United States General Accounting Office GAO Report to Congressional Committees April 1999 FRESH PRODUCE Potential Consequences of Country-of-Origin Labeling GAO/RCED-99-112 United States GAO General Accounting Office Washington, D.C. 20548 Resources, Community, and Economic Development Division B-282173 April 21, 1999 The Honorable Thad Cochran Chairman The Honorable Herb Kohl Ranking Minority Member Subcommittee on Agriculture, Rural Development, and Related Agencies Committee on Appropriations United States Senate The Honorable Joe Skeen Chairman The Honorable Marcy Kaptur Ranking Minority Member Subcommittee on Agriculture, Rural Development, Food and Drug Administration, and Related Agencies Committee on Appropriations House of Representatives The containers in which fresh produce of foreign origin enters the United States must be marked with the country-of-origin. However, this identification is not required to be maintained for loose, or bulk, produce at the retail level.1 In the past few years, several legislative proposals have been introduced to require that fresh produce be labeled at the retail level by its country of origin. As requested by the Senate and House conferees for the Omnibus Consolidated and Emergency Supplemental Appropriations Act, 1999,2 we reviewed a number of issues associated with the potential costs and benefits of a mandatory labeling requirement. Specifically, as agreed with your offices, this report provides information on (1) the potential costs associated with the compliance and enforcement of a mandatory country-of-origin labeling requirement at the retail level for fresh produce, (2) the potential trade issues associated with such a requirement, (3) the potential impact of such a requirement on the ability of the federal government and the public to respond to outbreaks of illness caused by contaminated fresh produce, and (4) consumers’ views of 1 This report uses the term “loose produce” to refer to bulk produce. 2 Conference Report 105-825 accompanied H.R. 4328, which became the Omnibus Consolidated and Emergency Supplemental Appropriations Act, 1999 (P.L. 105-277, Oct. 21, 1998). Page 1 GAO/RCED-99-112 Country-of-Origin Labeling B-282173 country-of-origin labeling. Finally, appendix I identifies U.S. trading partners that have country-of-origin labeling requirements for fresh produce, the nature and scope of those requirements, and the record of U.S. challenges to those requirements. For the purpose of this report, and as agreed with your offices, we assumed that the retailer would be responsible for ensuring that produce is labeled as to its country of origin and that the term “label” means any label, mark, sticker, stamp, placard, or other clear visible sign. The magnitude of compliance and enforcement costs for a Results in Brief country-of-origin labeling requirement at the retail level would depend on several factors, including the extent to which current labeling practices would have to be changed. According to an association representing grocery retailers, changing store signs to ensure that produce is properly labeled would cost about 2 staff hours per store per week. However, it is unclear who would bear the burden of any such additional labeling costs—retailers could absorb some or all of the costs or pass them to consumers or to their suppliers. Regarding enforcement, the Food and Drug Administration, in commenting on a recently proposed bill, estimated that federal monitoring would cost about $56 million annually and said that enforcement would be difficult. Inspectors would need documentary evidence to determine the country-of-origin of the many produce items on display, and this documentation is often not available at each retail store. Enforcement is carried out in only one of the three states with labeling laws—in Florida, where inspectors check shipping boxes against display signs during semiannual routine state health inspections. Florida inspectors told us that they sometimes have no reliable means to verify the accuracy of labels. According to U.S. Department of Agriculture officials and industry representatives, mandatory labeling at the retail level could be viewed by other countries as a trade barrier. For example, a country currently exporting produce to the United States may be concerned about the additional costs its exporters may incur if they are required to label loose produce. Officials also noted that countries concerned with a labeling law could take actions that could adversely affect U.S. exports. For example, these countries may develop or more strictly enforce their own labeling laws. Currently, about half of the countries that account for most of the U.S. trade in produce require country-of-origin labeling for fresh produce at the retail level. Additionally, officials from the departments of Page 2 GAO/RCED-99-112 Country-of-Origin Labeling B-282173 Agriculture and State believe that a U.S. labeling law is more likely to be challenged than other countries’ labeling laws because the United States is such a large importer and exporter of fresh produce. When outbreaks of foodborne illness occur, country-of-origin labeling for fresh produce would be of limited benefit to food safety agencies in tracing the source of contamination and to the public in responding to a warning of an outbreak, according to officials from the Food and Drug Administration and the Centers for Disease Control and Prevention. It can take weeks or months for food safety agencies to identify an outbreak, determine the type of food involved, identify the source of the food contamination, and issue a warning. Retail labeling would help consumers only if they remembered the country of origin or still had the produce, or if the produce were still in the store. Finally, according to nationwide surveys sponsored by the fresh produce industry, between 74 and 83 percent of consumers favor mandatory country-of-origin labeling for fresh produce, although they rated information on freshness, nutrition, and handling and storage as more important.3 Most consumers also prefer to buy domestic produce if price, taste, and appearance are equal. In addition, survey responses show that consumers believe that U.S. produce is safer than imported produce; however, officials from the U.S. Department of Agriculture, the Food and Drug Administration, and the Centers for Disease Control and Prevention told us that sufficient data are not available to make this determination. The Tariff Act of 1930, as amended, generally requires imported Background articles—such as clothing, appliances, and canned and frozen goods—to be marked by country of origin. Under the statute, however, certain articles, including fresh produce, are not required to be marked individually. For these items, the container holding the article must be marked by the country of origin. U.S. Customs Service rulings provide that when fresh produce is taken out of its container and put into an open bin 3 Based on nationally representative samples of U.S. households: Three surveys were conducted between 1990 and 1998 by Vance Publishing Corporation for The Packer newspaper and were published in its annual supplement, Fresh Trends and one survey was conducted by the Charlton Research Group in 1996 for the Desert Grape Growers League. For the data we included in our report, we obtained frequency counts, survey instruments, and other documents, in order to review the wording of questions, sampling, mode of administration, research strategies, and the effects of sponsorship. We used only the data that we judged to be reliable and valid. Page 3 GAO/RCED-99-112 Country-of-Origin Labeling B-282173 or display rack, there is no obligation to identify the items by the country of origin.4 Three states—Florida, Maine, and Texas—have enacted country-of-origin labeling laws for fresh produce. Florida requires all imported fresh produce to be identified by the country-of-origin by, for example, marking each produce item or placing a sign or label adjacent to the bin. Maine requires country-of-origin labeling for fresh produce at the retail level when it has been imported from countries identified as having specific pesticide violations.5 Texas requires country-of-origin labeling for fresh grapefruit. In addition, labeling laws for fresh produce have been proposed in at least five other states: California, Connecticut, Oregon, Rhode Island, and Virginia. Most large grocery stores carry over 200 produce items. Fresh produce is often imported to fill seasonal needs when U.S. production is not sufficient to cover demand or to satisfy the demand for tropical fruits not normally grown in the United States. Two-thirds of imported fresh produce arrives between December and April, when U.S. production is low and limited to the southern portions of the country. The majority of these imports are warm-season vegetables like peppers, squash, and cucumbers, although some imports, such as tomatoes, occur year round. Total U.S. consumption of fresh produce has increased 43 percent since 1980, from about 56 billion pounds to nearly 80 billion pounds in 1997, the latest year for which the U.S. Department of Agriculture (USDA) has compiled such data. During this same period, the amount of fresh produce the United States imported more than doubled—from 7.5 billion pounds to 16 billion pounds. The domestic share increased by one third—from about 48 billion to about 64 billion pounds. In 1997, most imported produce came from Mexico, Canada, and Chile, as shown in figure 1. 4 U.S. Customs ruling HRL 722992. This ruling was interpreted in Customs ruling HRL 733798 not to require marking because open bins or display racks were not determined to constitute ‘containers.’ 5 Maine also requires packages of Maine apples to state that they are from Maine and potatoes packaged in Maine to be labeled as to their country-of-origin. Page 4 GAO/RCED-99-112 Country-of-Origin Labeling B-282173 Figure 1: Source of Fresh and Frozen Imported Produce, 1997, by Dollar Value 2% Guatemala 3% Netherlands • • 4% Costa Rica 12% • 51% • 13% • 15% • Chile Other Canada Mexico Source: GAO’s analysis of data from USDA’s Economic Research Service. Page 5 GAO/RCED-99-112 Country-of-Origin Labeling B-282173 The United States is also the world’s largest exporter of fresh produce, valued at $2.9 billion in 1998. Three-fourths of exported U.S. produce goes to Canada, the European Union, Japan, Hong Kong, and Mexico.6 Complying with mandatory country-of-origin labeling for fresh produce Uncertainties Exist could change the way retailers and others involved in the production and About the Costs distribution of produce do business, thereby affecting their costs and Associated With consumers’ choices. Furthermore, such a law could be difficult to enforce. Compliance and Enforcement Magnitude of Compliance The fresh produce industry and retailers will have to incur costs to comply Costs and the with a mandatory country-of-origin labeling law. The additional efforts and Responsibility for These associated costs for compliance would depend on the specific requirements of the law and the extent to which current practices would Costs Are Uncertain have to be changed. For example, some produce is already labeled with a brand sticker. In these cases, compliance would require adding the name of the country to the sticker. For unlabeled produce, the additional effort would be more significant. Associations we spoke with representing grocery retailers are particularly concerned that a labeling law would be unduly burdensome for a number of reasons. First, retailers would have to display the same produce items from different countries separately if each individual item is not marked, which in some cases would result in only partially filled bins. According to these retailers, consumers are less likely to buy from such bins because they are less appealing, causing the retailers to lose sales. Second, retailers report that they do not have sufficient display space to separate produce and still stock all the different varieties consumers want. Large grocery stores usually carry over 200 produce items. Third, because the country of origin of retailers’ produce shipments may vary each week, retailers would incur costs to change store signs and labels to reflect the origins of the different shipments. According to the Food Marketing Institute, an association representing grocery retailers, it would take about 2 staff hours per store per week to ensure that imported produce is properly labeled. Costs would also be incurred if retailers were required to maintain paperwork at each store as evidence of the origin of these multiple 6 The European Union is composed of Austria, Belgium, Denmark, Finland, France, Germany, Greece, Ireland, Italy, Luxembourg, the Netherlands, Portugal, Spain, Sweden, and the United Kingdom. Page 6 GAO/RCED-99-112 Country-of-Origin Labeling B-282173 shipments. Florida does not require its retail stores to maintain paperwork documenting the country of origin. It is unclear who would bear the burden of compliance. A law requiring retailers to ensure that produce is properly labeled would initially place at least some of the compliance costs on retailers. However, retailers would not necessarily bear all these costs. Retailers could raise prices to pass their costs to consumers. However, if consumers reduce their purchases of fresh produce in response, retailers will absorb part of the cost through lower sales volume. For produce that does not have close substitutes, and for which consumer demand is relatively insensitive to price changes, retailers are likely to be more successful in passing costs on to consumers through price increases without experiencing significant declines in sales volume. Retailers may decide to require their suppliers to either package produce or label individual produce items. If retailers can impose this requirement without paying more for the same quantity and quality, they will have shifted the labeling costs to their suppliers. Consumer responses may also influence the eventual effect of a country-of-origin law. If consumers prefer domestic produce, they may buy more domestic and less imported produce, which would allow domestic producers to gain market share and/or raise their prices. However, if foreign countries respond by imposing their own labeling requirements, and if this resulted in foreign consumers’ buying less U.S. produce, then U.S. exports could suffer. It is also possible that a country-of-origin labeling requirement would result in fewer choices for consumers. This would occur if retailers decide to stock more prepackaged produce, which would already be labeled, and fewer bulk items, which would have to be labeled. Furthermore, if a law required labeling for imported produce only, retailers could decide to stock fewer imported produce items in order to avoid the compliance burden. An additional cost would be borne by restaurants and other food service providers if the labeling law applies to them. They would have to let their customers know the country of origin of the produce they use, which could involve, for example, changing information on menus each time the source of the produce changed. According to the National Restaurant Association, the cost of changing menus would be “prohibitive.” Page 7 GAO/RCED-99-112 Country-of-Origin Labeling B-282173 Federal Agencies Would According to Food and Drug Administration (FDA) and USDA officials we Need Enforcement spoke with, enforcing a labeling law would require significant additional Resources for an resources. The agency enforcing such a law would have to implement a system to ensure that the identity of produce is maintained throughout the Inherently Difficult Task distribution chain. While inspectors could ensure that retailers have signs or labels in place and could review documentation—if it were available—they might not be able to determine from a visual inspection that produce in a particular bin was from the country designated on the sign or label. Such documentation is often unavailable at the retail store. It is also unclear who would be responsible for these inspections. Grocery store inspections for compliance with federal health and safety laws are now generally conducted by state and local officials, often under memorandums of understanding with the Food and Drug Administration. USDA officials pointed out that if state and local governments were to carry out the inspections required by a federal country-of-origin labeling law, such a law would have to specify the states’ enforcement role and provide funding for enforcement activities. In commenting on a Senate amendment to the fiscal year 1999 appropriations bill regarding country-of-origin labeling, FDA expressed “reservations about its priority as a public health issue, its cost to administer, and [FDA’s] ability to enforce it.” FDA further noted that the cost of enforcement “would be significant,” and “it is unclear that enforcement would even be possible.” Among other enforcement problems, FDA cited the need for accompanying paperwork to verify country-of-origin labels and said this would place “an enormous burden” on industry. FDA estimated that the federal cost for 1-year’s monitoring under this proposed amendment would be about $56 million. The three states that have labeling laws vary in their degree of enforcement. In Florida, which has a mandatory labeling law for all imported produce, enforcement occurs during the course of routine state health inspections that are conducted about twice each year in every store. During the routine inspections, officials check the shipping boxes and packages in the store against the display signs or labels—a task they estimate requires about 15 minutes per visit. However, they said they sometimes have no reliable means to verify the accuracy of these signs and labels. When violations are found, Florida officials said that it takes 5 minutes to process paperwork for new violations and 30 minutes for repeat violations. Figure 2 shows produce labeled in Florida grocery stores. Page 8 GAO/RCED-99-112 Country-of-Origin Labeling B-282173 Figure 2: Labeled Produce in Florida Grocery Stores Page 9 GAO/RCED-99-112 Country-of-Origin Labeling B-282173 According to the Inspection Manager for Maine’s Department of Agriculture, Maine does not enforce its country-of-origin labeling requirements because the list of countries to be identified keeps changing and paperwork to verify the country of origin is often unavailable. In Texas, the labeling law applies only to grapefruit. According to a Texas Department of Agriculture official, grapefruit is rarely imported into Texas, and the labeling law is not currently being enforced. Depending on what it might require and how it might be implemented, a A Labeling Law Could law mandating country-of-origin labeling for fresh produce could have Have Trade adverse trade implications. U.S. trading partners might challenge the law’s Implications consistency with international trade obligations or take steps to increase their own country-of-origin labeling requirements. Moreover, according to USDA officials, enacting a labeling law could make it more difficult for the United States to oppose foreign countries’ labeling requirements that it finds objectionable. Any labeling law would need to be consistent with U.S. international trade obligations in order to withstand potential challenges from U.S. trading partners. International trade rules that the United States has agreed to, such as those embodied in the World Trade Organization (WTO) and the North American Free Trade Agreement (NAFTA), permit country-of-origin labeling.7 For example, WTO provisions recognize the need to protect consumers from inaccurate information while minimizing the difficulties and inconveniences labeling measures may cause to commerce. WTO rules require, among other things, that the labeling of imported products must not result in serious damage to the product, a material reduction in its value, or an unreasonable increase in its cost.8 Correspondence from the Office of the U.S. Trade Representative (USTR) stated that our trading partners could raise concerns that country-of-origin labeling requirements adversely affect their exports by raising costs. Similarly, NAFTA requires that any country-of-origin marking requirement must be applied in a manner that would minimize difficulties, costs, and 7 The WTO was established in 1995, as a result of the Uruguay Round of the General Agreement on Tariffs and Trade (1986-94). WTO facilitates the implementation, administration, and operation of multiple agreements that govern trade among its member countries. NAFTA is a multilateral trade agreement that contains obligations governing trade among Canada, Mexico, and the United States. NAFTA negotiations began in 1991 and the agreement entered into force in 1994. 8 In addition, country-of-origin labeling is covered as a technical regulation subject to the WTO Agreement on Technical Barriers to Trade. This agreement provides guidelines for developing and applying technical regulations. Page 10 GAO/RCED-99-112 Country-of-Origin Labeling B-282173 inconveniences to a country’s commerce. USTR and Department of State officials stated that Mexico requested consultations to discuss its concerns that one recently proposed U.S. country-of-origin labeling bill would violate certain NAFTA provisions on country-of-origin marking. USDA officials and food industry representatives expressed concern that mandatory country-of-origin labeling at the retail level could be viewed as a trade barrier and might lead to actions that could hurt U.S. exports. For example, a country currently exporting produce to the United States may be concerned about additional costs if its exporters are required to label loose produce. Such a country could respond by enacting or more strictly enforcing retail labeling laws that could hinder U.S. exports. The officials were also concerned that adopting mandatory country-of-origin labeling at the retail level could complicate U.S. efforts to address other countries’ labeling laws that the United States found objectionable. According to USDA officials, the United States has opposed certain country-of-origin labeling in other countries for various reasons, including concerns about the potential of those laws to raise the costs of U.S. exports and discourage consumers from purchasing imported goods. While U.S. representatives have worked informally and cooperatively to oppose certain foreign country-of-origin labeling requirements, the United States has not formally challenged any such requirements within the WTO. WTO officials said they were unaware of any formal challenges to any country’s country-of-origin labeling requirement. However, USDA and WTO officials agreed that the absence of any formal challenge does not necessarily indicate that existing country-of-origin labeling requirements are consistent with WTO rules. Moreover, the absence of formal challenges to existing laws does not preclude these laws from being challenged in the future. Finally, because the United States is such a large importer and exporter of fresh produce, officials with USDA and the Department of State pointed out that a U.S. labeling law is more likely to be formally challenged than are other countries’ laws. In February and March 1999, we surveyed U.S. embassy agricultural attachés in 45 countries with which the United States exports and imports agricultural products to determine which countries have and enforce country-of-origin labeling requirements for fresh produce at the retail level. Our survey included 28 countries that account for most of the U.S. produce imports and exports and 17 countries that USDA identified as having produce labeling requirements.9 Of the 28 countries, 13 (46 percent) 9 USDA surveyed these countries in 1998. Page 11 GAO/RCED-99-112 Country-of-Origin Labeling B-282173 require country-of-origin labeling for bulk produce at the retail level, and 15 require such labeling for packaged produce.10 Attachés in these countries reported the countries with requirements generally have a high level of compliance and moderate to high levels of enforcement.11 Appendix I identifies the U.S. trading partners that require country-of-origin labeling for fresh produce and the scope of their requirements. Considerable time—several weeks or months—generally passes between Labeling Would the outbreak of a produce-related illness, the identification of the cause, Provide Limited and a warning to the public about the risks of eating a specific produce Benefits in item, according to the Centers for Disease Control and Prevention (CDC) and FDA officials. By the time a warning is issued, country-of-origin Responding to labeling would benefit consumers only if they remembered the country of Outbreaks of origin or still had the produce, or if the produce were still in the store. Consequently, country-of-origin labeling would be of limited value in Foodborne Illnesses helping consumers respond to a warning of an outbreak. Several factors contribute to the delays in identifying causes of foodborne illness, including how quickly consumers become ill after purchasing and eating the food and whether they seek medical attention. State and local agencies report known or suspected foodborne illnesses to CDC, which uses this information to identify patterns of related illnesses—outbreaks—and to work with state, local, and FDA officials to identify the source. Once the source is identified, state and local public health officials generally issue a warning to the public if the product is still available in the marketplace. In most cases of foodborne illness, however, officials are not able to identify the specific point at which the food associated with the outbreak became contaminated. Between 1990 and 1998, CDC identified 98 outbreaks of foodborne illnesses linked to fresh produce. In 86 of these cases, the point of contamination was never identified. The remaining 12 cases were traced to contamination in food handling and to seed that was contaminated. Appendix II provides information on outbreaks of illnesses related to contaminated fresh produce since 1990. 10 The European Union (EU) has a single requirement for labeling of both loose and packaged produce that applies to all 15 EU member countries. Our 28 largest produce trading partners include 6 EU member countries. 11 Although the EU has a single labeling requirement for all 15 member countries, we surveyed these countries individually to obtain a better understanding of compliance and enforcement with the labeling requirement. Page 12 GAO/RCED-99-112 Country-of-Origin Labeling B-282173 Because of the time needed to identify the cause of an outbreak, country-of-origin labeling would not generally be useful in preventing more consumers from becoming ill. For example, when cyclospora-contaminated raspberries from Guatemala caused outbreaks of illnesses in 1996 and 1997, many individuals did not become ill until a week or more after they ate the fruit. CDC officials said that country-of-origin labeling might be a starting point in tracing the source of contamination if a person who had eaten a contaminated product remembered the source for that product. However, they said that more detailed information identifying every step from farm to table—for both domestically grown and imported produce—would be of greater use in tracing the source of an outbreak and identifying the practices that resulted in the contamination. Identifying such practices may enable officials to devise control measures that could be used throughout the industry to decrease the potential for additional illnesses. CDC officials also pointed out that a country-of-origin labeling law would be more useful to them if it required retailers to keep better records, including invoices and shipping documents. Such records would allow investigators to identify the source of produce that was in grocery stores at a particular time in the past. Finally, FDA and CDC officials observed that a law exempting food service establishments from country-of-origin labeling would be of limited value because many identified outbreaks have been traced to food served in restaurants or at catered meals. U.S. consumers are eating more meals, including more fresh produce, outside the home. Indeed, a significant portion of the illnesses that were traced to Guatemalan raspberries were contracted from meals eaten outside the home. Surveys representing households nationwide, sponsored by the produce Although Consumers industry between 1990 and 1998, showed that between 74 and 83 percent Favor Labeling, Other of consumers favor mandatory country-of-origin labeling for fresh produce Information Is More at the retail level.12 However, when asked to rate the importance of several types of labeling information, households reported information on Important to Them freshness as most important, followed by information on nutrition, storage 12 Surveys conducted for The Packer newspaper in 1990, 1992, and 1998 and for the Desert Grape Growers League in 1996. For the data we included in our report, we obtained frequency counts, survey instruments, and other documents, in order to review question wording, sampling, mode of administration, research strategies, and the effects of sponsorship. We only used data that we judged to be reliable and valid. Page 13 GAO/RCED-99-112 Country-of-Origin Labeling B-282173 and handling, and preparation tips. Information on country-of-origin was ranked fifth, as shown in figure 3.13 Figure 3: Importance of Different Types of Produce-Labeling Information to Consumers Source: GAO’s analysis of 1996 survey data collected for The Packer, a publication of the fresh produce industry. In addition, most consumers would prefer to buy U.S. produce if all other factors—price, taste and appearance—were equal.14 And, about half of all consumers would be willing to pay “a little more to get U.S. produce.”15 However, the survey did not specify the additional amount that consumers would be willing to pay. 13 Survey conducted for The Packer newspaper in 1996. 14 Survey conducted for the Desert Grape Growers League in 1996. 15 Survey conducted for the Desert Grape Growers League in 1996. Page 14 GAO/RCED-99-112 Country-of-Origin Labeling B-282173 Furthermore, according to a 1998 industry-sponsored nationwide survey, 70 percent of consumers believe that domestically grown produce is safer.16 In the same survey, about half of consumers reported having concerns about health and safety and growing conditions, and about one-third had concerns with cleanliness and handling when buying imported produce. Despite these concerns, officials with USDA, CDC, and FDA, told us that sufficient data are not available to compare the safety of domestic and imported produce. However, CDC officials told us that, in the absence of specific food production controls, the potential for contaminated produce increases where poor sanitary conditions and polluted water are more prevalent. In addition, Consumers Union—a nationally recognized consumer group—used data collected by USDA’s Agricultural Marketing Service to compare the extent to which multiple pesticide residues were found in selected domestic and imported fresh produce.17 For its analysis, Consumers Union developed a toxicity index, which it used to compare the pesticide residues. According to this analysis, pesticide residues on imported peaches, winter squash, apples, and green beans had lower toxicity levels than those found on their domestically grown counterparts. In contrast, the pesticide residues on domestically grown tomatoes and grapes were less toxic than their imported counterparts. The study acknowledges that almost all of the pesticide residues on the samples were within the tolerance levels allowed by the Environmental Protection Agency (EPA). We did not independently determine the validity of the toxicity index developed by Consumers Union or verify its analysis or results. However, according to FDA officials, pesticide residues present a lower health risk than the disease-causing bacteria that can be found on food. We provided the departments of Agriculture and State, Office of the U.S. Agency Comments Trade Representative, CDC, U.S. Customs Service, EPA, and FDA with a draft and Our Response of this report for their review and comment. These agencies generally agreed with the facts presented in the report and provided technical comments, which we incorporated as appropriate. Officials commenting on the report included the Deputy Administrator, Fruit and Vegetable Programs, Agricultural Marketing Service, USDA; the 16 Survey conducted for The Packer newspaper. Twenty percent said U.S. produce was about the same, 3 percent—worse, and 6 percent—don’t know. 17 Do You Know What You Are Eating? An Analysis of U.S. Government Data on Pesticide Residues in Foods, Consumers Union, Feb. 1999. Page 15 GAO/RCED-99-112 Country-of-Origin Labeling B-282173 Economic/Commercial Officer in the Agricultural Trade Policy Division, Department of State; the Director of Agricultural Affairs and Technical Barriers to Trade, Office of the U.S. Trade Representative; the Director of Food Safety Initiative Activities, Division of Bacterial and Mycotic Diseases, National Center for Infectious Diseases, CDC; a Senior Attorney, Office of Regulations and Rulings, U.S. Customs Service; the Interim Associate Commissioner for Legislative Affairs, FDA. We performed our review from November 1998 through March 1999 in accordance with generally accepted government auditing standards. Our scope and methodology are discussed in appendix III. Copies of this report will be sent to Senator Richard Lugar, Chairman, and Senator Tom Harkin, Ranking Minority Member, Senate Committee on Agriculture, Nutrition, and Forestry; and Representative Larry Combest, Chairman, and Representative Charles Stenholm, Ranking Minority Member, House Committee on Agriculture. We are also sending copies to the Honorable Dan Glickman, Secretary of Agriculture; the Honorable Madeleine Korbel Albright, Secretary of State; the Honorable Jane Henney, M.D., Commissioner, Food and Drug Administration; the Honorable Jeffrey P. Koplan, M.D., Director, Centers for Disease Control and Prevention; the Honorable Raymond W. Kelly, Commissioner of the U.S. Customs Service; the Honorable Jacob J. Lew, Office of Management and Budget; and Ambassador Charlene Barshefsky, the U.S. Trade Representative. We will also make copies available to others upon request. If you would like more information on this report, please contact me at (202) 512-5138. Major contributors to this report are listed in appendix IV. Robert E. Robertson Associate Director, Food and Agriculture Issues Page 16 GAO/RCED-99-112 Country-of-Origin Labeling Page 17 GAO/RCED-99-112 Country-of-Origin Labeling Contents Letter 1 Appendix I 20 U.S. Trading Partners That Require Country-Of-Origin Labeling for Fresh Produce and the Scope of Their Requirements Appendix II 23 Information on Outbreaks of Illnesses Related to Fresh Produce Appendix III 28 Objectives, Scope, and Methodology Appendix IV 31 Major Contributors to This Report Tables Table I.1: Trading Partner Countries’ Requirements for 20 Country-of-Origin Labeling of Fresh Produce at the Retail Level Table II.1: Outbreaks Associated With Fresh Produce in the 23 United States Reported to CDC, 1990-98 Figures Figure 1: Source of Fresh and Frozen Imported Produce, 1997, by 5 dollar value Figure 2: Labeled Produce in Florida Grocery Stores 9 Page 18 GAO/RCED-99-112 Country-of-Origin Labeling Contents Figure 3: Importance of Different Types of Produce-Labeling 14 Information to Consumers Abbreviations CDC Centers for Disease Control and Prevention EPA Environmental Protection Agency EU European Union FDA Food and Drug Administration NAFTA North America Free Trade Agreement USDA U.S. Department of Agriculture WTO World Trade Organization Page 19 GAO/RCED-99-112 Country-of-Origin Labeling Appendix I U.S. Trading Partners That Require Country-Of-Origin Labeling for Fresh Produce and the Scope of Their Requirements This appendix identifies the U.S. trading partners that have country-of-origin labeling requirements for fresh produce at the retail level, the nature and scope of these requirements, and the record of U.S. challenges to those requirements. Table I.1 identifies U.S. trading partner countries, their requirements for loose or packaged fresh produce to be labeled at the retail level, and the degree of compliance and enforcement with those requirements. This information is based on our survey of U.S. agricultural attachés for 45 countries. Of the 45 countries, 28 account for most of U.S. trade in produce. We also surveyed the 17 countries that were not among the largest produce trading partners but were identified in the Foreign Agricultural Service’s 1998 Foreign Country of Origin Labeling Survey as having produce labeling requirements. As the table indicates, 13 of the 28 major produce trading partners require country-of-origin labeling for loose produce at the retail level, and 15 require labeling for packaged produce. Attachés reported that these countries generally have a high level of compliance and a moderate to high level of enforcement. Officials of the World Trade Organization, the departments of Agriculture and State, the Office of the U.S. Trade Representative, and U.S. agricultural attaches were not able to identify any formal U.S. challenges to country-of-origin labeling requirements for fresh produce. Table I.1: Trading Partner Countries’ Requirements for Country-Of-Origin Labeling of Fresh Produce at the Retail Level Scope of labeling Degree of Degree of Country requirement compliance enforcement Major produce trading partners (28) Argentina No requirement a a Australia Loose and packaged Brazil Packaged High Moderate Canada Looseb and packaged High High Chile No requirement Costa Rica Packaged High Moderate Dominican Republic No requirement European Union Loose and packaged Belgium Very high Moderate France Very high Very high Luxembourg Very high Moderate Netherlands High High Spain High High (continued) Page 20 GAO/RCED-99-112 Country-of-Origin Labeling Appendix I U.S. Trading Partners That Require Country-Of-Origin Labeling for Fresh Produce and the Scope of Their Requirements Scope of labeling Degree of Degree of Country requirement compliance enforcement United Kingdom Very high Very high Guatemala No requirement Honduras No requirement Hong Kong No requirement Indonesia No requirement Japan Loose and packagedc High High Malaysia No requirement Mexico Loose and packaged High Moderate New Zealand No requirement Peru Loose and packaged High Moderate Philippines No requirement Republic of Korea Loose and packaged High High Republic of South Africa Loose and packaged Moderate Moderate Singapore No requirement Taiwan No requirement Thailand No requirement Other countries surveyed (17) Czech Republic Packaged High Moderate Egypt Loose and packaged High Very high European Union Loose and packaged Austria Very high Very high Denmark Very high Moderate Finland High Moderate Germany High High Greece Very high Very high Ireland Very high Very high Italy High High Portugal High High Sweden High Moderate a Hungary Loose and packaged Moderate Israel No requirement Russia Loose and packaged Moderate Moderate Switzerland Loose and packaged Very high Very high United Arab Emirates No requirement Venezuela No requirement (Table notes on next page) Page 21 GAO/RCED-99-112 Country-of-Origin Labeling Appendix I U.S. Trading Partners That Require Country-Of-Origin Labeling for Fresh Produce and the Scope of Their Requirements Source: GAO survey a Agricultural attaches were uncertain about this information. b Requirements for labeling loose produce are provincial government requirements and do not include all Canadian provinces. c Requirements currently apply to broccoli, taro, garlic, ginger, wet shitake mushrooms, edible burdock, asparagus, field peas, and onions. According to U.S. Department of Agriculture correspondence, labeling of all produce at the retail level will be required in Japan beginning April 1, 2000. Note: The European Union requires country-of-origin labeling for loose and packaged fresh produce. Page 22 GAO/RCED-99-112 Country-of-Origin Labeling Appendix II Information on Outbreaks of Illnesses Related to Fresh Produce Table II.1 provides information on the 98 outbreaks of produce-related illnesses that were identified between 1990 and 1998 by the Centers for Disease Control and Prevention (CDC). Contamination may occur when fresh produce is grown, harvested, washed, sorted, packed, transported, or prepared. As the table shows, food safety officials could not identify the source of the contamination in 86 of these cases. Food safety experts believe that there is not sufficient information to assess the relative safety of fresh produce from the United States and foreign countries. Table II.1: Outbreaks Associated With Fresh Produce in the United States Reported to CDC, 1990-98 Implicateda Year Country of origin commodity Pathogen Cause of contamination 1998 United States (California) Alfalfa sprouts Salmonella Senftenberg Contaminated seed. Unknown Mangos Salmonella Oranienberg Unknown. Unknown Fruit salad E. coli O157:H7 Unknown. United States Cabbage (cole slaw) E. coli O157:H7 Unknown; field contamination suspected. Unknown Lettuce E. coli O157:H7 Unknown. United States or Canada Cabbage (cole slaw) E. coli O157:H7 Unknown; field contamination suspected. United States Alfalfa sprouts E. coli O157:H7 Contaminated seed. United States Alfalfa sprouts Salmonella Havana; Contaminated seed. Salmonella Cubana Mexico Parsley Shigella sonnei Unknown; wash water or ice for packing suspected. 1997 Unknown Melons or lemon bars E. coli O157:H7 Unknown; cross contamination by food handlers suspected. United States Alfalfa sprouts E. coli O157:H7 Contaminated seed. (Idaho) United States Alfalfa sprouts Salmonella Infantis; Contaminated seed. (Kansas and Missouri) Salmonella Anatum Guatemala Raspberries Cyclospora cayetanensis Unknown; nonpotable waterb may have been used in pesticide spray mix. Unknown Mesclun lettuce (baby Cyclospora cayetanensis Unknown. lettuce) Unknown Basil Cyclospora cayetanensis Unknown. Unknown Lettuce salad Shigella sonnei Unknown; food handler suspected. United States Salad Salmonella Enteritidis Cross contamination from turkey. (continued) Page 23 GAO/RCED-99-112 Country-of-Origin Labeling Appendix II Information on Outbreaks of Illnesses Related to Fresh Produce Implicateda Year Country of origin commodity Pathogen Cause of contamination Unavailable Red cabbage in vinegar Unknown Unavailable. 1996 United States (California) Alfalfa sprouts Salmonella Montevideo; Contaminated seed. Salmonella Meleagridis Unknown Lettuce E. coli O157:H7 Unknown. Guatemala Raspberries and Cyclospora cayetanensis Unknown; nonpotable blackberries waterb may have been used in pesticide spray mix. United States (California) Mesclun mix E. coli O157:H7 Unknown; contamination (baby lettuce mix) in the field suspected. Unavailable Lettuce Unknown Unavailable. Unavailable Salad Unknown Unavailable. Unavailable Green salad Unknown Unavailable. Unavailable Green salad Unknown Unavailable. Unavailable Tossed salad Unknown Unavailable. 1996-95 Imported Alfalfa sprouts Salmonella Newport Contaminated seed. (country-of-origin unknown) 1995 Unknown Salad or sandwich E. coli O157:H7 Unknown. Unknown Caesar salad E. coli O157:H7 Unknown; food handler suspected. Unknown Unknown (produce Cyclospora cayetanensis Unknown. suspected) Imported Alfalfa sprouts Salmonella Stanley Contaminated seed. (country-of-origin unknown) United States (Idaho) Romaine lettuce or red E. coli O157:H7 Cross contamination with cabbage raw meat product during preparation. United States (Montana) Leaf lettuce E. coli O157:H7 Unknown; field contamination likely but unsanitary handling practices at the grocery store may have also occurred. United States Iceberg lettuce E. coli O157:H7 Cross contamination from ground beef. Unavailable Lettuce Norwalk-like virus Unavailable. United States Salad Salmonella Enteritidis Contaminated by asymptomatic food handler. Unavailable House salad Unknown Unavailable. (continued) Page 24 GAO/RCED-99-112 Country-of-Origin Labeling Appendix II Information on Outbreaks of Illnesses Related to Fresh Produce Implicateda Year Country of origin commodity Pathogen Cause of contamination 1994 Unknown Cole slaw or soup E. coli O157:H7 Unknown. Unknown Potato salad E. coli O157:H7 Unknown. Unknown Salad bar E. coli O157:H7 Unknown; cross contamination with raw ground beef suspected. Unknown Lettuce E. coli O157:H7 Unknown; food handler suspected. Mexico Green onions Shigella flexneri 6 Unknown; contamination at harvest suspected. Unknown Fruit salad Campylobacter jejuni Unknown; cross contamination suspected. Unavailable Pineapple E. coli O11:H43 Unavailable. Unknown Lettuce Salmonella Thompson Unknown; food handler suspected. Unavailable Salad bar Viral Unavailable. Unavailable Tossed salad Unknown Unavailable. Unavailable Greens (edible fern Unknown Unavailable. fronds) Unavailable Strawberries Unknown Unavailable. Unavailable Salad bar Unknown Unavailable. Unavailable Spring salad Unknown Unavailable. Unavailable Tossed salad Unknown Unavailable. 1993 United States (South Tomatoes Salmonella Montevideo Unknown; wash water Carolina) suspected. Unavailable Sliced watermelon Salmonella Javiana Unavailable. Unknown Vegetable salad E. coli O157:H7 Unknown; cross contamination suspected. Unknown Salad bar, lettuce or E. coli O157:H7 Unknown. cheese Unknown Cantaloupe from buffet E. coli O157:H7 Unknown; cross contamination suspected. United States Salad (carrots) Enterotoxigenic Unknown; contaminated E. coli (ETEC) carrots suspected. United States Tabouleh salad (carrots) Enterotoxigenic Unknown; contaminated E. coli (ETEC) carrots suspected. Unavailable Melon and strawberries Campylobacter jejuni Unavailable. Unknown Carrot and celery sticks Hepatitis A Unknown; food handler suspected. Unknown Lettuce Salmonella Unknown; foodhandler or Heidelberg cross contamination suspected. (continued) Page 25 GAO/RCED-99-112 Country-of-Origin Labeling Appendix II Information on Outbreaks of Illnesses Related to Fresh Produce Implicateda Year Country of origin commodity Pathogen Cause of contamination Unavailable Green salad Salmonella Unavailable. Infantis Unavailable Muskmelon and Unknown Unavailable. honeydew Unavailable Green beans or okra Unknown Unavailable. 1992 United States Vegetable E. coli O157:H7 Unknown; manure in home garden suspected. Unavailable Salad Unknown Unavailable. Unavailable Tossed salad Unknown Unavailable. Unavailable Tossed salad Unknown Unavailable. Unavailable Fruit salad Unknown Unavailable. Unavailable Green salad Unknown Unavailable. 1991 United States (Texas) Cantaloupe Salmonella Poona Unknown; contamination and Mexico in field suspected. Unavailable Salad bar Hepatitis A Unavailable. Unavailable Fresh fruit Giardia lambia Unavailable. United States (Florida) Watermelon Salmonella Javiana Unknown; improper handling (temperature abuse) suspected. Unavailable Tossed salad Unknown Unavailable. Unavailable Tossed salad Unknown Unavailable. Unavailable Fruit Unknown Unavailable. Unavailable Cantaloupe Unknown Unavailable. Unavailable Spring salad Unknown Unavailable. Unavailable Salad Unknown Unavailable. 1990 Central America and Cantaloupe Salmonella Chester Unknown; possible Mexico contamination from ice used in shipping. Unknown Alfalfa sprouts Salmonella Anatum Unknown. Unavailable Lettuce Hepatitis A Unavailable. United States (South Tomatoes Salmonella Javiana Unknown; wash water Carolina) suspected. Unavailable Salad bar Giardia lambia Unavailable. Unavailable Salad Salmonella Montevideo Unavailable. Unknown Raw vegetables Giardia lambia Unknown. Unavailable Salad bar Unknown Unavailable. Unavailable Lettuce Unknown Unavailable. Unavailable Lettuce salad Unknown Unavailable. Unavailable Salad bar Unknown Unavailable. Unavailable Tossed salad Unknown Unavailable. (continued) Page 26 GAO/RCED-99-112 Country-of-Origin Labeling Appendix II Information on Outbreaks of Illnesses Related to Fresh Produce Implicateda Year Country of origin commodity Pathogen Cause of contamination Unavailable Lettuce Unknown Unavailable. Unavailable Green salad Unknown Unavailable. Unavailable Salad Unknown Unavailable. Unavailable Fruit cup Unknown Unavailable. Note: CDC obtains reports of outbreaks primarily from state and local health departments. “Unavailable” describes information not reported to CDC. “Unknown” describes information that CDC and state and local health departments did not determine. a The information implicating fresh produce as the source of contamination is not necessarily conclusive for all of the outbreaks shown in the table. b Water unsuitable for drinking. Source: Preliminary data from CDC. Page 27 GAO/RCED-99-112 Country-of-Origin Labeling Appendix III Objectives, Scope, and Methodology As requested by the Senate and House conferees for the Omnibus Consolidated and Emergency Supplemental Appropriations Act, 1999,18 we reviewed a number of issues associated with the potential costs and benefits of a mandatory labeling requirement. Specifically, this report provides information on (1) the potential costs associated with compliance and enforcement of a mandatory country-of-origin labeling requirement at the retail level for fresh produce, (2) the potential trade issues associated with such a requirement, (3) the potential impact of such a requirement on the ability of the federal government and the public to respond to outbreaks of illness caused by contaminated fresh produce, and (4) consumers’ views of country-of-origin labeling. Finally, appendix I identifies U.S. trading partners that have country-of-origin labeling requirements for fresh produce, the nature and scope of those requirements, and the record of U.S. challenges to those requirements. To determine the potential costs associated with compliance and enforcement, we interviewed officials and reviewed documents from USDA’s Agricultural Marketing Service and the Foreign Agricultural Service; the U.S. Customs Service; the Food and Drug Administration; and the International Trade Commission. We also interviewed officials from the Food Marketing Institute and the Florida Retail Federation and visited several Florida groceries—both large chains and small independent stores—to examine how imported produce is labeled and how inspections are conducted. We interviewed officials from the United Fresh Fruit and Vegetable Association; the Food Industry Trade Coalition, which included representatives from the Food Distributors International, the National Grocers Association, ConAgra, Inc., the Chilean Fresh Fruit Association, the National Fisheries Institute, the Meat Importers Council of America Inc., the American Food Institute, and the National Food Processors Association; the Fresh Produce Association of the Americas; the Florida Fruit and Vegetable Association; the Northwest Horticultural Council; the Western Growers Association; and Chiquita Brands, Inc. To determine compliance and enforcement with state labeling laws, we interviewed officials from agricultural departments in Maine, Texas, and Florida. To determine the potential trade implications, we reviewed documents and interviewed officials from the Office of the U.S. Trade Representative, the Foreign Agricultural Service, the Department of State, and the World Trade Organization. We also examined international trade agreements. 18 Conference Report 105-825 accompanied H.R. 4328, which became the Omnibus Consolidated and Emergency Supplemental Appropriations Act, 1999 (P.L. 105-277, Oct. 21, 1998). Page 28 GAO/RCED-99-112 Country-of-Origin Labeling Appendix III Objectives, Scope, and Methodology To identify U.S. trading partners that have country-of-origin labeling requirements for fresh produce, we reviewed the survey conducted by the Foreign Agricultural Service, 1998 Foreign Country of Origin Labeling Survey, February 4, 1998. In addition, we developed a questionnaire to determine the nature and scope of other countries’ labeling requirements, which the Service sent electronically to the U.S. embassy agricultural attachés for 45 countries. Twenty-eight of the countries were selected because they are the countries with whom we import or export significant dollar volumes of fresh produce. The remaining 17 countries we surveyed were included because they were identified as requiring country-of-origin labeling in the Foreign Agricultural Service’s 1998 survey. We received responses for 45 countries. The survey was conducted in February and March 1999. To determine the potential impact on the federal government’s and consumers’ ability to respond to outbreaks of illness from fresh produce, we interviewed officials and obtained documents from the CDC, FDA, the U.S. Department of Agriculture, and Florida’s Department of Health. We also discussed these issues with consumer groups. To determine the potential impact of mandatory country-of-origin labeling on consumers, we reviewed the Tariff Act of 1930 and related regulations and rulings and discussed these issues with Customs officials. We also examined documents and interviewed officials with consumer groups, including the National Consumers League, the Center for Science in the Public Interest, and the Safe Food Coalition. We also analyzed the results of eight consumer surveys conducted from 1990 to 1998 to determine consumer opinions regarding mandatory country-of-origin labeling. The surveys were identified by industry experts and through literature searches. For the data we included in our report, we obtained frequency counts, survey instruments, and other documents, in order to review the wording of questions, sampling, mode of administration, research strategies, and the effects of sponsorship. We used only data that we judged to be reliable and valid. Five surveys, conducted between 1990 and 1998, represented households nationwide that have purchased fresh produce in the past year. These surveys were published by Vance Publishing Corporation for The Packer newspaper and were published in its annual supplement, Fresh Trends. Another nationwide survey was conducted by the Charlton Research Group in 1996 for the Desert Grape Growers League. Two surveys of Page 29 GAO/RCED-99-112 Country-of-Origin Labeling Appendix III Objectives, Scope, and Methodology Florida consumers were conducted by the University of South Florida’s Agriculture Institute in 1997 and the University of Florida in 1998. We also spoke with officials and obtained documents from CDC, FDA, the U.S. Department of Agriculture’s Agricultural Marketing Service, Florida’s Department of Health, the Environmental Working Group, and Consumers Union about the relative safety of imported and U.S. produce. We conducted our review from November 1998 through March 1999 in accordance with generally accepted government auditing standards. Page 30 GAO/RCED-99-112 Country-of-Origin Labeling Appendix IV Major Contributors to This Report Erin Lansburgh, Assistant Director Beverly A. Peterson, Evaluator-in-Charge Daniel F. Alspaugh Erin K. Barlow Shirley Brothwell Richard Burkard Daniel E. Coates Oliver Easterwood Fran Featherston Alice Feldesman Paul Pansini Carol Herrnstadt Shulman Janice M. Turner (150094) Page 31 GAO/RCED-99-112 Country-of-Origin Labeling Ordering Information The first copy of each GAO report and testimony is free. Additional copies are $2 each. Orders should be sent to the following address, accompanied by a check or money order made out to the Superintendent of Documents, when necessary. VISA and MasterCard credit cards are accepted, also. Orders for 100 or more copies to be mailed to a single address are discounted 25 percent. 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Fresh Produce: Potential Consequences of Country-of-Origin Labeling
Published by the Government Accountability Office on 1999-04-21.
Below is a raw (and likely hideous) rendition of the original report. (PDF)