Order Code 97-508 ENR
Updated March 27, 2001
CRS Report for Congress
Received through the CRS Web
Country-of-Origin Labeling for Foods:
Current Law and Proposed Changes
Geoffrey S. Becker
Specialist in Agricultural Policy
Resources, Science, and Industry Division
Summary
Federal law requires most imports, including many food items, to bear labels
informing the “ultimate purchaser” of their country of origin. Various bills have been
introduced to impose expanded country-of-origin labeling requirements on meats and on
several other agricultural products. Such proposals have attracted attention for a number
of reasons. One is that they are viewed (by some advocates) as a way to help U.S.
producers dealing with low farm prices. Also, some perceive that food products from
certain countries might pose greater risks than those from the United States. Proponents
of the bills contend that additional country labeling requirements would enable consumers
to know the source of retail food offerings and include that knowledge in selecting their
purchases. Opponents counter that country-of-origin labeling bears no relation to food
safety and would not raise U.S. commodity prices. They argue that it would impose
excessive and costly regulatory burdens on retailers and others in the marketing system
and on consumers, be difficult to enforce, and—by imposing new non-tariff trade
barriers—undermine ongoing U.S. efforts to reduce other countries’ trade barriers and
expand international markets for U.S. products. This report will be updated as events
warrant.
Current Country-of-Origin Labeling Requirements
Tariff Act Provisions
Under section 304 of the Tariff Act of 1930 as amended (19 U.S.C. 1304), every
imported item must be conspicuously and indelibly marked in English to indicate to the
“ultimate purchaser” its country of origin. The U.S. Customs Service, which administers
and enforces this requirement, generally defines the “ultimate purchaser” as the last U.S.
person who will receive the article in the form in which it was imported. So, if articles
arrive at the U.S. border in retail-ready packages—including food products, e.g., a can of
Danish ham, a slab of Dutch cheese, or a box of English candy—each must carry such a
Congressional Research Service ˜ The Library of Congress

---

CRS-2
mark. However, if the article is destined for a U.S. processor or manufacturer where it
will undergo “substantial transformation” (as determined by Customs), then that processor
or manufacturer is considered the ultimate purchaser.
The law authorizes a series of exceptions to the labeling requirements, such as
articles that are incapable of being marked or where the cost would be “economically
prohibitive.” One important set of exceptions is the “J List,” so named for section
1304(a)(3)(J) of the statute, which empowered the Secretary of the Treasury (where
Customs is located) to exempt classes of items that were “imported in substantial
quantities during the five-year period immediately preceding January 1, 1937, and were
not required during such period to be marked to indicate their origin.”
Among the items the Secretary placed on the J List were the following agricultural
products: eggs; cigars and cigarettes; feathers; flowers; raw hides; unfinished leather;
livestock; fur skins; maple sugar; and “natural products, such as vegetables, fruits, nuts,
berries, and live or dead animals, fish and birds; all the foregoing which are in their natural
state or not advanced in any manner further than is necessary for their safe
transportation.” (See 19 C.F.R. 134.33.) The J List has not changed substantially since
it was developed in the 1930's, according to Customs officials.

Although J List items themselves, including the agricultural products such as fruits
and vegetables, are exempt from the labeling requirements, section 304 of the 1930 Act
requires that their “immediate containers” have country-of-origin labels. For example, if
Mexican tomatoes, or Chilean grapes, are sold loosely from a bin at the supermarket,
country-of-origin labeling is not required. However, if those tomatoes or grapes are
wrapped in cellophane or otherwise packaged, the label is required.
Meat and Poultry Inspection Program Provisions
The U.S. Department of Agriculture’s (USDA’s) Food Safety and Inspection
Service (FSIS) is responsible for ensuring the safety, wholesomeness, and proper labeling
of all meat and poultry products for human consumption, including imports, under the
Federal Meat Inspection Act as amended (21 U.S.C. 601 et seq.) and the Poultry Products
Inspection Act as amended (21 U.S.C. 451 et seq.). Regulations issued under these laws
require that the country of origin appear in English on the immediate containers of all meat
and poultry products entering the United States (9 C.F.R. 327.14 and 9 C.F.R. 381.205,
respectively). Only plants in countries certified by USDA to have inspection systems
equivalent to those of the United States are eligible to export products to the United
States.
Such labeling must appear on all individual, retail-ready packages of imported meat
products (for example, canned hams or packages of salami). Imported bulk products, such
as carcasses, carcass parts, or large containers of meat or poultry parts destined for U.S.
plants for further processing also must bear country-of-origin marks.
However, once these non-retail items enter the country, the meat and poultry
inspection laws consider them to be domestic products. When they are further processed
in a domestic, USDA-inspected meat or poultry establishment—which is considered the
ultimate purchaser for purposes of country-of-origin labeling—USDA no longer requires
such labeling on either the new product or its container. USDA considers even minimal

---

CRS-3
processing, such as cutting a larger piece of meat into smaller pieces, enough of a
transformation so that country markings are no longer necessary. For example, after a U.S.
establishment grinds boneless foreign beef into hamburger and/or mixes it with domestic
product, processes it into sausage or lunchmeat, or uses it in a soup or stew, neither that
establishment nor the retailer is required to label the finished product to indicate that it
contains imported meat.
Although country-of-origin labeling is not required by USDA after an import leaves
the U.S. processing plant, the Department (which must preapprove all meat labels) has the
discretion to permit labels to cite the country of origin, if the processor requests it. This
includes labels citing the United States as the country of origin.
Meat and poultry product imports must comply not only with the meat and poultry
inspection laws and rules, but also with the Tariff Act labeling regulations. Because
Customs generally requires that imports undergo more extensive changes (i.e., “substantial
transformation”) than required by USDA to avoid the need for labeling, there is a potential
for conflict between the two requirements, Administration officials acknowledge. Several
Customs officials said that if their “substantial transformation” test were applied more
rigorously to meat and poultry products, it is likely that a piece of foreign meat that simply
was cut or ground into hamburger still would have to bear a country-of-origin label.
Customs notes that it requires such labels on other processed and/or repackaged food
products that contain imported agricultural commodities. However, the agency rarely has
challenged USDA-inspected products, according to Administration officials.
Congressional Action
In the 106th Congress, a number of bills aimed at expanding country labeling
requirements for meats and other agricultural products were introduced, and both the
House and Senate Agriculture Committees held hearings on the issue. However, no
mandatory legislation was enacted. However, language was included in the conference
report to the FY2000 USDA appropriation (H.R. 1906; P.L. 106-78) directing the
Secretary of Agriculture to "promulgate regulations defining which cattle and fresh beef
products are 'Products of the U.S.A.' This will facilitate the development of voluntary,
value-added promotion programs..."
On September 8, 2000, the National Cattlemen’s Beef Association, the American
Farm Bureau Federation, the Food Marketing Institute, the National Meat Association, and
the American Meat Institute petitioned USDA for regulations establishing a voluntary
certification program for U.S.-produced beef. As of late March 2001, USDA had not yet
acted on either the legislative directive or the industry petition. However, FSIS officials
assert that current agency rules already allow for “USA” labels if industry can provide
certain evidence of U.S. origin.
Recent Labeling Bills
Bills introduced early in the 107th Congress that would impose various new country-
of-origin labeling requirements include:

---

CRS-4
C
The Country of Origin Meat Labeling Act of 2001 (H.R. 1121), introduced March
20, 2001, by Representative Pomeroy, which would amend the Agricultural
Marketing Act of 1946 to require retailers, except restaurants, to notify consumers
of the country of origin of muscle cuts and ground products of beef, lamb, and pork
(but not poultry). To be considered from the United States, a product would have
to be “from an animal that is exclusively born, raised, and slaughtered” here.
Retailers could inform consumers through labels on the product itself or on a
“display, holding unit, or bin containing the commodity at the final point of sale.”
C
The Peanut Labeling Act of 2001 (S. 144), introduced January 23 by Senator
Cleland, which would require retailers to inform consumers at the final point of sale
of the country of origin of peanuts and peanut products – through “a label, stamp,
mark, placard, or other clear and visible sign [on the product] or on the package,
display, holding unit, or bin containing” the peanuts or product, unless USDA
determines it is impracticable for the retailer to determine the country of origin. The
bill spells out civil penalties for retailer violations.
C
The Consumer Right-to-Know Act of 2001 (S. 280), introduced February 7, 2001,
by Senator Johnson, which is similar to H.R. 1121 (see above), except that in
addition to meats, perishable agricultural commodities also must be covered. These
are defined generally as fresh and frozen fruits and vegetables. S. 280 also is
similar to language in Title III of S. 20, a broader agricultural bill introduced
January 22, 2001, by Senator Daschle.
Related Legislation
Legislation (S. 544) would amend the Federal Meat Inspection Act to prohibit
USDA from issuing a quality grade label for imported meat and meat food products that are
from any cattle, sheep, or goats that have not been fed in the United States for at least 90
days. Quality grading is a voluntary service conducted by USDA and funded by industry
fees; proponents of the bill, introduced March 15, 2001, by Senator Burns, contend that a
USDA grade implies that the product is of U.S. origin. Opponents counter that prohibiting
imports from carrying the grade is an unfair barrier to trade because it treats imports
differently than domestic products. (As of late March 2001, USDA had not yet acted on
earlier industry proposals that it use its standing regulatory authority to restrict USDA
grades on imported beef, veal, and/or lamb.)
Arguments for Expanded Labeling Requirements
One impetus for these bills is the concern about recent low farm prices.1 Some
believe that country-of-origin labeling requirements would provide U.S.-raised products
with a competitive advantage over foreign products because, they argue, U.S. consumers,
if offered a clearer choice, would choose fresh foods of domestic origin (an assertion that
others challenge). Proponents of these bills have long argued that U.S. consumers have a
right to know the origin of their food, particularly during a period when food imports are
increasing, and will continue to increase in the wake of trade agreements like the North
1 See CRS Issue Brief IB10043, Farm Economic Relief: Issues and Options for Congress.

---

CRS-5
American Free Trade Agreement (NAFTA) and the World Trading Organization (WTO)
accords. Such information is particularly important to consumers whenever specific health
and safety problems arise that may be linked to imported foods, proponents add. They cite
as examples the 1997 hepatitis outbreak linked to strawberries grown in Mexico, and
concerns about the potential safety of some European beef due to an outbreak of bovine
spongiform encephalopathy (BSE, or “mad cow disease”).2
Backers contend that the costs for industry, including retailers, to comply with
country-of-origin labeling requirements are minimal. For example, the Florida Department
of Agriculture has estimated the annual cost of its mandatory produce labeling law to be less
than $250,000 for the entire industry, in the country’s fourth-largest state. Compliance can
be achieved, according to proponents, simply by placing signs near produce bins or with
price information in stores, or displaying the items in their shipping cartons.
They also allege that it is unfair to exempt fruits, vegetables, and meats from some
country labeling requirements when almost all other imported consumer products, from
automobiles to most other foods, must comply with them, proponents add. Furthermore,
they note that numerous foreign countries already impose their own country-of-origin
labeling, at retail and/or import sites, for various perishable agricultural commodities, which
USDA has documented in a 1998 survey of foreign requirements.
Arguments Against Expanded Labeling Requirements
Opponents of the proposals view them as new, thinly-disguised, protectionist trade
barriers deliberately intended to increase costs for importers and foster the unfounded
perception that foreign products are inherently less safe (or of lower quality) than U.S.
products. They argue that such labeling does not increase public health protection by telling
consumers which foods are safer than others: all food imports already must meet equivalent
U.S. food safety standards, which are enforced vigorously by U.S. officials at the border
and overseas. In fact, they note, several serious outbreaks of food borne illness in recent
years have been linked to contaminants in perishable agricultural commodities produced in
the United States, including the bacteria e. coli 0157:H7 and salmonella. Scientific
principles, not geography, must be the arbiter of safety, they add.
The proposed bills undermine continuing U.S. efforts to break down other
countries’ trade barriers and to expand international markets for U.S. products, opponents
contend. Some have expressed reservations about some proposals because, by singling out
imports, they might be in violation of WTO trade rules mandating that imported and
domestic products be treated equitably. Also, other countries might retaliate by requiring
that more U.S. products bear origin labels and/or whether a product is produced by
methods that, while proven to be safe scientifically, might raise unreasonable fears among
potential foreign consumers, they contend.
Critics also argue that industry compliance and government implementation costs
would be high. They point out, for example, that the average produce department carries
2 USDA prohibits the importation of cattle and beef from any country with BSE, and no BSE cases
have been found in the United States.

---

CRS-6
more than 200 items annually, which change continuously due to perishability and
availability of supplies. Retailers and their suppliers would have to constantly update their
signs, imposing new labor, paperwork, and materials costs—which inevitably would result
in higher food prices for consumers, according to the Food Marketing Institute, a
supermarket trade association. Government oversight would be costly--in the millions of
dollars--if compliance were monitored down to the retail level, where as many as several
hundred thousand local sites might come under regulation, opponents contend.
GAO and USDA Reports
A congressionally mandated General Accounting Office (GAO) report on produce
found that the cost to government and the private sector of implementing and enforcing new
produce labeling requirements could be costly, although it would depend upon a number
of unknown factors such as how much current labeling practices would have to be changed.
GAO also concluded that new labeling requirements: were favored in surveys by most
consumers -- although freshness, nutrition, handling and storage, and preparation tips were
ranked higher; might be viewed by other countries as a trade barrier; and be of limited value
in responding to produce-related illnesses due to the time lag between outbreaks and their
cause.3
A congressionally mandated USDA study for beef and lamb concluded that the costs
of segregating and protecting the identity of imports “is unknown, but could be significant.”
Other potential costs include those for the labels themselves, from $500,000 to as much as
$8 million depending upon the extent of the requirements; for government verification; and
for market disruption (both also dependent upon the type of program required). The USDA
report found no "direct or empirical evidence" that U.S. meats would gain a large or long-
term price advantage from new country labeling rules, despite new government and industry
costs to implement and enforce them. The USDA report also cautions against potentially
adverse trade impacts, depending on the program imposed.4
3 Fresh Produce: Potential Consequences of Country-of-Origin Labeling (GAO/RCED-99-112).
[http://frwebgate.access.gpo.gov/cgi-bin/useftp.cgi?IPaddress=162.140.64.21&filename=rc99112.t
xt&directory=/diskb/wais/data/gao]
4 Mandatory Country of Origin Labeling of Imported Fresh Muscle Cuts of Beef and Lamb, January
2000. [http://www.fsis.usda.gov/oa/congress/cool.htm]

---