Country-of-Origin Labeling is a popular and effective means of informing consumers about the origin of the food they eat. American cattle producers are proud of the meat produced from our animals. Nine out of ten consumers want to know where their meat comes from and support country-of-origin labeling.
- Consumers increasingly want to know where their food comes from.
- Since the early 1990's US cattle producers have been told they need to learn how to compete in a Global market. Differentiating US beef is key to competing with foreign beef in both US and international markets. Volumes of market research & promotion show tremendous value in being able to differentiate ones product.
- COOL legislation was passed because of concern that under prior standards imported cattle slaughtered in the US and imported beef that was further processed, cut up, ground, cooked, or even just seasoned became US beef. This practice which was part of the old voluntary system not only deceived consumers, but compromised the integrity of US beef that was born, raised, and harvested in US.
Myths you have heard about COOL:
COOL is expensive and has shown no premiums to US producers. According to recent USDA study complying with COOL will cost $2.6 billion for all covered commodities
- $2.6 billion reported covers all commodities, not just beef.
- These cost have already been incurred in the initial implementation of COOL, these costs should now be viewed as an investment—repealing COOL throws these funds away
- According to previous reports by USDA and CRS (Congressional Research Service) the majority of these costs were already in place by the industry as record keeping requirements.
- These supposed costs of COOL has been used as a propaganda tactic by NCBA, AMI, Canada, and Mexico; all who claim "Beef is beef no matter where it comes from".
- Those who argue that costs outweigh benefits, base their claims on initial propaganda by opponents to COOL in the US, Canada and Mexico, not on hard facts.
- A KSU study utilized in US Courts and at WTO supporting these costs, fails to note the lack of promotion and marketing of the US Beef label; consumer awareness, a key to premium and branded programs, must be achieved through marketing strategies—none of which was done with COOL. Also, the KSU study fails to recognize recording keeping practices which were already in place and required by USDA for trace back purposes for recalls, etc, and other marketing claims. USDA used some of the same researchers from KSU in their own study which was mandated by the Farm Bill to occur and offered such a narrow scope of study and time frame to develop that only available research was viable for use.
Facts about the cost and benefits of COOL:
- Several studies show the value of COOL; both the University of Florida and CSU studies report that consumers are more than willing to pay a premium for US origin beef.
- More importantly the fact that both USDA and KSU failed to acknowledge that in some of the most robust beef markets in the world-the international market-where US Beef is promoted and marketed daily, last year US Beef averaged $3.27/lb. while the next closest competitor Canada received only $2.53/lb.
- US cattle producers recognized the importance and value in promoting and marketing US Beef.
- A Gallop poll of 8,000 producers asked them to agree or disagree with the following statement, “If it were possible, all or at least some portion of Beef Checkoff dollars should be used to promote ONLY U.S. born and raised beef.”
o This poll was a result of a court challenge brought by producers demanding to know the true reach of their investment in the beef checkoff.
o Over three quarters of the respondents were in strong agreement with having their Beef Checkoff dollars used to only promote US beef. This was the most strongly endorsed statement in the poll by cattle producers.
COOL was initiated by Protectionists to reduce imports
- COOL provides important benefits to American ranchers and consumers. It is a popular and effective program that permits U.S. producers to market their product with full country of origin information and allows consumers to make informed choices about the food they eat.
- COOL has not affected the prices Canadian and Mexican cattle when compared to US cattle. In fact, a more recent study by Dr. C. Robert Taylor of Auburn University based on actual reported trade data, finds that COOL did not negatively impact import volumes or prices for cattle. The number of live cattle we imported from Canada and Mexico actually rose in 2010, the year after the COOL rule went into effect, and they have remained above 2009 levels since then. The number of cattle rose again in 2014, the year after the revised COOL rule was implemented.
- The value of cattle imports from these two countries has risen even more rapidly, hitting $2.45 billion last year, nearly twice what it was in 2009 when COOL was first implemented.
- In both countries, beef cattle herds were in steep decline for several years until 2009 when COOL was implemented and have since leveled off for the most part with minimal reduction. Since COOL was implemented in 2009 we have experienced record combined cattle and beef imports based on a percentage of each country’s respective annual beef cow herd size.
- Since COOL was implemented, both the Canadian and Mexican cattle producers have seen not only the highest profits in recent history, but also the longest period of such profits.
The WTO has ruled 4 times against COOL
- The US has actually won more than lost. The WTO has stated many times that the US has every right to provide consumers with origin information.
- As a preliminary matter, Congress should consider the troubling implications of the WTO’s decisions on COOL. Though the WTO acknowledged that providing consumer information is a legitimate government objective, it also found that any labeling regime which alters the conditions of competition to the detriment of imports violates WTO rules, even if that detrimental impact results solely from legitimate regulatory distinctions. As all origin labels necessarily convey different information about products of different origins, this case could have much broader negative impacts beyond our cattle and beef sectors.
- On May 29, the U.S. Trade Representative expressed these concerns before the WTO:
"Paradoxically however, it would appear from those findings that there is no clear way under the covered agreements for a Member to achieve that legitimate objective [of consumer information]. When examined as a whole, the Panel and Appellate Body findings appear to mean that the United States cannot require U.S. retailers to inform consumers of beef and pork about where the animals were born, raised, and slaughtered. This is a conclusion with which the United States strongly disagrees."
- USTR concluded that the Appellate Body had failed to address these and other “serious and systemic concerns” raised in the dispute. These concerns should give Congress pause.
Retaliatory Tariffs will exceed $3 billion dollars and Congress should repeal COOL now
- Now is not the time to scrap this important program. The US has never, to our knowledge, pulled out of Arbitration at this stage.
- While Canada and Mexico have indicated their intent to retaliate against U.S. exports, those notifications are just the beginning of the process, not the end. The U.S. has requested that a WTO arbitrator determine the amount of retaliation Canada and Mexico are entitled to before any such retaliation occurs. The arbitration process can take 60 days or longer.
- The retaliation amounts notified by Canada and Mexico are merely their opening bids. It will ultimately be up to a neutral arbitrator, not Canada and Mexico, to decide what amounts may be warranted.
- Canada claims it is entitled to withdraw trade concessions exceeding 3 billion (Canadian), nearly $2.5 billion U.S. Mexico seeks $713 million in retaliation. On June 17, the U.S. Trade Representative told the WTO Dispute Settlement Body that it “strongly disagreed” with the amount claimed by Canada, noting that it was “quite excessive.”
- It is not unusual for countries to initially claim very large retaliation amounts that are later significantly reduced by an arbitrator. For example, in its case against U.S. cotton programs, Brazil asked for $2.7 billion in annual countermeasures, but got an amount equal to just under $295 million in the first year. Antigua and Barbuda initially sought retaliation of over $3.4 billion in its challenge to our gambling laws – the arbitrator ultimately found they were only entitled to $21 million per year.
- Canada and Mexico want this Congress to repeal COOL as soon as possible, thus their incentive to offer such unrealistic retaliation numbers. Congress should not be intimidated by these tactics, and it should not be rushed into action based on initial threats that may be without justification.
- The U.S. court system has rejected similar claims regarding the supposed costs of COOL. In September 2013, the U.S. District Court for the District of Columbia denied a motion to get the revised COOL rule preliminarily enjoined. The court found that plaintiffs had failed to show they would be irreparably harmed by COOL, and their claims of injury were “mere speculation.”
- Repealing COOL is not a solution.
- A vote to Repeal COOL is nothing more than a vote to go back to previous standards that deceived consumers.
How does changing mandatory COOL to voluntary COOL offer a solution?
- Changing mandatory to voluntary is a strategy to be used only if Retaliatory Tariffs are awarded that are unreasonable or too high. It is simply an option during Arbitration negotiations.
- Changing COOL at this point would be premature. Congress should let the WTO process continue before unilaterally weakening or repealing COOL, based on scare tactics.
Voluntary just takes us back to where we were before COOL
- No! Voluntary maintains the integrity of the “Product of the US” label.
- Changing mandatory to voluntary for cattle and beef in the current law preserves the integrity and definition of the US Beef label. That is--it's the law. If the law is repealed, then we go back to the old standards where virtually any cattle or beef imports can be called US beef. Thus the importance of maintaining the law.