Mexico demands before the World Trade Organization the compliance by the United States in the controversy of the Country of Origin Labeling
The Mexican government, in coordination with the Government of Canada, requested the establishment of a compliance panel before the appropriate authorities of the World Trade Organization (WTO) against the rules of Country of Origin Labeling (COOL) imposed by the United States, that affects the Mexican cattle exports, in order that the mentioned body may confirm that that country has not fully complied with its resolutions.
On July 23rd, 2012, the WTO determined that the COOL rules imposed by the U.S., are discriminatory and contrary to the principles of the organization, altering the bilateral trade practices on meat that prevailed for years and that allowed the efficient flow trade.
The WTO decision recognized that the measure of the U.S. about requiring that the meat product reflects on a label if it is derived from cattle born in Mexico, involves segregation practices affecting Mexican cattle along the production chain, resulting in high costs which are transferred to Mexican producers and encourages the use of U.S. livestock in the market of that American country for the production of meat products.
The WTO gave the United States a period of 10 months to modify these rules, which expired on May 23rd, 2013. On the same date, the Department of Agriculture of the United States issued a new rule amending the administrative provisions of COOL, by which intends to comply with the decision of the organization.
The new rule COOL is even stricter than the measure originally challenged in the WTO and will generate more trade distortions. Far from trying to eliminate the discriminatory aspects of the original measure, the new rule increases the incentives to avoid buying imported cattle, which will further impact the Mexican cattle exports to the United States.
Mexico bases its claim that the new COOL rule keeps the discriminatory effect and constitutes an unnecessary obstacle to international trade, which was determined to be contrary to the obligations of the United States before the WTO.
The compliance panel requested by Mexico will determine whether the COOL new rule issued by the United States comply with the WTO principles, or if continue without sticking to them. If the violation in compliance panel is confirmed, Mexico will be in a position to impose trade retaliation to the United States.
Following the practice of the WTO, the United States can object to the establishment of the panel for one occasion. If so, the panel would be finally established later this September. The panel's final decision could give out in the first half of next year.
Mexico will continue to defend its livestock sector discriminatory practices against the United States in the framework of the WTO and will seek the full compliance with the international obligations of that country.