Nobody ever wins a trade war, but the protectionists always want to try.
Their latest act of stubbornness will force American consumers to pay more at the grocery store and make it harder for American farmers to export what they grow—unless the federal government at last corrects a mistake that it keeps on making.
For the third time in three years, the World Trade Organization has ruled against country-of-origin labeling (COOL). It said that although the United States may permit these labels in principle, the U.S. Department of Agriculture’s rules in practice have unfairly blocked Canadian and Mexican products from the American market.
This is no surprise: Ranchers like me have been saying as much for years. Although we support voluntary labeling, we oppose labels that create artificial barriers to trade.
The problem—if you insist on calling it one—is that the North American meat industry has become incredibly efficient. We’re moving cattle all the time, from their birthplaces to the pastures where they grow to the feedlots where they fatten. This benefits consumers because it allows for specialization and economies of scale.
Sometimes cattle cross our borders with Canada or Mexico. A calf may be born in Montana, for example, then raised in Alberta, and finally packed in Nebraska.
When this happens, it’s all about efficiency. Intense competition helps keep prices in check for consumers.
In 2008, Congress mandated country-of-origin labels. The implementation proved difficult, however, and a set of complicated rules forced producers to focus on paperwork rather than food. Suddenly, we had to segregate herds and build special warehousing capacities, all at great cost.
None of this had anything to do with the health and safety of people or animals—and everything to do with obstructing trade. Consumers never demanded the rules, and few of them have bothered to squint at the tiny print on packages that explain where the livestock that produced their meat was born, raised, and slaughtered.
The real agenda of COOL was protectionism: To drive up the costs of trading across borders. That’s why Canada and Mexico complained to the WTO about unfair trade practices
I’m a patriotic American, but I have to say this—Canada and Mexico were in the right and we were in the wrong.
The WTO agreed with Canada and Mexico in 2011. The United States appealed the ruling—and lost again in 2012. So USDA revised its labeling requirements in 2013, but made them even worse. Canada and Mexico continued to object. Last week, the WTO favored them once more.
Three strikes and you’re out.
If Washington refuses to reform, Canada and Mexico will retaliate with a series of punitive tariffs on billions of dollars’ worth of goods produced or grown in the U.S., putting jobs at risk. They could sanction everything from cheese produced in Colorado to auto parts made in Michigan to potatoes grown in Oregon, with the purpose of delivering big blows to American exports. And they can do this with the full blessing of the WTO.
The solution is simple: The White House should abandon any plans it may have to appeal the ruling, which would merely put off an inevitable reckoning and continue to embarrass us on the international stage. Meanwhile, Congress should repeal the law that got us in this mess in the first place. However hard it might be to accomplish politically, upholding and honoring our trade obligations is the right thing to do. At a minimum, Congress should pass legislation that would authorize and direct U.S. Secretary of Ag Vilsack to rescind the pieces of COOL that are not compliant with our WTO trade obligations.
The shame of this dispute is that the WTO has been a tremendous ally to U.S. commerce in general and to American agriculture in particular. In other rulings, it has opened foreign markets to our exports, allowing us to sell goods and services to customers in other countries. An important case in point is our conflict with the European Union: The WTO has helped us sell American products to Europeans, despite the best efforts of protectionists to exclude them.
In the field of global trade, the United States should set an example for other nations to follow, not play the part of free-trade hypocrite. This is especially true as the Obama administration tries to strike ambitious trade agreements with Europe and the Pacific Rim nations.
The alternative to righteous support of free trade is a never-ending trade war that American consumers and exporters lose, over and over again.
Hope Pjesky and her family are farmers / ranchers in northern Oklahoma where they raise cattle and wheat. Hope volunteers as a board member for Truth About Trade & Technology (www.truthabouttrade.org).