A potential trade war between Canada, Mexico and the U.S. has been averted with the recent Congressional passage of spending legislation that contained a two-page rider that scrapped U.S. country-of-origin labeling rules for imported meat and poultry.

Commonly known as COOL, the rules had become a major irritant between the three trade partners with the two countries arguing that the measure was nothing more than thinly disguised protectionism.

The move by Congress followed quickly on the heels of a ruling by the World Trade Organization that the U.S. labeling rule puts Canadian and Mexican livestock are discriminatory, violate agreed-to international trade rules, and put Canadian and Mexican producers at a “disadvantage.”

The Obama administration had tried to defuse the situation by revising the labels in an attempt to comply with previous WTO rulings.

Last May, however, the U.S. lost its final appeal on the WTO ruling which would have granted Canada and Mexico more than $1 billion in punitive tariffs to Canada and Mexico in retaliation against the rules.

Reaction to the scrapping of the COOL rules was swift with a number of meat and poultry industry groups voicing relief that the threat of retaliation by the country’s two largest export markets had been averted.

“I am keenly aware that chicken and fowl could be at the top of the list for retaliation by Canada and Mexico, and that this labeling law continues to leave the door open for retaliatory action by other countries, too,” said National Chicken Council president Mike Brown in a statement, citing the potential impact on poultry exports.

COOL “has been a failure on all accounts,” said Philip Ellis, president of the National Cattleman’s Beef Association.

“It has cost our livestock industry billions in implementation. It has violated our trade agreements with two of our largest export markets, it has resulted in the closure of several U.S. feedlots and packing facilities and it has had no effect on the price or demand for U.S. beef,” he said.

Congress first required country-of-origin labeling in 2002 and renewed the program six years later, mostly at the behest of ranchers in the northern U.S who compete with the Canadian cattle industry.