Canada-Anger at United States over COOL Laws.

OTTAWA -- Stockwell Day, the International Trade Minister, said Thursday that Canada is "reserving judgment" on potential trade action against Washington over a meat-labelling law that domestic livestock producers argue represents a significant non-tariff barrier that is costing them hundreds of millions of dollars.

As it played down potential trade action with Washington, Mr. Day announced he asked the World Trade Organization to begin consultations to address South Korea’s nearly six-year ban on imported Canadian beef. And he said the government remained "disappointed" with a U.S. decision to slap a new tax on certain Canadian lumber exports.

Canadian livestock producers say their sector is in crisis as the result of a U.S. law that requires labels on meat and other foods sold at U.S. supermarkets that indicate from which countries the food originates. Sales of live hogs to Americans are down over 40% from a year ago, and the cattle producers claim the law has cost its sector $400-million, as U.S. meat packers decline to take Canadian livestock due to the added red tape the labelling law entails.

But what has producers further concerned was a recent move by U.S. Agriculture Secretary, Tom Vilsack, to encourage the U.S. packing sector to adopt new "voluntary" conditions on top of what’s in the bill, such as putting the labels processed meats. There is a fear the voluntary conditions will become permanent.

During a conference call with media from Japan, where he is on an Asian trade mission, Mr. Day said Ottawa is "concerned" that the Obama administration has added new barriers to the sale of Canadian livestock, and that it has backtracked from commitments Canada obtained from the former Bush administration.

Mr. Day said Canadian officials are trying to get "in a substantive way" what Mr. Vilsack is attempting to achieve through his call for further voluntary action. Until then, "we are reserving our judgment until we get further [clarification]."

There is a growing fear that trade protectionism will emerge with a vengeance as countries look to impose new barriers as a way to mitigate the domestic fallout from the worst financial crisis since the Second World War.

While Mr. Day said he would be patient on the U.S. labelling law, he announced Canada had no choice but to go to the WTO to try to get South Korea to lift its ban on Canadian beef. "We feel the only way to get this resolved is to move to the [WTO] process."

WTO consultations provide parties with an opportunity to resolve a dispute through discussions. If consultations fail to resolve the matter, the complaining party may request that the matter be referred to a WTO dispute settlement panel.

South Korea banned imports of Canadian beef after bovine spongiform encephalopathy (BSE), or mad cow disease, was discovered in a Canadian cow in May, 2003. The ban remains intact even though the World Organization for Animal Health has deemed Canada to be a "controlled BSE risk" country.

Trade officials say many of Canada’s trading partners have accepted the global body’s recognition and have removed restrictions on Canadian beef. In 2008, Canada exported beef to more than 55 countries.

Finally, Mr. Day said he and his Japanese counterpart have agreed to kick off talks on an "enhanced economic" pact between the two countries, which he acknowledged would fall somewhat short of a free-trade agreement.