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Published April 15, 2013, 10:24 AM

The rules on COOL

The U.S. Department of Agriculture’s Agricultural Marketing Service has issued a proposed rule to bring the current mandatory Country of Origin Labeling (COOL) requirements into compliance with U.S. international trade obligations.

By: Daryll E. Ray and Harwood D. Schaffer, Agweek

KNOXVILLE, Tenn. — The U.S. Department of Agriculture’s Agricultural Marketing Service has issued a proposed rule to bring the current mandatory Country of Origin Labeling (COOL) requirements into compliance with U.S. international trade obligations.

AMS is responding to the determination of the World Trade Organization Appellate Body that COOL requirements were “inconsistent with the WTO Technical Barriers to Trade Agreement’s national treatment obligation to accord imported products treatment no less favorable than that accorded to domestic products.”

The U.S. was given until May 23 to come into compliance with the WTO ruling.

The first element of the proposed rule amends the definition of “retailer” in COOL regulations to “help clarify that all retailers that meet the Perishable Agricultural Commodities Act definition of a retailer, whether or not they actually have a PACA license, are also covered by COOL.”

The rationale for making this change is not discussed in the proposed rule, but presumably, AMS thinks it will help bring the U.S. into closer compliance with the determination of the WTO Appellate Body.

Production steps

In the proposed rule, AMS requires that “all origin designations for muscle cut covered commodities slaughtered in the United States specify the production steps of birth, raising and slaughter of the animal from which the meat is derived that took place in each country listed on the origin designation.”

The requirement to include this information will apply equally to all muscle cut covered commodities derived from animals slaughtered in the U.S.

“This requirement will provide consumers with more specific information on which to base their purchasing decisions without imposing additional recordkeeping requirements on [the] industry,” AMS says. The AMS considers these changes “consistent with the provisions of the statute.”

This change would address the Appellate Body’s concern that the information the industry is required to collect is greater than the information the retailer is required to make available to the consumer by making more detailed information on the country in which each of the production steps took place. As a result, for muscle cuts that previously were designated as “Product of the U.S.” the new label would read, “Born, Raised, and Slaughtered in the United States.”

Two scenarios

For muscle cuts that were slaughtered in the U.S. but born or raised elsewhere, the AMS identifies two scenarios with respect to COOL.

The first scenario deals with meat derived from animals that were born in another country (and thereby raised for a period of time) and were imported as feeder cattle that were further raised and slaughtered in the U.S.

“For these products, current COOL regulations allow the origin to be designated as “Product of the U.S. and Country X.” Under this proposed rule, as with U.S.-only origin products, the origin designation for these products would be required to include location information for each of the production steps.”

An exception is granted when animals are raised in another country and the U.S., in which case the raising that occurs in the U.S. “may take precedence over the minimal raising that occurred in the animal’s country of birth. Accordingly, under this proposed rule, the production step related to any raising occurring outside the United States may be omitted from the origin designation of these products (“Born in Country X, Raised and Slaughtered in the United States” in lieu of “Born and Raised in Country X, Raised and Slaughtered in the United States”).

“This omission is not permitted in the relatively rare situation where an animal was born in the United States, raised in another country (or countries) and then raised and slaughtered in the United States.”

In the second scenario, the origin designation for meat derived from animals imported for immediate slaughter would be required to include information as to the production steps taking place in the countries listed on the origin designation. However, the country of raising for animals imported for immediate slaughter “shall be designated as the country from which they were imported (Born and Raised in Country X, Slaughtered in the United States).”

In addition, this proposed rule would eliminate the allowance for any commingling of muscle cut covered commodities of different origins. “All origin designations would be required to include specific information as to the place of birth, raising and slaughter of the animal from which the meat is derived. Removing the commingling allowance allows consumers to benefit from more specific labels.”

For muscle cuts that are imported into the U.S., the label can read “Product of Country X,” as under current regulations, or it can include more specific information related to “production steps, provided records to substantiate the claims are maintained and the claim is consistent with other applicable federal legal requirements.”

Thus, the label could read, “Born in Country X, raised in Country Y and slaughtered in Country Z.”

Most of the remainder of the proposed rule deals with estimating the costs and benefits of the regulatory change. Because most of the costs related to COOL already have become a part of the current cost structure of the industry, AMS looked only at the incremental costs associated with the proposed changes in the rule, which were “calculated to be comparatively small” relative to the costs associated with the original COOL rule.

The other problem the WTO Appellate Body identified in the 2009 COOL regulation is that the 2009 regulation exempts processed food items, items sold in food service establishments and items not sold through a “retailer” from labeling requirements. Perhaps the clarification of the term “retailer” is intended to take care of this, though that rationale is not made clear in the language of the proposed rule.

Editor’s Note: Ray is the director of the University of Tennessee’s Agricultural Policy Analysis Center. Schaffer is a research assistant professor at APAC.

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