06.25.15

Chairman Roberts on COOL: Retaliation is Coming, and Now is the Time to Act

WASHINGTON, D.C. – U.S. Senator Pat Roberts, R-Kan., Chairman of the Senate Committee on Agriculture, Nutrition and Forestry, today held a hearing on Country of Origin Labeling (COOL) and trade retaliation: what is at stake for America's farmers, ranchers, businesses and consumers.

“If you take anything away from my remarks today, I hope it is this: facts are stubborn things, and whether you support COOL or oppose COOL, the fact is retaliation is coming. And this committee has to fix it,” Chairman Roberts said.

“Products including beef, pork, cherries, ethanol, wine, orange juice, jewelry, mattresses, furniture and parts for heating appliances are just some of the targets of Canadian retaliation. Mexico has yet to finalize their list, but we expect it to be just as damaging. The U.S. economy cannot tolerate such economic injury.

“I want to emphasize that I understand completely the concerns of some members of this committee. I have encouraged alternatives to be brought forth. But as Chairman of this Committee I must emphasize to my colleagues and all of agriculture that retaliation is fast approaching and the responsibility sits squarely on our shoulders to avoid it.”

For witness info, testimonies, and to watch the hearing, click here.

The following is Chairman Roberts’ opening statement as prepared for delivery:

Good morning. I call this meeting of the Senate Committee on Agriculture, Nutrition and Forestry to order.

Today, the committee turns its focus once again to the issue of Mandatory Country of Origin Labeling or COOL.

I’ve got a bit longer statement today, full of history and details. But if you take nothing else away from it, I hope it is this: facts are stubborn things, and whether you support COOL or oppose COOL, the fact is retaliation is coming. And this committee has to fix it. 

This committee has a long history with COOL – a history that now spans three decades.

Discussions began in the mid to late 90’s. Then in the 2002 Farm Bill, legislative language first appeared. Over the course of the next several years, USDA attempted to issue regulations implementing the program.

After the department experienced some difficulty, Congress continually moved the COOL implementation deadlines to allow USDA more time.

With the passage of the 2008 Farm Bill, USDA received more direction from Congress on how to implement mandatory COOL. In late 2008, USDA proposed an Interim Rule.

However, they later withdrew that rule due to criticism from proponents that the regulation was too weak.

It wasn’t until 2009 that the mandatory COOL program as we know it was born. That’s when we began to see mandatory labels appearing on meat that read “Product of the U.S.” or “Product of the U.S. and Canada,” for example.

But that’s not the end of the debate.

Almost immediately upon implementation of the mandatory regulations, Canada and Mexico filed suit with the WTO. They claimed that the COOL requirements were causing the U.S. beef and pork sectors to discriminate against Canadian and Mexican origin livestock.

In 2011, the WTO ruled in favor of Canada and Mexico, finding that the U.S. requirements were in violation of WTO commitments by treating Canadian and Mexican livestock less favorably than U.S. livestock. To use a baseball analogy, that was strike one.

Later that year, the U.S. appealed the ruling, but in 2012 the WTO affirmed that the U.S. was in violation. Strike two.

USDA then went back to the drawing board to create a new set of regulations to implement mandatory COOL, and in May 2013 it put forth recommendations that were much worse and much more trade restrictive by requiring labeling of meat based on where the animal was born, raised and slaughtered.

Despite the warnings from many in the livestock sector and on Capitol Hill, USDA implemented the regulation, and Canada and Mexico again took the U.S. to the WTO in 2013.

In 2014, the WTO came back with a decision, affirming for the third time the claims of discrimination brought by Canada and Mexico.

Of course the U.S. appealed that WTO ruling, and on May 18 of this year the fourth and final ruling of the WTO compliance panel affirmed that the U.S.’s attempt to fix mandatory COOL fell short. Strike three. We’re out. 

And let’s not forget that also occurring at this time were the 2014 Farm Bill negotiations.

Congress had the opportunity to fix mandatory COOL in the 2014 Farm Bill. Some wanted to wait out the WTO process. Well, that process has played out, and there’s no more time to wait.

I share this history so all can understand that Congress, impacted industries, and the regulators at USDA have put in endless effort over the past three decades to make mandatory COOL viable. However, that objective has not been reached and has cost the U.S. billions of dollars.

Looking at my home state alone, a Kansas State University review of the current mandatory COOL regulations found that compliance has already cost Kansas $500 million.

Despite the best of intentions of COOL supporters, USDA estimates that mandatory COOL has cost the U.S. beef, pork and chicken sectors approximately $1.8 billion.

Furthermore, there have been no measurable increases in consumer demand to offset the losses inflicted on the livestock and meat sectors.

These costs are in addition to the strain this policy has put on our relationships with two of our closest trading partners – Canada and Mexico.

That, in and of itself, is cause for serious concern.

We know that the damages Canada and Mexico are seeking are immense – over $3.2 billion in sanctions on U.S. products is possible if we do not repeal mandatory COOL – and these are not just ag products in the cross hairs.

Products including beef, pork, cherries, ethanol, wine, orange juice, jewelry, mattresses, furniture and parts for heating appliances are just some of the targets of Canadian retaliation. Mexico has yet to finalize their list, but we expect it to be just as damaging.

The U.S. economy cannot tolerate such economic injury.                                    

The House has moved quickly to prevent retaliation by repealing mandatory COOL for meat.

Now the responsibility falls on us. The Senate must act prior to the WTO’s authorization of retaliation.

The WTO stove is hot, and we don’t want to touch it.

One estimate from Iowa State University suggests that $2 billion in retaliation applied to U.S. exports would result in 17,000 lost U.S. jobs. Yet we could face significantly higher retaliation damages of $3.2 billion from Canada and Mexico, which would lead to many more lost jobs.

Canada has made repeated statements that they intend to proceed with retaliation should the U.S. Congress fail to repeal COOL.

Just yesterday the Canadian Minister of Agriculture sent a letter to members of this Committee stating:

For Canada, legislative repeal of COOL is the only approach that will achieve this end…”.

Another letter was sent on Tuesday by the Mexican Secretary of the Economy stating:

“Retaliation is imminent and inevitable unless and until the U.S. takes action to repeal the underlying COOL statute.”

I ask for Unanimous Consent to include both of these letters in the record.

I want to emphasize that I understand completely the concerns of some members of this committee.I have encouraged alternatives to be brought forth.

But as Chairman of this Committee I must emphasize to my colleagues and all of agriculture that retaliation is fast approaching and the responsibility sits squarely on our shoulders to avoid it.

It is important to realize that regardless of what farm groups, USDA, or USTR says, or regardless of what action Congress may take; Canada and Mexico, and only Canada and Mexico, have the ability to halt retaliation.

So this takes me back to the beginning of my statement. It doesn’t matter if you’re pro-COOL or anti-COOL, you cannot ignore the fact that retaliation is imminent and we must avoid it.

Repeal of mandatory COOL is the surest way to protect the U.S. economy.

The witnesses we will hear from today represent different perspectives in the agriculture and food production chain, all of whom stand to suffer immensely should retaliation go into effect. 

I thank each witness for providing testimony before the Committee on such an important issue.

As you can imagine there are a number of folks who would have liked to have testified today, but it would take a week to get through them all. So I also ask for unanimous consent to include in the record testimony and letters submitted by the companies, trade associations and coalitions listed on the handout included in your materials – all of whom urge repeal of COOL to avoid retaliation.

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