Order Code 97-508 ENR
Updated August 3, 2004
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
The 2002 farm bill (P.L. 107-171) as modified by the FY2004 USDA appropriation
(P.L. 108-199) requires country-of-origin labeling (COOL) for fresh produce, red meats,
and peanuts starting September 30, 2006, and for seafood starting September 30, 2004.
The House Agriculture Committee approved on July 21, 2004, a bill (H.R. 4576) to
make COOL voluntary. Some lawmakers still support a mandatory program, especially
after recent discoveries of “mad cow” disease in a Canadian and a U.S. cow (the latter
from Canada). Others counter that COOL is a marketing, not an animal or human
health, issue and should be voluntary. 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 has administered and enforced 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 arriving at the U.S. border in retail-ready packages — including
food products, such as 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 exceptions to the labeling requirements, such as articles 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 was located until it was moved
to the Department of Homeland Security) 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.”
Congressional Research Service ˜ The Library of Congress

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Among the items placed on the J List were specified agricultural products including
“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.) Although
J List items themselves 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 store bin,
country 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. USDA’s Food Safety and Inspection
Service (FSIS) is responsible for ensuring the safety and proper labeling of most meat and
poultry products, 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 destined for U.S.
plants for further processing also have had to bear country-of-origin marks. However,
once these non-retail items enter the country the federal meat inspection law deems them
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 or grinding it for hamburger,
enough of a transformation so that country markings are no longer necessary.
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.
Efforts to create, administratively, a more explicit voluntary program at USDA effectively
ended with passage of the 2002 farm bill and the start of rulemaking for mandatory COOL.
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.
Requirements of the 2002 Farm Bill
Various bills were introduced in the 107th Congress to impose more prescriptive
country-of-origin requirements on a variety of food products. Ultimately, the House-
passed farm bill (H.R. 2646) included language requiring retail-level COOL for fresh

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produce. The Senate version further extended coverage to red meats, peanuts, and fish.
Section 10816 of the final farm law, signed May 13, 2002 (P.L. 107-171) amended the
Agricultural Marketing Act of 1946 to:1
! 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;2
! Require retailers (specifically, food stores that sell at least $230,000
annually in fruits and vegetables as defined by the Perishable Agricultural
Commodities Act) to inform consumers of these products’ 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, with mandatory labeling to begin on September 30, 2004 (now
delayed for two years).
Two-Year Delay in Mandatory COOL
In June 2003, the House Appropriations Committee reported the FY2004 USDA
appropriation (H.R. 2673) with language banning funds to implement mandatory COOL
for meats only but not other commodities. A floor amendment to delete the funding ban
was defeated, 208-193. In November 2003 the Senate approved a resolution insisting that
their conferees not agree to the House position on COOL. Nonetheless, the conference
report on the FY2004 omnibus bill (H.R. 2673, H.Rept. 108-401) postpones mandatory
COOL for two years. In lieu of a spending ban per se, conferees changed the farm bill to
delay the mandatory implementation date for all covered commodities, except farmed fish
and wild fish, to September 30, 2006. The omnibus conference report won final approval
by the House and Senate; it was signed into law (P.L. 108-199) on January 23, 2004.
Implementation and Selected Issues
USDA’s Agricultural Marketing Service (AMS) had published guidelines for the
voluntary phase in the October 11, 2002 Federal Register. (Few if any retailers opted for
voluntary compliance.) AMS published proposed rules for mandatory COOL on October
30, 2003; final rules have not been issued as of June 2004.3 Meanwhile, debate has
1 Deleted in conference was Senate language to ban the use of USDA quality grade labels on
imported carcasses and meat products. Currently, both domestic and imported meats and meat
products are eligible to receive USDA quality grades as a fee-based service.
2 USDA rules define what is processed and what is not. For example, cooked roast beef must be
labeled but not bacon; canned roasted and salted peanuts must be labeled but not mixed nuts.
3 AMS maintains an extensive website on COOL at [http://www.ams.usda.gov/cool/]. It contains
links to the voluntary guidelines, the proposed mandatory rules, and a cost-benefit analysis.

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continued on a number of policy issues, such as how rigorous the industry compliance
requirements must be, their cost, and whether a mandatory program is even desirable.
Farm Economic Impacts. Some believe that COOL will provide U.S.-origin
products with a competitive advantage over foreign products because, they argue, U.S.
consumers, if offered a clear choice, would choose fresh foods of domestic origin,
strengthening demand and prices for them. Many domestic fruit and vegetable growers,
for example, believe that the quality of foreign produce can be inferior to theirs, and the
two should be clearly differentiated. COOL supporters point to a number of studies and
surveys suggesting consumers want such labeling and would pay for it. However, the
analysis accompanying USDA’s October 2003 proposed rules found “little evidence that
consumers are willing to pay a price premium” for such information. USDA officials said
they were unable to quantify benefits because of a lack of evidence. They did estimate that
purchases of covered commodities would have to increase by between 1-5% for benefits
to cover COOL costs, but added that such increases were not anticipated.
Costs. Accompanying the proposed rule was a lengthy discussion of potential costs,
which include recordkeeping plus capital and related expenses to manage product flow.
USDA estimated that total first-year implementation costs for all affected industries could
range anywhere from $582 million to $3.9 billion, of which $582 million would be for
recordkeeping and related costs. Subsequent year recordkeeping costs were estimated at
$458 million annually. USDA estimated first-year costs per firm at between $180 to $443
for producers, $4,048 to $50,086 for intermediate suppliers, and $49,581 to $396,089 for
retailers. Critics of mandatory COOL view these estimates as evidence of the huge burden
industry is facing; some of them had developed estimates that were higher.
COOL supporters counter that USDA grossly exaggerated costs, partly because it is
opposed to the program and relied heavily upon critics’ estimates. COOL supporters note
that even USDA’s own figures break down to a fraction of a percentage point on a per-unit
basis — at most a penny or two per pound. A study published by the University of Florida
provides an alternative analysis suggesting first-year recordkeeping costs of between $70
million and $193 million — which authors contend are substantially outweighed by the
benefits, including consumers’ willingness to pay for country of origin information.4
Recordkeeping and Verification. The law explicitly prohibits USDA from
using a mandatory identification (ID) system, but states that the Secretary “may require
that any person that prepares, stores, handles, or distributes a covered commodity for retail
sale maintain a verifiable recordkeeping audit trail that will permit the Secretary to verify
compliance... .” USDA’s voluntary guidelines explicitly stated that suppliers of covered
commodities must maintain “auditable records.” The proposed rule words the requirement
differently, but still states that upon request, affected retailers and suppliers must make
available “records and other documentary evidence that will permit substantiation of an
origin claim” at a reasonable time and place. Suppliers “must make available information
to the buyer about the country of origin;” and those who initiate an origin declaration (e.g.,
4 VanSickle, McEowen, Taylor, Harl, and Connor, Country of Origin Labeling: A Legal and
Economic Analysis, International Agricultural Trade and Policy Center, Univ. of Florida, May
2003. Costs also are discussed in GAO’s Country-of-Origin Labeling: Opportunities for USDA
and Industry to Implement Challenging Aspects of the New Law (GAO-03-780), Aug. 2003.

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a meat packer or produce packer) “must possess or have legal access to records that
substantiate that claim,” the proposed rule states.
Suppliers must maintain records for two years that identify the immediate previous
source and immediate subsequent recipient of a covered commodity, the proposal states.
Retailers would have similar responsibilities. The law subjects retailers to $10,000 fines
for willful violations, although the proposed rule would not hold them (or their suppliers)
liable if they could not reasonably have known that a previous supplier had provided false
information. Animals themselves are not considered covered commodities, so the
proposal would not require livestock producers to keep records. However, packers are
likely to demand such producer records so they can substantiate their own origin claims.
This aspect of the program may be among the most controversial, because of the
potential complications and costs to affected industries of tracking animals (or plants)
from birth (harvest) through retail sale. Producers and processors may have to segregate
these relatively “fungible” (i.e., interchangeable) commodities when they come from
different sources. Failure to maintain acceptable records could result in the product being
forced off retail markets and into either export or restaurant outlets. Program proponents
do not agree that record-keeping difficulties will be as difficult as critics contend. Modern
production methods already incorporate many aspects of animal ID and tracking for
purposes of improved nutrition, animal health, and so forth, providing opportunities for
rules that are minimally burdensome.5 Some COOL supporters have charged that the
Administration deliberately has sought to promulgate overly complicated, costly rules in
order to discredit mandatory COOL, which it opposes. One pending bill, H.R. 3083, seeks
to ease producer recordkeeping requirements, delete the current prohibition against
USDA-mandated animal ID, and eliminate third-party audit provisions.
Defining “Origin.” To claim a product is entirely of U.S. origin, these 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 (wild and farm-raised seafood must be
differentiated); 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 meats — are produced in multiple
countries. For example, beef may be from an animal that was born in the United States,
fed and slaughtered in Canada, and its meat reimported for processing — now more
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.
The proposed rules would require the label to list all the countries of origin alphabetically.
Trade. Supporters of the new law argue 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. Furthermore,
5 Many analysts believe U.S. animal ID will be demanded in the near future, more likely for
animal health reasons. See CRS Report RL32012, Animal Identification and Meat Traceability.

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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. (The GAO
report examines COOL in 57 countries that account for most U.S. agricultural trade.)
Critics counter that country-of-origin labeling is a thinly disguised trade barrier
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.
Mandatory COOL undermines 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 could challenge a mandatory program as a violation of existing U.S.
trade obligations.
Consumer Choice and Food Safety. Proponents of mandatory COOL argue
that U.S. consumers have a right to know the origin of their food, particularly during a
period when food imports are increasing. 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 one prominent example concerns about the
safety of some foreign beef due to outbreaks of bovine spongiform encephalopathy (BSE,
or “mad cow disease”). The May 2003 and December 2003 discoveries of BSE in two
Canadian-born cows (one imported to the United States) prompted virtually all major
foreign markets to suspend shipments of both countries’ beef and cattle products. After
briefly suspending all Canadian beef imports, U.S. authorities have since granted entry to
hundreds of millions of pounds of some types of Canadian beef, making it more important
that U.S. consumers know where their meat is from, COOL supporters argue. (See CRS
Issue Brief IB10127, Mad Cow Disease: Agricultural Issues for Congress.)
Critics (and some proponents) of COOL assert that such labeling has little utility for
food safety; it does not increase public health by telling consumers which foods are safer
than others. They argue that all food imports already must meet equivalent U.S. 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 argue, adding that recent Canadian beef
imports have posed virtually no risk to consumers or U.S. agriculture.
Recent Congressional Activity
The House Agriculture Committee approved a bipartisan bill (H.R. 4576) that would
abolish the current, single mandatory program. In its place, H.R. 4576 would require
USDA to implement separate, voluntary COOL programs for red meats, for produce, and
for seafood (but not for peanuts). During committee markup, bipartisan amendments to
retain but modify mandatory COOL were not successful. Some 350 trade groups and
firms, including the National Cattlemen’s Beef Association, Food Marketing Institute,
National Pork Producers Council, American Meat Institute, United Fresh Fruit and
Vegetable Association, and National Fisheries Institute, expressed support for H.R. 4576.
Other groups, including the American Farm Bureau, National Farmers Union, R-CALF
USA, and Consumer Federation of America, are expected to oppose H.R. 4576 if it
reaches the House floor or arises in the Senate, where, these groups assert, stronger
support exists for retaining mandatory COOL. Bills to repeal the two-year delay have
been introduced in the House (H.R. 3732; H.R. 3993) and Senate (S. 2451).

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