United States: WTO COOL Decision Puts Congress On The Clock

Last Updated: December 10 2015
Article by Brenda C. Swick and Daniel D. Ujczo

The World Trade Organization (WTO) issued an arbitration decision in the longstanding Country-of-Origin Labelling (COOL) dispute between Canada, Mexico, and the United States on December 7. The arbitrator determined that Canada may request to impose retaliatory duties on U.S. goods in the annual amount of CAD 1,054.729 million. While the dispute concerns the labelling of beef and pork products, Canada's proposed retaliation list includes items such as wooden furniture, mattresses, corn, potatoes, cherries, maple syrup, fructose and fructose syrup, tomato ketchup, and stoves. Throughout the arbitration, Canada has signaled its intention to impose a 100 percent surtax on these goods, up to the total amount of retaliation authorized by the arbitrator. Unless the U.S. Congress acts for a full repeal of COOL – perhaps in this week's omnibus spending bill – Canada will likely request authorization to commence retaliation early in 2016. All companies that have goods entering into Canada, as well as Mexico, as part of their distribution or value chains should examine this matter to assess potential impacts.

Background

In 2009, the U.S. imposed mandatory country-of-origin labelling requirements on imports of beef and pork from Canada and Mexico into the U.S. COOL required that Canadian and Mexican imports be labelled according to where the animals were born. The COOL measures had an adverse effect on Canadian and Mexican cattle and pork exports to the United States. For this reason, on October 6, 2009, the governments of Canada and Mexico initiated dispute settlement proceedings against the United States at the WTO to challenge the COOL requirements as discriminatory against Canadian and Mexican livestock. In June 2012, the WTO Appellate Body agreed and afforded the United States until May 2013 to bring its COOL rules into compliance with its international agreements. In response, in May 2013, the U.S. revised its COOL requirements to require that meat labels on cattle and beef imports include where the animals were born, raised, and slaughtered. In response, Canada and Mexico challenged the U.S.'s revised COOL rules before the WTO. The WTO Appellate Body again found in their favour on May 18, 2015.

Supported by the favourable WTO Appellate Body decision, Canada and Mexico pursued this arbitration proceeding to determine the amount of retaliation that would be permitted against the U.S. The Canadian government published a list of proposed products –identified by tariff item in the Canadian Customs Tariff – against which they intend to impose 100 percent tariffs up to the total amount of retaliation agreed to by the WTO arbitrator.

The Decision

In the December 7 decision, the arbitrator determined that Canada annually lost CAD 1,054.729 million as a result of the measures imposed by the United States. In accordance with the WTO Understanding on Rules and Procedures Governing the Settlement of Disputes (DSU), Canada may now request authorization from the Dispute Settlement Body to suspend concessions and related obligations at a level not exceeding CAD 1,054.729 million annually with respect to any goods under the GATT 1994 treaty.

Notably, the decision authorizes retaliation in an amount less than the CAD 3,068.1 million than Canada requested. Canada proposed this amount based on the level of its export revenue losses (CAD 2,045 million), and losses as a result of from domestic price suppression (CAD 1,023.1 million). The arbitrator reduced the amount requested by Canada based on Canada's proposed methodology – including domestic price suppression – and substituted its own determination in its place.

With respect to Mexico, the arbitrator determined that Mexico annually lost USD 227.758 million, despite Mexico having claimed a combined total of USD 713.4 million in export revenue losses and losses from domestic price suppression.

Next Steps

All eyes now turn to Washington to see if the U.S. Congress will pass legislation repealing COOL. On June 10, 2015 the U.S. House of Representatives voted 300-131 to repeal the COOL rules by passing the Country of Origin Labeling Amendments Act, H.R. 2393. On June 25, 2015, the U.S. Senate Committee on Agriculture held a hearing on COOL and trade retaliation. During the Committee hearing, then Canadian Agriculture Minister Gerry Ritz indicated that anything but a full legislative repeal of the U.S. COOL regime would lead to Canadian retaliation. Unfortunately, following the Committee meeting, a vote was held and there were not enough votes in the Senate to fully repeal COOL.

On July 23, 2015 U.S. Senators John Hoeven (R-N.D.) and Debbie Stabenow (D-Mich.), members of the Senate Agriculture Committee, introduced a bill entitled the Voluntary Country of Origin Labeling (COOL) and Trade Enhancement Act of 2015. The bill was designed to prevent retaliatory trade sanctions by Canada and Mexico, yet still allow voluntary labelling of beef, pork and chicken that is produced in the United States. Cosponsoring the bill were Senators John Thune (R-S.D.), Amy Klobuchar (D-Minn.), Chuck Grassley (R-Iowa), Heidi Heitkamp (D-N.D.), Mike Enzi (R-Wyo.) and Sherrod Brown (D-Ohio). The legislation remains in committee.

On the same day as Hoeven and Stabenow introduced their bill, Senator Pat Roberts (R-Kan.), introduced an amendment to the highway appropriations bill to effectively and simply repeal COOL requirements for beef, pork and chicken. This procedural maneuver failed.

In the wake of today's decision, several U.S. members of Congress are hoping that appropriators will include a COOL repeal in the omnibus spending bill that must pass Congress by December 11, 2015. Rep. Rodney Davis (R-IL), a member of the House Agriculture Committee, is among those who have said that a COOL fix is one of several possible riders for the omnibus bill, which is expected to be made public this week. Senate Agriculture Chairman Pat Roberts (R-KS) said in a statement that many senators are concerned about retaliation. "There is a lot of will in the Senate to repeal COOL and prevent retaliation,"

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 Mondaq.com.

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

Authors
Brenda C. Swick
Daniel D. Ujczo
Similar Articles
Relevancy Powered by MondaqAI
 
In association with
Related Topics
 
Similar Articles
Relevancy Powered by MondaqAI
Related Articles
 
Related Video
Up-coming Events Search
Tools
Print
Font Size:
Translation
Channels
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
Password
Confirm Password
Position
Mondaq Topics -- Select your Interests
 Accounting
 Anti-trust
 Commercial
 Compliance
 Consumer
 Criminal
 Employment
 Energy
 Environment
 Family
 Finance
 Government
 Healthcare
 Immigration
 Insolvency
 Insurance
 International
 IP
 Law Performance
 Law Practice
 Litigation
 Media & IT
 Privacy
 Real Estate
 Strategy
 Tax
 Technology
 Transport
 Wealth Mgt
Regions
Africa
Asia
Asia Pacific
Australasia
Canada
Caribbean
Europe
European Union
Latin America
Middle East
U.K.
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

Mondaq.com (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 www.mondaq.com

To Use Mondaq.com 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.

Disclaimer

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.

General

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