Report: Labeling Law for Beef, Pork Impedes Canada-U.S. Trade

Washington, D.C., June 13, 2012 –  Complicated U.S. food labeling mandates on beef and pork impede trade between the U.S. and Canada without providing any real benefit to consumers, a new report shows.  The report, co-published by the Fraser Institute in Canada and the Competitive Enterprise Institute, explains how Mandatory Country-of-Origin (MCOOL) labeling laws have resulted in a drastic reduction in meat exports to the U.S.

“Canadian cattle and hog exports to the United States have decreased by 42 and 25 per cent, respectively, since MCOOL went into force in 2009,” said Alexander Moens, Fraser Institute senior fellow and co-author of “MCOOL and the Politics of Country-of-Origin Labeling.”

“These excessive labeling requirements do not increase food safety or improve health standards for consumers. MCOOL is simply a trade barrier, a product of the ‘Buy American’ shift.”

The law, passed in 2002 but implemented in 2008, forces American retailers to inform consumers about the country of origin of various classes of meat products, including muscle cuts of beef, pork, and lamb. However, instead of a comparatively simple labeling requirement, the U.S. law uses four types of labels and requires detailed information on the origin of the animal and where it was raised, and the country in which it was slaughtered and processed must be determined, tracked, and recorded.  Compliance has proved difficult, because of the “integrated supply chain for many red meat products in which calves and pigs may be born in one country, raised in another, and slaughtered on either side of the border,” the report finds.

“The nature of modern meat production makes this labeling requirement very costly,” said Fred L. Smith, President of the Competitive Enterprise Institute.  “As often happens when special interests get special treatment, the real losers are consumers who must pay higher costs for what are termed ‘benefits’ but are of dubious validity.”

Smith noted that the World Trade Organization has already ruled against the U.S. in a dispute brought by Canada. The WTO found that the U.S. MCOOL labeling requirements were in violation of several of its obligations as a member of that trade body.  Canada, however, has little interest in retaliating against the U.S. and starting a trade war. As Smith states, “It would be in neither Canada’s nor America’s interest to further jeopardize our mutually beneficial trade in meat products.”

This paper instead advocates building upon the strong trade relationship between the two countries by establishing “mutual recognition” of their regulatory regimes for cattle, beef, and pork, instituting a label that would state “Produced in the US and Canada,” and the creation of a bi-national group that would work to ensure that any future standards or regulations were negotiated jointly. This approach would allow the cross-border supply chain to continue without the disruptions and costs that MCOOL has created. Importantly, it would provide the relevant information useful to consumers at lower costs.