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The Market's Fine Print
Wednesday, May 20, 2015 5:41PM CDT

By John Harrington
DTN Livestock Analyst

Sometimes I think WTO stands for nothing more than "world trading optional." Is the international trade tribunal a critical tool in nurturing global economic growth, or an evil force set to destroy national sovereignty and individual freedom?

Sure, feel free to look at its latest verdict before answering.

Along these lines, the World Trade Organization once again parted the sea of popularity earlier this week when it ruled against a U.S. appeal of its decision that country-of-origin labeling (COOL) on meat unfairly discriminates against meat imports and give the advantage to domestic meat products.

On one hand, applause and kudos rise from the left bank where Canadian and Mexican producers claim victory in a long complaint process that dates back to early 2009. This vote of confidence is even spiced with a few cheers from critical accounts in the United States who never once conflated patriotism with rational marketing.

Yet noise from the other side of the wake would hardly warm David Letterman's finale. Boos and hisses reflect an utter disdain for this kind of internationalism. How dare this offshore court so pontificate with neither a single dime in the game nor an undivided concern for the American consumers.

Red, white, and blue meat for Yankee Doodle appetites, thank you very much. Anyone who checks that fundamental bias at the door should be prepared to be ignored.

Over the years, I have been guilty of being on both sides of this love/hate relationship with the WTO, sometimes championing the principle of free and fair trade, at other times defending the many guises of protectionism. While I'm not proud of such duplicity, pledging to break the two-faced habit would surely be easier said than done.

Can't most of us say the same? It's one thing to theoretically support safeguards to prevent gored oxen when your entire herd is polled, quite another when you brand nothing but longhorns.

So before you get on a high horse relative to WTO merit in the COOL case, your perspective may be well served by remembering one specific time (though telling examples are many) when the shoe was on the other foot.

Consider the fierce controversy of the 1990s when the EU moved to ban the importation of beef that contained artificial hormones. Prior to the recent labeling street fight, this was generally considered to be one of the most intractable agricultural controversies since the establishment of the World Trade Organization.

WTO rules permit such bans, but only where a signatory presents valid scientific evidence that the ban is a health and safety measure. Canada and the United States opposed this ban, taking the EU to the WTO Dispute Settlement Body. In 1997, the WTO ruled against the EU. The EU appealed the ruling.

The WTO Appellate Body affirmed the WTO Panel conclusion in a report adopted by the Dispute Settlement Body on Feb. 13, 1998. And when the EU still refused to accept hormone-containing beef from North America, the WTO gave the green light for Canada and the U.S. to impose $125 million in total extra annual tariffs of goods coming from the EU.

Does any of this sound familiar? Action, appeals, counter appeals, punitive tariffs? Although we have not yet seen the tariff remedy in the culminating fight over COOL, that final round now seems to be waiting in the wings.

The final ruling unveiled last week launches a WTO process to determine the level of retaliatory tariffs Canada and Mexico can impose on the U.S., and the U.S. will have to revise or repeal the COOL law in order to avoid such sanctions.

I can remember cursing the mule-headed and backwards ways of the EU. Not only was it blind to the best scientific data available, the flagrant way it seemed to flout the authority of the WTO was nothing short of irresponsible and contrary to general world order.

You know, the same thoughts our former partners in Canada and Mexico probably have as they look toward the dubious middle.

John Harrington can be reached at john.harrington@dtn.com

(AG)


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