On December 7, the Council of the European Union (EU) concluded that it’s time for a label on animal welfare, setting up what could become an epic trade dispute between Brussels and much of the world.
Brussels has a long history of legislating minimum animal welfare standards. Europe has a mandatory label on table eggs, and a patchwork of voluntary labels on meat products. Animal welfare is also a part of Europe’s organic farming rules. Now Brussels wants an EU-wide label to help consumers identify, and reward, farmers who invest more in animal husbandry.
What would such a label look like? Consider France’s Étiquette Bien-Être Animal, a label adopted by Carrefour and other retailers. It assigns a letter A (“superior”) through E (“minimal”) based on 230 criteria. These criteria build upon the EU’s “Five Freedoms” for farm-kept animals, including that they be raised without hunger or distress. Since 2018, there has also been talk of considering the animal’s emotional state. All told, the label’s creators say that it clearly conveys the information that consumers want, all in an intuitive way. An EU-wide label will be marketed in much the same way.
Farmers exporting to Europe will see things differently. They’ll argue that an EU-wide label is a “disguised” restriction on trade. They’ll say the record-keeping and verification requirements are onerous and disproportionate to the amount of information on the label. They’ll insist that the criteria vetted by the label are based on how European farmers do things, not science. And they’ll claim that the letters, numbers or colors on the label will be mistaken for a quality or health standard. What’s more, they’ll probably be right.
Mere conjecture? Not really. All of these arguments have been made countless times in trade disputes over labels, often with success. For example, in United States — Certain Country of Origin Labelling, the World Trade Organization (WTO) found the record-keeping and verification costs to be far in excess of what consumers could learn from the label. Few consumers understood what the letters meant, and most, if not all, mistook them for quality rankings. Moreover, there was no evidence consumers were willing to pay for this information, even if they fully understood the label.
The U.S. country of origin label was mandatory. Imagine that, instead, the EU makes its label voluntary. That’s where things get really interesting.
Back in 2012, the WTO convened a meeting on how to define voluntary standards in the case of health standards. This was no easy feat. But many developing countries had an example in mind: GlobalGAP. GlobalGAP, originally called EUREGAP, was launched in 1997 to incentivize “good agricultural practice,” including animal husbandry. The key was that retailers would take the lead, not governments. Compliance with GlobalGAP is necessary to get shelf space in many retailers around the world. The presented developing countries with a problem: the WTO has a lesser grasp of voluntary, as opposed to mandatory, standards. Brazil wasn’t buying it.
Brazil argued there is nothing voluntary about GlobalGAP. It’s de facto mandatory. How so? Brazil explained that retailers who adopted GlobalGAP represent too much market share to treat it as voluntary. In other words, GlobalGAP has the effect of being mandatory because it is virtually impossible to get shelf space from a retailer for food that is not compliant. An EU-wide animal welfare label, even if voluntary, will be open to the same charge.
There will be fights over an EU-wide label within Europe as well. The Council’s decision is breathtaking in its scope and, not surprisingly, anticipates frictions. For example, there’s the call not to punish countries with higher animal husbandry standards, but also a plea to write criteria that are “achievable by all” EU members. The Council expects that the label will cover all livestock at each stage of its life, transport and slaughter, yet also wants different geographical and climatic conditions across Europe to be taken into consideration. Finally, the Council wants the label to account for rules on organic farming, its “interplay” with national labels and the financial cost of doing all this.
To manage these and other frictions, look for a variety of exceptions to bridge intra-EU differences. Because these derogations are likely to be available to domestic farmers, but not foreign ones, they’ll be the low hanging fruit if (when?) the EU-wide label is challenged at the WTO.
Animal welfare is an important and legitimate public policy goal. The trick is to pursue it without creating a disguised restriction on trade. Has the EU Council asked for the impossible?
Marc L. Busch is the Karl F. Landegger Professor of International Business Diplomacy at the Walsh School of Foreign Service, Georgetown University, a nonresident senior fellow at the Atlantic Council and host of the podcast TradeCraft.