May 26, 2011 / 7:48 PM / in 6 years

WTO backs Mexico, Canada over U.S. meat labels: sources

<p>A woman waits at a meat counter in the Broadway Market in Buffalo, New York April 10, 2011. REUTERS/Eric Thayer</p>

GENEVA (Reuters) - The World Trade Organization has ruled against some U.S. labeling regulations for meat sold in supermarkets, saying they discriminate against foreign suppliers, people close to the case said on Thursday.

The confidential interim ruling, if approved later this year, would deal a partial victory to Mexican and Canadian breeders frustrated in their attempts to export to the United States, and opens the way to scores of similar legal challenges, the sources said.

A WTO spokesman said the interim report -- expected to be largely unchanged in its final version later this year -- was circulated to the United States, Canada and Mexico on May 20. The WTO declined to comment on its contents, citing its confidentiality.

Canada and Mexico sued the United States at the WTO in 2009, saying U.S. Country of Origin Labeling (COOL) rules requiring meat sold in U.S. stores to show which country it comes from damaged their North American trade.

More broadly, the case highlights a growing trend toward subtle trade barriers -- including standards on health, safety or consumer information -- that can hit demand for imports.

The ruling is expected to spur similar cases around the world where exports worth billions of dollars are being slowed by such standards, some of which are designed specifically to galvanize local consumer loyalty.

“The WTO is going to hear many more cases on standards such as consumer labels. The findings of the COOL case and others show labeling schemes have a very real chance of being ruled illegal at the WTO,” said a person familiar with the issue.

The U.S. rule obliges suppliers to label certain foods, including beef and pork, according to the country in which they are sourced. A U.S. label is permitted only on meat from animals born, raised and slaughtered in the United States.

U.S. CATTLE GROUPS MIXED

The biggest U.S. cattle industry group welcomed the decision, saying COOL was a bad idea from the start.

“This ruling is unfortunate for the U.S. government but the consequences of a poor decision have been revealed. We fully support WTO’s preliminary ruling,” Bill Donald, president of the National Cattlemen’s Beef Association, said in a statement.

Donald said U.S. cattle ranchers suffer from COOL along with cattlemen from Mexico and Canada because it reduces the value of North American feeder cattle.

But a rival cattle group warned the decision would hurt U.S. producers by denying consumers the ability to make an informed choice.

“We want consumers to be able to support our U.S. cattle industry by differentiating and selecting U.S.-grown beef from the growing volumes of imported beef sourced from over a dozen foreign countries,” Mike Schultz, of the Ranchers-Cattlemen Action Legal Fund, United Stockgrowers of America, said in a statement.

Once a final report is issued later this year, the United States will have 60 days to appeal.

“The U.S. remains committed to helping ensure that consumers get the information they need to make informed buying decisions about these products,” said Nkenge Harmon, spokeswoman for the U.S. Trade Representative’s office.

Additional reporting by Doug Palmer and Charles Abbott in Washington; Editing by Andrew Heavens and Vicki Allen

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