Agriculture Minister Gerry Ritz says he has growing confidence the U.S. will back off on country-of-origin labelling regulations on beef and pork, but is prepared to retaliate if they don't.

The minister and his provincial counterparts from Alberta and Manitoba were in Chicago on Monday speaking to the North American Meat Association in opposition to the U.S. law known as COOL, which Ritz said is costing Canadian producers $1-billion annually.

Last month, Tyson Foods Inc. announced it had stop buying slaughtered cattle from Canada because of the high costs associated with COOL, including the need for specific product codes, production interruptions and sorting.

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Ritz called the loss "devastating," adding that it would become "catastrophic" for Canadian producers if other U.S. processors followed suit.

But he said there is now a unique opportunity to fix the legislation so it does not discriminate against imports from Canada and Mexico through the U.S. farm bill that is currently before U.S. Congress.

He notes that Canada has industry allies within the U.S., including the American Association of Meat Processors, along with other industry players, who have sought a court injunction in U.S. federal court against the implementation of the labelling requirements.

Ritz said 100 senators and congressmen have also signed on support the industry-led court action.

"That would have been unheard of a year ago," he said in a conference call from Chicago. "So the ground has shifted, the tide has changed and we feel very confident we can move forward with this repeal of COOL through the farm bill."

In the meantime, Canada is proceeding with a World Trade Organization action seeking permission to retaliate against the United States.

In the summer, Ottawa announced a list of 38 imports from the U.S. – including cattle, pigs, cheese, pasta, some fruits and vegetables, chocolate and maple syrup – it is prepared to retaliate against if Washington does not change the COOL law.

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"Canadians buy over $2.2-billion a year of [those] products, our retaliatory measures will put those sales at risk," he said. "We mean business."

Ottawa would only be permitted to act once the WTO process is completed, which Ritz admitted can be slow. He says Canada's preferred solution is for the remedy to come in the current U.S. farm bill.