Country of Origin Labeling: What You Need to Know

by Elizabeth B. Fawell

tarting September 30, 2008, Through subsequent legislation, however, Covered Commodities food retailers will be required to Congress delayed the applicability of and Entities Snotify consumers of the coun- mandatory COOL for all covered com- Not all foods, or all retailers, are try of origin of beef (including veal), modities, except fish and shellfish, until required to comply with COOL. The lamb, pork, chicken, goat meat, peanuts, September 30 this year. AMS issued an covered commodities required to bear or interim final rule governing COOL for pecans, macadamia nuts, perishable be accompanied by COOL are beef (in- seafood that became effective in April agricultural commodities (fruits and veg- cluding veal), lamb, pork, chicken, goat 2005 (the seafood rule). etables) and ginseng sold in their stores. meat, peanuts, pecans, macadamia nuts, Seafood is already required to bear or Subsequently, the 2008 Farm Bill, perishable agricultural commodities, and be accompanied by country of origin signed into law this past June, contained ginseng. Fish and shellfish already are labeling (COOL), but with the impend- a number of provisions affecting COOL required to bear or be accompanied by ing expansion of COOL to many other requirements, including expanding the COOL and method production informa- products, retailers and their suppliers commodities covered, defining when tion. Of note, covered commodities are face a host of issues regarding the law’s certain commodities are of U.S. origin, excluded from COOL requirements if implementation. If you are a food retailer and modifying the law’s recordkeeping they are served at a food service estab- or a supplier of any of the above com- and penalty provisions. On August 1, lishment, or if they meet the “processed modities, here is what you need to know AMS published an interim final rule gov- food” exemption. about COOL. erning COOL for all covered commodi- Only retailers are required to pro- ties except seafood. The rule incorporates Background changes made to the Act by the 2008 vide country of origin information to The Farm Security and Rural Invest- Farm Bill. In addition, the agency made consumers. (Any person that supplies ment Act of 2002 (2002 Farm Bill) other modifications to the 2003 proposed covered commodities to a retailer, none- amended the Agricultural Marketing rule such that this interim final rule theless, must provide information to the Act (the Act) to require retailers, begin- closely tracks the seafood rule. The inter- retailer regarding country of origin). The ning September 30, 2004, to inform im final rule for all other commodities term “retailer” is limited to those persons their customers of the country of origin does not affect the regulatory require- Ms. Fawell of certain commodities at the point of ments for fish and shellfish, but enforce- is an Associate sale. In October 2003, the United States ment of the seafood rule will be consis- with the law firm Department of Agriculture’s (USDA’s) tent with the statute as amended by the of Hogan & Agricultural Marketing Service (AMS) 2008 Farm Bill. Based on the Act and the Hartson, LLP, published a proposed rule for manda- AMS regulations, here are basic funda- Washington, DC. tory COOL for all covered commodities. mentals of USDA’s COOL requirements.

FDLI September/October 2008 Up d a t e 43 licensed as retailers under the Perishable lettuce and a dressing packet; a salad mix the country from which the animal was Agricultural Commodities Act (PACA). that contains lettuce and carrots; a fruit imported and the United States (i.e., Therefore, only those retailers engaged in cup that contains melons, bananas, and “Product of Country X and the United the business of selling perishable agricul- strawberries; a bag of mixed vegetables States”). In either case, the country of tural commodities fall under the COOL that contains peas and carrots; and origin declaration may include more rules. As a result, specialty stores such as roasted peanuts. specific information regarding the pro- butcher shops that do not sell fruits and Notably, freezing is not considered to duction steps (e.g., raised in the United vegetables are not required to provide be processing sufficient to change the States and slaughtered in Country X) country of origin labeling. In addition, character of a product, nor would the provided records to substantiate those the Act exempts food service establish- preparation of fruits and vegetables by claims are maintained and the claims are ments, including restaurants, cafeterias, peeling, coring or chopping, if the pro- consistent with other applicable federal lunch rooms, food stands, saloons, bars, cessing merely prepares the product for requirements. Products from animals not lounges, taverns, or other similar enter- consumption (e.g., peeling, coring and born, raised, or slaughtered in the United prises, from COOL requirements. slicing a pineapple). States must retain their country of origin, Covered commodities are exempt Determining as declared to U.S. Customs and Border from COOL if the commodity “is an Country of Origin Protection (CBP) at the time the product ingredient in a processed food item.” Ac- entered the United States, through Country of origin labeling is, of cordingly, the definition of a “processed retail sale. course, just that: the identification of the food item” is of great interest to many Ground meat products must list all country of origin for a given product. food companies. A “processed food item” countries of origin or “all reasonably Importantly, there is no presumption of means a retail item that has undergone possible” countries of origin. In deter- United States origin — even domestically specific processing resulting in a change mining what is considered reasonable, produced covered commodities must in the character of the covered com- comply with COOL requirements. AMS regulations provide that when raw modity, or that has been combined with Beef, pork, lamb, chicken, and goat: material from a specific origin is not in at least one other covered commodity Covered meat commodities may only be a processor’s inventory for more than 60 or other substantive food component designated as having U.S. origin if the days, that country should not be listed as (e.g., chocolate, breading, tomato sauce), commodity is derived from an animal a possible country of origin. except that the addition of a compo- that is (1) exclusively born, raised, and Perishable Agricultural Commodities, nent (such as water, salt, or sugar) that slaughtered in the U.S.; (2) born and Ginseng, Peanuts, Pecans and Macada- enhances or represents a further step raised in Alaska or Hawaii and trans- mia Nuts: These commodities may only in the preparation of the product for ported for a period of not more than 60 be designated as having U.S. origin if consumption, would not in itself result in days through Canada to the U.S. and they are exclusively produced (grown) in a processed food item. slaughtered in the U.S.; or (3) present in the United States. Specific processing that is considered the U.S. on or before July 15, 2008. When these commodities are im- by AMS to result in a change of character When a meat product has multiple ported, and no production steps occur in includes cooking (e.g. frying, broil- countries of origin, including the U.S., the United States, they must retain their ing, grilling, boiling, steaming, baking, retailers may designate such products as country of origin, as declared to Customs roasting), curing (e.g. salt curing, sugar being from all of the countries in which and Border Protection (CBP) at the time curing, drying), smoking (hot or cold), the animal may have been born, raised, the product entered the United States, and restructuring (e.g. emulsifying and or slaughtered (e.g., “Product of the through retail sale. Likewise, when one of extruding). The following examples fall United States, Country X, and Country these commodities from one country is under the processed food exemption: Y, where Country X and Country Y rep- commingled with same commodity but meatloaf; meatballs; fabricated steak; resent the actual or possible countries of from a different country of origin and breaded veal cutlets; corned beef; sau- foreign origin). When the meat product presented for sale in a retail package (e.g. sage; breaded chicken tenders; teriyaki is from animals imported for immediate a bag of frozen peas), the country of ori- pork loin; a salad mix that contains slaughter, the country of origin is both gin must be indicated in accordance with

44 Up d a t e September/October 2008 www.fdli.org CBP requirements. If the retail product marking regulations (which in certain Further, these suppliers must maintain contains two different types of covered circumstances require the country of ori- records to establish and identify the im- commodities (e.g., peas and carrots) it is gin marking to be preceded by “Product mediate previous source (if applicable) considered a processed food item and is of” or similar language). State, regional, and immediate subsequent recipient of a not subject to mandatory COOL. or locality label designations (e.g., Idaho covered commodity for a period of one potato) are also acceptable for perishable year from the date of the transaction. Method of Notification agricultural commodities, macadamia In addition, the initial supplier of a Notably, mandatory COOL does not nuts, peanuts, pecans, and ginseng. covered commodity — which in the case require a “label,” it only requires “label- Additionally, only those abbreviations of meat products is the slaughter facil- ing.” Country of origin information can approved for used under CBP policies, ity — must possess or have legal access be provided to consumers by means of a such as “U.K.” for “The UnitedK ingdom to the records necessary to substanti- label, placard, pin tag, sticker, band, twist of Great Britain and Northern Ireland,” ate country of origin information. For tie, or other clear and visible sign on the are acceptable. Further, the adjectival imported commodities, the importer covered commodity, or on the package, form of the name of a country may be of record, as determined by CBP, must display, holding unit, or bin containing used provided it does not appear with ensure that records provide clear product the covered commodity. There are no other words so as to refer to a kind or tracking from the U.S. port of entry to requirements for the exact placement and species of product. Symbols or flags alone the immediate subsequent recipient and size of the country of origin, but such may not be used to convey country of accurately reflect the country of origin declarations must be “conspicuous” so origin information. as identified in the relevant CBP entry that they made be read and understood documents and information systems. by consumers under normal conditions Recordkeeping Importers must maintain these records of purchase. Requirements for a period of one year from the date of If the covered commodity is already Although only retailers are required to the transaction. individually labeled for retail sale regard- notify consumers of the country of origin Retailers. Records and other documen- ing country of origin, the retailer is of covered commodities, each link in the not required to provide any additional supply chain of a covered commodity tary evidence relied upon at the point of information. AMS regulations permit faces some type of COOL recordkeeping sale by retailers to establish a country of bulk containers used at retail to contain requirement. Upon request, suppliers origin claim must be maintained for one covered commodities from more than and retailers must make available to year from the date the origin declaration one origin or method of production so USDA representatives records main- is made at retail. For covered commodi- long as all possible origins or methods tained in the normal course of business ties sold in pre-labeled consumer-ready are listed in the declaration statement. that verify a country of origin claim. packages, the record must identify the In addition, for sales of covered com- Records must be provided within 5 covered commodity and the supplier. modities made prior to a customer’s business days of the request and may be For products that are pre-labeled with viewing of the retail package (i.e. Internet maintained at any location. the origin information on the shipping or home delivery sales), retailers may Suppliers. Any person engaged in the container (or other outer containers), the convey country of origin and method business of supplying a covered com- label itself is sufficient evidence on which of production information either on the modity to a retailer, whether directly or the retailer may rely to establish the sales vehicle or at the time the product is indirectly, must make available informa- product’s origin at the point of sale. In delivered to the customer. tion to the subsequent purchaser about this case, retailers must still maintain a The country of origin declaration the country of origin of the covered record identifying the covered commod- may be in the form of a statement such commodity. This information may be ity and the retail supplier. In addition, as “Product of USA,” or “Grown in provided either on the product itself, on to allow substantiation of the origin Mexico”; may only contain the name of the master shipping container, or in a claim, the retailer must either maintain the country such as “USA” or “Mexico”; document that accompanies the product the pre-labeled shipping container at the or may be in the form of a check box pro- through retail sale provided it identifies retail store for as long as the product is on vided the declaration complies with CBP the product and its country of origin. hand, or ensure the origin information

FDLI September/October 2008 Up d a t e 45 is included in the records identifying the Also of note, the 2008 Farm Bill made concerns over the safety of imported covered commodity and the supplier. For several modifications to the Act with food could lead to additional country products that are not pre-labeled, the re- respect to fines and penalties. First, the of origin labeling requirements. In fact, tailer must maintain records that identify Act now treats retailers and suppliers in draft legislation circulated last spring by the covered commodity, the supplier, and the same manner. Second, fines may only Congressman John Dingell (D-Mich- the origin information. be imposed against retailers or suppliers igan) would impose country of origin if, after notification and a 30-day compli- labeling requirements for processed Enforcement ance period, a determination is made foods. Under Congressman Dingell’s Importantly, COOL requirements that the retailer or supplier (1) has not legislation, not only would finished foods will not apply to covered commodities made a good faith effort to comply and need to identify the country where final produced or packaged before September (2) continues to willfully violate the law. processing occurs, but manufacturers 30. This will allow time for covered com- After providing notice and an oppor- would be required to identify the country modities that are already in the chain of tunity for a hearing, a retailer or sup- of origin of each ingredient in the food commerce and for which no origin infor- plier may be fined not more than $1,000 on the manufacturer’s website. mation is known or has been provided to for each violation. The 2008 Farm Bill At present, complying with mandatory clear the system. In addition, during the reduced this fine from $10,000. COOL is of greatest concern. As retailers six month period following the effective and their suppliers work to ensure date, AMS will allocate its enforcement Conclusion they are in compliance with COOL resources toward conducting indus- Beyond the existing COOL provi- requirements, the foregoing should try outreach and education programs sions, the food industry also should be remind them of the basic outlines of

regarding the rule. aware that, in the current environment, the COOL law. FDLI

46 Up d a t e September/October 2008 www.fdli.org