Floor Statement by Agriculture Committee Chairman K. Michael Conaway H.R. 2393

Jun 10, 2015 Issues: Country of Origin Labeling

Remarks as prepared for delivery: 

“Mr. Chairman, I rise in support of H.R. 2393, the Country of Origin Labeling Amendments Act of 2015, and yield myself such time as I may consume. ‘Mandatory country of origin labeling is really a marketing program, a heavy-handed approach by this Federal Government to demand a marketing program that may or may not work.’

“Those were my words before this very chamber— spoken more than 10 years ago. It turns out my doubts were well-founded. The program has not worked, and it is time to put this failed experiment behind us once and for all.

“Country of origin labeling, COOL for short, was first enacted for meat products as part of the 2002 farm bill.  Implementation of the law was delayed until 2008. Less than five months after the COOL implementing rule was published, Canada and Mexico challenged the rule at the WTO, arguing that it had a trade-distorting impact by reducing the value and number of cattle and hogs shipped to the U.S. market.

“The process has since progressed through the dispute settlement phase and a U.S. appeal to the WTO’s Appellate Body. In both instances, the WTO found that the way regulations were implemented violated WTO obligations by discriminating against imported livestock.

“The United States was given until May 2013 to bring its COOL regulations into compliance. In response, USDA issued a revised COOL rule in May 2013 which required that production steps—born, raised, and slaughtered, by origin country—be included on meat labels. The revised rule also prohibited the commingling of meat from imported and domestic livestock. 

“At the request of Canada and Mexico, the WTO established a compliance panel to determine if the revised rule brought the United States into compliance with previous rulings. Canada and Mexico claimed that not only did the revised rule fail to bring the United States into compliance, but certain parts, especially the prohibition on commingling, were even more onerous than the original rule. A key criterion of current COOL implementation is that it requires “segregation” of animals by country of origin, which significantly raises the cost of utilizing imported livestock.  The compliance panel report, released October 20, 2014, upheld the earlier findings of discrimination.

“The United States appealed the compliance panel report and on May 18, 2015, the WTO rejected the United States’ appeal and found for the fourth and final time that the U.S. COOL requirements for beef and pork are unavoidably discriminatory.  The final ruling kick-starts the WTO process to determine the level of retaliatory tariffs Canada and Mexico can now impose on the U.S., which has widely been predicted to have effects in the billions of dollars. 

“During a hearing of the House Agriculture Committee’s Livestock and Foreign Agriculture Subcommittee to examine the implications of potential retaliation against the U.S., witnesses made it clear that losing the final appeal in the WTO and the inevitable impacts of retaliation against the United States, would be devastating to our economy. Witnesses included representatives from the U.S. Chamber of Commerce, National Association of Manufacturers, National Confectioners Association, the Wine Institute of California, National Cattlemen’s Beef Association, National Pork Producers Council and the National Farmers Union.  

“Some have asked why we should act on the basis of a WTO decision.  If COOL worked, perhaps there would be a response other than repeal, but the fact is COOL has been a marketing failure.  In an April 2015 report to Congress, USDA explained that COOL requirements result in extraordinary costs with no quantifiable benefits.

“In terms of producers, packers, and retailers, USDA’s regulatory impact analysis for the 2009 COOL rule estimated incremental implementation costs of $1.3 billion for beef, $300 million for pork, $183 million for chicken, and $2.6 billion for all covered commodities.The increased costs of producing, processing, and marketing food products to comply with COOL requirements without a commensurate measurable increase in consumer demand results in economic losses to producers, packers, retailers, and consumers and leads to a smaller overall industry with higher consumer prices and less product available.

“Although some consumers desire COOL information, there is no evidence to conclude that this mandatory label translates into measurable increases in consumer demand for beef, pork, or chicken. Due to increases in the costs of production resulting from COOL implementation, however, economic models indicate that consumers over the longer run face higher prices and therefore purchase less.

“In response to those who argue that COOL enhances food safety, as I have maintained for over 10 years now, that is simply NOT the case. If it were, then all meat served at restaurants would come with information regarding the meat’s origin. But it doesn’t, and that is because retail food establishments are exempt from COOL requirements. Meat sold in the U.S. will continue to be inspected for safety by the USDA Food Safety Inspection Service. This bill does nothing to change that, and will simply repeal a heavy-handed, government-mandated marketing program that has proven unsuccessful.

“Finally, although chicken was not a part of the WTO dispute between Canada, Mexico, and the U.S., the industry requested that COOL requirements for chicken be repealed as well due to the high costs and lack of benefits associated with the requirements. The National Chicken Council has repeatedly expressed its desire to be removed from COOL requirements.

“So here we are with a policy that imposes high costs and no benefits, and if we keep it in place, our national economy WILL suffer significant damage that could reach into the billions of dollars. Secretary of Agriculture Tom Vilsack has been quoted numerous times acknowledging that repeal of the COOL requirements is a viable option for bringing the U.S. into compliance with its WTO obligations and avoiding retaliatory measures. 

“In a May 1, 2015, letter to Congress, Secretary Vilsack reaffirmed the need for Congress to repeal the disputed COOL requirements or develop a generic North American label. However, Canada and Mexico have previously rejected the North American label rendering that option unacceptable.  In other words, if we go down this path which Canada and Mexico have already rejected, we will continue to face retaliation unless, and until, we can demonstrate we are in compliance with our trade obligations.

“Repeal is the only viable option before us to avoid this retaliation.I urge all Members to support this simple legislation so that we can—in the best bipartisan tradition of this House—avoid damage to our economy.”