Washington Insider -- Friday

Product of USA Labeling

Here's a quick monitor of Washington farm and trade policy issues from DTN's well-placed observer.

House Appropriators Clear FY 2022 Agriculture Spending Plan

The House Appropriations Committee on Wednesday approved the Fiscal Year (FY) 2022 Agriculture appropriations, including amendments that would limit poultry line slaughter speeds and forbid the ownership of farmland by the Chinese government and its subsidiaries.

The China amendment was brought by Rep. Dan Newhouse, R-Wash., and includes a provision that would make any land currently owned by China ineligible for farm programs or subsidies.

The committee adopted by voice vote an amendment by Rep. Barbara Lee, D-Calif., that would revoke 16 waivers granted during the COVID-19 pandemic to meat and poultry plants to increase line speeds for moving animal carcasses.

The overall bill includes $26.6 billion FY 2022 Agriculture spending, a 12% increase in discretionary funding from the enacted FY 2021 level. The bill would provide a $2.9 billion increase in discretionary funds for USDA, Food and Drug Administration and Commodity Futures Trading Commission.

The plan also provides $5 million for the Food and Drug Administration to create a pilot program in India and China for unannounced inspections of drug manufacturers. Foreign plants are usually given three months prior notice before an inspection. Full House action is expected but the Senate has yet to move forward on its version of the agriculture spending plan.

US, Taiwan Restart Trade Talks

The U.S. and Taiwan restarted dormant trade and investment talks and pledged to keep supply chains free from forced labor, a clear jab at China. China, of course, objects to the negotiations taking place.

The trade talks were held via videoconference on Wednesday were the first between the U.S. and Taiwan since 2016.

The Office of the U.S. Trade Representative said the U.S. and Taiwan would create a new labor working group to pursue the issue. Taiwanese officials said the discussions were wide-ranging, covering supply chains, intellectual-property protection and financial services, as well as the import and export of vaccines and wild-animal protection.

U.S. officials said there are "a lot of things we have to do" before such an agreement can be reached.

While the talks do not deal with agriculture, the Trump administration refused to hold additional negotiations without assurances from Taiwan on ag trade issues.

Washington Insider: Product of USA Labeling

The Federal Trade Commission (FTC) voted 3-2 Thursday in favor of a new final rule the agency developed relative to "Made in USA" labels on products.

The new rule will become final 30 days after it is published in the Federal Register. The FTC said their final rule "will crack down on marketers who make false, unqualified claims that their products are Made in the USA." FTC said the rule means that marketers making unqualified Made in USA claims on labels "should be able to prove that their products are 'all or virtually all' made in the United States."

The FTC said the new rule will also help small businesses that rely on the Made in USA label, but typically do not have the resources to defend themselves from imitators. Under the new rule, the FTC has the ability to seek redress, damages, penalties, and other relief from those who lie about a Made in USA label. It will enable the Commission for the first time to seek civil penalties of up to $43,280 per violation of the rule, according to the agency.

"The final rule provides substantial benefits to the public by protecting businesses from losing sales to dishonest competitors and protecting purchasers seeking to purchase American-made goods," said Commissioner Chopra. "More broadly, this long-overdue rule is an important reminder that the Commission must do more to use the authorities explicitly authorized by Congress to protect market participants from fraud and abuse."

The issue has taken on attention in ag circles, with USDA Secretary Tom Vilsack releasing a statement praising the FTC move. USDA will complement the FTC's efforts with its own initiative on labeling for products such as beef, and other agricultural products regulated by the Food Safety and Inspection Service, Vilsack said.

"I am committed to ensuring that the Product of USA label reflects what a plain understanding of those terms means to U.S. consumers," Vilsack said. "Throughout the rulemaking process, we will be asking questions, collecting data, and requesting comments."

So what does USDA plan to do? Vilsack said they will be considering ideas from "the whole range of stakeholders" and that will include feedback from trading partners. Vilsack pledged that USDA will work with trading partners to "ensure that this labeling initiative is implemented in a way that fulfills our commitment to working cooperatively with our trade partners and meeting our international trade obligations."

The Product of USA label at USDA is a voluntary effort, one that some in the U.S. cattle industry have focused on since the end of mandatory Country of Origin Labeling (MCOOL) in 2015 after the U.S. lost at case at the WTO. The world trade body authorized Canada to enact more than $1 billion in retaliatory actions over the U.S. MCOOL program, and that retaliatory threat still exists even though the U.S. law has been repealed.

But even though the Product of USA labeling effort at USDA is voluntary, it has been met with opposition from the National Cattlemen's Beef Association (NCBA), one of the U.S. groups that fought MCOOL. NCBA has petitioned USDA to end the Product of USA labeling effort. NCBA said they back voluntary labeling efforts that "meet consumer demand and allow producers to distinguish their products in the marketplace."

In response to the FTC decision, NCBA President Jerry Bohn said, "The 'Product of the USA' label is not subject to source verification, is not tied to any kind of food safety standard, and is applied by packers and retailers in a manner that does not deliver value back to the cattle producer. This label not only misleads consumers, it is yet another barrier to producers gaining leverage and distinguishing their product in the marketplace."

NCBA's Bohn said the group looks forward to working with USDA "to find labeling solutions that represent investments made by producers to continually improve their product and meet consumer demand."

As the FTC developed its final rule, NCBA filed comments with the agency that "USDA has primary jurisdiction over all meat food product oversight activities, including the approval and verification of geographic and origin labeling claims."

But the key in all this will come in part from USDA pledging to work with U.S. trading partners to make sure Product of USA labeling meets U.S. trade commitments. In other words, USDA will be working closely with Canada and Mexico on the topic as they were the two countries involved in the MCOOL battle at the WTO. Canadian officials have also reminded that any attempt to re-establish MCOOL will bring a swift retaliatory action on their part.

No doubt that will be a key situation as this effort moves forward. But by USDA pledging to work on the Product of USA labeling effort, it also means that meat food product labeling will remain at USDA and not somehow shift over to FTC. Finding a workable solution is possible, but the key will be how Canada in particular reacts to whatever the U.S. opts to come up with.

So we will see. The trade implications are potentially very important and any resulting labeling effort would likely still have to be voluntary so as to not run afoul of U.S. trade commitments, making this matter that needs to be closely monitored in the weeks and months ahead, Washington Insider believes.

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