Canada and Mexico could impose tariffs on more than $1 billion-worth of U.S. goods as a way to compensate for losses brought on by a U.S. labeling law.
The World Trade Organization set the level of retaliation Monday, the final step in a long-running dispute over U.S.'s Country-Of-Origin-Labels, or COOL, policy.
As of 2009, retailers must include on meat a label that states where the animal was born, raised and slaughtered. Meat companies have to track and label products, and Canada and Mexico say that drops demand for their goods.
"Because there's additional steps those international suppliers have to follow, they end up receiving a lower price for their product than their domestic counterpart," said Veronica Nigh, an economist with the American Farm Bureau Federation.
COOL has always been controversial, as Food and Environment Reporting Network's Chuck Abbott writes:
Meatpackers and food companies opposed COOL from the start as an expensive, bookkeeping headache and have fought for years to get rid of it. Consumer groups, cow-calf ranchers in the Plains and the National Farmers Union support COOL, arguing that consumers have a right to know where their food is from.
The U.S. House passed a bill in June repealing COOL, but the Senate has yet to vote on the measure. While Senate Agriculture Committee chair Sen. Pat Roberts, R-Kansas, said he supports full repeal, some prominent members of the committee say they my draft legislation that would allow a voluntary labeling program.
It is not yet clear what products Canada or Mexico could target for retaliatory tariffs, but they could include products outside the agricultural sector.