COOL fallout

American-made chocolate could disappear from Canadian shelves with ‘retaliatory duties’, says NCA

By Oliver Nieburg

- Last updated on GMT

Canada and Mexico may tax U.S. confections in response to America's mandatory Country of Origin Labelling (COOL) for pork and beef.
Canada and Mexico may tax U.S. confections in response to America's mandatory Country of Origin Labelling (COOL) for pork and beef.

Related tags International trade World trade organization Canada Us

The U.S. National Confectioners Association (NCA) is worried retaliatory taxes in Mexico and Canada from country-of origin labeling could see American-made chocolate disappear from its main export markets.

Mexico and Canada have accused the US of breaching obligations as a World Trade Organization (WTO) member by introducing mandatory Country of Origin Labelling (COOL) for pork and beef.

Both countries have sought WTO’s authorization to implement retaliatory measures​ on U.S. agricultural and non-agricultural products.

Mexico has yet to declare products it intends to tax in response, but Canada has proposed levies on chocolate confectionery, sweet biscuits, waffles and wafers, bulk chocolate preparations and sugar substitutes including sorbitol and xylitol.

Disappearing act

The NCA’s executive vice president Alison Bodor said in a statement​ to a U.S. House of Representatives subcommittee that US confectioners had grown exports of finished chocolates to Canada by almost $45m in the last two years and bulk chocolate by $12m.

“Those years of investment will quickly be diminished if the retaliations are implemented… Many American-made chocolate products will disappear from Canadian shelves.”

She said manufacturers sourcing raw materials from U.S.-based suppliers would start looking outside the United States.

“We are aware already of Canadian companies using the threat of the retaliation to lure manufacturers to new and more secure supply sources. The loss of business will impact U.S. confectionery companies and their workers, also their communities.”

Number crunching

In Canada, US manufacturers supply:

  • 50% of imported chocolate confectionery.
  • 42% of sweet biscuit imports
  • 68% of waffle/wafer import demands
  • 75% of bulk chocolate imports
  • 28% of Canada’s imported sweeteners

Canada and Mexico: Half of US confectionery exports

Canada and Mexico account for half of the U.S. confectionery industry’s exports. U.S. confectioners sold $900m last year (40% of exports) to Canada and around $300m to Mexico (15% of exports).

The four confectionery related tariff codes on Canada’s proposed retaliatory duty list represent $615m of US confectionery exports to Canada last year.

“The longer these disputes are unresolved, the greater the consequences to the U.S. confectionery industry,” ​said Bodor.

The NCA has urged Congress to find a resolution to avoid retaliatory duties in Canada and Mexico and to ensure U.S. compliance with international trade obligations.

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