Canadian hog and cattle producers have estimated that U.S. country-of-origin labelling rules have cost it more than $1-billion a year in lost sales, higher costs and depressed pricesJeff McIntosh/The Canadian Press
California chardonnay and ketchup top the list of U.S. products Ottawa plans to hit with punitive taxes unless the Obama administration repeals meat labelling rules deemed illegal by the World Trade Organization.
The Canadian government unveiled a list of 38 possible targets Friday that includes a wide range of mainly agricultural and food items, ranging from live pigs to cookies and chocolate bars.
Also on the list are mattresses, wooden furniture and swivel chairs.
"Despite consistent rulings by the World Trade Organization, the U.S. government continues its unfair trade practices, which are severely damaging to Canadian industry and jobs," Trade Minister Ed Fast and Agriculture and Agri-Food Minister Gerry Ritz said in a joint statement.
"Our government is extremely disappointed that the United States continues to uphold this protectionist policy … and calls on the U.S. to abide by this WTO ruling."
Countries typically resolve disputes before retaliation measures are triggered. Canada has only resorted to retaliation a handful of times.
But if Ottawa follows through it would put a heavy burden on consumers and businesses that buy the items on the list. Canadian hog and cattle producers have estimated that U.S. country-of-origin labelling rules have cost them more than $1-billion a year in lost sales, higher costs and depressed prices.
"This is an attempt to rattle the U.S. cage and get their attention," said Colin Robertson, a former Canadian diplomat and now vice-president of the Canadian Defence and Foreign Affairs Institute.
Inclusion of wine on the list is likely targeted at getting the attention of California members of Congress who sit on the House of Representatives agriculture committee, Mr. Robertson said.
Other items are likely aimed at putting pressure on other interest groups who would push for a settlement over a trade war, he added.
The release of the retaliation hit list is the latest chapter in a long-running dispute that began in 2008, when the U.S. required grocery stores to put country-of-origin labels on meat and other products.
The WTO ruled last year that the country-of-origin rules discriminated against Canada and Mexico.
The United States had until last month to bring its regulations into line with the WTO.
The Obama administration responded by modifying the labelling requirements, which it insists are designed to help consumers make more informed food choices.
But in the highly integrated Canada-U.S. agrifood business the labelling rules are like putting a scarlet letter on Canadian imports. Canadian cattle and hogs are often processed alongside U.S. meat, mixed into products and then shipped back to Canada.
But under the rules, U.S. farmers, feed-lot owners, slaughterhouses and processing plants must carefully segregate and track imports. Many have apparently chosen to simply stop buying imported animals.
Canada insists the United States remains afoul of WTO rules.
The Canadian Pork Council (CPC) says that the amended rule "increases the discrimination against imported animals."
"The U.S. is making a mockery of the WTO rules," said Rick Bergmann, first vice-chair of the CPC.
The labelling rules have been devastating for Canadian cattle and hog producers, which saw exports drop by more than 40 per cent as U.S. food producers found it cheaper to source meat at home rather than track it through a long cross-border food chain.
The rules, for example, require that Canadian-raised animals remain segregated from U.S. hogs and cattle at slaughtering facilities and meat-processing plants.
Ottawa said it will soon publish the retaliation list in the Canada Gazette, the first step in a process that could take as long as two years to resolve.
Canadian officials said they will not impose retaliatory duties until authorized by the WTO.