Document: WT/DS384/R WT/DS386/R Page D-1 ANNEX D ORAL STATEMENTS OF THE PARTIES AT THE FIRST AND SECOND SUBSTANTIVE MEETINGS Contents Page Annex D-1 Executive summary of the opening oral statement of Canada at the first substantive meeting D-2
Document codes: WT/DS384/R; WT/DS386/R
Complainant: Mexico
Respondent: U.S.
Third parties: Argentina, Australia, Brazil, Canada, China, Colombia, EU, Guatemala, India, Japan, South Korea, New Zealand, Peru, Taiwan
Dispute stage: Implementation & Compliance
Agreements cited: Art. III, X:3(a), IX  GATT 1994Art. 2, 12  Technical Barriers to Trade (TBT)Art. 2, 5, 7  Sanitary and Phytosanitary Measures (SPS)Art. 2  Rules of Origin

ANNEX D

ORAL STATEMENTS OF THE PARTIES
AT THE FIRST AND SECOND SUBSTANTIVE MEETINGS

Contents Page
Annex D-1 Executive summary of the opening oral statement of Canada at the first
substantive meeting
D-2
Annex D-2 Executive summary of the opening oral statement of Mexico at the first
substantive meeting
D-6
Annex D-3 Executive summary of the opening oral statement of the United States at the
first substantive meeting
D-11
Annex D-4 Closing oral statement of Canada at the first substantive meeting D-17
Annex D-5 Closing oral statement of Mexico at the first substantive meeting D-19
Annex D-6 Executive summary of the opening or al statement of the United States at the
second substantive meeting
D-22
Annex D-7 Executive summary of the opening oral statement of Canada at the second
substantive meeting
D-27
Annex D-8 Executive summary of the opening oral statement of Mexico at the second
substantive meeting
D-32
Annex D-9 Closing oral statement of Canada at the second substantive meeting D-39
Annex D-10 Closing oral statement of Mexico at the second substantive meeting D-41

ANNEX D-1

EXECUTIVE SUMMARY OF THE OPENING ORAL STATEMENT OF CANADA
AT THE FIRST SUBSTANTIVE MEETING

I. INTRODUCTION
1. The COOL measure requires different labels to be placed on meat from cattle and hogs
slaughtered in the United States depending on where those animals were born and raised. The COOL
measure was not designed or implemented to provid e consumers with accurate information to further
a legitimate objective. The objective of the C OOL measure was to distort the conditions of
competition in the US market to favour US cattle and hogs compared to imported livestock.
II. THE COOL MEASURE CHALLENGED BY CANADA
2. The US measure challenged by Canada cons ists of multiple legal instruments and
governmental actions:
 The Final Rule, which came into force on March 16, 2009.
 The Interim Final Rule, which was an integr al part of the measure when it became
operative on September 30, 2008. Well before the Final Rule took effect the Interim
Final Rule caused slaughter houses and feedin g operations to take critically important
decisions to restructure their operations in order to comply with the COOL measure.
 The action by Collin Peterson, Chairman of the Committee on Agriculture of the US
House of Representatives, in instructing repr esentatives of the US industry not to use
Label "B" for the majority of their products.
 Clarification documents of the US Department of Agriculture that took away the
flexibility to use Label "B" for meat from liv estock born, raised, and slaughtered in the
United States.
 The Vilsack Letter, which introduced additio nal uncertainty for industry regarding the
proper application of the measure.
3. Regardless of whether the COOL measure is characterized as one overall measure made up of
several legal instruments and governmental actions, or as several related measures that work together
to achieve the same policy objective, the legal analysis is the same.
III. THE COOL MEASURE HAS ADVERSELY MODIFIED THE CONDITIONS OF
COMPETITION FOR CANADIAN CATTLE AND HOGS, IN VIOLATION OF TBT
ARTICLE 2.1 AND GATT ARTICLE III:4.
4. The United States has agreed that in the cont ext of GATT Article III:4, a measure provides
less favourable treatment if it "modif[ies] the conditi ons of competition in the relevant market to the
detriment of the imported product". It has also agreed that the meaning of less favourable treatment in
the GATT context is relevant to interpreting the oblig ation in TBT Article 2.1. That this modification
has actually happened is established by two types of evidence: (1) witness statements and other
evidence showing that the US market responded to the COOL measure by favouring US-born and -

raised livestock over imported livestock; and (2) Dr . Sumner's econometric analysis, which quantifies
the amount of the adverse effects.
1. The COOL measure effectively requires segregation of imported livestock
5. The COOL measure requires US participants th roughout the supply chain - from the importer
through to the retailer that sells the meat - to track the country of birth, raising, and slaughter of cattle
and hogs and meat produced from those cattle and hogs. In practice this requires segregation.
6. The United States wrongly suggests that the di scriminatory costs of segregation can be
avoided. The first option presented by the United St ates is to only buy livestock born in a single
country. That would establish separate but nominally equal distribution chains that in practice favour
domestic product. Such a discriminatory system was found WTO-inconsistent in Korea – Various
Measures on Beef. The second option would be to commingle on the same day, but that still imposes
additional segregation costs on operations that use both US-born livestock and livestock born abroad.
Either option changes the conditions of competition to the advantage of US-born livestock.
7. Canada presents three slides to illustrate how the COOL measure effectively requires
segregation and the differential impact that has ha d on Canadian cattle and hog imports to the United
States.
8. Basic economic logic based on the facts leads to the result that firms that use imported
livestock or meat derived therefrom can only recover their added costs by paying less for the imported
livestock. The lower US demand for imported cattle and hogs is reflected in lower import quantities
or in lower prices relative to the use of comparable domestic livestock.
9. Canada has submitted unchallenged specific eviden ce, in the form of witness statements and
letters, on the loss of competitive position caused by the COOL measure. That evidence establishes
that the COOL measure has modified the conditions of competition in the US market to the detriment
of imported Canadian livestock.
10. The US argued that because of Canada's low market share, the "conditions of competition"
have not really been altered, relying on the A ppellate Body report in Do minican Republic – Import
and Sale of Cigarettes. The present case is not analogous because there is no dispute here over a
single origin-neutral measure imposed equally on companies, some of which happen to be foreign and
have a lower market share. The present case is more analogous to the case of Korea – Various
Measures on Beef, in which the measure at issue required separate channels of distribution for
imported and domestic beef that in practice resulted in the limited use of imported beef.
11. The US also argues that the COOL measure does not "require" segregation. However, as the
United States concedes, the COOL measure requires processors to track information about where
livestock is born and raised, which in practice is done through segregation.
12. It is not necessary for the Panel to decide at th is stage the precise degree of impairment that
Canada has suffered. However, the economic analysis prepared by Dr. Sumner supports and
quantifies the degree of loss of competitive position.
2. Canada's econometric analysis
13. US criticisms of Dr. Sumner's analysis are not well founded. Dr. Sumner's econometric
analysis explores whether the conditions of competit ion for Canadian exports of cattle and hogs have

been differentially affected as a result of the COOL measure. Therefore much of the US criticism,
which is focussed on issues such as the general economic situation at the time and the ratio of imports,
misses the point.
14. The United States does not dispute that segrega tion has potentially large negative differential
effects on the demand for imported livestock rela tive to comparable domestic livestock. The
unchallenged specific evidence presented by Canada s hows that the costs of segregation caused most
major slaughter houses to limit or terminate the use of Canadian cattle and hogs. Dr Sumner's
simulation analysis shows that even low segregation costs cause substantial effects.
15. Unlike the US analysis, Canada's data anal ysis properly avoids the BSE period and the
associated structural disruptions; it includes a BSE variable only to account for any potential cross-
effects related to import restrictions on older cattle from July 16, 2005 to November 19, 2007. The
model tests the importance of this variable and finds no significant effect.
16. Canadian cattle exported to the United States typically travel farther than their US
competitors, and did so before the COOL measure. But the US analysis that suggests that including
this factor reduces the harm caused by the COOL measure is incorrect. This is because the United
States used the wrong index in its analysis (one that is focussed on what consumers pay for items such
as new cars, parking fees and tolls, airline fares, and tickets for public transit). Dr. Sumner used the
relevant right data (the producer price index for tr ucking) in his revised analysis and found that the
harm caused by the COOL measure is actually higher when transportation is included.
IV. THE COOL MEASURE VIOLATES TBT ARTICLE 2.2.
17. The United States argues that "the objective" of the COOL measure is to "provide consumer
information". Any determination of whether providing consumer information is a legitimate objective
must consider the nature of the information that is provided under the measure.
18. The United States has not seriously disputed that certain US cattle and hog producers and
political leaders advocating on their behalf were th e driving force behind the COOL measure. Most
of the US evidence of consumer support for coun try-of-origin labelling is focussed on support for
elements of the COOL regime that are not at issue in this dispute, such as the protection of animal and
human health. The United States has presented very limited evidence of consumer desire for
information related specifically to the origin of meat derived from imported livestock. Furthermore
the "consumer interest" expressed in that limited evidence does not support a legitimate objective.
Specifically, the "consumer interest" evidence is from certain hog and cattle producers or their
representatives, whose advocacy on behalf of consumer s is highly suspect; it is focussed on labelling
for health and safety reasons, which is an objective disavowed by the United States; it relates to the
protectionist objective to "support US farmers", wh ich cannot be a legitimate; or it relates to
information the COOL measure does not provide, such as a desire to "support the family farm" or to
buy meat that is produced close to home.
19. The United States has provided virtually no ev idence of consumers being concerned about
deception. As to possible confusion on the part of consumers about the USDA grading of meat and
country of origin, this could have been addressed by clarifying that USDA grading does not indicate
country of origin.
20. Even if the objective of the COOL measure was to provide consum er information for a
legitimate purpose, it does not fulfil this purport ed objective. Canada provides a further slide
illustrating the COOL regime as it applies to pr oducts other than meat derived from imported

livestock slaughtered in the United States, to demonstr ate that the regime hardly serves the purpose of
providing information to consumers. The informatio n provided to consumers through this process,
even if it were to further a legitimate objective (w hich Canada disputes) is confusing at best and
deceptive at worst.
21. Even if the COOL measure furthers a legitimate objective, it does not do so in the least trade-
restrictive way. Canada has suggested two less tr ade-restrictive alternatives: voluntary labelling and
substantial transformation.
22. The United States stated that voluntary labelli ng was attempted but failed. However, the
evidence demonstrates, in fact, th at where there is a true consumer demand for it, voluntary labelling
does succeed, for example in programs such as organic labelling, cer tified Angus, and Australian and
New Zealand lamb.
23. On substantial transformation, the United Stat es essentially argues that it would not provide
consumers with information about where the vari ous processing steps take place. However, the
United States has not explained why substantial tr ansformation is an appropriate basis for labelling
meat slaughtered outside of the United States (s uch as on meat from a US-born and-raised animal
slaughtered in Canada, classified as Label "D" unde r the COOL measure), but is not an appropriate
basis for labelling meat slaughtered in the United States.
V. CONCLUSION
24. On the basis of the evidence showing that th e COOL measure has changed the conditions of
competition of Canadian livestock in the US market , the COOL measure violates TBT Article 2.1 and
GATT Article III:4. The United States' criticism of Canada's supporting economic analysis is flawed
in many fundamental ways. The COOL measure also violates TBT Article 2.2 because it does not
achieve a legitimate objective and even if it did, it does not do so in a least trade-restrictive way. In
the interest of time, Canada has not specifically addressed Articles X:3(a) and XXIII:1(b) of GATT in
this Statement but will be pleased to do so in answer to questions.

ANNEX D-2

EXECUTIVE SUMMARY OF THE OPENING ORAL STATEMENT OF MEXICO
AT THE FIRST SUBSTANTIVE MEETING

I. INTRODUCTION
1. This case is about a US measure "the COOL me asure" that discourages the use of Mexican
cattle in the production of beef products in th e United States. The COOL measure has adversely
modified the competitive conditions to the disadvant age of Mexican producers and has distorted the
market with the sole purpose of protecting the US cattle industry, and thereby disrupted what was
previously a mutually beneficial trade relationship.
II. OVERVIEW OF MEXICAN CATTLE EXPORTS TO THE US
2. The productions of cattle in Mexico and beefs in the US have been closely integrated for
many decades. The Mexican cow-calf industry prod uces high quality, genetically desirable cattle for
the US market. They have the same genetic features as calves from the United States, and are
pastured on grass or winter wheat, similar to US cal ves. The US and Mexican cattle are clearly like
products.
3. The United States has conceded that the COOL measure is not an SPS measure, or any other
type of safety measure. Mexico wishes to high light that separately the United States subjects the
Mexican cattle to stringent SPS requirements. Mexico fully complies with those stringent measures.
4. In the case of Mexico, the overwhelming majo rity of cattle exported are young animals,
usually no more than seven or eight months old, and weighing in the range of 300 to 400 pounds. At
the time of slaughter, this is, when they reach 1100 to 1200 pounds, approximately 70% of the weight
and value of the animal has been added within the US territory.
III. THE MEASURE
5. This dispute concerns a mandatory country of or igin labelling requirement that is applied in a
manner and in circumstances such that it unjustifiably discriminates against and restricts imports of
Mexican cattle into the United States. The COOL me asure comprises statutory provisions, regulations
and other administrative actions by the US governme nt. All of the components identified by Mexico
in its First Written Submission are legal elements of the COOL measure.
6. The COOL measure is an internal measure applie d to US processed beef that has an adverse
effect on imported inputs for that product – that is, cattle. US producers of beef products have
segregated cattle of different origins entirely in or der to comply with the measure, and have passed
along the resulting costs to the Mexican cattle industry.
7. The COOL measure has disrupted the integrat ed Mexico-US market and has modified the
conditions of competition to the disadvantage of Me xican cattle compared to like US cattle. It has
also reduced the export opportunities available to, increased the handling cost of, and reduced the
price of Mexican cattle. The adverse effects of the COOL measure on the Mexican cattle industry
have been substantial. Specifically:
 US processors have restricted the number of plants that will process Mexican cattle;

 US processors have restricted the days on which plants will accept Mexican cattle;
 US processors have imposed special notice requirements;
 US processors have lowered the price of Me xican cattle expressly because of the costs of
complying with the COOL measure; and
 Some US backgrounders and feedlot oper ators have stopped purchasing Mexican cattle
entirely.
8. Mexico has presented evidence of each of these effects.
IV. IN THE CIRCUMSTANCES OF THIS DISPUTE, THE US COOL MEASURE IS
INCONSISTENT WITH THE WTO
9. Mexico is not challenging mandatory country of origin labelling in general. Whether a
particular mandatory country of origin labelli ng is WTO-consistent will depend on the specific
circumstances at issue and must necessarily be assessed on a case-by-case basis.
10. For example, mandatory country of origin labelling imposed on impor ted products at the
border is generally viewed as WTO-consistent. But the COOL measure is an internal measure that
has effects only with respect to goods that are processed in the United States.
11. The COOL measure has requirements and pro cedures that result in a loss of competitive
opportunities for imported cattle. In particular, unde r the COOL measure the United States refuses to
acknowledge that any processing of cattle is relevant – notwithstanding that the imported Mexican
cattle spend the great majority of their lives in the United States and are slaughtered and processed
there under the supervision of US agricultural officials.
V. THE DE FACTO NATURE OF MEXICO'S CLAIMS
12. Mexico has been very clear that its claim is based on the de facto effects of the COOL
measure.
VI. LEGAL CLAIMS
A. DISCRIMINATION CLAIMS UNDER ARTICLE 2.1 OF TBT AGREEMENT AND ARTICLE III:4 OF
THE GATT 1994
1. Like product
13. Mexico's claim concerns the treatment of Mexican cattle that are imported into the
United States for processing into beef. By its structure and design, the COOL measure applies
indirectly to cattle. In other words, the effect of the COOL measure – indeed its core purpose – is to
regulate the inputs to beef products – namely, ca ttle. Mexico presented prima facie evidence that
Mexican and US cattle, both of which compete for the same processing market, are like products.
The United States did not refute that evidence.
14. Long before the COOL measure came into existence, the high quality Mexican cattle
exported to the US market were treated as complete ly interchangeable with US cattle. There is no
question that Mexican and US cattle are "like products".

2. Less favourable treatment under 2.1. of the TBT Agreement and GATT Article III:4
15. By its design and structure, the COOL me asure creates a situation where the most
economically rational and low-cost method for comp liance with the measure is to restrict the
processing of Mexican cattle in the United States. What I mean by "restrict" is the reduction of
processing facilities, the reduction of processing days, the imposition of advance notification
requirements, and the imposition of a discount against the price of Mexican cattle.
16. By any standard, these effects are clearly a denial of competitive opportunities.
B. O
BSTACLES TO TRADE UNDER TBT ARTICLE 2.2
17. The COOL measure not only discriminates against Mexican cattle, it also creates a restriction
against imports of such cattle. This restriction is in the form of an unn ecessary obstacle to trade,
which violates TBT Article 2.2.
18. The United States argues that the legitimate obj ective is "consumer information". Mexico
does not deny that providing consumer information, in the abstract, can be a legitimate objective.
However, the legitimate objective must be defined at a level of specificity that accurately describes
the measure that is being justified. In this dis pute, the objective has to be defined as informing the
consumer where the cattle incorporated in the beef were born.
19. Consumer information objectives must be assessed on a spectrum. If the consumer
information provided is to protect safety or health, such as a listing of ingredients, or to provide
economic protection to purchasers, such as mandati ng accurate data about we ight and volume, the
measure is likely to be legitimate. If the informa tion is in fact misleading, or intended to discourage
purchases of products made with foreign inputs, the objective likely is not legitimate.
20. In this instance, when viewed from the perspectiv e of its design, structure, application and all
other relevant circumstances, the objective of this measure is solely protectionist and, therefore,
clearly not legitimate.
21. In this regard, the sole reason to provide information on the birthplace of the cattle
incorporated into the beef is to give US dom estic cattle a competitive advantage. Moreover, a
fundamental flaw of the COOL measure is that it does not provide accurate information to consumers.
C. TBT ARTICLE 2.4
22. The COOL measure is not based on the app licable CODEX standard, and therefore is
inconsistent with TBT Article 2.4. The US position is that if a relevant international standard would
prevent the United States from implementing a me asure, the international standard must be
inappropriate and ineffective. Obviously, the US approach to this issue would make Article 2.4
completely meaningless.
23. In this regard, the United States has asserted that the CODEX standard does not define the
word "processing", and suggests that this constitutes a gap in the standard. In fact, the United States
has rejected the CODEX standard entirely for b eef products. The COOL measure disallows the
possibility that any processing – including raising the animal from a young age, slaughtering and
processing – could affect the country of origin of the resulting beef product.

24. At the same time, the United States determines country of origin consistently with the
CODEX standard for beef products imported from othe r countries, for parts of the cattle other than
muscle cuts and ground beef, and for the great majority of other food products.
D. TBT ARTICLES 12.1 AND 12.3
25. Regarding TBT Articles 12.1 and 12.3, the United States has taken the position that simply
allowing Mexico to submit comments on the regulations was sufficient to satisfy the US obligation to
take into account of the special needs of developi ng countries. That interpretation of Articles 12.1
and 12.3 would render them meaningless. The Unite d States does not, and can not, point to anything
it did in the preparation and application of the COOL measure with a view to avoid creating an
unnecessary obstacle to exports from Mexico. Rather , it ignored Mexico's comments and the impact
that it knew the COOL measure would have on Mexican exports.
E. GATT ARTICLE X
26. Mexico's claim under GATT Article X helps to emphasize the inconsistent and arbitrary
manner in which the COOL measure has been impl emented. The COOL measure has truly been a
"moving target". There have been changes to the statute and changes to the regulations, as well as
both formal and informal pressure by the US authorities to restrict the manner in which US processors
can comply with their legal obligations.
27. The Vilsack letter is part of continuing actions by the United States government, under
authority of the COOL statute, to pressure the US industry not to use foreign cattle
28. Furthermore, the Vilsack letter pressured th e industry to undertake additional labelling
requirements when using the multiple label. Th is is evidence of US government pressure on
companies not to use the multiple origin label. Th is in turn eliminated the economic feasibility of
commingling Mexican and US cattle.
F. NON-VIOLATION NULLIFICATION AND IMPAIRMENT
29. With regard to Mexico's non-violation nullifica tion or impairment clai m, the United States
argues that Mexican cattle enter the United States under the NAFTA tariff concessions and not those
of the WTO. The NAFTA tariff is zero and the US MFN bound tariff is 1 cent per kilogram, which is
about $1.36 to 1.81 for a 300 to 400 pound animal. B ased on this WTO tariff binding, Mexico could
legitimately expect that its cattle would have a competitive disadvantage of $1.36-1.81 per animal
compared to like US products. The actual price di scount created by the COOL measure is between
$40.00-$60.00 for the same 300-400 pound animal . The competitive disadvantage or level of
protection reflected in this price discount vas tly exceeds Mexico's legitimate expectation of
$1.36-1.81 per animal.
30. Thus, the COOL measure nullifies or impairs benefits accruing to Mexico under both its
NAFTA and WTO tariff bindings.

VII. CONCLUSION
31. From the facts of this dispute and the evidence provided by Mexico it is clear that the COOL
measure adopted by the United States adversely affect s Mexican exports of cattle. Even though US is
trying to justify its measure by characterizing it as a facially neutral measure aimed at providing
additional information to the consumers, the m easure is discriminatory because it upsets the
conditions of competition of Mexican cattle in fa vour of like US cattle and creates an unnecessary
obstacle to trade. Such a measure is not permitted by the WTO rules.

ANNEX D-3

EXECUTIVE SUMMARY OF THE OPENING ORAL STATEMENT
OF THE UNITED STATES AT THE FIRST SUBSTANTIVE MEETING

1. Countries around the world have recognized that consumers desire – and have the right to
know – the origin of the products they buy at the reta il level. In fact, at least 40 WTO Members have
enacted COOL requirements in recent years. These requirements apply to a broad range of products
including consumer goods, apparel, and food, among others.
2. In this dispute, Canada and Me xico challenge US COOL requirements as they apply to beef
and pork. These measures are the result of a longstanding effort by the US Congress and USDA to
update and improve upon COOL requirements firs t adopted in the United States in 1930. The
objective of these updated requirements is to ensure that consumers are provided information about
the meat and other food products they buy at th e retail level and to prev ent consumer confusion
regarding the origin of muscle cuts of meat.
3. The updated US COOL system is the product of deliberative legislative and regulatory
processes. The United States made substantial effort s to ensure its measures provide consumers with
as much information as possible without imposing unduly burdensome compliance costs on market
participants. The United States formally solicited input on its regulations a nd received thousands of
comments. Many commentators strongly suppor ted enhanced COOL requirements for meat,
including consumer groups and i ndividual consumers. The United States received comments from
others, including industry and trading partners such as Canada and Mexico, opposing new labelling
requirements as overly burdensome. In response, the United States modified its proposed measures to
make them less burdensome and to reduce compliance costs.
4. While Canada and Mexico have brought claims under numerous WTO provisions, their
arguments focus on two issues. First, they challe nge the specific manner in which the United States
designed its COOL measures. They focus on the 2009 Final Rule's requirement that retailers list more
than one country of origin for meat derived from animals who were born and/or raised in another
country before being slaughtered in the United States . They argue that this requirement renders the
measures more trade restrictive than necessary. A ccordingly, they suggest that the United States
abandon its carefully crafted system in favour of a voluntary labelling system or one based on
substantial transformation.
5. These alternatives were proposed by the compla ining parties during the regulatory process;
they were not accepted then because, quite simply, they do not work: they do not ensure that
consumers get meaningful information about the origin of meat at the retail level. These suggestions
also do nothing to provide clarity in the one area wher e meat labels have the greatest potential to be
confusing – where the meat is derived from an an imal that crossed the US border before being
slaughtered. Thus, these suggestions should not be accepted now.
6. The United States went to great lengths to acco mmodate the cost-related concerns of Canada,
Mexico, and others while ensuring that its measures provide consumers with meaningful information.
Canada and Mexico's arguments on this point ove rlook these efforts and ignore the TBT Agreement's
recognition that any WTO Member may take measur es necessary to achieve legitimate regulatory
objectives "at the levels it consider s appropriate". The United States decided that consumers should
be provided with origin information about the food products they buy at the retail level, including
where the source animal for meat products was born, raised, and slaughtered to prevent consumer

confusion. None of the alternatives that Canada and Mexico propose would fulfil the US objective at
the level the United States determined is appropriate.
7. Second, Canada and Mexico argue that th e COOL regulations accord less favourable
treatment to their livestock because they force US slaughterhouses to stop purchasing their animals to
avoid allegedly high costs associated with pro cessing both foreign and domestic livestock. A major
problem with these arguments is that they mi srepresent the details of the COOL measures,
inaccurately asserting that they require segregation. To the contrary, the regulations were designed so
that segregation would not be necessary. Canada and Mexico also overstate the costs associated with
segregation for those firms who may choose to do so and they ignore market conditions unrelated to
COOL that explain the recent experience of their liv estock producers. Finally, Canada and Mexico's
claims regarding the impact of the measures cannot be reconciled with recent trade data. US
processors continue to buy livestock from Canada and Mexico with strong increases in US livestock
imports in 2010.
8. Canada and Mexico's less favourable treatment arguments are also flawed because they
presuppose that market participants will all choose to comply, and in fact, are forced to comply with
the regulations by discontinuing th e purchase of Canadian and Mexican livestock. This is simply not
the case. Rather, the COOL measures establish orig in neutral labelling requirements for retailers of
meat. Nothing in the measures prescribes how market participants in the upstream supply chain must
respond. These market participants are allowed to, and in fact they have been, complying with the
regulations in many different ways, including in ways that allow them to continue to purchase
significant amounts of Canadian and Mexican livestoc k. Even Canada and Mexico's own evidence
indicates that some market participants have not altered their purchasing behaviour in response to the
regulations. And even if the complaining parties could prove that some market participants decided to
buy less foreign livestock, this reflects independent decisions of private market actors and cannot be
attributed to the measures.
9. Canada and Mexico argue that various instruments (the COOL statute; the 2008 Interim Rule;
the 2009 Final Rule; the Vilsack Letter; and for Me xico, the FSIS Interim Rule and FSIS Final Rule)
constitute one "COOL measure". By defining the various US instruments this way, Canada and
Mexico attempt to sweep into the analysis measures th at no longer exist and, with regard to others, to
avoid proving their case. For example, the Vi lsack Letter does not incl ude mandatory labelling
requirements and is not a technical regulation under th e TBT Agreement. Similarly, neither party has
explained how the COOL statute and FSIS Final Rule, when examined separately from the 2009 Final
Rule, are inconsistent with US WTO obligations. The Panel should reject Canada and Mexico's
characterization of a single measure and instead analyze each of these measures and documents on its
own, consistent with the approach taken in past disputes.
10. Turning to their substantive claims, neither Canada nor Mexico prove that the COOL
measures are inconsistent with TBT Article 2.1 or GATT Article III:4 because all of the measures at
issue in this dispute treat beef, pork, and livestoc k identically regardless of origin. Despite this,
Canada and Mexico argue that the COOL measures are de facto inconsistent with US national
treatment obligations because they modify the conditions of competition to the detriment of their
livestock.
11. These arguments are flawed for multiple reasons. First, they are founded on the erroneous
assertion that a US slaughterhouse can only pro cess both foreign and domestic livestock by
segregating its production lines. To the contrary, th e regulations do not require segregation. Rather,
they permit US slaughterhouses to commingle US and foreign origin cattle within a single production
day and affix the resulting muscle cuts of meat with a mixed origin label.

12. Second, to the extent that US processors might choose to comply with COOL by segregating
instead of commingling, the cost of doing so is not as high as Canada and Mexico assert, and it is not
prohibitive. The complaining parties overstate the co sts, in part, because they overlook the fact that
many US processors have long segregated their production lines to meet grade labelling requirements,
for other marketing programs, and to meet expor t requirements. Insofar as these processors may
segregate to meet the COOL requirements, they ar e unlikely to incur signifi cant new costs since they
would not be deviating much from prior practice.
13. Third, these arguments presuppose that US sl aughterhouses who choose to segregate cannot
pass on any compliance costs to consumers and do not account for the possibility that some
slaughterhouses will continue to source both foreign a nd domestic livestock even if there is an added
expense. The reason for this is that their bus iness models are based on a supply of mixed origin
animals to ensure that the plant runs at full capacity and at maximum efficiency.
14. Beyond segregation, Canada and Mexico's view of what is happening in the market is
inaccurate. According to the ev idence presented by Canada and Mexico, at least 12 of the 15 US
slaughterhouses that were accepting foreign and domestic livestock in 2008 are continuing to do so.
This indicates that these slaughterhouses do not cons ider the cost of processing foreign livestock
under the regulations to be prohibitive. These sl aughterhouses have more than enough capacity to
process all Canadian and Mexican livestock sent to the United States.
15. To the extent that any US slaughterhouse may decide to stop processing foreign livestock to
comply with COOL, this would be the decision of that private market actor alone. The COOL
measures permit processors to comply with the labe lling requirements in any way they see fit as long
as they provide accurate information to retailers. Nothing in the regulations compels them to stop
accepting foreign livestock or to segregate.
16. Canada and Mexico's discussion of trade data ignores external factors that explain any
reduction in their livestock exports. In fact, while the COOL measures were being implemented, the
world was in the throes of a global economic recession. In 2009, trade in agricultural products was
down 12 per cent around the world and down 11 per cen t in the United States. Given the recession, it
would have been a major surprise if Canadian and Mexican livestock exports did not decline as well.
Yet both Canada and Mexico's submissions and th e economic studies they commissioned fail to take
notice of this major economic shock, much less to account for it in their analysis. Canada and Mexico
would have the Panel believe that had the Unite d States not enacted the COOL measures, their
livestock would have entered the United States at leve ls and prices unaffected by the recession. This
position does not withstand scrutiny.
17. Third, Canada and Mexico overs tate the severity of the decline in their exports and they
ignore recent market trends. Even during the recession, Canadian and Mexican cattle exports
remained above their historical averages and exports of both of these products are increasing
significantly in 2010. US imports of Canadian cattle are up 6 per cent while imports of Mexican
cattle are up 31 percent. These trends are expected to continue.
18. Canada and Mexico's arguments regarding less favourable treatment are premised on an
incorrect understanding of the meaning of less favourable treatment under the national treatment
provisions. The TBT Agreement preamble affirms the right of Members to regulate. Any time a
Member enacts a technical regulation, it likely im poses some costs on market participants. Further,
depending on their situation, some market actors will face higher costs than others, and they will
respond to these costs in different, and often unpredictable, ways. The fact that some market actors

may decide to change their behaviour in a manne r that disfavours products from some Members does
not establish that the measures accord those products less favourable treatment.
19. Here, the measures themselves are neutral on thei r face. The changes in the market that
Canada and Mexico identify are not mandated by th e measures themselves, but at most reflect how
some private entities have decided to structure th eir business based on their assessment of costs and
other commercial considerations. As such, the m easures do not accord "less favourable treatment" to
Canadian and Mexican livestock.
20. This conclusion is consistent with the Appellate Body's reasoning in Dominican Republic –
Import and Sale of Cigarettes where the Appellate Body noted that "the existence of a detrimental
effect on a given imported product resulting from a measure does not necessarily imply that this
measure accords less favourable treatment to imports if the detrimental effect is explained by factors
and circumstances unrelated to the origin of the pro duct, such as the market share of the importer in
this case."
21. Canada and Mexico have failed to prove that any of the measures breach TBT Article 2.2.
Under Article 2.2, read in conjunction with the TB T Agreement preamble, each Member has the right
to decide for itself which legitimate objectives to pursue and to take measures to meet those objectives
"at the levels it considers appropriate". The EC – Sardines panel agreed with this interpretation.
22. The COOL measures were enacted with the leg itimate objective of providing consumers with
information about the covered commodities they buy at the retail level. For muscle cuts of meat, the
United States decided that retailers should prov ide information about all the countries where the
source animal was born, raised, and slaughtered. If the measures only required retailers to list where
the animal was slaughtered, meat derived from liv estock that spent its entire life outside of the
United States and was only present in the country fo r a short time period (perhaps less than 24 hours)
would be designated US origin. Reading the label, a consumer would assume that the source animal
had been born and raised in the United States. Th e fact that this product might also carry a USDA
grade label would only exacerbate this confusion.
23. To verify the objective, the Panel should begin w ith their text and may consider their design,
architecture, and revealing structure. As the Appella te Body noted, "it is not necessary for a panel to
sort through the many reasons legislators and regul ators often have for what they do and weigh the
relative significance of those reasons to establish legislative or regulatory intent."
24. The text of the COOL measures clearly indicate that their objective is consumer information.
The 2009 Final Rule states that "the intent of the law and this rule is to provide consumers with
additional information on which to base their purch asing decisions". The COOL measures are also
designed to ensure that consumers receive in formation about the covered commodities and are
structured to prevent consumer confusion.
25. As a number of third parties have noted, the objectives of the US measures are legitimate.
TBT Article 2.2 contains a non-exhaustive list of le gitimate objectives, as confirmed by the use of the
term "inter alia". Thus, objectives not included in the list may also be legitimate. The legitimacy of
the US objectives are validated by the widespread c onsumer support for this information and the fact
that over 40 WTO Members have country of origin labelling systems. Additionally, one of the
objectives listed in Article 2.2 (the prevention of d eceptive practices) is closely related to consumer
information and the prevention of consumer confusion.

26. The COOL measures fulfil their objectives at th e level that the United States has deemed
appropriate. They provide US consumers with info rmation previously unavail able to them and have
helped prevent confusion. While they do not requi re retailers to convey ev ery detail regarding the
product's origin or cover every instance in which a consumer purchases food, this does not support the
conclusion that the measures' objective is something other than consumer information or demonstrate
that the measures do not fulfil their objectives. It is true that if exceptions and flexibilities were not
included and certain modifications were not made, the 2009 Final Rule would require retailers to
provide more information to consumers than it does. However, the rule would also have imposed
higher costs on industry. Given that USDA made a number of changes in response to concerns
expressed by Canada and Mexico, the United States finds it somewhat ironic that the complaining
parties now attempt to use these changes against the United States.
27. Taking into account the US objectives, and given the flexibilities the United States built into
its measures, they are not "more trade restric tive than necessary". The TBT Agreement does not
define the phrase "more trade restrictive than necessar y" and it has not been interpreted by any WTO
adjudicative body. Based on the text, a complaini ng party must demonstrate (1) that a particular
measure is trade restrictive and (2) that the measur e restricts trade more than is necessary to fulfil the
measure's legitimate objective. The United States agrees with Canada that SPS Article 5.6 provides
useful context for the interpretation of the phr ase "more trade restrictive than necessary". SPS
Article 5.6 includes similar language to TBT Article 2.2 and the Appellate Body has noted the "strong
conceptual similarities" between the two agreements . Therefore, a Member asserting a breach of this
provision must demonstrate that there is another measure that (1) is reasonably available to the
government, taking into account technical and econom ic feasibility; (2) fulfils the government's
legitimate objectives at the level the government has determined is appropriate; and (3) is
significantly less trade restrictive.
28. Canada and Mexico have faile d to prove that any of the COOL measures adopted by the
United States are more trade restrictive than necessary. Canada and Mexico's arguments in this regard
rest on their erroneous assertions that the US measures require segregation and that there are high
costs associated with that practice that have for ced US processors to comp letely reject foreign
livestock. Additionally, the complaining parties ig nore recent trade data that illustrate a significant
increase in Canadian and Mexican livestock exports in 2010.
29. Canada and Mexico have failed to demonstrate there is another measure that would meet the
US objectives of providing consumer information a nd preventing consumer confusion at the level the
United States deems appropriate while being signifi cantly less restrictive to trade. Both of the
measures that Canada and Mexico suggest – a vo luntary labelling system and a mandatory system
based on substantial transformation – fall short. A voluntary system would clearly not meet the US
objective. Indeed, the United States at one time attempted to implement a voluntary system, but US
retailers simply opted not to label their products.
30. A system based on substantial transformation woul d fail to meet the US legitimate objectives.
This system would not provide any information abou t the different countries in which an animal was
born and raised when the animal was born and/or ra ised in a foreign country and then slaughtered in
the United States. Further, it would not prevent consumer confusion. U nder this system, meat
derived from an animal that spent its entire life in another country before being slaughtered in the
United States would be characterized as US origin . This would defy consumer perception and could
perpetuate confusion. Finally, Canada and Mexico have not shown that a substantial transformation
system is significantly less trade restrictive.

31. Mexico has also failed to establish the COOL measures breach TBT Article 2.4. In particular,
Mexico has not demonstrated that the CODEX sta ndard it advances is an effective or appropriate
means of fulfilling the legitimate objectives pursued by the United States. CODEX-STAN 1-1985
appears to be based on substantial transformation. Thus, this standard suffers from the same
deficiencies as the alternative just discussed.
32. Mexico's arguments under TBT Article 12.3 fail to establish that any of the COOL measures
breach this provision. Mexico has not demonstrated that the United States did not take its needs into
account during the preparation and application of th e 2009 Final Rule. Rather, the United States gave
Mexico the opportunity to participate in the US rule making process and to share its concerns with the
United States in other fora. The United States cons idered Mexico's contributions and even modified
its regulations in response to concerns raised by Mexico.
33. Canada and Mexico have fa iled to demonstrate that any of the COOL measures are
inconsistent with US obligations under GATT Article X:3. Neither party offers evidence to show that
the administration of these measures has been unreas onable or non-uniform. Indeed, their arguments
do not even relate to the administration of the C OOL measures. Rather, Canada and Mexico focus on
the issuance of the Vilsack Letter, an action that di d not in any way "put into practical effect" or
"apply" the COOL statute or regulations. Further, changes the United States made to the regulations
were not non-uniform or unreasonable. In fact, many changes were made at the request of interested
parties, including Canada and Mexico.
34. Finally, Canada and Mexico have not demonstrated that any of the COOL measures nullify or
impair their benefits under the WTO Agreements. In fact, neither party is able even to identify the
relevant benefits under the covered agreements that have been a ffected, let alone establish that they
could not have reasonably anticipated the enactment of the COOL measures.

ANNEX D-4

CLOSING ORAL STATEMENT OF CANADA
AT THE FIRST SUBSTANTIVE MEETING

1. Mr. Chairman, members of the Panel, we thank you for the opportunity to provide a few
concluding comments.

2. We appreciate the contributions made by the third parties through their written submissions,
their statements and answers to questions.

3. Canada considers that we had a useful firs t discussion in this case. However, Canada is
struck by the fact that we have not really en gaged in detailed discussion of some key evidentiary
issues. Perhaps this is because the United States has offered no credible evidence, and in some cases
no evidence at all, to rebut the complainants' case.

4. The adverse effects of the COOL measure on the conditions of competition for Canadian
cattle and hogs in the US market is a critical issu e in this case. The United States has not contested
the letters and witness statements produced by Canada demonstrating the adverse effects. However,
the United States did criticize certain aspects of Dr. Sumner's econometric analysis on the effect of the
COOL measure. Canada has responded to this criticism in its Oral Statement.

5. Yesterday, the United States filed further e xhibits (US-57, US-58 and US-59) and discussed
the data in paragraphs 27-29 of its Oral Statement. These exhibits are so elementary and general in
nature that they cannot be considered any respon se to the serious and thorough analysis submitted by
Canada (in CDA-79 and updated in Canada's new exhibit CDA-152).

6. Canada has pointed out that simple pict ures of broad trade patterns provide no useful
information to help the Panel understand how th e COOL measure has actually affected the US
demand for imported cattle and hogs relative to comparable animals in the United States.

7. Using detailed weekly time patterns of import ratios (and differences between prices of
domestic livestock and comparable imported livestock) , as Canada does in its analysis of recent data,
helps account for potential factors such as economy-wide fluctuations, that affect the market as a
whole. Canada has shown the significant degree to which imports relative to US feedlot placements
and slaughter use have been directly and specifi cally caused by the COOL measure, after accounting
for trends, seasonality and other events.

8. Comparing overall cattle imports during the sever ely depressed first half of 2009 with the first
half of 2010 (which is done in exhibit US-59) is irrelevant and misleading. First, such data say
nothing about the continued lower prices received for Canadian fed cattle. And second, the United
States does not provide any data on hogs. On this point, we note how little emphasis there has been
on the exports of hogs as compared to cattle. In fact, US hog imports from Canada have declined
consistently since the COOL measure went into effect.

9. We trust that there will be more opportunity to explore these aspects in answers to written
questions and also at the next meeting, in December.

10. As to other evidence, the United States pr ovides vague suggestions on what the objective of
the COOL measure is. It suggests that it provid es some kind of information to consumers (though

what exactly is unclear) in response to an allege d strong demand for this unclear information. It
conflates consumer information with deceptive pr actices without providing any evidence, or even
persuasive logic, to explain ho w any consumers have been deceived prior to the COOL measure and
are now not deceived any more. Consumer decep tion or addressing consumer confusion cannot be a
legitimate objective when such deception or confusion is a result of the WTO Member's own laws and
regulations. Ultimately, where there is an unne cessary obstacle to trade in the absence of a
decipherable legitimate objective, there is a violation of Article 2.2 of the TBT Agreement.

11. Furthermore, the United States continues to deny the link between the COOL measure and
segregation in practice, and attributes any segregati on to private business decisions. Yet as Canada
has already pointed out in detail in its Opening St atement at paragraphs 27 and 28, and Mexico has
also shown (such as in exhibit MEX-41), slaught ering operations imposed segregation as a necessary
response to the COOL measure. The US suggestion that segregation is a private business decision
unconnected to COOL is disingenuous in the light of that evidence.

12. Mr. Chairman, Members of the Panel, we th ank you for your attention and your continuing
work on this very important matter for Cana da and the other Members of the World Trade
Organization. We would also like to express our appreciation to the Secretariat for organizing this
meeting. We look forward to receiving your written questions.

ANNEX D-5

CLOSING ORAL STATEMENT OF MEXICO
AT THE FIRST SUBSTANTIVE MEETING1

1. Mr Chairman and Members of the Panel, a number of issues have been discussed during this
substantive meeting. In this final statement, I intend to focus on a few key points only.
I. INTEGRATION OF THE MEXICAN MARKET
2. To begin with, it needs to be stressed that th e cattle and beef industries of Mexico and the
United States have historically been integrated a nd inter-related. Mexico's comparative advantage in
this relationship has involved producing feeder cattle to be sent at a very early stage to be raised and
slaughtered in the United States.
3. The comparative advantage of the United St ates has consisted in feeding the cattle,
slaughtering it, producing and marketing the meat a nd sending it to its domestic market, to Mexico
and to other countries. This is a historical relationship.
4. Today, Mexico is celebrating the 200
th anniversary of its fight for independence and the
100th anniversary of its Revolution. Since those times, the market has become naturally integrated to
the benefit of both countries.
5. Mexico has had to adapt to all of the sanitary requirements imposed by the United States; and
in spite of this, the United States has disrupted a natural trade relationship by introducing the COOL
measure.
II. DISCRIMINATION ARGUMENTS
6. Mexico's discrimination arguments with regard to Article 2.1 of the TBT Agreement and
Article III:4 of the GATT 1994 are fundamental to its case.
7. The COOL measure has adversely influenced the competitive opportunities of Mexican cattle
imports in favour of United States cattle by directly producing the following effects:
Reducing the number of plants that slaughter and process feed cattle that was born in Mexico and
raised in the United States;
reducing the number of days per week that such ca ttle are slaughtered and processed in the remaining
plants;
requiring advance notice prior to accepting such cattle;
reducing the number of US feeders that are ready to accept Mexican cattle.
8. US cattle has suffered no such loss of compe titive opportunities. These losses have reduced
the price paid for Mexican cattle as compared to th e price paid for cattle born in the United States,
thereby adversely affecting the conditions of competition for Mexico.
9. Mexico has presented a clear case of de facto discrimination in violation of Article 2.1 of the
TBT Agreement and Article III:4 of the GATT 1994.

1 This oral statement was originally made in Spanish.

III. EVIDENCE
10. Let me emphasize that Mexico has made a prim a facie case with respect to every fact and
legal element involved, particularly as regards the direct effect of the COOL measure on the balance
of competitive opportunities in the United States market.
11. Turning to the Vilsack letter, Mexico notes that one of the ways in which the industry can
comply with the letter is to avoid using the Categor y B label. The evidence that Mexico has adduced
with respect to the limitations imposed on exports of Mexican cattle would indicate that the main
processors have been forced to do just that.
IV. PRIVATE ACTORS
12. In its written and oral submissions, the United States argues that the effects identified by
Mexico as being the direct result of the COOL measure are in fact the result of action by private
actors in the industry.
13. The United States cites the report of the Appellate Body in Korea – Various Measures on
Beef in support of its argument.
14. The United States erroneously interprets the Appe llate Body's decision. What the Appellate
Body said in paragraph 146 of its report was the following:
"146. We are aware that the dramatic re duction in number of retail outlets for
imported beef followed from the decisions of individual retaile rs who could choose
freely to sell the domestic product or the imported product. The legal necessity of
making a choice was, however, imposed by the measure itself. The restricted
nature of that choice should be noted. Th e choice given to the meat retailers was not
an option between remaining with the pre-existing unified distribution set-up or going
to a dual retail system. The choice was limited to selling domestic beef only or
imported beef only. Thus, the reduction of access to normal retail channels is, in
legal contemplation, the effect of that measure. In these circumstances, the
intervention of some element of private choice does not relieve Korea of
responsibility under the GATT 1994 for the resulting establishment of
competitive conditions less favourable for the imported product than for the
domestic product." (Emphasis added)
15. This is exactly what is happening in this di spute. The COOL measure is limiting the options
available to US processors, so that the private sector actions can be attributed to the measure itself.
V. THE UNITED STATES' OBJECTIVE
16. As Mexico has said, the true objective of the C OOL measure is "protectionism". It is also
clear to Mexico that the objective is not legitimate.
17. The objective adduced by the United States has be en made clear: "to eliminate consumer
confusion".
18. To the extent that such confusion may have ex isted, it was due to an already existing legal
system in the United States.

19. It is clear from our discussions with the Unite d States during this meeting that the measure
merely causes confusion.
VI. ACKNOWLEDGEMENTS
20. We would like to thank the Panel for its attenti on during this meeting, and the Secretariat and
interpreters for their assistance.

ANNEX D-6

EXECUTIVE SUMMARY OF THE OPENING ORAL STATEMENT OF
THE UNITED STATES AT THE SECOND SUBSTANTIVE MEETING

1. Canada and Mexico have asserted that they are not challenging country of origin labelling
requirements in general. They acknowledge that many WTO Members maintain country of origin
labelling requirements for food and that this prac tice is not necessarily WTO-inconsistent. They both
maintain country of origin labelling requirements as do many third parties.
2. Canada and Mexico necessarily claim then, that their concern is not with country of origin
labelling in general, but only with the particular measures th at the United States adopted with respect
to beef and pork. However, Canada and Mexico's arguments regarding the WTO obligations at issue
cannot be reconciled with this positi on: were their arguments accepted, it is difficult to conceive of
any country of origin labelling system that would survive WTO scrutiny.
3. The complaining parties assert the US measures do not fulfil their legitimate objectives and
are protectionist because they apply only to some food products; yet even a cursory review of the
labelling systems of the third parties shows they do not apply to all products either. Canada and
Mexico find fault with the fact that the US measure s are mandatory and apply at retail; yet again, the
United States has identified nearly 70 Members with mandatory requirements, many of which apply at
retail. Canada and Mexico criticize the US measu res because they are not based on the concept of
substantial transformation; but the United States is hardly the only WTO Member not to base its
labelling requirements on this concept. Thus, if th e US measures are WTO-inconsistent due to their
scope, their mandatory nature, the fact that they apply at the retail level, or the fact that they rely on
criteria other than substantial transformation, this would raise questions about many other labelling
requirements maintained by WTO Members.
4. Canada and Mexico criticize the US measures as not providing complete information to
consumers, in particular because the United States strived to reduce compliance costs by adding, at
Canada's request, commingling provisions. When c oupled with their argumen t that compliance costs
are too high, Canada and Mexico's complaint rega rding commingling puts the United States and other
WTO Members with labelling requirements in an impossible position. Canada and Mexico condemn
the US measures as "more trade restrictive than ne cessary" because of their compliance costs, yet at
the same time claim that they fail to fulfil their legitimate objectives because of efforts made by the
United States to reduce these costs. In effect, Canada and Mexico's theory presupposes that WTO
panels should stand in the shoes of the regulator, re-calibrate the costs and benefits of a given
measure, and in the process undermine the right of WTO Members to adopt measures to provide
origin information to their consumers at the level they consider appropriate.
5. In addition to making overly-broad arguments that would jeopardize the ability of WTO
Members to adopt origin labelling requirements, Ca nada and Mexico argue th at the US measures are
WTO-inconsistent because of their alleged effects in the market. Ho wever, Canada and Mexico have
not identified any aspects of the COOL measures themselves that accord less favourable treatment to
their livestock exports. While the complaining pa rties have provided limited evidence suggesting
some private market actors changed their polici es in response to the measures, much of this
information is inaccurate and any such actions ar e not required by the measures. The measures only
require retailers to label their products with origin information, regardless of what that origin may be,
and they require suppliers to provide accurate informa tion to those retailers. They do not require feed
lots or slaughter houses to segregate and do not prevent them from accepting foreign livestock.

Further, Canada and Mexico's assertions regarding the impact of the measures cannot be reconciled
with recent data showing Canadian and Mexican livestock exports and prices are up.
6. Canada and Mexico's theory that the COOL me asures were adopted for protectionist reasons
is contradicted by the text of the measures, thei r design, and extensive ev idence demonstrating that
US consumers and consumer organizations activel y supported and sought the enactment of the US
measures. The United States provided substantial evidence regarding the role played by the
consumer, including letters of support from individual consumers, extensive lobbying efforts by the
leading consumer organizations in the United St ates, and even a recommendation adopted by the
Trans-Atlantic Consumer Dialogue (TACD), a coalition of 27 US and 49 EU consumer organizations,
explicitly endorsing the COOL statute.
7. Instead of making their case with regard to all of the instruments, Canada and Mexico urge
the Panel to make findings with regard to a singl e "COOL measure". This characterization overlooks
substantive differences between the instruments th at have implications for how the various WTO
obligations apply. In addition, many of the instruments Canada and Mexico characterize as part of the
single "COOL measure" have expired or are not within the Panel's terms of reference. Further, the
WTO reports that Canada and Mexico cite to suppor t their "single measure" theory are not applicable
to the instant dispute. Thus, the Panel should examine each instrument separately as was done in
Japan – Film and Turkey – Rice.
8. By advancing the "single measure" theory, Canada and Mexico attempt to hide deficiencies in
their case, such as the fact that the Vilsack Letter is not a technical regulation under the
TBT Agreement or a "requirement" under GATT Artic le III:4. The Vilsack Letter does not meet
these definitions because it is not mandatory. This is obvious from the letter's text, its lack of an
enforcement mechanism, and the fact that it has no legal status. Tellingly, the evidence before the
Panel also indicates that industry is not following the letter's suggestions.
9. Canada and Mexico have fa iled to demonstrate that the COOL measures breach TBT
Article 2.1 or GATT Article III:4. The COOL me asures treat covered commodities of all origins
identically, requiring products to be labelled with or igin regardless of what their origin may be. To
the extent that these measures apply to livestock, they apply to them identically – requiring that meat
derived from these livestock be labelled at the retail level, regardless of where the source animal was
born, raised, and slaughtered.
10. Canada and Mexico's arguments to the contra ry are premised on a misunderstanding of the
legal obligations at issue and a misapplication of past reports examining the meaning of "less
favourable treatment". A Member does not act inco nsistently with these provisions unless its measure
treats domestic products one way and provides di fferent, less favourable treatment to imported
products based on origin. A Member will not breach these provisions as a result of the behaviour of
private market actors not required by the measure itself. Neither the GATT 1994 nor the
TBT Agreement guarantees a Member a particular outco me in the hands of an individual market actor
or a particular level of sales for their product. The question is whether any of the COOL measures
provides for different treatment based on origin, and if so, whether that different treatment is less
favourable for imported products. Not only do the COOL measures not provide for different
treatment based on origin, but the detrimental eff ects complained about are based on the actions of
private market actors or due to external market factors.
11. Canada and Mexico's attempts to analogize the instant situation to Korea – Various Measures
on Beef by asserting that the COOL measures impose a choice on market actors that requires them to
accord less favourable treatment to imports are not persuasive. The Korea – Various Measures on

Beef measure on its face accorded different treatment to imported and domestic products and required
small retailers to choose between selling only domes tic or only imported products; they could not sell
both. The COOL measures are origin neutral and do not require retailers or any other private market
actors to make a choice between domestic and imported products or to take any particular action at all
that would harm imports. In fact, the COOL measu res allow market actors to comply in any fashion
they choose as long as the end product bears an accura te label. Feed lots and slaughter houses may
respond in many different ways, including by accep ting all domestic livestock, accepting all foreign
livestock, commingling different origin livestoc k on the same production day, accepting different
origin livestock on different days, or by segregating if they so choose.
12. In addition to misapplying the legal standard , Canada and Mexico ignore the commingling
provisions, which obviate the need to segregate. Us ing these provisions, feed lots can feed different
types of livestock together and send these animal s to be slaughtered on the same production day
without segregation. The slaughter house can proc ess these animals togeth er or commingle them
further and characterize the resulting meat as mixed or igin. Finally, after the meat derived from this
livestock leaves the slaughter house, it does not need to be segregated because it can all be affixed
with the same label at the retail level. Evidence before the Panel demonstrates that US processors are
taking advantage of the commingling flexibility, dire ctly contradicting Mexico's vague assertion that
USDA is somehow adopting a strict interpretation of the 2009 Final Rule that has discouraged the use
of these provisions.
13. Even if some feed lots and slaughter houses choose to respond to the COOL measures by
segregating, this does not establish that the measures accord different treatment based on origin, let
alone less favourable treatment. Segregation is but one among many options that these entities have
to respond to the measures, and the feed lots and slaughter houses who choose to respond to the
COOL measures by segregating are not required to reduce the price they pay for livestock (imported
or domestic) in order to offset any costs they c hoose to bear as a result. Rather, these entities can
absorb any associated costs, pass these costs on to consumers, or distribute these costs throughout the
supply chain. Nothing in these measures requi res them to impose these costs solely or
disproportionately on imported livestock through price discounting.
14. In addition to ignoring the commingling provi sions and pre-supposing that any segregation
costs will be imposed only on their products, Cana da and Mexico downplay the significance of the
segregation that has long been occurring in the ma rket independent of the COOL measures. The
significance of this pre-existing segregation is no t merely that slaughter houses who choose to
respond to the COOL measures by segregating can u se existing segregation me chanisms at limited
additional cost, but that segregation is extremely common and US processors can use their experience
and existing synergies to establish new segregation pr actices at a lower cost than if they had not
previously segregated for other purposes.
15. The evidence and economic studies that Canada and Mexico submit do not demonstrate that
the COOL measures accord less favour able treatment to their livestock. First, the evidence is of
questionable accuracy, and to the extent that it is accurate, it does not represent less favourable
treatment accorded by the measu res. Second, Canada and Mexico's argument that the COOL
measures have forced US feed lots and slaughter houses to reject their livestock and discount the price
paid for these animals is contradicted by recent economic data. Third, the economic models and
reports the complaining parties have submitted are highly flawed.
16.
Canada and Mexico have failed to demonstrate the COOL measures breach TBT Article 2.2.
If their arguments were accepted, it is unclear whether a Member could ever adopt country of origin
labelling requirements without breaching its WTO oblig ations. Canada and Mexico's arguments that

the COOL measures are "more trade restrictive than necessary" because they require too much
information and fail to fulfil their objectives because they do not provide enough put the United States
in an impossible position. The Panel should reject Canada and Mexico's attempts to turn the TBT
Article 2.2 analysis into a wholesale re-evaluation of every choice the United States made in the
process of developing a complex regime. Designi ng a technical regulation necessitates difficult
choices, especially when balancing the interests of US consumers and trading partners like Canada
and Mexico. Some interested parties advocated for a labelling system that provided more
information, while others advocated for a less costly system. The Panel need not – and should not –
stand in the shoes of the regulator and attempt to re -calibrate the balance that was struck. Rather, all
the Panel need determine is whether the measures fulfil their legitimate objectives at the level the
United States considers appropriate without restricting trade more than necessary.
17. The objectives of the COOL measures – providi ng consumer information about origin and
preventing consumer confusion regarding origin – are legitimate. Many third parties agree and
neither Canada nor Mexico dispute this fact. Th e legitimacy of these objectives is also confirmed by
the strong consumer support for country of origin labelling as well as the fact that many WTO
Members have adopted country of origin labelli ng requirements and explic itly identified "consumer
information" as their objective in their TBT notifications.
18. Providing consumer information about origin and preventing consumer confusion are the
objectives of the COOL measures. To determin e the objectives, the Panel should focus on the
measures' text and may also consider their design, ar chitecture, and revealing structure. The text and
design of the COOL measures clearly indicate that their objectives are consumer information about
origin and the prevention of consumer confusion. For example, the 2009 Final Rule states that "the
intent of the law and this rule is to provide cons umers with additional information on which to base
their purchasing decisions".
19. Canada and Mexico's arguments that the COOL measures are protectionist because of their
product coverage or origin defin ition would imply that most, if not all, of the labelling systems
maintained by WTO Members are also protectionist. Similarly, the fact that the 2009 Final Rule does
not provide the most detailed information possibl e in all circumstances does not imply that its
objective is protectionism. The commingling provis ions were specifically included at Canada's
request and they have reduced implementation costs. The fact that the COOL measures do not require
retailers to list more than one country on a Category D label when processing steps occur in more than
one country does not illustrate a protectionist objec tive either. The amount of meat to which this
applies is trivial and requiring multiple countries to be listed on a Category D label would increase
compliance costs for foreign producers.
20. To the extent that the legislative and regulator y history of the COOL measures are relevant, it
confirms the objectives as providing consumer info rmation about origin a nd preventing consumer
confusion. This is obvious from the Committee Repor ts, statements of legislators, statements of
interest groups, and statements of US consumers on the record.
21. The COOL measures fulfil their objectives at the levels the United States considers
appropriate. As a result of the measures, millions of consumers have information not previously
available to them. With regard to meat, consum ers have information on all the countries in which
processing steps took place when the meat is slaughter ed in the United States and will not be misled
into believing that meat labelled as US origin was derived from an animal born, raised, and
slaughtered in the United States when this is not the case.

22. While many consumers are pleased with th e COOL measures and the information they
provide, the United States could have designed these measures to provide even more information by
omitting the commingling flexibility or requiring point-of-production labelling. However, the
TBT Agreement does not require Members to take every step possible to fulfil its legitimate
objectives without regard to cost, and for this r eason, Canada and Mexico's arguments regarding
product coverage and imperfect information must fail.
23. Canada and Mexico have not identified a reasona bly available alternative. The suggestion of
a voluntary labelling system is not a reasonably av ailable alternative because the United States
attempted this option without success; therefore, it failed to fulfil the US objectives in a very
fundamental way. The suggestion that the Unite d States adopt a system based on substantial
transformation fails to fulfil the US objectives be cause it does not provide any information about the
multiple countries in which an animal spent its life when it was not born, raised, and slaughtered in a
single country; thus, it does not provide as much information as the US system and does nothing to
reduce consumer confusion regard ing meat products from animals bor n and/or raised in another
country and slaughtered in the United States. Many US consumers and consumer organizations
indicated that this level of information is important, and they rejected a definition based on substantial
transformation. Accompanying the 2009 Final Rule with a trace back system is not a reasonably
available alternative either. It is unclear how this alternative could possibly be less trade restrictive.
24. Mexico has failed to demonstrate that the COOL measures breach TBT Article 2.4. Mexico
asserts that the United States has conceded that the CODEX standard is relevant, but this mis-
characterizes the US position and fails to address the fact that the CODEX cannot be a relevant
standard for a large portion of the meat at issue (meat not pre-packaged) since it does not apply to
these products. Mexico has also failed to expl ain how substantial transformation would be an
"effective" or "appropriate" means of achieving the US legitimate objectives.
25. Mexico has also failed to demonstrate that the COOL measures breach TBT Article 12.3 and
has failed to identify what "special needs" it had. Mexico's arguments are based on a flawed legal
interpretation that ignores the text of Article 12.3, the context provided by other TBT provisions, and
the context provided by the special and differential treatment provisions of the SPS Agreement in
addition to past reports that have interpreted the SPS provision. Based on this, it is clear that Mexico
bears the burden of proof under this provision and th at the United States was not required to take any
particular actions in response to comments it recei ved from Mexico. In addition, the United States
has provided evidence on how it has taken Mexico's concerns into consideration with a view to
avoiding unnecessary obstacles to Mexico's exports.
26. Canada and Mexico have failed to demonstrate that any of the COOL measures breach GATT
Article X:3(a). Their arguments focus on actions that do not represent the "administration" of the
COOL measures and neither party has put forward an y evidence to suggest that the US administration
of the measures was unreasonable or non-uniform.
27. Finally, Canada and Mexico have continued to treat their nullification and impairment claims
in a cursory fashion. They have failed to present "a detailed justification in support" of their claim
that the COOL measures violate GATT Article XXIII(b) as required by DSU Article 26.1(a).

ANNEX D-7

EXECUTIVE SUMMARY OF THE OPENING ORAL STATEMENT
OF CANADA AT THE SECOND SUBSTANTIVE MEETING

I. INTRODUCTION
1. Canada is challenging the COOL measure principally because it has caused a serious
disruption to the conditions of competition in the US livestock market.
2. As a first preliminary point, Canada notes that it is not a defence to a violation of either TBT
Article 2.1 or 2.2, for a WTO Member to argue that it took into account competing interests in
developing a measure and provide d flexibility to accommodate all such interests. As a second
preliminary point, Canada notes that it is illogical to argue, as the United States does, that Canada has
to prove a violation of the statutory COOL provi sions separate from the Final Rule when the United
States itself has stated that the statutory COOL pr ovisions needed to be implemented by regulations
(i.e., the Interim Final Rule, and later the Final Rule).
II. TBT ARTICLE 2.1 AND GATT ARTICLE III:4
3. Findings regarding Canada's claims under TBT Article 2.1 and GATT Article III:4 are
important to achieve a "positive solution to the disput e", within the meaning of DSU Article 3.7. As
the TBT Agreement deals "specifically, and in deta il" with technical regulations, the COOL measure
should be assessed first under that Article; a similar finding of a violation of GATT Article III:4 will
follow from a finding of a violation of TBT Article 2.1.
4. The COOL measure has negatively affected th e conditions of competition for Canadian-born
cattle and hogs. Like all country-of-origin labelling, the COOL measure treats imported and domestic
products differently. US claims to the contrary, a pparently to equate the COOL measure with origin-
neutral technical regulations, are incorrect. It is also not relevant that that not all US slaughter houses
have rejected Canadian-born cattle and hogs. What is necessary is to show that the COOL measure
has negatively changed the conditions of comp etition for Canadian livestock by creating a
disincentive in the US market to use Canadian-born cattle and hogs.
5. Nothing in the TBT Agreement or the GATT s upports the United States' apparent argument
that a measure that causes harm to the conditions of competition for one category of products – cattle
–may somehow be "saved" if the product in question is an input into other products – beef –, the sales
of which have increased.
6. Despite its suggestion that the COOL measure did not cause slaughter houses in the United
States to stop or limit their use of Canadian-born cattle and hogs, the United States has effectively
conceded that the response by private actors can be attributed to the COOL measure. The US
reference to Dominican Republic – Cigarettes case is not of assistance to it either. In that case the
Dominican Republic applied this requirement identic ally to different individual companies without
reference to the origin of the product they sold . In contrast, the COOL measure makes product
distinctions solely based on the origin of the livestock.

A. S
EGREGATION
7. The COOL measure requires participants throughou t the meat supply chain to track the origin
of the livestock and meat derived from that livestock. This tracking in practice requires segregation.
8. The United States proposes four "options" to avoid segregation, which focus only on
slaughter houses. Options one and two require separat e supply chains. In Korea-Beef, retailers had a
choice to sell Korean or imported beef, or to place both types of beef in separate display cabinets in
large stores. The Appellate Body found that this created "obstacles" for imported beef that negatively
affected its conditions of competition. Similarl y, the COOL measure denies foreign-born cattle and
hogs access to the "normal" distribution chain: the exclusive Label "A" distribution chain that has
little or no segregation costs. Option three (commingling), does not eliminate segregation costs that
create an economic disincentive to use Canadian -born livestock. Meat from commingled livestock
must still be labelled differently –segregated from the majority of meat in the US market (being, Label
"A"). Option four (processing "B" or "C" Label me at on different days than Label "A" meat) was
adopted by slaughter houses that limited (but did not stop) their purchase of Canadian-born cattle and
hogs. It requires significant segregation costs.
9. The United States speculates (with no evidence) that pre-existing segregation programs may
reduce (but not eliminate) segregation costs rela ted to the COOL measure. Those pre-existing
programs cannot reduce the disincentive to the use of Canadian-born cattle and hogs for at least three
reasons. First, very few such programs relate to segregation on the basis of origin. Second,
segregation throughout the supply chain under those pre-existing programs remains voluntary. Third,
the costs of those programs were taken into acc ount in both the Informa Report and Dr. Sumner's
simulation analysis.
10. The United States also cl aims that post-segregation costs ar e low, ignoring the fact that a
great deal of meat is cut and packaged by distributor s or retailers, and that therefore there are costs of
segregation throughout the meat distribution chain. Simi larly, the US alleges that a retailer that sells
meat bearing only one type of label will not have additional segregation costs. This ignores the fact
that added costs incurred to sell meat under an additional label will be in curred overwhelmingly for
adding Label "B" or "C" meat, resulting in more favourable treatment for domestic products (Label
"A"). Finally, it is not relevant that the magn itude of the disincentive caused by the COOL measure
varies over time as a result of responses by market actors and particular market conditions because
these fluctuations do not remove the ongoing negati ve effects on the conditions of competition for
Canadian-born livestock.
B. E
CONOMIC FACTORS
11. Adverse trade effects, which is what the United States focuses on, are not necessary to
establish a violation of the WTO Agreement. Prices and volumes of Canadian exports of cattle and
hogs did drop during the recession, but that does not address the differential detrimental effect caused
by the COOL measure on those Canadian exports. Similarly, Canadian liv estock exporters' reliance
on consumer demand in the United States does not explain differential effects when the market at
issue for both Canadian-born and US-born livestoc k in this case is the US market. The gradual
decline in hog inventories in Canada does not e xplain the extensive unchallenged evidence that the
COOL measure caused slaughter houses to reduce or eliminate their purchase of Canadian-born hogs.
The decline began in 2005, but Canadian exports to the United States increased until 2008 when the
effects of the COOL measure began to be felt, and market share dropped precipitously while
inventories continued to decline gradually.

C. ECONOMIC ANALYSIS QUANTIFYING THE LOSS OF COMPETITIVE POSITION
12. Criticism of Dr. Sumner's econometric anal ysis by the United States is ill-founded, and
unsupported by a revised econometric analysis of its own.
13. The United States wrongly argues that weekly APHIS data used by Canada differ "quite
considerably" from official US census data. In fact, as demonstrated in Exhibit CDA-196, differences
are the result of errors by the United States. No tably, the United States compares census data that
included cows and bulls to APHIS numbers that appr opriately excluded them. Cows and bulls are not
included in Dr. Sumner's analysis because the lower quality of their meat means that it is generally not
subject to "A", "B", or "C" labelling. The Unite d States also mistakenly compares eight-week lagged
APHIS data in Exhibit CDA-160 with real-time census data.
14. The United States wrongly criticizes the use of a ma rket share ratio that rightly eliminates
market factors that do not have differential impacts on imported livestock.
15. The United States misleadingly compares prices in 2009 (after the COOL measure went into
effect) to 2010, instead of comparing 2007 (the year before the COOL measure came into effect) to
2010. In any event, while the price gap caused by the COOL measure may decrease in tight market
conditions, it will increase again when supplies are not as tight and slaughter houses can avoid
absorbing any of the additional costs of segregation by using only US-born and -raised cattle.
16. Dr. Sumner's analysis controls for long-term tr ends in the Canadian market, but it would be a
serious mistake to include in that analysis factors that are also in part caused by the COOL measure
such as the quantity of livestock in Canada. Simila rly, increased Canadian beef exports were caused
by market reaction to distortions caused by the COOL measure.
17. There is no evidence that the recession, starti ng in 2007 had differential effects in the US
market. Finally, the United States misunderstands that the BSE ban in force from 2005 to 2007
applied only to mature animals, and that Dr. Sumner 's statistical analysis explicitly accounted for any
potential spillover effects.
III. MEASURES OF OTHER WTO MEMBERS
18. The country-of-origin labelling measures of other WTO Members cited by the United States
include measures that vary in their product coverage and their mandatory or voluntary nature. Canada
is not challenging those measures, nor country-of- origin labelling generally. A country-of-origin
labelling measure may well be consistent with the TBT Agreement and the GATT 1994 if that
measure does not negatively affect the conditions of competition for imports, and it fulfils a legitimate
objective in the least trade-restrictive way.
IV. TBT ARTICLE 2.2
19. Canada applies the five step test for an analys is under TBT Article 2.2 to issues raised in the
Second Written Submission of the United States.
20. The United States has raised no new issues on this first element, i.e., the determination
whether the technical regulation restricts international trade.
21. On the second element of the test, the objectiv e of the measure, the United States presents
evidence that many consumers are interested in mandatory country-of-origin labelling generally ( i.e.,

not specifically for meat obtained by slaughter of imported livestock). That evidence is not relevant
to whether the COOL measure's specific labelling requirements that affect imported livestock have as
their objective the provision of consumer informati on. Most of the new evidence adduced by the
United States does not address what origin definition should be used for meat. And all but one of the
limited interventions specifically related to the defi nition of origin for meat either reflect producer
interests or are based on a connection between th e COOL measure and food safety that the United
States agrees does not exist. The Consumers Union survey prepared in October 2010 was prepared as
an advocacy piece to support US submissions in this dispute. It reveals key errors, bias and has no
probative value.
22. The United States argues that the objective of the COOL measure is not protectionism
because a variety of political representatives voted in favour of the Farm Bill or elements of it, and
because some principal supporters of the COOL m easure sometimes cited consumer information as a
reason to support the COOL measure. These facts do not refute the extensive legislative history and
other material showing that those instrumental in bringing the COOL measure into force favoured US
cattle and hog producer interests.
23. On the third element, whether the objective is le gitimate, support of certain consumer interest
groups and measures of many WTO Members gene rally does not support the legitimacy of the
objective of the COOL measure. Canada is ch allenging the COOL measure under TBT Article 2.2
because of its particular characteristics, including its structure, its objective, and the limited
information it provides. Therefore other measures of WTO Members with different characteristics are
not relevant to determining that the objective of the COOL measure is not legitimate.
24. On the fourth element, whether the challenged measure fulfils a legitimate objective, the
limited evidence of consumer interest cited by th e United States does not assist it for reasons already
discussed. Further, the limited information that the COOL measure provides does not fulfil the
objective of providing meaningful information to consumers.
25. On the final element, assessing the challenged measure against other less trade-restrictive
alternatives, the comparisons of mandatory labelling to a voluntary alternative must be fact-specific,
not based on general characteristics of measures by other WTO Members. For example, a mandatory
system of "trace back" for meat would provide ex tensive detail on where the animal from which the
meat was derived was born, where it was raised, a nd where it was slaughtered. Such a system would
also have the practical advantage of being potenti ally useful for animal health and food safety
purposes. A trace back system would no doubt impose higher costs, but those costs could (if the
system were designed correctly) be imposed e qually on both domestic and imported livestock.
However, the COOL measure provides none of those advantages.
26. Canada also notes that mandatory US country -of-origin labelling for meat, based on where
the livestock was slaughtered, could be combined w ith voluntary information about where the animal
is born and raised for any consumers that want such additional information.
V. GATT ARTICLE X:3(A)
27. Through the Vilsack Letter, the United States gove rnment issued directives, backed up by a
threat of regulatory amendments. This constitu tes an unreasonable administration of the COOL
legislation and the Final Rule, contrary to GATT Article X:3(a), because on the one hand the Letter
invokes "the intent of Congress" and on the other hand it issues directives to US industry for which no
authority exists.

VI. GATT ARTICLE XXIII:1(B)
28. Canada is entitled under Article XXIII:1(b) of the GATT 1994 to expect market access to the
United States for its live cattle and hogs that corresp onds to the tariff concessions that would apply,
on a MFN basis, between the United States and Canada, under the WTO Agreement . Given the
absence of any tariff on imported live hogs and a very low tariff rate in respect of live cattle under the
US MFN schedule, Canada was entitled to reasonably expect that its access to the US market for live
cattle and hogs would not be restricted through the effects of the COOL measure. Canada could not
have expected the possibility of a labelling regime formulated in the manner of the COOL measure,
which requires US retailers to label the origin of me at in a manner that is fundamentally at odds with
the long-standing rule of US customs law – i.e., the recognition of substantial transformation.

ANNEX D-8

EXECUTIVE SUMMARY OF THE OPENING ORAL STATEMENT
OF MEXICO AT THE SECOND SUBSTANTIVE MEETING

I. INTRODUCTION
1. The COOL measure constitutes an attempt by th e US to disguise a restriction on trade as a
consumer information measure.
2. Mexico has a competitive advantage in the prod uction of feeder cattle and an efficient and
competitive industry has developed in this sector. For decades, Mexican cattle exports were fully
integrated into the US market and were commingled with US cattle at all of the production stages.
The COOL measure has broken this integration a nd has adversely affected the conditions of
competition of Mexican cattle compared to like US cattle.
3. The COOL measure is made up of statutory provisions, regulations and administrative
guidance, all of which Mexico is challenging as a single measure.
4. The scope of Mexico's challenge is narrow. It concerns an internal measure that discourages
the use of imported inputs, specifically Mexican feeder cattle, to produce domestic US beef products.
5. Non-tariff measures such as the COOL measure ar e particularly problematic for developing
country Members. It is important that the Panel carefully review the measure and cumulatively apply,
in a strict manner, the WTO provisions raised in Mexico's claims.
6. Mexico requests that the Panel rule on each of Mexico's claims and avoid the exercise of
judicial economy. This is necessary to achieve a satisfactory resolution of this dispute.
II. MEXICO'S DE FACTO DISCRIMINATION CLAIMS UNDER ARTICLE III:4 OF
THE GATT 1994 AND ARTICLE 2.1 OF THE TBT AGREEMENT
7. The WTO-inconsistent nature of the C OOL measure is most apparent in the de facto
discrimination it creates against imports of Mexican cattle.
A. L
ESS FAVOURABLE TREATMENT
8. The United States argues that Mexico misinterprets past WTO Reports, ( Korea – Various
Measures on Beef and Dominican Republic – Import and Sale of Cigarettes ). Contrary, these reports
support Mexico's claims.
9. Mexico is citing these reports for two principles. First, whether or not imported products are
treated less favourably than like domestic produc ts should be assessed by examining whether a
measure modifies the conditions of competition in the relevant market to the detriment of imported
products. Second, that a measure accords less favour able treatment to imported products if it gives
domestic like products a competitive advantage in th e market over imported like products. The facts
in Korea – Various Measures on Beef are similar to this dispute, the effect of the COOL measure is to
restrict Mexican born cattle access to the normal distribution chain.

10. As a direct result of the COOL measure, the c onditions of competition in the relevant market
have been modified to the detriment of imported Mexican cattle in the following ways: (i) reduction
in processing plants accepting Mexican cattle; (ii) reduction in the number of days per week Mexican
cattle are processed; (iii) reduction in backgrounders and feedlo ts that will accept Mexican cattle; (iv)
and advanced notification requirements for processing.
11. The COOL measure has also caused US packing pl ants to reduce the price paid for fed cattle
that were born in Mexico and raised in the Unite d States, by means of applying a discount to the
purchase price. This discount continues.
12. The United Stated affirms that Mexico has presented only " anecdotical evidence " to
substantiate its claims. Contrary of the United States' assertion, Mexico has filed positive evidence in
the following manner: (i) Current invoices; (ii) affidavits provided by the Mexican industry; and (iii)
documentary evidence from packers and US processors.
13. These factors demonstrate how the COOL meas ure has disrupted the integrated North
American market for cattle and the conditions of co mpetition within that market to the detriment of
Mexican cattle. US "like" cattle have not faced a reduction in processing plants, processing days,
backgrounders, and feedlots, additional requirements or a COOL discount.
14. The United States also argues that there are many factors other than the COOL measure that
are affecting price and trade volumes of Mexican cattle. Mexico acknowledges these other factors;
however, they are irrelevant to the assessment of "conditions of competition" and Mexico need only
demonstrate that the measure modifies the conditions of competition in the relevant market to the
detriment of imported products. Mexico has clearly done so.
B. SEGREGATION
15. The United States wrongly argues that Mexico has not proven that the COOL measure
requires segregation. Although segregation is not e xplicitly required by the COOL measure, in
practice it is necessary for the indust ry to comply with the measure. Mexico has demonstrated that
segregation exists as a consequence of the COOL measure: (i) in light of how the COOL measure is
structured and designed, as a practical matter ther e is no way to comply with the measure without
segregating; (ii) USDA has recognized that segregation is a necessary means; (iii) US packing
companies are segregating; and (iv) studies show that segregation is required, all of these in order to
comply with the COOL measure.
16. The United States asserts that the COOL measure does not require segregation. It attempts to
support its assertion by pointing to 4 different options which, in its view, show that it is possible to
avoid segregation. Its assertion is without merit for the following reasons: (i) the first option is that
US slaughterhouses could process only livestock of dom estic origin. This optio n inherently involves
segregation because it excludes non-U.S. origin cattle from the processing stream and thereby
segregates that source completely; (ii) the second option is that slaughterhouses could process
livestock of exclusively mixed non-U.S. origin. This option is not economically feasible; (iii) the third
option is that slaughterhouses could process domestic and mixed non-U.S. origin livestock on the
same production day. Even though a slaughterhouse could agree on using label "B" only, it would still
need to segregate; and (iv) under the final option, the slaughterhouses could process domestic and
mixed origin livestock on separate days. This option inherently involves segregation.
17. Thus, it is clear that segregation in some form is required by the COOL measure.

C. T
HE COSTS OF COMPLIANCE WITH COOL CAN BE MINIMIZED BY USING US BORN CATTLE
ONLY
18. The United States argues that a comparison of th e four options will show that the cost of
processing only US origin livestock is not significan tly different from the cost of complying with
COOL by other means. This is incorrect. Segr egation represents compliance costs, and meat
processors can minimize the costs of compliance by using US born cattle only.
19. Regarding the US arguments that commingling avoids segregation, ev en if slaughterhouses
use the commingling rules, they need to segregate to be certain that they are complying with the rules
and therefore must bear the attendant segregation costs.
20. The US argument that processing cattle from diffe rent origins during different days does not
result in additional costs is wrong. This requires segr egation in order to identify the cattle and gather
animals from the same weight and the same origin.
D. THE INCREASE OF EXPORTS OF MEXICAN CATTLE RELATIVE TO THE PREVIOUS YEAR DOES
NOT ELIMINATE THE DESCRIBED EFFECTS OF THE COOL MEASURE
21. The United States refers to the recent increase in exports of Mexican cattle to the US
Increased exports have been due to factors such as general supply and demand conditions in the US
market.
22. However, the modification of conditions of competition continues. But for the COOL
measure, the volume and selling prices of Mexican cattle would be even higher. Also, it is not
necessary for Mexico's claims to demonstrate adverse trade effects. It only needs to demonstrate that
the conditions of competition have been modified by the COOL measure. Mexico has done this.
E. ACTIONS OF PRIVATE PARTIES
23. The United States argues that it is not the COOL measure that is causing the problems facing
Mexican cattle but, rather, the actions of private pa rticipants in the US market. The United States
misinterprets and misapplies the Appellate Body's reasoning in Korea – Various Measures on Beef.
24. In this dispute, the necessity of US market pa rticipants to take action to reduce the number of
plants processing Mexican cattle, reduce the nu mber of processing days, reduce the number of
backgrounders and feedlots that will accept Mexican cattle and impose advance notice requirements is
imposed by the COOL measure itself. If not for the COOL measure, these actions would not have
taken place. It is the measure and not private choice that is modifying the conditions of competition.
F. ORIGIN NEUTRAL MEASURES
25. The United States argues that the COOL measure is origin neutral. In support of its argument,
it cites as authority the Appellate Body report in Dominican Republic – Import and Sale of Cigarettes.
However, the discrimination in this dispute do es not depend on the characteristics of individual
importers but, rather, on the origin of the cattle. In this dispute it does matter from which country the
importer/re-seller purchased the cattle.
26. It is notable that the examples that the Unite d States presents of pre-COOL segregation are
origin neutral. The COOL measure is not origin neutral. The origin of the cattle is precisely what the
COOL measure is about.

III. THE COOL MEASURE IS INCONSISTENT WITH ARTICLE 2.2. OF THE
TBT AGREEMENT
A. INTRODUCTION
27. The United States has not raised any new arguments regarding Mexico's claim.
B. THE EVIDENCE PRESENTED BY THE UNITED STATES ABOUT CONSUMERS DEMANDING
COUNTRY OF ORIGIN INFORMATION DOES NOT SUPPORT THE US ARGUMENTS
28. The United States presents comments from indivi dual consumers indicating their desire to
know the origin of the food that they buy, which do not support the US arguments.
29. The vast majority of the statements presented by the United States relate to country of origin
in general and not for the specific origin rules created for meat products, and, specifically not for the
origin of the input used to produce the meat. In the narrow context of the subject matter of this
dispute, they cannot be used to justify the COOL measure.
30. Also, all the statements were made after the cr eation of the 2002 Farm Bill, so they do not
serve as evidence of the reasons why the US government created the COOL measure.
31. In EC – Sardines the panel stated that "the danger is that Members, by shaping consumer
expectations through regulatory in tervention in the market, would be able to justify thereafter the
legitimacy of that very same regulatory intervention on the basis of governmentally created consumer
expectations."
32. The introduction of the COOL measure in the 2002 Farm Bill and the discussions concerning
that measure would have shaped consumer expectati ons and perceptions rather than the expectations
and perceptions that would exist in the absence of the measure.
33. The evidence presented by Mexico clearly shows th at the intent of the measure was to protect
US ranchers and cattle producers with the political c over of providing information to the consumer at
the retail level.
34. Finally, the consumer poll referred to by the US does not represent a reliable source to
demonstrate what consumers want in the context of this dispute.
C. THE COOL MEASURE DOES NOT FULFIL THE STATED OBJECTIVE OF THE UNITED STATES AND
INSTEAD FULFILS A PROTECTIONIST OBJECTIVE
35. The objective of the COOL measure is protectionist and is not legitimate.
36. If the Panel finds that the objective of the measu re is legitimate, the COOL measure does not
fulfil that objective. The COOL measure does not achieve the stated objective. Rather, it misleads
consumers when labels other than the "A" label are used.
37. In the case of Mexico, it misleads the consumer when label B (Product of the United States
and Mexico) is used. The most diligent consumer will never know that the meat labelled as "B" was
produced in the United States from an animal that (i) was born in Mexico and has the same genetic
features of the cattle born in the United States, (ii) was sent to the United States at a very early period
in its life to be fed in the same grasslands on which cattle born in the United States are fed, (iii) was

sent thereafter to a feedlot to be fed with the same grains with which cattle born in the United States
are fed, (iv) obtained more than 70% of its weight in the United States, and (v) was slaughtered and
processed into meat in the same facilities as the cattle born in the United States, and (vi) its meat was
classified with the same quality grading as meat derived from an animal born in the United States.
38. The United States refers to the ability of US pr oducers to distinguish their products for their
quality. This assertion is without merit. The beef produced from cattle that was born in Mexico, has
identical quality from beef produced from a cattle born in the United States.
39. The only label giving accurate information to th e consumer is label "A". The United States
argues that the COOL measure fulfils its stated ob jective of consumer information at the level it
considers appropriate. However, th e level it considers appropriate is the level that will allow the
United States to achieve its protectionist objectiv e by isolating label "A" beef and maximizing
production under that label.
D. M
EXICO HAS PRESENTED AT LEAST THREE REASONABLY AVAILABLE ALTERNATIVES
40. Mexico has identified three less trade restri ctive alternatives that fulfil any legitimate
consumer information objective.
2. Voluntary labelling with "born, raised, slaughtered rule" is a reasonably available
alternative
41. Although the first alternative will satisfy consumer s interested in this information, it is not
accepted by the United States because in the view of the United States it will not be sufficiently
adopted by participants in the US market. It is notable that this alternative will transfer the costs of the
labelling to their domestic industries and their consumers.
3. Mandatory lbailing based on substantial transformation is a reasonably available
alternative
42. The benefit of this second alternative is that it can be a mandatory measure that does not
depend on voluntary implementation in the US mark et. This alternative is not acceptable to the
United States because it would not target meat based on where the animal was born. In other words, it
would not support the protectionist element.
4. A real traceback system is a reasonably available alternative
43. The third alternative is a tracing system that should ensure tracking from the farm where the
animal was born to the table where the meat is consumed. Since such a measure tracks cattle based on
the farm on which they originate, it does not discriminate based on national origin. There is no
incentive under such a system to reduce access for Mexican cattle. Th e same costs will have to be
incurred irrespective of the country of origin of the cattle. However, the United States cattle
producers, which strongly support the COOL measure, have strongly opposed a tracing system that
would create equal costs to every participant, inst ead of creating a disproportionate cost on Mexican
cattle.

IV. THE COOL MEASURE IS INCONSISTE NT WITH ARTICLE 2.4 OF THE
TBT AGREEMENT
44. The COOL measure is not based on the relevant international standard that is effective and
appropriate for informing consumers about the country of origin of the product at issue.
45. The United States argues that some meat sold in US stores is not prepackaged but it offers no
defence to the fact that the Codex standard app lies to the prepackaged meat products that compose
most of the meat sales by large grocery stores.
46. The very purpose of the Codex standard is to avoid deception and confusion for consumers.
The United States has not explained why the substa ntial transformation rule is not effective or
appropriate. It is only protectionism that cannot be achieved.
V. THE COOL MEASURE IS INCONSISTENT WITH ARTICLE 12.3 OF THE
TBT AGREEMENT
47. Contrary to the US assertions, it did not take in to account Mexico's special financial and trade
needs as a developing country as required by Article 12.3.
48. The United States did not notify or give any opportunity to Mexico to participate in the
drafting of the 2002 Farm Bill. Only after the COOL Measure was approved, signed and ready to be
implemented, was Mexico able to provide commen ts to the United States. This situation cannot
amount to compliance with Article 12.3 of the TBT Agreement.
49. Also, the United States did not undertake any discer nible effort to take into account Mexico's
special needs as a developing country in the creation of the COOL Measure. The issue is that the US
did not take seriously the special needs of Mexico as a developing country in accordance with
Article 12.3 of the TBT Agreement.
VI. THE COOL MEASURE IS INCONSISTENT WITH ARTICLE X:3 OF THE
GATT 1994
50. The United States argues that the COOL Measure is not in breach of Article X:3, and focuses
on the Vilsack letter and the development of the 20 09 Final Rule, claiming that neither put the COOL
measure into practical effect. Mexico does not see how those actions taken for purposes of the
administration of the measure cannot be considered as part of the administration of the measure. The
United States ignores the evidence put forward by Me xico that USDA pressured US processors not to
commingle US cattle with imported cattle and is wro ng in its interpretation of "administration" under
Article X:3.
51. The continuing change in the criteria expressed by the USDA with regard to the compliance
with the COOL measures, which included but was not li mited to the issuance of the Vilsack letter, are
clear examples of a measure that is not administered in a reasonable and predictable manner within
the meaning of GATT Article X:3.

VII. THE COOL MEASURE NULLIFIES OR IMPAIRS BENEFITS ACCRUING TO
MEXICO WITHIN THE MEANING OF ARTICLE XXIII:1(B) OF THE GATT 1994
52. The United States argues that Mexico has faile d to identify a relevant benefit under the
covered agreement. The nullification or impairment not only exceeds the NAFTA tariff but also the
WTO tariff, and thus, nullifies and impairs benefits under the covered agreements.
53. Also, none of the previous initiatives presen ted by the United States demonstrates that
Mexico, after years of trade in cattle with the Unite d States, could have expected a rule that would
require the labelling of the meat derived from cattle bo rn in Mexico, but raised and slaughtered in the
United States as "Product of the United States and Mexico". A reasonable assessment of the facts
demonstrated that Mexico could have not expected such rule.
VIII. CONCLUSION
54. Mexico has presented a prima facie case that demonstrates that the COOL measure is a
protectionist measure that is inconsistent with core provisions of the WTO.
55. Mexico respectfully requests that the Panel find that the COOL measure is inconsistent with
the aforementioned provisions of the WTO.

ANNEX D-9

CLOSING ORAL STATEMENT OF CANADA
AT THE SECOND SUBSTANTIVE MEETING

I. INTRODUCTION
1. Mr. Chairman, members of the Panel, we thank you for the opportunity to provide a few
concluding comments.
2. We appreciate the contributions made by the parties and third parties through their statements
and answers to questions at the second substantive meeting.
II. TBT ARTICLE 2.1 AND GATT ARTICLE III:4
3. In respect of Canada's claims under TBT Artic le 2.1 and GATT Article III:4, Canada is
pleased that there was more of an exchange at the second substantive meeting about the effects of the
COOL measure. As noted by Canada, the discriminatory effects of the COOL measure are at the
heart of this dispute.
4. Canada wishes to emphasize again that proof of actual trade effects is not a prerequisite for a
finding of less favourable treatment and that all that is required for such a finding is proof that the
conditions of competition for Canadian-born cattle and hogs have been adversely affected by the
COOL measure, as compared with US-born ca ttle and hogs. Canada has provided abundant
documentary and econometric evidence demonstrat ing these adverse effects on the conditions of
competition. Moreover, despite attempts to im pugn Dr. Sumner's work, the United States has not
been able to undermine Canada's documentary and econometric evidence, which stands unrefuted.
5. Canada appreciates the Panel's useful questions on Canada's econometric analysis quantifying
the negative effects the COOL measure has had and is having on fed and feeder cattle and market
hogs and feeder pigs from Canada. Canada looks forward to further assisting the Panel in assessing
the quantification of these negative effects. Speci fically, we will seek to assist the Panel in that
endeavour by further developing and explaining, with reference to the appropriate economic
literature, the strengths of particular economic and econometric approach es to incorporate the
influence of the state of the general economy (i ncluding strong economic c onditions and recessions)
on meat demand and the derived demand for livestock.
6. Canada objects to the characterization by the United States of the multiple witness statements
submitted by Canada as "anecdotal evidence" (in paragraph 30 of the Second Opening Statement of
the United States). These witness statements, conf irmed by letters from major US slaughter houses,
are not "anecdotal" but demonstrate the actual effects of the COOL measure in the US market. Nor
have these "anecdotes" been rebutted by any evidence from the United States. This is direct evidence
of less favourable treatment of Canadian-born cattle and hogs from private actors in the US market. If
it were not true that slaughter houses and others limited or stopped their acceptance of Canadian-born
cattle and hogs because of the COOL measure, surely the United States could have provided a myriad
of statements to that effect. They have pr ovided none: not on that key point, nor even on its
secondary argument that pre-existing segregation for other purposes somehow reduces the costs of
segregation imposed by the COOL measure.

III. TBT ARTICLE 2.2
7. As to TBT Article 2.2, there has been extens ive discussion about the stated objective of the
United States (providing information to consumer s) and what evidence the United States has that
consumers in the United States want country-of-origin labelling of beef and pork.
8. The United States remains unable to explain wh at additional information the COOL measure
provides to consumers. In particular, in the c ontext of the discussion of USDA grading and health
certification, it has been unable to explain what additional value the confusing information provided
by the COOL measure gives to consumers. While the United States has alleged generally that
consumers may make origin distinctions on the basis of "quality", it has presented no evidence that on
the specific facts of this case there is any difference in quality, nor that consumers perceive that there
is. Canada emphasizes that this case deals with liv estock imported into the United States, often raised
for the majority of their life in the United States, slaughtered in the United States, and subject to the
same USDA grading and food safety certification (and other US quality, health and safety, and animal
welfare programs) as US-born and –raised livestock. While some consumer groups have supported
COOL, none has cited alleged quality differences as a reason for that support – consumer support
overwhelmingly is based either on protectionist purposes or a false connection between the COOL
measure and health and safety.
9. Canada notes also that the United States has presented no evidence that consumers would
obtain any less information related to quality or ot her objective criteria from the "mixed-origin" label,
i.e., "Product of Canada, Mexico, or the United States". This is essentially the option the European
Union advocates in paragraph 14 of its Second Oral Statement. Canada does not agree with the EU
that consideration of this option obviates the need to find a violation of TBT Article 2.1. However,
Canada notes that this option is another alternative measure that w ould better fulfil the United States'
purported legitimate objective than the COOL measure.
10. US industry planned to use the mixed-origin la bel (Label "B") after the Interim Final Rule
was issued until certain US producer interests ( not consumer interests) pressured Congress and the
USDA to prevent that. It was not until after th at, following pressure by Chairman Peterson on
slaughter houses to use mostly Label "A", and the issuance by USDA of new guidance documents,
that the first communication stating consumer intere st on the question was received. It is therefore
obvious that consumer interests did not influence the formulation of the COOL measure.
11. Mr. Chairman, Members of the Panel, we thank you for your attention and your ongoing work
on this very important matter for Canada and the ot her Members of the World Trade Organization. In
addition, we would like to express our apprecia tion to the members of the WTO Secretariat for
organizing this meeting, and to the interpreters. We look forward to receiving your written questions.

ANNEX D-10

CLOSING ORAL STATEMENT OF MEXICO
AT THE SECOND SUBSTANTIVE MEETING

I. INTRODUCTION
1. I would like to follow up on the amicus curiae issue and the points raised by Canada. On
further reflection Mexico agrees with Canada that letter contains some elements that are different
from the exhibit presented by the United States. Mexico agrees with Canada's comments on this point.
2. The COOL measure has the effect of protec ting producers not informing consumers. The
historic integration between the Mexican and US cattle industries has b een destroyed by a system that
provides no useful information to US consumers. COOL ignores the fact that the Mexican Cattle and
US are alike in every respect, except the place wh ere they were born. The only purpose for this
provision is to impose additional cost on Mexican cattle, thus benefiting the US industry.
3. I would like to re-iterate Mexico's request that the Panel rule on all of the claims before it and
not exercise judicial economy with respect to any of those claims.
4. In its third party statement today, the European Union suggested that this dispute could be
resolved through a ruling on Mexico and Canada's claim under Article 2.2 of the TBT Agreement and
that the Panel could judicially economize on the remainder of the claims. This is incorrect.
5. Mexico's discrimination claims are very important to its challenge and it is essential that the
Panel rule on both discrimination claims under Article 2.1 and III:4 of the GATT. It is also necessary
that the Panel rule on the remainder of the claims be cause this is the first time a mandatory country of
origin labelling measure has been challenged an d such rulings will allow for the satisfactory
resolution of this dispute.
II. MEXICO'S DISCRIMINATION CLAIMS
6. Starting with Mexico's discrimination claims, Mexico is requesting that the Panel make
findings under both Article 2.1 of the TBT Agreement and Article III:4 of the GATT 1994.
7. Mexico has presented evidence establishing a prima facie case that the COOL measure
modifies the conditions of competition in the relevant market to the detriment of imported products in
the following ways:
 reduction in processing plants accepting Mexican cattle;
 reduction in the number of days per week Mexican cattle are processed;
 reduction in backgrounders and feedlots that will accept Mexican cattle; and
 additional requirements imposed on Mexican cattle in the form of advanced notification
requirements for processing.
8. The COOL measure has also caused US packing pl ants to reduce the price paid for fed cattle
that were born in Mexico and raised in the Unite d States, by means of applying a discount to the
purchase price.

9. US "like" cattle have not faced a reduction in processing plants, processing days,
backgrounders, and feedlots. They have not fa ced additional requirements such as advanced
notification requirements. Finally, they have not faced the COOL discount.
10. The United States' defence is limited to argu ing that Mexico is relying on "anecdotal"
evidence limited to certain participants and is not re flective of conditions in th e market as a whole.
These points are completely without merit.
11. The United States' position that Mexico's eviden ce is "anecdotal" goes to the quality of the
evidence. The term is used to refer to evidence that is in the form of an "anecdote" and there is doubt
about its veracity. It is also used where evidence is considered untrustworthy.
12. This is plainly not the case for the evidence put forw ard by Mexico to establish the
modification of conditions of competition. Th e evidence put forward by Mexico is "positive
evidence" of an affirmative, objective and verifiable character. It is credible evidence. That evidence
is in the form of documents and invoices from la rge US beef processors and affidavits from the
Mexican cattle industry. For instance, MEX-42, containing BCI, presents a communication from a
major slaughterhouse indicating that Mexican-born ca ttle may be processed only in one plant due to
COOL segregation. Other exhibits of Mexico showing the reduction of competitive conditions
against Mexican-born cattle are MEX-33, MEX-37, MEX-46, MEX-64 and MEX-97. This evidence
is corroborated by other evidence in the form of price statistics and industry reports that the
United States has failed to rebut.
13. The United States' argument that the evidence is not reflective of conditions in the US market
as a whole is equally without merit.
14. In light of this, Mexico has focused its evid ence on the top three US beef processors (Tyson,
Cargill and JBS) as well as a few others. These processors are market leaders and their actions are
reflective of the market as a whole. The US cattle market is a commodity market which inherently
will drive actions and prices to similar levels across the market. Cana da's evidence on the
modification of conditions of competition corroborates the fact that the effect s are throughout the US
market as a whole.
15. Mexico's evidence on the price discount is refl ected in the invoices of specific processors as
well as in the pricing data for the US cattle market as a whole (Exhibits MEX-37 and MEX-48). For
instance, MEX-97, containing BCI, presents recen t invoices from July and August 2010 where the
price of Mexican-born cattle was subject to a direct reduction in price for a COOL adjustment. Even
the evidence on US market prices that was filed by the United States confirms that the discounts on
Mexican feeder cattle are market-wide (Exhibit US-108).
16. Thus, contrary to the argument of the United States, Mexico has presented a prima facie case
that the modification of conditions of competition in the relevant market to the detriment of imported
products is occurring across the US cattle market.
17. The United States also argues that there are ma ny factors that influence the trade effects
related to Mexican cattle exports and that the co st of the COOL measure to the industry is not
significant.
18. Mexico's case focuses on conditions of competition not trade effects. It is not a legal
requirement that Mexico prove adverse trade effects in order to succeed in its de facto discrimination
claims (AB, Japan – Alcoholic Beverages, p. 16; AB, US – FSC , para. 215). It is also not necessary

for it to demonstrate the costs of the COOL measure in financial terms. It is sufficient for Mexico to
demonstrate that the conditions of competition have been modified. We has clearly done so.
19. The European Union focuses on the costs that are inherent in regulating and the fact that those
costs might be felt differently among participants. Mexico acknowledges this fact. However, it is not
relevant to Mexico's discrimination claims. Mexico's claims do not focus on the cost associated with
the COOL measure. To the extent that costs are relevant, Mexico focuses on the distribution of those
costs to Mexican cattle compared to like US ca ttle. Moreover, Mexico is not arguing about the
magnitude of those costs but rather how the cond itions of competition are modified by the COOL
measure as a result of the disincentives to carry Mexican cattle.
20. The European Union also argues that in a situ ation such as this, a complainant like Mexico
must:
"necessarily have to adduce evidence of other facts (at least two or more) and explain
how they work together to support the finding of other facts, of which there is no
direct evidence, so as to build a reasoned and adequate explanation between the facts
thus established and any finding of inconsistency". (paragraph 6 of oral statement)
21. Mexico fundamentally disagrees with this ch aracterization of Mexico's case. Mexico has
direct evidence of the modification of conditions of competition and this is supported by both positive
evidence from numerous sources as well as by corrobora ting evidence. Even if the European Union's
characterization of Mexico's case was accurate, Mexi co has in any event met the evidentiary standard
stated by the European Union, that is Mexico has adduced evidence of at least two or more facts and
has explained how they work together to support the finding of other facts.
III. MEXICO'S CLAIMS UNDER ARTICLE 2.2 OF THE TBT AGREEMENT
22. The obligations in Article 2.2 are complex. It is therefore important that the Panel apply each
of the elements of that Article in a comprehens ive manner starting with the determination of the
"objective" of the COOL measure.
23. Where the substantive content of an obliga tion is complex such as it is in the case of
Article 2.2, it is helpful to have an establishe d methodology to interpret and apply the provision.
Mexico has set out such a methodology in its first written submission as has Canada.
24. The objective of the measure is the starting point for this obligation and it must be carefully
defined at the outset.
25. Mexico has explained why the objective of the measure is overwhelmingly protectionist.
26. However, if the Panel concludes that there is a consumer information objective within the
measure, Mexico considers that it is important that the Panel examine and define not just the general
categorization of the objective (e.g., "the provision of consumer information" or "the provision of
consumer information on country of origin") but ex amine and define all relevant details. What exact
type of consumer information on c ountry of origin? In the case of the COOL measure, the objective
is to provide information to consumers concerning wh ether the cattle that were an input into the beef
were born outside the US
27. This objective would be clear from the design and structure of the COOL measure. The only
accurate information provided by the COOL measure is whether the beef is from cattle born, raised
and slaughtered in the United States.

28. The next question is whether the objective of providing information to consumers concerning
whether the cattle that were an input into the beef were born in the US or, by negative implication,
they were born in a foreign country, is legitimate.
29. In Mexico's view, the COOL measure as struct ured has the sole purpose of distinguishing
between domestic and foreign inputs in a protecti onist manner. The objective of protectionism can
never be found to be legitimate within the m eaning of Article 2.2 because it goes against the
fundamental purpose of the WTO Agreements—i.e., to avoid protectionism.
30. If there ever was a measure that had an objec tive that was not legitimate it is the COOL
measure. If this measure is found to be legiti mate it will rob the "legitimacy" requirement in
Article 2.2 of any meaning.
31. If the Panel disagrees with Mexico on this point , it is Mexico's alte rnative position that the
COOL measure does not fulfil the legitimate objective. The reasons for this are set out in Mexico's
written submissions and answers to questions of the Panel.
32. The United States argues that the gaps in prod uct and sector coverage in the COOL measure
are the result of flexibility to take into account the various interests including the interest of Mexico.
Mexico disagrees. The flexibility h as no value to Mexican cattle. Th e only value that flexibility had
was to US domestic interests. As noted in Mexico 's written submission, that flexibility minimizes the
adverse impact of the COOL measure on US domestic interests while maintaining the effect of the
measure on the main distribution channel for beef a nd, therefore, maximizing its adverse effect on
imported Mexican cattle.
33. If the Panel finds that the COOL measure fulf ils a legitimate objective, Mexico has presented
three less trade restrictive alternatives to the C OOL measure that would meet the same legitimate
objectives taking into account the risks non-fulfilment would create.
34. As explained in response to questions during th is meeting, the more precise the information
provided in a consumer information measure the fewe r options that are available to implement that
measure in a manner that is consistent with Article 2.2.
35. If the United States wishes to provide the highest level and quality of consumer information
related to origin it may be limited to the third alternative proposed by Mexico, which would be a fairly
implemented traceback system. As explained in pa ragraph 78 of Mexico's second written submission,
such a system is technologically and economically feasible in the United States.
IV. MEXICO'S CLAIMS UNDER ARTICLE 12 OF THE TBT AGREEMENT
36. This case presents crucial issues regarding the in terpretation of Article 12.3, in particular
whether it has any meaning at all.
37. The United States has asserted that it adjusted th e COOL measure at the request of Mexico.
There is no evidence that the United States took an y steps to accommodate Mexico, as opposed to US
interests, such as excluding restaurants and small butcher shops. Indeed, as we have shown, the
burden of the costs of the measure has been disproportionately shifted to Mexico.
38. It is Mexico's position that it is not sufficient for a Member simply to make a new measure
available for comment, as the United States is arguing. That would make Article 12.3 of the TBT
meaningless.

39. In any event, the United States did not notify or give any opportunity to Mexico to participate
in or comment upon the drafting of the original CO OL measure (i.e., in the drafting of the 2002 Farm
Bill). It is this original law that established the requirement to base origin on where the cattle were
born. Mexico was given the opportunity to comment only after the enactment into law. This situation
cannot amount to compliance with Article 12.3 of the TBT Agreement.