The United States has passed new legislation to cover gaps in the existing country-of-origin food labelling laws. Lawyer David de Jersey and Partner Andrew Buchanan consider the effect that the new rules are likely to have once they come into force.
Background
For more than 70 years, the US has had laws requiring imported items to bear a label identifying their country of origin to the purchaser. Usually, the country of origin of the goods would be displayed on the shipping carton or box containing the goods as they were imported into the US. However, the existing laws permit retailers to remove products from their shipping cartons or boxes and to display and sell them individually without further notification of their country of origin to the consumer.
The US Congress has passed legislation that addresses gaps in the existing scheme (the new rules). By requiring the country of origin of the goods to be disclosed in writing at the point of sale, the new rules are intended to provide consumers with a means of distinguishing US-grown food from food sourced from overseas.
Key features of the new rules
The new rules were enacted with the 2002 United States Farm Bill. These were to become fully operational on 30 September 2004. However, on 23 January 2004, the US Senate approved a two-year moratorium on their implementation. Until this moratorium concludes, compliance with the new rules will be voluntary.
What products must be labelled?
Food products to which the new rules apply are designated 'Covered Commodities' and are defined as:
- muscle cuts of beef (including veal), lamb and pork;
- ground beef, lamb and pork;
- farm-raised fish and shellfish (including fillets, steaks, nuggets and other flesh);
- fresh and frozen fruits and vegetables; and
- peanuts.
What products need not be labelled?
Covered Commodities are excluded from application of the new rules if they are merely 'an ingredient in a processed food item'. Two types of commodities fall within the description 'processed food item' as it is defined in the regulations:
- commodities that have undergone a physical or chemical change, causing the character of the item to be materially different from the Covered Commodity; and
- retail items derived from a Covered Commodity that have been combined with either another Covered Commodity or other substantive food components, resulting in a distinct retail item that is no longer marketed as a Covered Commodity.
The new rules exempt 'food service establishments' from their application. Food service establishments include restaurants, cafeterias, lunchrooms, food stands, saloons, taverns, bars, lounges and 'other similar facility operated as an enterprise engaged in the business of selling food to the public'. Establishments that provide ready-to-eat foods such as delicatessens and salad bars, whether their product is consumed on or off the premises, are 'similar facilities'.
Also excluded from the ambit of the new rules are establishments that sell less than US$230,000 retail value of Covered Commodities annually, such as small butcher shops.
Criteria for labelling as 'made in the USA'
The new rules provide that Covered Commodities may be labelled as having the US as their country of origin only if they meet the criteria set out below:
Covered Commodity Criteria
- Beef, lamb, pork-Commodity must have been born, raised and slaughtered in the US
- Farm-raised fish or shellfish-Commodity must be derived from fish hatched, raised, harvested and processed in the US
- Wild seafood-Commodity must have been harvested in US waters by a US-flagged vessel and processed in the US or aboard a US-flagged vessel
- Fruit, vegetables and peanuts-Commodity must be derived exclusively from produce or peanuts grown in the US
In addition to these criteria, the new rules require retailers to supply consumers with sufficient information to enable them to distinguish between wild and farm-raised seafood.
The new rules require retailers to inform consumers of the origin of Covered Commodities by means of a label, stamp, mark, placard or other clear and visible sign on the commodity or package, or on the holding unit or bin containing the commodity at the final point of sale. The label must, according to the new rules, be legible, in English, and not obscure the required information. Products that contain ingredients sourced from more than one country, or which involve a series of manufacturing processes carried out in more than one country, are labelled by listing alphabetically the countries of origin of each ingredient or stage of the manufacturing process.
Record-keeping obligations and offences
The new rules require retailers to maintain records for two years. They require suppliers to assist retailers by making available information regarding the country of origin. For that purpose, the new rules require that auditable records must be kept throughout the chain of custody, and made available to the US Department of Agriculture (USDA) upon request.
The USDA will administer the new rules. It will conduct routine compliance reviews at retail establishments and associated administrative offices, and at premises of suppliers affected by the Act. Only the USDA will have standing to initiate enforcement actions against persons and companies found to be in violation of the new rules. Retailers face fines of up to US$10,000 per offence for each wilful violation of the new rules. Suppliers are subject to fines of up to US$10,000 per offence for each violation.
Ensuring compliance
When the new rules come into force, producers, distributors and retailers will need to ensure systems are established and maintained that enable:
- Covered Commodities to be able to be identified by country of origin throughout the entire production chain;
- documentation to be kept that verifies the integrity of systems put in place to identify covered components and that creates an audit trail for USDA inspections; and
- appropriate labels to be affixed to the products.
The two-year moratorium on enforcement of the new rules will enable producers, distributors and retailers to ensure that appropriate compliance systems are put in place.
April, 2004
|
