WTO Dispute Settlement Panel Rules Against U.S. Country Of Origin Labeling Requirements
On November 18, 2011, a WTO dispute settlement panel issued its report in the case United States--Certain Country of Origin Labeling (COOL) Requirements. The dispute concerns U.S. statutory provisions and regulations establishing mandatory country of origin labeling (“COOL”) for beef and pork, which are intended to allow consumers to distinguish meat from cows and pigs born or raised in other countries but processed in the United States. Canada and Mexico both challenged the U.S. COOL requirements, which were added to the 2002 Farm Bill, as a violation of the WTO Agreement on Technical Barriers to Trade (“TBT”) and the General Agreement on Tariffs and Trade 1994 (“GATT”). While the Panel affirmed the right of the United States to use country of origin labeling for meat products, it concluded that the COOL requirements had been drafted and implemented in a WTO-inconsistent manner.
The Panel first ruled that the COOL statutory provision and accompanying regulations are technical regulations subject to the TBT Agreement. According to Article 2.1 of the TBT Agreement, WTO members must ensure that products imported from any other member are treated no less favorably than like domestic products or like products originating in any other country with respect to technical regulations. The Panel determined that the COOL measures accord less favorable treatment to Canadian and Mexican cattle and hogs than to like domestic products, and thus the COOL requirements violate Article 2.1.
Article 2.2 of the TBT Agreement also requires countries to ensure that technical regulations are not “prepared, adopted, or applied with a view to or with the effect of creating unnecessary obstacles to international trade,” and as a result must be “no more restrictive than necessary to fulfill a legitimate objective.” The Panel held that the United States also violated Article 2.2 because, as drafted and implemented, the COOL requirements do not fulfill the legitimate objective of providing consumers with information on origin.
Finally, the Panel found that a letter issued by the U.S. Secretary of Agriculture regarding the implementation of the COOL requirements violated Article X:3(a) of the GATT 1994, which requires WTO members to administer all laws, regulations, decisions and rulings pertaining to the classification or valuation of products for customs purposes “in a uniform, impartial and reasonable manner.” More specifically, the Panel found that the letter did not meet the minimum standards of procedural fairness because it suggested industry compliance with “voluntary” labeling requirements that were different and more strict than those appearing in the regulation, thereby creating uncertainties for the industry. Therefore, the letter was an “unreasonable administration” of the COOL statute and regulations.
Under WTO rules, the panel report will be adopted by the WTO’s Dispute Settlement Body and given legal effect unless it is appealed within 60 days, or by no later than 17 January 2012 in this case. The U.S. government has not yet indicated whether it intends to appeal nor how it would seek to make the measures WTO-consistent if no appeal is filed.
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