Canada is prepared to impose trade sanctions of up to C$1 billion (US$980 million) a year against the United States unless the new mandatory country-of-origin (mCOOL) rules comply with the World Trade Organization (WTO) ruling, Agriculture Minister Gerry Ritz said this week.

The United States implemented mCOOL regulations and labeling requirements for meat and other products in 2009. Mexico and Canada successfully argued before the WTO that the labeling rules were discriminatory. The United States was given until May 23 to change them.

The Canadians and Mexicans want USDA to comply with the WTO ruling by the United States amending its meat labeling rules. U.S.  labels now identify the source of beef, pork, chicken, lamb, and certain other commodities sold in the United States.  However, USDA’s proposed rules significantly complicate the labeling requirements for beef and pork, according to Canada.

Mandatory country-of-origin rules have caused U.S. imports of Canadian pigs and cattle to drop sharply because it raised costs for U.S. packers who must segregate imported animals from U.S. livestock.

Ritz said Canada would consider imposing “extensive retaliatory measures” if the United States failed to act and noted Canadian beef and pork producers complained the rules were costing them C$1 billion a year in lost sales, according to a Reuters news report.

“We’re looking for those kinds of dollars in retaliatory action. Should the Americans put in place the proper response to the WTO … then this won’t be required,” he told reporters from Washington after talks with U.S. Agriculture Secretary Tom Vilsack. “As a country we are more than prepared to apply retaliatory measures to recoup that billion dollars,” he said. Last month USDA proposed new regulations to address the dispute by imposing stricter rules for labeling meat. Ritz said the new measures fell far short of what was needed. The products that are on Canada’s retaliation list is not publicly available, so it is not known if chicken will be a targeted import that will be damaged by Canada’s retaliatory action.