In the United States, Mandatory Country-of-Origin Labeling (MCOOL) was brought into force in 2008. Because of the bill, American retailers must inform consumers about the country of origin of various classes of meat products including muscle cuts of beef, pork, and lamb, as well as chicken, fish products, and other perishable food items.
The common practice in most countries is that imported products are either labeled with a simple declaration of their country of origin, or are labeled under the name of the country that has added the last substantial amount of value (such as processing) to the product. The MCOOL provision is substantially different. It requires retailers to use one of four types of labels. In the process of determining the appropriate label, the origin of the animal, where it was raised, and the country in which it was slaughtered and processed must be determined, tracked, and recorded. 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 young pigs may be born in one country, raised in another, and/or slaughtered on either side of the border. Because of this, the new MCOOL label imposes by necessity a tracking, segregating, and recording system that adds significant extra cost to the integrated system of meat production.
This extra cost threatens the efficiency created over the years between Canada and the United States (and Mexico). Producers can now choose an “all-American-all-the-time” product and in so doing avoid steep labeling costs. Contrary to what many legislators suggest—this product is not necessarily of better quality, or derived from a safer animal or a better health standard, but just happens to have cheaper transaction costs due to the criteria and processes needed to implement MCOOL.
Since MCOOL went into force, Canadian cattle and hog exports to the United States have decreased by 42 and 25 percent respectively. This drop in trade affects the US nearly as much as it affects Canada as many American processors and packers are faced with a lack of supply. There is an additional impact on employment. The livestock industry directly contributes to over 100,000 jobs in Canada and indirectly to many others. Likewise, many jobs in the United States are jeopardized by this measure.