WTO Country-of-Origin

Labelling Case
International Law

Saron Tsegaye Bekele (4062631)

Diana Janet Vargas Sanchez

Pgina 0 de 9

Table of Contents
1

WTO definition..................................................................................................... 1

WTO Country-of-Origin Labelling Case.................................................................1

2.1

COOL definition.............................................................................................. 1

2.2

Case overview................................................................................................ 1

2.3

Main points of discussion............................................................................... 1

2.3.1

Canadian overview..................................................................................2

2.3.2

Mexican Overview................................................................................... 2

2.3.3

US Overview............................................................................................ 2

2.4

Relevant events............................................................................................. 3

2.5

The resolution................................................................................................ 4

Annex................................................................................................................... 5
3.1

Agreements cited on the case are.................................................................5

3.1.1

General Agreement on Tariffs and Trade 1994 (GATT).............................5

3.1.2

Rules of Origin:........................................................................................ 5

3.1.3

Agreement on the Application of Sanitary and Phytosanitary Measures. 5

3.1.4

Technical Barriers to Trade (TBT).............................................................6

Bibliography......................................................................................................... 6

1 WTO DEFINITION
WTO is an Intergovernmental Organization that regulates international trade. It was
established on April 15, 1995 replacing the GATT (General Agreement on Tariffs and
Trade which was created in 1947). It is signed by 125 nations.

2 WTO COUNTRY-OF-ORIGIN LABELLING CASE

COOL case is a Dispute between US and Canada and it has been a long-running
dispute since 2008 to 2015, regarding country-of-origin labelling requirements for
livestock and meat imports. For seven years, COOL case has become one of the
most high/profile cases.
Canada/ Mexico vs USA the whole case is contained on WTO website (WTO, 2015)
number DS384 and DS386. But what is COOL case about? What are they
demanding?.

2.1 COOL

DEFINITION

US COOL (certain country of origin labelling): Obligation to inform consumers at the

retail level of the country of origin in respect to covered commodities, including
beef, lamb, pork, chicken, goat meat, fresh and frozen fruits and vegetables, and
peanuts.

2.2 CASE

OVERVIEW

The country-of-origin labeling (COOL) rule that has a pre-implementation phase of

the September 30, 2008 and its final implementation was on March 16, 2009 has
negative consequences, on December 1st 2008.
Canada and Mexico challenged U.S. COOL in the World Trade Organization (WTO),
arguing that COOL has a trade-distorting impact by reducing the value and number
of cattle and hogs shipped to the U.S. market, thus violating WTO trade
commitments

2.3 MAIN

POINTS OF DISCUSSION

2.3.1 Canadian overview

The COOL measure was not designed or applied to give consumers accurate
information in order to achieve a legitimate objective. The objective of the COOL
measure was to alter the conditions of competition in the US market for US cattle
and pigs with imported animals. (March 16 2009).
Canada argue that COOL measure has changed the condition of competence for
Canadian cattle and pigs they refer to the paragraph 1 of Article 2 of the TBT
Agreement and paragraph 4 ARTICLE III OF GATT. Where is mentioned that of
technical regulations for imported products for any Member must be equal
treatment no less favorable GATT refers to the same adding affecting their
internal sales.
Canada Claims:
i.
Additional costs and fees and unnecessary burdens than feeders, packers and
US retailers claim to reduce Canadian cattle prices compared to USA.
ii.
With such practices US market reduce the demand for Canadian animals or
meat. Deterring feedlots and slaughterhouses, to buy it on US.
iii.
Disrupts competition with regard to imports of Canadian cattle and hogs in
the United States and the subsequent production of beef and pork from
animals such practices.
2.3.2 Mexican Overview
The Mexican industry of cows and calves produces high-quality animals and
genetically appropriate for the US market. They have the same genetic
characteristics as the calves of the United States and, like these, are eating grass or
winter wheat. The US cattle and Mexican cattle are clearly similar products.
Mexico claims:
i.
Processing companies in the US have restricted the number of establishments
that are sacrificed to Mexican cattle. And also they are adding additional
requirements.
ii.
Feedlots and slaughterhouses in the US have reduced the price of Mexican
cattle expressly because of the cost of compliance with the COOL measure.
iii.
Some facilities as fattening, feedlots and slaughterhouses have completely
stopped buying cattle, which generates losses to Mexican farmers.
2.3.3 US Overview
United States contends that "the goal" of the COOL measure is to "provide
information to consumers." Any evaluation to determine whether the provision of
information to consumers is a legitimate objective must consider the nature of the
information provided under the measure.
The COOL measure imposes costs and burdens of segregation feedlots,
slaughterhouses and retailers that use Canadian cattle and pigs origin or meat from
such animals.
These costs and expenses have resulted in many feedlots and slaughterhouses in
the United States stopped accepting Canadian cattle and pigs. As a result, animals
that are exported must travel greater distances with higher costs, being transported
to feedlots and slaughterhouses Americans continue to accept Canadian animals.

2.4 RELEVANT

EVENTS

November 18, 2011 the WTO panel found COOL measure is inconsistent with the US
WTO obligation. It violates ART. 2.1 Of TBT (Technical Barriers to Trade) agreement.
Or alternatively several articles of the Agreements on Sanitary and Phytosanitary
Measures (SPS), as the article 2.2 related to it. The panel also found that A letter
was issued by US secretary of agriculture (Vilsack), Vilsack letter suggestions for
voluntary action went beyond COOLs obligations and, while not a technical
regulation, constitute unreasonable administration of COOL itself, because this is a
violation to the Article X: 3(a) GATT 1994. (See annex to refer art). The resolution is
favorable to Mexico and Canada.
Under WTO rules, the US had various rules: to accept the rule and make changes to
the COOL statute or to appeal the panel report on legal issues. On March 2012, The
US appealed two findings of the DS (Dispute Settlement) panels report to the WTO
Appellate Body (AB).
June 29, 2012 the WTOs Appellate Body (AB) upheld the DS panels finding that
COOL treats imported livestock less favorably than domestic livestock. But the AB
reversed the DS finding that COOL does not fulfill its legitimate objective to provide
consumers with information on origin. AB resolution is referring to TBT 2.2 article
claiming that DS panel interpretation was too narrow.
According to WTO rules, the parties must accept the arbitrators decision as final
and cannot seek a second arbitration.
Once WTO finding are adopted by the DSB, a compliance deadline is established.
After the adoption of the dispute settlement reports, the US had up to 30 days to
inform the DSB of its plans to implement the WTO findings. WTO members are given
approximately one year from the date of adoption of the panel report to comply. If
the disputing countries fail to agree on a compliance deadline, as occurred in this
case, an arbitrator may determine the deadline. US argued 18 months, Canada
argued 6 months and Mexico argued 8. The arbitrator determined from reports
adoption (July 23, 2012) was a reasonable time (until May 23, 2013) for US to
comply.
In order to meet a May 23, 2013, compliance deadline, USDA (United States
Department of Agriculture) issued a revised COOL rule they require that labels show
where each step born, raised, slaughtered and prohibiting the mix meat from
different origins. Canada and Mexico expressed disappointment with USDA revised
rule.
Canadian cattle and hogs industry representatives stated that the revised COOL rule
would not bring the US into compliance, they said that it would increase the
discrimination. The government of both Canada and Mexico rejected the USDA

revised rule as solution to the WTO dispute. Because they said it will damage the
industry on both sides of the boarder.
On June 10, 2013, Mexico, Canada, USA, stablish a compliance panel and address
compensation or suspension of concessions.
On October 20, 2014 the compliance result was that COOL rule:
The panel confirmed that COOL is legitimate objective.
The manner in which COOL is implemented treats imported livestock
unfavorably than domestic livestock.
The panel couldnt determine if the rule is more trade restrictive than
necessary.
United States Asked to Appeals on November 28, 2014. The reviews finding was
that the rule is More trade restrictive than necessary this mean COOL violated U.S.
WTO obligations.

2.5 THE

RESOLUTION

In June 2015 Canada requested over C$3 billion (US$2.4 billion) per year, while
Mexico requested US$713.4 million that they say was resulted by COOL measure.
US argues that the amounts were insane and they dont calculate well, they dont
consider external factors. Canada should be US$43.22 million, and should not
exceed US$128.71 million annually. And Mexico should be entitled to US$47.55
million per year.
On December 20015, the arbitration panel mention on the report that the Canadas
annual losses were C$1,055 billion (US$ 781 million) and Mexico at $228 million..
But it doesnt include indirect losses.
December 18, 2015 President Barack Obama signs a large spending package for
2016 which includes the repeal of COOL labeling, which violates the rules of the
World Trade Organization (WTO) and affected exports of calves and other products
from Mexico and Canada. (MORALES, 2015).
The result derogation on the COOL law.

3 ANNEX
3.1 AGREEMENTS

CITED ON THE CASE ARE

3.1.1 General Agreement on Tariffs and Trade 1994 (GATT)

(WTO-GATT, 1994):
Article III*: National Treatment on Internal Taxation and Regulation: 4.The
products of the territory of any contracting party imported into the territory of
any other contracting party shall be accorded treatment no less favorable
than that accorded to like products of national origin in respect of all laws,
regulations and requirements affecting their internal sale, offering for sale,
purchase, transportation, distribution or use.
Article IX: Marks of Origin: 2.contracting parties recognize that, in adopting
and enforcing laws and regulations relating to marks of origin, the difficulties
and inconveniences which such measures may cause to the commerce and
industry of exporting countries should be reduced to a minimum, due regard
being had to the necessity of protecting consumers against fraudulent or
misleading indications.
Article X: Publication and Administration of Trade Regulations. In this article is
mentioned that each party could pertaining to the classification or the
valuation of products for customs purposes, including rates of duty, taxes or
other charges, or to requirements, restrictions or prohibitions on imports or
exports or on the transfer of payments therefor. Thats why Canada and
Mexico are pricing their lost when they dont get a fair price for the livestock.
Article XXIII: Nullification or Impairment: 1.If any contracting party should
consider that any benefit accruing to it directly or indirectly under this
Agreement is being nullified or impaired or that the attainment of any
objective of the Agreement is being impeded as the result of: (b) the
application by another contracting party of any measure, whether or not it
conflicts with the provisions of this Agreement.
3.1.2 Rules of Origin:
Art. 2, 2(b), 2(c), 2(e),2(j)
Article 2: Disciplines During the Transition Period: (b) notwithstanding the
measure or instrument of commercial policy to which they are linked, their
rules of origin are not used as instruments to pursue trade objectives directly
or indirectly. This shall not themselves create restrictive, distorting, or
disruptive effects on international trade. Possessing unduly strict
requirements or require the fulfilment of a certain condition not related to
manufacturing or processing, as a prerequisite for the determination of the
country of origin. Sometimes are permissible rules dont confer where a
positive determination of origin is not necessary?.
3.1.3 Agreement on the Application of Sanitary and Phytosanitary
Measures
(SPS) (WTO-SPS, n.d.):

Article 2: Basic Rights and Obligations back to top: In this agreement is

mentioned that the members have the right to take sanitary and
phytosanitary measures necessary for the protection of human, animal or
plant life or health, also is mentioned that this measures do not arbitrarily or
unjustifiably discriminate between Members where identical or similar
conditions prevail, including between their own territory and that of other
Members. This measures shall not be applied in a manner which would
constitute a disguised restriction on international trade.
Article 5: Assessment of Risk and Determination of the Appropriate Level of
Sanitary or Phytosanitary Protection. This articles refers to avoid the
discrimination against other countries, the members should be objective in
order of Minimizing negative trade effects.
Article 7: Transparency back to top. Members shall notify changes in their
sanitary or phytosanitary measures and shall provide information of
measures.

3.1.4 Technical Barriers to Trade (TBT)

(WTO-TBT, 1994)
Article 2: Preparation, Adoption and Application of Technical Regulations by Central
Government Bodies.

2.1 Members shall ensure that in respect of technical regulations, products

imported from the territory of any Member must be accorded treatment no
less favorable than products of national origin and to like products originating
in any other country.

2.2 Technical regulations are not prepared, adopted or applied with a view to
or with the effect of creating unnecessary obstacles to international
trade. Regulations shall not be more trade-restrictive than necessary to fulfil
a legitimate objective. Such are, inter alia: national security
requirements; the prevention of deceptive practices; protection of human
health or safety, animal or plant life or health, or the environment.

2.4 Where technical regulations are required and relevant international

standards exist or their completion is imminent, Members shall use them as a
basis for their technical regulations except when such international standards
or relevant parts would be an ineffective or inappropriate means for the
fulfilment of the legitimate objectives.

4 BIBLIOGRAPHY
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