Money Talks is a business column from CBC radio.
By Michael Hlinka, CBC business columnist:

There is a huge amount of bilateral trade in agricultural products between the United States and Canada. Last year, it topped $37 billion, and the winners were American and Canadian consumers. Canada’s biggest imports were fresh fruits and vegetables. The United States’ biggest imports were beef and hog products.

We’re still buying their oranges and lettuce. But our meat sales have come close to grinding to a halt – exports of hogs are down 60 per cent – and it’s all because of a label law that came into being in January of this year.

Let me label that label law for what is it: It’s how protectionism is being practiced these days.

The idea behind the law seemed innocent enough. The legislation requires American companies to notify customers where the meat that they’re buying comes from. Defenders think of it almost as “truth in advertising.”

For example, I have friends who explicitly support Canadian agriculture by having baskets of locally grown food delivered weekly to their home. If they didn’t know where, for example, the apples came from, they couldn’t do this. But it’s an apples and bacon comparison when you look at the way that fruits and vegetables are grown and livestock is raised. Frequently, young animals born in Canada are shipped to the States for fattening, mixing in with an American-reared herd. It’s a logistical nightmare for farmers and packers to keep track of which hogs were originally born where.

Canada is doing the only thing it can do - wWhich is also the right thing to do. After months of direct and unsuccessful talks with the Obama administration, we’re taking it to the World Trade Organization. Trade Minister Stockwell Day reluctantly announced that last week.

Mr. Day’s American counterparts are sticking to their guns. They believe that country-of-origin labelling is legitimate policy and in some cases, I’d agree. But not this time. The bottom line is that there will be a ruling. Typically, it takes nine months for one to come down. Then there’s an appeal process – does the phrase “softwood lumber” ring any bells?

And while this unfolds, Canadian meat producers will bear the brunt of the price.

But not all of it. American consumers will pay more for their meat than they would if there were free trade between the two countries. American producers – of fruits and vegetables – will sell less, because at least some of their Canadian customers don’t have as much money as they had before. American businesses in the food supply chain will see their costs increase. The bill itself puts the compliance tab at $2.5 billion annually.

This is a classic case of Economics 101 that demonstrates conclusively that free trade is a win-win situation for almost everyone. It’s just too bad that the Obama Administration cares much more about Political Science 101 which says that you’ll go farther catering to special interests – this case, American beef and hog farmers – than you will by serving the public good or doing what’s right.