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OpenMarket: November 2013

  • COOL Protectionism Still a Hot Issue

    November 27, 2013 2:38 PM

    A protectionist meat labeling rule requires complicated labeling of beef, pork and poultry to indicate where the animals were born, raised, and slaughtered. Called country-of-origin labeling or COOL, the U.S. Department of Agriculture labeling scheme means that cattle from Canada moved to the U.S. for slaughtering, for example, will have to be tracked, segregated, and recorded to show that the meat is from cattle “Born in Canada, raised in Canada, and slaughtered in the U.S.” Meat products from animals born, raised, and slaughtered in the U.S. would have labels indicating that.


    The rule particularly affects major U.S. trading partners, Canada and Mexico, which are part of an increasingly integrated system of meat production for those three countries. But the rule also hits domestic meat processors and retailers with higher costs of a tracking and record-keeping system from birth through raising, then through the meat processing and distribution systems.


    The original COOL rule was part of the 2008 U.S. farm bill. It mandated that the “Made in America” label could only be used for meat products from animals that had been born, raised, and harvested in the U.S.  However, Canada and Mexico in 2009 brought a complaint to the World Trade Organization that the rule discriminated against those two countries and was a violation of the WTO rule on Technical Barriers to Trade. The WTO ruled in 2012 against the U.S. and determined that the COOL label requirements had a “detrimental impact on imported livestock because its record-keeping and verification requirements create an incentive for processors to use exclusively domestic livestock.” The WTO said the rule had to be rewritten to be compliant.


    The revised USDA rule first went into effect in May 23, 2013, with the USDA allowing an extension to November 23, 2013. But its requirements for major trade partner Canada has led two Canadian government ministers to call for another WTO review to ascertain whether the revised rule is compliant and to publish a list of possible retaliatory measures against a wide range of imports from the U.S. In a statement accompanying the listing, the two ministers wrote:


    Despite consistent rulings by the World Trade Organization, the U.S. government continues its unfair trade practices, which are severely damaging to Canadian industry and jobs.


    Our government is extremely disappointed that the United States continues to uphold this protectionist policy, which the WTO has ruled to be unfair, and we call on the United States to abide by the WTO ruling.


    We are preparing to launch the next phase of the WTO dispute settlement process on the new U.S. rule, which we had hoped to avoid by the United States living up to its trade obligations.


    The Canadian government, with the full support and active engagement of Canadian industry, has fought against this unfair treatment, which is also hurting U.S. industry and consumers.


  • CEI Podcast for November 27, 2013: Toxic Turkey Day?

    November 27, 2013 12:08 PM

    Senior Fellow Angela Logomasini debunks scare stories about chemicals in your family's Thanksgiving dinner, from BPA in canned foods to naturally occurring pesticides in potatoes.


  • Disregard Toxic Advice on Turkey Day

    November 25, 2013 5:08 PM

    thanksgiving-dinnerplate Toxic chemicals lurk in the "typical" Thanksgiving meal, warns a green activist website. Eat organic, avoid canned food, and you might be okay, according to their advice. Fortunately, there's no need to buy this line. In fact, the trace levels of man-made chemicals found in these foods warrant no concern and are no different from trace chemicals that appear in food naturally.


    The American Council on Science and Health (ACSH) illustrates this reality best with their Holiday Dinner Menu, which outlines all the "toxic" chemicals found naturally in food.  The point is, at such low levels, both the man-made and naturally occurring chemicals pose little risk. This year the ACSH puts the issue in perspective explaining:


    Toxicologists have confirmed that food naturally contains a myriad of chemicals traditionally thought of as “poisons.” Potatoes contain solanine, arsenic, and chaconine. Lima beans contain hydrogen cyanide, a classic suicide substance. Carrots contain carototoxin, a nerve poison. And nutmeg, black pepper, and carrots all contain the hallucinogenic compound myristicin. Moreover, all chemicals, whether natural or synthetic, are potential toxicants at high doses but are perfectly safe when consumed in low doses."


    Watch ACSH's video on this topic here.


  • Cataloging Washington's Hidden Costs, Part 3: The Costs of Regulatory Benefits

    November 25, 2013 11:22 AM

    In the first installment of "Cataloging Washington's Hidden Costs," the topic was loss of liberty; in Part 2, unmeasured economic costs. Regulators assume their regulations create net benefits; here I note that those benefits may really be costs.


    Governmental decisions, not just private action, can adversely impact health and safety. The ways risks are best identified, prioritized and society made safer and healthier have not all been discovered by beltway residents. The means to address them all do not necessarily lie within government’s ambit.


    The nanny state that believes otherwise is sometimes explicit; other times, it seeks to “nudge” us toward ends that it sees fit. For our own good, of course.


    Benefits are best seen as forms of wealth. When “regulation” as a phenomenon removes values like risk reduction, or privacy, or cybersecurity, or safety from the competitive pressures required to advance them, agencies undermine the actual "regulation" that needs to take place in society.


    Often what government calls a benefit is not one. For example. Denial of choice on energy efficiency is a cost not a benefit. Such compulsion is a negative, a denial of options. When this happens, regulators are imposing costs.


    Complex technologies also require that private risk-management institutions like insurance and liability emerge alongside the innovation itself (consider nuclear energy, homeland security, nanotechnology, biotechnology, financial instruments, cybersecurity).


    Government now preempts this needed private risk management in almost every respect, from flood insurance on wealthy seashores to too-big-to-fail financial institutions, to ordinary health care.


  • CEI’s Battered Business Bureau: The Week in Regulation

    November 25, 2013 9:22 AM

    60 new regulations, from salamanders to beans from Jordan.


  • Senate Abolishes Filibuster, With Potentially Profound Implications for the Rule of Law

    November 22, 2013 1:34 PM

    Yesterday, the Senate voted 52-48 to effectively abolish the filibuster for nominations to federal offices, such as federal appeals courts and trial courts, and cabinet departments. It used a tactic Senate Democrats once insisted violated Senate rules. As Reason Magazine notes, "The Senate struck down a rule requiring 60 votes to cut off a filibuster of an appeals court judicial nominations, voting 52-48 along party lines to disregard it, effectively overturning more than 200 years of Senate precedent, not only on the judicial filibuster, as the Washington Post notes, but by moving to change the chamber’s rules without the traditional two-thirds majority in support, something previously done only to alter relatively minor rules. It’s rules all the way down."


    (University of Chicago law professor Will Baude says that, technically, the Senate voted to ignore the current filibuster rule," rather than “change it," since it was procedurally barred from changing the rule. He says it did so because a "vote to actually change the rule would also have been in contradiction to Senate Rule V, which requires 'one day’s notice in writing, specifying precisely the rule or part proposed to be suspended, modified, or amended, and the purpose thereof.'" That, he says, "may be relevant to the constitutionality of what the majority did," although it is "extremely unlikely" that the courts would accept jurisdiction over such a politically thorny constitutional challenge.)


  • CEI Podcast for November 22, 2013: Daniel Hannan on Inventing Freedom

    November 22, 2013 11:41 AM

    Daniel Hannan is a member of the European Parliament, representing South East England. He discusses his latest book, Inventing Freedom: How the English-Speaking Peoples Made the Modern World.


  • I, iPad – Sir Jonathan Ive and Leonard Read Sing the Same Tune

    November 21, 2013 6:28 PM

    Apple recently released an ad for the new iPad Air that -- whether intentionally or not -- mimics CEI’s I, Pencil short film. In the new ad, a pencil sits on a table as the narrator describes the many purposes of this simple machine. At the end of the 1:03 ad, the pencil lifts to reveal an iPad Air that’s been hiding behind the slim writing tool.


    Hark, Leonard Read fans! Take heart, disillusioned entrepreneurs! The iPad is a wonder of capitalism just like the pencil. And contrasting a pencil – seemingly simple, but used far less in our digital age – with an iPad reminds us that the collaboration that made possible the manufacture of old tools still works the same way today.


    An iPad and a pencil aren’t that different, after all. As the ad notes, both can “start a poem or finish a symphony;” both are “extremely simple and yet extremely powerful.” And just as importantly, the process of making each of these items hinges on the expertise of many parties, working independently of one another to advance their own interests.


    With our I, Pencil short film recently winning the first Reason Video Prize, this pencil ad holds special value to us here at CEI. Hopefully, it will encourage all who enjoy Apple products to also consider the beauty and wonder in uninhibited creative energies.


    Another ad on Apple’s website offers an expansive, beautiful montage of all the daring, innovative activities people around the world are doing with the iPad’s help. Yet another shows Apple’s design team raving about the device’s lighter design and longer battery life. One man describes the A7 power chip in the Air as “rigid but nothing precious about it.” But that could be said of any product. There’s “nothing precious” about anything until people find it useful. By that standard, a pencil and an iPad are both very valuable indeed.


  • Taxpayer-Funded Propaganda to Show the "Evils" of Private Alcohol Sales

    November 21, 2013 5:45 PM

    As if there wasn’t enough money in politics, now government agencies are using taxpayer dollars—our dollars—in an attempt to influence state policy. The National Institutes of Health (NIH) has awarded The Public Health Institute’s Alcohol Research Group almost $650,000 a year for five years to research the effects that alcohol privatization in Washington State has had on prices and alcohol-related harms. At first glance, it may seem like a perfectly appropriate research topic for the NIH to support, but the details make one wonder whether the motives for such research are scientific curiosity or pure politics.


    The organization that received the grant and its scientists have a long history of producing anti-alcohol-biased research. Dr. William Kerr, the lead on the project, has written and spoken many times in the past about his firm stance against the privatization of alcohol sales which he believes directly results in increased drinking and costs to the state. He received funding from the National Alcohol Beverage Control Association, an organization with the sole purpose of defending control state systems, to produce a study warning states of the dangers of privatization. In all likelihood, the conclusion of this forthcoming study will communicate a similar attitude.


    Why would NIH award millions of taxpayer dollars to fund a study by a researcher with such an obvious bias? The answer is that NIH wants a study to show the evils of privatization that it can then show to any lawmaker considering privatization in his or her own state. Not only is this a waste of taxpayer money, but this government propaganda makes it harder for real stakeholders in the debate, such as citizens and businesses, to make their case for less government.


    Results of Privatization


    In November 2011, voters in Washington State approved Initiative 1183 officially ending the state monopoly on the sale of spirits. Since then, health advocates, retailers, and employee unions have waged a PR war, attempting to spin the story about the aftereffects of privatization, either to convince other control states (those states that have government-run liquor stores) to follow suit or to send them running from the very idea of loosening state control over liquor sales. According to the Reason Foundation's Leonard Gilroy:


    Robust competition is starting to take place among national retail chains, which tend to focus on offering few brands at more competitive prices (due to volume purchasing), while smaller specialty spirits retailers are emerging to offer competition through more variety in product mixes and greater attention to customer service and offering a high-quality retail experience. Perhaps more importantly, the fears promulgated by privatization opponents—primarily over the potential declines in state liquor revenues and significant negative effects on public health and safety—have not materialized.


    And according to the Washington Policy Center, alcohol-related crimes have even declined since privatization in Washington. Of course, the facts have not deterred public health advocates from spinning a yard about the dangerous of getting the state out of the business of selling liquor.


    Of course, that won’t stop organizations like ARG and others from pushing the idea that liquor privatization is unequivocally bad for society.


  • Can the Government Regulate Bitcoins?

    November 21, 2013 5:36 PM

    Bitcoins themselves cannot be regulated under current law, at least not directly. But certain activities involving bitcoins can be regulated. This came out in a recent hearing held by the Senate Committee on Homeland Security and Governmental Affairs focused on the necessity and ability for the federal government to regulate virtual currencies, such as bitcoin. The first panel repeatedly claimed that under current law virtual currencies were already sufficiently regulated.


    Under Article 1, Section 8 of the U.S. Constitution, Congress is granted the power “[to] coin money, regulate the value thereof, and of foreign coin, and fix the standard of weights and measures.” Bitcoins are not created by the federal government but through data processing within a network of computers. Thus, bitcoins are very much like a foreign currency and remain outside of U.S. jurisdiction as far as valuation or creation. This sentiment was echoed in a letter by current Federal Reserve Chairman Ben Bernanke on the virtual currency.


    However, when recognized as a currency, there are conditions under which bitcoins, and other digital currencies can find themselves subject to regulation.

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