(Un)COOL: How Congress (Unsuccessfully) Made Sausage Labeling Laws

Crises averted in international trade usually make good economics, but unsatisfying politics.  They’re a half-loaf of success in which positioning, inertia and self-interest usually win.  So it is with the recent repeal of meat country of origin labeling (“COOL”) laws.

The basic story is that the 2002 and 2008 Farm Bills included COOL provisions requiring meat sold in the U.S. to be labeled with a statement indicating where the animal had been born, raised and slaughtered.  The justification was consumer transparency, but just as the regulations implementing COOL for meat labeling were going into effect in late 2008, Canada sued—and eventually established before the World Trade Organization (“WTO”)—that the United States’ real purpose was to protect American cattle from foreign competition.

Businesses can still voluntarily label meat products with their countries of origin, but the mandate is dead.

Essentially, Canada argued that COOL was giving consumers the impression that foreign meat was inferior.  After winning their initial WTO bid and several rounds of appeals, Canada and Mexico earned WTO’s international trade blessing to retaliate against American goods—not just meat—to the tune of $1 billion.  Just as Canada and Mexico were preparing to retaliate, Congress accepted reality and repealed the offending labeling law. Businesses can still voluntarily label meat products with their countries of origin, but the mandate is dead.

The thing is, Congress basically sat on its hands for four years before doing the inevitable.  Sure, there was an appeal process that didn’t fully get wound up until December 2015 and an interim federal court challenge on First Amendment-compelled speech grounds, but almost everyone in the trade community knew where things were headed.  A quick cui bono analysis and the tangle and delay starts to make sense:

• From a consumer advocate perspective, transparency on food labels is the right fight and Congress was doing its part to protect the public.
• From an executive branch angle, delaying the end of COOL until all appeals were exhausted simply was prudent and probably meant some leverage on the international stage that didn’t need to be ceded until a final decision.
• From Canada and Mexico’s standpoint, while delay meant preserving the status quo and giving the law’s beneficiaries extra time to take advantage of their unfair competitive benefit, it also made their WTO case stronger.
• And finally, from a congressional view, legislative productivity wasn’t necessarily the highest priority between 2011 and 2015.

To put it another way, the only people who consistently agreed that COOL should go away immediately were businesses selling goods other than meat that faced a threat—though not immediate—of trade retaliation.  For them, the repeal is good news, but the delay was wholly unnecessary and essentially meaningless.  The trade barriers Canada and Mexico had in place in 2011 are still in place, but preparations made in advance of the retaliation are sunk costs that will never be recovered.  For these businesses, none of this was cool.