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U.S. and Canada Agree on Dispute Settlement Procedures in Country of Origin Labeling Dispute

Monday, June 17, 2013
Sandler, Travis & Rosenberg Trade Report

As previously reported, the government of Canada released earlier this month a list of U.S. goods that could be subject to retaliation in an ongoing dispute over U.S. country of origin labeling regulations for meat. Canada contends that the final rule issued by the U.S. Department of Agriculture’s Agricultural Marketing Service amending the country of origin labeling (COOL) requirements for muscle cut covered commodities to provide consumers with more specific information merely perpetuates a “protectionist policy” that is “severely damaging to Canadian industry and jobs.” Accordingly, Canada has signaled its intention to pursue “a fair resolution of this issue through the WTO.”

In this regard, the U.S. and Canada on June 13 issued a set of agreed procedures under Articles 21 and 22 of the WTO Dispute Settlement Understanding regarding the COOL dispute. Article 21 relates to surveillance of implementation of recommendations and rulings while Article 22 involves compensation and the suspension of concessions. Highlights of these procedures are provided below.

- If Canada considers that the U.S. adopted a measure to comply with the recommendations and rulings of the Dispute Settlement Body in the case at hand that is inconsistent or there is disagreement between the parties as to the existence of a measure taken to comply, Canada may request the establishment of a panel at any time.

- Canada is not required to hold consultations with the U.S. prior to requesting the establishment of a panel.

- The parties shall cooperate to enable the panel to circulate its report within 90 days of its establishment, excluding such time during which the panel’s work may be suspended.

- Either party may request the DSB to adopt the report of the panel at a DSB meeting held at least 20 days after the circulation of the report unless either party appeals the report to the Appellate Body.

- In the event of an appeal, the parties shall cooperate to enable the Appellate Body to circulate its report to the members within 90 days from the date of notification of the appeal.

- In the event that the DSB rules that a measure taken to comply does not exist or is inconsistent with a covered agreement, Canada may request authorization to suspend the application of concessions or other obligations under the covered agreements to the U.S. pursuant to DSU Article 22. The U.S. shall not assert that Canada is precluded from obtaining such DSB authorization on the ground that the request was made outside the 30-day time-period specified in DSU Article 22.6.

- If Canada requests authorization to suspend the application of concessions or other obligations under the covered agreements to the U.S., the U.S. may object to the level of suspension of concessions or other obligations and/or claim that the principles and procedures set forth in DSU Article 22.3 have not been followed, thereby referring the matter to arbitration.

- The parties will cooperate to enable the arbitrator to circulate its decision within 60 days of the referral to arbitration.

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