Order Code 97-508 ENR
Updated January 28, 2003
CRS Report for Congress
Received through the CRS Web
Country-of-Origin Labeling for Foods
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. Meats, produce, and
several other raw agricultural products generally have been exempt. The omnibus farm
law (P.L. 107-171) signed on May 13, 2002, contains a requirement that many retailers
provide, starting on September 30, 2004, country-of-origin labeling (COOL) on fresh
fruits and vegetables, red meats, seafood, and peanuts. The program is voluntary until
then. USDA on October 8, 2002, issued guidelines for the voluntary labeling program.
Some food industry leaders are urging the 108th Congress to revisit the new labeling law,
on the grounds that it is deeply flawed. Proponents maintain that its benefits to
producers and consumers will far exceed any costs. This report will be updated if events
warrant.
Background
Tariff Act Provisions. Under §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 mark. However, if the article is destined for a U.S.
processor 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 has been the “J List,” so named for
§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
Congressional Research Service ˜ The Library of Congress

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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, have been exempt from the labeling
requirements, §304 of the 1930 Act has required that their “immediate containers” have
country-of-origin labels. For example, when Mexican tomatoes, or Chilean grapes, are
sold loosely from a bin at the supermarket, country-of-origin labeling has not been
required. However, if those tomatoes or grapes are wrapped in cellophane or otherwise
packaged, the label has been required.
Meat and Poultry Inspection Provisions. The Food Safety and
Inspection Service (FSIS) of the U.S. Department of Agriculture (USDA) 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 have required 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.
All individual, retail-ready packages of imported meat products (for example, canned
hams or packages of salami) have had to carry such labeling. 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 have had to bear country-of-origin marks.
However, once these non-retail items entered the country, they have been considered
(under the federal meat inspection law, see 21 U.S.C. 620(a)) to be domestic products.
When they are further processed in a domestic, USDA-inspected, meat or poultry
establishment—which has been considered the ultimate purchaser for purposes of country-
of-origin labeling—USDA no longer has required such labeling on either the new product
or its container. USDA has considered even minimal 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, once 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 has been
required to label the finished product to indicate that it contains imported meat.
Although country-of-origin labeling has not been required by USDA after an import
leaves the U.S. processing plant, the Department (which must preapprove all meat labels)
has had the discretion to permit labels to cite the country of origin, if the processor
requested it. This has included labels citing the United States as the country of origin.

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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 has been a
potential for conflict between the two requirements, Administration officials acknowledge.
Action in the 107th Congress
As in previous Congresses, a series of separate bills were introduced into the 107th
Congress to impose more prescriptive country-of-origin requirements on a variety of food
products. These included: H.R. 1121, for muscle cuts and ground products of beef, lamb,
and pork (but not poultry); H.R. 1605, for perishable agricultural commodities (i.e., fresh
and fresh frozen fruits and vegetables); H.R. 2439, for farm-raised fish; S. 144, for peanuts
and peanut products; H.R. 3329 and S. 1664, both for raw agricultural ginseng; and S. 280
and Title III of S. 20, both for beef, lamb, pork, and perishable agricultural commodities.
The House-passed farm bill (H.R. 2646) required retail-level COOL only for fresh
produce, based on H.R. 1605. The Senate version contained more extensive labeling
language, covering not only fresh produce but also red meats, peanuts, and both wild and
farm-raised seafood.1 Title X, §10816, of the final omnibus farm law, signed May 13,
2002 (P.L. 107-171, the Farm Security and Rural Investment Act of 2002), amends the
Agricultural Marketing Act of 1946 to:
! Cover ground and muscle cuts of beef, lamb and pork, farm-raised and
wild fish and shellfish, peanuts, and “perishable agricultural
commodities,” i.e., fresh and fresh frozen fruits and vegetables;
! Exempt these products if they are ingredients of processed foods;
! Require retailers (i.e., supermarkets and other food stores) to inform
consumers of these products’ country of origin “by means of a label,
stamp, mark, placard, or other clear and visible sign on the covered
commodity or on the package, display, holding unit, or bin containing the
commodity at the final point of sale to consumers;”
! Exempt “food service establishments,” such as restaurants, cafeterias,
bars, and similar facilities that prepare and sell foods to the public;
! Require USDA to issue, by September 30, 2002, voluntary guidelines for
labeling these above commodities, with mandatory labeling to begin on
September 30, 2004;
! Define requirements for products that denote the United States as the
country of origin. For example, U.S.-labeled beef, lamb, and pork have
to be from animals “exclusively born, raised, and slaughtered in the
United States;”
! Require that country of origin notices distinguish between wild and farm-
raised fish;
! Provide guidance regarding record keeping, certification procedures and
enforcement by USDA.
1 The Senate version included a provision prohibiting the use of USDA quality grade labels on
imported carcasses, meats, or meat food products. Currently, both domestic and imported meats
and meat products are eligible to receive USDA quality grades as a fee-based service. The
prohibition was deleted in the House-Senate conference on H.R. 2646.

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Implementation and Selected Issues
USDA’s Agricultural Marketing Service (AMS) has the lead role in implementing
the new law. AMS published in the October 11, 2002 Federal Register guidelines for the
voluntary phase. The experience of retailers that choose to undertake the voluntary
program will help AMS as it begins development of the mandatory program, the agency
stated, adding that the process for developing mandatory rules will begin in April 2003.
(However, as of January 2003 no firm was participating in the voluntary phase, according
to an AMS official.) Publication of the guidelines has sparked renewed debate over a
number of policy issues, most of which also were explored during congressional
consideration of COOL. Much of the controversy has focused on what the meat industry
would have to do to comply.
Farm Economic Impacts. One impetus for COOL has been a concern about the
U.S. farm economy. Some believe that COOL will 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, strengthening
demand for, and prices, of the latter. Many domestic fruit and vegetable growers, for
example, believe that the quality of foreign produce is inferior to theirs, and the two should
be clearly differentiated. However, a USDA study for beef and lamb found no “direct or
empirical evidence” that U.S. meats would gain a large or long-term price advantage from
new country labeling rules.2 Some critics have noted, if industry (including on-farm)
compliance costs (see below) prove to be high, they could outweigh any potential benefits
– particularly for beef, lamb, and pork producers competing with poultry, whose products
are not subject to COOL. Another concern is that if COOL rules are not simplified
(particularly with regard to origin designations; see below) they might encourage a food
company to conduct all production and processing off-shore in a single country to avoid
labeling complications – rather than encourage U.S. companies to buy more U.S. products,
as some COOL supporters anticipated.3
Defining “Origin.” Under the AMS guidelines, to claim a product is entirely of
U.S. origin, specified criteria must be met: for beef, lamb, and pork, and for farm-raised
fish and shellfish, the product must be derived exclusively from animals born (for fish and
shellfish, hatched), raised, and slaughtered (processed) in the United States; wild fish and
shellfish must be derived exclusively from those either harvested in U.S. waters or by a
U.S. flagged vessel, and processed in the United States or on a U.S. vessel; fresh and
frozen fruits and vegetables and peanuts must be exclusively from products grown,
packed, and if applicable, processed in the United States.
Difficulties arise when products – particularly livestock – are raised in multiple
countries. The guidelines require that consumers be so informed. Thus, for example, beef
may be from an animal that was born in the United States, fed in Canada, and then
2 Mandatory Country of Origin Labeling of Imported Fresh Muscle Cuts of Beef and Lamb,
January 2000. Further, the National Cattlemen’s Beef Association (NCBA), in its April-May
2002 National Cattlemen magazine, argued that approximately 70% of imported beef may never
be labeled under the new law. Such imports are used mainly in food service and processed foods,
which are exempted by the law, NCBA observed.
3 Pasco, Richard. “Country of Origin Labeling Not So Cool for Some,” Agricultural Law Letter,
December 2002 (at [www.agriculturelaw.com/dec2002.html].

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reimported for processing – now increasingly common, as the two countries become more
dependent on each’s economic strengths in those production phases. All such information
would have to be noted at the retail level. Likewise, products from several different
countries often are mixed, such as ground beef, or pre-cut and mixed salad greens. In such
cases, the label would have to list all the countries of origin in order of their
predominance.
Recordkeeping and Verification. USDA will not conduct formal audits or
prosecute violations during the voluntary phase of COOL. However, in a possible
precursor to the mandatory rules, the guidelines do require “every person” who prepares,
stores, distributes, or supplies the covered commodities for retail sale – including retailers,
producers, growers, handlers, packers, processors and importers – to keep records on their
country of origin which are legible, readily accessible to reviewers, and in English.
Although various forms of documentation are acceptable, “self-certification...is not
sufficient.” This aspect of the program may be among the most controversial, because of
the potential complications and costs to affected industries of tracking the identity of each
animal (or plant) from birth (harvest) through retail sale. Producers and processors may
have to determine how to segregate what often are considered relatively “fungible” (i.e.,
interchangeable) commodities when they come from different sources. Failure to maintain
a documented chain of custody could result in the product being forced off retail markets
and into either export or restaurant outlets.4 Program proponents do not agree that
recordkeeping difficulties will be as difficult as critics contend. Modern production
methods already incorporate many aspects of individual animal tracking for purposes of
improved nutrition, animal health, and so forth. However, one COOL supporter, R-CALF
USA, said that the voluntary guidelines appear to impose greater record-keeping
requirements on U.S. producers than on beef importers.
Implementation Costs. AMS published, in the November 21, 2002, Federal
Register, an estimate that the recordkeeping cost for the industry might be $1.968 billion
in the first year. This preliminary estimate, for which AMS sought public comments, was
based on a projection of time requirements for 2 million farm and fish producers costing
$1 billion, plus 100,000 handlers (processors, distributors, importers, etc.) costing $340
million, plus 31,000 retailers costing $628 million. While COOL critics view these
estimates not only as evidence of the huge burden industry is facing (and some suggest the
figures are too low), COOL supporters disagree, calling the estimates grossly exaggerated.
AMS “makes sweeping, unfounded assumptions” about numbers of affected parties and
the costs of simple recordkeeping, which producers, handlers, and retailers already do in
order to comply with other government rules; fails to account for food origin labeling
already required in several states; and ignores the benefits to U.S. food security and ability
to respond to foodborne illnesses, supporters argue.5 Earlier, the Florida Department of
Agriculture 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. Proponents say
stores can comply simply by placing signs with existing price information, or displaying
the items in their shipping cartons.
4 Cattle in particular take so long to move from birth to meat, that producers should consider
identification of each animal now – well before the mandatory program, some analysts believe.
5 Sparks Policy Report, December 18, 2002.

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Critics assert that the average produce department alone carries more than 200 items
annually, which change continuously due to perishability and availability. Retailers and
their suppliers will have to constantly update their signs, imposing new labor, paperwork,
and materials costs—which ultimately will result in higher food prices for consumers,
according to the Food Marketing Institute, a supermarket trade association. Government
oversight costs (although uncertain at this time) also will be high, opponents believe.
Trade. Supporters of the new law 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.
Furthermore, they note that many foreign countries already impose their own country-of-
origin labeling, at retail and/or import sites, for various perishable agricultural
commodities, which USDA documented in a 1998 survey of foreign requirements.6
Critics counter that country-of-origin labeling is deliberately intended to increase costs for
importers and to foster the unfounded perception that foreign products are inherently less
safe (or of lower quality) than U.S. products. The new law will undermine continuing
U.S. efforts to break down other countries’ trade barriers and to expand international
markets for U.S. products, critics contend. They add that several countries view the new
requirement as discriminatory to imports and an unjustified obstacle to trade, and that they
are likely to challenge the provision as a violation of existing U.S. trade obligations under
the World Trade Organization and North American Free Trade Agreement.
Consumer Choice and Food Safety. Proponents of the new program 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 under both
existing and future trade agreements. 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 safety of some foreign beef due
to outbreaks of bovine spongiform encephalopathy (BSE, or “mad cow disease”).7
Critics of the new law 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.
A General Accounting Office (GAO) report on produce concluded that new labeling
requirements were favored in surveys by most consumers – although freshness, nutrition,
handling and storage, and preparation tips were ranked higher. However, labeling would
be of limited value in responding to produce-related illnesses due to the time lag between
outbreaks and their cause.8
6 USDA, FAS, 1998 Foreign Country of Origin Labeling Survey, February 4, 1998.
7 USDA prohibits the importation of cattle and beef from any country with BSE, and no BSE
cases have been found in the United States.
8 Fresh Produce: Potential Consequences of Country-of-Origin Labeling (GAO/RCED-99-112).