COOL Ruling Shows Trade Pacts’ Threat to Consumers, Small Businesses

COOL Ruling Shows Trade Pacts’ Threat to Consumers, Small Businesses

By Jeff Milchen
First published January 13, 2016 in The Washington Times.

“No trade agreement is going to force us to change our laws,” declared President Obama in a speech at Nike Corporation’s Oregon headquarters last May. He mocked the critics who warned treaties like the proposed Trans-Pacific Partnership (TPP) would undermine a wide range of U.S. laws protecting consumers, ​small businesses and local democracy​, among other concerns.

“They’re making this stuff up,” chided Obama. Before the year was over, however, Obama proved the critics right. He and Congress revoked the U.S. Country-of-Origin Labeling law  with passage of the federal spending bill on December 18. The law enabled consumers to know the origin of meats for sale in grocery stores via mandatory package labels, but was deemed an illegal barrier to trade by the World Trade Organization last spring.

The WTO tribunal demanded the U.S. weaken or drop Country-of-Origin Labeling (COOL) or else face more than $1 billion in retaliatory tariffs by Canada and Mexico (the amount of profits allegedly lost by meatpacking corporations due to compliance costs). The WTO ruled COOL illegal because its requirements “create an incentive for processors to use exclusively domestic livestock.”

About 90 percent of Americans (pdf) favor mandatory food labeling laws because they want to make informed decisions about what their families eat. But the labels also are popular among smaller ranchers. Why? When competitive options exist, most of us prefer to buy American-sourced products or services. But if global corporations can force us to make decisions in ignorance, small businesses and consumers both will lose.

Gerald Schreiber’s family has raised cattle on Colorado’s eastern plains for more than a century. He believes losing COOL would be harmful to small ranches like his, noting “when you’re in a commodity business, branding is crucial.”

TPP-COOL-labelingSchreiber scoffed at a Senate proposal to replace COOL requirements with voluntary labeling, “The big meatpackers won’t do it – they prefer keeping you in the dark.”

Jack Owen, who runs a family ranch in Alzada, Montana, suspects the WTO ruling is responsible for driving down the price he receives for some cattle by more than one-third. “All the other fundamental market conditions would point to sustaining healthy prices,” said Owen.

The COOL precedent worries many small business owners and advocates, because a variety of measures to support local entrepreneurs could be deemed illegal under the TPP. For example many communities have passed laws preferring purchasing from local businesseslimiting the size of big box stores and other policies to protect local values and quality of life. But under the TPP, taxpayers have no right to prefer contracting a local resident for a project over a global corporation based in Tokyo or Beijing.

Like most gifts to large corporations, the TPP is being sold to citizens as something that will help small businesses. Factoids like “95% of potential customers live outside our borders” appear throughout the Obama Administration’s TPP marketing material. Since well over 99 percent of all businesses have fewer than 500 employees, some of those naturally could increase overseas sales. But according to the U.S. Census Bureau, just 3% of those businesses export anything at all.

Firms with fewer than 100 employees saw their share of U.S. exports to Mexico and Canada decrease (pdf) after implementation of NAFTA — from 14 percent to 10 percent. There’s no reason to think homogenizing (read: lowering) standards globally will result in anything other than global corporations grabbing even more market share.

The debate over TPP is the rare issue with virtually no correlation to partisan affiliations. Homogenizing laws across states and nations invariably means diminishing the ability of communities and states to serve their own residents and build more self-reliant economies. The resulting centralization of power in distant institutions concerns people across the political spectrum.

If foreign corporations can force the U.S. to abandon a compelling public interest like knowing the source of your food, it’s hard to imagine what laws won’t be challenged.

While TPP boosters would have us believe it’s simply about trade, tariffs and economics, the core of the vast treaty deals with limiting the potential for democracy to create regulations disfavored by transnational corporations.

It’s about who will govern.

Jeff Milchen (@JMilchen) is the co-founder of the Montana-based American Independent Business Alliance (AMIBA), which helps communities instigate and sustain efforts that support support local entrepreneurs. Thanks to R-CALF for research assistance –their COOL page has more on that issue.

More on this topic:
Fact sheet (pdf) addressing small business benefits and impacts

Corporate Meat’s Takeover Through TTIP (2016 report from Institute for Agriculture and Trade Policy)


from AMIBA
Free Trade Isn’t the Goal of These Treaties
The Small Business Case Against “Fast Track” for Trans-Pacific Partnership
Free trade in 54 words (U.S. Constitution)

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