Canada: Canada Positioned To Impose C$1-Billion In Retaliatory Surtaxes On Imports

Under international trade rules, as of December 7, 2015, Canada has the right to impose just over C$1-billion per year in surtaxes on goods imported from the U.S. This is due to a decision by a World Trade Organization (WTO) arbitrator who ruled that Canada may impose additional border taxes on any goods of its choosing in retaliation for the failure of the U.S. to repeal and/or bring into compliance certain Country of Origin Labelling (COOL) laws found to be contrary to WTO rules. In the same decision, Mexico was granted the right to impose surtaxes of up to US$228-million per year on U.S. goods.


Now that the arbitrator's decision has been issued, the final step is for Canada and Mexico to receive final authorization from the WTO's Dispute Settlement Body (DSB) to impose the retaliatory measures in the amounts determined by the arbitrator. In June of 2013 Canada published a list of products on which it intends to impose retaliatory surtaxes should the U.S. fail to repeal the COOL measures. Importers of the following general categories of goods, among others, are potentially at risk of paying 100 per cent surtaxes or finding alternate sources of supply:

  • Meats
  • Cheese
  • Fruits (i.e. apples, cherries)
  • Corn
  • Rice
  • Glucose and fructose
  • Chocolate
  • Pasta
  • Prepared foods
  • Breads and baked goods
  • Potatoes
  • Orange juice
  • Tomato ketchup
  • Wine
  • Sugars
  • Jewellery
  • Stainless steel tubes, pipe and hollow profiles
  • Stove and range parts
  • Grinding balls
  • Swivel seats
  • Wooden furniture
  • Mattresses

In a press release issued on the same day as the arbitrator's decision, Canada's new Minister of International Trade, Chrystia Freeland, and Minister of Agriculture and Agri-Food, Lawrence MacAulay, reinforced Canada's intention to impose retaliatory measures, stating that Canada would "quickly take steps to retaliate" should the U.S. Senate not take immediate action to repeal the COOL measure. However, given the new federal government's commitment to deepen Canada-U.S. relations, it is still possible that Canada may choose not to move forward with retaliatory measures, despite the fact that the U.S. has exhausted its ability to block or delay such measures at the WTO. Even if the federal government decides to proceed, it will still need to finalize the list of goods that it will target, and it is very likely that the final list will be a much truncated version of the 2013 list given the arbitrator's decision.


The COOL dispute dates back to December 1, 2008, when Canada first requested consultations with the United States at the WTO regarding COOL provisions in the Agricultural Marketing Act of 1946, as amended by the Food, Conservation and Energy Act of 2008 (known as the 2008 Farm Bill), and as implemented through an interim final rule of July 28, 2008. The impugned provisions included an obligation to inform consumers at the retail level of the country of origin in respect of covered commodities, which included beef and pork. Canada alleged that the COOL provisions were in contravention of a number of U.S. WTO obligations under the 1994 General Agreement on Tariffs and Trade, the Technical Barriers to Trade Agreement, and the Sanitary and Phytosanitary Measures Agreement.

The DSB established a panel to hear the dispute in November of 2009, and concluded in its 2011 report that the COOL measure did accord less favourable treatment to imported Canadian cattle and hogs than to similar domestic products in a manner inconsistent with commitments the U.S. had made to the WTO. Both Canada and the U.S. appealed the panel's report to the WTO's Appellate Body (AB), which issued its report in June of 2012, and also found the COOL measure to be non-compliant vis-à-vis the WTO agreements.

In the face of the DSB panel and AB reports, on May 23, 2013, the U.S. Department of Agriculture issued a final rule that made changes to the COOL labelling requirements. Unfortunately, the new rule called for greater specification in the required labelling, such that producers would need to indicate in which country the animal was born, raised and slaughtered. Canada took the position that the new rule was more restrictive than the original, and on August 19, 2013, requested the establishment of a compliance panel, tasked with determining whether the U.S. had complied with the DSB's recommendation to bring the COOL measure into WTO compliance.

The compliance panel's report was issued on September 27, 2013, finding that the U.S. had failed to properly revise the COOL measure, a conclusion shared by the AB when it issued its report on May 18, 2015, in response to the U.S. appeal of the panel's report. Several weeks after the AB's decision, Canada announced on June 4, 2015, that it had filed a request for authorization with the DSB to impose over C$3-billion in retaliatory measures against U.S. exports to Canada. It was this figure to which the U.S. objected, asking for an arbitrator to set the proper level of retaliatory measures.

As part of a final push to resist the imposition of retaliatory tariffs by Canada and Mexico, on June 22, 2015, the United States exercised its right under the WTO Dispute Settlement Understanding to have an arbitrator determine the value of retaliatory measures Canada and Mexico could take against the U.S. The decision issued on December 7, 2015, marks the end of this WTO dispute, leaving Canada with some clear options to consider in connection with taking retaliatory measures in order to put pressure on the U.S. to withdraw the COOL measures.

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.

To print this article, all you need is to be registered on

Click to Login as an existing user or Register so you can print this article.

Events from this Firm
14 Nov 2018, Speaking Engagement, Ontario, Canada

Join members of the Blakes Environmental and Enterprise Risk & Crisis Response groups for a discussion of hot topics and trends in Canadian environmental law.

15 Nov 2018, Webinar, Toronto, Canada

Join us for a live webcast with partners from our Employment & Labour and Litigation & Dispute Resolution groups as they discuss employment-related challenges and considerations surrounding the recent legalization of recreational cannabis in Canada.

15 Nov 2018, Webinar, Toronto, Canada

Join us for a live webcast with partners from our Employment & Labour and Litigation & Dispute Resolution groups as they discuss employment-related challenges and considerations surrounding the recent legalization of recreational cannabis in Canada.

In association with
Related Topics
Related Articles
Related Video
Up-coming Events Search
Font Size:
Mondaq on Twitter
Register for Access and our Free Biweekly Alert for
This service is completely free. Access 250,000 archived articles from 100+ countries and get a personalised email twice a week covering developments (and yes, our lawyers like to think you’ve read our Disclaimer).
Email Address
Company Name
Confirm Password
Mondaq Topics -- Select your Interests
 Law Performance
 Law Practice
 Media & IT
 Real Estate
 Wealth Mgt
Asia Pacific
European Union
Latin America
Middle East
United States
Worldwide Updates
Registration (you must scroll down to set your data preferences)

Mondaq Ltd requires you to register and provide information that personally identifies you, including your content preferences, for three primary purposes (full details of Mondaq’s use of your personal data can be found in our Privacy and Cookies Notice):

  • To allow you to personalize the Mondaq websites you are visiting to show content ("Content") relevant to your interests.
  • To enable features such as password reminder, news alerts, email a colleague, and linking from Mondaq (and its affiliate sites) to your website.
  • To produce demographic feedback for our content providers ("Contributors") who contribute Content for free for your use.

Mondaq hopes that our registered users will support us in maintaining our free to view business model by consenting to our use of your personal data as described below.

Mondaq has a "free to view" business model. Our services are paid for by Contributors in exchange for Mondaq providing them with access to information about who accesses their content. Once personal data is transferred to our Contributors they become a data controller of this personal data. They use it to measure the response that their articles are receiving, as a form of market research. They may also use it to provide Mondaq users with information about their products and services.

Details of each Contributor to which your personal data will be transferred is clearly stated within the Content that you access. For full details of how this Contributor will use your personal data, you should review the Contributor’s own Privacy Notice.

Please indicate your preference below:

Yes, I am happy to support Mondaq in maintaining its free to view business model by agreeing to allow Mondaq to share my personal data with Contributors whose Content I access
No, I do not want Mondaq to share my personal data with Contributors

Also please let us know whether you are happy to receive communications promoting products and services offered by Mondaq:

Yes, I am happy to received promotional communications from Mondaq
No, please do not send me promotional communications from Mondaq
Terms & Conditions (the Website) is owned and managed by Mondaq Ltd (Mondaq). Mondaq grants you a non-exclusive, revocable licence to access the Website and associated services, such as the Mondaq News Alerts (Services), subject to and in consideration of your compliance with the following terms and conditions of use (Terms). Your use of the Website and/or Services constitutes your agreement to the Terms. Mondaq may terminate your use of the Website and Services if you are in breach of these Terms or if Mondaq decides to terminate the licence granted hereunder for any reason whatsoever.

Use of

To Use you must be: eighteen (18) years old or over; legally capable of entering into binding contracts; and not in any way prohibited by the applicable law to enter into these Terms in the jurisdiction which you are currently located.

You may use the Website as an unregistered user, however, you are required to register as a user if you wish to read the full text of the Content or to receive the Services.

You may not modify, publish, transmit, transfer or sell, reproduce, create derivative works from, distribute, perform, link, display, or in any way exploit any of the Content, in whole or in part, except as expressly permitted in these Terms or with the prior written consent of Mondaq. You may not use electronic or other means to extract details or information from the Content. Nor shall you extract information about users or Contributors in order to offer them any services or products.

In your use of the Website and/or Services you shall: comply with all applicable laws, regulations, directives and legislations which apply to your Use of the Website and/or Services in whatever country you are physically located including without limitation any and all consumer law, export control laws and regulations; provide to us true, correct and accurate information and promptly inform us in the event that any information that you have provided to us changes or becomes inaccurate; notify Mondaq immediately of any circumstances where you have reason to believe that any Intellectual Property Rights or any other rights of any third party may have been infringed; co-operate with reasonable security or other checks or requests for information made by Mondaq from time to time; and at all times be fully liable for the breach of any of these Terms by a third party using your login details to access the Website and/or Services

however, you shall not: do anything likely to impair, interfere with or damage or cause harm or distress to any persons, or the network; do anything that will infringe any Intellectual Property Rights or other rights of Mondaq or any third party; or use the Website, Services and/or Content otherwise than in accordance with these Terms; use any trade marks or service marks of Mondaq or the Contributors, or do anything which may be seen to take unfair advantage of the reputation and goodwill of Mondaq or the Contributors, or the Website, Services and/or Content.

Mondaq reserves the right, in its sole discretion, to take any action that it deems necessary and appropriate in the event it considers that there is a breach or threatened breach of the Terms.

Mondaq’s Rights and Obligations

Unless otherwise expressly set out to the contrary, nothing in these Terms shall serve to transfer from Mondaq to you, any Intellectual Property Rights owned by and/or licensed to Mondaq and all rights, title and interest in and to such Intellectual Property Rights will remain exclusively with Mondaq and/or its licensors.

Mondaq shall use its reasonable endeavours to make the Website and Services available to you at all times, but we cannot guarantee an uninterrupted and fault free service.

Mondaq reserves the right to make changes to the services and/or the Website or part thereof, from time to time, and we may add, remove, modify and/or vary any elements of features and functionalities of the Website or the services.

Mondaq also reserves the right from time to time to monitor your Use of the Website and/or services.


The Content is general information only. It is not intended to constitute legal advice or seek to be the complete and comprehensive statement of the law, nor is it intended to address your specific requirements or provide advice on which reliance should be placed. Mondaq and/or its Contributors and other suppliers make no representations about the suitability of the information contained in the Content for any purpose. All Content provided "as is" without warranty of any kind. Mondaq and/or its Contributors and other suppliers hereby exclude and disclaim all representations, warranties or guarantees with regard to the Content, including all implied warranties and conditions of merchantability, fitness for a particular purpose, title and non-infringement. To the maximum extent permitted by law, Mondaq expressly excludes all representations, warranties, obligations, and liabilities arising out of or in connection with all Content. In no event shall Mondaq and/or its respective suppliers be liable for any special, indirect or consequential damages or any damages whatsoever resulting from loss of use, data or profits, whether in an action of contract, negligence or other tortious action, arising out of or in connection with the use of the Content or performance of Mondaq’s Services.


Mondaq may alter or amend these Terms by amending them on the Website. By continuing to Use the Services and/or the Website after such amendment, you will be deemed to have accepted any amendment to these Terms.

These Terms shall be governed by and construed in accordance with the laws of England and Wales and you irrevocably submit to the exclusive jurisdiction of the courts of England and Wales to settle any dispute which may arise out of or in connection with these Terms. If you live outside the United Kingdom, English law shall apply only to the extent that English law shall not deprive you of any legal protection accorded in accordance with the law of the place where you are habitually resident ("Local Law"). In the event English law deprives you of any legal protection which is accorded to you under Local Law, then these terms shall be governed by Local Law and any dispute or claim arising out of or in connection with these Terms shall be subject to the non-exclusive jurisdiction of the courts where you are habitually resident.

You may print and keep a copy of these Terms, which form the entire agreement between you and Mondaq and supersede any other communications or advertising in respect of the Service and/or the Website.

No delay in exercising or non-exercise by you and/or Mondaq of any of its rights under or in connection with these Terms shall operate as a waiver or release of each of your or Mondaq’s right. Rather, any such waiver or release must be specifically granted in writing signed by the party granting it.

If any part of these Terms is held unenforceable, that part shall be enforced to the maximum extent permissible so as to give effect to the intent of the parties, and the Terms shall continue in full force and effect.

Mondaq shall not incur any liability to you on account of any loss or damage resulting from any delay or failure to perform all or any part of these Terms if such delay or failure is caused, in whole or in part, by events, occurrences, or causes beyond the control of Mondaq. Such events, occurrences or causes will include, without limitation, acts of God, strikes, lockouts, server and network failure, riots, acts of war, earthquakes, fire and explosions.

By clicking Register you state you have read and agree to our Terms and Conditions