Although U.S. protectionism is a hot topic in Canada these days, an economist from the U.S. National Cattlemen’s Beef Association says Canadian livestock producers shouldn’t panic.
Gregg Doud, chief economist for the NCBA, insists that changes will stand to the final rule for country-of-origin labelling that loosen restrictions on segregating Canadian livestock.
“Our information, at this point in time, is that there will not be any changes to this final rule and it will go into effect. I just can’t tell you exactly when.”
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On Jan. 21, the day after U.S. president Barack Obama’s inauguration, agriculture secretary Tom Vilsack announced a review of COOL as part of a broad re-examination of all regulations proposed in the final days of George Bush’s presidency.
“Are they going to come back and tinker with it? Not to the best of our knowledge,” Doud said, referring to the final rule that will allow U.S. packers to commingle animals from the three categories: born and fed in the U.S., born in Canada and fed in the States and exported directly from Canada.
While Doud remains confident about COOL, a trade economist at Ohio State University wonders why Canada hasn’t launched a more aggressive challenge of the labelling restrictions, considering the regulations are likely a barrier to trade.
“I’m surprised there wasn’t a dispute filed within NAFTA (North American Free Trade Agreement),” said Ian Sheldon of the university’s agricultural economics department.
“It seems, to me, to put in place rules that potentially discriminate against (America’s) ostensible trading partners, Canada and Mexico.”
The Canadian government did initiate a World Trade Organization challenge to COOL in December, but that process is now on hold as the government assesses its effects after proposed changes.
Sheldon said he’s disappointed Canada isn’t pursuing the WTO challenge more aggressively because a ruling is needed on the issue.
“We’ve never had a ruling on this. In fact, many of us (economists) were hoping that this would go,” he said.
Sheldon said he worked on genetically modified labelling in Europe when that issue dominated headlines in 2002-03. The WTO dispute over that issue produced a vague result on labelling, he said, because most of the ruling was about the speed of approval of GM products.
That is why he was hoping for a more definitive ruling on how countries can or cannot label products.
“It might set a precedent on being clear about what kind of labelling you’re allowed to use, that’s not considered to be trade distorting,” Sheldon said.
It’s possible Sheldon may get his wish, because Mexico is proceeding with its WTO complaint on COOL.
Taking a look at the bigger picture, Sheldon was not particularly worried that this is the beginning of a new era of U.S. protectionism and trade wars.
He said Larry Summers, the former president of Harvard University and now Obama’s chief economic adviser, is an avid free trader.
“Larry Summers is famous for saying he loves all isms. Which means he loves unilateral free trade, bilateral free trade and multilateral free trade.”
Doud agreed, saying the Buy American slogan in the United States is more about politics than trade.
“Populism is alive and well in America today,” he said. “That kind of rhetoric is exceedingly popular and appealing … to a lot of segments of the U.S. populace.”
However, one prominent American economist is not convinced that this is simply a matter of politicians being politicians.
Sidney Weintraub of the Centre for Strategic International Studies in Washington, D.C., said members of Congress from states such as Ohio, Pennsylvania, Michigan and Indiana, once considered to be the heartland of American industry, would like to rip up trade deals.
“I don’t think it’s just posturing. They are protectionists,” he said. “A lot of Democrats were elected on protectionist grounds and we’re seeing that played out.”
