The Tariff Act of 1930, as amended, generally requires imported 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 or display rack, there is no obligation to identify the items by the country of origin. 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. 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. 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. Complying with mandatory country-of-origin labeling for fresh produce could change the way retailers and others involved in the production and distribution of produce do business, thereby affecting their costs and consumers’ choices. Furthermore, such a law could be difficult to enforce. The fresh produce industry and retailers will have to incur costs to comply with a mandatory country-of-origin labeling law. The additional efforts and associated costs for compliance would depend on the specific requirements of the law and the extent to which current practices would 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 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.” According to Food and Drug Administration (FDA) and USDA officials we spoke with, enforcing a labeling law would require significant additional resources. The agency enforcing such a law would have to implement a system to ensure that the identity of produce is maintained throughout the 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. 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 law mandating country-of-origin labeling for fresh produce could have adverse trade implications. U.S. trading partners might challenge the law’s 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.