November 5, 2014 / 8:44 PM / 3 years ago

Mexico could seek hefty damages against U.S. over meat laws: official

WASHINGTON (Reuters) - Mexico would seek "hundreds of millions" of dollars in trade retaliation against the United States if Washington does not change meat labeling laws, a Mexican official said, as Mexico and Canada kept up pressure on the United States to act.

The World Trade Organization ruled last month that the United States had failed to bring its meat labeling regulations fully in line with international fair trading rules after a complaint by its two neighbors. The ruling would be a step toward potential retaliation if packaging laws are not changed.

Canada estimates U.S. rules requiring retailers to list the country of origin on meat cost its farmers and processors $1 billion a year in lost sales and lower prices, and warned on Friday it would pursue all available remedies.

Studies on the damage to Mexico had not yet been finalized but would run into the "hundreds of millions," the Mexican official said on Tuesday. This could take total retaliation from Canada and Mexico to as much as $2 billion.

"Neither Mexico nor Canada will accept anything less than a full solution," said the official, who is familiar with the WTO case and who spoke on condition of anonymity. Acceptable options include scrapping the labeling law or replacing labels such as "Born in Mexico, Raised and Slaughtered in the United States" with a generic "North American" source, the official said.

The United States has said it may appeal the decision on country-of-origin labeling, or COOL, and in that case a final WTO ruling is likely between April and June 2015.

Under WTO rules, retaliation is linked to the level of damage done by the offending actions, with the exact amount worked out in negotiation with the parties.

The Canadian Cattlemen’s Association said on Wednesday the COOL law forced Canadian and Mexican cattle to be segregated, adding costs along the supply chain.

"For the U.S. to come into compliance it has to make a legislative change and that legislative change has to be significant enough to eliminate the need to segregate," CCA counsel Edward Farrell said at a Heritage Foundation event on Wednesday.

U.S. Chamber of Commerce Senior Vice President for International Policy John Murphy said at the event that Congress should act soon to make sure the relevant sections of the law could be quickly rescinded once the WTO made its final ruling.

Advocates would be looking for opportunities to get such provisions before Congress this year or early next year, he said, noting there would be funding bills that must come up for a vote before the end of the year.

Reporting by Krista Hughes; Editing by David Gregorio

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