The U.S. has played coy little games with our North American trading partners and the World Trade Organization for most of the twenty-first century. The first time we were hauled into the WTO 'court' to defend our decision to impose country of origin labeling could be called excusable. But not the second time. Or the third. Or the fourth.
Mexico and Canada chose to play by the rules even though the USDA insisted that meaningless cosmetic revisions in the COOL rule would satisfy the WTO. They simply took us back to court, knowing that nothing had really changed and the decision would be the same. COOL imparts an unfair advantage and must be rescinded.
What is in play is the status of more than a trillion dollars in North American trade. Last year, Canada was our largest trading partner, with $658 billion in total bilateral trade and Mexico was our third-biggest trading partner, with $534 billion.
House Agriculture Committee Ranking Member Collin Peterson (D-MN) doesn't sound like he's willing to kiss and make up, though. In one of the many news releases that descended on the press immediately after the World Trade Organization ruled against country of origin labeling again, he said, “I am disappointed in today’s ruling and will oppose efforts to fully repeal COOL. There are still several steps in the WTO process that must be met before any retaliation could go into effect so we should take the time to thoughtfully consider how to move forward.”
He was disappointed? Maybe, but I hope he wasn't surprised. The WTO has been consistent. The time to 'thoughtfully consider' how to move forward with COOL is long gone. It should have been done shortly after losing the first decision, certainly after losing the second time. Retaliation could come as soon as mid-summer and, if we can't live up to our obligations, thoughtful consideration should be done now to determine how to handle a North American trade war.
When I interviewed North American Meat Institute CEO Barry Carpenter way back in January, he correctly defined COOL as a marketing decision. If a packer or processor thinks he can gain a sales advantage by labeling his beef or pork as "made in America," let him do it. If he can increase his market share and improve his bottom line, so be it. Forcing the industry to take on the added financial burden of correctly managing the rule is a waste of time and money.
In another of those immediate statements after the WTO decision, Carpenter was even more forceful. “If there ever was any question that mandatory country-of-origin labeling is a trade barrier that violates our international agreements, the World Trade Organization’s ruling against the United States today should lay those doubts to rest. The WTO has spoken not once, not twice, not three times, but four times in panel and appellate body decisions. All four rulings found against the US.”
R-CALF and the National Farmers Union insist that COOL is a way to satisfy consumer demand for more information about the sources of the foods they buy. Study after study, though, shows there is no compelling consumer demand that must be satisfied.
Now that the WTO has spoken for the fourth and last time, our trading partners are ready to stroll past Representative Peterson and take the next step permissible by treaty: punitive tariffs. The Canadian embassy in Washington, D.C. has published a list of targeted products which you can review, state-by-state, by going here: http://www.can-am.gc.ca/washington/events-evenements/2015/COOL-Labeling.aspx?lang=eng.
To save yourself a click or two, here is what a few of the most agriculture-intensive states stand to lose in their ag and agrifoods trade if Canada and Mexico impose tariffs:
Bottom Line: Congress should give it up. It's past time that we started to live up to our trade obligations and ditch even the slightest hint of COOL. Let those companies that want to use it as a marketing tool label at their discretion. Let the rest of the industry go about its business without losing business to punitive tariffs.