Is it really so bad that WTO ruled against U.S. in country-of-origin labeling dispute?

The World Trade Organization (WTO) today ruled in favor of Canada and Mexico, saying that U.S. country-of-origin labeling (COOL) rules violate our commitments in previous trade agreements.

The COOL rules in dispute required new labels on fresh beef, pork, and lamb, but not on processed foods such as hot dogs. The labels would say what country the product comes from. In some cases, the labels might have to be complex ("this cow was born in Canada, fed in the United States ...").

Many people who care about food policy from a public interest perspective will say the WTO ruling is terrible. For example, Food & Water Watch Executive Director Wenonah Hauter says today:

The WTO’s continued assault against commonsense food labels is just another example of how corporate-controlled trade policy undermines the basic protections that U.S. consumers deserve.

But let me ask, is the WTO ruling really so bad? I have two reasons for asking this question.

First, perhaps the WTO ruling has some merit.

Canada and Mexico claimed that the U.S. law was designed as a trade barrier, not merely as a consumer labeling provision. They pointed out that the tracking and record-keeping burdens fell more heavily on Canadian and Mexican producers than they did on seemingly similar U.S. producers. They also cast doubt on the consumer information merit of all this tracking and record-keeping, because so much of the meat was destined for processed food that never would carry a country-of-origin label anyway. If the U.S. asks Canada and Mexico to incur tracking and record-keeping costs, and then fails to share the resulting information with processed meat consumers anyway, it does look like maybe the whole point was just to create a burden for our trading partners.

It would be one thing if the United States simply never negotiated a trade agreement in the first place. But, it is another thing altogether if the United States does negotiate a trade agreement, saying we will reduce trade barriers in return for Canada and Mexico doing the same, but then we fail to do what we promised.

Second, from the perspective of Food & Water Watch and other trade-skeptical consumer groups, perhaps the consequences are not so terrible.

WTO critics claim such rulings violate U.S. sovereignty. For example, Lori Wallach, director of Public Citizen's Global Trade Watch says today:

Many Americans will be shocked that the WTO can order our government to deny U.S. consumers the basic information about where their food comes from and that if the information policy is not gutted, we could face millions in sanctions every year.

This is not true. The WTO cannot order our government to deny U.S. consumers such information. The WTO cannot rewrite U.S. laws. The U.S. can simply refuse to comply.

When the WTO rules against the United States, the only remedy the WTO has is the power to permit Canada and Mexico to put up trade barriers of their own, without these trade barriers being ruled non-compliant with the same trade agreements. In other words, the only power the WTO has is the power to state for the record, "fair is fair."

For example, if the U.S. chooses not to honor the WTO ruling, Canada has proposed a list of U.S. exports that may get new import tariffs at the Canadian border: corn, meat, apples, pasta, orange juice, and so forth.

The United States may honor its trade agreements, or we may fail to honor them. If we don't honor them, surely it is right to be good sports when Canada and Mexico establish new import tariffs.

On what grounds should Food & Water Watch or Public Citizen's Global Trade Watch complain about the WTO ruling? If it is fine for the United States to exercise our sovereignty, it is fine for others also. Far from griping about the WTO ruling, trade-skeptical public interest organizations could just tip their hat to the WTO, contemplate the consequences for reduced food trade, and declare, "all is well."

There is a good reason why they don't do so. Many Americans, especially in agricultural regions of the country, are glad for the business that trade brings in the form of increased export markets for our farmers. When we remember that Americans are food producers as well as consumers, the trade agreements begin to seem more sensible and the WTO begins to seem more reasonable.

Further information

Chapter 4 of Food Policy in the United States: An Introduction addresses trade issues. I do my best to make the case for a public-interest pro-trade perspective in a talk at Cornell University last fall (video here).