The five-year dispute between Canada and the United States over Country of Origin Labelling (COOL) requirements is entering the retaliation phase. The Government of Canada announced on August 19, 2013 that it has requested a Compliance Panel of the World Trade Organization (WTO) to review the United States' efforts to comply with the WTO Appellate ruling of June 2012.1 This Compliance Panel review is the first step towards receiving WTO approval for Canada to implement retaliatory and punitive taxes against the United States.
The current dispute between Canada and the United States over COOL legislation dates back to 2008 when the US Congress implemented a law requiring articles of foreign origin destined for sale in the United States to be marked conspicuously and permanently with the name of the country of origin of the article. The United States' view was that the labelling requirement enabled consumers to make informed decisions about the food they consume.
The legislation had an immediate impact on Canadian livestock exports to the United States. The Canadian Pork Council reported a consistent decline in swine exports to the US and estimates industry loss as a result of COOL at over $1.9 billion US to the end of 2012.2 The Canadian Cattlemen's Association estimated the loss to the Canadian beef industry due to COOL at $640 million per year since 2008.3
In the face of these losses, the Canadian livestock exporters took the position that COOL is a non-tariff barrier that has the effect of preferring American producers over Canadian producers. In November 2009, Canada announced that it would ask the WTO to determine whether the COOL legislation was in violation of WTO trade obligations.
The WTO ruled in Canada's favour two years later in November 2011. The United States appealed the decision. The WTO Appellate body confirmed that COOL was a violation of trade obligations that discriminated against Canadian livestock in the United States market,4 and gave the United States until May 23, 2013 to amend the COOL legislation to bring it into harmony with WTO requirements. Under the May 2013 amendments, labels on covered meat products must sequentially list the country where the animal was born, the country where the animal was raised, and the country where it was slaughtered. The new rules also make it unlawful to combine meats with different "Born, Raised, and Slaughtered" combinations in the same package at retail.
The United States has explained the new rules on the basis that they promote transparency and that consumers have the right to know where their food comes from. Supporters of the May 2013 changes say that the new labelling requirements provide purchasers of meat products with more detailed (and consequently more useful) information.
Canada has announced its intention to ask the WTO Compliance Panel to find that the amendments of May 2013 are inconsistent with the Appellate ruling of 2012, and to grant Canada the right to take retaliatory action. In June 2013, Canada released a list of 38 commodities imported from the United States that could be subject to retaliatory and punitive taxes.5 The process, if successful, could take up to 18 months to two years.
In the United States, the American Association of Meat Processors, the Canadian Cattlemen's Association, the Canadian Pork Council, together with other plaintiffs, have filed a lawsuit in the federal court challenging the constitutionality and legislative authority of the May 2013 COOL amendments.6