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Thursday, May 2, 2013

Country-of-Origin Labeling for Foods and the WTO Trade Dispute on Meat Labeling

Remy Jurenas
Specialist in Agricultural Policy

Joel L. Greene
Analyst in Agricultural Policy

Most retail food stores are now required to inform consumers about the country of origin of fresh fruits and vegetables, fish, shellfish, peanuts, pecans, macadamia nuts, ginseng, and ground and muscle cuts of beef, pork, lamb, chicken, and goat. The rules are required by the 2002 farm bill (P.L. 107-171) as amended by the 2008 farm bill (P.L. 110-246). Other U.S. laws have required such labeling, but only for imported food products already pre-packaged for consumers. The final rule to implement country-of-origin labeling (COOL) took effect on March 16, 2009.

Both the authorization and implementation of COOL by the U.S. Department of Agriculture (USDA) have been controversial, particularly for the labeling rules for meat and meat products. A number of livestock and food industry groups continue to oppose COOL as costly and unnecessary. They and the main livestock exporters to the United States—Canada and Mexico— view the requirement as trade-distorting. Others, including some cattle and consumer groups, maintain that Americans want and deserve to know the origin of their foods, and point out that many U.S. trading partners have labeling laws.

Less than one year after the COOL rules took effect, Canada and Mexico challenged them in the World Trade Organization (WTO), arguing that COOL has a trade-distorting impact by reducing the value and number of cattle and hogs shipped to the U.S. market, thus violating WTO trade commitments agreed to by the United States. In November 2011, the WTO dispute settlement (DS) panel found that (1) COOL treats imported livestock less favorably than like U.S. livestock (particularly in the labeling of beef and pork muscle cuts), and (2) COOL does not meet its objective to provide complete information to consumers on the origin of meat products.

In March 2012, the United States appealed the WTO ruling. In June 2012 the WTO’s Appellate Body (AB) upheld the DS panel’s finding that the COOL measure treats imported Canadian cattle and hogs, and imported Mexican cattle, less favorably than like domestic livestock. But the AB reversed the finding that COOL does not fulfill its legitimate objective to provide consumers with information on origin. The Obama Administration welcomed the AB’s affirmation of the U.S. right to adopt labeling requirements to inform consumers on the origin of the meat they purchase. Participants in the U.S. livestock sector had mixed reactions, reflecting the heated debate on COOL that has occurred over the last decade.

This case entered the compliance phase when the WTO’s Dispute Settlement Body (DSB) adopted the AB and DS panel reports on July 23, 2012. A WTO arbitrator set a deadline of May 23, 2013, for the United States to comply with the WTO findings. On March 12, 2013, USDA issued a proposed rule to modify how muscle cuts of meat are to be labeled in order to comply with the WTO’s findings that current COOL labeling requirements discriminate against livestock imports. The proposed changes would require that labels show where each production step (i.e., born, raised, slaughtered) occurred and would remove the current “allowance for commingling of muscle cuts.” COOL’s supporters favor a regulatory solution and applauded the proposal’s focus on providing consumers with specific and more useful information on their origin. Domestic opponents decried the proposed rule, arguing that it makes such labeling “worse even as it claims to ‘fix it’, imposes additional record-keeping burdens on processors and retailers and in turn, additional costs to consumers.” Canada and Mexico expressed disappointment with the proposed changes, viewing them as not bringing the United States into compliance with its WTO obligations. Canada and Mexico have stated that all options will be considered, including retaliation, if the United States does not comply with the WTO findings.

Date of Report: April 22, 2013
Number of Pages: 46
Order Number: RS22955
Price: $29.95

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