Sort & Cull

The WTO, Free Trade, and Fair-Weather Friends

John Harrington
By  John Harrington , DTN Livestock Analyst

We're a fickle bunch when it comes to the WTO, championing its authority and free-trade mission when it serves our purpose, ignoring its rulings and directives when it does not.

Such fair-weather friendship is embarrassingly clear in the wake of Thursday's lame effort by the USDA to "fix" the country-of-origin-labeling law.

Actually, given how the new MCOOL (M for mandatory) regs released call for even greater detail in labeling, thereby increasing the discriminatory costs for Canadian and Mexican livestock producers (i.e., the exact component of the program that the WTO found unacceptable early last summer), "lame" may be too kind a word.

How about "oblivious," "confrontational," or "irresponsible?"

In fairness, the WTO's original judgment of MCOOL was not free from ambiguity. On one hand, the international trade body affirmed the United States' right to adopt labeling requirements that provide information to American consumers about the meat they buy. On the other, the WTO ruled that the specific way MCOOL was implemented creates an unfair competitive environment for imported Canadian and Mexican cattle and hogs.

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But advanced degrees in international law and economics were hardly necessary to understand the WTO's true emphasis.

Since evolving out of GATT in the late 1990s, the WTO has been the world's lonely policeman of free trade, working to reduce tariffs and trade barriers wherever possible. On paper, the U.S. is a big supporter of both the WTO and the principle of free trade.

Of course, papers often get lost in the wash of domestic politics and the perception of short-term market advantage.

If U.S. packers found it necessary to bid lower on Canadian and Mexican livestock in order to offset the expense of complying with old MCOOL specs (e.g., sorting, separating, labeling), how much more will they be forced to minimize the cost of foreign cattle and hogs in order to live with the demands of even tougher specs?

Let me be clear. While I think a healthy packing sector is as crucial to overall market vitality as a robust cow/sow sector and a hearty feeding sector, I have no interest in paving the way of processors per se.

Making MCOOL easy on packers is hardly the point.

The critical point is that MCOOL (emphasis on "M" as in mandatory) puts our export-hungry livestock industry on the wrong side of free trade. Future growth in the beef and pork industries absolutely depends on a non-stop war against unjustified tariff and trade barriers around the globe.

Frankly, anyone who thinks the mysterious prompting of patriotic appetites through red, white, and blue labeling can somehow unleash a home-grown surge in consumption that is larger and more promising than the potential of foreign demand has simply not been reading the hard data.

Apparently the politicos at the USDA are right in the middle of this illiterate crowd.

(AG)

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CS Dept.
5/29/2013 | 10:43 AM CDT
Way to go John! Unfortunately the meat industry will pay the price of MCOOL through the import tariffs and new trade barriers that will be enacted swiftly by Mexico. I emphasize the word swiftly as Mexico will shoot and ask questions later. Having traded meat to and from Mexico for longer than I will admit, Mexico will return the favor ten fold and force us to a compromise quickly and painfully. I don't think the political lobby and supporters behind MCOOL realize the value that both Mexico and Canada add back to our cutout in beef and pork. In a time of instability in other export markets such as Egypt and Russia, think end cuts, trimmings, hearts, livers, kidneys, cheek meat, lips, tripe etc. This will eventually come back to the price paid to producers. I am not only for buying American when at all possible but one step further BUYING LOCAL whenever possible. Not everyone cares or has the ability pay more for either choice. We should though have the ability to make a choice and not be told how it will be by being out spent by the few who want to tell us how it will be at the expense of everyone else..