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WTO rejection of US Country of Origin Labelling Upheld on Appeal

The World Trade Organization (WTO) Appellate Body confirmed on 29 June 2012 that the United States Country-of-Origin Labelling (COOL) measure discriminates against Canadian livestock and is inconsistent with the WTO trade obligations of the United States.

COOL is a mandatory United States labelling regime for food products implemented in 2008 as amendments to the Agricultural Marketing Act of 1946. The regime includes the obligation to inform retail consumers of the country of origin in respect of covered commodities, in particular beef and pork. Only meat coming from an animal that was exclusively born, raised and slaughtered in the United States can indicate US origin.

According to the Government of Canada, the impact on the Canadian livestock industry was immediately negative. Between 2008 and 2009, exports to the United States of Canadian feeder cattle declined 49 percent and exports of slaughter hogs declined 58 percent. Canada and the United States enjoy the largest bilateral trading relationship in the world, with two-way trade in goods and services reaching almost $709 billion last year including $43 billion in agriculture and agri-food trade.

In December 2008 Canada made a complaint under the WTO dispute mechanism alleging that the regime was inconsistent with US trade obligations, and later that month Mexico joined in the consultations. After two rounds of unsuccessful consultations Canada requested, in October 2009, a WTO panel to resolve the dispute and the Panel was convened in November 2009.

The Panel agreed that the COOL measures were technical regulations inconsistent with US obligations under the WTO, violating Art 2.1 and 2.2 of the TBT Agreement by according less favourable treatment to imported Canadian cattle and hogs while not fulfilling its legitimate objective of providing consumers information on origin. The Panel also found that a letter issued by (US) Secretary of Agriculture Vilsack on the implementation of COOL , including suggestions for voluntary action, constituted ‘unreasonable administration’ and was a violation of Art X:3(a) of the GATT 1994.

The decision was released to the parties confidentially in July 2011 and publicly in November 2011. The United States appealed on 23 March 2012.

The Appellate Body agreed with the Panel that the COOL measure has a detrimental impact on imported livestock, providing an incentive for purely domestic livestock over like imported livestock. The Appellate Body went on to note that the Panel had not completed the analysis, which required determining whether the de facto detriment stemmed exclusively from a legitimate regulatory distinction, in which case it could be saved. In the result, the Appellate Body determined that the upstream record-keeping requirements were disproportionately onerous compared to the information provided to consumers  and could not be said to stem from the consumer information requirement and therefore could not be saved.

However, the Appellate Body reversed the finding that COOL also violated TBT 2.2, instead taking the position that it could not determine whether the COOL measures were overly restrictive in achieving the legitimate objectives.

“We are pleased with today’s World Trade Organization appeal decision in favour of our livestock industry,” said (Canadian) Agriculture Minister Gerry Ritz. “Our government has always stood with our cattle and hog producers, in order to create a stronger and more profitable integrated North American livestock industry.

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