WTO Ruling Against Country of Origin Labeling Causes Spike in Beef Imports

by Michael Stumo

A spike in beef imports has occurred, but consumers are unaware because a global tribunal said last December that we can't be told where our food comes from.

You may be surprised to hear that US farmers and ranchers are harmed by trade agreements. I can understand if you believe the opposite. The media, the US Department of Agriculture and large agriculture associations (funded by the transnational food import lobby) say that farmers and ranchers want trade deals to export to the 95% of consumers that live outside the US. Those soothing words are said to lure you into believing falsehoods.

Fact 1: The US consumer market is the primary - indeed, almost exclusive - market for farmers and ranchers.  Farmers and ranchers sell their livestock, grains and produce to buyers in the US. Those buyers are sale barns, packing plants, cooperative elevators and grain terminals or specialty crop packers in the 50 states. Farmers and ranchers do not sell to overseas buyers, non-farm agri-businesses do that.

Fact 2: The biggest single market for food and fiber products is the US. Politicians may say that 95% of consumers live outside the US but those people are not "consumers" in the sense that they have the money or ability to buy our products. Also, many of those countries have food self sufficiency objectives. And, of course, the US is not the only source of food and fiber products... they can buy from many sources if they do buy.

Fact 3: Our ag trade performance is better among countries with which we have no trade agreements.  Trade deals cause more imports to the US than exports in terms of "primary agriculture", i.e. products that farmers grow.  Census data clearly show that we are a net importer of primary agriculture products among trade agreement countries. But we are a net exporter to the rest of the world.  Here is a quick chart showing this below (data in millions USD).

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Fact 4: The US is a net importer of live cattle and beef, not a net exporter.  In fact, the US cattle herd is the smallest it has been in over 50 years. Yet the US population has grown and so has its beef consumption. Imports have taken much of that growth and we have not captured the exports.

Fact 5: There has been a spike of beef imports recently, enabled by the World Trade Organization ruling against our country of origin labeling (COOL) law. Consumers want to know the source of their food. Congress passed the COOL law, as a result, in 2002. But the WTO last December disregarded the US democratic system ruling that COOL was inconsistent with international trade rules. Agricultural economists Daryll Ray and Harwood Schaffer (Univ. of TN) said that there has been a spike in beef imports (especially from Canada, Mexico and Australia) and that the WTO ruling is a contributing factor.

US beef imports increased from $3.2 billion in 1992 to $5.7 billion in 2013, an average of $113 million a year....

So why have imports surged these last few years? The increase has occurred within the context of the dispute Canada and Mexico had filed with the World Trade Organization (WTO) over the US Country of Origin Labeling (COOL) laws. COOL was also opposed by the US meatpacking industry, which argued that it would be very costly to implement.

In May 2013, the US had amended the COOL regulations in response to an adverse ruling by the WTO. The new regulations included changes, which Canada argued were more onerous than the earlier regulations. In March 2014, the WTO established a compliance panel to review the matter and many in the meatpacking industry expected the ruling to go against the US.

With COOL nearly in the rearview mirror, one explanation, or least contributing factor, for the surge in US beef imports could be that the packers felt free to import beef from the least expensive source without fear that increased imports would undermine their arguments against COOL.

Fact 6: This problem for the US cattle industry will get worse as the USDA, last year, made the controversial decision to allow imports of beef from Brazil and Argentine despite the incidence of the highly contagious foot and mouth disease in their cattle herds.

The upshot is that actual farmers and ranchers are generally harmed by trade deals. When you hear otherwise, listen to two things: (1) are they only talking about exports rather than imports; and (2) is the speaker representing, or funded by, the food processing industry rather than actual agricultural producers. 

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