Canada shelves trade complaint over U.S. meat rule

OTTAWA (Reuters) - Canada will shelve for now its World Trade Organization complaint about U.S. rules that require a country-of-origin label on meat sold in American grocery stores, Canadian Agriculture Minister Gerry Ritz said on Tuesday.

Revisions to U.S. rules that allow greater labeling flexibility now meet Canadian needs and amount to “tremendous good news” for the Canadian livestock sector, he said.

Ritz said the U.S. changes should boost export volumes and prices.

“We’ve gotten what we’ve asked them to do,” Ritz told a conference call from India, where he is promoting Canadian food products. “We should start to see live animals moving south.”

The United States agreed to allow a label showing a mixed origin, for example saying beef was of U.S. and Canadian origin. This means meat packers and producers will not have to incur the extra cost of segregating Canadian animals.

He said that the price spread of U.S. meat over Canadian meat in the U.S. market had gone to “wonky” levels as the country-of-origin regulations were phased in but that this should now return to more normal levels.

Canada traditionally exports C$4 billion ($3.3 billion) a year in livestock, beef and pork to the United States. Ritz said Canadian exports were hit by the labeling requirement but he said it was difficult to say by how much.

Technically, the Canadian complaint at the World Trade Organization will not be withdrawn in case it needs to be revived as the government monitors how the revised rules are applied.

“We will shelve our concerns at this point but we will continue to assess the impact of COOL (country-of-origin labeling) as it moves along,” Ritz said. “We hold it in abeyance.”

Prime Minister Stephen Harper had raised the issue with President George W. Bush and Canadian ministers had raised it with their U.S. counterparts.

Under the interim rule that had taken effect on Sept 30, some U.S. pork producers fattening young Canadian pigs had incurred higher transportation costs because some packing plants were only processing U.S.-origin pigs.

Packers had directed Canadian-born pigs to other plants and the demand for Canadian “weanlings” weakened.

Ritz said that he thought contracts for young Canadian pigs would now be honored again.

The Canadian Pork Council said it was cautiously optimistic the new rule would allow the market to stabilize but it remained opposed to the labeling rule overall, and still considered it a barrier to trade.

A U.S. Agriculture Department spokesman was not immediately available for comment on Ritz’s decision.

Additional reporting by Chuck Abbott in Washington; editing by Peter Galloway