A World Trade Organization compliance panel on Oct. 20 ruled against the United States in the case Canada and Mexico brought against the U.S. country-of-origin labeling (COOL) rules.  The panel said the amended COOL rules accorded less favorable treatment to imported livestock than to U.S. livestock and violated the W.T.O.’s Technical Barriers to Trade Agreement (T.B.T.).

The W.T.O. compliance panel ruling pertained to the amended COOL rules issued in May 2013 by the U.S. Department of Agriculture. The rules in turn were developed in response to an earlier W.T.O. decision that asserted the COOL meat labeling rules as issued in January 2009 unfairly discriminated against livestock raised in Canada and Mexico and did not meet their objective to provide complete information to consumers on the origin of meat products. The amended rules increased the information non-U.S. livestock producers have to provide including information on where each animal was born, raised and slaughtered.

The W.T.O. said the amended COOL measure was not compliant with international trade rules “because it accords imported Canadian (and Mexican) livestock treatment less favorable than that accorded to domestic livestock, in particular because the amended COOL measure increases the original COOL measure’s detrimental impact on the competitive opportunities of imported Canadian (and Mexican) livestock, and this detrimental impact does not stem exclusively from legitimate regulatory distinctions.”

The W.T.O. panel did not challenge the underlying notion of COOL, that consumers have the right to know the origins of the food they buy. The problem was with the rules that imposed burdens on non-U.S. livestock producers, with accompanying costs, that put them at a disadvantage relative to domestic livestock producers. The panel requested the United States “to bring the inconsistent measure into conformity with its obligations under the T.B.T. agreement and the General Agreement on Tariffs and Trade 1994.”

The U.S. Trade Representative and the U.S. Department of Agriculture have not indicated whether they will appeal the ruling. Meanwhile, Canada and Mexico considered retaliatory measures on U.S. agricultural and non-agricultural products in the event no steps are taken to resolve the conflict.

Canadian International Trade Minister Ed Fast and Minister of Agriculture and Agri-Food Gerry Ritz, jointly with Mexican Secretary of the Economy Ildefonso Guajardo Villarreal and Secretary of Agriculture Enrique Martínez y Martínez, issued a statement on the W.T.O. ruling.

“The W.T.O. has confirmed once again what we have known all along: that the United States’ mandatory COOL requirement for beef and pork is a blatant breach of its international obligations as a member of the W.T.O. The United States’ amended COOL measure has increased the discrimination against Canadian and Mexican livestock exports, and is harming our integrated and mutually beneficial North American meat industry, livestock farmers, ranchers, processors, plant workers and retailers in their communities.

“Canada and Mexico remain extremely disappointed that the United States has continued, to date, to attempt to defend this clearly protectionist policy, which harms trade with the United States’ largest export markets and also hurts domestic U.S. livestock producers and meat processors and retailers,” the ministers said. “The W.T.O.’s latest ruling provides an opportunity for the United States to cease this harm and to comply with its international obligations.”

The ministers said they remained committed to using the W.T.O. process to reach a satisfactory resolution to the case but would seek authorization to implement retaliatory measures on U.S. agricultural and non-agricultural products if necessary.

Response to the ruling ran the gamut in the United States. Most meat industry associations, while supporting the underlying principle that consumers have the right to know the origin of foods they purchased, urged regulatory and/or congressional efforts to structure COOL in such a way that it did not violate U.S. obligations under the W.T.O. Certain consumer groups vowed to continue to defend COOL as it stands.

The American Meat Institute and the North American Meat Association (NAMA) said the ruling on COOL came as no surprise.

“While the United States has the option to appeal the ruling, we encourage U.S.T.R. and U.S.D.A. 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,” the A.M.I. and NAMA said. “Such a change would help restore strong relationships with some of our largest and most important trading partners.”

Bob McCain, president of the National Cattlemen’s Beef Association, said the W.T.O. ruling “brings us all one step closer to facing retaliatory tariffs from two of our largest trading partners. Our producers have already suffered discounts and faced the closure of a number of feedlots and packing plants due to the effects of this short-sighted regulation. COOL is a failed program that will soon cost not only the beef industry, but the entire U.S. economy, with no corresponding benefit to consumers or producers.”

“N.C.B.A. has maintained that there is no regulatory fix to bring the COOL rule into compliance with our W.T.O. obligations or that will satisfy our top trading partners,” Mr. McCain said. “We look forward to working with Congress to find a permanent solution to this issue, avoiding retaliation against not only beef, but a host of U.S. products.”

Bob Stallman, president of the American Farm Bureau Federation, said, “Farm Bureau will carefully review the decision and then determine further recommended actions. We will work with the Office of the U.S. Trade Representative and U.S.D.A. to reach the goal of an effective COOL program for meats that conforms to international trade rules.”

Roger Johnson, president of the National Farmers Union, urged the U.S. government to appeal the ruling.

“The ruling gives U.S.D.A. and U.S.T.R. the opportunity to redefine the rule without the need for Congress to get involved,” he said. “There may well be a more clear way to define ‘born, raised, slaughtered’ such that it cleans up the confusion which was in the decision.”

Mr. Johnson asserted, “There is a very strong conviction among all of us that the COOL statute needs to remain in place. The W.T.O., in all of the decisions that have been rendered in this case so far, has always said the law is okay. We have a right to do this.”

Certain consumer advocate groups asserted they would continue to defend COOL rules as they stand.

“While the W.T.O. announcement is certainly a disappointment, this isn’t the end of the road for COOL,” said Colin O’Neil, government affairs director, Center for Food Safety. “The courts have declared the COOL rules to be valid under U.S. constitutional law. We will continue to defend the COOL rules from corporations that seek to sacrifice Americans’ food safety for their own profit.”