Canada ready for Canadian $1 billion sanctions against U.S. over labels

Canada is prepared to impose sanctions of up to C$1 billion ($980 million) a year against the United States unless it complies with a WTO order to redesign its meat labels, Agriculture Minister Gerry Ritz said on Tuesday.

The United States introduced country of origin labels for meat in 2009. Mexico and Canada successfully argued before the World Trade Organization that the labels were discriminatory and Washington has until May 23 this year to change them.

The Canadians and Mexicans want Washington to comply with the WTO ruling that it must amend its meat labeling rules. The labels right now identify where beef, pork, chicken and lamb sold in the United States come from.

The rules cut U.S. imports of Canadian pigs and cattle sharply because it raised costs for U.S. packers who must now 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.

"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 the United States sought to address the dispute by proposing stricter rules for labeling meat but Ritz said the new measures fell far short of what was needed.

($1=$1.02 Canadian)

(Reporting by David Ljunggren; Editing by Sandra Maler)