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Stabenow's risky trade policy

Jul 13, 2015

Here’s a story you probably haven’t heard about – but which could end up costing Michigan thousands of jobs and hundreds of millions in lost trade with Canada.

That certainly wouldn’t be cool – but ironically, what I’m talking about is all about COOL – an acronym standing for County Of Origin Labeling.

Seven years ago, a U.S. law took effect that required all meat products to be labeled with their country of origin.

This turned out to be financially disastrous for Canadian farmers, who for years have sold cattle and hogs to American processors, especially in times of short supply.

Canadians say this, “increased U.S. competitiveness, supported U.S. jobs, and helped plants run at capacity on both sides of the border.” But then the United States decided meat products had to be labeled with their country of origin. That may not sound like a big deal, but it is.

Douglas George, Canada’s current consul general in Detroit, told me this has made Canadian meat more expensive and less competitive, because, “it requires meat and livestock to be segregated at every step of the supply chain and adds costs for farmers, ranchers, consumers.”

Canada and Mexico both felt this was illegal under NAFTA, the North American Free Trade Act, and complained to the World Trade Organization.

The WTO ruled against the United States. The U.S. filed an appeal, and lost again. There was a second case, and the U.S. lost two more times. Now, Canada says it is at the end of its patience. If COOL isn’t repealed, Ottawa plans to slap more than two and a half billion dollars in retaliatory tariffs on U.S. agricultural products by the end of the summer.

That will make them essentially impossible to sell in Canada, and these sanctions will hit Michigan especially hard. Most of what we export goes to Canada. The sanctions will fall on beef and chicken, corn, cereals, and all sorts of baked goods.

Currently, that amounts to nearly $700 million dollars a year. Canadian economists say this represents a potential loss of nine thousand jobs in the U.S. packing industry alone.

By the way, this not a food safety issue; the U.S. Department of Agriculture says there are no issues with imports from Canada; this is sheer protectionism. The House of Representatives is ready to throw in the towel; they passed a bill last month repealing COOL.

But it has bogged down in the Senate, and the Canadians say a main obstacle is Michigan Senator Debbie Stabenow, who until January was chair of the Senate Agriculture Committee, and is now the ranking minority member.

She is now calling for a system of “voluntary” labeling of U.S. meat products. The Canadians aren’t impressed. Senator Pat Roberts of Kansas is now the agriculture chair. He told the Wall Street Journal that he wouldn’t mind a face-saving compromise, but added that Canada had won fair and square before the World Trade Organization, and added, “only they can turn off retaliation. Any action we take in Congress must meet their approval.”

Crippling sanctions against our products is the last thing Michigan needs. Stabenow is a passionate advocate for Michigan farmers, but there’s something they could tell her.

When you find yourself in a dangerous hole, stop digging.

Jack Lessenberry is Michigan Radio's political analyst. Views expressed in his essays are his own and do not necessarily reflect those of Michigan Radio, its management or the station licensee, The University of Michigan.