WTO Appellate Body Partially Upholds Panel's Adverse Ruling on COOL
A World Trade Organization Appellate Body partially upheld a panel’s November 2011 ruling against U.S. Country of Origin Labeling (COOL) requirements for meat products in its June 29 decision in United States — Certain Country of Origin Labelling Requirements (DS384 / DS386), the WTO said. The Appellate Body upheld the panel’s finding that the requirements discriminate against cattle and hogs imported from Canada and Mexico, but reversed its finding that the requirements do not serve a legitimate purpose.
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Appellate Body Upholds Panel Finding that COOL Requirements Violate National Treatment Principles
The Appellate Body upheld the panel’s findings that the COOL requirements violate the national treatment provisions in Article 2.1 of the Technical Barriers to Trade (TBT) agreement, but for different reasons. While the panel said 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, the Appellate Body said the panel’s finding did not go far enough because the panel did not decide whether this detrimental impact served a legitimate regulatory purpose. Had the Appellate Body found that it did not serve a legitimate purpose, the COOL measure would not have violated Article 2.1 of the TBT, the WTO said.
However, the Appellate Body said that while 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 labeling requirements at all. Therefore, according to the WTO, the detrimental impact does not serve a legitimate purpose, and instead reflects discrimination prohibited by Article 2.1 of the TBT.
But Reverses Panel’s Analysis that COOL Requirements do not Fulfill a Legitimate Purpose
The Appellate Body reversed the panel’s decision that the COOL requirements do not serve a legitimate purpose, and therefore violate Article 2.2 of the TBT. The panel erred in its analysis because it set the threshold for a legitimate purpose too high, it said. According to the Appellate Body, the COOL requirements do contribute, at least to some extent, to achieving its objective, namely providing consumers with information on country of origin.
(See ITT’s Online Archives 11112114 for summary of the panel report, and 12032912 for summary of the U.S. Trade Representative’s announcement that it would appeal the panel’s ruling.)