Thursday, December 08, 2011

 

What's The Beef?



By Henry Curtis

In December 2008 Canada and Mexico submitted independent concerns about U.S. Country Of Origin Labelling (COOL) Requirements for beef products.

On November 18, 2011 the World Trade Organization (WTO) ruled against the  U.S. based on the Agreement on Technical Barriers to Trade (TBT, 1994)

A review of the WTO record (432 pages, 200,000+ words)  reveals that the ruling in not on whether Country Of Origin Labelling violates WTO but instead whether the U.S. COOL laws comply with internationally accepted WTO standards for Country Of Origin Labelling.

First I will reduce the 200,000 word WTO record to less than 900 words, and then discuss the problem with the US laws.

WTO Dispute Settlement Body

The claims brought by Canada and Mexico concern the United States' country of origin labelling (COOL) requirements for meat products. ...

Specifically, Canada argues that the United States has not explained why the information provided by the COOL measure is important for consumers to have or why consumers need that information. Canada considers that there are some potential purposes for providing information to consumers that are, or could be, legitimate when the objective is sufficiently specific, such as to allow consumers to make decisions and choices based on food safety or environmental protection considerations, objectives closely linked to the listed objectives. ...

The United States points out that nearly 70 other WTO Members maintain some form of mandatory country of origin labelling for food and other products intended for human consumption. Many of these mandatory labelling systems apply to food products at the retail level. According to the United States, among the WTO Members with mandatory labelling systems, many explicitly identified consumer information as the objective of their labelling requirements in their TBT notifications. The United States also notes that many other WTO Members have also indicated that their mandatory country of origin labelling requirements for food products were adopted to prevent deceptive practices or prevent consumers from being misled or confused. The United States considers that to conclude that consumer information and preventing consumer confusion are not legitimate objectives would suggest that none of these regimes was adopted to achieve a legitimate objective. ...

We have reviewed examples of the mandatory labelling requirements maintained by the complainants and by third parties to this dispute. We observe that many of these labelling requirements purport to provide consumer information on origin of food products. This suggests that consumer information on country of origin is considered by a considerable proportion of the WTO Membership to be a legitimate objective under the TBT Agreement. ...

The reference to protection of consumers ... suggests to us that objectives relating to consumer information or consumer protection can in principle constitute a legitimate objective under the WTO covered agreements. ...
There is a basic agreement among the parties that consumer information concerning country of origin can constitute a legitimate objective. At the same time, the complainants underline that its legitimacy should be determined based on the factual circumstances of each case. ...

Clearly, if consumers know the country of origin, they will be able to make informed choices with respect to origin of products, including meat. Some consumers may indeed have preferences for products produced by or originating in particular countries for a variety of reasons. ...

We are persuaded, based on the evidence before us regarding US consumer preferences as well as the practice in a considerable proportion of WTO Members, that consumers generally are interested in having information on the origin of the products they purchase. We also observe that many WTO Members have responded to that interest by putting measures in place to require the provision of such information, albeit with different definitions of "origin". ...

In our view, whether an objective is legitimate cannot be determined in a vacuum, but must be assessed in the context of the world in which we live. Social norms must be accorded due weight in considering whether a particular objective pursued by a government can be considered legitimate. It seems to us, based on the evidence before us, that providing consumers with information on the origin of the products they purchase is in keeping with the requirements of current social norms in a considerable part of the WTO Membership. ...

In light of the foregoing, we conclude that providing consumer information on origin is a legitimate objective. ...

The complainants argue that the United States limited the product scope of the COOL measure to US products threatened by foreign competition. The complainants highlight the fact that various products that are produced in the United States, but that face little or no competition, are not subject to the COOL measure. ...

We are not persuaded by the complainants' arguments. We consider that merely because the COOL measure does not apply to all food products and all relevant entities does not necessarily mean that the measure is designed for a protectionist purpose.  ...

Our assessment of the COOL measure, based on its text, and design and structure, is that its objective is consumer information on origin as declared by the United States. ...

The parties do not dispute that information on the origin of products must be clear and accurate for it to be able to convey meaningful information to consumers. ...

Under a labelling regime adopted for this purpose, the fulfilment of this objective will depend on the capability of labels to convey clear and accurate information on origin. To determine whether clear and accurate country of origin information of meat products is conveyed to consumers under the COOL measure, we must examine how the specific labelling scheme under the COOL measure, particularly the content and categorization of different categories of labels, is set out in the measure itself. ...

The complainants argue that country of origin labels under the COOL measure can provide consumers with inaccurate or misleading information. ...


Overall, the mandatory labelling scheme under the COOL measure falls short of providing consumers with information on the country of origin of meat products in an accurate and clear manner.”


Analysis

The average consumer probably does not understand the difference between labels which state “product of Country X, the US” (Label B) and "product of Country X, the US" (Label C).

Label A: no foreign element

Label B: ("product of the US, Country X") born in Country X, and raised & slaughtered in US

Label C: ("product of Country X, the US") born/raised in Country X, imported for immediate slaughter

Label D: no domestic element.

Exceptions

Label A includes born and raised in Alaska or Hawaii, with a maximum of 60 days through Canada to US for slaughter

Label B and C include meat that is in fact qualify for Label A (born, raised and slaughtered in US), but the producer saved time and money not verifying it, and instead used Label B or C because: (1) animals co-mingled when slaughtered, (2) meats co-mingled during processing, or (3) some of the producers meats did involved another country, but historically so far back as to be certain that it did not involve this particular meat.

Thus consumers would not be able to learn about the origin of the meat and the regulations only serve as a barrier to trade.

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