WTO Rules Against United States Country of Origin Labeling Rule
In a widely-anticipated move, the World Trade Organization’s Appellate Body on May 18th ruled against the U.S. Country of Origin Labeling (“COOL”) rule for meats, upholding the compliance panel’s report that the rule discriminates against Canada and Mexico. As has been discussed in prior posts (here and here), the COOL rules have been the subject of litigation brought by the American Meat Institute (“AMI”). The AMI lost its court fight (or at least abandoned the effort after several actions) but now may have won the larger battle. Retaliation by Canada and Mexico is likely unless steps are taken to amend the offending portions of the rule.
Not surprisingly some industry insiders are in a backwards way, pleased with this outcome as it may lead to changes in the law. National Cattlemen’s Beef Association President and Chugwater, Wyoming cattleman, Philip Ellis said:
We have long said that COOL is not just burdensome and costly to cattle producers, it is generally ignored by consumers and violates our international trade obligations “Now that the WTO has ruled for a fourth time that this rule discriminates against Canadian and Mexican livestock, the next step is retaliation by Canada and Mexico. Retaliation will irreparably harm our economy and our relationships with our top trading partners and send a signal to the world that the U.S. doesn't play by the rules. It is long past time that Congress repeal this broken regulation.”
The NCBA calls on Congress to fix this broken rule and supports legislation to repeal COOL before retaliation is awarded. Canada has released detailed proposed targets for retaliatory tariffs by state here.
Similarly, the AMI reacted strongly to the ruling:
If there ever was any question that that mandatory country-of-origin labeling is a trade barrier that violates our international agreements, the World Trade Organization’s (WTO) ruling against the United States today should lay those doubts to rest. The WTO has spoken not once, not twice, not three times, but four times in panel and appellate body decisions. All four rulings found against the U.S.
Now, after years of grappling with this costly and onerous rule – a rule that USDA’s own economic analysis says is a burden on livestock producers, meat packers and processors with no consumer benefit – it is clear that repealing the statute is the best step forward.
While the WTO action says nothing about US disclosure laws, it shows the many avenues of attack that US business have against compelled commercial speech. What the AMI could not achieve through the US courts was handed to them by this international body. The decision thus leaves open the question of precisely where the boundaries lie under US for mandated disclosure.