Country of Origin Labeling: What It Means for Us

The United States government, in response to consumers' desires to know more about the origin of the food they were buying, passed a law in 2002 called the Country of Origin Labeling (COOL) law.  The law aims to provide information to consumers regarding the origin of food products.  The 2002 Farm Bill (and subsequent amendments) requires processors, packers, and retailers to label the country of origin for fish and shellfish; peanuts, pecans, and macadamia nuts; ginseng; fresh and frozen fruits and vegetables; ground beef, lamb, pork, goat, and chicken; and muscle cuts of beef, veal, lamb, pork, goat, and chicken (and muscle cuts cannot be comingled with meat from another country).  Additionally, seafood products are required to have a label indicating if the product is farmed or wild-caught.
 

Meat Label

There are four categories of labels for meat products:

  1. Product of the US (meat from animals born, raised, and slaughtered in the US) 
  2. Born in Country X and raised and slaughtered in the US (meat from animals born in a different country and raised and slaughtered in the US) 
  3. Born in Country X, raised in Country Y, and slaughtered in the US (meat from animals imported to the US and immediately slaughtered)
  4. Born, raised, and slaughtered in Country X (imported meat)

The COOL law exempts processed foods and defines “processed” as anything that has been cooked, roasted, smoked, cured, or combined with at least one other ingredient.  The law also applies only to retailers purchasing “at least $230,000 of perishable agricultural commodities” and exempts establishments that “prepare and sell foods to the public,” such as restaurants. 

However, US trade partners, Canada and Mexico, have found fault with the COOL law, claiming it discriminates against imported products.  In 2008, Canada and Mexico appealed the US COOL law to the WTO, alleging the law was trade-distorting.  Specifically, Canada and Mexico alleged that the COOL law was inconsistent with the 1994 GATT agreement, the Agreement on Technical Barriers to Trade, and the Agreement on Rules of Origin.  Canada's complaint focused mostly on the potential costs to livestock producers.  The Canadian Cattlemen's Association claimed that cattle producers spent $92 million (Canadian dollars) during the first two months after the initial implementation of the COOL law, and they estimate that the law will cost producers $500 million (Canadian dollars) per year moving forward.  They argue that Canadian cattle were losing $90 (Canadian dollars) per head because US slaughterhouses were not willing to segregate Canadian cattle from US cattle to abide by the new law (separating cattle by country makes it easier for labeling and packaging), leading to lower prices for Canadian cattle and increased transportation costs. The US argued that imported and domestic products were all affected by the COOL law, thus imported products were not receiving less favorable treatment. The WTO panel sided with Canada and Mexico and ruled that portions of the COOL law violate the Agreement on Technical Barriers to Trade and GATT.  The US appealed the ruling and in 2012, the WTO upheld the decision that COOL “treats imported Canadian cattle and hogs, and imported Mexican cattle, less favorably than like domestic livestock, due to its record-keeping and verification requirements.”
 

Pigs
(photo credit: Jordan Silverman)

The US revised their rules to come into compliance with the WTO findings, and those revised rules went into effect in May 2013.  Specifically, the revised rules clarified labeling requirements for muscle cuts of meat. However, Canada and Mexico are still not pleased with the new COOL law, saying that the revisions have made the law worse than it was before.  Canada has requested another WTO panel, which was created on September 25, 2013 in Geneva, to review the new law. A ruling from the WTO is expected to occur in the next few months.  If the WTO sides with Canada, the country's government may ask to impose retaliatory tariffs on the US on selected products including cattle, pigs, beef, pork, some fruit and vegetables, and chocolate.  It should be noted that other countries, including Canada and Mexico, also have food product labeling laws.

Critics of the law in the US argue that it will be expensive for those affected to come into compliance.  The USDA estimated that the implementation of the final COOL law would incur costs of $32.8 million, with costs of prohibiting the commingling of muscle meat to add an additional $90.5 million.  The USDA also “estimated that 33,350 establishments owned by 7,181 firms would need to rework labels” and that most of the costs will be incurred by packers and processors. In August 2013, a number of US, Canadian and Mexican livestock groups asked a federal court for an injunction against the implementation of the COOL law while they challenge the law's constitutionality in court.  They are challenging the law as a form of “compelled speech” and claim that labeling country of origin of meat products does not protect consumers. Additionally, the plaintiffs argue that COOL violates the Administrative Procedure Act “because it is burdensome for industry but provides little or no benefit to consumers.”  In September 2013, the federal judge refused to issue the injunction, which suggests that she does not believe the livestock groups will be successful in challenging the COOL law in court.  Just last week, the plaintiffs went ahead and challenged the COOL law in court.  It will take weeks before a verdict is reached.  The COOL law has also served as a stumbling block during the 2014 Farm Bill negotiations.
 

Beef Cow
(photo credit: Ben Sarle)

So, as a border state, has trade between Vermont and Quebec been affected by the COOL law?  City Market’s Meat and Seafood Manager, Jamie Lewis, mentioned that the COOL law has not affected the Meat and Seafood Department significantly, other than the requirement to change retail labels, which was more of a burden for our IT Department. Lewis did say that the COOL law has the potential to make operations more difficult for one of the major poultry producers in the region, Misty Knoll, which imports their poults from Canada.  Since City Market pieces out whole chickens from Misty Knoll, City Market is therefore required to detail on our label where the chickens were born, raised, and slaughtered, meaning Misty Knoll must have all of that information recorded and available.

One of City Market’s Produce Buyers, Mary Manghis, mentioned that for years City Market has made it a practice to sign produce according to where it is produced, and in fact, indicating which products originate in Quebec actually helps sell products, as Burlington is a popular tourist destination for Quebecois, and since some parts of Quebec are closer to us than parts of Vermont or New England for those thinking about the local foodshed.  Manghis mentioned that only two producers that sell to City Market, Deep Root Cooperative and Taste of the North, are located on the border between Vermont and Canada.  Those producers initially had some frustrations ensuring they had all the correct paperwork when the initial COOL law went into effect, but since then, the COOL law has not noticeably impacted our Produce Department.
 

Chicken
(photo credit: Shayne Lynn)

What seemed like a fairly straightforward law, created to meet consumers' demands for more information about the food they were buying, has become a controversial piece of legislation at the global scale.  Despite working through disputes following the WTO grievance procedures, the US and Canada have continued to disagree about the effects and intent of the COOL law. The coming decision from the WTO regarding the US' implementation of the 2013 COOL law revisions will be critical in the future trade relations between the US, Canada, and Mexico, and if Canada does choose to impose retaliatory tariffs on US exports, then trade between Vermont and Quebec may be more significantly affected.