Thursday, May 30, 2013

USDA/AMS Issues New COOL Rule

On May 23, 2013, the USDA’s Agricultural Marketing Service (AMS) issued the new Country of Origin Labeling (COOL) rule in response to successful challenges made by Canada and Mexico to the World Trade Organization (WTO).

Originating in the 2002 Farm Bill and expanded under the 2008 Farm Bill, COOL amended the Agricultural Marketing Act of 1946 to require mandatory retail-level country of origin labeling for various agricultural commodities. Canada and Mexico, along with several other countries, challenged COOL, stating that COOL violated the U.S.’s obligations under the WTO Agreement, including the Technical Barriers to Trade Agreement (TBT). In 2011, the WTO’s Appellate Body affirmed a previous WTO Panel’s ruling that the U.S. was in violation of the TBT. The WTO did find, however, that the U.S. had a right to label products according to their country of origin. Based on these findings, the U.S. was given a reasonable period of time to reform COOL.

The major reforms in the new COOL rule mostly deal with muscle cut covered commodities. These commodities must be labeled to specifically identify the countries in which each step in production occurred. The new rule also clarifies the definition of the term “retailer” to be any person subject to be licensed as a retailer under the Perishable Agricultural Commodities Act.  Furthermore, for six months after implementation, AMS will be conducting industry education concerning the new rule. According to the AMS, the costs of implementation of the new rule will be incurred primarily by packers and processors of muscle cut covered commodities and retailers subject to COOL.

Reactions to the new rule vary from outright disapproval to enthusiastic acceptance. Internationally, Canada’s Ministries of Agriculture and International Trade are still not appeased and Canada is considering retaliatory measures, stating that the new rule will “increase discrimination against Canadian cattle and hogs and increase damages to industry on both sides of the border.”

Domestically, the National Grocer’s Association (NGA) fears the new rule will increase cost burdens on independent grocers and hinder consumer choices. Also, the American Meat Institute and the National Cattlemen’s Beef Association are displeased with new rule and believe it will only harm American agriculture and will not satisfy the WTO.

In contrast, the United States Cattlemen’s Association applauds the new rule, stating that it will bring the U.S. into compliance with trade obligations while providing the consumer with more accurate information about their purchasing decisions. The National Farmers’ Union (NFU) is also pleased with the new rule and states that NFU will continue to “vigorously support it.”

For additional information about COOL, please see the AMS website: 
Written by Sarah Doyle, Research Assistant
Penn State Law, Agricultural Law Resource Center
May 30, 2013

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