BUSINESS

U.S. challenges Canadian math in simmering trade fight

06/17/2015 05:32 EDT | Updated 06/17/2016 05:59 EDT
WASHINGTON - The United States is challenging the math that's led the Canadian government to demand $3 billion in punitive tariffs on American products in a potential trade war.

It's requesting arbitration to calculate an appropriate amount, as Canada moves toward tariffs in this decisive phase of a years-long battle at the World Trade Organization.

The arbitration request came at a meeting Wednesday in Geneva, where Canada asked the WTO to approve the multibillion-dollar penalties in a long-running dispute over meat labelling.

Canada is in a position to retaliate after a series of rulings against an American law that requires meat sold in the U.S. to carry a label saying where it was born, raised and slaughtered.

The law's proponents call it a valuable bit of information for consumers. Its opponents call it unfair protectionism, designed to complicate the sorting process for companies that import from Canada and Mexico.

Because the WTO sided against the U.S., Canada is preparing to slap 100 per cent tariffs on a variety of U.S. products ranging from wine to frozen orange juice and Mexico could follow suit.

At the same time, American lawmakers are moving to end the dispute. A bill to cancel the labelling rule passed the House of Representatives last week, although to become law it also has to clear the Senate.

Some Democratic lawmakers who support mandatory labelling urged their colleagues in the House debate to wait, while the inevitable dispute over the dollar amount plays out at the WTO.

They suggested the $3 billion retaliatory request was over-the-top and would be deemed so by the WTO — given that meat imports from Canada surged in 2014, after dropping in previous years.

Those lawmakers proposed taking the time to find a solution that preserves some form of labelling, such as a North American label.

Their efforts failed in the House, where the repeal bill passed with 70 per cent support, including the backing of one-third of the chamber's Democrats.

But the fight could be tougher in the Senate.

If American legislators don't pass a law by late summer, tariffs are coming, according to the Canadian government.

In a statement, the government insisted its $3 billion estimate was on solid footing. That's the amount in penalties that Canada hopes to impose within a few months, unless U.S. lawmakers act.

"Canada is disappointed that the U.S. is attempting to prolong the WTO process by requesting arbitration," said the ministers of agriculture and trade, Gerry Ritz and Ed Fast.

"The U.S. is out of options and retaliation cannot be avoided by drawing out this process."