How COOL is that?

EU consumers are becoming increasingly concerned not only about the characteristics and qualities of the food products that they are buying but also about their origin. To address these concerns, the EU is considering introducing mandatory country of origin labelling (CoOL) for some food products. As a result, CoOL is gradually becoming one of the central points of discussion of the controversial EU food labelling reform (which have a covered a previous post). More importantly, CoOL is set to become one of the priorities of the so called Food Movement and is already spreading through the world.

Before you start wondering about the rationale behind CoOL, you might already observe that indication of country of origin is already there most of the times on the products you buy in the EU. So, why to bother and make it mandatory?

That seems to be a good point. Indeed, already today details about the origin of products are often found on food labels. This happens either because the legislation requires that for some foodstuffs (to address a market failure --> information asymmetry) or because a company voluntarily decide to provide such information (to obtain a competitive advantage).

However, the truth is that, under existing EU food labelling legislation, only few foodstuffs, typically those whose origin are likely to be related to certain qualities of the product, have to carry labels saying which country they come from (i.e. beef, fish, honey, olive oil, certain fruit and vegetables and poultry if imported from a third country). As a result, under the existing labelling directive, the large majority of foods such as pasta, pies, sausages and ready meals need only include this information when the absence of such indication is misleading the consumer as to the true origin of the product.

According to the European Commission proposal for consumer information labelling, the basic requirement remains the same (country of origin labelling is voluntary, but if failure to give such information might mislead the consumer, the labelling becomes mandatory). Yet – this is the element of novelty – the same proposal extends the scope of mandatory labelling to processed food. This inclusion of multingredients products under CoOL will require retailers to provide country of origin information on previously unlabelled products. Although largely opposed by the food industry, this provision has been endorsed first by the EP ENVI Committee, then by the EP and the Council Working Party on Foodstuffs last June.

Mandatory country of origin labelling is controversial. Consumer research has indicated a stated preference among consumers for country of origin information, although the literature is divided as to the benefits and effects of origin labelling. It seems that country of origin information is often not sought by the consumer as valuable information per se, but instead used to infer certain perceived qualities of the food product or make other choices which are related to the country of origin.

According to the supporters of CoOL, CoOL is not a ‘buy local’ regulation, nor a food safety campaign. It’s about choices. In particular, it is about increasing the information EU shoppers have available to them so they can buy products based on criteria they care about (support for local produce, characteristics of the product, ethical and environmental concern, carbon footprint, etc). In sum, they believe that country of origin can be used as a proxy measure for quality, safety and other credence attributes. Moreover – they argue – mandatory CoOL might provide EU products with a competitive advantage over foreign products because EU consumers, if offered a clear choice, prefer foods of domestic origin (so-called ‘food nationalism’ or ‘consumer ethnocentrism’), thereby strengthening demand and prices for them. Opponents of this legislation argue instead that mandatory labelling merely raises costs and bring few benefits. Indeed, - they observe - as a result of this regulation, packers and processors that supply covered commodities to their retail customers must provide CoOL information to those retailers and prepare labels listing the origin of dozens of ingredients. Constantly changing labels would increase costs, which will be passed on consumers, and waste. More importantly, they believe that CoOL is a thinly disguised trade barrier intended to increase importers’ costs and to foster the unfounded perception that imports may be inherently less safe (or of lower quality) than domestic products. Opponents finally argue that scientific principles, not geography, must be the arbiter of safety.

At the time the EU legislator faces this debate, the WTO established a panel that will determine whether U.S. Country of Origin Labelling (COOL) rules are a violation of WTO law (TBT Article 2 and GATT Article III.4 are at stake). A first substantive meeting will be held at the WTO in Geneva, Switzerland in September 2010. For an insightful and original analysis of the trade implications of country of origin labelling you can read the wonderful paper by Wendy Johnecheck on SSRN.

Regardless of the WTO legal status of consumer information schemes like CoOL, the question remains as to whether consumers value information on country of origin. If country of origin information is only valued as a proxy for measure of safety and quality, it might indeed turn out to be a slippery slope to implement such a system within the EU. This might indeed contradict the idea of the internal market and come into conflict with the free movement imperative and the EU food regime, without necessarily bringing net benefits.

These and other cutting edge questions will be addressed next week by 25 brilliant policy-makers, food industry regulatory affairs specialists and academics at the Summer Academy on Global Food Law & Policy. Selected participants come from all over the world: Australia, New Zealand, United States, Honduras and the EU.