By Benjamin Goad - 05/23/13 05:09 PM EDT
The Agriculture Department (USDA) finalized more stringent meat labeling regulations Thursday, drawing fierce criticism from industry groups that say the new requirements will drive American companies out of business.
The country-of-origin labeling (COOL) rule was issued against a deadline imposed last year by the World Trade Organization (WTO), which ruled that previous U.S. labeling regulations violated international standards.
Inaction could have triggered damaging international sanctions from Canada and Mexico, the United States’ top two meat-trading partners.
But leading industry groups argued Thursday that the new rules would not satisfy the WTO and accused the Obama administration of ignoring their opposition to the proposal with “reckless disregard” for the consequences.
“This rubber-stamping of the proposal begs the question of the integrity of the process — many people spoke, but no one at USDA listened,” said Mark Dopp, general counsel for the American Meat Institute.
The U.S. adopted COOL labeling rules for various produce and meat products four years ago in an effort to give consumers more information about where their food comes from.
Though supported by public interest groups, the regulations were roundly criticized by the American meatpacking industry, which was faced with costly new livestock segregation, record keeping and packaging practices.
Mexico and Canada also protested, saying the labels give American beef an unfair advantage in the marketplace. The WTO agreed and ordered the United States to remedy the problem by May 23 or else face potential sanctions.
Industry groups called upon the Obama administration to scrap the rules altogether, saying no regulatory fix would remedy the violation.
But last month, the Agriculture Department issued draft regulations that would require more specific labeling give more information about where meat products were born, raised and slaughtered. Under the rule finalized Thursday, the label on a cut of beef could theoretically read “Born in Mexico, raised in Canada, slaughtered in the U.SA.”
The rule gives some flexibility in the terminology used, allowing packers to use the word “harvested” in place of “slaughtered” and, in the case of chickens, “hatched” instead of “born.”
The agency said the rule would affect nearly 7,200 American firms and acknowledged it would bring new compliance expenses. National costs are estimated at between $53.1 million to $137.8 million, but could rise as high as $192.1 million.
However, the Agriculture Department maintained that the rule would avert the threat of retaliatory tariffs that could otherwise be imposed by Canada and Mexico.
“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,” a section of the 98-page rule says.
Industry groups disagree. The National Cattlemen’s Beef Association (NCBA) said the rule was overly burdensome and does little to solve the problem.
“Our largest trading partners have already said that these provisions will not bring the United States into compliance with our WTO obligations …” NCBA President Scott George said. “While trying to make an untenable mandate fit with our international trade obligations, USDA chose to set up U.S. cattle producers for financial losses.”
The rule is set to take effect immediately, though it was not immediately clear how soon the WTO would issue a finding on whether it resolves the trade violation.