Here is the compliance (DSU Article 21.5) panel report as well as a summary of findings. Overall, the panel followed the Appellate Body’s approach in the original COOL dispute. The panel concluded that the amended COOL measure actually “has increased the original COOL measure's detrimental impact on the competitive opportunities of imported livestock, and that this impact does not stem exclusively from legitimate regulatory distinctions.”
The gist of the COOL amendment measure, in terms of compliance with the original Appellate Body report, was to increase the level of precision: for example, changing from “Product of the United States, Canada, and Mexico” to “Born in Canada, Raised in Canada, Mexico and the U.S., and Slaughtered in the U.S.” Obviously, the Article 21.5 panel did not buy this kind of change. Here go some excerpts from the panel report to give readers some taste of the report.
7.112. As mentioned, under the amended COOL measure more labels still mean more segregation. As a result of the unchanged requirement for an unbroken chain of reliable country of origin information, segregation of the downstream product (muscle cuts) necessarily entails segregation of the upstream product (livestock). The increase in the number of distinct labels for the above three types of muscle cuts also entails more segregation for the relevant types of muscle cuts and the originating livestock.
(…)
7.282. In the original dispute, the Appellate Body found that "the manner in which the [original] COOL measure seeks to provide information to consumers on origin, through the regulatory distinctions described above, to be arbitrary, and the disproportionate burden imposed on upstream producers and processors to be unjustifiable." We consider that this finding is also relevant for the amended COOL measure, which entails an increased recordkeeping burden and a potential for label inaccuracy, and continues to exempt a large proportion of muscle cuts.
(…)
7.284. We have found that the amended COOL measure has increased the original COOL measure's detrimental impact on the competitive opportunities of imported livestock, and that this impact does not stem exclusively from legitimate regulatory distinctions. We therefore find that the amended COOL measure accords less favourable treatment to imported livestock than to like products of US origin.
For your information, the amended COOL measure was litigated in the U.S. court on different legal grounds (such as the First Amendment). On July 30, 2014, the U.S. Court of Appeals for the DC Circuit denied a request for a preliminary injunction to block implementation of the amended COOL measure filed by the American Meat Institute (AMI). Today, the AMI prevailed, not in the U.S court, but in the WTO tribunal. The AMI announced today that:
“The WTO decision upholding Canada’s and Mexico’s challenge to the U.S. COOL rule comes as no surprise. USDA’s mandatory COOL rule is not only onerous and burdensome on livestock producers and meat packers and processors, it does not bring the U.S. into compliance with its WTO obligations. By being out of compliance, the U.S. is subject to retaliation from Canada and Mexico that could cost the U.S. economy billions of dollars.
While the U.S. has the option to appeal the ruling, we encourage USTR and USDA to instead work together with the industry and Congress to amend the COOL statute so that it complies with our international obligations and brings stability to the market. Such a change would help restore strong relationships with some of our largest and most important trading partners.”
This whole COOL saga is reminiscent of an important dictum in the Section 301 case.
7.77. Trade is conducted most often and increasingly by private operators. It is through improved conditions for these private operators that Members benefit from WTO disciplines. The denial of benefits to a Member which flows from a breach is often indirect and results from the impact of the breach on the market place and the activities of individuals within it. (…) (emphasis added)
In this dispute, these “private operators” include not only Canadian/Mexican but also American meat producers and suppliers.
