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14 Apr 2013 - We Don’t need a Trade War

I do not like trade wars because nobody wins a trade war. Depending on the industry, workers in factories, or on farms and ranches tend to be the losers. That is why I am hoping that a current trade disagreement can be confined to a trade skirmish’.

This is what I am talking about . . . A few days ago, Canada’s Agriculture Minister Gerry Ritz said to the United States, “Redesign your meat labels or we will impose trade sanctions worth up to
$1-billion dollars (Canadian), or $980-million dollars, U.S.” Here is the history and it goes back to 2009, the year we introduced COOL, Country of Origin Labeling.

Our two biggest agricultural trading partners, Mexico and Canada, didn’t like it. They complained to the World Trade Organization and were successful in convincing the W.T.O. that U.S. meat labels were discriminatory. Those labels now identify where beef, pork, chicken and lamb sold in this country originates.

Canada, in its complaint, claimed the rules sharply cut its exports of hogs and cattle into the United States. The reason, they said, is it raised the cost for U.S. packers who must now segregate imported animals from domestic animals to assure the meat label is correct and avoid violations and heavy fines. Canadian hog and cattle producers say the loss of exports to the U.S. has cost them a billion dollars and according to the Agriculture Minister, the government is now ready to impose “extensive retaliatory measures” that could go beyond the trade of beef and pork, and include other products.

The U.S. did respond to the W.T.O. complaint a few months ago with proposed labeling changes, but both Canada and Mexico said they were “not adequate” and we now officially have until May 23rd to change the labels. The Canadian and Mexican Agriculture Ministers met in Mexico City a few days ago and when asked if Mexico would join Canada in imposing sanctions, Minister Ritz said he would let Mexico speak for itself and so far, there has been no word from South of the Border.

But we are now faced with a situation that could become extremely serious with our NAFTA partners. I understand foreign trade is very complicated and the W.T.O takes forever to make decisions and then enforce them, so in this case, I think it behooves us to negotiate a solution with our two partners and then got on with increasing our agricultural trade. I know many livestock producers like the idea of identifying U.S meat at the meat counter, but I don’t know how many consumers really care and I must admit, I have never checked the meat label before making a purchase. I just don’t think it is worth a trade war that nobody can win.

My thoughts on Samuelson Sez.