The World Trade Organization (WTO) arbitrator this week set a deadline of May 23, 2013, for the U.S. to bring its mandatory country of origin labeling (MCOOL) law into compliance with WTO rules. This deadline follows a successful complaint lodged with the WTO by Canada and Mexico charging that the U.S. MCOOL law was an unfair trade barrier. WTO’s May 23 date probably carries very little significance, other than marking the date when Canada and Mexico will be able to begin enacting penalties for U.S. non-compliance with its WTO obligations.
For its part, the U.S. seems to be committed to putting new policies in place that will still accomplish the goals of informing consumers of the country of origin, but that are WTO compliant. In retrospect, one might argue that it would have been prudent to do that the first time around.
Still, while everyone seems to understand the intended course, there’s been very little leadership on this issue; no one is emerging as the champion to make sure this gets done.
While there’s been much written about this decision, most of it is hyperbole and political rhetoric. First, the WTO decision did not eliminate MCOOL; it merely ruled that COOL has to be restructured to fit WTO guidelines. We shouldn’t forget that the U.S. previously has prevailed on many WTO arguments only to find that WTO’s coercive power is somewhat limited, and the offending countries were willing to shoulder the penalties in order to retain their challenged policies.
Another Perspective: Survey Shows Most Consumers Don’t Care About COOL
It’s also been implied by MCOOL supporters that the WTO’s decision on MCOOL was attempting to overrule U.S. law, but that isn’t the case. WTO members join the WTO and pledge to abide by its rules in order to level the playing field. An analogy would be the rules set by an organization like 4-H. I’m not obligated to follow them, but I must if I want to be a member and participate in 4-H activities. Neither WTO nor 4-H has any legal jurisdiction.
Thus, to avoid penalties, Congress will have to make adjustments to the law. And failing to live up to our WTO agreements means the U.S. will face sanctions/penalties that will remain in effect until the law is altered by Congress.
Any impartial and knowledgeable observer would admit that we knew well before MCOOL was passed that it wouldn’t pass muster with WTO guidelines. And we also knew WTO would rule against the U.S. when Canada and Mexico sought remedies.
We also knew this deadline was coming (in fact, it was only two months short of the deadline the U.S. had requested), and yet nothing of substance has been done to try and bring MCOOL into compliance. We shouldn’t be surprised; delay, after all, is a common tactic of other countries that elect not to follow WTO guidelines. They just delay until they absolutely have to do something.
So the clock continues to tick on a May 23 deadline. MCOOL opponents hope it dies, while MCOOL proponents refuse to accept that what has passed can’t be kept. They don’t want to bring the rule into compliance because they believe it will weaken the legislation that’s already been a massive failure relative to accomplishing its original goals.
Then there are groups like the National Cattlemen’s Beef Association (NCBA), which opposed MCOOL in its current form, but supports a measure that is WTO-friendly and market-sustainable. NCBA seems hesitant to lead because it rightly senses that any advocacy will be used by both sides to attack it, making the political risk too high.
Much like the current discussions over the economic fiscal cliff at the federal level, which was designed to force people to address the debt crisis, the deadline looms but nobody seems willing to make the tough choices and fix the problem. The difference is that politicians will likely come up with a faulty compromise to the fiscal cliff issue and kick the problem further down the road.
Meanwhile, the deadline for MCOOL likely will pass unanswered and then we’ll see if the financial pain and consequences are enough to motivate action. It will all depend upon the retaliatory measures placed on U.S. goods by Canada and Mexico as a result of U.S. non-compliance.
