The dispute over country-of-origin labeling comes at an inconvenient time for the Obama administration as it presses Congress to clear the way for the biggest free-trade pact ever, the Trans-Pacific Partnership.

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With Canada and Mexico threatening to unleash $2 billion in retaliatory tariffs against U.S. products, including wine, farm products and even chocolate, House Republicans are moving rapidly to repeal a law requiring that beef carry a label giving its country of origin.

The World Trade Organization (WTO) ruled Monday that the requirement violates the North American Free Trade Agreement (NAFTA), igniting an uproar among Democrats and food activists who said the move demonstrates how free-trade pacts can override U.S. laws. Large U.S. meat packers and producers that export beef want the law repealed, while some smaller ranchers see country-of-origin labeling as a way to separate their beef from imports.

The dispute comes at an inconvenient time for the Obama administration as it presses Congress to clear the way for the biggest free-trade pact ever, the Trans-Pacific Partnership, which the administration is negotiating with 11 other Pacific Rim nations.

Sen. Jon Tester, D-Mont., who raises and butchers his own beef, said that if the labeling law is repealed, consumers will go to the meat counter and “not know whether it’s American beef, Brazilian beef, Argentinian beef, Australian beef or anywhere else. But they will see that USDA seal and that implies that it’s American meat, and it’s not.”

The WTO’s ruling will allow Canada and Mexico to impose tariffs on U.S. goods in retaliation for the labeling law. Canada issued a list two years ago of products on which it might impose tariffs, targeting politically vulnerable states such as California whose industries are big exporters to Mexico and Canada, the U.S. partners in NAFTA.

Congress passed the country-of-origin labeling law in 2008 and amended it to appease Canada and Mexico in 2012. Rep. Jim Costa, D-Calif., and longtime critic of the law, joined House Republicans on Tuesday in promising a repeal, starting with a vote in the Agriculture Committee. Costa called the labeling law “misguided,” saying it hurts U.S. producers and packers.

Sen. Dianne Feinstein, D-Calif., urged Congress to find a middle course that protects consumers’ right to know but avoids retribution.

Feinstein said in a statement that California would “feel the brunt of the ruling,” citing potential tariffs on wine, cheese, beef, apples, tomatoes and chocolate that she said “could cripple many companies.”

But fellow Democrats said the Department of Agriculture has already tried to modify the labels to comply with NAFTA.

Rep. Peter DeFazio, D-Ore., said Feinstein “is well-intentioned. But I don’t think, given the magnitude and breadth of the ruling, that it’s possible” to find a middle ground.

“Plain and simple, these trade agreements are specifically designed to undermine our laws and cause us to repeal them,” DeFazio said.

Rep. Rosa DeLauro, D-Conn., said the ruling shows how trade agreements allow other countries “to take down democratically enacted” laws “designed to give American consumers essential information about the origin of their food.”

Francis Scarpulla, who raises grass-fed cows in Northern California, said high-end stores selling boutique meats will label their meat regardless of the law. But “for mass-produced, packaged beef like you find in Safeway,” he said, “I do think it’s important to let consumers know where their food comes from.”

Rep. Michael Conaway, R-Tex., chairman of the House Agriculture Committee, called the labeling law a failure, citing studies showing that consumers do not look for the label. He called the labels little more than a marketing device, and said they have nothing to do with food safety because all meat offered for sale in the United States must meet USDA safety standards.

The Wine Institute, which represents California wineries, urged swift repeal of the labeling law. Canada and Mexico buy $500 million in California wine each year, the group said, and Canada is the largest export market for California wines.