Recently, the Fraser Institute, a think-tank based in Vancouver, published a research paper on the American Country of Origin Labelling legislation (COOL — also known as MCOOL, an amended version). The paper thoroughly dissected its history, its implementation and finally the consequences.
The paper also did a forthright analysis of the political motives for the legislation.
Clearly, the COOL legislation hasn’t worked —— a classic lose-lose proposition, thanks to politicians’ never-ending fascination with trying to control the free market. It’s also a classic example of politicians trying to curry favour with gullible voters.
The report noted that, prior to the BSE crisis, the North American cattle, pig, beef and pork industries were well on their way to creating a North American meat supply chain that functioned according to supply and demand.
The process has developed over the past 120 years. The only times it was derailed was when U.S. government protectionist legislation was forced on the industry. COOL was just a reincarnation of similar legislation that was in place in the U.S. in the 1920s and 1930s.
In both cases, the idea is that if we shut out imports, our domestic producers will thrive because buyers will be forced to pay higher prices. That works in theory, and perhaps for some commodities — it doesn’t work in livestock due to the nature of the beast.
You would think common sense might rule in this matter, but in trade, nothing is ever logical.
The Fraser report gives credit to the notorious RCALF group and its allies in having the political and lobbying smarts to fool both American congressmen and consumers. They managed to insinuate that COOL was a food-safety issue (which it was not), but that was enough to fool naive politicians and consumers.
Then they added patriotism to the issue — that proved irresistible to vote-hungry politicians. Then there was a fortunate change in the U.S. government and COOL was implemented. The former Bush administration was opposed to COOL and managed to veto, delay and derail its implementation for almost eight years.
Canada successfully challenged COOL at the WTO. The Canadians won, but the U.S., as expected, appealed and has other delaying tactics that can thwart a ruling for years.
Besides, Canada is not a big fan of trade retaliation. The report recognized that political and trade reality and recommends a different approach to bring some resolution to this long-simmering issue.
The authors of the report recommend that the governments of Canada and the U.S. begin talks to create a made, grown and produced in North America designation for beef and pork products produced in either country.
They correctly contend that such a label would drastically reduce the cost of present compliance and segregation of livestock and meat products. That could make both beef and pork less expensive for consumers — and that’s where this makes the most sense.
In the original run-up to the COOL idea, it was shown through surveys that American consumers preferred to buy American. However, what was left out of that patriotic perspective was how much consumers were willing to pay for a patriotic label — not much, as it turns out.
Processors, marketers and retailers have discovered that the fickle consumer is a lot more willing to pay for quality branding like Angus or Sterling beef than for a country of origin label that says nothing about quality.
The “Made in North America” label, as suggested by the Fraser Institute study, would take the non-issue of origin out of the marketing exercise and allow processors and retailers to concentrate on quality labelling — as they should. That would put beef and pork on a more equal marketing footing to poultry, which has been steadily taking market share away from red meats.
One of the reasons for poultry’s success has been that it’s not as encumbered by costly self-inflicted regulations like COOL, as beef and pork have been, at least in the U.S. There are plenty of consumers who will substitute chicken for beef or pork for a nickel a pound.
However, as much sense as a “Made in North America” label might seem, it’s unlikely to ever happen.
There’s too much common sense, as usual.