The Canadian beef scare

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On Thursday, the Ninth U.S. Circuit Court of Appeals, siding with the federal government, ruled in favor of reopening U.S. markets to Canadian cattle. This is good news and long overdue. Since the ban went into effect, the U.S. beef industry has suffered greatly from what can be described as a case study in the workings of protectionist policies. Americans have seen a 27 percent increase in beef prices, while processing plants have been forced to lay off thousands of workers.

In May 2003, the United States halted Canadian cattle imports after a single Canadian cow was diagnosed with bovine spongiform encephalopathy, otherwise known as mad cow disease. At the time, closing the border was probably the most prudent way to assure the American public that the federal government was taking mad cow seriously. Aside from higher prices and fewer jobs, the embargo of course has had other unfortunate results. Having lost access to U.S. processing plants, Canada went to work on investing in its own processing industry. Meanwhile, Japan, one of the United States' largest beef trading partners, reacted similarly when a BSE-infected cow showed up in the United States in December 2003. As a result, the U.S. beef industry has lost billions of dollars.

Mad cow is indeed a serious threat to cattle herds. During the 1980s and 1990s, Great Britains's cattle herds were devastated by the then-mysterious malady. The epidemic reached critical mass when it was discovered that humans could contract a lethal variation of mad cow when ingesting the brain and spinal tissue of an infected cow.

But the threat to humans was greatly exaggerated. Scientists now know that humans can eat the beef of an infected cow with zero threat of contracting the disease. The United States, as well as the other top beef-producing nations, have mitigated the threat by imposing stricter cattle-feed regulations and discarding the areas of the cow that carry the disease.

The U.S. Department of Agriculture has understood the real threat to humans for some time now, but its efforts to relax the embargo were met with stiff resistance from the Ranchers-Cattlemen Action Legal Fund (R-CALF) of Billings, Mont., which had the assistance of powerful Washington lawmakers. R-CALF, of course preferring the higher prices resulting from the ban, wanted to extend it indefinitely, citing safety as its primary reason. The group managed to convince a district judge in March to issue a temporary injunction against USDA's plan to reopen the border. Although the 9th Circuit's ruling is likely to take precedence, the district judge will still hear R-CALF's case for making the injunction permanent later this month.

The 9th Circuit's decision will also help Agriculture Secretary Mike Johanns' effort to convince our trading partners like Japan, South Korea and Taiwan to lift their own bans on American beef. Meanwhile, it will probably take some time before Canadian cattle shipments offset the embargo's negative effects.