Beef, Russia Sanctions Bill, Canada-Europe Relations, and Italian Pasta
The Trade Guys
The episode examines several recent shifts in international and domestic trade policy, beginning with an analysis of President Trump's executiv
Key takeaways
- President Trump's executive orders aim to examine country-of-origin labeling and reform regulations for small meat processors.
- The Russia sanctions bill passed the Senate 86-11 but faces House opposition due to concerns over expanded presidential tariff authority.
Main topics
- Beef import executive orders
- Russia sanctions legislation
Notable quotes
The states are laboratories of democracy.
Conclusion
The episode offers a detailed look at how political decisions and regu
Transcript preview
Speaker 2 (0:00) I'm Scott. I'm Bill. And we're the Trade Guys. Speaker 3 (0:07) You're listening to The Trade Guys, a podcast produced by CSIS, where we talk about trade in terms that everyone can understand. I'm Alex Kisly, and I'm here with Scott Miller and Bill Reinsch, the CSIS Trade Guys. Speaker 3 (0:21) Thanks for listening to The Trade Guys. On today's episode, we follow up on President Trump's executive orders on beef, look at the Russia sanctions bill stalled in Congress, and discuss the push for closer ties between Canada and Europe. Plus, what Italian pasta can tell us about the administration's approach to trade enforcement. All that and more on today's episode Speaker 1 (0:42) of The Trade Guys. Speaker 3 (0:47) Welcome back to The Trade Guys, everyone. We're going to start today with an update we promised last week on President Trump's executive orders on beef imports. The president was actually signing these orders as we were recording last week, so we weren't able to get into the details in our last episode. Just for context, the orders came as the administration was facing pushback from the ranching community and some allies in Congress over the president's decision to temporarily increase imports of foreign brown Speaker 1 (1:13) beef in an effort to bring down prices at the grocery store. Speaker 3 (1:16) So, Scott, let me start with you. What was in the executive orders signed last week? Speaker 1 (1:20) Sure. And for those of you who missed last week's episode, it's a decent one. But there's obviously high prices for beef, unusually high, because the herd is about as small as it's been in more than 50 years. And that's pushed upward pressure on a lot of beef prices. Now, we went over last week some of the causes of it and why it's so difficult to resolve and the action the president took to help the consumer. was to increase imports of ground beef for at least for three months. It's a modest increase directionally right for the problem of inadequate supply, but it had some other repercussions like from the political community here in Washington. And that's what the executive orders turned out to have been about. There are basically two of them or two policies that they're working on. The first one is country of origin labeling, conservative agriculture. has been instructed to see what can be done on country of origin labeling. Last week, Bill talked some length about how it's a popular idea to label a country of origin, but it's one which has gotten us in trouble based on our WTO obligations. And Congress recently repealed what did exist in terms of country of origin labeling because it was violative of our WTO obligations. So this one will be an examination by the Secretary to see what's available. And then the second part of it is to look for ways to reform the ability of small producers, farmers or ranchers, to process their own meat and also potentially sell state-approved processed meat across state lines. So this is an agenda where the secretary is once again going to examine what are the options, what are the opportunities to reduce the concentration in the industry, but more importantly, allow individual farmers and ranchers to supply their friends and neighbors and perhaps even larger groups with their own meat processing. So I would say that overall, this is kind of what we expected. None of this is a sure thing. I would point out that while the president is an outsider, he is not immune to politics. And after pleasing the consumer modestly with the increased imports of ground beef, he had to do something for the ranchers. Well, the something for the ranchers, I think, is the country of origin labeling. which either will be available to him or something he'll have to say to the ranchers, sorry, you got to go to Congress and get them to find a trade-compliant way to do it. We'd love to help you, can't do it. So that's a decent political outcome for the president. The same goes for the help for small processors. First, I think it's a great idea to look at state regulation on this because, as Justice Brandeis said, the states are laboratories of democracy. And there are probably 50 different ways that states have determined how to handle locally processed foods of all sorts, including meats. And so some of them will be really interesting and creative and some will be quite restrictive. So I think examining them is a great idea. It will be one of those things that will be actually easier to examine than to actually modify or change. But it does help the president, I think, to at least have his secretary of agriculture and their team trying to find out. if there's a good way to do this that has the right safety results, that has the outcomes they're looking for, and helps the little guy, which is, I think, how the president wants to present himself. He's found his villains. The villains are the four big consolidated meat processing firms. So he hasn't been able to stick it to the villains yet, but he'd love to, and this would be one opportunity. It's a long shot, but those are the two things they're working on, both of which, I think, help to moderate the politics, even if they don't get... meat prices down anytime soon. Speaker 3 (5:06) Yeah, and I believe while he was signing the executive orders in the Oval Office last week, he acknowledged perhaps multiple times that he was going to be the meatpacking giants were going to be no fan of this move. Bill, how are the ranchers responding here? How should they be responding to this? Does this go far enough for them, do you think? Speaker 2 (5:24) No, they don't think so. They're unhappy. To be honest about it, my father-in-law was a cattle farmer. Not out West. He was a cattle farmer in Pennsylvania, which, believe it or not, is a large agricultural state and has a lot of farmers, including cattle farmers. He was a small one. He had about 130 head or something like that, depending on what year it was. Having talked to him for many, many years, he was never happy. And farmers in general are never happy. And they've got a lot of reasons not to be happy. So the ranchers are not. They're propounding an odd theory. I guess it'll be tested if cool. gets enacted, which is that Americans want American beef. You know, they want American steers. And my gut tells me that Americans have no idea what is American beef and what is, in this case, Canadian beef or Mexican beef. And I'm not sure that if they were told the difference, that it would make any difference to them in the marketplace, unless there was a price difference, in which case they'd probably opt for the cheapest. But in addition, it turns out that implementation is complicated. Because in a lot of cases, what we're talking about here is calves that are born in Canada or Mexico, and then at a certain stage of their development, shipped across the border into the United States for further fattening and growth, where they're ultimately slaughtered in the United States and turned into steaks and roast and then ground meat. What makes them American at that point? Are they Canadian because they were born in Canada? Or are they American because they spent the better part of their lives here and were fattened and grown here? It's not an easy distinction to make. And I'm not sure the American consumer cares that much about it. I also think the president was, I think, smart to dump this on USDA to study. Because the question of what to do about country of origin labeling is a complicated legal question. I consulted a lawyer before this podcast about this and didn't get a clear answer at all. It's not at all clear to me whether that it requires legislation or not. The last time we had it, It was the product of legislation. It was not the president simply declaring it. The Congress passed a law which it later repealed, as Scott said. Trump being Trump, you know, he may try simply to declare it based on previous circumstances. If he does that, there will probably be another WTO case. On the other hand, the last one was more than 10 years ago. And I suspect now we're a time period when adverse WTO decisions don't carry as much weight as they did then. And I don't know that if we lost another one, that Congress would be quick to repeal another version of fool. But we'll see. Right now, it's effectively off the table for a few months while USDA studies it. So we can come back and address this probably after the midterm election. Speaker 1 (8:11) One thing that the Congress has always liked and most people in Washington like is made in USA or country of origin labeling. Very popular idea, and it works almost nowhere. The Made in USA is a specific claim. It's actually closer to a trademark than it is a customs classification. But Made in USA is valuable in certain specific industries and products, hand tools being one of them. But when you get outside the few places that made in USA is an important claim to make, it falls off pretty quickly. And often, as long as it is what the consumer expects in terms of safety and quality. Origin is of little interest to the consumer, but it's much loved as an idea in Washington. That may be the situation we're in with beef here. Speaker 2 (8:57) That's a good point. I remember the hand tools has been also the subject of threat litigation, which actually, to digress just a minute, produced a very amusing and novel case, but it illustrates why USA matters in some cases.