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TACKLING A NEW SESSION

WASHINGTON -- When the U.S. Congress reconvenes on Tuesday, all eyes of those in the food industry will be on the Senate.Amid election-year congressional and presidential politicking, the chamber's first order of business will be legislation containing a two-year delay of implementing costly country-of-origin labeling for meat.Much to the delight of supermarket officials and several others in the

WASHINGTON -- When the U.S. Congress reconvenes on Tuesday, all eyes of those in the food industry will be on the Senate.

Amid election-year congressional and presidential politicking, the chamber's first order of business will be legislation containing a two-year delay of implementing costly country-of-origin labeling for meat.

Much to the delight of supermarket officials and several others in the food industry, the House voted last year to delay the Sept. 30, 2004, implementation date. Postponement was seen as a compromise between the pro- and anti-labeling camps, large parts of which are now negotiating terms of voluntary labeling programs in an attempt to replace the legislation.

Yet despite Senate Republican leadership favoring a delay, the chamber's Democratic leader, Tom Daschle, D-S.D., hopes to keep the original country-of-origin labeling legislation, or COOL, intact. Daschle said he'll fight a delay. To bolster his argument for COOL, he cited the single case of mad cow disease detected just before Christmas.

"Americans have faith in American beef, and they deserve to know what they're buying at the grocery store. In order to maintain consumer confidence, the Bush administration should immediately implement country-of-origin labeling," Daschle said in a recent news release.

His attack on COOL's delay is worrisome to retailers because they said labeling has nothing to do with food safety. In addition, Daschle's bid could succeed because the Senate is narrowly divided between Republicans and Democrats, 51 to 48. Sixty votes are needed to forestall a bill-killing Democratic filibuster.

A delay would only be temporary, as well as a partial fix for COOL. Produce, fish, shellfish, and frozen fruits and vegetables would still have to be labeled by Sept. 30.

When COOL cleared Congress two years ago, the measure received strong support from both parties as a marketing tool for U.S. food producers to better compete with imports. However, many COOL supporters have since questioned the program's recordkeeping complexities and annual price tag of $4 billion, of which retailers would shoulder an estimated $1.5 billion to $2 billion.

John Motley, senior vice president of government and public affairs for the Food Marketing Institute here, said Daschle's maneuvering on the COOL issue may have more to do with political horse trading than food labeling. The COOL delay is contained in a giant federal agency funding bill, and Motley said Daschle may be rekindling the labeling issue to garner support on other fronts, such as blocking pending changes by the Bush administration to the Labor Department's overtime rules.

"It's all about whether Daschle can rally enough Democrats" to renegotiate terms of the massive spending legislation, Motley said.

Since the recent announcement about a Washington state cow testing positive for the dreaded mad cow disease, the food industry has been busy dispelling concern about the safety of the nation's meat supplies. The U.S. Department of Agriculture, meanwhile, has issued new guidelines for which meat by-products -- suspected transmitters of the disease -- can be added to animal feed. It has ordered that meat from any suspect cows not be sold until tests are returned negative.

With the two-year COOL delay for meat under threat in the Senate, food-industry lobbyists are also busy reminding lawmakers that COOL and food safety are two different issues. "It's food hysteria," said United Fresh Fruit and Vegetable Association President and Chief Executive Officer Tom Stenzel, who is based here, of the attempt by Daschle and others to say labeling would improve detection of mad cow. "Let food safety be food safety, and marketing be marketing."

The debate swirling around COOL as Congress reconvenes "is going to be very intense," predicted Tom Wenning, senior vice president and general counsel of the National Grocers Association, Arlington, Va.

"Either the two-year delay has to go into effect, or there has to be some legislation repealing COOL," said Wenning, eying the approaching September deadline, when a single violation could prompt a $10,000 daily fine. "We don't even have final regulations yet" on how to comply with COOL, he stated.

"This has become so political," said Susan Stout, vice president of federal affairs, Grocery Manufacturers Association, based here, of the Democratic maneuverings over COOL in the Senate. Stout said she remains concerned that the USDA, in writing COOL regulations, could broaden labeling requirements for packaged produce.

While the mad cow issue is expected to be the focus of House and Senate hearings, legislation revamping the nation's meat inspection system doesn't appear to be in the offing.

Because of the Nov. 2 election, this year's congressional agenda will be truncated, leaving time for campaigning and political conventions as Bush, the entire House and one-third of the Senate prepare to go before voters. Conventional political wisdom pegs most major legislative action occurring by June.

Congressional Wish List

Aside from delaying COOL, retailers and wholesalers intend to complete repeal of the estate tax. The start of a multi-year estate-tax reduction began in 2001, but repeal has remained elusive largely because of Senate opposition among a large swath of Democrats and moderate Republicans.

President Bush has said he will make estate-tax repeal a centerpiece of his proposed 2005 budget, which he will unveil soon and which Congress will consider this year. The president has been able to push almost $2 trillion worth of tax cuts through Congress in his first term.

However, conservative Democrats and moderate Republicans in the Senate who backed Bush's tax slashing, and whose votes would likely be needed to repeal the estate tax, have questioned the need for more reductions. Their concern: the ballooning federal deficit threatening high interest rates and, eventually, economic growth. Yet, the administration counters that the current $500 billion deficit will be cut in half in the next five years as the economy, fed by tax cuts, brings in more revenue.

To estate-tax opponents, repeal would only be good for business; support in Congress for that position remains strong. As is the case with COOL, it's the Senate where estate-tax repeal remains stalled after passage in the House.

"We're so close to permanent repeal that most people can taste it," said David French, senior vice president, government relations, International Food Service Distributors Association here. "It's just a question [of] whether pressure from grassroots groups and business owners can be brought to bear on a handful of senators."

With the impending election, French said estate-tax repeal as a means to bolster capital and thus the economy should be an attractive issue for lawmakers. "Our political leverage on this issue will be high this year," he averred.

Likewise in an election year, Democratic legislation increasing the $5.15 federal minimum wage could be in the mix, which wage-paying retailers would resist.

Bush hasn't proposed a wage hike. Additionally, Capitol Hill Republicans, citing the shaky economic recovery, have resisted Democratic calls for an increase. However, as French noted, "minimum wage is another issue whose vitality is probably the highest during an election year."

Other food-industry issues facing Congress this year are routine but crucial, such as the renewal of federal programs including the Work Opportunity and Welfare-to-Work tax credits. The credits of up to $2,400 per worker are given to employers who hire individuals from nine hard-to-employ groups, including teenagers, war veterans, convicts and welfare recipients.

Another program needing renewal is the Women, Infants' and Children, or WIC, program that gives more than 7 million people vouchers to buy nutritious food at retailers, translating into upward of $4 billion in sales. Renewal of the tax credits and WIC enjoy broad-based support.