Please review the article Country of origin labeling (COOL) still remains a touch subject after the WTO's final ruling against the U.S. By: Paul Peterson  

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pohnpei397 eNotes educator| Certified Educator

In writing this answer, I will assume that your class is a basic economics class and I will use concepts that you would have learned in such a class.

This article discusses the causes and current status of a trade dispute between the United States on the one hand and Mexico and Canada on the other.  The dispute arose because the US imposed country of origin labeling (COOL) requirements for meat.  Mexico and Canada submitted complaints to the World Trade Organization (WTO), which ruled in favor of those countries.  After the latest ruling, Mexico and Canada have imposed tariffs on various US goods to compensate for the losses they have suffered due to the COOL requirements.

There are a number of economic principles to be found in this article. 

One economic principle found here has to do with the way that exchange rates affect importing and exporting.  The article says that Canadian meat growers started selling more of their animals to US processors when the Canadian dollar’s value dropped.  They would have done this because they would get paid in dollars.  When they brought those dollars back into Canada, they would have been worth more than they would have when the Canadian dollar was strong.  This illustrates the principle that, when a country’s currency weakens, it will (all other things being equal) be willing and able to export more goods.

A second economic principle is the principle that equilibrium prices and quantities are set by supply and demand.  Economic theory tells us that, when a market is left to function on its own, the price and quantity bought and sold will reach a natural equilibrium through the mechanism of supply and demand.  When government intervenes in the market, the process of finding an equilibrium can be disrupted.  When the government imposes COOL requirements, it raises the cost of producing meat.  We know that an increase in the cost of producing meat will lead to a decrease in the supply of meat.  When the supply goes down, prices will increase and less of the product will be bought and sold.

A final economic principle involved here has to do with free trade.  In this article, we see two things having to do with free trade.  First, we see that free trade leads to greater competition.  This is good for the consumer but bad for producers.  Therefore, producers try to limit the amount of free trade that exists.  This brings us to the second point which is that there are non-tariff barriers to free trade that can be erected.  The US did not place tariffs on Mexican and Canadian meat, but they did try to keep it out of the country by imposing COOL requirements that disadvantaged foreign meat.  Imposition of non-tariff trade barriers is a very common ploy in today’s world.

My view of this article is that it is written very much from a mainstream economics point of view.  The author believes that free trade is a good thing and that the US should not try to reduce the amount of free trade.  He argues that the meat industry is only using COOL as an excuse to keep foreign meat out of the country.  There are many people who would argue that COOL requirements are an important way to make sure that consumers are able be informed about the safety and quality of the meat they are consuming.