OTTAWA -(Dow Jones)- The Canadian government launched a World Trade Organization dispute settlement process over the U.S.'s mandatory country-of-origin labeling, or COOL, law with a request for a WTO panel Wednesday.
"The U.S. COOL requirements are so onerous that they affect the ability of our cattle and hog exporters to compete fairly in the U.S. market," International Trade Minister Stockwell Day said in a statement. "That is why our government has no choice but to request a WTO panel."
Agriculture Minister Gerry Ritz said in the same statement that Canadian farmers and ranchers are facing "unfair discrimination" because of the COOL law. He said Canada is confident it will succeed in the WTO challenge.
The request for a panel was made after two rounds of WTO consultations with the U.S. failed to resolve the issue. Day had said in July that he was optimistic the issue could be resolved without going to a dispute settlement panel.
U.S. Agriculture Secretary Tom Vilsack and Trade Representative Ron Kirk said they regret that formal consultations failed to resolve Canada's concerns over COOL.
"We believe that our implementation of COOL provides information to consumers in a manner consistent with our WTO commitments," they said in a joint statement. "We hope to continue to work with Canada to resolve this issue amicably."
The U.S. labeling law requires firms to track and notify customers of the country of origin of meat and other agricultural products at each major stage of production, including the retail level.
The Canadian government said these provisions impose unfair and unnecessary costs on integrated North American supply chains and reduces competitiveness in both Canada and the U.S.
"COOL has created confusion and uncertainty for livestock industries on both sides of the border," it said. But the U.S. says countries have agreed even from pre-WTO days that country of origin labeling is legitimate policy, and it's common for other countries to require goods to state their origin.
The Canadian statement said both countries "continue to have a close and ongoing dialogue on COOL and other issues."
The U.S. and Canada are each other's largest agricultural trading partners. Bilateral agricultural trade last year totaled about C$37 billion.
-By Nirmala Menon, Dow Jones Newswires; 613-237-0668; nirmala.menon@dowjones.com