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Statement of Need: Under current Federal laws and regulations, country of origin labeling is not universally required for the covered commodities. In particular, labeling of U.S. origin is not mandatory, and labeling of imported products at the consumer level is required only in certain circumstances. Thus, consumers generally do not have the ability to purchase products based on country of origin. This intent of the law is to provide consumers with additional information on which to base their purchasing decisions.

Summary of the Legal Basis: Section 10816 of Public Law 107-171 amended the Agricultural Marketing Act of 1946 to require retailers to inform consumers of the country of origin for covered commodities beginning September 30, 2004, and requires USDA to promulgate requirements for the mandatory labeling program no later than September 30, 2004.

Alternatives: Various methods are being considered by which the objectives of this law could be accomplished. The proposed rule specifically invites comment on several alternatives including alternative definitions for "processed food item," alternative labeling of mixed origin, and alternatives to using "slaughtered" on the label. The proposed rule provides for a 60-day comment period which closes on December 29, 2003. In formulating the final mandatory regulations, the Agency will analyze all of the public comments that were received and will give due consideration to any alternatives brought forth by the commenters.

Anticipated Costs and Benefits: USDA has examined the economic impact of the proposed rule as required by Executive Order 12866. The estimated benefits associated with this rule are likely to be negligible. The estimated first-year incremental cost for growers, producers, processors, wholesalers, and retailers ranges from $582 million to $3.9 billion. The estimated cost to the U.S. economy in higher food prices and reduced food production in the tenth year after implementation of the rule ranges from $138 million to $596 million. AMS has invited further comment on start up costs and maintenance costs for the first year and beyond for firms directly affected by the proposed rule.

Risks: AMS has not identified any risks at this time.