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'Made in the USA' meat rule sparks trade battle

A newly finalized rule with more stringent requirements for meat products labeled as “Made in the USA” is being applauded by domestic meat producers and fretted over by industry groups as it promises to change dynamics within U.S. meat consumption and trade.

The new rule mandates that only meat, poultry and egg products that have been “born, raised, slaughtered and processed in the United States” can be labeled as “Made in the USA” or “Product of USA” on their packaging.

Additionally, it requires that all other ingredients in meat products with USA labels beside spices and flavorings be of domestic origin, and that all food preparation must have occurred in the U.S., as well.

The new rule is voluntary, meaning companies don’t have to put a USA label on their meat product if they don’t want to, but it could still have a large impact on what meat Americans choose to consume.

Numerous scientific studies have shown that country of origin labeling affects consumer demand levels on food products. One 2003 study found that consumers were “willing to pay an average of $184 per household annually for a mandatory country-of-origin labeling program.”

“Respondents were also willing to pay an average of $1.53 and $0.70 per pound more for steak and hamburger labeled as ‘U.S. Certified Steak’ and ‘U.S. Certified Hamburger,’ which is equivalent to an increase of 38 percent and 58 percent, respectively, over the initial given price,” the study from the Western Agricultural Economics Association found.

While nearly half of all U.S. beef is consumed by just 12 percent of Americans, according to another recent study, similar label premiums could translate to hundreds of millions of dollars in shifting sales revenue.

“Today’s announcement is a vital step toward consumer protection and builds on the Biden-Harris Administration’s work to bolster trust and fairness in the marketplace where smaller processors can compete,” Agriculture Secretary Tom Vilsack said in a statement.

Some Republicans have also cheered the measure on, especially those from states where meat production is a big chunk of the economy.

“This rule change is a victory for American consumers and producers,” South Dakota Sen. Mike Rounds (R) said in a statement that acknowledged the “magnitude” of the rule change. Rounds has also taken issue with concentration in the meatpacking industry, which is run by just three or four giant companies that wield power over prices, as well as with mandatory country of origin labels in the cattle market.

Advocates representing U.S. meat producers see the rule change as a huge win.

“These are long, hard fights that are measured in years — but today’s ‘Product of U.S.A.’ labeling win shows that our efforts were worth it,” Joe Maxwell, co-founder of the Farm Action advocacy group, said in a statement.

Other industry groups and foreign governments disagree, believing the rule change portends retaliation in the international trade sphere.

“Congress repealed COOL (Country of Origin Labeling) because Canada and Mexico challenged COOL as a nontariff trade barrier,” the North American Meat Institute trade group wrote in a statement last year. “The U.S. government lost four times before the World Trade Organization (WTO) and the WTO authorized Canada and Mexico to retaliate and levy more than $1 billion in tariffs on goods ranging from meat to wine, chocolate, jewelry and furniture.”

“Canada and Mexico still retain that authorization and could initiate retaliation with no further action by the WTO,” the group added.

The Mexican government has already expressed “disappointment” with the new USDA regulation, arguing that “this measure does not take into consideration the deep integration of the livestock and meat industries of North America.”

Mexican exports of cattle and beef products to the U.S. were around $3 billion in 2023, comprising 1.25 million heads of cattle and 260 thousand tons of beef, according to the Mexican government.

The Mexican Ministry of Agriculture said on Monday that the new rule creates “inconsistencies” with U.S. obligations to the World Trade Organization (WTO) and that “Mexico reserves the rights accordingly.”

U.S. pork producers have also warned of trade retaliation resulting from the “Product of USA” label rule, arguing that pork production and distribution chains are internationally stitched together as a result of the 1994 NAFTA trade agreement and its successor, the USMCA, which got rid of pork tariffs across the continent.

The rule change is the latest sign of increasing protectionism in U.S. economic policies, following Made In America conditions on clean energy manufacturing provisions included in Democrats’ Inflation Reduction Act. 

Former president and current presidential candidate Donald Trump has already proposed a blanket 10-percent tariff on foreign imports, a move that would further erode the international trade regime last significantly bolstered in the 1990s.

Concerned about the U.S. pullback from agricultural trade, GOP senators wrote a letter Wednesday to Vilsack and U.S. Trade Representative Katherine Tai, calling US trade strategy “unambitious.”

“The current sharp decline in U.S. agricultural exports is directly attributable to and

exacerbated by an unambitious U.S. trade strategy that is failing to meaningfully expand market access or reduce tariff and non-tariff barriers to trade,” John Thune (S.D) and 21 other senators wrote Wednesday.

Source: The Hill

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