Question Period Note: VOLUNTARY PRODUCT OF USA LABELLING

Q1 – Why is the Government of Canada concerned about the new proposed rules on voluntary “Product of USA” labelling , when we have our own voluntary “Product of Canada” labelling guidelines? Q2 – Will Canada uses retaliatory measures/tariffs against this new proposal? Q3 – Is the United States meeting its WTO obligations?

R1 - Canada supports enabling consumers to make informed choices and have access to affordable food.
As with any measure, we urge policymakers and stakeholders to consider potential unintended consequences which, in this case, could impact our integrated economies, food security and costs to consumers.
The current economic environment, as well as the orientation of Canada-U.S. meat and livestock supply chains, suggests changes to “Product of USA” risk far greater economic impact. R2 - Canada maintains the retaliatory rights awarded by the WTO when we successfully challenged the U.S.’s 2008 mandatory country-of-origin labelling (COOL) measure.
The proposed rule is different than the U.S.’s mandatory COOL rule, which required all covered beef/pork products sold in the U.S. to indicate the country of origin.
Canada will review and assess the appropriate next steps if and when a final rule is released. We continue to seek constructive engagement with our U.S. counterparts. R3 - Government officials will analyze the amendments in a potential final rule to ensure that the rule-making complies with the U.S.’ obligations under the WTO and CUSMA.
The requirement is voluntary and would apply only when a retailer decides to label a product with a Product of United States of America label.
This is different than the U.S.’ mandatory COOL rule, which required all covered beef/pork products sold in the U.S. to indicate the country of origin and which Canada successfully litigated at the WTO.

• On March 13, 2023, the United States (U.S.) government published proposed changes to its voluntary Product of United States of America (PUSA) labelling requirements for meat, poultry, and egg products. These proposed updates are a result of a previously announced (July 1, 2021) “top to bottom” review of the regulations by the United States Department of Agriculture (USDA). AAFC is working on this issue in close collaboration with Global Affairs Canada (GAC) and the Canadian Food Inspection Agency (CFIA).

• Under the proposed rulemaking, the two authorized claims “Product of USA” and “Made in the USA” may be displayed on labels of U.S. Food Safety and Inspection Services (FSIS)-regulated products only if the product is derived from animals born, raised, slaughtered, and processed in the U.S.. The proposed rule would also apply to processed products, which must meet the above-mentioned criteria, and also have all other inputs (except spices and other flavorings) grown and processed in the U.S. If it comes into force, this would change the current rule that allows “Product of USA” or “Made in the USA” to be displayed on meat products that are “processed” in the U.S..

• This proposed change would have an impact on Canada’s meat and livestock sector because it would likely require traceability and segregation of Canadian cattle, hogs, and meat products throughout the supply chain. However, the voluntary nature of this rule makes it challenging to predict impact to Canada given that it will depend entirely on uptake.

• The requirement would apply only when a retailer decides to label a product with a PUSA label, which is different than the U.S.’s mandatory COOL rule, which applied to all covered related products sold in the U.S., and which Canada successfully litigated at the World Trade Organization (WTO) for beef and pork.

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Ongoing U.S. Bill and Canada’s Successful Challenge of Previous Mandatory COOL at the WTO

• In September 2008, mandatory COOL was implemented in the U.S., and had a significant negative impact on the Canadian cattle and hog industries.

• In December 2008, Canada (and separately, Mexico) initiated dispute settlement proceedings at the WTO on the COOL requirements for beef and pork. The WTO found, on four separate occasions, that COOL discriminated against imports of Canadian (and Mexican) livestock and was in violation of the U.S.’s trade obligations.

• On December 21, 2015, the WTO granted final authorization for Canada to retaliate up to C$1.055 billion annually (and Mexico up to US$228 million) on U.S. exports to Canada.

• On December 18, 2015, U.S. Congress passed legislation which repealed the COOL requirements for beef and pork.

• On March 2, 2016, the USDA published a Final Rule to amend the implementing regulations for COOL to reflect the repeal for beef and pork.

• Despite Canada’s WTO victories and the subsequent repeal of COOL for beef and pork, there continues to be attempts in the U.S. (i.e., in Congress, certain state legislatures) to introduce voluntary or mandatory COOL schemes that could restrict trade.

• Over the last two years, bills have been introduced in the U.S. Congress, in both the Senate and the House, to reintroduce mandatory COOL. These bills generally seek to direct the U.S. Trade Representative, in consultation with the U.S. Secretary of Agriculture, to develop a WTO-compliant means of reinstating mandatory COOL for beef. There are currently three proposed bills related to COOL in the current Congress. REDACTED

• Canada remains concerned about any measure that may disrupt North American supply chains or Canada-U.S. trade, including changes to voluntary “Product of USA” labelling requirements for meat, poultry, and egg products from the U.S..
• Canada has submitted formal comments to the United States Department of Agriculture expressing concerns over the potential impacts to the North American meat and livestock supply chains.
• Canada also requested that the U.S. pauses and reconsiders the proposed rule in order to allow for consultations between Canadian and U.S. officials.
• Canada wishes to be a constructive partner in the rule-making process to ensure that new definitions and rules do not restrict trade or disrupt supply chains.
• It is important that producers, processors, and consumers, on both sides of the border, can continue to benefit from efficient, stable, and competitive markets.