On October 10, 2013, a World Trade Organization (“WTO”) Compliance Panel was established to determine if the U.S. Department of Agriculture’s revised country-of-origin labeling (“COOL”) regulations for meat are consistent with U.S. obligations under the WTO. If the revised COOL regulations are found to be inconsistent with WTO rules, the United States will have to bring the regulations into compliance or provide Canada and Mexico “compensation” (additional trade benefits or cash). If the United States fails to do so, Canada and Mexico will be permitted to retaliate anywhere from $1 billion to $2 billion annually.
This stems from a June 2012 WTO ruling that the old U.S. COOL regulations violated WTO rules. In May 2013, USDA released the new COOL regulations, but neither Canada nor Mexico were satisfied. In June 2013, Canada published a list of 38 U.S. commodities that could be subject to retaliation, including live bovine or swine, meat of bovine or swine, cheese, cherries, rice, potatoes, syrups, frozen orange juice, tomato ketchup and other tomato sauces, chocolate, pasta, cereals, wines, ethyl alcohol, certain sugars, as well as jewelry, welded stainless steel pipes and tubes, and certain furniture items (i.e., swivel seats, wood office furniture, and mattresses). The retaliatory measures would likely take the form of a 100-percent surtax on some or all of the above-listed U.S. products. Mexico is also threatening retaliation on products such as fruit, vegetables, juice, meat, dairy products, machinery, furniture, and household goods, but has not published a formal list. The WTO compliance proceedings could take over a year, and Canada and Mexico cannot retaliate until authorized by the WTO.
In the meantime, U.S. companies that export goods to Canada or Mexico should review the list to determine if their exports could be affected and consider working with Canadian and Mexican importers to ensure that their exports are not affected.