On Friday, the World Trade Organization Appellate Body upheld earlier findings that the U.S. mandatory country-of-origin labeling (COOL) law violates the WTO Technical Barriers to Trade Agreement. The WTO said the labeling requirement itself is legal, but the way it is administered unfairly makes beef and pork from livestock born in Canada and Mexico more expensive to produce. The process requires extensive record keeping, and the animals must be kept separate from American-born cows and pigs.
The report states, "the Appellate Body found that the COOL measure lacks even-handedness because its recordkeeping and verification requirements impose a disproportionate burden on upstream producers and processors of livestock as compared to the information conveyed to consumers through the mandatory labelling requirements for meat sold at the retail level. That is, although 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 labelling requirements at all."
The Appellate Body also reversed the DSP finding that "it does not fulfil its legitimate objective of providing consumers with information on origin" but was unable to complete the legal analysis and determine whether the COOL measure is more trade restrictive than necessary to meet its objective. The DSP will adopt the Appellate Body report at its next meeting on July 23, at which time the U.S. must begin efforts to comply.
"We are pleased with today's ruling, which affirmed the United States' right to adopt labeling requirements that provide information to American consumers about the meat they buy," said United States Trade Representative Ron Kirk.
Congress, however, needs to rework the law in order to come under compliance. Under WTO rules, Mexico and Canada can impose trade sanctions against the United States if the current labeling requirements stay in effect.
In a statement, National Cattlemen's Beef Association Vice President Bob McCan said, "NCBA worked with Canada and Mexico to prevent any retaliatory action that could have occurred from the unfortunate decision made by the U.S. government to appeal the initial ruling. Cattlemen deserve a government that fights for and protects our opportunities. We need a government that not only demands WTO compliance of our trade partners but one that ensures the United States is abiding by these same guidelines. We are committed to working with this administration and Congress to find a permanent solution to this issue in order to bring the United States back into compliance. It is absolutely critical that the United States leads by example."