This summary has been prepared by the Secretariat under its own responsibility. The summary is for general information only and is not intended to affect the rights and obligations of Members.
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Summary of the dispute to date back to top
The summary below was up-to-date at
Consultations
Complaint by Mexico. (See also DS384)
On 17 December 2008, Mexico requested consultations with the United States concerning the mandatory country of origin labelling (COOL) provisions in the Agricultural Marketing Act of 1946, as amended by the Farm, Security and Rural Investment Act of 2002 and the Food, Conservation and Energy Act of 2008, and as implemented through the regulations published as 7 CFR Parts 60 and 65. According to Mexico, in the case of certain products, the determination of their nationality deviates considerably from international country of origin labelling standards, a situation which has not been justified as necessary to fulfil a legitimate objective.
Mexico considers that the mandatory COOL provisions appear to be inconsistent with the United States' obligations under the WTO Agreement, including:
- Articles III, IX and X of the GATT 1994;
- Article 2 of the TBT Agreement, or, in the alternative, Articles 2, 5 and 7 of the SPS Agreement; and
- Article 2 of the Agreement on Rules of Origin.
These violations appear to nullify or impair the benefits accruing to Mexico under those Agreements. Moreover, these measures appear to nullify or impair the benefits accruing to Mexico in the sense of Article XXIII:l(b) of the GATT 1994.
On 30 December 2008, Canada requested to join the consultations. Subsequently, the United States informed the DSB that it had accepted the request of Canada to join the consultations.
On 7 May 2009, Mexico requested further consultations concerning related amendments and measures adopted by the United States after Mexico's initial request for consultations. It also includes any modifications or amendments to the COOL measures, including any further implementing guidance or other documents that may be published in relation to such measures.
Mexico considers that the cited measures appear to be inconsistent with the United States' obligations under the WTO Agreement, including:
- Articles III, IX and X of the GATT 1994;
- Articles 2 and 12 of the TBT Agreement, or, in the alternative, Articles 2, 5 and 7 of the SPS Agreement; and
- Article 2 of the Agreement on Rules of Origin.
On 15 May 2009, Canada requested to join the further consultations. On 22 May 2009, Peru requested to join the further consultations. Subsequently, the United States informed the DSB that it had accepted the requests of Canada and Peru to join the consultations.
On 9 October 2009, Mexico requested the establishment of a panel. At its meeting on 23 October 2009, the DSB deferred the establishment of a panel.
Panel and Appellate Body proceedings
At its meeting on 19 November 2009, the DSB established a single panel pursuant to Article 9.1 of the DSU, to examine this dispute and dispute DS384. Argentina, Australia, Canada, China, Colombia, India, Japan, Korea, Peru and New Zealand reserved their third-party rights. Subsequently, Brazil, the European Communities, Guatemala and Chinese Taipei reserved their third-party rights.
On 30 April 2010, Mexico requested the Director-General to compose the panel. On 10 May 2010, the Director-General composed the panel. On 21 December 2010, the Chairman of the panel informed the DSB that it would not be able to issue its report within six months. The timetable adopted by the Panel after consultations with the parties to the dispute envisaged that the final report shall be issued to the parties by the middle of 2011. The panel expects to conclude its work within that timeframe.
On 18 November 2011, the panel report was circulated to Members.
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| Summary of key findings
- This dispute concerns: (i) the US statutory provisions and implementing regulations setting out the United States' mandatory country of origin labelling regime for beef and pork (“COOL measure”); as well as (ii) a letter issued by the US Secretary of Agriculture Vilsack on the implementation of the COOL measure (“Vilsack letter”).
- The Panel determined that the COOL measure is a technical regulation under the TBT Agreement, and that it is inconsistent with the United States' WTO obligations. In particular, the Panel found that the COOL measure violates Article 2.1 of the TBT Agreement by according less favourable treatment to imported Mexican cattle than to like domestic products. The Panel also found that the COOL measure does not fulfil its legitimate objective of providing consumers with information on origin, and therefore violates Article 2.2 of the TBT Agreement.
- As regards the Vilsack letter, the Panel found that the letter's “suggestions for voluntary action” went beyond certain obligations under the COOL measure, and that the letter therefore constitutes unreasonable administration of the COOL measure in violation of Article X:3(a) of the GATT 1994. The Panel refrained from reviewing the Vilsack letter under the TBT Agreement, as it found that this letter is not a technical regulation under that agreement.
- Further, the Panel determined that Mexico has failed to demonstrate that the COOL measure violates Articles 2.4 (use of existing relevant international standards), 12.3 (take account of special needs of developing country Members) and 12.1 (general special and differential provision) of the TBT Agreement.
- In light of the above findings of violation, the Panel did not consider it necessary to rule on the claims under Article III:4 of the GATT 1994 (national treatment) or on the non‑violation claims under Article XXIII:1(b) of the GATT 1994.
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On 21 December 2011, Mexico and the United States requested the DSB to adopt a draft decision extending the 60-day time period stipulated in Article 16.4 of the DSU, to 23 March 2012. At its meeting on 5 January 2012, the DSB agreed that, upon a request by Mexico or the United States, the DSB, shall no later than 23 March 2012, adopt the panel report, unless the DSB decides by consensus not to do so or Mexico or the United States notifies the DSB of its decision to appeal pursuant to Article 16.4 of the DSU.
On 23 March 2012, the United States notified the DSB of its decision to appeal certain issues of law covered in the panel report and certain legal interpretations developed by the panel. On 28 March 2012, Mexico notified the DSB of its decision to appeal certain issues of law covered in the panel report and certain legal interpretations developed by the panel. On 21 May 2012, the Chair of the Appellate Body informed the DSB that the Appellate Body would not be able to circulate its report within the 90-day timeframe as provided for in Article 17.5 of the DSU due in part to the size of the appeal, including the number and complexity of the issues raised by participants as well as the Appellate Body's heavy caseload, scheduling difficulties resulting from the overlap in the composition of the Divisions hearing different appeals at the same time, as well as constraints resulting from the relocation of the Appellate Body and its Secretariat. Accordingly, the Appellate Body expects to circulate its report no later than 29 June 2012.
On 29 June 2012, the Appellate Body report was circulated to Members.
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| Summary of key findings
The appeal concerned the COOL measure (the US statutory provisions and implementing regulations setting out the United States' mandatory country of origin labelling regime for beef), and the Panel's findings that this measure is inconsistent with Articles 2.1 and 2.2 of the TBT Agreement. The United States appealed both findings. Mexico conditionally appealed certain aspects of the Panel's analysis under Article 2.2, and requested the Appellate Body to complete the legal analysis in the event that it reversed the Panel's finding under Article 2.2. Mexico also raised conditional appeals under Articles III:4 and XXIII:1(b) of the GATT 1994.
The Appellate Body upheld, albeit for different reasons, the Panel's finding that the COOL measure violates Article 2.1 of the TBT Agreement by according less favourable treatment to imported Mexican cattle than to like domestic cattle. The Appellate Body reversed the Panel's finding that the COOL measure violates Article 2.2 of the TBT Agreement because it does not fulfil its legitimate objective of providing consumers with information on origin, and was unable to complete the legal analysis and determine whether the COOL measure is more trade restrictive than necessary to meet its objective.
In its analysis under Article 2.1 of the TBT Agreement, the Appellate Body agreed with the Panel that the COOL measure has a detrimental impact on imported livestock because its recordkeeping and verification requirements create an incentive for processors to use exclusively domestic livestock, and a disincentive against using like imported livestock. The Appellate Body found, however, that the Panel's analysis was incomplete because the Panel did not go on to consider whether this de facto detrimental impact stems exclusively from a legitimate regulatory distinction, in which case it would not violate Article 2.1. In its own analysis, the Appellate Body found that the COOL measure lacks even-handedness because its recordkeeping and verification requirements impose a disproportionate burden on upstream producers and processors of livestock as compared to the information conveyed to consumers through the mandatory labelling requirements for meat sold at the retail level. That is, although a large amount of information must be tracked and transmitted by upstream producers for purposes of providing consumers with information on origin, only a small amount of this information is actually communicated to consumers in an understandable or accurate manner, including because a considerable proportion of meat sold in the United States is not subject to the COOL measure's labelling requirements at all. Accordingly, the detrimental impact on imported livestock cannot be said to stem exclusively from a legitimate regulatory distinction, and instead reflects discrimination in violation of Article 2.1. For these reasons, the Appellate Body upheld the Panel's finding under Article 2.1.
In its analysis under Article 2.2 of the TBT Agreement, the Appellate Body found that the Panel properly identified the objective of the COOL measure as being “to provide consumer information on origin”. The Appellate Body found, however, that the Panel erred in its interpretation and application of Article 2.2. This was because the Panel appeared to have considered, incorrectly, that a measure could be consistent with Article 2.2 only if it fulfilled its objective completely or exceeded some minimum level of fulfilment, and to have ignored its own findings, which demonstrated that the COOL measure does contribute, at least to some extent, to achieving its objective. The Appellate Body therefore reversed the Panel's finding that the COOL measure is inconsistent with Article 2.2, but was unable to determine whether the COOL measure is more trade restrictive than necessary to fulfil a legitimate objective within the meaning of Article 2.2.
As the conditions on which Mexico's appeals with respect to Articles III:4 and XXIII:1(b) of the GATT 1994 were made were not satisfied, the Appellate Body made no findings under these provisions. | |
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At its meeting on 23 July 2012, the DSB adopted the Appellate Body report and the panel report, as modified by the Appellate Body report.
Reasonable period of time
On 21 August 2012, the United States informed the DSB that it intended to implement the DSB recommendations and rulings in a manner that respects its WTO obligations and that they would need a reasonable period of time to do so.
On 13 September 2012, Mexico requested that the reasonable period of time be determined through binding arbitration pursuant to Article 21.3(c) of the DSU. On 26 September 2012, Mexico requested the Director-General to appoint the arbitrator. On 4 October 2012, the Director-General appointed Mr Giorgio Sacerdoti to act as arbitrator under Article 21.3(c) of the DSU. Mr Sacerdoti accepted this appointment by letter dated 5 October 2012.
On 4 December 2012, the Arbitration
under Article 21.3(c) was circulated to Members.
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WTO Arbitrator determines “reasonable period of time” in United States — Certain Country of Origin Labelling (COOL) Requirements trade disputes
A WTO Arbitrator, Mr. Giorgio Sacerdoti, on 4 December 2012, issued his award regarding the “reasonable period of time” for the implementation of Dispute Settlement Body recommendations and rulings in the disputes “United States — Certain Country of Origin Labelling (COOL) Requirements” (DS384 and DS386). The Arbitrator determined that the “reasonable period of time” for the United States to implement the recommendations and rulings of the DSB in these disputes is 10 months from the adoption of the Panel and Appellate Body Reports, that is, until 23 May 2013. |
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