A U.S. House committee has voted to end a program requiring Country of Origin Labels (COOL) on certain beef, pork and poultry products that state where the animals were bred, raised and slaughtered. The House Agriculture Committee voted 38-6 to repeal the regulations, which have been opposed by the U.S. meat industry, which has said the labels are costly because of the rules that require the segregation of livestock, record-keeping and new packaging.

The vote by the committee comes after a ruling Monday by the World Trade Organization that the U.S. labels put on Canadian and Mexican livestock are discriminatory, violate agreed-to international trade rules, and put Canadian and Mexican producers at a “disadvantage.”

The Obama administration has already revised the labels once to try to comply with previous WTO rulings.

Now that the revised labels have also been struck down, Agriculture Secretary Tom Vilsack has called on Congress to change or end the COOL program to avoid retaliation, such as extra tariffs on U.S. exports, from the country’s two NAFTA neighbors. “Congress has got to fix this problem. They either have to repeal [COOL] or modify and amend it,” he says.

Canada and Mexico issued a joint statement calling on the U.S. to repeal the labeling rules altogether, saying they will seek authorization from the WTO to take retaliatory measures against U.S. exports if the program isn’t decommissioned. The labeling, the statement said, is “damaging to North America’s supply chain and is harmful to producers and processors in all three countries.”

The Office of the U.S. Trade Representative issued a statement that the administration is “considering all options going forward, and will continue to consult with members of Congress and interested members of the public regarding possible next steps.”

CANADA AND MEXICO COULD RETALIATE IF CONGRESS DOESN’T ACT

One of the U.S. products that could well be targeted for retaliatory measures is wine. U.S. wine producers, centered in California, currently export more than $500 million of wine to Canada and Mexico annually with Canada alone serving as the single-largest export market for U.S. wine.

“Retaliation by Canada and Mexico would do hundreds of millions of dollars in damage to U.S. wine exports and is simply unacceptable,” says Robert Koch, president and CEO of Wine Institute. “In Canada, it has taken decades to build the market for U.S. wine and it could be irreparably harmed in an instant if Congress does not act.”

Without Congressional action to bring the U.S. into WTO compliance, says Koch, Canada and Mexico, “could be in a position to retaliate against U.S. products as early as this summer.”

According to the Wine Institute, U.S. wines surpassed wines from France and Italy for the first time ever to claim the largest share of the Canadian market. Any disruption caused by new retaliatory tariffs, the trade group says, “would result in a significant loss of market share that would take years to recover.”
Congress first required Country of Origin Labels in 2002 and renewed the program six years later, mostly at the behest of ranchers in the northern U.S who compete with the Canadian cattle industry.

Originally, the U.S. Department of Agriculture (USDA) allowed the labels to say simply “Product of U.S.” or “Product of U.S. and Canada,” but the WTO rejected that approach in 2012. USDA then revised the labels to require more specific information in an attempt to win approval.

The WTO rejected those revised rules last year, and the U.S. filed one last appeal, the one rejected this week.