The Politics of Country-of-Origin Labeling

July 3, 2012

In the United States, Mandatory Country-of-Origin Labeling (MCOOL) was introduced in 2002 in the U.S. Farm Bill, but it was not brought into force until 2008. Because of the bill, American retailers must inform consumers about the country of origin of various classes of meat products, including muscle cuts of beef, pork and lamb, as well as fish products and other perishable food items, say Alexander Moens, a senior fellow, and Amos Vivancos Leon, a research assistant, at the Fraser Institute.

The net impact of the regulation is to protect American livestock producers by helping create a trade barrier to competition from abroad, especially Canada.  This is especially important because Canada is such a vital trade partner in agricultural goods.

  • In 2011, Canada-U.S. bilateral trade in agricultural products was worth $38 billion.
  • Canadian exports to the United States accounted for 19 percent of all the country's agricultural imports, and Canadian imports accounted for approximately 14 percent of all American agricultural exports.
  • Of this trade, roughly $4.1 billion is related to the sectors of agriculture affected by MCOOL.

Whatever the motivation for the MCOOL regulations, whether it is to protect public safety by ensuring high health standards (little evidence supports this claim) or implicitly encouraging Americans to buy American, the economic harm of the rule is substantial.

  • Since MCOOL went into force in 2009, Canadian cattle and hog exports to the United States decreased by 42 percent and 25 percent, respectively.
  • This drop in trade affects the United States nearly as much as it affects Canada, as many American processors and packers are faced with a lack of supply.
  • According to the Canadian Cattlemen's Association, the regulation has put in danger some 9,000 jobs in the American meat-processing industry.
  • This is in addition to the damage done to the livestock sector in Canada, which employs an estimated 100,000 people.

Source: Alexander Moens and Amos Vivancos-Leon, "MCOOL and the Politics of Country-of-Origin Labeling," Fraser Institute, June 2012.

For text:

http://www.fraserinstitute.org/research-news/research/display.aspx?id=18373

 

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