consumers.

It will be interesting to see the Congressional reaction to this ruling. Congress has been catching significant heat recently for its perceived indifference to trade policy issues in the farm Act and criticism over the settlement of the long, lingering cotton case has been strong. In addition, the United States has now lost several WTO-related cases.

In addition, now that last year’s efforts to tighten the rules to meet the WTO objection has fallen short, there seems to be little chance the issue can be managed through the rulemaking process and there are signals that other industries whose products are in the cross-hairs of Canadian and Mexican trade sanctions may be tiring of efforts by a small number of US groups to impose protections at their expense. Thus, it seems unlikely that political support for a further modified COOL can be found in the Congress now and that the powerful meat industry may succeed in its push for far less costly or interventionist labeling policies, Washington Insider believes.

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(GH/CZ)

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