On October 4th, 2024, the European Court of Justice (ECJ) issued a judgement concerning the labeling of organic products and the use of the EU organic label. The ruling could have lasting implications for trade into the EU market under the U.S. - EU Organic Equivalence.
The judgment is the result of a case brought by a German company, Herbaria Kräuterparadies GmbH, which produces a food supplement made of fruit-based ingredients with added vitamins and iron. The German regulatory authorities determined the company needed to remove the EU organic logo and references from the product, as the EU organic regulations do not allow for the addition of vitamins and minerals, except in the case that it is required for the production of a specific type of product under EU or national legislation.
The company disagreed with the determination and took the case to the European Court of Justice, arguing it was receiving unfair treatment as the same product manufactured in the U.S. can be sold into the EU under the U.S. - EU Organic Equivalence and bear the EU organic logo. Current National Organic Program (NOP) regulations allow for the fortification of organic products, and this has not been determined to be a critical variance under the current equivalence agreement.
Organic equivalence arrangements are a mutual recognition in the form of bilateral arrangements between key trading partners that reduce trade barriers and strengthen the supply chain. Organic equivalences recognize two systems as comparable and verifiable, though not necessarily identical, and acknowledge in certain instances that technical requirements will differ by jurisdiction or region. Ultimately, the goal of these arrangements is to recognize two countries’ standards as comparable without compromising the integrity of the organic designation in both markets. This allows for trade between the markets without the added burden of redundant national certifications throughout the entire supply chain. The U.S. - EU Organic Equivalency has been in place since 2012.
After reviewing the Herbaria complaint, the European Court of Justice issued a judgement that processed products from third countries with recognized equivalent organic production standards, like the U.S., cannot use the EU organic logo if they do not fully comply with EU regulations. Products from third countries with recognized equivalent organic production standards, like the U.S., can however still export their products with the USDA organic seal. However, the ruling states that third countries can only use the EU organic logo if the product fully complies with EU organic production regulations.
Implications and Potential Outcomes
It remains unclear at this point how the European Commission and EU member states will interpret the judgement from the ECJ, namely, if the ruling will only apply to fortified products or to all products sold in the EU. OTA is in ongoing communication with several partners in the US government and EU to better understand potential interpretations of the ruling and impact to trade. Our European partners, in communication with the Commission, anticipate that member states and third country partners will be informed by the European Commission in early 2025 on the scope of the ruling. Based on our conversations with USDA and European trade groups, OTA is anticipating one of the following outcomes:
- The judgement will only apply to fortified products sold in the EU. In this case, certified organic fortified products exported from the U.S. to the EU could maintain the USDA organic seal, but not use the EU organic seal. It is unclear if the word “organic” could be used elsewhere on the packaging.
- The judgement applies to all processed products sold into the EU. In this case, U.S. companies that wish to sell any processed organic products into the EU and use the EU organic seal must comply with EU production regulations, including allowed inputs and productions methods. U.S. organic products could still maintain the USDA organic seal, but only use the EU organic seal if their product was in compliance with EU regulations.
- The judgement applies to all products sold into the EU. In this case, U.S. companies that wish to sell any organic products into the EU and use the EU organic seal must comply with EU production regulations, including allowed inputs and productions methods all the way back to the farm level. U.S. organic products could still maintain the USDA organic seal, but only use the EU organic seal if their product and its entire supply chain back to origin was in compliance with EU regulations.
- The utility of the U.S. - EU organic equivalence is questioned by the United States. If the EU determines that this ruling extends to all organic processed products sold in the EU, it will undermine the justification for having an organic equivalence arrangement in the first place and give an unfair advantage to EU producers exporting their products to the U.S. In a 2024 OTA consumer study it was found that only 2% of German consumers recognized the USDA organic seal versus 50% recognizing the EU organic seal. In a forthcoming consumer survey to be published in 2025, we found that 74% of U.S. consumers recognized the USDA organic seal while only of 8% recognized the EU seal. If U.S. producers will need to fully comply with EU regulations to sell into the European market, then it would be justified for the U.S. to impose the same restrictions on the EU.
Impacts to Trade
Based on EU import data, U.S. organic exports to the EU surpassed 75,000 metric tons between 2018-2023. Though we do not have complete U.S. import data, tracked organic imports from the EU surpassed 517,000 metric tons between 2018-2023.
U.S. organic companies that import from and/or export to the European Union rely on the existing equivalency to trade in everything from fresh fruits and vegetables to feed ingredients to packaged goods. Major imports from Europe include olive oil, pasta, chocolate, wine and other processed products. Major exports include fresh produce, tree nuts, soy sauce, grains and other processed products.
If the equivalence were to be nullified as a result of this ruling, companies would face increased costs and compliance burdens due to additional certification requirements, which would result not just in EU organic products being more expensive in the United States or vice versa, but organic in general being more expensive than conventional food sales. Other implications could result in U.S. companies shifting supply chains away from the EU and vice versa.
What Comes Next?
Since the judgement was announced, OTA has been working closely with the USDA Foreign Agricultural Service (FAS), NOP, and our European partners to better understand the impact of this ruling on our members. We expect to learn more in the coming weeks as the European Commission must present its interpretation of the judgement to EU member states.
Additionally, OTA, NOP, and FAS will have several staff present at Biofach, the world’s largest organic trade fair held in Nuremburg, Germany this February. OTA will participate in several panels alongside EU partners with an outlook on trade, where we expect to learn more about this judgement and its implications. We will continue to advocate for equitable organic market access in Europe and for fair trade practices that support the U.S. organic industry.