Olive oil is generally regarded as the healthiest oil among all kinds that is backed by numerous food scientists and nutritionists. Americans consume approximately 80 million gallons of olive oil every year, and nearly all of it comes from overseas. But selecting fine olive oil is more complicated than one thinks due to asymmetric information between consumers and producers. Olive oil possesses a more sophisticated classification system than any other oil. 

According to a consumer survey from the University of California at Davis’s Olive Center, 55 percent out of the 2,234 American consumers surveyed believed that they understood the meaning of grades of olive oil but in reality, only 25 percent of the consumers responded correctly to statements about the grades. Lack of sufficient knowledge prevents consumers from choosing the right one for the money, and they rely heavily on the labeling of bottles to get informed. Another study directed by the Olive Center finds that 73 percent of the imported “extra virgin” oil failed to meet the International Olive Council sensory standards.

To deal with this circumstance, some olive farmers in California want to gain ground on imported oil by lobbying Congress to make sure imported olive oil is held to the same standard as the American olive oil. A Tougher testing standard was originally included in the farm bill last year, but that part was taken out and debated recently between congressmen from California representing farmers’ interest and lawmakers from New York speaking for importers. In the end, the proportion of the bill was defeated. The United States government will not post tougher standard tests for the imported olive oil. 

From a free trade perspective, this is encouraging news for American olive oil consumers. The U.S. government has intensively committed in free trade in a way that imposing plenty of explicit tariffs will not be backed by the legislature. But raising the imported standard to a higher level is one of the norms that replaces tariffs to prevent imported goods. Tariffs, pricing ceilings and other instruments to regulate trade hurt consumers and society as a whole.

Further, the North American Olive Oil Association strongly disagreed with farmers’ claim that most of the imported olive oil doesn’t meet the U.S. standard. They said the recent alarm of olive oil quality is overblown, even in a bad faith, and that a solid standard already exists: the current USDA trade standard, which is based on the world’s most widely-used quality regulation, formulated by the International Olive Council. They imply that domestic growers are actually more interested in raising trade barriers to aid their own business than in defending American consumers.

Last year, more than 97 percent of the olive oil consumed was imported from the European Union. The EU is no less concerned than Americans about the quality of olive oil that they produce and place stricter standards on the grading system. Certainly some of the imported olive oil doesn’t meet the U.S. or international standard. But Americans and Europeans have very different approaches to taste and grade olive oil, making it less possible to place a one-size-fits-all standard across the Atlantic. Perhaps the smart way to deal with it is not to eliminate the discrepancy but to let consumers decide by giving them enough information about olive oil.

Consumers are not food scientists and nutritionists and most of them do not pay attention to how olive oil is processed but only the tastes. In many stores devoted to olive products in the U.S., consumers are allowed to taste the olive oil before they decide which one to buy. Tasting it before buying gives them the best information they need to match their preference of flavor and quality. A complex system of regulation and barrier seems redundant in such a case.