After more than a decade of wrangling and a proven legacy of failure, Congress has a chance to finally ‘fix’ Country of Origin Labeling — by killing it once and for all.
The World Trade Organization ruled on Monday that Country of Origin labels on red meat cuts put Canadian and Mexican livestock producers at a disadvantage, rejecting a U.S. appeal after a similar WTO decision last year. The current labels that appear on packages of certain whole-muscle cuts of beef and pork state where the livestock were born, raised and slaughtered.
As the Associated Press reported, the administration already revised the labels once to comply with previous WTO rulings in favor of Canada and Mexico, but now USDA Secretary Tom Vilsack is saying says Congress will have to amend COOL to avoid the imposition of additional tariffs on U.S. products that Canada and Mexico could impose.
The two countries said they would seek authorization from the WTO to take retaliatory measures against U.S. exports.
“Congress has got to fix this problem,” Vilsack told AP after the WTO decision. “They either have to repeal [Country of Origin Labeling] or modify and amend it.”
Canada and Mexico denounced the law, saying it unfairly discriminates against their exports of beef and pork. Canada’s international trade minister, Ed Fast, said Ottawa would consider retaliatory measures if the United States does not repeal the law.
“The WTO has confirmed once again what we have known all along: that the United States’ mandatory COOL requirement for beef and pork is a blatant breach of its international obligations as a member of the WTO,” Fast said in a joint statement with Mexico’s secretary of the economy, Ildefonso Guajardo Villarreal, and secretary of agriculture, Enrique Martinez y Martinez.
The Canadian-Mexican joint statement explained that the rules cause Canadian and Mexican livestock and meat to be segregated from those of U.S. origin — a costly process that has resulted some U.S. companies to stop buying exports. According to the official statement the labeling is “damaging to North America’s supply chain and is harmful to producers and processors in all three countries.”
I’ve been saying the same thing for 10 years now.
An epic failure
COOL has failed miserably — and caused all kinds of economic pain and commercial disruption along the way — because it was based on two erroneous assumptions. The first is that slapping a “Made in USA” sticker on a package of ground beef would give U.S. producers a big advantage in the marketplace, driving up demand for American meat and putting a premium into the pockets of independent ranchers and producers.
That simplistic accounting ignored the reality that even in 2003, when COOL was first proposed, the North American industry had become highly integrated, and not just because the bigger packers were able to manipulate supply and demand. It made sense economically for Canada, where land and energy is cheaper, to run breeding operations, for example, then ship piglets and calves for finishing down south where feed supplies are more plentiful and less expensive.
It’s called synergy, and it’s a business phenomenon rare enough that when it actually exists, it’s utterly foolish for regulators to put up roadblocks to stunt its development.
The second false assumption made by the proponents of COOL was that consumers would actually care about knowing where livestock originated — at least enough to fork over more money for the information.
Early polling a decade ago seemed to show strong support for COOL, based on the same “right-to-know” premise that underlies the majority support for mandatory GMO labeling. But those were “soft” numbers, based on responses to a throwaway question where there’s no downside to saying, “Hell yes, I want COOL labeling on my meat.”
More sophisticated research, which mimicked the supermarket environment and blindly tested consumer reactions to non-labeled and COOL-labeled packages — the latter reflecting a higher price point to cover the added costs involved in tracking, segregating and labeling products — revealed that only a small minority of consumers were willing to pay the premium.
And we already know that only about a third of shoppers actually read food labels anyway, so that doesn’t leave much of a market for higher priced products whose only point of difference is a sticker most people don’t even notice or care about.
Tim Reif, chief counsel for the U.S. Trade Representative, said the Obama administration would consider “all options going forward,” and would continue to consult with Congress and the public regarding next steps.
Here’s your next step: Repeal the law. It hasn’t worked and it won’t work “going forward,” no matter what options are considered.
There is already a bill introduced by Rep. Rick Crawford (R-Ark.), a member of the House Agriculture Committee, to repeal the law. In the Senate, Sen. Pat Roberts (R-Kan.) said he would sponsor a companion bill.
The National Farmers Union, which has supported Country of Origin labeling all along, argued that “negotiations would be better than congressional intervention.”
“WTO members often work together to find a solution,” said Roger Johnson, NFU president.
And in this case, the solution is simple: A quick and painless demise.
Dan Murphy is a food-industry journalist and commentator