The World Trade Organization's recent ruling against a U.S. food-labeling law highlights how international trade rules can override national priorities, including ours. At issue is a 7-year-old U.S. requirement that beef and pork products be labeled to disclose their country of origin. On Monday, the WTO ruled for the fourth time that this mandate violates international agreements because it harms Mexican and Canadian meat suppliers without delivering commensurate benefits to consumers. Coming just as the Senate is debating a bill to put future trade agreements on a fast track, the timing of the decision couldn't be worse for the Obama administration. But it's an edifying reminder that we can't ask our trading partners to eliminate artificial trade barriers without doing so ourselves.
The General Agreement on Tariffs and Trade — a global trade pact that the WTO enforces — allows country-of-origin labeling laws as long as they don't restrict or distort trade, and Congress included a labeling mandate in the 2008 farm bill. Canada and Mexico soon challenged the law, however, because the cost of tracking and segregating foreign cattle and hogs led U.S. meat processors to buy less of their products and pay less for them. That wouldn't necessarily be a problem, the WTO ruled, but the United States couldn't show that the harm was the unavoidable result of a legitimate regulatory objective.
U.S. exporters of all kinds now face up to $2 billion in punitive trade restrictions by Canada and Mexico unless the labeling rules are brought into compliance or dropped. The chairman of the House Agriculture Committee has already introduced a bill to rescind the labeling mandate for beef, pork and — to avoid future battles — chicken.
Opponents of fast-track legislation and the looming Trans-Pacific Partnership free-trade deal argue that the labeling episode shows how such pacts can endanger consumers. But the country-of-origin labels are mainly about marketing. If they were about safety, they'd apply to all cuts of pork and beef; instead, as the WTO noted, most of those cuts are exempted from the labeling rule. The main safety rule is the federal requirement that all meat products offered for sale in the United States pass inspection and comply with standards deemed at least as rigorous as ours.
The real lesson here is that trade agreements apply an anti-protectionist discipline that can prove problematic for U.S. law. We can part with food labels that accomplish little more than giving U.S. farmers and ranchers an edge over their North American rivals. What we can't give up is our ability to impose high standards for consumer safety, workers' rights and environmental protection. The Obama administration says the goal of the Pacific trade deal is to bring its trading partners up to those standards, rather than allowing globalization to continue as a race to the bottom. That's the right goal, and Congress should insist that any new agreement meets it.