It’s Cowboys vs. Packers in the Game of Politics, and the Price of Beef Is at Stake

An effort is underway at the Department of Agriculture to reform the federal government’s mandatory country-of-origin labeling rules for beef.  The current scheme was successfully challenged by Canada and Mexico as a violation of WTO obligations prohibiting protectionist regulatory discrimination.  If the United States does not bring its law into compliance, Mexico and Canada will have the option of raising tariffs on U.S. goods in retaliation.

The supposed purpose of mandatory origin labels is to improve food safety by providing consumers with information.  How does the country of origin of the cattle impact food safety?  I surely do not know.  If consumers want this information, why is a law needed to compel businesses to provide it?  I don’t know that either.

The actual purpose of the law is to prevent Canadian cattle raisers from competing with American cattle raisers.  The labeling scheme accomplishes this not by informing consumers that their beef is made from cattle that ate grass north of the 49th parallel, but by imposing on downstream processors the expense of keeping track of the cattle’s historical whereabouts.  The meat packers can avoid this expense by purchasing only purely U.S. origin cattle.    The price of American cattle goes up accordingly.

The extent of any reforms made this year will tell us how much the WTO ruling affected the balance of political power within the cow-to-hamburger value chain.  The law’s existence is evidence that cattle raisers currently have more influence in Washington than meat packers, but the WTO ruling has already made a difference simply by prompting the initiation of a reform effort.  The possibility of retaliation by Canada and Mexico spreads the negative consequences of the law to other politically relevant U.S. industries with a stake in North American trade.  These industries will not sit idly by while their own businesses suffer in the name of expensive beef.  

Let the lobbying begin!