Order Code 97-508
Updated March 20, 2006
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
USDA’s FY2006 appropriation (P.L. 109-97; H.R. 2744) again postpones rules
requiring many retailers to provide country-of-origin labeling (COOL) for fresh produce,
red meats, and peanuts — until September 30, 2008. Mandatory COOL for seafood was
finalized on September 30, 2004. Some in Congress still strongly support mandatory
COOL, and say they voted against final passage of H.R. 2744 because of the delay.
Others counter that COOL should be voluntary. Several pending bills would alter the
program including H.R. 2068, H.R. 2744, S. 135, S. 1300, S. 1331, and S. 1333. 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 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, articles arriving at the U.S. border
in retail-ready packages — including food products, such as a can of Danish ham, or a
bottle of Italian olive oil — 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 labeling requirements, such as for 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 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 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
Congressional Research Service ˜ The Library of Congress

---

CRS-2
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.
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 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. 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 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, a potential for
conflict has existed between the two requirements, Administration officials acknowledge.
Requirements of the 2002 Farm Bill, As Amended
Various bills were introduced in the 107th Congress to impose more prescriptive
country-of-origin requirements for a variety of commodities. Ultimately, the House-
passed farm bill (H.R. 2646) included language requiring retail-level COOL for fresh
produce. The Senate version extended coverage to red meats, peanuts, and fish. The final
conference language (Section 10816 of P.L. 107-171) amended the Agricultural
Marketing Act of 1946 to:

---

CRS-3
! Cover ground and muscle cuts of beef, lamb and pork, farm-raised and
wild fish and shellfish, peanuts, and “perishable agricultural
commodities” as defined by the Perishable Agricultural Commodities Act
(PACA), ( i.e., fresh and fresh frozen fruits and vegetables);
! Exempt these products if they are ingredients of processed foods,
generally as defined by USDA — for example, USDA has proposed that
cooked roast beef be labeled but not bacon, and that canned roasted and
salted peanuts be labeled but not mixed nuts;
! Require PACA-regulated retailers (those selling at least $230,000 a year
in fruits and vegetables) 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.
Effective Dates. The 2002 farm bill required USDA to issue voluntary guidelines
for labeling by September 30, 2002, and mandatory rules by September 30, 2004.
Congress has twice postponed full implementation. The FY2004 omnibus money bill
(P.L. 108-199; H.R. 2673), which incorporated the USDA appropriation, delayed
mandatory implementation for all covered commodities, except farmed fish and wild fish,
until September 30, 2006. The FY2006 USDA appropriation (P.L. 109-97; H.R. 2744)
postponed the date for two more years, until September 30, 2008.
Implementation and Selected Issues
USDA’s Agricultural Marketing Service (AMS) published guidelines for the
voluntary phase in the October 11, 2002 Federal Register. Few if any retailers opted for
it. AMS published a proposed rule for mandatory COOL on October 30, 2003; the final
rule is pending.1 Meanwhile, debate continues on a number of policy and implementation
issues, such as how rigorous industry compliance requirements must be, their cost, and
whether a mandatory program is even desirable.
Industry Costs and Benefits. Some contend that U.S. consumers, if offered a
clear choice, would choose fresh foods of domestic origin, strengthening demand and
prices for them. COOL supporters argue that a number of studies show that consumers
want such labeling and would pay extra for it. Analysis accompanying USDA’s October
2003 proposed rule found “little evidence that consumers are willing to pay a price
premium” for such information. A Colorado State University economist suggests that
consumers might be willing to pay a premium for “COOL meat” from the United States,
but only if they perceive U.S. meat to be safer and of higher quality than foreign meat.2
1 However, the agency did publish an interim final rule on covered fish and shellfish on October
5, 2004, to take effect April 4, 2005 (69 Federal Register pp. 59708-59750). AMS maintains an
extensive website on COOL at [http://www.ams.usda.gov/cool/], with links to the voluntary
guidelines, the seafood rule, the proposed mandatory rule, and a cost-benefit analysis.
2 Wendy J. Umberger, “Will Consumers Pay a Premium for Country-of-Origin Labeled Meat?”
Choices, 4th Quarter 2004, published online at [http://www.choicesmagazine.org].

---

CRS-4
USDA did estimate that purchases of (i.e., demand for) covered commodities would
have to increase by between 1% and 5% for benefits to cover COOL costs, but added that
such increases were not anticipated. Data from several recently reported economic
modeling studies of COOL impacts appear to fall within this range.3
Potential costs 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 from $582 million to $3.9 billion, of which $582 million might be
for recordkeeping and related costs. (Subsequent recordkeeping costs were estimated at
$458 million per year.) 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 higher estimates.
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
$70 million-$193 million — which, authors contend, are substantially outweighed by the
benefits, including consumers’ willingness to pay for country of origin information.4
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, and whenever particular health and safety
problems arise. They cite as one prominent example concerns about the safety of some
foreign beef arising from the discoveries of bovine spongiform encephalopathy (BSE, or
“mad cow disease” in four Canadian-born cows in 2003 and 2004 (one imported earlier
to the United States). Most foreign markets suspended imports of both countries’ beef
and cattle. After briefly suspending all Canadian beef imports, U.S. authorities have since
granted entry to large quantities 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.)
Critics (and some proponents) of COOL assert that such labeling does not increase
food safety or 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. 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.
3 Gary W. Brewster et al., “Who Will Bear the Costs of Country-of-Origin Labeling?” and Daniel
D. Hanselka et al., “Demand Shifts in Beef Associated with Country-of-Origin Labeling to
Minimize Losses in Social Welfare,” both in Choices. Brewster argues that the “poultry industry
is the only unequivocal winner” because it is not subject to the COOL law.
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.

---

CRS-5
Recordkeeping and Verification. The law 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 proposed mandatory rule 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., 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 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 suppliers liable if they
could not reasonably have known that a previous supplier had provided false information.
Though animals are not considered covered commodities, some believe that meat packers
still will demand origin records from livestock producers to back their own claims.
Verification may be among the most controversial program issues, 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 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 tracking for purposes of improved nutrition,
animal health, and quality control, providing opportunities for rules that are minimally
burdensome.5 Some COOL supporters have charged that the Administration deliberately
wrote complicated, costly rules in order to discredit mandatory COOL, which it opposes.
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.
5 Many analysts believe U.S. animal ID will be demanded in the near future, initially for animal
health reasons. See CRS Report RL32012, Animal Identification and Meat Traceability, by
Geoffrey S. Becker.

---

CRS-6
Likewise, products from several different countries often are mixed, such as ground beef.
The proposed rule would require the label to list all the countries of origin alphabetically.
Trade. Supporters of the COOL law argue that it is unfair to exempt meats and
produce from country labeling requirements when almost all other imported consumer
products, from automobiles to most other foods, must comply. They note that many
foreign countries already impose their own country-of-origin labeling, at retail and/or
import sites, for various perishable commodities. (The GAO report examines COOL in
57 countries that account for most U.S. agricultural trade.) Critics counter that COOL is
a thinly disguised trade barrier intended to increase importers’ costs and to foster the
unfounded perception that imports may be 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.
Recent Congressional Activity
108th Congress. The House Agriculture Committee in July 2004 approved a bill
(H.R. 4576) that would have abolished the current, single mandatory program. In its
place, H.R. 4576 would have required USDA to implement separate, voluntary COOL
programs for red meats, for produce, and for seafood (but not peanuts). 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 National Farmers Union, R-CALF USA, and some
consumer organizations, voiced support for mandatory COOL. Other bills (H.R. 3732;
H.R. 3993; S. 2451) to implement mandatory COOL sooner did not pass. During its
September 2004 markup of the FY2005 USDA appropriation, the Senate Appropriations
Committee defeated, on a tie vote of 14 to 14, an amendment to start mandatory COOL
on January 1, 2005.
109th Congress. Continuing differences have propelled COOL into the 109th
Congress. On June 8, 2005, the House cleared its version of the USDA FY2006
appropriation (H.R. 2744, H.Rept. 109-102) with a provision prohibiting use of funds to
implement COOL for meat and meat products only. A floor amendment (H.Amdt. 232)
to strike this provision was defeated, 187 to 240. COOL was not addressed in the Senate-
passed version of H.R. 2744. The final conference agreement (H.Rept. 109-255)
expanded the two-year postponement to cover produce (fresh fruits and vegetables) and
peanuts as well as meats. H.R. 2744 was signed into law (P.L. 109-97) on November 10,
2005.
Pending in the House Agriculture Committee is legislation (H.R. 2068) introduced
by its chairman that would replace the mandatory program for meats with a voluntary
program. The Senate companion bill is S. 1333; another Senate bill (S. 1300) would
make COOL voluntary for all of the covered commodities. COOL debate was fueled
partly by a USDA rule, published January 4, 2005, permitting younger live cattle to enter
the United States from Canada. Among pending bills to modify this rule are bills (H.R.
384, S. 108) that would prohibit its implementation in any year unless retail COOL for
meat was in effect (see also CRS Report RS22345, BSE ('Mad Cow Disease'): A Brief
Overview). Other COOL-related bills include S. 135 and S. 1331.

---