Here we go again.
Congress wants to bring back country of origin labeling, also called COOL, on meat products. This is tricky. The previous version was found to be illegal by the World Trade Organization and pushed the United States to the brink of a trade war with Canada and Mexico.
There’s bipartisan support for COOL 2.0 but no consensus on whether it needs to be written to comply with the WTO. The Beef Origin Labeling Accountability Act says it should. The Country of Origin Labeling Enforcement Act of 2023 says it doesn’t matter what the WTO “or any other international organization” thinks about the new version.
It’s a false choice. Not politically, mind you, but because of technology. Blockchain is the fix.
First, the backstory.
The U.S. rolled out COOL 1.0 in the early 2000s. Proponents argued that consumers want to know the national origins of beef and pork. COOL provided this information on a label, but the label was confusing. It defined nationality according to where cattle and hogs were “born,” “raised” and “slaughtered.” Meat processors were responsible for auditing all this information and had an incentive to source domestically because imports increased the costs of recordkeeping and verification.
Canada and Mexico challenged it as a technical trade barrier. The WTO ruled in their favor in 2012. The appellate body concluded that there was a substantial disconnect between the costs of recordkeeping and verification of imports and the amount of information on the label. Exempting restaurants from the requirements of COOL didn’t help.
COOL 2.0 is likely to use COOL 1.0’s definition of “Made in the USA.” Compliance will be mandatory rather than voluntary because even though consumers may want to know the origins of their food, there’s no evidence they’ll pay for this information.
This is where blockchain comes in.
Blockchain enables the sharing of secure and verifiable data almost instantaneously. Think of a DocuSign contract that can be updated at every point along a global supply chain on a decentralized platform.
For COOL 2.0, the key is that upstream suppliers and government regulators could share almost unlimited tamper-resistant data with each other and consumers. Consumers could scan a QR code to get a digital label on their phone. This digital label could even suggest additional resources.
And there it is — a match between the data collected by meat processors and the information conveyed by a label to consumers. This would fix much of what the WTO didn’t like about COOL 1.0.
Blockchain is already being used to do food traceability. As the World Bank explains, food traceability involves tracking lots of produce from suppliers to processors to consumers. A decentralized app would enable dynamic recordkeeping and verification on every shipment.
This is not just about digitizing forms that are currently filled out on paper. It’s about using technology to fully democratize farm-to-fork audits of food.
An added benefit is that blockchain would also make it unnecessary to exempt restaurants from COOL 2.0. Patrons are used to scanning QR codes to get menus. Embedding a digital COOL label in these menus could remedy one of the WTO’s most important concerns about COOL 1.0.
Politics brought out the worst in COOL 1.0. Blockchain could bring out a different side of COOL 2.0.
Marc L. Busch is the Karl F. Landegger professor of International Business Diplomacy at the Walsh School of Foreign Service, Georgetown University, and a global fellow at the Wilson Center’s Wahba Institute for Strategic Competition. Follow him on Twitter @marclbusch.