Studies in
CANADA-US RELATIONS
June 2012
MCOOL and the Politics of Country-of-Origin Labeling
by Alexander Moens and Amos Vivancos-LeonPreace by Fred L. Smith, Jr., President, Competitive Enterprise Institute
Key fndings
The Mandatory Country-o-Origin Label (MCOOL) or bee andpork products was brought into orce by the United States in2008. It imposes uneven tracking, segregating, and recordingcosts that result in a
de facto
barrier to trade, which has created asevere impact on the more than $4 billion in annual trade in thissector.Since MCOOL was implemented, Canadian cattle and hog exportsto the United States have decreased by 42 and 25 percent respec-tively. The trade impact threatens the livestock industry, whichcontributes over 100,000 jobs in Canada. At the same time, thou-sands o jobs are at stake in the US slaughtering industry. Overtime, the regulation will likely lead to higher prices or consumerson both sides o the border.MCOOL does not address specic problem, but is a product o concentrated lobbying by US livestock producers coupled with aCongressional sentiment to “Buy American.”Even ater accounting or other major actors, MCOOL appears tohave caused a signicant reduction in Canadian hog and cattleexports to the United States. The solution or this regulatory problem in meat trade is to har-monize the sector and manage it bi-nationally. The paper callsor Canadian-American negotiations to remove the outstandingregulatory diferences between our two countries.
Studies inCanada-US Relations
June 2012
MCOOL and the Politics of Country-of-Origin Labeling
by Alexander Moens and Amos Vivancos-Leon
Fraser Insti tute
4
www.fraserinstitute.orgMCOOL and the Politics of Country-of-Origin Labeling
4
June 2012
4
iii
Précis
In the United States, Mandatory Coun try-of-Origin Labeling (MCOOL) was in tro-
duced in 2002 in the United States Farm Bill, but it was not brought into force until2008. Because of the bill, American retailers must in form consumers about the coun-
try of origin of various classes of meat products including muscle cuts of beef, pork,
and lamb, as well as fish products and other per ish able food items. Chicken was addedto the list in 2008.The com mon practice in most coun tries is that imported prod ucts are eitherlabeled with a sim ple declaration of their country of origin, or are labeled under the
name of the country that has added the last substantial amount of value (such as pro-
cessing) to the product. The MCOOL pro vision is substan tially dif ferent. It requires
retailers to use one of four types of labels. In the process of deter mining the appropri-
ate label, the ori gin of the animal, where it was raised, and the coun try in which it wasslaughtered and pro cessed must be determined, tracked, and recorded. Over the pastsev eral decades, Canada and the United States (as well as Mexico) have developed an
integrated supply chain for many red meat prod ucts in which calves and young pigsmay be born in one country, raised in another, and/or slaughtered on either side of theborder. Because of this, the new MCOOL label imposes by necessity a track ing, seg re-
gating, and recording system that adds signif icant extra cost to the integrated sys tem
of meat production.This extra—and, we argue, misdirected and unnecessary—cost imposi tion
threatens the efficiency created over the years between Canada and the United States
(and Mex ico). US producers can now choose an “all-American-all-the-time” product
and in so doing avoid steep label ing costs. Con trary to what many leg islators sug-
gest—this product is not necessarily of better quality, or derived from a safer ani mal or
a better health stan dard, but just happens to have lower trans action costs due to thecriteria and processes needed to imple ment MCOOL.
In 2011, Can ada-US bilateral agriculture trade was worth over US $38 billion.
Canadian exports to the United States were approximately 19 percent of total US agri-
cultural imports. Canadian imports from the US were approx imately 14 percent of
total US agricul tural exports to the world (USDA/FAS, 2012). Of this trade, over US$4.1 bil lion relates to trade in live cat tle and hogs, or trade in beef and pork prod ucts.In 2011, over US $2.8 bil lion of this trade was Canadian exports to the US (Sta tisticsCanada, 2011). In turn, the United States exported over US $1.3 billion in such trade toCanada; the highest figure to date. The damages to trade caused by the Man datory
Country-of-Origin Label ing (MCOOL) law have been costly on both sides of the bor-
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MCOOL and Politics of Country of Origin Labeling
The Mandatory Country-of-Origin Label (MCOOL) for beef and
pork products was brought into force by the United States in
2008. It imposes uneven tracking, segregating, and recording
costs that result in a de facto barrier to trade, which has created a
severe impact on the more than $4 billion in annual trade in this
sector.
pork products was brought into force by the United States in
2008. It imposes uneven tracking, segregating, and recording
costs that result in a de facto barrier to trade, which has created a
severe impact on the more than $4 billion in annual trade in this
sector.
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