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Developments in Canada/US COOL dispute

Readers may recall my 2012 update on the WTO dispute between Canada and the United States in respect of US Country-of-Origin labelling (COOL) that Canada alleges are inconsistent with US trade obligations. At that time, the WTO appellate body ruled in favour of Canada’s complaint, finding that the COOL regime for livestock was discriminatory.

That ruling required the US to come into compliance with its obligations by May 2013, but appropriate action was not taken and accordingly Canada along with Mexico made a request to the WTO for a ruling allowing them to suspend concessions to the US in the amount of approximately USD$2.5 billion per year. The US objected to the proposal as being excessive, and prior to the result Mexico withdrew from the proposal and will likely file its own, separate proposal. Nonetheless in August 2014 the WTO once again ruled in favour of Canada, requiring the US to meet its obligations under GATT and the TBT Agreement. The US once again appealed and in May 2015 the WTO Appellate Body confirmed that the US COOL regime was inconsistent with its international trade obligations.

Following its victory on appeal, on 4 June 2015 Canada applied to WTO to authorize punitive measures on a range of US goods imported to Canada; and on 17 June this request was referred to arbitration. According to International Trade Minister Ed Fast, “The World Trade Organization has yet again reaffirmed Canada’s long-standing position that the U.S.’s COOL measures are blatantly protectionist and discriminatory. We call on the U.S. to cease this harmful policy and restore our integrated North American supply chain, benefitting businesses and workers on both sides of the border.”

Interestingly, in May 2015 following its loss on appeal the US House of representatives began taking steps to repeal the regime, with the House of representatives Agriculture Committee voting overwhelmingly (and bipartisanly) to refer the issue to the full House. However, while it seems increasingly likely now that the regime will be substantially repealed, we can expect that the arbitration will proceed over the question of damages and compensation for industry losses over the past 6 years.

Stay tuned!

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