As you have probably read, the United States lost another round in its fight with Canada and Mexico in front of the World Trade Organization (“WTO”) over country of origin labeling (“COOL”) rules relating to beef and pork.  Unless an appeal is upheld, or our rules change, Canada and Mexico will have the right to retaliate against other U.S. products with restrictions of their own.

Reading the decision of the panel, which is 206 pages long, leaves one with the impression that there is nothing the U.S. could do either to win this argument or to change its labeling to comply with what the WTO is requiring.

Without going too deeply into the dispute, when you wade through all the verbiage it seems to come down to two arguments:

1.         The U.S. says, “the labeling requirements and recordkeeping requirements are the same for U.S. and imported beef and pork, because everyone has to say where it was born, raised and slaughtered.  Nothing could be fairer.”

2.         Canada, Mexico and the WTO panel say, “U.S. beef and pork producers have an advantage because they don’t really have to keep records to know what to put on the label and people won’t buy our cattle or pigs to raise and/or slaughter in the U.S. because it means they have to keep a record in order to do the labeling right.”

A WTO proceeding involves many cool charts

These two arguments really boil down to the age-old argument between “equality of opportunity” and “equality of result”, don’t they?  The U.S. is basically saying “everybody has to do the same thing, so that’s equal.”  Canada and Mexico are saying, “the result of us having to do the same thing ends up in a financial advantage for you, and that’s not equal.”  And the WTO agrees with them.  It’s a little bit like taxing everyone the same amount, the billionaire and the guy who doesn’t know where his next meal is coming from.  These are literally two competing worldviews, and as with any other two competing worldviews, different people have different ideas on which one is right (and people sometimes apply one of the positions to one situation and the other to a different situation).

Practice before a body like a WTO panel is quite different from the normal style of litigation in the United States, and while U.S. delegates to these kind of tribunals are well-trained for their task, U.S. politicians may be less likely to understand (at least publicly) the reasons for the different manner of submission and the possibility of a bad result.  Our advocates, however, good they are, cannot, of course, change the facts on which they must make their case, facts that are heavily influenced by domestic political considerations.  And in domestic politics, the idea that U.S. arguments are not automatically accepted as true is sometimes hard for some to accept.

Yet, the United States is as likely to be a complainant as a respondent before the WTO.  Again, though, it’s the age old argument:  I do it because I’m right and you do it because you want to annoy me or you know the panel will be prejudiced against me.

Any U.S. flexibility in this area, because these rules come directly from an Act of Congress, is also affected by domestic politics in other ways, including the overrepresentation of the states most dependent on agriculture in Congress and the happenstance of the first presidential caucuses being in Iowa.

Which really gets to the crux of the matter.  From the perspective of the WTO, a cow is a cow:  Mexican, Canadian and American cattle are “alike”.  From the standpoint of U.S. domestic politics, or some U.S. consumers, there’s a big difference.  Some people like to buy American, even if the cattle came from clear across the country and the imported cow came from closer in.  Some remember, as people are remembering right now as Chinese chickens are approved for importation, every food safety issue from an exporting country (as though there were no such issues in America).  Some people like local products, although the COOL regulations won’t tell you whether your beef came from Florida or Washington, Maine or California.

The problem, of course, is that the treaties that are administered by the WTO, while they take issues of consumer preference into account (each decision by the panel in this case had to weigh the costs against perceived benefits, and the U.S. actually prevailed on one issue), are more concerned with the goal of cutting down international barriers to trade than they are about the goals that are meant to be balanced against that goal.  The panels in these cases are not made up of American consumers, and they are made of free trade advocates.  Which may explain the decision better than anything.