GAINESVILLE, Fla. -- A new report issued by the International Agricultural Trade and Policy Center at the University of Florida finds the Country of Origin Labeling law could be implemented for less than $195 million through use of a "Presumption of U.S. Origin" rule.
The price tag is much less than industry and government estimates, which range up to $2 billion for producers, handlers and retailers. Specifically, the study pegs retailer implementation costs at $67.6 million, almost 90% less than the estimate generated by the U.S Department of Agriculture.
The study refuted the USDA's retail wage rate of $50 per hour for one person to establish start-up record keeping, for each retailer, over the course of five days, for a total of $626 million. The report cited Bureau of Labor Statistics figures showing the wage to be closer to $9 an hour. And, even "with some involvement of supervisory personnel at a higher median wage rate of $24.75 per hour," the rate is reduced by almost 80%. Another 10% savings would come from making fewer changes than anticipated record-keeping systems to gain compliance.
In developing the cost estimates, the group of agricultural economists and law professors from five universities reviewed three implementation options: third-party verification; self-verification; and "Presumption of U.S. Origin."
The authors stated that third-party verification is the most expensive system under consideration, and its costs "far outweigh the risks." In discussing the option, the study notes that the COOL law doesn't specifically require third-party verification, and that other regulatory schemes -- including the Livestock Mandatory Price Reporting Act of 1999 -- have operated without independent confirmation.
However, the practice of self-reporting may not be viable under the COOL law as written by Congress. The authors state that because producers are not named as entities subject to regulation by federal agencies for the purpose of COOL law enforcement, self-verification would not be feasible. Additionally, the producers of livestock do not technically trade in a covered commodity, but rather live animals -- also not addressed in the law.
The study promotes a third option, called "Presumption of U.S. Origin," whereby all covered products are "presumed" to be of U.S. origin unless they carry a mark from another country. The authors argued that simply maintaining the mark of origin that is currently required on most imported products as a condition of their entry into the United States would comply with international trade rules and minimize the burden on those operating under the law.
Under this rule, the vast majority of U.S. producers would not have to worry about labeling, since U.S. origin would be implied. Also, problems regarding lack of jurisdiction over producers would become moot, since the trigger point for labeling would shift from producers to the "passage of a covered commodity over the border, through customs."
In fact, the study points out that the USDA acknowledged in its voluntary guidelines issued in October 2002 that several, current federal laws require most imports to bear some degree of country-of-origin information. Maintaining those marks or data would make it much easier for retailers and others to fall under compliance, the authors wrote. There would have to be changes in some instances, such as those classes of imported livestock for which country of origin is not presently recorded, they wrote.