Canada seeks $3 billion in tariffs on U.S. products

Meat labelling continues to be a contentious issue between both countries

Canada has filed a request to impose more than $3 billion a year in tariffs on the United States unless a simmering trade dispute gets resolved quickly.

The Canadian government has asked the World Trade Organization to authorize punitive measures against dozens of American products including meat, wine and chocolate.

The tariffs will be imposed by late summer–unless the U.S. Congress addresses Canadian and Mexican concerns, Canada's Agriculture Minister Gerry Ritz warned Thursday.

Congress is currently re-examining the law at the centre of the dispute: a requirement that meat sold in American grocery stores carry a sticker identifying where the livestock was born, raised and slaughtered.

And if the law's not gone within a few weeks there could be retaliatory tariffs on up to 38 U.S. products that amount to $8 billion in annual exports to Canada, with the tariffs potentially totalling nearly half that figure.

"Let me restate that a full repeal is the United States' only option to avoid retaliation,'' Ritz said during a Washington visit.

"Hopefully the Americans will see the light and realize that they need to rescind COOL (country-of-origin-labelling).''

Backers of the labelling rules say consumers have a right to know where their food comes from and resent foreign countries and an international trade body ripping up U.S. law.

But industry groups, Canada and Mexico call it a thinly disguised protectionist measure that complicates the supply process and drives up the cost of exporting to the U.S.

They also argued that it was illegal under international trade law–and they won. The WTO has repeatedly sided with Canada and Mexico in the dispute and the last appeal decision set the stage for possible retaliatory tariffs.

In a race to avoid such tariffs, the U.S. Congress has begun studying a bill that would repeal the labelling rules. It's likely to gain easy passage in the House of Representatives, but then face a tougher fight in the Senate.

Ritz said the U.S. is out of options, and out of time.

He warned the Senate not to try watering down the law with some other labelling requirement, which he said would be unsatisfactory to Canada and Mexico who want full repeal.

He brushed aside the question of whether the WTO might agree that such severe retaliation was deserved.

While Canada has blamed the labelling rules for damaging meat exports, and they did indeed suffer for several years, exports actually shot up significantly in 2014 despite the labelling.

Exports of Canadian meat to the U.S. surged in a year when the loonie dropped–rising to US$4.99 billion in 2014, from US$3.86 billion a year earlier.

Ritz said the retaliation request was carefully worked out and scrutinized by Daniel Sumner, an agriculture economist at the University of California: ``He's adjudicated this number. We didn't make it up.''

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