Hall of Shame: Possible NTB on EVOO

For those of you that don't watch Rachel Ray (who uses the acronym with somewhat annoying frequency), EVOO is Extra Virgin Olive Oil. For those who haven't taken my IPE class, an NTB is a Non-Tariff Barrier to trade.

The AP reports that US olive oil producers are pushing Congress to impose standards and testing on imported olive oil labeled as Extra Virgin. They claim this is a truth in advertising issue, but it is clearly aimed at expanding their market share from its current level of 3%.

In fairness to them, they are asking that domestic USDA testing and labeling standards be extended to imports. Therefore, their proposal might not be WTO illegal (as it does not subject imports to different standards than domestic products). Of course, in the inevitable case of a challenge from the EU, the WTO might rule on the scientific merits of the regulation (which is a somewhat controversial aspect of the WTOs rules).

However, the thing that irked me about the AP article was the comparison to California wine included in these passages:

"U.S. producers are seeking to build on that growth in a struggle reminiscent of the California wine industry's push to gain acceptance decades ago.

"They've mounted an aggressive push in Washington, holding olive oil tastings for members of Congress and lobbying for stricter standards on imports. The strategy almost worked last year when industry-proposed language was included in a massive farm bill passed out of the House Agriculture Committee."

What struck me about the above comments was that, from a political economic point of view, the olive oil producers are hardly reminiscent of the wine producers. If you have seen the movie Bottle Shock or are familiar with the story of the "Judgement of Paris" (the 1976 blind taste test in which pitting California wine versus French wine), you will know that California wine rose in prominence due to its quality. California vinters benefited from a taste testing by private experts in Paris, not a taste testing by politicians in DC. California wine, therefore, represents a case of consumer sovereignty in action.

As for the case of olive oil  producers, while they too are in a situation in which the imported product has a better reputation for quality, they are attacking it by seeking government intervention rather than appealing to consumers directly. Indeed, by seeking to have the testing done on their product extended to imports, they are giving up on a potentially important claim to quality for their product (i.e., that it is tested). If testing of imports is implemented, the resulting testing might only enhance the reputation of the imported brands that pass the test.

Now, I am an admittedly bizarre consumer due to the time I spend studying this stuff, but I do use EVOO quite a bit and favor imported brands. I currently use Bertoli, which is made in Italy. Knowing that domestic EVOO is tested and Betorli's is not actually inclines me to give a domestic oil a try.  If, however, uniform testing is imposed (and Bertoli's wasn't pulled from the shelves), I would have no such inclination. This is what really qualifies this case as a Hall of Shame moment.