The federal government is threatening "retaliatory measures" against the United States in a dispute over meat-labelling rules that Ottawa and the World Trade Organization consider discriminatory.

The U.S. government has announced new regulations on so-called country-of-origin labelling that would track beef and pork through the meat processing and distribution systems.

Canada objects to the labelling system on the grounds that it is costly, burdensome and will lead to the "disintegration" of the North American supply chain.

"Canada is extremely disappointed with the regulatory changes put forward by the United States today," Agriculture Minister Gerry Ritz and Trade Minister Ed Fast said in a joint press release Thursday.

The ministers said the U.S. regulations will not bring the Americans into compliance with last year's ruling by the World Trade Organization, which found the labelling system discriminated against foreign livestock and was not consistent with U.S. trade agreements.

"Canada will consider all options at its disposal, including, if necessary, the use of retaliatory measures," said the government release.

Opposition supports government stance

The NDP urged the government to stand firm on the issue.

"New Democrats believe that fair, robust trade rules are critical to the success of our industries," Don Davies, the party's trade critic, said in a news release.

"The government must step up and protect these important sectors."

Washington first imposed its country-of-origin labelling system in 2008, a move the U.S. Department of Agriculture said was designed to help consumers make informed decisions about food choices.

The labelling system cut Canadian cattle shipments to the U.S. by 50 per cent within a year and cut the export of slaughter hogs by 58 per cent.

Rules too costly for industry

The Canadian Pork Council estimates the labelling rule has already cost Canada about $1 billion annually in beef and pork exports.

Earlier Thursday, Ritz addressed the issue while on a trade mission in Kazakhstan.

"Even their own industry has come forward and said this is going to cost them hundreds of millions of dollars as well to comply, so we are analyzing what they come forward with," he said on a conference call.

"Of course, the next step is to go back to the WTO. That will take a month or two as the Americans try to sell what they come forward with and we try to convince the WTO that it is completely off the mark."

In addition to fighting the U.S. move, Ritz said, Canada must focus on finding new markets for its meat products.

"As the Americans are making their market tougher for us to get into, then it is incumbent on governments to get out around the world and start putting more market share in other than the American market."