Wine Industry Faces Retaliatory Tariffs

Canada, Mexico target plethora of imports over meat labeling

by Jane Firstenfeld
Canada is threatening to add tariffs to U.S. wine should the United States mandate country of origin on meat packaging.
Washington, D.C.—United States trade regulation of imported meat may adversely affect a wide variety of U.S. industries, including wine. Governments of Canada and Mexico have threatened to impose “retaliatory tariffs” amounting to some $2 billion if the U.S. retains regulations first adopted in 2002 requiring imported meats to display Country of Origin Labels (COOL).

WineAmerica is a member of COOL Reform, a broad-based coalition of diverse U.S. businesses that would face additional tariffs. Canada’s laundry list of imports to be taxed includes not just wine, but other non-meat products: apples, cherries, maple syrup, chocolate, cornflakes, prepared foods, ketchup, jewelry, swivel chairs and wooden office furniture. The variety of products would impact industries in virtually every state.

Not surprisingly, these proposed punitive measures are opposed by both producers and trade organizations in the United States, including the Coca Cola Co., General Mills, Heinz, Hershey, Hormel, Kraft Foods, Nestle U.S.A., Wal-Mart, the USA Rice Federation, U.S. Chamber of Commerce, U.S. Dairy Export Council, U.S. Grains Council and Wine Institute (see complete list here).

WineAmerica members addressed the issue with their state and local elected representatives during their annual “fly-in” earlier this month. Michael Kaiser, WineAmerica’s director of public affairs, focused their concerns. “We just want to be left out of this fight,” which has been brewing since the COOL regulations were originally adopted with the 2002 Farm Bill.

“The House and Senate need to pass legislation to rescind or amend the regulations,” he told Wines & Vines. The case is being adjudicated by the World Trade Organization (WTO), which said it would announce its final ruling May 16. The European Union recently expanded its COOL regulations. Effective April 1, fresh, chilled and frozen meat from sheep, goats, pigs and poultry must bear COOL labels.

In the U.S. case, WTO has backed Canada and Mexico, and the ruling is “not expected to go in favor of the U.S.,” Kaiser said. This would allow implementation of tariffs as early as mid-summer or fall. “Congress is waiting until the May ruling, then will work to get something in the pipeline to the president before their August recess,” he said.

Wine Institute urged Congress to address the COOL law to avoid trade retaliation by Canada and Mexico. The meeting was held, according to the Wine Institute, to “build a record for Congress to repeal COOL once the WTO decision becomes final.” Based on an earlier Mexican retaliatory tariff increase, WI stated, “COOL-related retaliation would result in a significant loss of sales for California wineries. Wine Institute urged Congress to prevent retaliation against U.S. winemakers and other important sectors of the U.S. economy.”

The international food fight has potentially vast financial implications. Because of its wide-ranging impact, Kaiser said, “Both (political) parties realize it needs fixing.”

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