GENEVA - Canada and Mexico may impose tariffs onto U.S.-traded products worth about $1 billion, a World Trade Organization panel ruled on Monday, as the countries prepared to retaliate over the United States' meat-labeling rules.
A WTO arbitration panel set the annual level of retaliation at C$1.055 billion ($780 million) for Canada and $228 million for Mexico, considerably less than the C$3.068 billion and $713 million the two countries had asked for.
The dispute stems from a 2009 U.S. requirement that retail outlets use labels in the United States to give consumers more information about the origin of their food.
Canada and Mexico have argued that U.S. rules, known as COOL (country of origin labeling), led to fewer of their cattle and pigs being slaughtered and processed in the United States, costing farmers' income.
"We are disappointed with this decision and its potential impact on trade among vital North American partners," said Tim Reif, general counsel for the Office of the U.S. Trade Representative. "We will continue to consult with members of Congress as they consider options to replace the current COOL law and additional next steps."
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If Canada and Mexico raise duties on U.S. exports, "it will only harm the economies of all three trading partners," he said.
The amount is big enough to get U.S. legislators' attention, said John Masswohl, director of government and international relations for Canadian Cattlemen's Association.
"What we want is for the US Senate to be motivated to repeal COOL," he said. "I think they will take notice at the prospect of losing a billion dollars' worth of trade."
It was unclear which U.S. products Canada and Mexico would target if a diplomatic solution fails.
Canadian Agriculture Minister Lawrence MacAulay, whose Liberal party took power from the Conservatives in October, said last month that Canada would retaliate if necessary. But he was hopeful Washington would comply with the WTO's earlier ruling that the rules were discriminatory.
Spokespersons for MacAulay and Canada's International Trade Minister Chrystia Freeland could not be immediately reached.
The previous Conservative government had drafted a lengthy list of possible U.S. targets, ranging from beef and pork to California wines and cherries.
The latest ruling cannot be appealed further and is expected to get formal approval by the WTO's dispute settlement body later this month.
