Canada, Mexico Request Retaliation Against US in COOL Case

11 June 2015

Canada and Mexico have circulated a request for WTO-authorised countermeasures against the US in their dispute over the latter’s country-of-origin labelling (COOL) policies for imported meat and livestock, ramping up the pressure for Washington lawmakers to repeal the measures.

In a joint statement published last Thursday, the two complainants said that they would be formally presenting that request at a special meeting of the WTO’s Dispute Settlement Body (DSB) on 17 June.

The move comes just weeks after the Appellate Body, which is the WTO’s highest court, ruled that the latest version of the COOL policy – which was amended in 2013 in response to a previous ruling – was still in violation of global trade rules. (See Bridges Weekly, 21 May 2015)

“The WTO has ruled that the United States is out of options and out of time. The only way for the United States to avoid billions in immediate retaliation is to repeal COOL,” said Canadian Agriculture and Agri-Food Minister Gerry Ritz in a statement.

Canada plans to ask for over C$3 billion (US$2.4 billion) per year in countermeasures, while Mexico says it plans to request over US$653 million, commensurate with the nullification or impairment of benefits that they say has resulted annually from the COOL policy. What items could be included in such a list are yet to be confirmed, though both complainants have said that they intend to provide a DSB with information on the goods and level of tariffs that these would face “in due course.”

However, Ottawa has already hinted which goods it is likely to target, having released a list in 2013 citing various imported US goods – such as cattle, pork, apples, rice, corn, maple syrup, pasta, wine, jewellery, office chairs, wooden furniture, and mattresses – that could be subject to countermeasures, should the WTO authorise them.

Under the terms of agreements reached in 2013 between the US and the complainants, Washington is now allowed to object under the WTO rules that govern trade disputes – known as the Dispute Settlement Understanding – to the level of requested countermeasures.

The US also has the option of claiming that the principles and procedures involved in considering what concessions or other obligations to suspend, as outlined by the same WTO agreement, were not followed by the complainants.

As a general rule, complainants are first required to seek suspension of concessions or other obligations under the same sector or sectors at issue in the case. Under certain conditions, the suspension can be expanded to other sectors under the same WTO agreement, or even to obligations outlined under another WTO agreement.

Should the US make such objections, WTO rules require the matter to be referred to arbitration. The agreement between the US and complainants also provides that all parties will work to help the arbitrator circulate its decision within 60 days after the arbitration process begins.

Seven years

The start of the COOL case dates back nearly seven years, when Ottawa and Mexico City both filed formal consultations requests with the WTO – the first step of dispute settlement proceedings – challenging the Washington policy.

The time it has taken to reach this stage in the dispute process was criticised by both the complainants and the respondent at a meeting last month of the DSB, sources say.

Canada, for example, reportedly raised the impact its economy has faced as a result of the dispute’s prolonged nature, given that COOL has been in place either in its original or revised form throughout that time period. The US also listed concerns of its own over both the length of the dispute, and a decision by the Appellate Body not to meet with the dispute parties to indicate when a ruling might be forthcoming, after having requested more time.

US repeal effort underway

At last month’s DSB meeting in Geneva, the US criticised the Appellate Body ruling on various counts, saying that despite WTO judges deeming the provision of origin information to consumers a legitimate objective in itself, “it would appear from those findings that there is no clear way under the covered agreements for a member to achieve that legitimate objective.”

“When examined as a whole, the panel and Appellate Body findings appear to mean that the United States cannot require US retailers to inform consumers of beef and pork about where the animals were born, raised, and slaughtered. This is a conclusion with which the United States strongly disagrees,” the US said.

In Washington, legislative efforts are already underway to remove the COOL policy. The US House of Representatives voted on Wednesday in favour of its repeal, after the legislation passed successfully out of that chamber’s Agriculture Committee last month. (See Bridges Weekly, 21 May 2015)

While the repeal must also go through the Senate, where its prospects remain uncertain, some US consumer groups have already come out against both the WTO ruling and the House move. Public Citizen’s Global Trade Watch is among various organisations who have cited the repeal as yet another example of an American public policy that has been impacted by trade deals.

The COOL ruling came amid an already heated debate in Washington over how to balance regulations and legislation aimed at meeting domestic public policy objectives with international trade rules, particularly under new trade deals currently under negotiation, such as the Trans-Pacific Partnership (TPP) and the Transatlantic Trade and Investment Partnership (TTIP).

The debate has spilled out into the open in light of recent efforts to renew legislation that would set Washington’s negotiating objectives in trade deals and the US President’s authority to submit such agreements to Congress for straight up-or-down votes. That bill, known as Trade Promotion Authority (TPA) is currently making its way through Congress; already approved by the Senate, it could face a House vote as early as this week. (See Bridges Weekly, 4 June 2015)

ICTSD reporting; “COOL supporters mount last-ditch effort to sidetrack repeal,” AGRI-PULSE, 8 June 2015.

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