In March and April 2013, we wrote three articles (http://agpolicy.org/articles13.html) examining the World Trade Organization’s (WTO) ruling that the U.S. mandatory Country of Origin Labeling (COOL) was inconsistent with the WTO Technical Barriers to Trade obligation to accord imported products treatment no less favorable than accorded to domestic product. In particular, the WTO found fault with 1) the “mixed origin” label for both beef and pork that allowed packers to commingle muscle cuts of U.S., Canadian, and Mexican origin and 2) the COOL label that did not convey where the animal was born, raised, and slaughtered, though packers were required to collect that data.

The COOL statute covers beef, pork, lamb, chicken, goat meat, wild and farm-raised fish and shellfish, perishable agricultural commodities, peanuts, pecans, ginseng, and macadamia nuts. The revised rule primarily focuses on beef and pork because other covered products either have few imports or the country in which they are grown is the same as the one in which they are processed.

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The July 23, 2012, WTO decision gave the U.S. until May 23, 2013, to come into compliance with its ruling or face the possibility of trade sanctions. On March 12, 2013, the United States Department of Agriculture Agricultural Marketing Service (AMS) published proposed revised regulations that it believed would correct the problems found by the WTO.

Given the short timeframe, the AMS allowed only 30 days for a comment period, issued the final revised rule (http://www.gpo.gov/fdsys/pkg/FR-2013-05-24/pdf/2013-12366.pdf) on May 20, 2013, and made the rule effective May 23, 2013—instead of 30 days after publication in the Federal Register—to avoid the possibility of trade sanctions by Canada and Mexico.

To compensate for the short notice given to the beef and pork industries, the AMS established a 6-month period during which it “will conduct an industry education and outreach program concerning the provisions and requirements of this rule. AMS has determined that this allocation of resources will ensure that the industry effectively and rationally implements this final rule.” The AMS also allows “existing stock of muscle-cut covered commodities labeled in accordance with the 2009 COOL regulations that are already in the chain of commerce to clear the system.”

Stakeholder comments

During the 30-day comment period, the AMS received 936 comments from stakeholders ranging from consumers to foreign governments. Of those comments, 453 “including four petitions signed by more than 40,000 individuals…indicated that the proposed rule makes labels more informative for consumers.”

The remaining “476 comments opposing the rule [came] from numerous producer, packer, and international trading partner entities, as well as individual ranchers, packing companies and Foreign Government officials.”

Many of the comments opposing the rule were concerned with the costs of implementing the changes in the COOL labels and losing the ability to commingle cattle processed on the same day, including the costs of segregating animals depending on the label to be used. As a result, the AMS revised the cost estimates that were contained in the proposed rule. The new estimate of costs ranges from $53.1 million to $137.8 million.

Language was of concern to some who made comments. One “recommended that chicken should be labeled “hatched” instead of “born.” This commenter, as well as others stated their opposition to having to use the term “slaughtered.” They suggested alternatives that consumers may find more acceptable including “harvested” or “processed.” The agency explained that those terms were already permissible under COOL regulations.

In addition, “in terms of using labels and stickers to provide the origin information, the Agency recognizes there is limited space to include the specific location information for each production step. Therefore, under this final rule, abbreviations for the production steps are permitted as long as the information can be clearly understood by consumers. For example, consumers would likely understand “brn” as meaning “born”; “htchd” as meaning “hatched”; “raisd” as meaning “raised”; “slghtrd” meaning “slaughtered’ or “hrvstd” as “harvested.” In addition, the current COOL regulations allow for some use of country abbreviations.”

Labels

For muscle cuts from animals slaughtered in the U.S., the consumer can expect to see four different labels:

“As stated in the March 12, 2013, proposed rule, under the current COOL regulations, imported muscle-cut covered commodities retain their origin as declared to the U.S. Customs and Border Protection at the time the products entered the United States (i.e., Product of Country X) through retail sale.” However, if there is documentation of the three production steps, muscle cuts that were slaughtered outside the U.S. can use the “born, raised, and slaughtered” format.

Daryll E. Ray holds the Blasingame Chair of Excellence in Agricultural Policy, Institute of Agriculture, University of Tennessee, and is the Director of UT’s Agricultural Policy Analysis Center (APAC). Harwood D. Schaffer is a Research Assistant Professor at APAC. (865) 974-7407; Fax: (865) 974-7298; [email protected] and [email protected]; http://www.agpolicy.org.

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