Canada has been awarded the right to seek $1 billion in trade sanctions against the United States by a World Trade Organization panel in a dispute over American meat-labelling rules that single out foreign beef and pork.

The Liberal government said it will "quickly take steps to retaliate" against the U.S. if the labelling requirements aren't dropped promptly — a condition the lead American senator on agriculture issues said he will do his utmost to satisfy before Canada imposes tariffs.

At issue is the U.S.'s mandatory labelling for packaged steaks and other cuts of meat, which requires grocery stickers explaining where livestock was born, raised and slaughtered.

Labelling defenders say consumers deserve to know where their meat comes from. Opponents, including Canada and Mexico, say it's simple protectionism, designed to suppress foreign-sourced meat in the U.S. market without any food-safety or inspection benefits.

International Trade Minister Chrystia Freeland says the U.S. must take 'immediate action' to repeal country-of-origin labelling for beef and pork, or face retaliation. (Sean Kilpatrick/Canadian Press)

The WTO arbitration panel said Monday the annual losses to Canadian cattle, pig and hog producers as a result of the U.S. country of origin labelling laws amount to $1.054 billion — an amount Canada can now seek to reclaim by slapping tariffs on certain imports from the U.S.

International Trade Minister Chrystia Freeland and Agriculture Minister Lawrence MacAulay welcomed the ruling in a joint statement.

"Country of origin labelling harms Canadian and Mexican livestock producers, as well as U.S. processors and producers. It also disrupts the highly integrated North American meat industry supply chain," the release said.

Canada sought $3B

The WTO has previously said the U.S. labelling rules violate international trade law.

Canada must now request permission from the WTO to apply the retaliatory tariffs, which could come on a variety of American goods including chocolate, pasta, ketchup and frozen orange juice.

The Canadian government has suggested it might impose a 100 per cent tariff on products from states where politicians supported the meat-labelling law. Canada had sought the right to slap $3 billion in duties on U.S. goods.

The WTO panel found Mexico is also being unfairly hit by the U.S. meat-labelling rules, to the tune of $227.8 million US a year. Mexico had argued the amount was closer to $700 million annually.

Reacting to the prospect of American exports being hit with tariffs, Tim Reif, general counsel for the Office of the U.S. Trade Representative, said: "If Canada and Mexico take steps to raise import duties on U.S. exports, it will only harm the economies of all three trading partners."

The U.S. House of Representatives voted in June to repeal mandatory country of origin labelling for meat and replace it with a voluntary system. But the measure stalled in the Senate.

"If the U.S. Senate does not take immediate action to repeal [country of origin labelling] for beef and pork, Canada will quickly take steps to retaliate," Freeland and MacAulay warned in their statement.

U.S. Senate agriculture committee chairman Pat Roberts, a Kansas Republican, said Monday that he will look for "all legislative opportunities" to repeal the labelling law. "We must prevent retaliation, and we must do it now before these sanctions take effect," he said.