Congress to repeal meat-labeling rule in spending bill

WASHINGTON — Congress is expected to repeal a meat-labeling rule as early as this week in a move to avoid retaliation from two of America's biggest trading partners, Canada and Mexico.

As part of a $1.1 trillion spending package released early Wednesday, Congress would end country-of-origin labeling (COOL). The rule, in effect for about two years, requires labels on steaks, pork chops and other meat products showing where the animals were born, raised and slaughtered.

The rule has been struck down twice by the World Trade Organization. Last week the trade body ruled that Canada and Mexico could retaliate against American-made exported goods through more than $1 billion in tariffs.

Canada has estimated that 11 percent — about $506 million — of Iowa's commodity exports to its country are threatened by retaliation. The products at the greatest risk include ethanol, corn and pork.

With mandatory country-of-origin labeling unlikely to be resurrected, attention is expected to focus on voluntary labeling, lawmakers and academic experts said.

“With this most recent ruling concerning the damages that Mexico and Canada are going to be able to claim, it really added fuel to the argument by people that have been opposed to COOL ... for years,” said Drake University law professor Neil Hamilton. “The shift is going to be on U.S. producers who believe there is some value to inform consumers on a voluntary basis.”

RELATED: Iowa farm group calls for repeal of meat labeling rule

Sen. Mike Rounds, R-S.D., said negotiators decided to end the mandatory rule with the retaliation from Canada and Mexico looming and deal with a voluntary provision next year. Lawmakers were concerned that retaliatory tariffs would hurt relations between the United States and its trading partners.

“We knew that we had to stop or eliminate the mandatory COOL,” Rounds said. “The move here is not to be caught with $1 billion in penalties.”

During the next few months, Rounds said lawmakers would try to get farmers, ranchers and other groups to work together to agree on a voluntary label that is WTO compliant. Congress would then consider whether legislation is necessary.

Canada and Mexico have argued country-of-origin labeling saddles them with higher costs to comply with the rule because they must separate their animals from those that originated in the United States.

Chad Hart, an associate professor of economics at Iowa State University, said he expected Canada and Mexico to withdraw their plans to seek retaliatory damages once the spending deal is signed into law, a reflection of the strong trading relationship among the three North American countries.

“When you look at the trading relationship that has been built up among all these countries, especially in agriculture, I would consider it highly successful,” Hart said. "If we get this fixed I think we'll see things return back to normal fairly quickly."

The U.S. meat industry has expressed concerns about the costs of labeling meat. Lawmakers, farm and consumer groups that back the provisions say labeling provides more information to consumers.

Members of the Iowa Cattlemen's Association have favored ending the mandatory labeling requirement and would consider a voluntary one. "We want consumers to have choices when they're buying beef, possibly including the option to choose where their beef comes from," said Phil Reemtsma, a veterinarian who lives in DeWitt. "But whether or not we would support a policy regarding country-of-origin labeling again really depends on whether there is a market for those labeled products."

RELATED: Grassley says Congress can still save meat labeling rule

The National Farmers Union said it was “deeply frustrated and angered” by Congress’ decision to repeal the meat-labeling mandate.

“Clearly this language was produced by longtime COOL opponents who legislated in the dark of the night under the guise of solving an issue, when really their intentions completely undermine the will of American consumers and producers,” said Roger Johnson, president of the National Farmers Union.

As part of the 2,009-page spending package, congressional leaders also agreed to extend the wind production tax credit for at least five more years, but those credits would be gradually reduced. Iowa generated 28 percent of its electricity from wind in 2014, the highest percentage in the United States.

"This agreement will enable wind energy to create more affordable, reliable and clean energy for America by providing multiyear predictability as we have called for,” said Tom Kiernan, head of the American Wind Energy Association. “The later years of this agreement will provide some challenges that the wind industry will work to overcome.”

Congress is expected to approve the spending bill as early as Friday.

Contact Christopher Doering at cdoering@usatoday.com or reach him at Twitter: @cdoering