In Canada, I like to say that we love our American friends. Living on the North American continent hasn’t always been peaceful. In my neighborhood there are all kinds of monuments of the War of 1812, its bicentennial being celebrated here over the last few years. Things weren’t so peaceful then. However, that is long forgotten (at least when its convenient) and we have enjoyed many years of peace since then. Occasionally, we have our problems together, but cool heads always prevail. We got something pretty good going on this side of the world.
So it was with interest this past week that I read my DTN colleague Chris Clayton’s piece, “A Long COOL Ride Is Ending”, where he documents the long history of the country of origin labeling process and implementation in the United States. He talked about the many sides of the issue aside from Canada and Mexico and many others. There certainly was a lot of opposition to it within the United States. As is, if all goes right the Senate and the House will be voting within days and the President will sign off on the spending bill next week. COOL as we know it here in Canada will be over.
I am no expert on American politics. I’m especially no expert on the legislative process in the United States. Needless to say, this is one of the few times that I can remember that Canada almost came out with what we wanted against our American friends. Unless there is some 11th hour rabbit coming out of the box, that’s the way I see it.
From the beginning with regard to the COOL labeling laws I felt it was yet another instance where our American friends were ignoring the reality called Canada. We had a free-trade arrangement with our US friends, but that didn’t seem to make any difference to US legislators. All Canadians knew that once legislation was put in place, it would be a very difficult thing to change. Canadian livestock would be caught in the crossfire and there would be little that we could do about it.
Successive Canadian governments, both Liberal and Conservative did what we always do. The first thing we do is ask politely to our American friends how they could do this to us? The reaction that we typically get from US administrations is one of surprise. For instance, we really didn’t mean you guys but you got caught up in the collateral damage. After that doesn’t work, of course we took it to the WTO, which is always our default position. The Americans did not have a leg to stand on at the WTO, but all Canadians know that doesn’t really matter.
Of course, when you are dealing with the most powerful country in the world and with an agricultural economy 13% larger than yours, it is never straightforward. I had my doubts that our American friends would comply even if the WTO ruled against them. We’ve seen that so many times before. In other sectors of our economy like softwood lumber we have won the battle, but usually our government would negotiate a compromise position. That’s the way we keep peace with our American friends.
It is not a bad strategy. When you have the world’s biggest economy on a land border, it is a ready-made market for Canadian goods. Just think about the Australians and the New Zealanders or anybody else trying to get into the American market. They have miles of ocean between them, while we have a huge land border. So keeping our American friends happy with us in trade negotiations and disputes is always a good thing.
As I’ve said before beef cattle born in Canada but raised and slaughtered in the US versus beef cattle born raised and slaughtered in the United States really should make no difference. Needless to say, times have changed. The Canadian dollar is now at a 30% discount to the US dollar and Canadian livestock and anything related to it is 30% cheaper to US buyers. That reality will have a greater impact on Canada US trade than COOL probably ever did. Now that COOL is gone and our loonie is where it is, our trade advantage in livestock is accentuated.
So what does that mean? Well, it means that somebody in the United States will probably put their hand up somewhere in livestock country. Don’t expect it to be an easy ride with foreign Canadian livestock crowding into American processing facilities to get those US greenbacks. It is what it is. Canada is the US best ally, but we aren’t American. That will mean something sometime in the future another law will come along that might make COOL seem so easy. If that happens, we’ll start the band playing again here in Canada. We’ll ask, then go back to the WTO. After almost 150 years as a country, we know how to coexist with our American friends.