* Expects U.S. to follow WTO ruling
* Too soon to consider retaliation on US
* Canada willing to negotiate all issues at TPP
By Rod Nickel
WINNIPEG, Manitoba, Jan 17 Canada expects the United States to make regulatory changes to its country of origin meat labelling rules in time for a spring deadline from the World Trade Organization, Canadian Agriculture Minister Gerry Ritz said on Thursday.
In a wide-ranging interview on agricultural trade, Ritz said Canada wants the U.S. to pass legislation to change labelling rules, known as COOL, rather than altering regulations.
But gridlock in Congress meant regulatory change was more likely, he told Reuters by phone from Edmonton, Alberta. "At the end of the day, we fully expect them to adhere to the letter and spirit and ruling from the WTO."
The WTO ruled on June 29 that COOL unfairly discriminates against Canada and Mexico with rules that say grocers must signal the country of origin on cuts of beef, pork, lamb, chicken and ground meat.
The program cut U.S. imports of Canadian pigs and cattle sharply because it raised costs for U.S. packers who must now segregate imported animals from U.S. livestock.
Ritz said legislated change looks unlikely before the WTO's May 23 deadline, but the United States might be able to tweak regulations governing meat labelling to ensure Canadian animals aren't treated any differently from American animals.
John Masswohl, director of government and international relations for the Canadian Cattlemen's Association, said the only way the U.S. can comply is by making legislative changes, since it was within legislation that the WTO found discrimination against imported livestock.
"A regulatory change will either be insufficient to comply or will be illegal and risks court action to prevent it," Masswohl said. "A U.S. attempt to address the WTO findings via regulation is a path toward retaliation on U.S. exports (by) Canada and Mexico."
Canadian hog farmers on Monday said that COOL has cost the industry $2 billion and counting, and they called for Canada to impose retaliatory tariffs on U.S. products if the United States fails to change its labelling rules by May 23.
"It's early to talk about that," Ritz said. "I've had good, frank discussions with my counterpart, (U.S. Department of Agriculture) Secretary Tom Vilsack. They know they have to get this done. They're moving toward that end."
A spokesperson for U.S. Trade Representative Ron Kirk said on Monday that the USTR is working with the U.S. Department of Agriculture and consulting others, including Congress, to determine what it will do.
ALL ISSUES ON TABLE AT TPP - RITZ
Ritz said Canada will participate in talks this year on a free-trade deal for the Asia Pacific region, called the Trans Pacific Partnership (TPP). Canada is under pressure from countries like New Zealand to scrap its system that controls supplies of dairy products, eggs and poultry by restricting how much farmers can produce and limiting imports.
All issues are on the table for negotiation, Ritz said.
"We don't negotiate these (deals) in public, but at the end of the day, we'll only sign a deal that's in the best interests of all Canadian industry."
The "crown jewel" for all countries involved in TPP would be greater access to Japan, one of several countries looking at joining the group, Ritz said.
Canada is also eager to see Russian trade restrictions lifted against imported meat with ractopamine, he said, although it is not contemplating trade retaliation.
Ritz said Canada will continue to press Japan this year to accept Canadian beef from cattle under 30 months of age, instead of the current level of under 21 months.
($1=$0.99 Canadian) (Reporting by Rod Nickel in Winnipeg, Manitoba; Editing by Janet Guttsman and Marguerita Choy)