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Posted June 6, 2012

North American Economy

Labeling Law for Beef and Pork Impeding Canada-U.S. Trade While Providing No Consumer Benefits

VANCOUVER, BRITISH COLUMBIA - A simplified "Product of Canada and the USA" labeling system should apply to beef and pork as well as livestock raised, processed, and traded between Canada and the United States, recommends a new study released today by the Fraser Institute, Canada's leading public policy think-tank, and the Competitive Enterprise Institute of Washington, DC.

The study found that regulatory differences in North America's integrated supply chain for red meat are costly and unnecessary. In particular, the Mandatory Country-of-Original Labeling (MCOOL) law in the United States imposes substantial costs on producers by requiring beef and pork products to be labeled according to the origin of the animal, where it was raised, and the country in which it was slaughtered and processed.

"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 standard for consumers. MCOOL is simply a trade barrier, a product of the 'Buy American' shift."

Over the past several decades, Canada and the United States (as well as Mexico) have developed an 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. In 2011, Canada-U.S. trade in agriculture was worth more than $38 billion US, $4.1 billion of which came from hogs and cattle, and pork and beef products.

"The nature of modern meat production makes this labeling requirement very costly. 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," said Fred L. Smith, Competitive Enterprise Institute president.

Despite nearly identical standards and regulations for red meat processing in both countries, MCOOL imposes a tracking, segregating, and recording system that increases production costs. American producers are now avoiding the onerous and expensive labeling requirements by choosing 100-per-cent U.S. products. The resulting drop in trade puts thousands of Canadian jobs in the livestock industry at risk, and many American processors and packers are faced with a lack of supply.

To boost trade between the two countries, the report recommends the creation of a single regulatory area by:

-- Implementing bi-national food and animal safety standards for beef and

-- Installing a bi-national inspection regime on both sides of the border
at various stages of the production process, including in slaughtering
and processing plants;

-- Blending or harmonizing meat grades designations;

-- Adopting a single, bi-national country-of-origin label, specifically
"Product of the USA and Canada"; and,

-- Removing all border inspections.

"Regulatory cooperation would create a single red meat regime in which both Canadian and American products can be priced according to their quality and in which the origin of the animals is irrelevant," Moens said.

"This would benefit consumers through lower prices, help keep beef and pork competitive among increasing food choices, and also make North American meat more competitive in the global market."

Added Smith: "Free trade is one of the basic means of ensuring a pro-consumer competitive economy. If the United States treats its closest neighbor and trade partner in this way, what grounds can we have for urging the rest of the world to eschew protectionism and embrace free trade as a governing principle?"

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