Quit beefing and start trading
Canada is threatening to fight beef with ketchup, hogs with orange juice. It’s part of Ottawa’s attempt to tear down the protectionist machinery of the U.S. Department of Agriculture — a marathon battle to force the USDA to remove meat labelling rules that hurt Canadian cattlemen and hog producers.
The label regulations, arcane and monumentally silly, allegedly cost Canada’s hog and beef producers up to $1-billion a year in lost sales, and the gov- ernment of Canada says it is ready to launch a trade war to win back those dollars.
One might ask why Canadian beef and hog producers can’t find their way into the U.S. market without putting the rest of us at risk in a trade war.
One reason is Gerry Ritz, Canada’s Agriculture Minister and a fearless defender of open agricultural markets who keeps riding his rhetorical horse into battle.
“Free and unfettered trade is a two-way street,” Mr. Ritz declared Monday as he announced that if Congress and the USDA don’t remove America’s offensive meat-labelling rules, Canada would take retaliatory action against U.S. products coming into Canada.
A good place to start that retaliation, one might think, would be to target U.S. agriculture products. How about a fat tariff on U.S. milk and dairy products — that’ll teach those Americans not to mess with Canadian free traders. And let’s get that U.S.-made Chobani Greek yogurt off the shelves of Canadian supermar - kets. Oops. What am I thinking? We already have 300% tariffs on milk and dairy products.
And Mr. Ritz helped drive Chobani out of Canada a couple of years ago. Instead, in the name of defending the rights of Canadian beef and hog producers to unfettered access to the U.S. market, Mr. Ritz proposes to target a range of other U.S. products, from orange juice to tomato ketchup, to wooden furniture, chocolate, swivel seats, mattresses, jewellery and maple syrup.
The fact that tariffs or other import restrictions on these U.S. products would hurt Canadian consumers and industries is seen as just so much collateral damage in what has become a typical grinding trade dispute before the World Trade Organization, where trade conflicts routinely become procedural nightmares.
In the meat-labelling case, WTO panels have decided in Canada’s favour, with varying degrees of precision, in 2011, 2012 and again on Monday, when a WTO “compliance panel” found that U.S. labelling rules contravene international trade agree- ments and artificially limit Canadian access to the U.S. market.
In the U.S., all beef and hog product must be labelled by country of origin. But the rules contain protectionist measures that have little meaning at the retail level but complicate wholesale sales. The basic U.S. label for U.S. beef is: “Born, Raised and Slaughtered in the United States.” But if an animal was born in Canada, raised in Canada and then sold at auction to a U.S. slaughterhouse, the label must say: “Born and Raised in Canada, Slaughtered in the United States.”
Few consumers care, but Canadian cattle officials say the effect of the labels is to discourage U.S. slaughterhouses from buying Canadian beef because of the cost and complexity of tracking and labelling the Canadian animals. While this seems improbable, the WTO panels have agreed.
Is this worth a trade war? No, and in reality the chances of Canada imposing $1-billion worth of trade restrictions on U.S. ketchup, maple syrup and products appear minimal.
For one thing, it would be damn stupid. Our cattlemen, from Alberta to Ontario, are no doubt fine folk. I spoke to one Tuesday, and he seemed like a decent guy. But there would be no economic justification for any attempt by Ottawa to sacrifice Canadian consumers over a narrow U.S. regulatory regime that happens to hurt one sector of the economy.
Even the beef and hog producers do not expect Mr. Ritz and Canadian trade officials to launch a trade war over meat labelling, even though Canada has won three WTO challenges.
The U.S. has one final opportunity to appeal Monday’s WTO ruling. That appeal could take another year or more, pushing the mean label dispute in its seventh year. If the U.S. loses again, Canada could begin retaliating. By then, however, with a new Congress in place, the U.S. is more likely to change its label regulations.
What the Canadian cattle and hog industries really want is c o nt i nent- wide labelling: “Born, Raised and Slaughtered in North America.” Free trade in meat is a fine objective, but many of us might not want to fight for it if it risks access to cheaper ketchup. A far better objective for Mr. Ritz would be unfettered two-way trade in dairy products.