Canada and Mexico Seek Sanctions against United States over COOL

  On June 5, 2015, Canada and Mexico requested the right to impose sanctions worth $3 billion on the United States through the World Trade Organization (WTO).  The request comes after U.S. failure to meet WTO recommendations on the Country of Origin Labeling (COOL) ruling.  WTO’s meeting to decide on whether to implement sanctions is scheduled for June 17, 2015.

    The dispute over COOL originated December 1, 2008 when Canada claimed COOL violated both WTO’s Technical Barriers to Trade (TBT) agreement and General Agreements on Tariffs and Trade (GATT).  The dispute specifically focused on imported muscle cut meat commodities: beef and pork.  Mexico requested to join Canada in the proceedings December 12, 2008. On November 18, 2011, WTO ruled that the U.S. had violated both TBT and GATT.  WTO found COOL created a detrimental effect on competitive opportunities for imported livestock by unfairly making domestic products more favorable. 

  Though the U.S. appealed the decision on March 23, 2012, the decision was reaffirmed by the WTO Appellate Body on June 29, 2012.  On May 24, 2013, the U.S. issued an amended final rule 78 Fed. Reg. 31367 to meet WTO recommendations.  Canada and Mexico stated the rule was protectionist and requested compliance proceedings.  On October 20, 2014, WTO found that the U.S. amended COOL measures contained the same violations as the prior regulation.

  Congress has not reached a unanimous decision on how to handle the recent challenges to COOL.  While advocates believe COOL provides a legitimate objective by providing country of origin information to beef and pork consumers, opponents cite a USDA economic study that found that unless there is an increased demand for beef and pork by consumers based on COOL information, implementing COOL results in losses along supply chains. 

  On May 18, 2015, House Agriculture Committee Chairman Michael Conaway (R-TX) introduced H.R. 2398, which would repeal beef, pork, and chicken from COOL.  On May 20, 2015, the House Agriculture Committee favorably reported H.R. 2393 to the House where it is expected to go to the House floor in early June.  

Written by Katharine Richter- Research Assistant

June 8, 2015