By Chris Clayton
DTN Ag Policy Editor

OMAHA (DTN) -- U.S. country-of-origin labeling for meat will continue to be controversial and divisive with greater potential scrutiny from the World Trade Organization and possible retaliatory measures from Canada.

USDA issued a final rule Thursday modifying country-of-origin labeling, commonly called COOL. USDA stated, "The final rule will ensure that consumers are provided with accurate origin information for muscle cut meats as Congress intended and bring the United States into conformity with its WTO obligations. The United States remains committed to ensuring that consumers are provided with information about the origin of muscle cut meats they buy at the retail level."

Yet, opponents of COOL on Thursday lashed out against USDA and the new labeling requirements. Those criticisms were loudest from U.S. meatpackers, feeders and Canadians.

Under the WTO process, the U.S. will have to ask the trade body to ratify its changes.

Gerry Ritz, Canada's agricultural minister, said he was not surprised, but disappointed with USDA's changes. He added Canada would do everything in its power to make sure the WTO understands its concerns over the labels.

"We are sure that this does not comply," Ritz said during a press conference, adding he saw no significant changes but the "same misguided direction" in the modifications USDA announced in its final rule Thursday.

A new labeling rule was required after the U.S. lost a WTO case last year to Canada and Mexico. The countries had argued the rule, which went into effect in 2009, discriminated against imported livestock, notably cattle and hogs. Canadian and Mexican livestock producers said markets for their livestock fell sharply after USDA began requiring the labels on U.S. meat products.

The rule released Thursday would modify labeling provisions for muscle cuts to require more information on where each of the production steps -- born, raised and slaughtered -- occurred. For instance, a steer born in Canada, but raised and slaughtered in the U.S. would be labeled effectively in that manner, "Born in Canada, Raised and Slaughtered in the United States."

For all domestic animals, the label would change from "Product of the U.S." to "Born, Raised and Slaughtered in the U.S."

Retailers also would be prevented from co-mingling muscle cuts from different countries in packaging. Currently, a label for multiple cuts of meat may state "Product of the United States, Mexico and Canada." Now, meat from animals from different countries will have to be segregated during processing to provide more accurate information.

National Farmers Union, which helped create COOL and has defended such labeling from the outset, stated Thursday the group is pleased USDA moved ahead with a new rule that NFU said would be in compliance with international rulings. "We further applaud the administration for deciding to take a proactive approach in bringing COOL into compliance by providing more information on the origins of our food, instead of simply watering down the process," said Roger Johnson, president of NFU.

Last week, backers of country-of-origin labeling touted a new survey from the Consumer Federation of America citing that 90% of Americans favor labeling the origin of meat.

The Canadian Cattlemen's Association argued Thursday that USDA failed to comply with the WTO rule. To suggest it complies is "absurd," said CCA President Martin Unrau.

"It is extremely frustrating that the United States is continuing to inflict these costs on Canadian producers," Unrau said. "USDA has demonstrated that they have no intention of attempting to end the discrimination and it is time they experience some consequences."

CCA called on the Canadian government to swiftly respond by publishing a list of retaliatory options to impose on U.S. products.

Ritz said Canada will analyze the changes, assess all options and expects to go back to WTO in the next month or two. He added that Canada is continuing to work with Mexico on this.

Ritz stressed that the WTO process takes time, but emphasized Canada has "no interest in backing off or backing down. If the Americans think this is a game of chicken, well, the cliff's in front of them."

Scott George, president of the National Cattlemen's Beef Association, also stated the group was deeply disappointed in USDA's actions, citing the retaliatory threats from Canada and Mexico. "While trying to make an untenable mandate fit with our international trade obligations, USDA chose to set up U.S. cattle producers for financial losses," George stated. "Moreover, this rule will place a greater record-keeping burden on producers, feeders and processors through the born, raised and harvested label."

George said NCBA backs a voluntary label used as a marketing tool. "However, USDA is not the entity that we want marketing beef, and on its face, a label that says 'harvested' is unappealing to both consumers and cattle producers."

Mark Dopp, vice president for regulatory affairs at the American Meat Institute, called it "incomprehensible" that USDA moved ahead with the new language on COOL. AMI argues the label would harm U.S. agriculture and agribusinesses. Dopp said politics is driving USDA's decision on COOL.

"This rubber stamping of the proposal begs the question of the integrity of the process: many people spoke, but no one at USDA listened," Dopp stated. "The decision to proceed with a rule that is more costly, complex and burdensome than the earlier version, when WTO and our trading partners have sent strong signals that this is no 'fix,' shows a reckless disregard for trade relations and for companies whose very survival is at risk because they rely upon imported livestock."

AMI argued COOL cost the meat sector $500 million in 2009 alone, when the labeling provision went into effect. USDA stated in March that its new labeling rule would affect 3,038 livestock packing and processing facilities, 30,156 supermarkets and warehouse clubs, as well as 156 chicken-processing plants. The White House Office of Management and Budget stated it will cost those facilities an estimated $32.8 million to implement the changes.

DTN Associate Managing Editor Elaine Shein contributed to this report.

Chris Clayton can be reached at chris.clayton@telventdtn.com

(SK/CZ)

© Copyright 2013 DTN/The Progressive Farmer. All rights reserved.