Will proposed farm bill set off trade retaliations?

After the announcement that the House and Senate agriculture leaders constructed and agreed on a five-year farm bill proposal, many agriculture groups applauded the efforts and outcome to be voted on later this week. However, some organizations fear that their members will face economic harm because in its current form, the 2014 farm bill fails to fix the U.S. Country of Origin Labeling (COOL) law.

“The bill that the conference committee released Monday is not one that addresses the concerns of our members,” said Scott George, president of the National Cattlemen’s Beef Association. “The released bill is a slap in the face to every livestock producer in this country and we are calling on Congress to fix the mistakes they have made that are costing cattlemen and women every day.”

Canada and Mexico filed a complaint over the law with the World Trade Organization, which is expected to rule on it next month. If the WTO finds that the labeling law doesn’t comply with U.S. trade obligations under the WTO, Canada and Mexico are set to place retaliatory tariffs on dozens of U.S. products, including beef, pork, furniture and bakery goods.

“It is only a matter of time before the World Trade Organization rules in favor of Mexico and Canada,” George said. “Once that does happen, producers will realize the full cost of this failed legislation.”

According to National Pork Producers Council president Randy Spronk, Canada already has a retaliation list that includes pork and Mexico is very likely to follow suit.

If the past is any indication, those retaliations would be costly. Back in 2009, the U.S. violated a trucking provision of NAFTA and Mexico placed tariffs of up to 20% on 99 U.S. pork products, totaling over $2.4 billion. Pork exports to Mexico fell and at the same time Canada’s pork exports to Mexico increased, causing a large loss of market share.

“If Country of Origin Labeling isn’t fixed, pork producers like me will suffer,” Spronk said. “So will dozens of U.S. businesses, the U.S. economy and U.S. workers.”

The National Farmers Union, however, is pushing for passage of the farm bill as is with regard to COOL. 

“NFU is pleased with the conference report for a variety of reasons,” said Roger Johnson, NFU president. “The bill includes fixed reference prices to provide assistance to farmers only when truly necessary. It provides a strong crop insurance title and approximately $4 billion in livestock disaster assistance. The bill increases funding for the Farmers Market and Local Foods Promotion Program and related initiatives. We are also encouraged by the inclusion of robust mandatory funding levels for renewable energy programs. We’re also very happy that the bill preserves the ability of American family farmers and ranchers to distinguish their products in the marketplace through the existing Country-of-Origin Labeling (COOL) law.”

The House passed the farm bill on Wednesday. Both House Speaker John Boehner and House Majority Leader Eric Cantor expressed a level of disappointment with the lack of reforms to the Supplemental Nutrition Assistance Program, but Boehner said the legislation is worthy of the House’s support. Senate Agriculture Committee Chair Debbie Stabenow suggested the Senate could vote as early as next week.

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