Agricultural Law Weekly Review—September 15, 2016

Written by M. Sean High – Staff Attorney

The following information is an update of recent, local, state, national, and international legal developments relevant to agriculture:

Labor: California Governor Signs Bill Removing Agricultural Worker Overtime Exemption

On September 12, 2016, California Governor Edmund G. (“Jerry”) Brown signed into law legislation removing California’s agricultural worker overtime exemption (AB 1066).  Prior to the enactment of AB 1066, California agricultural workers only received overtime pay if they worked more than 10 hours a day or 60 hours per week.  Now, however, agricultural workers must receive overtime pay if they work in excess of 8 hours a day or 40 hours per week.  The new law will phase in the new overtime requirements for agricultural worker over the course of 4 years, though agricultural producers with 25 or fewer employees will be given an additional 3 years to phase in the overtime requirements.

Trade: U.S. Brings WTO Action against China for Rice, Wheat, and Corn Support  

On September 13, 2016, the United States Department of Agriculture (USDA) issued a press release stating that “the Obama Administration has launched a new trade enforcement action against the People's Republic of China at the World Trade Organization (WTO) concerning excessive government support provided for Chinese production of rice, wheat, and corn.” According to USDA, China’s excessive government support violates WTO rules, have caused an inflation of prices above market levels, and have denied American rice, wheat, and corn farmers the ability to compete on a level playing field.

Litigation: Court Rules EPA’s Release of CAFO Information Violated FOIA

On September 9, 2016, the United States Court of Appeals for the Eighth Circuit ruled that the Environmental Protection Agency (EPA) violated the Freedom of Information Act (FOIA) when EPA released personal information pertaining to owners of concentrated feeding operations (American Farm Bureau Federation v. U.S. Environmental Protection Agency, Case No. 15-1234).  The court remanded the case back to the district court to consider American Farm Bureau Federation’s request for injunctive relief. 

FSMA: States to Receive $21.8 Million to Farmers Comply with Produce Rule

On September 9, 2016, the United States Food and Drug Administration (FDA) issued a press release announcing that the agency was “awarding…$21.8 million to support 42 states in the implementation of the FDA Food Safety Modernization Act (FSMA) produce safety rule.” According to FDA, the state “[a]pplicants were classified into five tiers of funding eligibility based on the estimated number of farms growing covered produce within their jurisdiction.” FDA stated that the funding is available for five years, subject to the availability of funding from Congress.

Quarantine: PDA Establishes Quarantine for Spotted Lanternfly

On September 10, 2016, the Pennsylvania Department of Agriculture published notice in the Pennsylvania Bulletin of an Addendum to the Order of Quarantine regarding the Spotted Lanternfly (46 Pa.B. 5814).  According to PDA, “[a] quarantine is hereby established with respect to Lyons Borough, Alsace Township, Exeter Township, St. Lawrence Borough, Berks County and Upper Macungie Township, Lehigh County and West Pottsgrove, Montgomery County.” PDA stated that “[t]his is in addition to, and does not replace, any townships and areas already subject to the Spotted Lanternfly Quarantine Order published at 44 Pa.B. 6947 issued Saturday, November 1, 2014, and any previous Addendums to that Quarantine Order.”

WTO Arbitrator Rules against U.S. COOL Law

Written by M. Sean High – Staff Attorney

On December 7, 2015, the U.S. Country of Origin Labeling (COOL) law suffered a significant blow as a World Trade Organization (WTO) arbitrator determined that COOL violated international trade obligations, and awarded Canada and Mexico the right to impose over $1.2 billion in retaliatory tariffs against U.S. exports.

Under COOL, certain food retailers (such as supermarkets and grocery stores) are required to provide the name of the country of origin on the labels on specific food products including “muscle cut and ground meats: beef, veal, pork, lamb, goat, and chicken; wild and farm-raised fish and shellfish; fresh and frozen fruits and vegetables; peanuts, pecans, and macadamia nuts; and ginseng.” 

According to Canada and Mexico, through the enactment of COOL, the U.S. violated Article 2.1 of the Agreement on Technical Barriers and Trade (TBT Agreement) requiring that all signatory members (which include the U.S., Canada, and Mexico) “shall ensure that in respect of technical regulations, products imported from the territory of any Member shall be accorded treatment no less favourable than that accorded to like products of national origin and to like products originating in any other country.” Canada and Mexico contended that by requiring country of origin labeling, the two nations were “accorded less favourable treatment of imported livestock than to like domestic livestock,” and because of this treatment, the U.S. failed to carry-out its TBT Agreement obligations.

During the arbitration proceedings, Canada and Mexico’s asserted that because of COOL, they each experienced “export revenue losses” and “revenue loss as a result of domestic price suppression.” Canada claimed annual revenue losses totaling $1,054,729,000 and Mexico claimed annual revenue losses totaling $227,758,000.  Ultimately, the presiding arbitrator agreed with Canada and Mexico and awarded each nation the ability to impose retaliatory tariffs on the U.S. commensurate with their claimed annual revenue losses.  

Following the WTO arbitral ruling, U.S. House Agriculture Committee Chairman K. Michael Conaway (R-TX) stated, “We have known for some time that the Country of Origin Labeling law violates our international trade obligations.” Significantly, on June 10, 2015, legislation sponsored by Chairman Conaway that would repeal COOL (H.R. 2393), passed the U.S. House of Representatives by a vote of 300-131.  Currently, H.R. 2393 awaits action by the U.S. Senate. 

COOL Dispute Arbitration Date Set

By Tyler R. Etter

A date has been set by the World Trade Organization’s Dispute Settlement Body for the arbitration hearing on Canada and Mexico’s retaliatory tariffs against the United States in response to Country of Origin Labeling (COOL). At the request of the parties, the hearing will be open to the public, occurring on September 15 and 16, 2015.

A decision in May found the mandatory COOL labeling to be in violation of the United States’ international obligations to Canada and Mexico. The two nations are seeking over $3 billion in retaliatory tariff measures against U.S. goods. The U.S. has requested a decision rejecting the proposed damages, instead setting totals at $43.22 million and $47.55 million.

The U.S. House of Representatives has since passed a bill to repeal COOL, but the Senate has passed competing measures. One proposal is for the creation of a voluntary “Product of the U.S.” label, and another would repeal COOL for beef, pork, and chicken from the surface transportation bill.

Canada and Mexico have already voiced opposition to the voluntary label, and will proceed if COOL is not fully repealed.

National Pork Producers Council Urges Repeal of COOL

On July 20, 2015, the National Pork Producers Council (NPPC) and its state chapters wrote a letter urging the Senate to repeal country-of-origin labeling (COOL) for beef, pork, and chicken.

The NPPC letter states that unless COOL is repealed, the World Trade Organization will calculate and authorize what level of retaliation Canada and Mexico can place on the United States.  Mexico and Canada are insisting that the retaliatory tariffs will happen if COOL is not repealed and will remain until COOL is repealed. 

The NPPC letter asserts there will be a negative economic impact if the senate chooses to not repeal COOL.  According to the NPPC letter, Mexico was the United States second largest export market for pork in 2014 and totaled $1.55 billion and Canada was the third largest export market totaling $984 million.  “Exports helped add $63 to the price of each hog marketed last year. Furthermore, pork exports support more than 147,000 U.S. jobs.”  The NPPC letter states that jobs will be affected if COOL is not repealed, “[a]ccording to Iowa State University economist Dermot Hayes, the U.S. economy stands to lose 17,000 jobs if the WTO sets a retaliation level of $2 billion. Over 25,000 U.S. jobs will be lost if the retaliation level is set at $3 billion.”

The NPPC letter urges the Senate to repeal COOL before the August recess.

Written by Katharine Richter - Research Assistant

July 23, 2015

Canada and Mexico Seek Sanctions against United States over COOL

  On June 5, 2015, Canada and Mexico requested the right to impose sanctions worth $3 billion on the United States through the World Trade Organization (WTO).  The request comes after U.S. failure to meet WTO recommendations on the Country of Origin Labeling (COOL) ruling.  WTO’s meeting to decide on whether to implement sanctions is scheduled for June 17, 2015.

    The dispute over COOL originated December 1, 2008 when Canada claimed COOL violated both WTO’s Technical Barriers to Trade (TBT) agreement and General Agreements on Tariffs and Trade (GATT).  The dispute specifically focused on imported muscle cut meat commodities: beef and pork.  Mexico requested to join Canada in the proceedings December 12, 2008. On November 18, 2011, WTO ruled that the U.S. had violated both TBT and GATT.  WTO found COOL created a detrimental effect on competitive opportunities for imported livestock by unfairly making domestic products more favorable. 

  Though the U.S. appealed the decision on March 23, 2012, the decision was reaffirmed by the WTO Appellate Body on June 29, 2012.  On May 24, 2013, the U.S. issued an amended final rule 78 Fed. Reg. 31367 to meet WTO recommendations.  Canada and Mexico stated the rule was protectionist and requested compliance proceedings.  On October 20, 2014, WTO found that the U.S. amended COOL measures contained the same violations as the prior regulation.

  Congress has not reached a unanimous decision on how to handle the recent challenges to COOL.  While advocates believe COOL provides a legitimate objective by providing country of origin information to beef and pork consumers, opponents cite a USDA economic study that found that unless there is an increased demand for beef and pork by consumers based on COOL information, implementing COOL results in losses along supply chains. 

  On May 18, 2015, House Agriculture Committee Chairman Michael Conaway (R-TX) introduced H.R. 2398, which would repeal beef, pork, and chicken from COOL.  On May 20, 2015, the House Agriculture Committee favorably reported H.R. 2393 to the House where it is expected to go to the House floor in early June.  

Written by Katharine Richter- Research Assistant

June 8, 2015

The World Trade Organization Finds that China Violated Trade Laws Concerning Imports of Chicken Products

On August 2, 2013, the World Trade Organization (WTO) Dispute Settlement Body (DSB) Panel found that China was acting inconsistently with the Anti-Dumping Agreement and Subsidies and Countervailing Measures Agreement (SCM Agreement) after reviewing the duties imposed by China on U.S. poultry products.

China began imposing anti-dumping duties and countervailing duties on broiler products from the U.S in 2009, alleging that the U.S. was subsidizing poultry production and then flooding China’s domestic market with low cost chicken products, causing the sale of domestic poultry to decline (a practice called “dumping”). In 2011, after discussions with China failed to settle the dispute over these duties, the U.S. requested that the WTO resolve the matter.  

After review, the WTO DSB Panel stated that China did not give the U.S. adequate facts or calculations of how they determined the effects of the alleged dumping. In addition, the Panel found that China acted inconsistently with numerous other articles of the Anti-Dumping Agreement and SCM Agreement. The Panel recommended that China conform to the agreements or face potential retaliations.

China has the ability to appeal this resolution within 60 days. If appealed, the Appellate Body of the WTO will review the Panel’s findings and make a determination within 90 days. If China does not appeal and does not conform to the agreements in accordance with the WTO’s findings, then the U.S. and other parties involved may impose retaliatory measures.

For more information, please see the WTO’s findings and the dispute settlement procedures.

Written by Sarah L. Doyle - Research Assistant
The Agricultural Law Resource and Reference Center
@PSUAgLawCenter
August 5, 2013