from the National Farmers Union
Contrary to arguments made by America’s trade competitors to the World Trade Organization (WTO), an economic downturn that sapped consumer demand — not Country-of-Origin Labeling (COOL) — caused decreased demand for cattle imports into to the U.S., according to a new study released last week.
“COOL did not cause the declines in livestock exports to the United States, which largely coincided with a substantial global economic downturn that sapped demand for more expensive meat products,” notes the study, authored by C. Robert Taylor, Ph.D., an Auburn University Alfa Eminent Scholar and Professor.
Canada and Mexico challenged COOL provisions related to muscle cuts of beef at the WTO in 2008, alleging the widely popular labeling law was a trade barrier that compromised their export opportunities and market access to the United States for live cattle and hogs. The cost of implementing COOL, they argued, discouraged U.S. meatpacking and processing companies from purchasing livestock of non-U.S. origin and, as a result, reduced the prices of these livestock exports.
But after close examination of more robust data sources to assess the impact of COOL on market access, the study found:
- COOL has not had a significant negative effect on the price paid for imported slaughter cattle relative to comparable domestic cattle. In fact, the fed cattle price basis declined after the law went into effect. “The price basis is lower in the six years since implementation of COOL than it was the preceding four years,” the study notes;
- COOL did not negatively impact imports of slaughter cattle. “Qualitative and econometric analysis of Mandatory Price Reporting (MPR) and monthly trade and price data cast considerable doubt on assertions that COOL negatively affected imports of slaughter cattle,” says the study. Failure to recognize the effects of imported and domestic captive supplies of slaughter cattle and beef demand uncertainty, along with other factors, played a larger role in reduced import demand than acknowledged in previous studies.
- COOL did not significantly affect imports of feeder cattle. “USDA monthly data on imports of 400-700 lb. cattle did not show COOL having a significant negative effect of imports of feeder cattle from either Canada or Mexico relative to placements in U.S. feedlots,” the study points out.