The trade dispute between Canada and the US over American country of origin labelling requirements (referred to everywhere as “COOL”) is entering its eighth year. It presents a history of delay, frustration and prevarication that, sad to say, tarnishes the utility of the WTO dispute settlement system.
Canada took the matter to the WTO back in 2008. After over five years of Canadian legal victories, the US still hasn’t repealed the COOL measure.
It’s a US law that requires separate labelling of beef and pork products based on country of origin. That measure discriminated against Canadian products, because it requires American processors to segregate Canadian imports from US products. Given the complexities and costs in doing this, it resulted in US processors taking less beef and pork from Canadian sources.
In November 2011, a WTO panel said the law was contrary to US treaty obligations and had to be replaced with a compliant measure. The US appealed. In June 2012, the WTO Appellate Body turned down the appeal, siding with Canada.
The US brought in a new COOL regulation in 2012. Canada argued that this new measure was even more restrictive than the original one and took the case back to the WTO. In October 2014, a WTO panel agreed with Canada and said the US was still non-compliant with its treaty obligations. The US appealed this decision as well. They lost.
In June 2015, Canada advised the WTO of the retaliatory measures it proposed to take against the US in the form of tariff surcharges. The US objected to the amount of tariff hikes Canada was seeking. It appealed that to a WTO arbitration panel. This new panel will hear arguments this September and will issue its decision before the end of the year.
The COOL dispute is now over seven years old and still not at an end. There are machinations underway to find some sort of solution. The Canadian agriculture minister, Mr. Ritz, in the middle of an election, said he expects the US to comply in full with the panel ruling. He can’t afford to be seen as caving in. Retaliation may be in the offing.
If the US continues to refuse to comply with the 2011 panel decision and Canada finally does retaliate, by the time it does the dispute will have been around for eight years. And, of course, retaliation doesn’t end the dispute. It simply puts it into another chapter.
This is clearly one of the most frustrating of WTO cases and, regrettably, illustrates the weaknesses in the WTO dispute settlement system. It shows that if members want to prevaricate, delay or dissemble in meeting their WTO obligations, there are endless routes available.
While solutions are not easy, serious thought is needed on ways to improve the process and make it more efficient – without opening up the WTO Agreement, which is a non-starter anyway. Kicking around a trade dispute for the better part of a decade, is out of step with the real world of trade and commerce. It weakens public confidence in the value of multilateral dispute settlement.