If you have bought any packaged meat recently, you may have noticed a new type labe: a Country of Origin label that may list up to three countries under the categories of “born, raised, and slaughtered.” Consumer groups have long advocated for Country of Origin labeling, but not everyone in the food supply chain is pleased.
On July 22, 2014, Bill Bullard, CEO, R-CALF USA presented a webinar, titled “Country of Origin Labeling: How Multinational Agribusinesses Are Attacking This Law” to members of the Coalition for a Prosperous America (CPA) and sponsoring organizations.
He explained that County of Origin Labeling is not new. The Federal Meat Inspection Act of 1906 was passed by Congress to prevent adulterated or misbranded meat and meat products from being sold and to ensure that meat and meat products are slaughtered and processed under sanitary conditions. It required labels on imported meat, but the USDA considered imports of non-retail-ready meat products to be of domestic origin once they passed a U.S. safety inspection, so origin markings were not maintained. The USDA also considered imported livestock to be domestic after its Animal and Plant Health Inspection Service inspects and releases these animals. USDA inspection of poultry was added by the Poultry Products Inspection Act of 1957.
The Tariff Act of 1930 required that every imported item must be conspicuously and indelibly marked to indicate to the “ultimate purchaser” its country of origin. Products were exempt if they were too difficult or economically prohibitive to mark. The list of exemptions included livestock, “natural” or raw agriculture products such as vegetables, fruits, nuts, and berries.
Mr. Bullard stated that Country of Origin Labeling (COOL) was included in 2002 Farm Bill. It covered muscle cuts of beef, lamb, and pork; ground beef, ground lamb, and ground pork; farm-raised fish and wild fish; perishable agricultural commodities (fruits and vegetables); peanuts.
However, Mr. Bullard explained that this requirement applies to retailers (grocery stores), but not restaurants or if sold by retailer not required to be licensed under PACA (Perishable Agriculture Commodities Act), such as specialty markets, fish markets, butcher shops or roadside stands.
The USDA rules for COOL exempt “processed” versions of the foods, so that the following are exempt:
- cooked, roasted, smoked or cured (even teriyaki flavored meat)
- combined with one other ingredient
Most nuts sold in grocery stores are roasted, so they aren’t labeled. Ham, bacon, sausage and other products in the pork section of the meat case are exempt because they are smoked or cured.
However, he started that there was an 11-year delay in writing the rules for USA Label for USA-born, raised, and slaughtered beef. The multinational agribusinesses and their trade organizations like the American Meat Institute (AMI) and the National Cattlemen’s Beef Association (NCBA) fought hard to stop Implementation of this label. They convinced then Secretary of Agriculture Ann Veneman to support their efforts to keep consumers in the dark.
Congress’ FY 2004 appropriations bill delayed COOL for everything except wild and farm-raised fish and shellfish until Sept. 30, 2006. Congress’ FY 2006 appropriations bill further delayed COOL for everything except wild and farm-raised fish and shellfish until Sept. 30, 2008.
Just days before the 2009 presidential inauguration, on Jan. 15, 2009, USDA issued its final rule on COOL. It allowed packers to commingle a single foreign animal during a day’s production and then label the entire day’s production as “Product of U.S. and Canada and/or Mexico.”
Despite the quid pro quo, on May 7, 2009, both Canada and Mexico filed actions with the World Trade Organization (WTO) alleging COOL violated U.S. obligations under various WTO agreements.
In 2012, the WTO faulted COOL and ruled (in part):
- Violates Article 2.1 of the WTO TBT Agreement because COOL’s recordkeeping and verification requirements impose a disproportionate burden on upstream producers and processors, because the level of information conveyed to consumers through the mandatory labeling requirements is far less detailed and accurate than the information required to be tracked and transmitted by these producers and processors.
- These same recordkeeping and verification requirements “necessitate” segregation, meaning that the associated compliance costs are higher for entities that process livestock of different origins resulting in a detrimental impact on the competitive opportunities of imported livestock.
- The COOL labels contain confusing and inaccurate information.
- The regulatory distinctions imposed by the COOL measure amount to arbitrary and unjustifiable discrimination against imported livestock, such that they cannot be said to be applied in an even-handed manner. Accordingly, we find that the detrimental impact on imported livestock does not stem exclusively from a legitimate regulatory distinction but, instead, reflects discrimination in violation of Article 2.1 of the TBT Agreement.
On May 24, 2013, the U.S. informed the Dispute Settlement Board that on 23 May 2013, the USDA had issued a final rule that made certain changes to the COOL labeling requirements that had been found to be inconsistent with Article 2.1 of the TBT Agreement. The U.S. was of the view that the final rule had brought it into compliance with the DSB recommendations and rulings.
This rule reversed their concession of 2009 to consider comingled livestock as a U.S. product. The new implementing regulations require the label to show the Country of Origin for the production steps of born, raised, and slaughtered in the U.S.
This effectively ended the deceptive practice of commingling that previously allowed meat exclusively from U.S. animals to be mislabeled as if it were meat from multiple origins, such as the inaccurate label: “Product of the Canada, Mexico and the U.S.
Mr. Bullard said that the benefits of this regulation are:
- Optimizes U.S. Value-Added Supply Chains
- Prevents industry consolidation
- Prevents consumer deception
- Enhances competition
- Provides synchronous information (between consumer and packer/retailer)
- Facilitates more accurate price discovery
- Provides consumers with more choices
- Empowers consumers to make informed decisions
- Provides food safety proxy for expression of nationalism/patriotism
However, Canada did not agree that the changes brought the U.S. into full compliance. In its view, the changes were more restrictive and caused further harm. On August 19, 2013, Canada requested the establishment of a compliance panel. Brazil, China, the European Union, India, Japan, Korea and New Zealand reserved their third-party rights, followed by Australia, Colombia, Guatemala and Mexico. On September 27, 2013, the compliance panel was composed. On 26 March 2014, the Chair of the compliance panel informed the DSB that the compliance panel expects to issue its final report to the parties towards the end of July 2014 (not issued as of this date.)
In the meantime, the WTO and multinational Agribusinesses continued to promote global supply chains. The World Trade Organization has been working on the “Made in the World” initiative for years. The WTO’s Made in the World initiative is part of a process of “re-engineering global governance.” On February 26, 2013, Former WTO Director General Pascal Lamy, said, “Fewer and fewer products are actually ‘Made in the UK’ or ‘Made in Switzerland’, and more and more are ‘Made in the World.’”
According to Mr. Bullard, the multinational agribusinesses and their allies have used every front to defeat COOL: U.S. Federal Courts, the U.S. Congress, industry propaganda, and the WTO.
COOL has been attacked in Federal Court by the American Meat Institute (AMI), National Cattlemen’s Beef Association (NCBA), National Pork Producers Council, American Association of Meat Processors, North American Meat Association, Southwest Meat Association, Canadian Cattlemen’s Association, Canadian Pork Council, and the Confederacion Nacional De Organizaciones Ganaderas.
The arguments they used were:
- COOL violates their constitutionally protected rights to freedom of speech.
- COOL improperly prohibits them from “commingling.”
- The “Born, Raised, and Slaughtered” labels are not authorized by the 2002 COOL statute amended in 2008.
- There is no substantial governmental interest in informing consumers where the meat they buy for their families was born, raised and slaughtered.
Thus far, the U. S. Courts have upheld COOL: the U.S. District Court for District of Columbia denied the Preliminary Injunction request, and the U.S. Court of Appeals for District of Columbia Circuit affirmed the District Court judgment. However, on April 4, 2014, the appeals court vacated its judgment and issued an order for the case to be heard en banc regarding the narrow issue related to the First Amendment, and a decision is pending.
The multinational agribusinesses have tried to eliminate or weaken COOL in each of the past three U.S. Farm Bills, but failed in their effort to include language to weaken COOL by allowing a “North American” label. They did succeed in adding anti-COOL language in House Agriculture Appropriations Committee report language.
In conclusion, Mr. Bullard explained that the main reason why COOL is under attack is the fact that the U.S. Department of Justice and USDA have failed to enforce U.S. antitrust laws and market competition laws against multinational meatpackers. In addition, unrestrained mergers and acquisitions, and the lack of enforcement of anticompetitive practices have accorded U.S. multinational meatpackers oligopolistic market power in U.S. meat markets (four firms control about 85% of beef market). As a result of this market power, meatpackers can and do discriminate against whomever they choose, including the countries of Canada and Mexico.
He said that COOL is the most pro-producer, pro-consumer, and pro-competition legislation to be passed by Congress in a long, long time, and it must be preserved.