Protectionist Denial and Bribery

The Democratic members of the House Committee on Natural Resources have sent President Obama (and the rest of us) a letter urging him not to water down dolphin-safe labeling requirements in response to a ruling by the WTO, which found that the law unjustifiably discriminates against the Mexican tuna industry.  The substance of the letter offers an excellent example of how NOT to respond to an adverse WTO ruling, and there are two particularly interesting parts that are worth a moment of analysis.

The next to last paragraph reads as follows:

When Congress approved the Uruguay Round Implementation Act, we never intended to allow non-discriminatory, voluntary labeling regimes like the dolphin-safe labels to be a subject of this type of trade dispute.  The voluntary labels represent the good faith effort of the U.S. to use less trade restrictive regulatory approaches.  The implication of the recent WTO ruling, in contrast, is that the US should expend significant regulatory resources around the globe in an untargeted fashion, or alternatively, that imports from Mexico could utilize dolphin safe labels without having to meet the same requirements as tuna caught by US or other nations’ fleets. Neither result is acceptable, and “complying” in either way simply invites further costly WTO litigation from other nations, not to mention serious disruption of the canned tuna market in the US and loss of consumer confidence in environmental laws and labels.

First off, the labeling regime IS discriminatory—that’s why it lost at the WTO—and the regime isn’t exactly voluntary considering that you can’t include information about dolphin safety on your label unless you meet the requirements of the law.  The concern for expending “significant  regulatory resources around the globe in an untargeted fashion” would normally be as laudable as it is uncharacteristic, but the targeting that exists under the current law results in a lot of concern for dolphins where the Mexican fleet operates and none where the U.S. fleet operates.

As far as consumer confidence is concerned, the real issue is that the current labels are controlled by a regulation that is misleading and protectionist.  As I have noted here and elsewhere, consumers don’t need labeling laws, whose only function is to restrict the flow of information, in order to make ethical purchasing decisions.  Examples abound of how informative labels can thrive and adapt in the free market, including this story about the meaning of fair trade coffee and a recent controversy surrounding once-kosher chocolate chips.

The most revealing part of the letter, however, is in the last paragraph when the representatives ask the President to bribe the Mexican government to go away.

If the Mexican government continues to pursue WTO action in this case, we ask that your administration reconsider the level of economic assistance Mexico receives from U.S. taxpayers.

This doesn’t seem very respectful of a dispute settlement process the U.S. has used on numerous occasions to challenge WTO-inconsistent measures like Europe’s aircraft subsidies, Korea’s beef restrictions, India’s chicken restrictions, China’s export quotas, China’s duties on chicken parts, China’s duties on steel, and China’s green energy subsidies, to name a few recent examples.  Criticizing the WTO judicial process as overreaching because it revealed the inadequacies of a favored piece of protectionist legislation and then threatening to abuse the process through petty sanctions does nothing to enable consumers to protect dolphins and makes it more difficult for the United States to mount effective challenges to foreign protectionism.