The World Trade Organization (WTO) compliance panel ruled against the United States for a second time reaffirming that its revised U.S. Country of Origin Labeling (COOL) measure for meat fails to comply with the WTO’s original ruling against it. While this ruling does not affect COOL for fresh fruits and vegetables, the consequence of the U.S. failing to comply, or being successful in a final appeal, could result in Canada and Mexico issuing retaliatory tariffs against the U.S., including tariffs on fresh fruits, vegetables and tree nuts. However, in the near term, pending the appeal outcome, no retaliatory action is expected on these items.
The U.S.’s mandatory 2008 COOL rules were amended in 2013 following a WTO ruling against them. The United States now has one chance to appeal this decision before the WTO issues a final, binding ruling. Under WTO rules, if the U.S. appeal fails, Canada and Mexico would be authorized to impose trade sanctions against the United States unless or until the U.S. government changes or eliminates the labeling policy.
As expected, Canada has already indicated that it would implement retaliatory measures on U.S. agricultural and non-agricultural products should the U.S. fail to comply with any final ruling. It is anticipated that Mexico would to do the same.
An appeal process or negotiated settlement will undoubtedly run well into next year, thereby delaying or preventing any near term retaliatory tariffs.
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