On May 23, 2013, the U.S. Department of Agriculture (USDA) Agricultural Marketing Service (AMS) issued a final rule on mandatory Country of Origin Labeling (COOL) requirements for muscle cut covered commodities. The rule requires origin designation labels to include information about where each of the production steps occurred, meaning the label must indicate where the animal was born, raised and slaughtered, even if each step occurred in separate countries. Since its release, strenuous objections have been issued by industry stakeholders and trading partners. This includes lawsuits and threats to impose retaliatory tariffs, respectively.
The COOL requirements originated in the 2002 Farm Bill. Final implementation was delayed for several years until the 2008 Farm Bill was enacted. That legislation included an agreement reached by interest groups most affected by the COOL provisions who had reached consensus on some of the more onerous provisions of the original law. The final measure amended the Agricultural Marketing Act of 1946 to require retailers to notify their customers of the origin of covered commodities. The list of covered commodities includes muscle cuts of beef, lamb, chicken, goat and pork; ground beef, ground lamb, ground chicken, ground goat and ground pork; wild and farm-raised fish and shellfish; perishable agricultural commodities, macadamia nuts; pecans, ginseng and peanuts.
AMS published a final rule implementing the COOL statute in January 2009. The rule adopted the following labeling system:
(A) “Product of the United States,” for meat derived from an animal born, raised and slaughtered in the U.S., or present in the U.S. on or before July 15, 2008
(B) “Product of the United States, Country X, and (as applicable) Country Y,” for meat derived from an animal born and raised outside of the U.S. and imported into the U.S. more than two weeks before slaughter
(C) “Product of Country X and the United States,” for meat derived from an animal imported from Country X to be slaughtered within two weeks
(D) “Product of Country X,” for finished meat products derived from animals slaughtered outside the U.S. and imported from Country X
After AMS published this rule, Canada and Mexico filed a complaint before the World Trade Organization (WTO), contending that the requirements discriminated against Canadian and Mexican livestock imports and thus violated the WTO Agreement on Technical Barriers to Trade (TBT). In 2011, the WTO decided in favor of Mexico and Canada, specifically saying that COOL “creates an incentive to use domestic livestock — and a disincentive to handle imported livestock — by imposing higher segregation costs on imported livestock than on domestic livestock.”
The WTO further noted that several U.S. processing plants discontinued the acceptance of imported livestock altogether. The decision was appealed by the Obama Administration, but was upheld in a 2012 ruling by the WTO Appellate Body, which required the U.S. to comply by May 23, 2013, the date on which the final rule was released and went into effect.
In response to the decision, AMS published its modified final rule on May 23, stating that “the Agency 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.” The final rule wasn’t all that different from the proposed rule which was issued previously, surprising many. The final rule requires the retail labeling of covered meat commodities to include the origin destination for each step of the production process; requires a modified label for those cuts exclusively processed in the U.S.; eliminates the use of mixed origin labels such as “Product of the United States, and Country X, and/or Country Y;” expands the definition of a retailer to be any entity that meets the retailer definition under the Perishable Agricultural Commodities Act of 1930; and precludes the use of special labels for commingled meat processed in the same day but in different countries.