Trade Groups Decry New COOL Rule

The National Grocers Association (NGA), the Food Marketing Institute (FMI) and American Meat Institute (AMI) are among the trade groups expressing frustration over an immediately-enacted revision the United States Department of Agriculture (USDA) imposed on the existing mandatory Country of Origin Labeling (COOL) law.

The new rule COOL rule orders a major overhaul of the current labeling requirements which were released in March 2009 and have reportedly cost the grocery industry billions of dollars in labeling and recordkeeping expenses over the past four years.

The latest rule extension follows a recent World Trade Organization (WTO) ruling, and drastically expands the current COOL regulations for the country of origin label to include each production step for muscle cuts of beef, pork, lamb and chicken and eliminates any allowed commingling of muscle cuts of covered commodities of different origins.

"This action by the USDA is just another example of the unnecessary and growing regulatory excess that will burden not only retailers and processors, but the entire industry," said Peter J. Larkin, president and CEO, NGA. "Even though we are given a six month educational period by USDA, the industry is being forced to immediately sustain regulatory expenses that are likely to once again be ruled discriminatory by the WTO."

Characterizing the latest COOL rule "discriminatory," NGA said it will further limit the capacity of service meat departments, as well as the variety of product they offer their customers.

“It is incomprehensible that USDA would finalize a controversial rule that stands to harm American agriculture, when comments on the proposal made clear how deeply and negatively it will impact U.S. meat companies and livestock producers,” added Mark Dopp, SVP of regulatory affairs and general counsel, AMI. “This rubber stamping of the proposal begs the question of the integrity of the process: many people spoke, but no one at USDA listened.”

FMI president/ CEO Leslie G. Sarasin concurs. “It is unreasonable to have a 98-page rule of this magnitude effective immediately. Furthermore, it is profoundly unfair for the regulatory authorities to impose a rule that will have a significant, financial impact on our members when they know that the rule is unlikely to address the concerns raised by the World Trade Organization dispute settlement panel, making yet another round of costly changes inevitable."

Supermarkets already "face significant financial and labor burdens associated with this new rule, and will have to make modifications to existing procedures," Sarasin added, despite the substantial time and financial resources that have already been devoted to reconfiguring packaging and labels in the past year in order to comply with meat nutrition information requirements."

While the USDA estimates the cost unrealistically low at $32 million, NGA believes the new regulation is likely to exceed $100 million on the industry for new and bigger labels, new machines and signage that could change daily. Aside from impacting grocers' bottom line, NGA contends the final rule will cause market and supply dislocations, adversely affect jobs, business operations and international trade.

Countries like Canada and Mexico are likely to challenge the rule, making any adoption and implementation precipitous and cause unnecessary economic harm to the food industry through expenses for a regulation that is likely to be found in violation of WTO trade agreements. NGA strongly urged that USDA delay the effective date of the final rule until WTO considered its next challenge.

“Regulations are expensive and have consequences,” said FMI's Sarasin, adding: “USDA cannot continue to impose these kinds of costly, poorly designed rules without considering their impact on retailers and consumers.”