The Canadian government will proceed with a dispute settlement process through the World Trade Organization (WTO) stemming from mandatory Country of Origin Labeling (COOL).

You can’t blame them.

The Mexican government will likely follow suit.

You can’t blame them either.

“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,” said Stockwell Day, Asia-Pacific Gateway minister of international trade. “That is why our government has no choice but to request a WTO panel. This request demonstrates our ongoing commitment to resolving this issue and defending the interests of Canadian producers.”

Meanwhile, a statement from the National Cattlemen’s Beef Association (NCBA) says: “Canada’s decision to move forward with their complaint against U.S. COOL regulations is unfortunate, due to the potential retaliatory action that could be taken against U.S. beef. Since COOL was first proposed, we’ve continued to have concerns about its potential implications on our relationship with our top two trading partners – not to mention its impact on domestic feeder cattle markets at our borders to the North and South.

“The U.S. imports and adds value to Mexican and Canadian livestock through our feedlots, processing and infrastructure; and we export this value-added finished product back to Mexican and Canadian consumers. Any disruptions to either of these markets will have a significant economic impact on our industry. Unfortunately, it’s becoming clear that COOL has damaged these critically important trading relationships, and is not putting any additional money into the pockets of cattlemen.”

Canada and Mexico are the top-two U.S. trading partners, together accounting for 59% of total U.S. beef, beef variety meat and processed beef product export revenues last year.

Canada’s request for a panel comes after two rounds of WTO consultations with the U.S. failed to resolve the issue. Panels are the next step in the WTO’s dispute settlement process.

Canada initially requested WTO consultations with the U.S. on COOL in December 2008, as it believed the measures were creating undue trade restrictions, to the detriment of Canadian exporters. At that time, U.S. provisions were being implemented based on the interim final rule. The final rule was published in the Federal Register on Jan. 15, 2009, and implemented on March 16.

In order to gain a better understanding of COOL’s effects on the entire beef chain, NCBA has asked USDA to reinstate a joint Agricultural Marketing Service/Economic Research Service study – “Economic Analysis of Country of Origin Implementation Costs for Producers and Processors in the Beef, Pork and Lamb Industries” – that was to be completed in cooperation with the Livestock Marketing Information Center. The 2010 Agriculture Appropriations Bill did not direct USDA to reinstate the funding for this purpose.