By Carol Keiser: Belleair, Florida
"Where’s the beef?" was a catchphrase in the 1980s.
"Where’s the beef from?" is a question for our own times--possibly an important one for consumers, but also one that was starting to do them a big disservice by becoming a job-killing, price-hiking tool of protectionism.
On June 29, the World Trade Organization handed down a final ruling in a dispute between the United States and Canada involving Country of Origin Labeling, also known as COOL. It said the United States can require labels that show the origin of certain food products, but that its existing COOL regulations amounted to an illegitimate trade barrier.
That’s because the rules were needlessly complicated--and so cumbersome for producers that Americans became reluctant to trade with Canadians. Between 2007 and 2011, U.S. cattle imports from Canada dropped by more than half and hog imports fell by more than 40 percent.
Canada is our most important trading partner. Last year, we exchanged almost $600 million in goods and services. By some accounts, about 8 million U.S. jobs depend on trade with our neighbors to the north.
So we should stay on good terms with the Canadians, looking for ways to cooperate rather than antagonize. Yet COOL regulations, imposed in 2009, devastated the Canadian meat industry. It hurt Americans as well, causing the price of our meat to inch up and threatening thousands of meat-processing jobs.
Over the last few decades, the United States and Canada have integrated their red-meat supply chains so closely, it became possible for calves and pigs to be born in one country, raised in another, and made to cross the border again for slaughter.
There are good reasons for so much movement, from local market conditions to the simple unpredictability of the weather. Just last month, we moved one group of cattle from drought-ridden Illinois to Kansas, where there’s more available feed to eat. Sometimes it makes sense to move cattle not across state lines but over the international border between the United States and Canada.
The new COOL rules, however, made it economically inefficient for animals to cross from Canada to the United States. "The law requires that livestock and meat products imported into the U.S. be segregated from domestic commodities throughout the product’s life cycle," write Alexander Moens and Amos Vivancos Leon in a recent report for the Fraser Institute. "This means that if a company that deals with domestic products chooses to import Canadian livestock, the Canadian livestock must be kept, slaughtered, processed, and packed separately from American products."
That’s a lot of paperwork. As a result, Canadian cattle and hogs became too expensive.
There is no health or safety reason for any of this. The motivation is almost entirely protectionist, meant to aid certain special interests at the expense of the greater good.
It’s also sneaky, because it doesn’t look like traditional trade protectionism. A recent issue of The Economist observes that this is a disturbing new trend in the developed world: "An increasingly popular method nowadays is to strangle traders not with high tariffs, which are easy to spot, but with red tape, which is not."
The WTO decision is a victory against red tape and for common sense. Ranchers will find it easier to move their herds. Consumers will see their meat prices drift down.
Going forward, we should pursue harmonization--a linking of rules and regulations that makes it easier for goods and services to cross borders. Imagine binational safety and inspection standards, possibly leading to a COOL-compliant label that says, "Product of the USA and Canada." One day, the system might even include Mexico, with a label that says, "Product of North America."
This may not be appropriate for every area of the economy, but it definitely would work well in mine.
Last December, President Obama and Canadian Prime Minister Stephen Harper took a step in the right direction, with a joint declaration called "Beyond the Border" that calls for more economic integration.
Now they need to make good on its promise. Our leaders need to show us the beef.
Carol Keiser owns and operates cattle feeding operations in Kansas, Nebraska and Illinois. She volunteers as a Truth About Trade & Technology board member. www.truthabouttrade.org