Is it really so bad that WTO ruled against U.S. in country-of-origin labeling dispute?

The World Trade Organization (WTO) today ruled in favor of Canada and Mexico, saying that U.S. country-of-origin labeling (COOL) rules violate our commitments in previous trade agreements.

The COOL rules in dispute required new labels on fresh beef, pork, and lamb, but not on processed foods such as hot dogs. The labels would say what country the product comes from. In some cases, the labels might have to be complex ("this cow was born in Canada, fed in the United States ...").

Many people who care about food policy from a public interest perspective will say the WTO ruling is terrible. For example, Food & Water Watch Executive Director Wenonah Hauter says today:

The WTO’s continued assault against commonsense food labels is just another example of how corporate-controlled trade policy undermines the basic protections that U.S. consumers deserve.

But let me ask, is the WTO ruling really so bad? I have two reasons for asking this question.

First, perhaps the WTO ruling has some merit.

Canada and Mexico claimed that the U.S. law was designed as a trade barrier, not merely as a consumer labeling provision. They pointed out that the tracking and record-keeping burdens fell more heavily on Canadian and Mexican producers than they did on seemingly similar U.S. producers. They also cast doubt on the consumer information merit of all this tracking and record-keeping, because so much of the meat was destined for processed food that never would carry a country-of-origin label anyway. If the U.S. asks Canada and Mexico to incur tracking and record-keeping costs, and then fails to share the resulting information with processed meat consumers anyway, it does look like maybe the whole point was just to create a burden for our trading partners.

It would be one thing if the United States simply never negotiated a trade agreement in the first place. But, it is another thing altogether if the United States does negotiate a trade agreement, saying we will reduce trade barriers in return for Canada and Mexico doing the same, but then we fail to do what we promised.

Second, from the perspective of Food & Water Watch and other trade-skeptical consumer groups, perhaps the consequences are not so terrible.

WTO critics claim such rulings violate U.S. sovereignty. For example, Lori Wallach, director of Public Citizen's Global Trade Watch says today:

Many Americans will be shocked that the WTO can order our government to deny U.S. consumers the basic information about where their food comes from and that if the information policy is not gutted, we could face millions in sanctions every year.

This is not true. The WTO cannot order our government to deny U.S. consumers such information. The WTO cannot rewrite U.S. laws. The U.S. can simply refuse to comply.

When the WTO rules against the United States, the only remedy the WTO has is the power to permit Canada and Mexico to put up trade barriers of their own, without these trade barriers being ruled non-compliant with the same trade agreements. In other words, the only power the WTO has is the power to state for the record, "fair is fair."

For example, if the U.S. chooses not to honor the WTO ruling, Canada has proposed a list of U.S. exports that may get new import tariffs at the Canadian border: corn, meat, apples, pasta, orange juice, and so forth.

The United States may honor its trade agreements, or we may fail to honor them. If we don't honor them, surely it is right to be good sports when Canada and Mexico establish new import tariffs.

On what grounds should Food & Water Watch or Public Citizen's Global Trade Watch complain about the WTO ruling? If it is fine for the United States to exercise our sovereignty, it is fine for others also. Far from griping about the WTO ruling, trade-skeptical public interest organizations could just tip their hat to the WTO, contemplate the consequences for reduced food trade, and declare, "all is well."

There is a good reason why they don't do so. Many Americans, especially in agricultural regions of the country, are glad for the business that trade brings in the form of increased export markets for our farmers. When we remember that Americans are food producers as well as consumers, the trade agreements begin to seem more sensible and the WTO begins to seem more reasonable.

Further information

Chapter 4 of Food Policy in the United States: An Introduction addresses trade issues. I do my best to make the case for a public-interest pro-trade perspective in a talk at Cornell University last fall (video here).

The food policy of Hampton Creek's "Just Mayo"

"Just Mayo" from Hampton Creek is a vegetable oil spread offering a new vegan egg-free alternative to traditional mayonnaise. For people who follow food policy, it generates a pile of interesting things to think about, including: (1) food industry innovation, (2) nutrition content, (3) food labeling for people who care about animal welfare and the environment, and (4) standards of identity. 

I heard about Just Mayo from a recent Friedman School alum, who works in marketing for the company and who now has hired some current students on her marketing team. Josh Balk, from the Humane Society of the United States, who spoke at the Friedman School last year, is one of the founders.

(1) In part because of interest from Bill Gates in alternatives to eggs, Just Mayo has been heavily covered in the business and technology press. According to Forbes in December, Gates backs Hampton Creek as one of a handful of companies that may transform the food system. The New York Times last year described the investment of venture capitalists in the start-up. Bloomberg BusinessWeek in October focused on Just Mayo's recent success in getting shelf space in Whole Foods.

(2) Part of the consumer motivation for choosing an egg-free product is likely to be nutrition goals. Like traditional mayonnaise, Just Mayo is a high-fat high-calorie vegetable spread. Its role in a healthy diet likely depends heavily on how the consumer chooses quantities and also on what foods the product complements (in reasonable quantities, mayo in cole slaw complements tasty vegetable consumption and serves as a gateway salad, while mayo on fried potatoes Belgian-style is a high-energy occasional treat).  I am not a dietitian, but I would think of Just Mayo's nutrition profile as neither better nor worse than mayonnaise.

INGREDIENTS: Non-GMO Expeller-Pressed Canola Oil, Filtered Water, Lemon Juice, White Vinegar, 2% or less of the following: Organic Sugar, Salt, Apple Cider Vinegar, Pea Protein, Spices, Garlic, Modified Food Starch, Beta-Carotene.

(3) Many other consumers may seek an alternative to mayonnaise for animal welfare or environmental reasons. Both Just Mayo and traditional grocery store mayonnaise are processed food products, with similar transportation and packaging issues. For animal-friendly consumers at a loss to navigate confusing cage-free and free-range egg labels, Just Mayo certainly makes things easier by simply avoiding the use of eggs as an input. As a rule, plant food sources exhaust less of the planet's land and energy resources per unit of food energy produced. For these consumers, Just Mayo would be an improvement over traditional mayonnaise.

(4) As a product name, "Mayo" was close enough to "mayonnaise" to prompt me to look up the standard of identity for mayonnaise [Edit Feb 13: this sentence toned down from an earlier version saying Just Mayo "flirts with violating" the standard of identity]. A standard of identity is the federal government's official definition of a food. Sometimes, having a standard of identity protects consumers, by forbidding the sale of foods that are adulterated with fillers. At other times, a standard of identity may become outdated, preventing healthful or environmentally sound innovations. For example, there have been major controversies over whether the word "milk" can be used in the label for "soy milk."

The presence of eggs in mayonnaise is almost an archetypal example of a standard of identity. The Congressional Research Service glossary of agriculture policy terms (.pdf) specifically mentions mayonnaise under the heading for "standards of identity." According to the standards of identify in the Code of Federal Regulations, which are accessible on the Food and Drug Administration (FDA) website, "mayonnaise" includes eggs. 

The label for Just Mayo uses the slang "mayo" rather than "mayonnaise" in the product name. A favorable review on a vegan website calls the product "vegan mayonnaise," while a Whole Foods press release goes instead with "vegan mayonnaise-style product." In a similar fashion, Kraft Mayo or low-fat Hellmann's may use the term "mayo" or "mayonnaise dressing" without observing complete agreement with the standard of identity for mayonnaise [Edit Feb 13: sentence added]. The American Egg Board, a semi-public federal government checkoff entity, has begun a campaign to address the labeling of egg substitutes. It has a related white paper appealing for a "clean label" to oppose some of the egg labeling alternatives that may implicitly or explicitly be critical of traditional industrial egg production.

There may be some legal fireworks before the labeling of vegan alternatives to mayonnaise is settled.

OMG! Sodium!

I showed this cereal box to my 10-year-old daughter at breakfast this morning, but she couldn't see the pun.  At first, I thought maybe she didn't know the text message shorthand, OMG.  On the contrary, she could only read the message, "Oh my God, sodium!"

Albany Law School professor Timothy Lytton has a new book, Kosher: Private Regulation in the Age of Industrial Food.  A key point is that this topic is more broadly relevant than one might think, because kosher food is just one of many examples of food regulation systems that can be adopted by the private sector.

Lytton was interviewed on the What is Your Food Worth? blog.

As a general matter, private food safety audits and industry-sponsored nutrition labeling schemes have been a great disappointment. Behind most major food-poisoning outbreaks is some private auditing firm that gave the food producer a phony five-star rating. And when nutritional rating schemes give high marks to sugary cereals and full-fat ice cream, you have to wonder.

As a kosher-observant Orthodox Jew, I realized that kosher certification offers a 2000 year old example of private food certification. My initial suspicion was that kosher certification was full of price gouging and unnecessary, super-stringent standards. As I began to get into my research, however, I found that, although fraud and corruption were rampant a century ago in kosher meat production, today’s kosher system is highly reliable. My book tells the story of how, within the span of a century, kosher certification became the one of the most reliable systems of private certification in the food industry, indeed, perhaps in any industry.

POM Wonderful claims are false and misleading

An administrative judge for the Federal Trade Commission (FTC) concluded (.pdf) last week that POM Wonderful marketing claims about health benefits were "false and misleading."

For example, POM Wonderful advertisements imply that the juice protects against prostate cancer.  Could this be true?  POM Wonderful cited a study with some evidence that "PSA doubling time" -- a measure of prostate cancer's progress -- is slowed by drinking POM Wonderful.  Yet, truthfulness requires more than selective quotation from a favorable study.  In the FTC hearing, the balance of scientific evidence failed to support POM Wonderful's implied prostate cancer claim. 

POM Wonderful argued that some of its claims were merely puffery, not intended actually to convince grown-up consumers that the juice protects against cancer.  Yet, truthfulness does not permit the kindergarten defense: "Okay, I implied it, but I didn't really say it, so it's not a lie."

The administrative judge is correct to tar the claims as false and misleading.

What is the policy implication?  Some reasonable people would say the FTC should crack down on misleading health claims.  Other reasonable people would say "buyer beware," while maintaining that regulation will do little good.  In either case, let us all acknowledge that the claims are false and misleading.  There can be no defense of the claims themselves.

Or, so I thought.

POM Wonderful's response to the ruling this week has a breathtaking audacity.  I see today on the NYT website, POM Wonderful advertisements boasting of the FTC judge's ruling.  For the prostate issue above, here is the key quote in the POM Wonderful ad today:

“Competent and reliable scientific evidence supports the conclusion that the consumption of pomegranate juice and pomegranate extract supports prostate health, including by prolonging PSA doubling time in men with rising PSA after primary treatment for prostate cancer.”

– Judge Chappell, Chief Administrative Law Judge, FTC

In the Matter of POM Wonderful LLC, Initial Decision (5/17/2012), page 282

How is this possible?  Did the judge really endorse the very cancer-protective claim that POM Wonderful had implied?  Here is the full passage from page 282 of the judgment, with the sentences not quoted by POM Wonderful underlined.

Competent and reliable scientific evidence supports the conclusion that the consumption of pomegranate juice and pomegranate extract supports prostate health, including by prolonging PSA doubling time in men with rising PSA after primary treatment for prostate cancer.  However, the greater weight of the persuasive expert testimony shows that the evidence relied upon by Respondents is not adequate to substantiate claims that the POM Products treat, prevent, or reduce the risk of prostate cancer or that they are clinically proven to do so.  Indeed, the authors of the Pantuck Study and the Carducci Study each testified that their study did not conclude that POM Juice treats, prevents, or reduces the risk of prostate cancer.

Let anybody who was tempted to criticize the FTC or defend POM Wonderful read these two passages and evaluate for themselves the company's standard of honesty.

In my view, POM Wonderful is truly a bold titan of the dubious claims industry.

Update (1:45 pm): I just noticed that Marion Nestle also covered the NYT ads.  Soon perhaps POM Wonderful will quote Marion's sentence: "Fruit juices are healthy and especially delicious when fresh."  Of course, Marion goes on to say she doubts the cancer claims too.