Canada’s ‘COOL’ ties with the U.S

More often than not, the United States gets what it wants.

As one of the most powerful nations on the planet, and one of the world’s largest economies, our neighbours to the south seem to have the power to choose the laws they wish to obey, and in the case of international trade, it causes smaller countries a high level of frustration.

Such is the case with Canada and its largest trading partner, as our battle against the U.S.’s Country of Origin Labelling scheme (COOL) continues with seemingly no end in sight. An American initiative which, by some estimates, has cost beef and pork industries in Canada over $1 billion, COOL requires packaged meat include information producers on this side of the border say is extraneous. They say it discriminates against imported meat, as packaging must include where the animal was born, raised and slaughtered, which means animals have to be segregated at slaughter and tracked throughout the process.

Other than adding significant costs to producers, it has been argued, successfully, COOL violates free-trade agreements. The World Trade Organization has already ruled the United States must change its meat-labelling laws, a ruling which has been appealed, with a mid-2015 decision expected.

Should that appeal go Canada’s way, the expectation is very clear – COOL needs a complete overhaul to comply with the WTO. The U.S. is at least examining the issue, with a report expected to come before Congress in early May concerning what COOL changes may be needed to satisfy the WTO, which is at least a positive indication the Americans are willing to at least attempt a compromise.

If that compromise is deemed insufficient, however, Canada will start discussions with the WTO regarding possible retaliation in the form of tariffs on beef, orange juice and wine coming into Canada from the U.S. And while that would appear to be a sound strategy on paper, going toe to toe with our largest trading partner does not make a lot of sense in the grand scheme of things as, to put it simply, we need them a lot more than they need us.

Having access to one of the world’s largest markets, with our shared border, is key to many segments of the Canadian economy. We rely on American customers for a bevy of goods produced here, and engaging in a widespread trade battle is not the most wise course of action.

There is a strong sense Canada should stick to its guns in this circumstance, and adding more items to the trade-sanction list is certainly one way to attack the situation. Politicians on both sides of the border have blustered on about their positions in this matter for years, and the level of rhetoric will only rise, no matter which way the American WTO appeal falls in 2015.

The challenge for Canada, as it has always been, is finding ways to work around America’s habit of flouting international trade agreements, and ensuring businesses on this side of the border can continue to have access to, and greatly benefit from, the massive market right at their fingertips.

It is unfortunate two countries which share a close relationship in many ways must resort to waging very public battles through intermediaries like the WTO. Politicals forces on both sides of the border often conspire to complicate matters, however, and more often than not, it is the smaller fish, like Canada, who bear the brunt of the system.