United States - Certain Country of Origin labelling (COOL) Requirements - Recourse to article 21.5 of the DSU by Canada and Mexico - Reports of the Panel

United States – Certain Country of
Origin Labelling (COOL) Requirements

Recourse to Article 21.5 of the DSU by Canada and Mexico

reports of the panel

Addendum

This addendum contains Annexes A to C to the Reports of the Panel to be found in documents WT/DS384/RW and WT/DS386/RW.

 

 

_______________

 

 


LIST OF ANNEXES

ANNEX A

Working Procedures of The Panel

Contents

Page

Annex A-1

Working Procedures of the Panel (DS384) as revised on 21 January 2014

A-2

Annex A-2

Working Procedures of the Panel (DS386) as revised on 21 January 2014

A-6

Annex A-3

Procedures for an open substantive meeting of the Panel (DS384) as revised on 21 January 2014

A-10

Annex A-4

Procedures for an open substantive meeting of the Panel (DS386) as revised on 21 January 2014

A-11

Annex A-5

Procedures of the Panel concerning business confidential information (DS384)

A-12

Annex A-6

Procedures of the Panel concerning business confidential information (DS386)

A-13

ANNEX B

Arguments Of The Parties

Contents

Page

Annex B-1

Integrated executive summary of the arguments of Canada

B-2

Annex B-2

Integrated executive summary of the arguments of Mexico

B-14

Annex B-3

Integrated executive summary of the arguments of the United States

B-27

ANNEX C

Arguments of the Third Parties

Contents

Page

Annex C-1

Integrated executive summary of the arguments of Brazil

C-2

Annex C-2

Integrated executive summary of the arguments of China

C-4

Annex C-3

Integrated executive summary of the arguments of Colombia

C-7

Annex C-4

Integrated executive summary of the arguments of the European Union

C-10

Annex C-5

Integrated executive summary of the arguments of India

C-15

Annex C-6

Integrated executive summary of the arguments of Japan

C-18

Annex C-7

Integrated executive summary of the arguments of the Republic of Korea

C-24

Annex C-8

Integrated executive summary of the arguments of New Zealand

C-26

 

 


ANNEX A

Working Procedures of the Panel

Contents

Page

Annex A-1

Working Procedures of the Panel (DS384) as revised on 21 January 2014

A-2

Annex A-2

Working Procedures of the Panel (DS386) as revised on 21 January 2014

A-6

Annex A-3

Procedures for an open substantive meeting of the Panel (DS384) as revised on 21 January 2014

A-10

Annex A-4

Procedures for an open substantive meeting of the Panel (DS386) as revised on 21 January 2014

A-11

Annex A-5

Procedures of the Panel concerning business confidential information (DS384)

A-12

Annex A-6

Procedures of the Panel concerning business confidential information (DS386)

A-13

 

 


ANNEX A-1

working procedures of the panel (ds384)

Adopted on 25 October 2013 and revised on 21 January 2014

 

 

1. In its proceedings, the Panel shall follow the relevant provisions of the Understanding on Rules and Procedures Governing the Settlement of Disputes (DSU). In addition, the following Working Procedures shall apply.

General

 

2. The deliberations of the Panel and the documents submitted to it shall be kept confidential. Nothing in the DSU or in these Working Procedures shall preclude a party to the dispute (hereafter "party") from disclosing statements of its own positions to the public. Members shall treat as confidential information submitted by another Member to the Panel which the submitting Member has designated as confidential. Where a party submits a confidential version of its written submissions to the Panel, it shall also, upon request of a Member, provide a non-confidential summary of the information contained in its submissions that could be disclosed to the public. The Panel may adopt special procedures concerning Business Confidential Information after consulting the parties.

3. The parties, and Members having notified their interest in the dispute to the Dispute Settlement Body in accordance with Article 10 of the DSU (hereafter "third parties"), shall be present at the meetings only when invited by the Panel to appear before it. The Panel may open its meetings with the parties to the public, subject to appropriate procedures to be adopted by the Panel after consulting the parties.

4. Each party and third party has the right to determine the composition of its own delegation when meeting with the Panel. Each party and third party shall have responsibility for all members of its own delegation and shall ensure that each member of such delegation acts in accordance with the DSU and these Working Procedures, particularly with regard to the confidentiality of the proceedings.

Submissions

 

5. Before the substantive meeting of the Panel with the parties, each party shall transmit to the Panel a first written submission, and subsequently a written rebuttal, in which it presents the facts of the case and its arguments, and counter-arguments, respectively, in accordance with the timetable adopted by the Panel.

6. A party shall submit any request for a preliminary ruling at the earliest possible opportunity and in any event no later than in its first written submission to the Panel. If Canada requests such a ruling, the United States shall submit its response to the request in its first written submission. If the United States requests such a ruling, Canada shall submit its response to the request prior to the substantive meeting of the Panel, at a time to be determined by the Panel in light of the request. Exceptions to this procedure shall be granted upon a showing of good cause.

7. Each party shall submit all factual evidence to the Panel no later than during the substantive meeting, except with respect to evidence necessary for purposes of rebuttal, answers to questions or comments on answers provided by the other party. Exceptions to this procedure shall be granted upon a showing of good cause. Where such exception has been granted, the Panel shall accord the other party a period of time for comment, as appropriate, on any new factual evidence submitted after the substantive meeting.

8. Where the original language of exhibits is not a WTO working language, the submitting party or third party shall submit a translation into the WTO working language of the submission at the same time. The Panel may grant reasonable extensions of time for the translation of such exhibits upon a showing of good cause. Any objection as to the accuracy of a translation should be raised promptly in writing, no later than the next filing or meeting (whichever occurs earlier) following the submission which contains the translation in question. Any objection shall be accompanied by a detailed explanation of the grounds of objection and an alternative translation.

9. In order to facilitate the work of the Panel, each party and third party is invited to make its submissions in accordance with the WTO Editorial Guide for Panel Submissions attached as Annex 1.

10. To facilitate the maintenance of the record, and maximize the clarity of submissions, each party and third party shall sequentially number its exhibits throughout the course of the compliance proceedings. For example, exhibits submitted by Canada could be numbered CDA‑1, CDA‑2, etc. If the last exhibit in connection with the first submission was numbered CDA‑5, the first exhibit of the next submission thus would be numbered CDA‑6. The first time a party or third party submits to the Panel an exhibit that corresponds to an exhibit submitted in the original panel proceedings, the party or third party submitting such exhibit shall also identify the number of the original exhibit in the original panel proceedings.

Questions

 

11. The Panel may at any time pose questions to the parties and third parties, orally in the course of the substantive meeting or in writing.

Substantive meeting

 

12. Each party shall provide to the Panel the list of members of its delegation in advance of the meeting with the Panel and no later than 5.00 p.m. (Geneva time) on the previous working day.

13. The substantive meeting of the Panel shall be conducted as follows:

a.   The Panel shall invite Canada to make an opening statement to present its case first. Subsequently, the Panel shall invite the United States to present its point of view. Before taking the floor, each party shall provide the Panel and other participants at the meeting with a provisional written version of its statement. In the event that interpretation is needed, each party shall provide additional copies to the interpreters. Each party shall make available to the Panel and the other party the final version of its statement, preferably at the end of the meeting, and in any event no later than 5.00 p.m. (Geneva time) on the first working day following the meeting.

b.   After the conclusion of the statements, the Panel shall give each party the opportunity to ask questions or make comments, through the Panel. Each party shall send in writing, within a timeframe to be determined by the Panel, any questions to the other party to which it wishes to receive a response in writing. Each party shall be invited to respond in writing to the other party's questions within a deadline to be determined by the Panel.

c.   The Panel may subsequently pose questions to the parties. The Panel shall send in writing, within a timeframe to be determined by it, any questions to the parties to which it wishes to receive a response in writing. Each party shall be invited to respond in writing to such questions within a deadline to be determined by the Panel. The Panel's written questions to the parties and each party's written answers to questions after the substantive meeting with the Panel shall be made available to all third parties.

d.   Once the questioning has concluded, the Panel shall afford each party an opportunity to present a brief closing statement, with Canada presenting its statement first, followed by the United States.

Third parties

 

14. The Panel shall invite each third party to transmit to the Panel a written submission prior to the substantive meeting of the Panel with the parties, in accordance with the timetable adopted by the Panel.

15. All third parties may be present during the entirety of the substantive meeting with the parties. During this meeting, third parties may, at the invitation of the Panel, ask questions to the parties or the other third parties. The parties and the other third parties, however, have no obligation to respond to these questions.

16. Each third party shall also be invited to present its views orally during a session of the substantive meeting, set aside for that purpose. Each third party shall provide to the Panel the list of members of its delegation in advance of this session and no later than 5.00 p.m. (Geneva time) on the previous working day.

17. The third party session shall be conducted as follows:

a.   All third parties may be present during the entirety of this session.

b.   The Panel shall first hear the arguments of the third parties in alphabetical order. Third parties present at the third-party session and intending to present their views orally at that session, shall provide the Panel, the parties and other third parties with provisional written versions of their statements before they take the floor. In the event that interpretation is needed, each third party shall provide additional copies to the interpreters. Third parties shall make available to the Panel, the parties and other third parties the final versions of their statements, preferably at the end of the session, and in any event no later than 5.00 p.m. (Geneva time) on the first working day following the session.

c.   After the third parties have made their statements, the parties may be given the opportunity, through the Panel, to ask the third parties questions for clarification on any matter raised in the third parties' submissions or statements. Each party shall send in writing, within a timeframe to be determined by the Panel, any questions to a third party to which it wishes to receive a response in writing.

d.   The Panel may subsequently pose questions to the third parties. The Panel shall send in writing, within a timeframe to be determined by it, any questions to the third parties to which it wishes to receive a response in writing. Each third party shall be invited to respond in writing to such questions within a deadline to be determined by the Panel.

Descriptive part

 

18. The description of the arguments of the parties and third parties in the descriptive part of the Panel report shall consist of executive summaries provided by the parties and third parties, which shall be annexed as addenda to the report. These executive summaries shall not in any way serve as a substitute for the submissions of the parties and third parties in the Panel's examination of the case.

19. Each party shall submit an executive summary of the facts and arguments as presented to the Panel in its written submissions and oral statements, in accordance with the timetable adopted by the Panel. This executive summary may also include a summary of responses to questions. The Panel will not summarize in the descriptive part of its report, or annex to its report, the parties' responses to questions. The executive summary provided by each party shall not exceed 15 pages.

20. Each third party shall submit an executive summary of its arguments as presented in its written submission and statement in accordance with the timetable adopted by the Panel. This summary may also include a summary of responses to questions, where relevant. The executive summary to be provided by each third party shall not exceed 6 pages.

Interim review

21. Following issuance of the interim report, each party may submit a written request to review precise aspects of the interim report and request a further meeting with the Panel in accordance with the timetable adopted by the Panel. The right to request such a meeting shall be exercised no later than at the time the written request for review is submitted.

22. In the event that no further meeting with the Panel is requested, each party may submit written comments on the other party's written request for review in accordance with the timetable adopted by the Panel. Such comments shall be limited to commenting on the other party's written request for review.

23. The interim report, as well as the final report prior to its official circulation, shall be kept strictly confidential and shall not be disclosed.

Service of documents

 

24. The following procedures regarding service of documents shall apply:

a.   Each party and third party shall submit all documents to the Panel by filing them with the DS Registry (office No. 2047).

b.   Each party and third party shall file three paper copies of all documents it submits to the Panel. When exhibits are provided on CD‑ROMS/DVDs, three CD‑ROMS/DVDs and three paper copies of those exhibits shall be filed. The DS Registrar shall stamp the documents with the date and time of the filing. The paper version shall constitute the official version for the purposes of the record of the dispute.

c.   Each party and third party shall also provide an electronic copy of all documents it submits to the Panel at the same time as the paper versions, in Microsoft Word format, either on a CD-ROM, a DVD or as an e-mail attachment. If the electronic copy is provided by e-mail, it should be addressed to *****@wto.org, and cc'd to *****.*****@wto.org, to *****.*****@wto.org, to *****.*****@wto.org, and to *****.*****@wto.org. If a CD-ROM or DVD is provided, it shall be filed with the DS Registry.

d.   Each party shall serve any document submitted to the Panel directly on the other party. Each party shall, in addition, serve on all third parties its written submissions in advance of the substantive meeting with the Panel. Each third party shall serve any document submitted to the Panel directly on the parties and all other third parties. Each party and third party shall confirm, in writing, that copies have been served as required at the time it provides each document to the Panel.

e.   Each party and third party shall file its documents with the DS Registry and serve copies on the other party (and third parties where appropriate) by 5.00 p.m. (Geneva time) on the due dates established by the Panel.

f.    The Panel shall provide the parties with an electronic version of the descriptive part, the interim report and the final report, as well as of other documents as appropriate. When the Panel transmits to the parties or third parties both paper and electronic versions of a document, the paper version shall constitute the official version for the purposes of the record of the dispute.

25. The Panel reserves the right to modify these procedures at any time following consultations with the parties.

 

 


ANNEX A-2

working procedures of the panel (DS386)

Adopted on 25 October 2013 and revised on 21 January 2014

 

 

1. In its proceedings, the Panel shall follow the relevant provisions of the Understanding on Rules and Procedures Governing the Settlement of Disputes (DSU). In addition, the following Working Procedures shall apply.

General

 

2. The deliberations of the Panel and the documents submitted to it shall be kept confidential. Nothing in the DSU or in these Working Procedures shall preclude a party to the dispute (hereafter "party") from disclosing statements of its own positions to the public. Members shall treat as confidential information submitted by another Member to the Panel which the submitting Member has designated as confidential. Where a party submits a confidential version of its written submissions to the Panel, it shall also, upon request of a Member, provide a non-confidential summary of the information contained in its submissions that could be disclosed to the public. The Panel may adopt special procedures concerning Business Confidential Information after consulting the parties.

3. The parties, and Members having notified their interest in the dispute to the Dispute Settlement Body in accordance with Article 10 of the DSU (hereafter "third parties"), shall be present at the meetings only when invited by the Panel to appear before it. The Panel may open its meetings with the parties to the public, subject to appropriate procedures to be adopted by the Panel after consulting the parties.

4. Each party and third party has the right to determine the composition of its own delegation when meeting with the Panel. Each party and third party shall have responsibility for all members of its own delegation and shall ensure that each member of such delegation acts in accordance with the DSU and these Working Procedures, particularly with regard to the confidentiality of the proceedings.

Submissions

 

5. Before the substantive meeting of the Panel with the parties, each party shall transmit to the Panel a first written submission, and subsequently a written rebuttal, in which it presents the facts of the case and its arguments, and counter-arguments, respectively, in accordance with the timetable adopted by the Panel.

6. A party shall submit any request for a preliminary ruling at the earliest possible opportunity and in any event no later than in its first written submission to the Panel. If Mexico requests such a ruling, the United States shall submit its response to the request in its first written submission. If the United States requests such a ruling, Mexico shall submit its response to the request prior to the substantive meeting of the Panel, at a time to be determined by the Panel in light of the request. Exceptions to this procedure shall be granted upon a showing of good cause.

7. Each party shall submit all factual evidence to the Panel no later than during the substantive meeting, except with respect to evidence necessary for purposes of rebuttal, answers to questions or comments on answers provided by the other party. Exceptions to this procedure shall be granted upon a showing of good cause. Where such exception has been granted, the Panel shall accord the other party a period of time for comment, as appropriate, on any new factual evidence submitted after the substantive meeting.

8. Where the original language of exhibits is not a WTO working language, the submitting party or third party shall submit a translation into the WTO working language of the submission at the same time. The Panel may grant reasonable extensions of time for the translation of such exhibits upon a showing of good cause. Any objection as to the accuracy of a translation should be raised promptly in writing, no later than the next filing or meeting (whichever occurs earlier) following the submission which contains the translation in question. Any objection shall be accompanied by a detailed explanation of the grounds of objection and an alternative translation.

9. In order to facilitate the work of the Panel, each party and third party is invited to make its submissions in accordance with the WTO Editorial Guide for Panel Submissions attached as Annex 1.

10. To facilitate the maintenance of the record, and maximize the clarity of submissions, each party and third party shall sequentially number its exhibits throughout the course of the compliance proceedings. For example, exhibits submitted by Mexico could be numbered MEX‑1, MEX‑2, etc. If the last exhibit in connection with the first submission was numbered MEX‑5, the first exhibit of the next submission thus would be numbered MEX‑6. The first time a party or third party submits to the Panel an exhibit that corresponds to an exhibit submitted in the original panel proceedings, the party or third party submitting such exhibit shall also identify the number of the original exhibit in the original panel proceedings.

Questions

 

11. The Panel may at any time pose questions to the parties and third parties, orally in the course of the substantive meeting or in writing.

Substantive meeting

 

12. Each party shall provide to the Panel the list of members of its delegation in advance of the meeting with the Panel and no later than 5.00 p.m. (Geneva time) on the previous working day.

13. The substantive meeting of the Panel shall be conducted as follows:

a.   The Panel shall invite Mexico to make an opening statement to present its case first. Subsequently, the Panel shall invite the United States to present its point of view. Before taking the floor, each party shall provide the Panel and other participants at the meeting with a provisional written version of its statement. In the event that interpretation is needed, each party shall provide additional copies to the interpreters. Each party shall make available to the Panel and the other party the final version of its statement, preferably at the end of the meeting, and in any event no later than 5.00 p.m. (Geneva time) on the first working day following the meeting.

b.   After the conclusion of the statements, the Panel shall give each party the opportunity to ask questions or make comments, through the Panel. Each party shall send in writing, within a timeframe to be determined by the Panel, any questions to the other party to which it wishes to receive a response in writing. Each party shall be invited to respond in writing to the other party's questions within a deadline to be determined by the Panel.

c.   The Panel may subsequently pose questions to the parties. The Panel shall send in writing, within a timeframe to be determined by it, any questions to the parties to which it wishes to receive a response in writing. Each party shall be invited to respond in writing to such questions within a deadline to be determined by the Panel. The Panel's written questions to the parties and each party's written answers to questions after the substantive meeting with the Panel shall be made available to all third parties.

d.   Once the questioning has concluded, the Panel shall afford each party an opportunity to present a brief closing statement, with Mexico presenting its statement first, followed by the United States.

Third parties

 

14. The Panel shall invite each third party to transmit to the Panel a written submission prior to the substantive meeting of the Panel with the parties, in accordance with the timetable adopted by the Panel.

15. All third parties may be present during the entirety of the substantive meeting with the parties. During this meeting, third parties may, at the invitation of the Panel, ask questions to the parties or the other third parties. The parties and the other third parties, however, have no obligation to respond to these questions.

16. Each third party shall also be invited to present its views orally during a session of the substantive meeting, set aside for that purpose. Each third party shall provide to the Panel the list of members of its delegation in advance of this session and no later than 5.00 p.m. (Geneva time) on the previous working day.

17. The third party session shall be conducted as follows:

a.   All third parties may be present during the entirety of this session.

b.   The Panel shall first hear the arguments of the third parties in alphabetical order. Third parties present at the third-party session and intending to present their views orally at that session, shall provide the Panel, the parties and other third parties with provisional written versions of their statements before they take the floor. In the event that interpretation is needed, each third party shall provide additional copies to the interpreters. Third parties shall make available to the Panel, the parties and other third parties the final versions of their statements, preferably at the end of the session, and in any event no later than 5.00 p.m. (Geneva time) on the first working day following the session.

c.   After the third parties have made their statements, the parties may be given the opportunity, through the Panel, to ask the third parties questions for clarification on any matter raised in the third parties' submissions or statements. Each party shall send in writing, within a timeframe to be determined by the Panel, any questions to a third party to which it wishes to receive a response in writing.

d.   The Panel may subsequently pose questions to the third parties. The Panel shall send in writing, within a timeframe to be determined by it, any questions to the third parties to which it wishes to receive a response in writing. Each third party shall be invited to respond in writing to such questions within a deadline to be determined by the Panel.

Descriptive part

 

18. The description of the arguments of the parties and third parties in the descriptive part of the Panel report shall consist of executive summaries provided by the parties and third parties, which shall be annexed as addenda to the report. These executive summaries shall not in any way serve as a substitute for the submissions of the parties and third parties in the Panel's examination of the case.

19. Each party shall submit an executive summary of the facts and arguments as presented to the Panel in its written submissions and oral statements, in accordance with the timetable adopted by the Panel. This executive summary may also include a summary of responses to questions. The Panel will not summarize in the descriptive part of its report, or annex to its report, the parties' responses to questions. The executive summary provided by each party shall not exceed 15 pages.

20. Each third party shall submit an executive summary of its arguments as presented in its written submission and statement in accordance with the timetable adopted by the Panel. This summary may also include a summary of responses to questions, where relevant. The executive summary to be provided by each third party shall not exceed 6 pages.

Interim review

21. Following issuance of the interim report, each party may submit a written request to review precise aspects of the interim report and request a further meeting with the Panel in accordance with the timetable adopted by the Panel. The right to request such a meeting shall be exercised no later than at the time the written request for review is submitted.

22. In the event that no further meeting with the Panel is requested, each party may submit written comments on the other party's written request for review in accordance with the timetable adopted by the Panel. Such comments shall be limited to commenting on the other party's written request for review.

23. The interim report, as well as the final report prior to its official circulation, shall be kept strictly confidential and shall not be disclosed.

Service of documents

 

24. The following procedures regarding service of documents shall apply:

a.   Each party and third party shall submit all documents to the Panel by filing them with the DS Registry (office No. 2047).

b.   Each party and third party shall file three paper copies of all documents it submits to the Panel. When exhibits are provided on CD‑ROMS/DVDs, three CD‑ROMS/DVDs and three paper copies of those exhibits shall be filed. The DS Registrar shall stamp the documents with the date and time of the filing. The paper version shall constitute the official version for the purposes of the record of the dispute.

c.   Each party and third party shall also provide an electronic copy of all documents it submits to the Panel at the same time as the paper versions, in Microsoft Word format, either on a CD-ROM, a DVD or as an e-mail attachment. If the electronic copy is provided by e-mail, it should be addressed to *****@wto.org, and cc'd to *****.*****@wto.org, *****.*****@wto.org, *****.*****@wto.org, and *****.*****@wto.org. If a CD-ROM or DVD is provided, it shall be filed with the DS Registry.

d.   Each party shall serve any document submitted to the Panel directly on the other party. Each party shall, in addition, serve on all third parties its written submissions in advance of the substantive meeting with the Panel. Each third party shall serve any document submitted to the Panel directly on the parties and all other third parties. Each party and third party shall confirm, in writing, that copies have been served as required at the time it provides each document to the Panel.

e.   Each party and third party shall file its documents with the DS Registry and serve copies on the other party (and third parties where appropriate) by 5.00 p.m. (Geneva time) on the due dates established by the Panel.

f.    The Panel shall provide the parties with an electronic version of the descriptive part, the interim report and the final report, as well as of other documents as appropriate. When the Panel transmits to the parties or third parties both paper and electronic versions of a document, the paper version shall constitute the official version for the purposes of the record of the dispute.

25. The Panel reserves the right to modify these procedures at any time following consultations with the parties.

 

 


ANNEX A-3

Procedures for an open substantive meeting of the Panel[1] (DS384)

Adopted on 28 October 2013 and revised on 21 January 2014

 

 

1.     The Panel shall hold a joint substantive meeting in DS384 and DS386.

2.     Subject to the availability of suitable WTO meeting rooms, the Panel will start its substantive meeting, on 18-19 February 2014, with a session with the parties open to the public. At that session, each party will be asked to make an opening statement. After the parties have made their statements, they will be given the opportunity to pose questions to the other party or make comments on the other party's statement. The Panel may pose any questions or make any comments during such session. The parties will also have an opportunity to make their closing statement during the session open to the public.

3.     To the extent that the Panel or any party considers it necessary, the Panel will also hold a session with the parties not open to public observation during which the parties will be allowed to make additional statements or comments, and pose questions, that involve business confidential information. The Panel may also pose questions during such a session.

4.     In addition to its sessions with the parties, at the substantive meeting the Panel will also hold a separate session with the third parties. The Panel will start the third party session by opening a portion of this session to the public. At this portion of the third party session, any third party wishing to make its oral statement in a public session shall do so. Following the third party open session, the Panel will proceed to a third party closed session during which any other third party shall make its oral statement. At each of these third party open or closed sessions, after the third parties' statements, the Panel or any party may pose questions to any third party or make comments concerning these statements. Third parties may also ask questions to the parties or other third parties at the invitation of the Panel; however, the parties and the other third parties have no obligation to respond to these questions by third parties.

5.    The following persons will be admitted into the meeting room during all sessions of the Panel's substantive meeting, whether open or closed to the public:

–     the members of the Panel;

–     all members of the delegations of the parties to DS384 and DS386;

–     all members of the delegations of the third parties to DS384 and DS386; and

–     WTO Secretariat staff assisting the Panel.

 

6.     No person shall disclose any business confidential information at any session open to the public.

7.     WTO Members and Observers and the public may observe the Panel's sessions that are open to the public by means of a real time closed-circuit television broadcast to a separate viewing room. The broadcasts will be open to officials of WTO Members and Observers upon presentation of their official badges. Accredited journalists and representatives of relevant non-governmental organizations may indicate to the Secretariat their interest in attending the broadcasts (Information and External Relations Division). Members of the general public will be invited to register their interest in attending each broadcast via the WTO website, by close of business on 7 February 2014.

 

 

 


ANNEX A-4

Procedures for an open substantive meeting of the Panel[2] (DS386)

Adopted on 28 October 2013 and revised on 21 January 2014

 

 

1.     The Panel shall hold a joint substantive meeting in DS386 and DS384.

2.     Subject to the availability of suitable WTO meeting rooms, the Panel will start its substantive meeting, on 18-19 February 2014, with a session with the parties open to the public.  At that session, each party will be asked to make an opening statement.  After the parties have made their statements, they will be given the opportunity to pose questions to the other party or make comments on the other party's statement.  The Panel may pose any questions or make any comments during such session.  The parties will also have an opportunity to make their closing statement during the session open to the public.

3.     To the extent that the Panel or any party considers it necessary, the Panel will also hold a session with the parties not open to public observation during which the parties will be allowed to make additional statements or comments, and pose questions, that involve business confidential information.  The Panel may also pose questions during such a session.

4.     In addition to its sessions with the parties, at the substantive meeting the Panel will also hold a separate session with the third parties.  The Panel will start the third party session by opening a portion of this session to the public.  At this portion of the third party session, any third party wishing to make its oral statement in a public session shall do so.  Following the third party open session, the Panel will proceed to a third party closed session during which any other third party shall make its oral statement.  At each of these third party open or closed sessions, after the third parties' statements, the Panel or any party may pose questions to any third party or make comments concerning these statements. Third parties may also ask questions to the parties or other third parties at the invitation of the Panel; however, the parties and the other third parties have no obligation to respond to these questions by third parties.

5.    The following persons will be admitted into the meeting room during all sessions of the Panel's substantive meeting, whether open or closed to the public:

–     the members of the Panel;

–     all members of the delegations of the parties to DS386 and DS384;

–     all members of the delegations of the third parties to DS384 and DS386; and

–     WTO Secretariat staff assisting the Panel.

 

6.     No person shall disclose any business confidential information at any session open to the public.

7.     WTO Members and Observers and the public may observe the Panel's sessions that are open to the public by means of a real time closed-circuit television broadcast to a separate viewing room.  The broadcasts will be open to officials of WTO Members and Observers upon presentation of their official badges.  Accredited journalists and representatives of relevant non-governmental organizations may indicate to the Secretariat their interest in attending the broadcasts (Information and External Relations Division).  Members of the general public will be invited to register their interest in attending each broadcast via the WTO website, by close of business on 7 February 2014.

 

 


ANNEX A-5

Procedures of the Panel Concerning Business Confidential Information[3] (DS384)

Adopted on 28 October 2013

 

 

1.     These procedures apply to any business confidential information (BCI) that a party submits to the Panel.

2.     For the purposes of these procedures, BCI is defined as any information that has been designated as such by the Party submitting the information, that is not available in the public domain and the release of which could reasonably be considered to cause or threaten to cause harm to an interest of the person or entity that supplied the business information to the Party.

3.     No person may have access to BCI except a member of the Secretariat or the Panel, a party's or third party's employee participating in the dispute, and a party's or third party's outside advisor for purposes of this dispute. However, an outside advisor is not permitted access to BCI if that advisor is an officer or employee of an enterprise engaged in the production, export, or import of cattle, swine, beef, or pork. When a party or third party provides BCI to an outside advisor who is an employee or officer of an industry association of such enterprises, that party or third party shall obtain written assurances from such advisor that he or she has read and understands these Working Procedures and will not disclose any BCI in contravention of the Working Procedures.

4.     A party or third party obtaining access to BCI as a result of the BCI being submitted in this dispute shall treat it as confidential, i.e. shall not disclose that information other than to those persons authorized to receive it pursuant to these procedures. Each party and third party shall have responsibility in this regard for its employees as well as any outside advisors for the purposes of this dispute. BCI obtained under these procedures may be used only for the purpose of providing information and argumentation in this dispute.

5.     A party or third party submitting or referring to BCI in a document shall mark the cover and each page of the document to indicate the presence of BCI in the document as follows:  BCI shall be placed between double brackets (for example, [[xx,xxx.xx]]). The cover and the top of each page of the document shall contain the notice "Contains Business Confidential Information". Any BCI that is submitted in electronic form shall be clearly marked with the phrase "Contains BCI" on a label on the storage medium, and clearly marked with the phrase "Contains BCI" in the electronic file name.

6.     In the case of an oral statement containing BCI to be delivered in the session not open to public observation as foreseen in paragraph 2 of the "Procedures for an open substantive meeting of the Panel," the Panel should ensure that only persons authorized to have access to BCI pursuant to these procedures are permitted to hear the statement.

7.     The parties, third parties, and the Panel shall store all documents containing BCI so as to prevent unauthorized access to such information.

8.     The Panel shall not disclose BCI, in its report or in any other way, to persons not authorized under these procedures to have access to BCI. The Panel may, however, make statements of conclusion drawn from such information. Before the Panel makes its final report publicly available, the Panel shall give each party an opportunity to ensure that the report does not contain any information that it has designated as BCI. 

9.     Submissions containing BCI will be included in the record forwarded to the Appellate Body in the event of an appeal of the Panel's Report.


 

 

ANNEX A-6

Procedures of the Panel Concerning Business Confidential Information[4] (DS386)

Adopted on 28 October 2013

 

 

1.     These procedures apply to any business confidential information (BCI) that a party submits to the Panel.

2.     For the purposes of these procedures, BCI is defined as any information that has been designated as such by the Party submitting the information, that is not available in the public domain and the release of which could reasonably be considered to cause or threaten to cause harm to an interest of the person or entity that supplied the business information to the Party.

3.     No person may have access to BCI except a member of the Secretariat or the Panel, a party's or third party's employee participating in the dispute, and a party's or third party's outside advisor for purposes of this dispute. However, an outside advisor is not permitted access to BCI if that advisor is an officer or employee of an enterprise engaged in the production, export, or import of cattle, swine, beef, or pork. When a party or third party provides BCI to an outside advisor who is an employee or officer of an industry association of such enterprises, that party or third party shall obtain written assurances from such advisor that he or she has read and understands these Working Procedures and will not disclose any BCI in contravention of the Working Procedures.

4.     A party or third party obtaining access to BCI as a result of the BCI being submitted in this dispute shall treat it as confidential, i.e. shall not disclose that information other than to those persons authorized to receive it pursuant to these procedures. Each party and third party shall have responsibility in this regard for its employees as well as any outside advisors for the purposes of this dispute. BCI obtained under these procedures may be used only for the purpose of providing information and argumentation in this dispute.

5.     A party or third party submitting or referring to BCI in a document shall mark the cover and each page of the document to indicate the presence of BCI in the document as follows:  BCI shall be placed between double brackets (for example, [[xx,xxx.xx]]). The cover and the top of each page of the document shall contain the notice "Contains Business Confidential Information". Any BCI that is submitted in electronic form shall be clearly marked with the phrase "Contains BCI" on a label on the storage medium, and clearly marked with the phrase "Contains BCI" in the electronic file name.

6.     In the case of an oral statement containing BCI to be delivered in the session not open to public observation as foreseen in paragraph 2 of the "Procedures for an open substantive meeting of the Panel," the Panel should ensure that only persons authorized to have access to BCI pursuant to these procedures are permitted to hear the statement.

7.     The parties, third parties, and the Panel shall store all documents containing BCI so as to prevent unauthorized access to such information.

8.     The Panel shall not disclose BCI, in its report or in any other way, to persons not authorized under these procedures to have access to BCI. The Panel may, however, make statements of conclusion drawn from such information. Before the Panel makes its final report publicly available, the Panel shall give each party an opportunity to ensure that the report does not contain any information that it has designated as BCI. 

9.     Submissions containing BCI will be included in the record forwarded to the Appellate Body in the event of an appeal of the Panel's Report.


ANNEX B

Arguments of the Parties

Contents

Page

Annex B-1

Integrated executive summary of the arguments of Canada

B-2

Annex B-2

Integrated executive summary of the arguments of Mexico

B-14

Annex B-3

Integrated executive summary of the arguments of the United States

B-27

 


ANNEX B-1

integrated executive summary of the argument of canada

I.     introduction

 

1.     In a report issued on 29 June 2012, the Appellate Body confirmed that the COOL measure of the United States accorded less favourable treatment to imported livestock as compared to domestic livestock, in violation of the United States' obligations under TBT Article 2.1. In response to this ruling, instead of eliminating the incentive created by the COOL measure for U.S. market actors to handle exclusively domestic livestock, the United States amended the labelling requirements in a manner that further undermined the competitive position of Canadian cattle and hogs in the U.S. market.

II.    factual background

 

A.   The original COOL measure

 

2.     The original COOL measure provided that retailers licensed under the Perishable Agricultural Commodities Act, 1930 were required to provide consumers with origin information on pork and beef muscle cuts that was loosely based on the location of three production steps undergone by livestock: birth, raising, and slaughter. Muscle cuts of pork and beef were divided into the following four categories:

Category A

Meat from animals born, raised, and slaughtered in the United States, or from animals present in the United States on or prior to 15 July 2008

Product of the U.S.

Category B

Meat from animals born in Country X and raised and slaughtered in the United States. (These animals were not exclusively born, raised and slaughtered in the United States or imported for immediate slaughter.)

Product of the U.S., Country X, Country Y (if applicable; can appear in any order)

Category C

Meat from animals imported into the United States for immediate slaughter

Product of Country X, U.S.

Category D

Foreign meat imported into the United States

Product of Country X

 

3.     The original COOL measure permitted the commingling of muscle cuts derived from categories A, B, and C on a single production day. Where commingling occurred, the muscle cuts could be labelled under a common, mixed-origin label (e.g. "Product of Canada, United States"). Imported muscle cuts were labeled so as to indicate that they were a product of the country in which the animal from which they were produced was slaughtered (e.g. "Product of Canada"), regardless of where the birth and raising steps occurred.

4.     In addition, the original COOL measure permitted labels that applied to ground beef and pork to list countries if "raw material" from those countries was in a processor's inventory less than 60 days prior to the ground meat's production. This "60-day inventory allowance" flexibility was available for market participants at every stage of meat supply and distribution.

5.     Large amounts of pork and beef consumed in the United States were exempted from the scope of the original COOL measure's application. Specifically, food service establishments, all processed pork and beef, and retailers that either purchased less than $230,000 worth of fresh fruits and vegetables annually or that did not ship, receive, or contract to be shipped or received fresh fruits and vegetables in quantities exceeding 2,000 pounds (one ton) in a single day were exempt from the original COOL measure's labelling requirements.

B.   The amended COOL measure

 

6.     The amendments to the original COOL measure introduced two major changes: (1) the commingling flexibility, which had somewhat mitigated the original COOL measure's segregation requirements, was eliminated; and (2) subject to certain exceptions, labels applying to muscle cuts of beef and pork were required to name the country (countries) in which the animal from which the muscle cut was derived was born, was raised, and was slaughtered.

7.     The amended COOL measure provides that if an animal was raised in part in the United States and in part outside the United States, the label may treat the animal as if it was raised entirely in the United States, unless the animal was imported for immediate slaughter (when it is consigned directly from a port of entry to a recognized slaughtering establishment and slaughtered within two weeks from its date of entry) or where by doing so the muscle cut covered commodity would be designated as having a United States country of origin.

8.     The amended COOL measure did not modify the original COOL measure's extensive exclusions and exemptions, the labelling of imported muscle cuts, or the 60‑day inventory allowance that applies to ground beef and pork.

III.  The scope of canada's challenge

 

9.     Canada's challenge of the amended COOL measure concerns the labelling of muscle cuts of beef and pork derived from livestock slaughtered in the United States. Canada does not make claims of inconsistency of the provisions of the amended COOL measure pertaining to the labelling of muscle cuts of foreign origin imported into the United States or the labelling of ground meat with the WTO obligations of the United States. However, Canada refers to these provisions of the amended COOL measure to demonstrate the WTO-inconsistency of the labelling requirements in respect of muscle cuts of beef and pork derived from livestock slaughtered in the United States.

IV.   Legal claims

 

A.      The amended COOL measure is a technical regulation and Canadian cattle and hogs are "like" U.S. Cattle and hogs

 

10.   The Panel concluded that the original COOL measure was a technical regulation. The United States did not appeal this finding and this aspect did not become an issue in the current compliance proceedings. The amended COOL measure equally qualifies as a technical regulation. In the original proceedings, the Panel concluded that Canadian cattle and hogs are "like" U.S. cattle and hogs. This was not appealed in the previous proceedings and this aspect did not become an issue in the current compliance proceedings either.

B.   The amended COOL measure violates TBT Article 2.1

 

1.      The amended COOL measure accords less favourable treatment to Canadian cattle and hogs, in violation of TBT Article 2.1

 

11.   TBT Article 2.1 imposes a national treatment obligation on WTO Members with respect to technical regulations. The analysis of whether a technical regulation is de facto inconsistent with TBT Article 2.1 consists of the following two inquiries: (i) whether the technical regulation at issue modifies the conditions of competition in the relevant market to the detriment of imported products compared to like domestic products; and, if so, (ii) whether the detrimental impact on imported products stems exclusively from a legitimate regulatory distinction (LRD).

12.   The assessment under element (i) is the same test as that which applies under GATT Article III:4 for determining whether a measure accords less favourable treatment to imported products. The legal test under element (ii) assesses both whether the regulatory distinction and technical regulation in issue are designed and applied in an even-handed manner. In assessing even-handedness, a panel must carefully scrutinize the particular circumstances of the case, that is, the design, architecture, revealing structure, operation and application of the technical regulation at issue.

13.   As a result of the removal of the commingling flexibility and the introduction of point-of-production labelling through the 2013 Final Rule, the amended COOL measure's labelling, recordkeeping, and segregation requirements are more onerous than those that prevailed under the original COOL measure.

14.   Throughout the original proceedings, the United States argued that the original COOL measure did not require the segregation of animals on the basis of their origin because of the availability of commingling, which was alleged by the United States to be widely used by producers. The elimination of the commingling flexibility removes any pretence that segregation is not necessary under the COOL regime. This view is confirmed by comments on the amended COOL measure that were submitted by industry actors to the U.S. Department of Agriculture (USDA) and referred to by Canada in these proceedings.

15.   Basic economic logic suggests that the elimination of commingling and the resulting additional recordkeeping and segregation requirements will further deter market actors from handling Canadian livestock and the muscle cuts derived therefrom. The United States resorts to both bald assertions regarding what it now considers to have been the limited extent to which commingling occurred and criticism directed at industry actors for failing to provide evidence regarding the extent of commingling in practice.

16.   The United States further contends that Canada's claim regarding the amended COOL measure's detrimental impact is based on the elimination of commingling. This contention is without merit. While the prohibition of commingling has exacerbated the original COOL measure's significant and negative impact, this is by no means the sole basis for Canada's argument regarding the amended COOL measure's detrimental impact. The amended COOL measure does nothing to alter the elements of the original COOL measure that were responsible for undermining the competitive position of Canadian cattle and hogs in the U.S. market.

17.   The amended COOL measure has increased the recordkeeping and verification requirements that cause the segregation that is the source of the detrimental impact on Canadian cattle and hogs.

18.   As a result of the commingling flexibility that applied under the original COOL measure, producers could affix a common label to muscle cuts derived from combinations of commingled Category A, B, and C animals. Both the provisions on commingling that were set out in the 2009 Final Rule and the USDA's commentary on that Rule reveal that the original COOL measure provided flexibility for upstream producers that reduced the records that had to be kept in the case of commingled muscle cuts. This flexibility has been eliminated by the amended COOL measure.

19.   Furthermore, the original COOL measure permitted Category B muscle cuts to bear Label C, even where no commingling occurred. In practical terms, only one set of records was necessary to track Category B and C animals and the muscle cuts derived therefrom. The elimination of this flexibility means that two sets of records will now be required.

20.   Canada has submitted evidence that demonstrates the widespread expectation among a wide range of industry actors, that recordkeeping will increase under the amended COOL measure, and has provided practical examples that demonstrate the reasons for this expectation.

21.   The United States acknowledges that compliance costs will rise as a result of the changes introduced through the amended COOL measure but fails to recognize that it is the structure of the North American markets for beef and pork muscle cuts that ensures that Canadian cattle and hogs will bear a disproportionate burden of those compliance costs.

22.   The U.S. market for cattle and hogs is dominated by U.S. animals. As a result, U.S. market actors can usually avoid the segregation requirements of the amended COOL measure by handling exclusively U.S. animals and muscle cuts derived therefrom. In order to compete with these entities, market actors selling muscle cuts or animals that have undergone a production step in Canada must pass the higher costs of segregating and tracking Canadian cattle and hogs and the muscle cuts derived therefrom up the supply chain to Canadian cattle and hog producers. The amended COOL measure not only perpetuates this situation but adds to the higher costs arising from the use of imported livestock, thereby strengthening the incentive for U.S. producers to handle exclusively domestic livestock.

23.   Canada has submitted extensive evidence demonstrating the detrimental impact that the amended COOL measure has had on Canadian cattle and hogs, even with the six-month delay in the amended COOL measure's enforcement. This evidence is consistent both with basic economic logic, which is elaborated upon by Dr. Sumner in his report on the amended COOL measure's economic impact on Canadian livestock, and the expectations of industry actors that are documented by Canada.

24.   Canada has shown that the amended COOL measure does not stem exclusively from a LRD, in that the measure is arbitrary, lacks even‑handedness, and results in unjustifiable discrimination against Canadian livestock.

25.   The United States attempts to limit the scope of the Panel's analysis under TBT Article 2.1, adopting the position that the distinctions between the categories of meat and the different labels should be considered in the abstract, divorced from the amended COOL measure's overall architecture and application. In so doing, the United States advocates an approach that runs directly counter to both the analytical framework that the Appellate Body has developed and applied under the LRD component of the TBT Article 2.1 test and to the analysis conducted by the Appellate Body in this case.

26.   At the core of the Appellate Body's approach are assessments of the even‑handedness of both the challenged technical regulation and the relevant regulatory distinction(s). These assessments require close scrutiny of the particular circumstances of the case, that is, the design, architecture, revealing structure, operation, and application of the technical regulation at issue.

27.   An important panel finding supporting the Appellate Body's conclusion that the detrimental impact on Canadian cattle and hogs caused by the COOL measure did not stem from a LRD was the "considerable proportion" of beef and pork that is exempt from labelling requirements. The amended COOL measure does not address the scope of the extensive exemptions to the original COOL measure in any way.

28.   Canada has demonstrated that approximately 33% of beef and 9% of pork that is consumed in the United States is subject to the amended COOL measure's labelling requirements. These figures are broadly consistent with the findings of the U.S. Congressional Research Service in its report on COOL and this WTO dispute. Furthermore, factoring ground beef into this consideration shows that approximately only 16% of all beef that is consumed in the U.S. bears labels that provide origin information regarding the place of birth, raising, and slaughter.

29.   Thus, despite the fact that information regarding the origin of all livestock must be identified, tracked, and transmitted throughout the chain of production by producers, processors, and retailers, the amended COOL measure conveys information regarding the location of the three production steps on only a fraction of the meat that is derived from this livestock. This reveals that a lack of correspondence between the recordkeeping and verification requirements, on the one hand, and the limited information provided to consumers, on the other hand, persists under the amended COOL measure. Consequently, the detrimental impact on Canadian cattle and hogs cannot be explained by the need to provide origin information to consumers and, therefore, reflects arbitrary and unjustifiable discrimination.

30.   The amended COOL measure purports to address the lack of correspondence between the recordkeeping and verification requirements and the limited information conveyed to consumers. However, the requirements of the latter half of this ratio have been expanded by the amended COOL measure. Moreover, the increased recordkeeping and verification requirements apply throughout the entire beef and pork muscle cut supply chains, while the information conveyed through the new labels is limited to the much smaller segment of beef and pork that is subject to point‑of-production labelling. This more than offsets the contribution that any additional information provided to consumers under the amended COOL measure makes to the rectification of the imbalance described above.

31.   The Appellate Body considered that Label A was capable of conveying to consumers that the livestock used to produce muscle cuts were born, raised, and slaughtered in the United States. Label D remains unchanged under the amended COOL measure. Therefore, any additional meaningful information provided to consumers by the amended COOL measure is limited to those muscle cuts to which Labels B and C were previously applied.

32.   Even if the United States' assertion that roughly 27 to 28% of pork and beef muscle cuts that were subject to the original COOL measure bore Label B or C is accepted, this means that the additional information provided to U.S. consumers by the amended COOL measure applies to less than a third of all muscle cuts that are subject to the amended COOL measure's labelling requirements.

33.   The information conveyed to consumers by the amended COOL measure may be incomplete or misleading, particularly with respect to the labels that apply to muscle cuts that are derived from animals that do not satisfy the definition of U.S. origin. For example: (1) Imported muscle cuts may be labeled as "Product of Canada" even if the animal used to produce the muscle cut was born and raised in the United States; (2) Muscle cuts may be labelled as "Born in Canada, Raised and Slaughtered in the United States" even if the animal from which the muscle cut is derived spends as little as 15 days in the United States prior to slaughter; (3) Labels affixed to an animal that spends a short time in Canada prior to being exported to the United States for immediate slaughter must be labelled as "Born and Raised in Canada, Slaughtered in the United States".

34.   The United States describes the objective of the amended COOL measure as the provision of accurate origin information to consumers. Yet, consideration of the amended COOL measure's design, architecture, and revealing structure demonstrates that significant dissonance exists between this objective and the measure's operation and application. The following aspects of the amended COOL measure's treatment of meat consumed in the United States illustrate this point: (1) The only information on the location of the production steps that can be relied on by U.S. consumers as accurate is that which is conveyed in respect of muscle cuts that are derived from animals that satisfy the measure's definition of U.S. origin; (2) As a result of the 60-day inventory allowance that applies to ground beef and pork, consumers are only informed of the countries of origin "that may be reasonably contained therein". The USDA simply asserts that this is reasonable because precise labelling for ground meat would be burdensome for industry, ignoring the contradiction with its approach to muscle cut labels, which is also burdensome for industry; (3) The amended COOL measure permits the omission of information on the raising production step occurring in a foreign country if an animal is raised in both the United States and a foreign country. However, this flexibility is unavailable if an animal is born and raised in the United States, raised in another country, and then raised and slaughtered in the United States. The United States offers no explanation that accounts for this clear contradiction that prioritizes U.S. origin information; (4) The amended COOL measure continues to exempt food service establishments, processed foods, and retailers that either do not purchase $230,000 worth of fresh fruit and vegetables annually or do not ship, receive, or contract to be shipped or received quantities of fresh fruit and vegetables in quantities exceeding 2,000 pounds (one ton) in a single day. This means that butcher shops, i.e. shops that specialize in selling meat products do not provide consumers with origin information.

35.   These elements of the amended COOL measure reveal the uneven manner of its operation and application to meat products and the animals from which they are produced. This uneven application in turn demonstrates that the amended COOL measure and its regulatory distinctions are arbitrary, and that the discrimination against Canadian cattle is unjustifiable.

36.   The Panel's findings in respect of Label D were a factor in the Appellate Body's analysis of the legitimacy of the original COOL measure's regulatory distinctions. Furthermore, Label D is part of the amended COOL measure's design, architecture, and revealing structure that affects its operation and application. Therefore, Label D must factor into the Panel's LRD analysis.

37.   Canada is not challenging the consistency of the ground meat label with the WTO obligations of the United States. However, the logic that underpinned the Appellate Body's analysis weighs in favour of the amended COOL measure's treatment of ground meat being regarded as a relevant factor in assessing the measure's consistency with TBT Article 2.1.

38.   Cattle and hogs, which are used to produce both muscle cuts and ground meat, are subject to the amended COOL measure's onerous tracking and verification requirements, despite the fact that a large portion of the meat derived from these animals (i.e. ground meat) does not convey the information that must be tracked and transmitted upstream. This element of the amended COOL measure supports the following conclusions: (i) the detrimental impact on Canadian cattle and hogs that results from the recordkeeping and verification requirements cannot be explained by the need to provide origin information on the location of the three production steps; and (ii) the amended COOL measure, therefore, reflects discrimination.

39.   The prohibition of trace-back is a relevant consideration in assessing whether the amended COOL measure's detrimental impact on Canadian livestock reflects discrimination. This prohibition, coupled with a mandate for the Secretary of Agriculture to audit retailers to verify compliance, necessitates the implementation of the amended COOL measure's labelling requirements through the system of recordkeeping and verification that is the cause of the detrimental impact on Canadian livestock. Therefore, the prohibition on trace-back is a critical element in demonstrating that the detrimental impact on Canadian livestock does not stem exclusively from a LRD.

C.   The amended COOL measure violates GATT Article III:4

 

40.   The Appellate body has clarified that the national treatment obligations in TBT Article 2.1 and GATT Article III:4 differ in scope and content. As a result, Canada requests that, regardless of the Panel's findings under TBT Article 2.1, the Panel address Canada's claim under GATT III:4.

41.   According "treatment no less favourable" in the context of a de facto violation of GATT Article III:4 means according conditions of competition no less favourable to the imported product than to the like domestic product. The analysis of a measure's effect on the conditions of competition in the context of TBT Article 2.1 applies equally to GATT Article III:4.

42.   Notwithstanding the long line of jurisprudence that has applied the GATT Article III:4 analysis, the United States seeks to import the LRD component of the TBT Article 2.1 test into this analysis. There is no textual basis for the position of the United States, which disregards the specific context in which the LRD analysis was developed and the context provided for in the GATT 1994 itself.

43.   The genesis of the LRD analysis is the balance between the right to regulate and the commitment to liberalize trade that is provided for in the context of the TBT Agreement and also reflected in GATT Articles III and XX. That balance is reflected in both GATT Articles III and XX (as well as in the two-step TBT Article 2.1 test) accounts for the Appellate Body's clarification that the scope and context of TBT Article 2.1 and GATT Article III:4 are not the same.

44.   The United States fails to explain how an assessment of whether a challenged technical regulation is applied in a manner that would constitute a means of arbitrary or unjustifiable discrimination, as is required in the LRD analysis under the TBT Agreement would somehow apply under GATT 1994. In particular, the United States does not explain how the assessment of arbitrary or unjustifiable discrimination that it proposes to read into GATT Article III:4 would interact with the assessment under the chapeau of GATT Article XX of whether the challenged measure is "applied in a manner that would constitute arbitrary or unjustifiable discrimination between countries where the same conditions prevail".

45.   The extensive jurisprudence interpreting the relationship between GATT Article III and XX should not be jettisoned through the importation of the interpretation of TBT Article 2.1 into the GATT. Accepting the United States' position on this point would defy basic principles of treaty interpretation and create uncertainty among Members about the scope of both the WTO commitments that they have agreed to and that are under negotiation.

46.   If the United States had legitimate regulatory purposes relevant for an analysis under the GATT 1994, it should have put forward a GATT Article XX defence. Having failed to do so, it cannot now seek to twist the GATT Article III:4 test to pretend that it does not need Article XX of GATT 1994.

D.   The amended COOL measure violates TBT Article 2.2

 

47.   Two issues are in dispute: (i) the identification of the objective, and; (ii) the necessity of the trade-restrictiveness of the amended COOL measure.

48.   The objective of a measure is the benchmark on a scale against which to assess the actual contribution of the measure to the fulfilment of the objective. If defined too narrowly, an objective may more easily correlate with the measure that is being challenged and, as a result, affect the comparison with alternative measures by reducing the possibility of formulating measures that achieve a level of fulfilment of the objective that is equivalent to that achieved by the challenged measure.

49.   In the original proceedings, the Appellate Body confirmed the Panel's finding that the United States' objective was "the provision of consumer information on origin". The United States nevertheless contends that its objective may be stated in a number of ways, including more narrowly as "to provide consumers with information on the countries in which the livestock from which the meat they purchase is produced were born, raised and slaughtered". The Panel should reject the United States' attempt to reformulate its objective in an artificially narrow and self-serving manner, all the more because the United States has conceded that its objective remains the provision of consumer information on origin.

50.  Assessing the necessity of the trade-restrictiveness of a measure involves the consideration of the following factors:  (i) the trade-restrictiveness of the regulation; (ii) the degree of contribution the regulation makes to the achievement of the objective, and (iii) the nature of the risks are issue and the gravity of the consequences that would arise from non-fulfilment of the objective pursued through the measure. In most cases, the analysis involves a comparison with alternative measures.

51.   A measure is trade-restrictive if it has a limiting effect on trade. A measure that affects the conditions of competition to the detriment of imported products is trade‑restrictive. An actual reduction in trade flows is not a conditio sine qua non for a measure to be considered trade-restrictive. A technical regulation that increases compliance costs in a non‑discriminatory manner, but does not otherwise modify the conditions of competition to the detriment of imported products, may nevertheless be trade-restrictive if the cost increase has the effect of reducing trade flows or reducing prices of both imported and domestic products. The amended COOL measure is highly trade-restrictive.

52.   WTO jurisprudence recognizes that panels enjoy a certain latitude in choosing and designing the methodology to assess the contribution of a measure to the fulfilment of the measure's objective. There is no reason why panels should not enjoy the same latitude in choosing the methodology to assess the trade-restrictiveness of a measure. Contrary to the position expressed by the United States, trade-restrictiveness is not exclusively concerned with trade volumes. The assessment of trade-restrictiveness is concerned with the impact of a measure on imports. Such an impact may be, inter alia, a reduction in prices or quantities or both, as in this case.

53.   The assessment of the contribution is concerned with the degree of contribution that the technical regulation actually makes towards the achievement of the objective. There is no requirement for a panel to identify, in the abstract, the level at which a responding Member aims to achieve that objective. The Appellate Body has explained that a Member, "by preparing, adopting, and applying a measure in order to pursue a legitimate objective, articulates either implicitly or explicitly the level at which it seeks to pursue that particular legitimate objective".

54.   Contrary to the contention of the United States, whether an alternative measure provides an equivalent "amount" of information on the countries where the animal was born, raised and slaughtered is not the "only question". Further, determining the actual degree of contribution of a measure does not preclude characterizing that degree as, for instance, "low" or "limited". Such characterization allows comparing the degree of contribution of the challenged measure with alternative measures that contribute to the objective in a different way.

55.   The amended COOL measure is capable of contributing towards its objective to a very limited degree. A considerable proportion of beef and pork sold in the United States continues to be exempted from the labelling requirements.

56.   The obligation to consider the "risks non-fulfilment would create" means that the comparison of the challenged measure with a possible alternative measure should be made in the light of the nature of the risks at issue and the gravity of the consequences that would arise from non-fulfilment of the legitimate objective. In this case, the consequence that would arise from non-fulfilment would be that those consumers who want information on the origin of source livestock might not be able to get it. The Appellate Body has already found that the consequences that may arise from non‑fulfilment of the objective would not be particularly grave.

57.   The comparison with possible alternative measures is a conceptual tool for ascertaining whether the challenged measure is more trade-restrictive than necessary. As with any analytical tool, it must not be applied in a mechanistic fashion. It is relevant to determine whether the alternative is less trade-restrictive, whether it would make an equivalent contribution to the relevant objective, taking into account the risks non-fulfilment would create, and whether it is reasonably available. An alternative measure is not reasonably available if it imposes an undue burden on the responding Member, such as prohibitive costs or substantial technical difficulties. The reasonable availability of an alternative measure must be assessed in relation to the capacity of the responding Member to implement it.

58.   A comparison with an alternative measure that is less trade-restrictive than the challenged measure but fulfils the responding Party's objective to a lesser extent does not preclude a finding that the challenged measure is more trade-restrictive than necessary. Such a finding would require that the consequences that would arise from non-fulfilment of the objective would not be grave.

59.   Turning to the comparative analysis, Canada submitted a detailed analysis prepared by Dr. Sumner to assist the Panel in making a determination on the trade-restrictiveness element (Exhibit CDA-126). That analysis calculates the magnitude of compliance costs required for a non-discriminatory alternative measure to cause an impact on trade equal to the impact of the original COOL measure. The impact is calculated in terms of export revenue losses in dollar amounts. The concept of export revenue losses captures the meaning of trade restrictiveness because it is a measurement of the magnitude of the impact of a measure on imports. Dr. Sumner used the costs of the original COOL measure to Canadian producers – in the sense of the losses that the measure has caused them, both in terms of reduced prices and quantities – to calculate how much tracing livestock and meat, labelling meat and keeping records would need to cost to market participants under a non-discriminatory measure to cause Canadian producers the same export losses as under the original COOL measure. In Exhibit CDA‑126, Dr. Sumner has demonstrated that a non‑discriminatory alternative measure would have to entail implausibly high compliance costs to cause such losses. These already implausibly high minimum amounts of compliance costs are even much higher when calculated based on the export revenue losses caused by the amended COOL measure or on quantities alone, further to the United States' conception of trade-restrictiveness. None of the alternative measures could possibly entail compliance costs of the magnitude calculated.

60.   The United States has not rebutted Canada's prima facie case that any one of the proposed alternative measures would be less trade-restrictive than the amended COOL measure.

61.   First alternative measure – Mandatory labelling of muscle cuts of beef and pork based on substantial transformation could be implemented, combined with voluntary labelling for the production steps of birth and raising. This measure would be significantly less trade-restrictive than the amended COOL measure because it would not require segregation of livestock and muscle cuts for that segment of the market that does not voluntarily provide consumer information on where livestock were born and raised. The United States has not contested that this alternative measure is reasonably available.

62.   While this alternative measure might not contribute to the fulfilment of the objective to the exact same degree as the amended COOL measure, that consideration does not preclude the Panel from finding that the amended COOL measure is more trade‑restrictive than necessary. This is so because the consequences that may arise from non-fulfilment of the objective of the amended COOL measure are not particularly grave. Based on the following factors, considered in conjunction, the Panel should find that the amended COOL measure is more trade-restrictive than necessary: the amended COOL measure is capable of contributing towards its objective to a very limited degree; the amended COOL measure is highly trade-restrictive; any difference in the degrees of fulfilment of the objective between the two measures is not considerable, given that the alternative measure would have a broader scope of application than the amended COOL measure, and; the alternative measure would be significantly less trade restrictive than the amended COOL measure.

63.   Second alternative measure – The 60-day inventory allowance flexibility applicable to ground meat could be extended to muscle cuts of beef and pork. This alternative measure would be significantly less trade-restrictive than the amended COOL measure, because market participants throughout the meat supply chain would have sufficient flexibility as a result of less intense segregation requirements. Also, the alternative measure could not possibly entail costs of the magnitude calculated by Dr. Sumner to track livestock and meat, label meat and keep records. This alternative measure is reasonably available. While this alternative measure, like the first alternative measure, might not contribute to the fulfilment of the objective to the exact same degree as the amended COOL measure, that consideration does not preclude the Panel from finding that the amended COOL measure is more trade-restrictive than necessary for the same reasons Canada provided with respect to the first alternative measure.

64.   Third alternative measure – A mandatory trace-back system could be implemented to provide information, with respect to covered muscle cuts derived from livestock slaughtered in the United States, on where the production steps took place for the relevant source animal or group of animals. Tellingly, the amended COOL measure prohibits the USDA from using a trace-back system.

65.   The first stage of a trace-back system involves the establishment of an animal identification and traceability system. Several WTO Members have established such a system. The United States once had a comprehensive voluntary system – the National Animal Identification System (NAIS) – that could have been maintained and made mandatory to provide information to consumers. The second stage of a trace-back system occurs at the slaughterhouse, where processors have to preserve the link between the animal, or group of animals, and the muscle cuts. Preserving the link between the animal, or groups of animals, and the muscle cuts is done on a country-wide and commercial basis in at least two WTO Members, namely Japan and Uruguay; various supply chains elsewhere on the globe also preserve that link. Most of the compliance costs under a trace-back system would be incurred at that stage. The third stage of a trace-back system involves the distributors and the retailers, who have to preserve the information about the muscle cut.

66.   A trace-back system would achieve a contribution to the fulfilment of the objective that is equal to or greater than the contribution achieved by the amended COOL measure. The label on a muscle cut could indicate the precise name and address of the facility where each of the production steps took place. However, as an alternative, the labelling requirements under a trace-back system could be the same as those under the amended COOL measure, provided that market participants be able to demonstrate, if audited, that a muscle cut has been derived from an animal, or group of animals, that was born, raised and slaughtered at a specific location.

67.   Also, a trace-back system would be less trade-restrictive than the amended COOL measure. This is so because it could be implemented in such a way as to avoid modifying the conditions of competition to the detriment of imported livestock and it could not possibly entail the minimum amounts of compliance costs calculated by Dr. Sumner.

68.   Further, a trace-back system is a reasonably available alternative measure. It would be unreasonable for the United States to expect Canadian producers to continue shouldering the burden of a measure that affects the competitive conditions of imported livestock when all market participants could share equally the burden of providing consumer information on origin. Further, there is no evidence that the first stage of a trace-back system would reward vertical integration at the expense of family farms in the United States. While a trace-back system would likely increase compliance costs for U.S. producers (and would lower the overall enormous costs borne by Canadian producers), these costs would not be prohibitive; the U.S. industry would remain profitable. The experience of other countries' industries demonstrates that changes in production practices are well within the capacity of the U.S. industry. Finally, given that the United States has asserted that providing consumer information on origin is very important, the United States should be expected to use its capabilities to implement its objective consistently with its WTO obligations.

69.   Fourth alternative measure – In addition to the existing requirements of the amended COOL measure to designate the country or countries where production steps occurred on labels of muscle cuts of beef and pork derived from livestock slaughtered in the United States, the designation of the state(s) and/or province(s) where each of those steps occurred could also be required on those labels.

70.   The proposed alternative measure would achieve a greater degree of fulfilment than that achieved by the amended COOL measure, because it would provide the same consumer information as that provided under the amended COOL measure, with the addition of other information.

71.   The proposed alternative would also be less trade-restrictive than the amended COOL measure. This is so because it could be implemented in such a way as to avoid modifying the conditions of competition to the detriment of imported livestock and it could not possibly entail the minimum amounts of compliance costs calculated by Dr. Sumner.

72.   The proposed alternative measure is reasonably available. State/province designations may already be used in lieu of country of origin labeling for, inter alia, perishable agricultural commodities. Also, the alternative measure is based on the principle that animals should be traceable when in interstate commerce in the United States, which is operationalized in the Final Rule on Traceability for Livestock Moving Interstate (Final Rule on Traceability). The fourth alternative measure would entail lower compliance costs than a trace-back system. Further, animals would not need to have been raised in all the same states or provinces; it would be sufficient that they have the last state/province in common. The United States could rely on the segregation of animals on a state/province basis and on documents generated pursuant to, or required under, the Final Rule on Traceability, combined with requirements for producer's affidavits for elements that are not currently fully covered under that Rule, to implement the fourth alternative measure. Alternatively, the United States could implement a national animal identification and traceability system, as many other WTO Members have done. The United States once had such a system