Canada has asked the World Trade Organization to restart formal consultations with Washington about about a U.S. country-of-origin meat-labelling law that International Trade Minister Stockwell Day says is devastating the Canadian livestock industry.

The law is aimed at helping consumers protect their health by avoiding foods from countries experiencing food-borne illnesses. (CBC)

If the 60-day consultation period between Canada and the U.S. fails to resolve the dispute surrounding the law, known as COOL (for country of origin labelling), Canada can then launch a trade complaint with WTO.

"We are concerned with the approach the United States is taking to implement COOL and the negative impact it is having on our exporters," said Day.

"Recent instructions from the U.S. Secretary of Agriculture encouraging the U.S. industry to use very strict labelling practices have removed the flexibility previously envisioned in the legislation and this affects the ability of our cattle and hog exporters to compete fairly in the U.S. market."

Day advised Ron Kirk, the top U.S. trade representative, of the move last month.

The legislation, which was implemented in the U.S. on an interim basis in September and became full law in March, requires meat processed in the U.S. but made from Canadian livestock to be labelled as Canadian rather than simply North American as has been the case to date.

Canadian producers say that U.S. meat packers, which buy most of Canada's meat, are reluctant to segregate livestock and prepare different labels and will instead stop buying Canadian meat.

Representatives of the Canadian cattle industry estimate cattle exports to the U.S. have dropped by 25 per cent and live hog exports are down by 40 per cent in the first three months of this year, compared to the same period last year. The law has also created a glut of meat on store shelves in Canada, meaning lower prices for producers.

Canada initially requested WTO consultations with the U.S. in December, but suspended the request after Washington revised the legislation to make it more flexible.

However, before it became law in March, U.S. Agriculture Secretary Tom Vilsack asked U.S. meat packers to go beyond those rules and identify products as being from Canada or Mexico.

The legislation requires country-of-origin labelling on beef, pork, lamb, chicken, goat meat, wild and farm-raised fish and shellfish, perishable agricultural commodities, peanuts, pecans, ginseng and macadamia nuts.