Monday, June 10, 2013

Canadian (and maybe Mexican) Trade Retaliation?

. Monday, June 10, 2013

I often think that retaliatory measures taken by aggrieved parties in the WTO dispute settlement process are among the most interesting aspects of trade politics.*  US industry/policymakers may have to deal with retaliation from Canada, after the WTO ruled against the US in a dispute over mandatory meat labeling requirements.  Canada (and Mexico too, see here) has suggested that the US has not complied with the WTO’s ruling, justifying authorized trade retaliation against US products.
This kind of policy response is far from arbitrary or scattershot.  Countries deliberately identify industries that are politically important, and then they target them for retaliation by threatening to impose higher tariffs on their products.  The idea, of course, is that these industries will complain to the offending government to convince their representatives to implement the WTO decision, thus preventing the imposition of the punitive tariffs.  Here, because the Canadian government has determined that the US failed to implement the WTO ruling, it released a list of potential commodities that it might select for trade retaliation, including beef, pork, cheese, corn, steel pipes, wood furniture, cherries, rice, potatoes, maple syrup, chocolate and others (see here and here and here).**  Absent steps by the US to implement the WTO decision, or otherwise come to a settlement with Canada, the new tariffs could (eventually) come into effect.  The value of this disrupted trade would be pretty substantial, as one estimate sugggests that Canadian livestock producers have "lost $640 million annually because of COOL [i.e., the US labeling regulation], with similar losses in pork- approximately $500 million per year." (Here).
This list contains a lot of products that probably sound familiar if you follow trade disputes between the US and other countries.  Many of the products have previously been the subject of various “trade remedies” such as antidumping orders.  That such sensitive industries are being targeted is not surprising . . . after all, that’s kind of the point.  But what is also pretty interesting is that trade representatives might even target specific legislators at particular times.  As the US Congress debates amendments to the 2013 Farm Bill, we might see legislators that are instrumental to this process targeted -- maybe in an effort to get them to add an amendment to the Bill modifying the current US labeling regime.  In any case, it’ll be fun to watch this play out the next 18+ months to see if/how tariffs end up getting imposed on these products. 

* A while back I noted that Antigua threatened to ignore copyright protection to the detriment of US firms in response to the US failure to abide by a WTO ruling.  
**  full list from Canadian Ministry of Int'l Trade: 


Canadian (and maybe Mexican) Trade Retaliation?
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