USDA Proposed COOL Rule Would Boost Labeling Burden

March 11, 2013 12:58 AM
 
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via a special arrangement with Informa Economics, Inc.

Comments on proposal being taken through April 11

NOTE: This column is copyrighted material, therefore reproduction or retransmission is prohibited under U.S. copyright laws.


The proposed rule from USDA to bring the U.S. Country of Origin Labeling (COOL) requirement into compliance with US WTO obligations would boost labeling requirements on retailers and others in the meat chain. Link to notice.

The rule would eliminate the ability of meat from multiple origins to be labeled as such and instead would require the label to state where the animal was born, raised and slaughtered. USDA also would broaden their definition of “retailer” under the proposal.

“USDA expects that these changes will improve the overall operation of the program and also bring the current mandatory COOL requirements into compliance with U.S. international trade obligations,” said Agriculture Secretary Tom Vilsack.

Even meat from animals that are born, raised and slaughtered could not be merely labeled as a “Product of the US” but rather would have to carry a label stating the product was “Born, Raised and Slaughtered in the US.”

In addition, commingling currently allowed under the current mandatory COOL regulations would no longer be available under the proposed amendments.

The estimated number of firms that would need to augment labels for muscle cut covered commodities is 2,808 livestock processing and slaughtering firms, 38 chicken processing firms, and 4,335 retailers,” USDA said. “This totals 7,181 firms that would need to augment the mandatory COOL information presented on labels for muscle cut covered commodities.”

As for a cost, USDA said they estimate a “midpoint cost of the proposed rule for this label change is $32,764,500 with a range of $16,989,000 to $47,326,500.”

Reaction from Canada was swift, and negative. In a statement late on Friday, Canadian Agriculture Minister Gerry Ritz said his government was "extremely disappointed" with the US proposal. "We do not believe that the proposed changes will bring the United States into compliance with its WTO obligations," Ritz said. "The proposed changes will increase the discrimination against exports of cattle and hogs from Canada and increase damages to Canadian industry. Our government will consider all options, including retaliatory measures, should the US not achieve compliance by May 23, 2013, as mandated by the WTO."

The Canadian Cattlemen's Association (CCA) said the proposed rule, by adding labeling requirements and "eliminating some of the existing mitigating flexibility," will "significantly increase the costs of compliance." The net result, the CCA said, is "a rule that not only does not comply with the WTO Appellate Body’s findings but will also violate WTO provisions not previously ruled upon." USDA appears set to rush the rule through with a relatively quick comment period "in order to implement something, regardless of how ill-conceived," before the WTO's May 23 deadline, the CCA said. "This tactic not only increases the discrimination against imported livestock, but also creates additional process and delay at the WTO."

The CCA noted that USDA's release "sounds very similar to the regulation initially proposed by USDA in 2002 that was never implemented because of the enormous cost to the US packing and livestock production sectors." If implemented, the CCA said, the proposed rule "will degrade the competitiveness of the US meat industry and undoubtedly result in the elimination of thousands of American jobs."

CCA's recent analysis showed COOL has hurt the Canadian cattle industry $639 million per year. The cost to Canada's hog industry, meanwhile, was pegged in the area of $500 million per year.

Canada's government will likely publish a list of potential US targets and allow Canadian stakeholders to comment on it. This would also identify those items to US stakeholders. Observers have noted the believe that besides US beef and pork being on the likely retaliatory list, other products, including US fruit and vegetables would likely end up on the list, as well as non-agricultural products.

Analysis commissioned by the CCA, and prepared by U.S. ag economics professor Dan Sumner at the University of California at Davis, concluded that based on a very conservative estimate, there are 9,000 US jobs at risk in the packing sector alone if the US does not comply with the WTO ruling. And that reportedly did not take into account people whose job it is to drive trucks, and other affiliated services.

The American Meat Institute (AMI) also criticized USDA's rule. “Only the government could take a costly, cumbersome rule like mandatory country-of-origin labeling (COOL) and make it worse even as it claims to ‘fix it,’" AMI president J. Patrick Boyle said in a statement. Complying with the new regulations would bring costs that would ultimately be passed on to consumers, Boyle said. “An absurd example of one of the proposed changes is this: a plant or grocery retailer that currently labels its product, ‘Product of the US’ would now have to change the labels on its packages to read, ‘Born, raised and slaughtered in the US,’” he observed. Boyle ripped the entire idea of mandatory COOL as "conceptually flawed, in our view and in the eyes of our trading partners." Further, he said, "the anti-free trade objectives of this labeling scheme’s proponents are no secret. Requiring us now to provide even more information at a greater cost when evidence shows consumers, by and large, are not reading the current country-of-origin information is an ill-conceived public policy option.”

USDA said Friday it doesn't believe additional recordkeeping or new systems would be needed to transfer data on origin from one link in the value chain to the next.

The National Farmers Union, a usually pro-Obama administration farm group, offered its support for the changed rule. “The proposed rule changes released by OMB are an excellent response to decisions by the World Trade Organization that called for changes to our COOL implementation,” National Farmers Union President Roger Johnson said in a press statement. “By requiring further clarity in labels and stronger recordkeeping, the set of rules released today are a win-win for farmers, ranchers and consumers,” he added. “The proposed rule is consistent with the legal analysis commissioned by NFU and other producer and consumer allies,” Johnson added.

Beginning Monday, the public and interested parties will have 30 days to comment. AMS must consider all comments before the rule is finalized. Notice of the proposed rule will be posted in the March 11 Federal Register. Comments, which are due by April 11, should be submitted electronically at http://www.regulations.gov, or to Julie Henderson, director; USDA, AMS, LPS, COOL Division; 1400 Independence Ave. S.W., Room 2620-S; Washington, D.C. 20250; telephone number (202) 720-4486; or fax (202) 260-4486.



NOTE: This column is copyrighted material, therefore reproduction or retransmission is prohibited under U.S. copyright laws.


 


 

 

 

 

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