US to Appeal against WTO Ruling on Labelling of Origin Rules

The US filed a notice of appeal last week in the WTO dispute over its country-of-origin labelling (COOL) requirements for livestock and meat imports, challenging a previous compliance panel’s ruling that Washington had failed to make sufficient changes to the policy in order to bring it in line with trade rules.

Washington announced the appeal at a special meeting of the WTO’s Dispute Settlement Body (DSB) last Friday, saying it would be challenging some of the panel’s findings and conclusions regarding whether the revised version of the COOL requirements still grant less favourable treatment to imported livestock.

The US move guarantees that the case will return to the Appellate Body, which generally reviews questions relating to facts of law or legal interpretation in panel rulings. Canada and Mexico, who were the complainants, can also file their own appeals.

Six years in

The dispute (DS384, DS386) is now finishing its sixth year at the global trade body, with the original complaints being filed by Mexico and Canada in 2008. The US lost the case at both the panel and appeals stages at the WTO, with the global trade arbiter finding that the policy put foreign products at a disadvantage by making the processing of imported livestock prohibitively costly.

At the same time, the Appellate Body upheld the US’ argument that the COOL policy was not more trade-restrictive than necessary to meet the legitimate objective of providing consumer information. As a result, Washington regulators have since been juggling to find a balance between meeting this approved domestic objective, while not putting Canadian and Mexican livestock and meat products at an unfair disadvantage.

The original policy involved a series of instruments put in place under the 2002 version of the Farm Bill, the omnibus legislation governing US agricultural spending. COOL was then revised in 2009. Under the terms of the policy, producers were required to inform consumers of meat’s country of origin via a label on the sale package, a complex process involving five categories, each with three sub-categories.

A year after the 2012 Appellate Body ruling, Washington revised the policy once more, imposing new point-of-production labelling requirements, presumably to answer the conclusions raised by the WTO’s highest court.

However, a compliance panel had subsequently found in October that the US’ revised COOL policy was still in violation of the WTO’s non-discrimination requirement.

Even so, the panel also found that the alternatives that Canada and Mexico had suggested in place of the COOL revisions were insufficient to meet the US’ objective of providing consumer information – while finding that Washington’s own policy is itself not fully accurate in this regard.

US challenges discrimination claim

The US notice of appeal specifically challenges the panel’s conclusions that the revised policy is discriminatory, citing alleged errors in certain findings that led to this conclusion.

For instance, the US has challenged the panel’s conclusion that the detrimental impact that Mexican and Canadian producers have suffered is not just the consequence that naturally comes from Washington trying to meet a legitimate regulatory objective.

Canada, Mexico slam move

The US’ decision to appeal the compliance panel’s report received harsh criticism from Canadian and Mexican officials, who argued that it prolongs an already lengthy process, while keeping in place a policy that continues to hurt foreign producers.

“With this delay, the United States is yet again preventing both of our countries from enjoying the benefits of freer and more open trade and is hurting farmers, ranchers, and workers in the United States and Canada,” said Canadian trade minister Ed Fast and agriculture minister Gerry Ritz in a joint statement on Friday.

The Mexican Secretariat of the Economy similarly lambasted the move, and both complainants raised the prospect of potentially seeking retaliation, should the WTO Appellate Body agree that the US’s amended COOL measure is in violation of trade rules.