OTTAWA (Reuters) - Canada took action against the United States at the World Trade Organization on Thursday over a U.S. meat labeling law that Canadian producers say has hurt their hog and cattle sales.
Ottawa requested a further round of consultations, a formal step that will enable it to request a WTO dispute settlement panel after 60 days if talks with the United States do not resolve its concerns.
The issue is over a new rule that forces U.S. meat packers to include the country of origin on their product labels. Canada had requested WTO consultations last year but then suspended its action after Washington revised the final version to make it more flexible.
But before the law went into effect on March 16, U.S. Agriculture Secretary Tom Vilsack warned meat packers he would rewrite it unless they voluntarily made labels more explicit.
"Recent instructions from the U.S. secretary of agriculture encouraging U.S. industry to use very strict labeling practices have removed the flexibility previously envisioned in the legislation and will affect the ability of our cattle and hog exporters to compete fairly in the U.S. market," Canadian Trade Minister Stockwell Day said.
Ironically, as it was announcing its trade action against Washington, Ottawa was issuing a joint statement with the United States and Mexico expressing concern over import bans by other nations on pigs and pork products because of H1N1 flu concerns, also called swine flu.
The three NAFTA countries threatened to take all appropriate measures to fight what they consider unjustified restrictions on pork and swine trade.
Although the World Health Organization has advised keeping animals out of the food supply that are sick or have been found dead, it has also stressed there is no risk of infection from eating or handling pork so long as normal precautions are taken.
The flu restrictions and the country-of-origin labeling rules have created a double whammy for Canada's pork industry.
Day said in a statement that Mexico was also in the process of filing a WTO challenge over the U.S. labeling rule.
In Washington last week, Day said he had notified U.S. Trade Representative Ron Kirk that Canada would proceed with a WTO complaint.
Canada says one concern it has is that meat processors may need to segregate animals according to country of origin, which could generate additional costs and prompt them to choose not to buy Canadian animals or to seek to buy them at a discounted prices.
Canada normally exports about C$4 billion ($3.4 billion) a year of hogs and cattle to the United States.
Reporting by Randall Palmer; editing by Rob Wilson