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'Scaring up support' for COOL based on BSE 'uncool,' says policy analyst

Monday, January 26, 2004

A major policy paper by a top analyst at the Washington, D.C.-based Cato Institute calls the recently de-funded country-of-origin labeling (COL) mandate "a complicated, costly" measure that he said is ultimately all about "saddling others with what should be the marketing costs of domestic producers and reducing import competition."

Late in 2003, the House passed a moratorium on implementation of mandatory COL for all covered commodities, except fish, until September 2006. The Senate debated that amendment but ended up approving the House version of the Agriculture Appropriations bill, which had been rolled into the omnibus federal funding measure the Senate approved on Friday (Jan. 23).

Titled, "Uncool Rules: Second Thoughts on Mandatory Country of Origin Labeling," the study was authored by Dan Ikenson, a policy analyst with the Cato Institute's Center for Trade Policy Studies, and made the argument that COL has nothing to do with food safety.

"By attempting to link the COL issue to a health concern, particularly one that generates hysteria and overreaction, advocates are hoping to scare up support for a complicated, controversial and costly idea."

Proponents argue that mandatory COOL is desired by both producers and consumers, Ikenson stated. A "Made-in-the-USA" label would help identify U.S. products for consumers who are otherwise unsure and who might be willing to pay a premium to know they are buying American food he noted.

"That sounds fair enough," Ikenson wrote. "But there's more to the story. If, in fact, consumers are overwhelmingly in favor of country-of-origin labeling, then why haven't domestic producers voluntarily obliged? After all, if there is demand for it, why does there need to be a law mandating it?"

Proponents of COL -- often producer splinter groups -- have expended considerable time and money to force compliance requirements further down the supply chain, Ikenson pointed out.

"Processors, wholesalers, and retailers who buy and sell both domestic and imported products would incur the costs of segregating inventory, keeping records, constructing and maintaining compliance systems and often physically labeling products. Burdensome compliance costs may induce those firms to limit their sources, in some cases, to only domestic suppliers. [But] if products of foreign origin are treated differently from U.S. products, there is question as to the WTO [World Trade Organization] legitimacy of this legislation.

"Mandatory labeling is nothing more than a scheme to pass on what should be the marketing costs of U.S. producers to other firms in the supply chain," Ikenson's report concluded. "It is also intended to drive up the costs and reduce the revenues of businesses that produce, process, distribute, and retail imports. The temporary moratorium on implementing COL is a good start. Eventually, though, Congress needs to repeal this ill-advised measure and put COL on ice permanently."

For the full report, log onto http://www.freetrade.org/pubs/FTBs/FTB-007.html

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