Dive Brief:
- The World Trade Organization has authorized Canada and Mexico to demand more than $1 billion in tariffs on U.S. products in response to COOL: Canada $780 million, and Mexico $228 million.
- WTO had previously ruled that COOL could lead to discrimination against Mexican and Canadian livestock and put the two countries' products at a disadvantage to U.S. goods. In May, WTO denied the U.S.'s appeal for the fourth and final time.
- "We are disappointed with this decision and its potential impact on trade among vital North American partners," said Tim Reif, general counsel for the Office of the U.S. Trade Representative.
Dive Insight:
Canada and Mexico are the U.S.'s two biggest trading partners, according to Food Safety News, so authorized retaliation from these two countries could significantly impact more than just the U.S. meat industry.
WTO authorization of this threatened retaliation was exactly what a group of senators, who recently wrote a letter concerning the repeal of COOL to Senate leadership, had feared. While a voluntary COOL act has been introduced in the Senate (which Canada assured retaliation against, if passed), the House already passed a bill to repeal COOL altogether.
Originally, Canada had requested the WTO's authorization for $2.4 billion in tariffs per year on U.S. goods. With Mexico, that number rose to $3 billion. The United States Trade Representative filed a legal brief in the dispute that called the countries' economic methodology for the tariffs "flawed," saying it "severely overestimates the level of nullification or impairment attributable" to COOL.