Order Code RS22955
September 16, 2008
Country-of-Origin Labeling for Foods
Geoffrey S. Becker
Specialist in Agricultural Policy
Resources, Science, and Industry Division
Summary
Under the 2002 farm bill (P.L. 107-171) as amended by the 2008 farm bill (P.L.
110-246), many U.S. retailers must begin providing country-of-origin labeling (COOL)
for fresh produce, red meats, peanuts, chicken, ginseng, pecans, and macadamia nuts.
However, COOL rules will not be fully enforced by the U.S. Department of Agriculture
(USDA) for the six months following their September 30, 2008, effective date. Some
lawmakers have proposed other COOL requirements for foods and food ingredients, as
part of a proposed overhaul of the Federal Food, Drug, and Cosmetic Act.
Background
Since the 1930s, U.S. tariff law has required almost all imports to carry labels so that
the “ultimate purchaser,” usually the retail consumer, can determine their country of
origin. However, certain products, including a number of agricultural commodities in
their “natural” state such as meats, fruits and vegetables, were excluded. For almost as
many decades, various farm and consumer groups have pressed Congress to end one or
more of these exceptions, arguing that U.S. consumers have a right to know where all of
their food comes from and that, given a choice, they would purchase the domestic version.
This would strengthen demand and prices for U.S. farmers and ranchers, it was argued.
Opponents of ending these exceptions to country-of-origin labeling (COOL)
contended that there was little or no real evidence that consumers want such information
and that industry compliance costs would far outweigh any potential benefits to producers
or consumers. Such opponents, including other farm and food marketing groups, argued
that mandatory COOL for meats, produce, or other agricultural commodities was a form
of protectionism that would undermine U.S. efforts to reduce foreign barriers to trade in
the global economy. COOL supporters countered that it was unfair to exempt agricultural
commodities from the labeling requirements that U.S. importers of almost all other
products already must meet, and that major U.S. trading partners impose their own
COOL requirements for imported meats, produce, and other foods.
Since at least the 95th Congress (1977-1978), lawmakers have introduced bills,
unsuccessfully, to end the exception for various agricultural commodities. That changed

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with passage of the 2002 farm bill (P.L. 107-171, § 10816), which mandated retail-level
COOL for fresh fruits and vegetables, beef, pork, lamb, seafood, and peanuts, starting
September 30, 2004. However, continuing controversy over the new requirements within
the food and agricultural industry itself led Congress to postpone full implementation for
a total of four years, until September 30, 2008.1
Meanwhile, lawmakers in the 108th and 109th Congresses debated several new bills
to alter, in some cases significantly, the provisions of the 2002 law. Finally, stakeholders
in the sectors affected by COOL reached a consensus on a series of amendments intended
to ease what many of them viewed as some of the more onerous provisions of the 2002
COOL law, such as its recordkeeping requirements, considerations for labeling U.S. and
non-U.S. origin products, and penalties for noncompliance. These amendments were
incorporated into the 2008 farm bill (P.L. 110-246, § 11002). The enacted 2008 bill also
maintained the September 30, 2008, implementation date and added goat meat, chicken,
macadamia nuts, pecans, and ginseng as commodities covered by mandatory COOL. A
more detailed description of the new law follows later in this report.
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 to 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
J List items themselves have been exempt from the labeling requirements, § 304 of the
1930 Act has required that their “immediate container”(essentially, the box they came in)
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 by the Tariff Act.
1 The FY2004 omnibus appropriations act (P.L. 108-199) postponed COOL — except for seafood
— until September 30, 2006; the FY2006 agriculture appropriation (P.L. 109-97) further
postponed it until September 30, 2008. An interim final rule for seafood COOL was published
on October 5, 2004, and took effect April 4, 2005 (69 Federal Register pp. 59708-59750).

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Meat and Poultry Inspection Provisions
USDA’s Food Safety and Inspection Service (FSIS) is to ensure 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 country of origin appear in English on 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). 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 have entered the country, the federal meat inspection law has
deemed them to be domestic products. When they are further processed in a domestic,
FSIS-inspected meat or poultry establishment — which has been considered the ultimate
purchaser for purposes of country-of-origin labeling — FSIS no longer requires such
labeling on either the new product or its container. FSIS 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.
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.
Farm Bill COOL Requirements
The COOL provisions of the 2002 and 2008 farm bills do not change the
requirements of the Tariff Act or the food safety inspection statutes; rather, they amend
the Agricultural Marketing Act (AMA) of 1946 (7 U.S.C. 1621 note). USDA’s
Agricultural Marketing Service (AMS) administers most AMA-authorized programs,
including COOL.2 AMS published an interim final rule to implement COOL for all
covered commodities (except seafood, which is already implemented) on August 1, 2008,
to take effect September 30, 2008.3 However, it indicated it would not enforce the rule
for six months to give those affected more time to understand and fully comply with it.
Among the major COOL provisions:
! Covered commodities are ground and muscle cuts of beef, lamb, and
pork, farm-raised and wild fish and shellfish, peanuts, “perishable
agricultural commodities” as defined by the Perishable Agricultural
2 AMS maintains an extensive website on COOL, with links to implementing regulations, cost-
benefit analysis, and other materials at [http://www.ams.usda.gov/cool/].
3 73 Federal Register, pp. 45106-45151.

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Commodities Act (PACA, i.e., fresh and fresh frozen fruits and
vegetables), goat meat, chicken, pecans, macadamia nuts, and ginseng.
! These items are exempt if they are an ingredient in a processed food.
! Only PACA-regulated retailers (those purchasing at least $230,000 a year
in fresh fruits and vegetables) are covered, and must inform consumers
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.”
! Exempt are “food service establishments” such as restaurants, cafeterias,
bars, and similar facilities that prepare and sell foods to the public.
Defining Origin. In designating country of origin, difficulties arise when products
— particularly meats — are produced in multiple countries. For example, beef might
have been from an animal that was born and fed in Canada, but slaughtered and processed
in the United States. Likewise, products from several different countries often are mixed,
such as for ground beef. For covered red meats and chicken, the COOL law:
! permits the U.S. origin label to be used only on items from animals that
were exclusively born, raised, and slaughtered in the United States, with
a narrow exception for those animals present here before July 15, 2008;
! permits meats or chicken with multiple countries of origin to be labeled
as being from all of the countries in which the animals may have been
born, raised, or slaughtered;
! requires meat or chicken from animals imported for immediate U.S.
slaughter to be labeled as from both the country the animal came from
and the United States;
! requires products from animals not born, raised, or slaughtered in the
United States to be labeled with their correct country(ies) of origin; and
! requires, for ground meat and chicken products, that the label list all
countries of origin, or all “reasonably possible” countries of origin.
Many retailers and meat processors reportedly plan to use the “catch-all” label
(second bullet, above) on as much meat as possible — even products that would qualify
for the U.S.-only label, because it is both permitted and the easiest requirement to meet.
COOL supporters are concerned about that the label will be overused, undermining the
whole intent of COOL (i.e., to distinguish between U.S. and non-U.S. meats).4
For perishable agricultural commodities, ginseng, peanuts, pecans, and macadamia
nuts, retailers may only claim U.S. origin if they were exclusively produced in the United
States. However, a U.S. state, region, or locality designation is a sufficient U.S. identifier
(e.g., Idaho potatoes). For farm-raised fish and shellfish, a U.S.-labeled product must be
derived exclusively from fish or shellfish hatched, raised, harvested, and 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. Also, labels must differentiate between wild and farm-raised seafood.
4 Cattle Buyers Weekly, August 4, 2008; and Food Chemical News, September 15, 2008.

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Record-Keeping, Verification, and Penalties. The law prohibits USDA from
using a mandatory animal identification (ID) system, but the original 2002 version stated
that the Secretary “may require that any person that prepares, stores, handles, or
distributes a covered commodity for retail sale maintain a verifiable record-keeping audit
trail that will permit the Secretary to verify compliance.” Verification immediately
became one of the most contentious issues, particularly for livestock producers, in part
because of the potential complications and costs to affected industries of tracking animals
and their products from birth through retail sale. Producers of the plant-based
commodities, as well as food retailers and others, also expressed concern about the cost
and difficulty of maintaining records for commodities that are highly fungible and often
widely sourced. The 2008 law eased these requirements somewhat by stating that USDA
“may conduct an audit of any person that prepares, stores, handles, or distributes a
covered commodity” in order to verify compliance. Such persons must provide
verification, but USDA may not ask for any additional records beyond those maintained
“in the course of the normal conduct of business.”
In its August 1, 2008, interim final rule, AMS stated that covered persons would
have to keep records for one year that can identify both the immediate previous source
and the immediate subsequent recipient of a covered commodity. A slaughter facility can
accept a producer affidavit as sufficient evidence for animal origin claims.
Also, potential fines for willful noncompliance are set for retailers and other persons
at no more than $1,000 per violation. The 2002 law had set the fine at no more than
$10,000 (and for retailers only), but the amount was lowered by the 2008 farm bill.
Costs and Benefits. COOL supporters argue that a number of studies show that
consumers want such labeling and would pay extra for it. Analysis accompanying
USDA’s interim final rule concludes that, while benefits are difficult to quantify, it
appears they will be small and accrue mainly to consumers who desire such information.
A Colorado State University economist suggested 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.5 USDA earlier had estimated that
purchases of (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 economic modeling studies of COOL impacts appear to
fall within this range.6 Another research paper found that demand for domestic apples
would need to increase by a range of 3% to 7% and for domestic tomatoes by 8% to 22%
for COOL to increase total economic welfare in these markets.7
5 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].
6 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.
7 Alejandro Plastina and Konstantinos Giannakis, “Market and Welfare Effects of Mandatory
Country-of-Origin Labeling in the U.S. Specialty Crops Sector,” Selected Paper, American
Agricultural Economics Association Annual Meeting, Portland, Oregon, 2007.

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Critics of mandatory COOL have argued that large compliance costs will more than
offset any consumer benefits. USDA’s analysis of its interim final rule estimates first-
year implementation costs to be $2.517 billion for the approximately 1.222 million firms
affected. Of the total, commodity producers would bear an estimated $450 million,
intermediary firms (such as wholesalers or processors) $1.115 billion, and retailers $952
million. In the tenth year after full implementation, the estimated cost to the U.S.
economy would be $212 million, the result of higher food prices and reduced production,
as compliance costs are passed on to consumers at the retail level, USDA estimates.
Coverage. Consumers may not find country labels on much more of the food they
buy, due to COOL’s statutory and regulatory exemptions. First, as noted, all restaurants
and other food service providers are exempt, as are all retail grocery stores that buy less
than $230,000 a year in fresh fruits and vegetables. Second, “processed food items”
derived from the covered commodities are exempt, and USDA, in its interim final rule,
has defined this term broadly (at 7 C.F.R. 65.220). Essentially, any time a covered
commodity is subjected to a change that alters its basic character, it is considered to be
processed. Although adding salt, water, or sugar do not, under USDA’s definition, change
the basic character, virtually any sort of cooking, curing, or mixing apparently does. For
example, roasting a peanut or pecan, mixing peas with carrots, or breading a piece of meat
or chicken, all count as processing. As a result, only about 30% of the U.S. beef supply,
11% of all pork, 39% of chicken, and 40% of all fruit and vegetable supplies may be
covered by COOL requirements at the retail level.8
Food and Drug Globalization Act of 2008 (Dingell Draft)9
A draft bill being circulated in 2008 by the chairman of the House Energy and
Commerce Committee would establish new COOL requirements, presumably focusing
on non-meat and non-poultry foods regulated under the Federal Food, Drug, and Cosmetic
Act (FFDCA) by the U.S. Food and Drug Administration (FDA). Currently, the FFDCA
(at 21 U.S.C. §§ 301 et seq.) does not contain express COOL requirements for foods or
drugs. It addresses origin to some extent, however, by providing, in § 403(e), that a food
in package form will be deemed to be misbranded unless it bears a label containing the
name and place of business of the manufacturer, packer, or distributor.
The Dingell draft would add new sections to §403 of the FFDCA on misbranding.
New section (z) would provide that a “processed food” will be considered misbranded if
“(1) the labeling of the food fails to identify the country in which the final processing of
the food occurs; and (2) the website for the manufacturer of the food fails to identify the
country (or countries) of origin for each ingredient in the food.” The bill also would add
a new section (aa) to § 403 to provide that a “non-processed food” will be considered to
be misbranded if “(1) the labeling of the food fails to identify the country of origin of the
food; and (2) the website for the original packer of the food fails to identify the country
of origin for the food.” It is unclear whether (but unlikely that) the Dingell or other
similar proposals might receive formal consideration prior to adjournment.
8 Percentages calculated by CRS based upon USDA estimates of retail-level COOL coverage in
pounds, divided by total annual supply (USDA data on domestic production plus imports).
9 Portions of this section are from material prepared by Jeanne Grimmett, Legislative Attorney
in the CRS American Law Division.

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