WTO Rules Against Country of Origin Labeling
Read below for a summary of key findings, and responses to the ruling from USCA, NCBA and the COOL Reform Coalition.
Summary of key findings
The Appellate Body rejected the US arguments against the panel’s findings under Article 2.1 of the TBT Agreement.
The Appellate Body maintained the panel’s conclusions that the amended COOL measure increases the record-keeping burden for imported livestock entailed by the original COOL measure. The Appellate Body rejected US arguments that the panel’s conclusions were based on “incorrect hypothetical” scenarios that were not based on actual, or the most common, trade situations.
The Appellate Body also maintained the panel’s conclusions regarding the potential for labelling inaccuracy under the amended COOL measure and the exemptions prescribed by the amended measure. The Appellate Body agreed with the panel that the recordkeeping and verification requirements of the amended COOL measure impose a disproportionate burden on producers and processors of livestock that cannot be explained by the need to provide origin information to consumers, and that the exemptions under the amended COOL measure support a conclusion that the detrimental impact of that measure on imported livestock does not stem exclusively from legitimate regulatory distinctions. In this regard, the panel had noted that between 57.7% and 66.7% of beef and between 83.5% and 84.1% of pork muscle cuts consumed in the US convey no consumer information on origin despite imposing an upstream recordkeeping burden on producers and processors that has a detrimental impact on competitive opportunities for imported livestock.
In regards to Article 2.2 of the TBT Agreement, the Appellate Body agreed with the Panel that an alternative measure providing less or less accurate information, but having significantly wider product coverage, could qualify as making a degree of contribution “equivalent” to that of the amended COOL measure. However, the Appellate Body also agreed with Canada and Mexico that the panel made several errors in concluding that the two countries failed to make a prima facie case that the amended COOL measure is more trade restrictive than necessary. The panel incorrectly excluded Label D and Label E from consideration when reaching its conclusion that the amended COOL measure makes a “considerable but necessarily partial” contribution to its objective of providing consumer information on origin. The panel also erred in concluding it was unable to ascertain the gravity of the consequences of non-fulfilment of the amended COOL measure’s objective; while making such an assessment is difficult, this should not relieve a panel from its duty to assess this factor, the Appellate Body said.
As a result, the Appellate Body reversed the panel’s conclusion that Canada and Mexico failed to make a prima facie case that the amended COOL measure violated Article 2.2 of the TBT Agreement. However, the Appellate Body made no finding as to whether the amended COOL measure is inconsistent with Article 2.2.
Finally, the Appellate Body upheld the panel’s analysis under Article III:4 of GATT 1994.
U.S. Cattlemen’s Association Responds to WTO COOL Ruling
The United States Cattlemen’s Association (USCA) issued the following statement regarding today’s ruling by the World Trade Organization on country of origin labeling (COOL). The following statement may be attributed to (USCA) Director Emeritus Leo McDonnell:
“The WTO ruled on Monday, May 18th that the amended COOL measure does not comply with U.S. WTO obligations. The panel’s findings allow Canada and Mexico to now file notification of their intent to retaliate; any filing done on their part will specify the retaliation amounts they believe are warranted. The U.S. may request arbitration on any requested levels of retaliation; the process to conduct all necessary protocol will take approximately 60 days.
“As stated by USCA previously, COOL provides consumers a choice at the grocery stores and the ability for U.S. cattle producers to differentiate their product. As other countries move to implement country or origin labeling programs, we are disappointed that today’s ruling by the WTO contradicts this growing trend.”
“This past week saw significant movement on Fast Track Authority, and inevitably the Trans-Pacific Partnership agreement. TPP has the potential, if implemented, to increase and broaden the import and export markets for the U.S. With a burgeoning international trade arena, it is vital that today’s consumers know where their food products originate. We are asking that consumers have a choice; once the product reaches the store shelves, then it is up to them on where they will lend their buying power.”
“USCA will work with the administration and Congress to implement any necessary changes to COOL as required by today’s ruling. We are committed to maintaining the information provided to consumers through the “A” label, which distinguishes those products born, raised and harvested in the U.S., and will work to address any concerns or violations as ruled on by the WTO.”
National Cattlemen’s Beef Association Responds to WTO COOL Ruling
Today, the World Trade Organization’s Appellate Body ruled against the U.S. Country of Origin Labeling rule for meats, upholding the compliance panel’s report. National Cattlemen’s Beef Association President and Chugwater, Wyoming cattleman, Philip Ellis said the next step is retaliation.
“We have long said that COOL is not just burdensome and costly to cattle producers, it is generally ignored by consumers and violates our international trade obligations,” said Ellis. “Now that the WTO has ruled for a fourth time that this rule discriminates against Canadian and Mexican livestock, the next step is retaliation by Canada and Mexico. Retaliation will irreparably harm our economy and our relationships with our top trading partners and send a signal to the world that the U.S. does play by the rules. It is long past time that Congress repeal this broken regulation.”
The NCBA calls on Congress to fix this broken rule and supports legislation to repeal COOL before retaliation is awarded. Canada has released detailed proposed targets for retaliatory tariffs by state here.
COOL Reform Coalition Responds to WTO COOL Ruling
Today, in response to the World Trade Organization’s (WTO) ruling on U.S. Country of Origin Labeling (COOL) program for muscle cuts of beef and pork, the COOL Reform Coalition is calling for immediate congressional intervention to bring the U.S. into compliance with its trade obligations. The only way to mitigate the negative impact of the U.S. manufacturing and agricultural economies, and to save thousands of jobs, is for Congress to act now.
With the WTO issuing this final ruling, Canada and Mexico, America’s two largest export markets, will promptly move to institute billions of dollars’ worth of retaliatory tariffs on U.S. food, agricultural, and manufactured goods.
“WTO-authorized retaliation by two of the largest U.S. trading partners could result in very substantial tariffs affecting multiple sectors of the U.S. economy, threatening the livelihoods of American families who depend on U.S. manufacturing,” said Linda Dempsey, Vice President of International Economic Affairs at the National Association of Manufacturers, and Co-Chair of the COOL Reform Coalition.
Canada has already issued a preliminary retaliation list targeting a broad spectrum of commodities and manufactured products that would affect every state in the country. Mexico has not yet announced a preliminary retaliation list but has implemented retaliatory tariffs in the past which may be indicative of future tariff actions.
“More than 95% of the world’s consumers live outside of our borders. We flaunt our country’s obligations under the rules-based trading system at our peril,” said U.S. Chamber Senior Vice President for International Policy John Murphy and Co-Chair of the COOL Reform Coalition. “American farmers, workers, and companies will not be able to sell their goods and services to those consumers if we fail to live up to these rules ourselves. Congress must take action now to repeal the COOL rule for meat before retaliation hits as soon as late summer.”