COOL: Canada, Mexico Retaliations Could Impact Grain Trade

The World Trade Organization’s (WTO’s) decision announced Monday to allow Canada and Mexico to recoup more than $1 billion in retaliatory tariffs in their case against a U.S. country-of-origin meat labeling (COOL) law will likely have an impact on the trade of grain, grain co-products and ethanol.

Both markets are large buyers of U.S. feed grain products – including corn, barley, sorghum, distiller’s dried grains with solubles (DDGS), ethanol and meat – due to their proximity to the United States. In fact, Canada is the top buyer of U.S. ethanol, and Mexico has been a steady and consistent top market for U.S. commodity grains and DDGS.

Though a final list of products to face retaliatory measures like new tariffs had not been announced at press time, Canada did release a list of items that could be targeted including corn, corn fructose and glucose, live beef cattle and swine, and meat products, in addition to cheese, apples and cherries, pasta, bread and bakery products, and several industrial products. Mexico has not indicated the products they will focus on yet.

“Mexico’s and Canada’s retaliatory efforts could have significant impacts on the U.S. grain trade,” said U.S. Grains Council Director of Trade Policy and Biotechnology Floyd Gaibler. “Our next door neighbors have been our key trading partners since the ratification of the North American Free Trade Agreement (NAFTA) more than 20 years ago. The WTO’s ruling would allow them to enact barriers to trade that the United States hasn’t seen in more than two decades.”

The National Corn Growers Association (NCGA) and National Grain and Feed Association (NGFA) called for repeal of the COOL provisions that could lead to adverse economic impacts on U.S. ag products, including many grain- and animal-based products.

“Canada and Mexico represent two of our largest trading partners,” said Ohio farmer John Linder, who lead’s NCGA’s committee on trade and biotechnology, in a press release. “Noncompliance threatens our market share and has serious ramifications for the entire food supply chain and the rural economy."

More information on COOL is available from NCGA here.