An international dispute over U.S. meat-labeling rules may trigger a trade war that could raise tariffs on wine shipped into a major export market for California wines.
On Monday, the World Trade Organization upheld a complaint by Canada over U.S. rules that require stringent labeling on meat to identify its country of origin, agreeing that it placed a “disproportionate burden” on foreign-based farmers.
Under the ruling, Canada and Mexico may pursue additional tariffs on American products, and the Canadians have released a list of U.S. products that they may target as early as this summer, which includes wine.
The wine industry is urging Congress to repeal or reform the rule to make it compliant with international trade regulations, especially as U.S. wine exports to Canada topped $1 billion in retail sales last year; the U.S. surpassed Italy and France to rank as the top wine exporter to Canada.
“In Canada it has taken decades to build the market for U.S. wine, and it could be irreparably harmed in an instant if Congress does not act,” said Robert P. Koch, president and CEO of Wine Institute, a trade group representing California wineries, in a statement.
The Canadian retaliatory plan likely would double the cost of U.S. wine exported to Canada, according to WineAmerica, which represents wineries across the country. The tariffs would fall disproportionately on wineries in California, which represents about 90 percent of the U.S. wine market.
“Any disruption caused by new retaliatory tariffs would result in a significant loss of market share that would take years to recover,” Koch added.
The tariffs go beyond wine and could total billions of dollars in lost sales, including chicken from Oklahoma, potatoes from Idaho and car parts from Ohio, according to the COOL Reform Coalition, a trade group representing those affected industries.
Given the widespread economic repercussions, Congress appears ready to act. House Agriculture Chairman Michael Conaway, R-Texas, said Monday that “it is more important now than ever to act quickly to avoid a protracted trade war with our two largest trade partners.”
Conaway said his panel will hold a hearing Wednesday to discuss legislative options to move forward and bring the United States into compliance.
You can reach Staff Writer Bill Swindell at 521-5223 or email@example.com. On Twitter @BillSwindell.