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Agricultural News

R-CALF Finds U.S. Economic Model Shows COOL Losses Overstated by Billions

Tue, 04 Aug 2015 15:26:42 CDT

R-CALF Finds U.S. Economic Model Shows COOL Losses Overstated by Billions In a 41-page brief to the World Trade Organization (WTO), the United States Trade Representative (USTR) demonstrated that Canada and Mexico inappropriately overstated their losses related to the U.S. mandatory country of origin labeling (COOL) law by billions of dollars.

Using its own partial equilibrium economic model to more accurately estimate the true trade effects of mandatory COOL on Canada and Mexico, the USTR determined that the maximum amounts that Canada and Mexico can possibly claim as a result of the United States' implementation of mandatory COOL is less than $91 million annually.

"This is a far cry from the more than $3 billion that Canada and Mexico have been claiming as damages arising from our mandatory COOL law," said R-CALF USA CEO Bill Bullard.

Bullard said the USTR's estimate of less than $91 million in damages resulting from COOL reinforces the message that 142 groups sent to the U.S. Senate last month to urge the rejection of any effort to repeal COOL or to weaken it by converting it to a voluntary program. The groups made their request in part because, "Canada and Mexico have threatened an absurdly high penalty designed to frighten the U.S. Congress into rashly repealing COOL."

According to Bullard, Canada's and Mexico's scare tactics worked brilliantly and a bill to repeal COOL in the U.S. House of Representatives passed 300 to 131 in early June amidst claims that Canada and Mexico were already moving towards instituting retaliatory tariffs on U.S. exports that could reach as high as $3.6 billion per year.

Reacting also to Canada's and Mexico's unsubstantiated claims that the WTO would authorize their collection of billions of dollars through retaliatory tariffs, the U.S. Senate agriculture committee scrambled in July to introduce two COOL repeal bills of their own. The first repeal bill, sponsored by Senate Agriculture Committee Chairman Pat Roberts (R-Kans.) was identical to the House repeal bill. The second repeal bill, sponsored by Senators John Hoeven (R-N.D.) and Debbie Stabenow (D-Mich.), was also identical to the House repeal bill but with the addition of a provision granting the Secretary of Agriculture the authority to establish a voluntary COOL program.

In support of its contention that neither Canada nor Mexico can prove the damages they claim, the USTR's brief argues that both Canada's and Mexico's methodologies for calculating losses were flawed. In one example, the USTR describes how Canada claimed that its export revenue losses resulting from COOL were $1.61 billion annually. However, Canada's total export value of affected livestock in 2014 was $1.744 billion, which the USTR described as the second highest level after the 2007 level, which was before the economic recession.

"It is alarming that Congress and others who are supporting COOL repeal and/or voluntary COOL are so eager to defer to Canada's and Mexico's saber rattling rather than to critically analyze their outrageous claims - It isn't even remotely possible that COOL could cause Canada to experience export revenue losses that are nearly as high as their near-record exports in 2014," Bullard commented.

In a notice issued today, the WTO has scheduled an arbitration hearing for September 15-16, 2015 in Geneva, Switzerland, to hear evidence presented by the United States, Canada and Mexico regarding the impact that COOL has had on Canada's and Mexico's livestock exports.

"This notice further demonstrates that Congress and supporters of both COOL repeal and voluntary COOL alike are premature in their efforts to eliminate our mandatory COOL law.

"We hope that a careful review of USTR's brief will encourage Congress to withdraw their bills to eliminate mandatory COOL and to reaffirm their support for America's consumers, farmers and ranchers by defending our nation's sovereign right to inform consumers as to the origins of their food," concluded Bullard.



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