Financial Post (Canada)
By Paul Vieira
April 09, 2009

OTTAWA — Stockwell Day, the International Trade Minister, said on Thursday Canada is "reserving judgment" on potential trade action against Washington over a meat-labelling law that domestic livestock producers argue is a "significant" non-tariff barrier costing them hundreds of millions of dollars.

As he played down potential trade action with Washington, Mr. Day announced he asked the World Trade Organization to begin consultations to address South Korea’s nearly six-year ban on imported Canadian beef.

Canadian livestock producers say their sector is in crisis as the result of a U.S. law that requires labels on meat and other foods sold at U. S. supermarkets to indicate from which countries the food originates. Sales of live hogs to Americans are down over 40% from a year ago, and the cattle producers claim the law has cost its sector $400-million, as U.S. meat packers decline to take Canadian livestock due to the added red tape the labelling law entails.

Producers are further concerned was a recent move by U.S. Agriculture Secretary, Tom Vilsack, to encourage the U.S. packing sector to adopt new "voluntary" conditions to the law, such as that labels be put on processed meats. There is a fear these conditions will become permanent.

In a conference call with media from Japan, where he is as part of an Asian trade mission, Mr. Day said Ottawa is "concerned" the Obama administration has added new barriers to the sale of Canadian livestock and has backtracked from commitments Canada obtained from the former Bush administration.

He said Canadian officials are trying to get "in a substantive way" what Mr. Vilsack is attempting to achieve through his call for further voluntary action. Until then, "we are reserving our judgment until we get further [clarification]."

The Liberal agriculture critic, Wayne Easter, charged the government has failed livestock producers, and said he will ask a Parliamentary agriculture committee to call U.S. officials to testify on the labelling law’s implications.

"Once again, the Conservative government has failed to get ahead of an issue that has been brewing for some time…. Its failure to act has left our industries and our workers to take the brunt of these measures."

As for South Korea and Canadian beef, Mr. Day said Canada had no choice but to go to the WTO to get the Asian country’s ban lifted. "We feel the only way to get this resolved is to move to the [WTO] process."

WTO consultations provide parties with an opportunity to resolve a dispute through discussions. If consultations fail to resolve the matter, the complaining party may request that the matter be referred to a WTO dispute-settlement panel.

Mr. Day also said he and his Japanese counterpart have agreed to start talks on an "enhanced economic" pact between the two countries, which he acknowledged would fall somewhat short of a free-trade agreement.