On Friday, March 8, 2013, the United States Department of Agriculture (USDA) issued a new rule to bring the mandatory Country of Origin Labeling (COOL) regulations into compliance with the July 2012 decision of the World Trade Organization (WTO) Appellate Body (AB). The U.S. first included COOL requirements in the 2002 farm bill though no regulations were issued for beef, pork, lamb, and a number of other agricultural products until after COOL was again included in the 2008 farm bill along with a firm date for issuing the implementing regulations—September 30, 2008.

The administration complied on August 1, 2008 by issuing rules implementing COOL, though in a way that left loopholes large enough to drive a train through. As we will see, in part, the loopholes put into place by an administration that consistently resisted COOL that, in part, provided the basis, in a case filed by Canada and joined by others, for the World Trade Organization (WTO) Appellate Body to rule that the COOL regulations violated U.S. trade obligations under parts of the WTO Technical Barriers to Trade Agreement (TBT). A full history of the WTO case and the rulings of the Dispute Resolution Body and the Appellate Body can be found at (http://www.wto.org/english/tratop_e/dispu_e/cases_e/ds384_e.htm).

In this week’s column we will examine a legal opinion on the AB ruling. The legal analysis was conducted by the legal firm Stewart and Stewart (S&S) for the National Farmers Union, the United States Cattlemen’s Organization, the Food and Water Watch, and Public Citizen’s Global Trade Watch. Next week’s column will be focused on the specific regulations being proposed by the current administration so that our readers can make the comparison between the S&S analysis and the changes in the regulations being sought by the USDA.

Violates obligations

According to the S&S memorandum, the Appellate Body “ruled that the current COOL regime violates the obligations of the United States under Article 2.1 of the Agreement on Technical Barriers to Trade (‘TBT Agreement’).” In addition, the panel “was unable to complete the analysis to determine on its own whether COOL violates Article 2.2.”

In their memorandum, S&S “explains how the United States can come into compliance with its obligations under Article 2.1 of the TBT Agreement, as well as maintain compliance with Article 2.2, by strengthening the COOL regulations to provide more accurate and complete information on animal origin, raising, and processing to consumers.”

While rejecting the rationale used by the Dispute Resolution Body that found the U.S. COOL legislation in violation of the TBT, the Appellate Body found elements of the implementing regulations were responsible for the violations of Article 2.1.

According to the Appellate Body, the issue under examination is not whether the COOL law and its implementing regulations “have a detrimental impact on imports” but whether or not the measure “‘stems exclusively from a regulatory distinction rather than reflecting discrimination against the group of imported products.’”

 

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