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Since 2009, it’s been required that a variety of foods be labeled with their country of origin. But the World Trade Organization recently ruled that parts of this US requirement break their rules. Find out what happens when US law and the WTO clashes — and whether it will affect your ability to know where your food comes from.
- Lori Wallach Director of Public Citizen’s Global Trade Watch
MR. KOJO NNAMDIThe tag that tells you how to wash that new sweater you got over the holidays without ruining it also tells you where that garment was made. If you look at the back of your TV or stereo it's probably pretty easy to see what country they came from as well. And at the grocery store your meat, fish and veggies have a country of origin clearly marked on them as well. The food labeling requirement has been the law for a few years now. But a recent World Trade Organization ruling may bring big changes to, or even end the practice.
MR. KOJO NNAMDIJoining us in studio to discuss this is Lori Wallach, director of Public Citizen's Global Trade Watch where she follows the domestic and international aspects of trade. Lori Wallach, thank you for joining us.
MS. LORI WALLACHThank you.
NNAMDIGood to see you again. Happy New Year. Country of Origin Laws, also known as COOL went into effect just a few years ago. What do they cover and how are they enforced?
WALLACHWell, as you pointed out the United States has had different forms of country of origin labeling for over 100 years. But perversely while we could know where our shoes came from it was not actually available, the information, for food. So originally in the 2002 Farm Bill there was a new policy that there'd be country of origin labeling for food, including at the consumer level meat. So that the actual Styrofoam tray with its plastic would have a sticker telling you where the source of all of the inputs to that hamburger, where that muscle cut, i.e. steak came from.
WALLACHIndustry didn't like this. There was a huge skirmish despite the fact there'd been a very open process of compromise, negotiation with the ranchers, the packers, the consumer groups. And they blocked implementation until 2008. The new Farm Bill, again, new balance did a very balanced version of how we consumers could have the information on our food and how it could be the least expensive to comply with for the producers.
WALLACHAnd in 2009 we started to see in our grocery stores these labels that said product of the United States or product of the United States and Mexico, etcetera on all of our meat. And that was a huge breakthrough. There's been 50 years of fighting for it.
NNAMDIWell, in addition to meat, seafood, fruit and vegetables the law also covers certain kinds of nuts and Ginseng, which seems a little random. How and why were the foods covered by COOL chosen?
WALLACHIt had to do with what wasn't already covered by other laws.
WALLACHThis particular set of law basically made sure certain products that had been excluded now were covered.
NNAMDIThree-quarters of the seafood eaten in the U.S. comes from other countries and most shoppers really like knowing where their food comes from. But not all suppliers and grocers like having to provide that information, as you pointed out earlier. Why not?
WALLACHThere are lots of theories about why not. I would say on some level there are justifiable consumer concerns about food safety standards in various countries. Some other countries have food safety standards superior to the United States. But in some other places we've seen all the import scares, for instance, with China. There are some very serious problems. So consumers want to know for safety purposes. Obviously, as well, when there's an outbreak of food borne illness consumers want to know if the issue is shrimp from Chile, they want to know, oh, that's Chilean, I may pass this week until that gets resolved.
WALLACHAnd then finally it's important just for tracking. So when there's a recall you have an idea of where that came from. Is that part of the stuff that could be tainted? So the polling is stunning. In this very divided country, one of the few things that unites us across the ideological spectrum is we love having labeling of country of original information on our food. The numbers are 80 percent, 90 percent across the board. Zombie's done it, numerous polls have done it. Systematically Americans love knowing.
NNAMDIWe did put in a request with the U.S. Trade Association, USDR and they were not able to provide a guest to join us on this subject. So the reasons -- well, we'll get into that later in the broadcast. You can join the broadcast, the conversation right now by calling 800-433-8850. Have you come to rely on labels that tell you where food is from when you shop? Or do you ignore them?
NNAMDIIf you're a food supplier or a grocery who has to comply with COOL, what effect has the law had on your business? Call us, 800-433-8850. Go to our website kojoshow.org. Ask a question, make a comment there. Send us a Tweet at kojoshow or email to firstname.lastname@example.org. We're talking with Lori Wallach. She is director of Public Citizens Global Trade Watch. She follows the domestic and international aspects of trade.
NNAMDICanada filed a complaint against COOL three years ago saying the U.S. law hurt its businesses. And other countries, most notably Mexico, joined this complaint. A WTO ruling finally came in mid November. What was the finding of the WTO?
WALLACHSo the WTO's panel said that the United States law violated the United States' obligations under the World Trade Organization on two different grounds. And the panel ruling, which I have sitting here, 233 pages plus six (word?) also orders the U.S. as the punch line to bring its law into conformity, i.e. to change its law.
WALLACHNow it's worth stepping back for one second just -- if people are hearing this thinking what the heck is the WTO, a trade body, telling us to change our domestic consumer labels? It's a very good question. The WTO replaced the old trade regime called GATT, the General Agreement on Tariffs and Trade. That old system was very narrow. It literally was 60 pages and it set the traditional standards, border taxes, tariffs and how much stuff, quotas.
WALLACHIn contrast, starting in 1994 the WTO replaced GATT. GATT became one of 17 agreements WTO, a global commerce agency, enforced. And but for three of those agreements they don't have mainly to do with trade. So for instance, the one under which the U.S. law has been sacked has to do with what're called technical standards. Whether and how you are allowed to label or ban toxics or provide information or packaging.
WALLACHThere's a whole agreement on copyrights and patents. There's a whole agreement that bans by America. It's about what kind of procurement policy you can have. All domestic policy limits. And then the key rule in the WTO is countries shall ensure the conformity of their domestic laws, regulations and administrative procedures with the attached agreements. If one country fails up front to change its laws -- and the U.S. rewrote large swaths of laws, for instance imported meat -- thanks to these changes no longer even has to meet U.S. law. Different issue but related.
WALLACHBut when we rewrote many of our laws, for instance we didn't have this COOL law in place. So if a new law comes along it can be attacked by another country saying it's a violation of that obligation to conform. And those decisions are made by a tribunal sitting in Geneva under the World Trade Organization of trade attorneys. Not due process, not conflict of interest rules. There's no outside appeal. And once it rules if you don't change your law domestically to comply you face trade sanctions.
WALLACHSo we have 15 months from the point this ruling gets adopted, unless we appeal it, which the administration has not bizarrely yet decided to do, well, we either have to change our law, gut our labels or we'd be hit with perpetual trade sanctions.
NNAMDIThere is no way that the U.S. outside of challenging this WTO ruling can maneuver around it.
WALLACHWell, the U.S. could -- there are two other options, one I would highly advocate, which is a longer term solution which is we need to fix the underlying trade rules. We need trade rules like WTO 'cause there are benefits to trade. You don't want high tariffs limiting your choices but you also don't want a so called trade agreement invading domestic policy space to impose on you subjective decisions the way the WTO does. I mean, I have it here in the studio. It's 900 pages...
NNAMDIYeah. You do have it indeed. I'll testify.
WALLACH...of policy limits. It's not your typical trade agreement. This is the part that's just on domestic regulatory limits. And so...
NNAMDIAnd I can tell you've been thumbing through it a lot.
WALLACHLimiting all of these choices about buy America, about food, about drug prices, is not the business to bet set one size fits all. In a permanent international agreement where decisions are made by unaccountable tribunal and we have to just impose the implementation, we want those things done in our domestic courts, Congress, like COOL was. But now here's this WTO tribunal going after it.
NNAMDIGot to take a short break. When we come back we will continue this conversation about of country of origin labeling. Do country of origin labels influence the choices you make when grocery shopping, or not? 800-433-8850 is the number to call. You can go to our website kojoshow.org, send us a tweet @kojoshow, or email to email@example.com. I'm Kojo Nnamdi.
NNAMDIWelcome back. We're talking about the controversy over country of origin labeling in the wake of a ruling by the World Trade Organization. Our guest is Lori Wallach, director of Public Citizen's Global Trade Watch where she follows the domestic and international aspects of trade. We've been inviting your calls at 800-433-8850. If you're a food supplier or grocer who has to comply with country of origin labeling, what effect has the law had on your business? 800-433-8850. I'll start with a phone call from Adrienne in Alexandria, Va. Adrienne, you're on the air. Go ahead, please.
ADRIENNEHi Kojo, it's very nice to talk to you. I've been a long-time listener, first-time caller. I just think you're awesome.
ADRIENNEAnyway, my statement was basically it's so important to have food country of origin labeling, not only country of origin, but state of origin is very helpful too. I shop at Whole Foods, and I try to keep my carbon footprint as small as possible by buying local if I can. And if I can't I buy as close as I can. So not only does the origin labeling help you determine, you know, what foods not, you know, to buy and not to buy, and especially with regard to my dog food, I source all of my dog food from within the United States after the last -- I make sure all of my dog food is sourced within the U.S. after the last Chinese episode where a whole bunch of dogs died on Chinese meat-based products.
ADRIENNESo it's really helpful to have that country of origin, and if your guest could -- if there is a threat to our country of origin labeling, I would very much personally like to be able to help out in any way I can to keep the country of origin labeling here in the U.S. So if your guest could ...
NNAMDIWell, Adrienne, I'll also read you a Facebook posting we got from Arielle who said, "It's very important to me to know where my food comes from, especially with all of these poisoning stories coming out of China. I won't knowingly buy edibles or makeup from China now, and certainly not dog consumables or chewables," which gets to the point that Adrienne was making. As I said earlier, we invited the U.S. trade representative to be on this show. It couldn't provide a guest, but it issued a statement, and Lori Wallach, here's what the statement says.
NNAMDI"We are pleased that the WTO panel affirmed the right of the United States to require country of origin labeling for meat products, although the panel disagreed with the specifics of how the United States designed those requirements. We remain committed to providing consumers with accurate and relevant information with respect to the origin of meat products that they buy at the retail level. In that regard, we are considering all options including appealing the panel's decisions." Please explain.
WALLACHWell, first on Adrienne's point, there is work to be done.
WALLACHBecause even though this is this unaccountable international body, ultimately, the U.S. government is the member. So the U.S. government has to decide will it change our law, or is it going to appeal, or if it loses the appeal, is it going to just keep the law, face the sanctions and use that as motivation to change the underlying rules, because we can't live with this over the long term. And just as a footnote, the European Union had one of its food safety laws attacked by the U.S. I'm sad to say at the WTO, lost, was told to get rid of its ban on artificial growth hormones in meat, and the European Union government said, we're sorry.
WALLACHOur consumers will come after us with steak knives effectively. We're just gonna pay the sanctions, and they paid $200 million a year for over a decade, at which point finally the U.S. said, they're not actually going to eat this stuff, maybe we should change the rules, and that got settled. So we have options. One thing, Adrienne, you can do directly, is we are putting together a consumer petition to try and demonstrate to the Obama administration how broadly Americans want this label, and why they should appeal and fight this.
WALLACHAnd if you go to our website which is tradewatch.org, tradewatch.org, you can sign the petition, get more information, and sign up to get continuing information as the case goes forward. Just teaching people about this and how the WTO can undermine our domestic laws is part of fixing it. Now, on the U.S.T.R. statement...
NNAMDIAdrienne, thank you very much for your call.
ADRIENNEThank you, Kojo.
NNAMDIOn the U.S.T.R. statement.
WALLACHSo unfortunately, that kind of schizophrenia is not unusual in the world of trade. If you look at this large stack of paper that is the WTO ruling, the first page of it always has this lovely hortatory language. The WTO supports the rights of consumers to have information. It makes the free market work. And you read the first page and you say, wow, we must have dodged the bullet.
WALLACHThen if you're a trade lawyer, you go to the last place which is where they actually give you the marching orders, and then you read the marching orders which is, the U.S. law violates the following provisions and must be altered immediately, and you think holy beans, what's in the middle of this. So basically what the U.S.T.R. is doing is they're trying to change the topic. The trade office doesn't find it appealing that once again, a U.S. important loved consumer law has been successfully attacked at the WTO.
NNAMDIYou say once again because it is my understanding that this is not the first time that the WTO has found fault with the U.S. law. How has the U.S. handled similar rulings in the past?
WALLACHWell, we lost a spade of rulings in the '90s against the Clean Air Act regulations and gasoline cleanliness, against CAFÉ, the corporate fuel average economy standards for the Clean Air Act, and as well, against our ban on tuna fish caught killing dolphins. And I'm very sad to say, in each case we watered down the law and complied, unlike the European Union which basically said...
NNAMDIWhich, as you pointed out paid the sanctions.
WALLACH….said we're not gutting our law. Now, just in 2011, the U.S. lost three major WTO cases against consumer laws. We lost this one on country of origin labeling. We also had our now voluntary, because we'd already weakened it once, dolphin-safe tuna label sacked as a WTO violation, so we not only can't ban the dolphin-deadly tuna, but according to the WTO, as consumers can't even know to make a choice voluntarily to buy the stuff that's dolphin safe, and the WTO ruled against the U.S. ban on candy-flavored cigarettes.
WALLACHThat was part of the Obama administration's initiative to try and stop teen smoking. Now again, with all three cases, when I talk about this most people say what the heck does this have to do with trade? There's no tariff protectionism, there's no subsidy, these are consumer laws, and everyone has to meet these rules. Domestic producers couldn't have candy-flavored cigarettes, and importers couldn't either, so the labeling, both the tuna labeling and the meat labeling, it doesn't matter where it's made, everyone has to comply with the labels.
WALLACHSo what's the trade issue, and this again gets to this overreach with these current trade rules, and why U.S.T.R. is not very keen to put a spotlight on this problem. Because right now they're negotiating the first trade agreement of the Obama administration. It's called the Transpacific Free Trade Agreement. Right now they're negotiating something like more or less NAFTA with Vietnam, Singapore, New Zealand, and Australia. There's a huge push in Congress, and the polling shows the public wants, and President Obama as a candidate promised a new kind of trade agreement.
WALLACHSo they don't want to highlight the fact that the old rules that are about to replicate with a whole bunch more countries can sack popular U.S. domestic laws we all love. Because everyone knows these agreements have caused big trade deficits, outsourced jobs. So if you add all of these threats to the most basic consumer information, really kind of our democracy to decide what domestic non-trade laws will have here, you end up with the perfect storm of really uniting left, right, and center, demanding a change.
NNAMDIWell, if presumably the purpose of negotiating these trade agreements is to facilitate access of U.S. products into these countries, then the WTO I guess can't be all bad for the U.S. Has America benefitted from past rulings of the WTO?
WALLACHWell, I guess it depends who you think of as America. The -- I would say that to put it in the current terms, the one percent has done incredibly well under the WTO. If you go to our website, tradewatch.org, we have a chart. In 90 percent of the cases, laws challenged under WTO are ruled against. In each of these chapters, the rules are very pro-deregulation, pro-business. They have a very -- I guess you would call it neo-liberal philosophy behind them.
WALLACHIt's sort of this old model, the Washington consensus that allegedly died as it failed, except for one thing. There's a zombie called the WTO stalking around fully implementing said rules that theoretically are now out of favor. And so there are a lot of big businesses, the Chamber of Commerce loves it, you know, the grocery manufacturers and those guys who didn't like the country of origin labels in the first place, are, you know, having a party about this ruling.
WALLACHBut the problem is, for the 99 percent, systematically the WTO keeps ruling against domestic policies that are good for the rest of us, and not just here. I mean, for instance, there's a WTO ruling against India's policy to make medicine affordable cheap -- medicine affordable in that poor country. There was this horrible case against the Caribbean bananas that we've talked about.
NNAMDIOh, yeah. We've talked about that.
WALLACHWhere basically, you know, the economies of eight small windward islands in Jamaica just got totally flattened for whom Dole, a big company who -- and Chiquita, got the U.S. to challenge. So it's been good for some big companies. It's not been good for the rest of us.
NNAMDIA lot of people have calls or comments or questions. We'll start with Andy in Boyds, Md. Andy, you're on the air. Go ahead, please.
ANDYKojo, of course you asked my question, and I think I know the answer. Well, I heard the answer, but I'm gonna just ask it one more time. My question at the time was, you know, I get the whiff of conspiracy and, you know, okay, so the WTO bad, speaker good. I get that. But I was gonna ask is there any non-nefarious incentive or reason for the ruling, and I think her answer was no. There's no non-nefarious because the rich people are behind this. So now I know there's, you know, now I hate the WTO and I'm gonna be in the streets with everybody else, you know. Or maybe I'll check it out for myself. But great show as always, and that's all I got.
NNAMDIThank you very much for your call, Andy.
WALLACHActually, I want to respond to that, Andy, because as a recovering trade attorney, when I first started reading this agreement, the WTO, I read it and I thought, all right, this seems like a very lopsided set of rules, but I'm not conspiracy theorist. I must just be reading it wrong. And we wrote analyses saying, hmm, this could be interpreted to sack this law. This could be interpreted to sack that law.
WALLACHAnd you had some very interesting senators and congressmen for instance, Senator Byrd from West Virginia, but then conservative Senator Hank Brown, Republican from Colorado, who also read the agreement and had different concerns about what it meant for democracy, for federalism, for our ability to make our non-trade laws. Because, you know, the upside of having a trade agreement is the benefits of expanded trade.
WALLACHI'm not saying we shouldn't have a trade agreement. We need trade rules. The problem is, what should their scope be. So you have this particular set of rules, and as I started reading and reading, and I thought how the heck did this get so imbalanced, I started doing more research. And part of what happened is, in the U.S., who has a very disproportionate role in setting the rules, we have a trade advisory system that has about 600 corporate advisors, but at the time that these WTO, and the NAFTA rules were written, had about 20 union folks, no one from the consumer movement, no one representing the elderly and access to medicines, nobody representing the environment.
WALLACHAnd so it wasn't a conspiracy, it literally was who was at the table. If a different set of people were at the table, you'd have a different set of rules, and now the question is, we've seen how it's worked over these 15 years, how the heck do we fix it?
NNAMDIThere's this, Sharita from Washington says, "It does matter to see these labels. Most of the time, when I'm at the store, I try to buy American. It was especially important with the Gulf oil spill. To what extent does the notion to buy American here while we are encouraging people abroad also to buy American, affect how the WTO rules?"
WALLACHIn this instance, they didn't focus that much on what consumer preferences were, though in the dolphin case, they did more or less say that providing people with information that leads them to make choices that could disadvantage a kind of product, could be a WTO violation, to which I say, free market economists of the world, that is not free trade. Because as we were all trained in our economics courses, having information and then making an informed choice in the free market is how it's supposed to work.
WALLACHIn this case, more or less what the panel did is they looked at economic data. There were eight different studies, and they couldn't find actually that Canadian or Mexican meat products had been disadvantaged by the label. So there were some industry studies from Mexico and Canada that showed that there were issues, but if you looked at the government data, U.S., Mexican, Canadian, for instance, right now Mexican imports of beef are up since COOL was implemented.
WALLACHCanadian beef imports are at the same level. The only time they dropped was at the bottom of the recession. So they couldn't show there really was a discriminatory effect, and so they started concocting different theories of how theoretically because Mexico sells less cattle here, it could be harder to get them slaughtered on a given day, and basically, they kind of held the U.S. government responsible for how many cows are Mexico, how far you can ship a cow or a hog before you kill it, and what packing houses decide to do to implement a neutral law.
NNAMDIAnd I'm afraid that's all the time we have. Lori Wallach is the director of Public Citizen's Global Trade Watch. There she follows the domestic and international aspects of trade. We've been discussing the country of origin label issue on which the WTO rules. This clearly is not over yet. We'll be following it. Lori Wallach, thank you so much for joining us.
NNAMDIAnd thank you all for listening. I'm Kojo Nnamdi.
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