The study found that regulatory differences in North America's integrated supply chain for red meat are costly and unnecessary. In particular, the Mandatory Country-of-Original Labeling (MCOOL) law in the United States imposes substantial costs on producers by requiring beef and pork products to be labeled according to the origin of the animal, where it was raised, and the country in which it was slaughtered and processed.
"Canadian cattle and hog exports to the United States have decreased by 42 and 25 percent, respectively, since MCOOL went into force in 2009," said Alexander Moens, Fraser Institute senior fellow and co-author of MCOOL and the Politics of Country-of-Origin Labeling.
"These excessive labeling requirements do not increase food safety or improve health standard for consumers. MCOOL is simply a trade barrier, a product of the 'Buy American' shift." Over the past several decades, Canada and the United States (as well as Mexico) have developed an integrated supply chain for many red meat products in which calves and pigs may be born in one country, raised in another, and slaughtered on either side of the border. In 2011, Canada-U.S. trade in agriculture was worth more than US$38bn, $4.1bn of which came from hogs and cattle, and pork and beef products.
"The nature of modern meat production makes this labeling requirement very costly. As often happens when special interests get special treatment, the real losers are consumers who must pay higher costs for what are termed 'benefits' but are of dubious validity," said Fred L. Smith, Competitive Enterprise Institute president.
Despite nearly identical standards and regulations for red meat processing in both countries, MCOOL imposes a tracking, segregating, and recording system that increases production costs. American producers are now avoiding the onerous and expensive labeling requirements by choosing 100-percent U.S. products. The resulting drop in trade puts thousands of Canadian jobs in the livestock industry at risk, and many American processors and packers are faced with a lack of supply.
To boost trade between the two countries, the report recommends the creation of a single regulatory area by:
-- Implementing bi-national food and animal safety standards for beef and pork; -- Installing a bi-national inspection regime on both sides of the border at various stages of the production process, including in slaughtering and processing plants;
-- Blending or harmonizing meat grades designations;
-- Adopting a single, bi-national country-of-origin label, specifically "Product of the USA and Canada"; and
-- Removing all border inspections.
"Regulatory cooperation would create a single red-meat regime in which both Canadian and American products can be priced according to their quality and in which the origin of the animals is irrelevant," Moens said. "This would benefit consumers through lower prices, help keep beef and pork competitive among increasing food choices, and also make North American meat more competitive in the global market."
