On October 20, 2014 the World Trade Organization (WTO) Compliance Panel released its report regarding U.S. mandatory COOL, confirming that Canada has won another important and decisive victory at the WTO on MCOOL. The compliance panel report unequivocally supports Canada’s position that the U.S. amendments to the COOL regulation continue the discrimination against live imports of cattle and hogs into the US marketplace. Indeed, in finding that “. . . the amended COOL measure has increased the original COOL measure’s detrimental impact on the competitive opportunities of imported livestock . . .,” the compliance panel affirmed the CCA’s position that the revised regulation is worse than the original.
The CCA wants the U.S. Congress to immediately repeal the red meat requirements of the COOL legislation or amend the statute to mandate a single label for meat processed in the U.S., thus eliminating the need for U.S. cattle buyers to segregate imported from U.S. born livestock. Until COOL comes into compliance with the WTO, the CCA will continue to insist that the Government of Canada prepare to impose prohibitively high tariffs on key U.S. exports to Canada, including beef.
In June 2013, the Government of Canada released a wide-ranging list of U.S. commodities that could be targeted for retaliation in relation to the ongoing COOL dispute. The CCA fully supports this move by the Government of Canada in response to the U.S.'s failure to bring the COOL regulation into compliance with its trade obligations as directed by the WTO.
On June 29, 2012, the WTO Appellate Body confirmed the most important part of the WTO Dispute Panel decision of November 2011 that U.S. COOL legislation discriminates against Canadian livestock in the U.S. market. The Appellate Body’s final decision provided an important victory for Canadian cattle producers.
In December 2012, the WTO arbitrator established a firm deadline for the U.S. to ensure its COOL requirements square with its WTO obligations. The U.S. was given until May 23, 2013 to comply with the Panel and Appellate Body reports adopted by the WTO Dispute Settlement Body confirming that U.S. COOL legislation discriminates against Canadian livestock in the U.S. market.
The regulatory change proposed by the U.S. on May 23, 2013 however, is expected to necessitate additional segregation which will increase the impact of COOL to an estimated $90 to $100 per head compared with the current $25 to $40 per head. COOL discrimination costs Canadian cattle producers around $640 million per year, losses incurred since COOL was implemented in late 2008.
The CCA will continue to fight COOL until a resolution that genuinely eliminates the discrimination is achieved. The CCA has so far spent in excess of $2 million in legal and advocacy expenses to fight COOL. The CCA’s position remains that the only outcome that would bring the U.S. into compliance with the WTO is to amend the COOL legislation to allow either a single mandatory label for all meat produced in the U.S. or to allow for voluntary labelling. Until this outcome is achieved, the CCA will continue to work with its allies in the U.S. and with the Government of Canada to pursue retaliatory or compensation options through the WTO.
Under the circumstances of the final interim mCOOL rule, the Canadian government requested formal consultations under the WTO in December, 2008.
Formal consultations are the first step that must be taken before requesting the initiation of a trade dispute settlement panel under either the WTO or the North American Free Trade Agreement (NAFTA). The formal consultation period must last a minimum of 60 days before a request for a dispute settlement panel can be made. The first step of the challenge process, WTO consultations are intended to encourage disputing countries to reach a negotiated resolution.
The Government of Mexico initiated its own WTO consultation process on mCOOL. Canada is permitted to participate in the Mexico WTO process.