Canada, Mexico win $1 billion sanctions against U.S. in meat spat

GENEVA/WINNIPEG, Manitoba (Reuters) - Canada and Mexico prepared to target $1 billion worth of U.S. exports after the World Trade Organization (WTO) authorized the countries on Monday to retaliate against the United States’ meat-labeling rules.

The World Trade Organization WTO logo is reflected in water on a sidewalk at the entrance of the WTO headquarters in Geneva April 9, 2013. REUTERS/Ruben Sprich

A WTO panel set the annual retaliation level at C$1.055 billion ($780 million) for Canada and $228 million for Mexico, considerably less than the C$3.068 billion and $713 million the two countries had sought.

The dispute stems from a 2009 U.S. requirement that retail outlets label food with information about its origin.

Canada and Mexico have argued that country of origin labeling, known as COOL, has led to fewer of their cattle and pigs being slaughtered in the United States.

Canada will retaliate if the U.S. Senate does not take “immediate action” to repeal COOL for beef and pork, Canadian International Trade Minister Chrystia Freeland and Agriculture Minister Lawrence MacAulay said in a statement.

The U.S. House of Representatives passed a bill in June to repeal COOL, but the Senate has not yet voted on it.

Mexico’s economy ministry said it has started internal procedures to strip benefits from some imports of U.S. apples, dairy, alcoholic drinks and personal hygiene products.

“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. “We will continue to consult with members of Congress as they consider options to replace the current COOL law and additional next steps.”

The amount is big enough to get U.S. legislators’ attention, said John Masswohl, director of government and international relations for the Canadian Cattlemen’s Association.

“What we want is for the U.S. Senate to be motivated to repeal COOL,” he said.

COOL has been costly for the U.S. farm sector, said the North American Meat Institute, which represents meatpackers. Chicago live cattle contracts fell by their daily price limit following the WTO’s announcement.

But R-CALF, a group of U.S. cattle producers, said the “absurd” decision overstated the damage.

It was unclear which products Canada might target.

The previous Conservative government in Canada had drafted a lengthy list of possible targets, ranging from beef and pork to wines and cherries.

Only in six of the previous 18 cases in which the WTO has authorized sanctions did countries actually apply them, since most cases were settled first.

The latest ruling cannot be appealed.

Additional reporting by Krista Hughes in Washington, Anna Yukhananov and Adriana Barrera in Mexico City, David Ljunggren in Ottawa and Theopolis Waters and Tom Polansek in Chicago; Editing by Stephanie Nebehay and Sandra Maler