UNITED STATES – CERTAIN COUNTRY OF ORIGIN LABELLING (COOL) REQUIREMENTS RECOURSE TO ARTICLE 21.5 OF THE DSU BY CANADA AND MEXICO REPORTS OF THE PANEL
Document: Addendum
Date: 20 October 2014
Document codes: WT/DS384/RW/Add.1; WT/DS386/RW/Add.1; WT/DS384/RW; WT/DS386/RW.
Complainant: Canada
Respondent: U.S.
Third parties: Argentina, Australia, Brazil, China, Colombia, EU, Guatemala, India, Japan, South Korea, Mexico, New Zealand, Peru, Taiwan
Dispute stage: Implementation & Compliance
Agreements cited: Art. 2.1, 2.2, 2.4  Technical Barriers to Trade (TBT)Art. 2, 5, 7  Sanitary and Phytosanitary Measures (SPS)Art. IX:2, IX, X:3(a)  GATT 1994Art. 2(b), 2(c), 2(e), 2(j)  Rules of Origin

UNITED STATES – CERTAIN COUNTRY OF
ORIGIN LABELLING (COOL) REQUIREMENTS
RECOURSE TO ARTICLE 21.5 OF THE DSU BY CANADA AND MEXICO
REPORTS OF THE PANEL
Addendum
This addendum contains Annexes A to C to the Reports of the Panel to be found in documents
 and

 •

LIST OF ANNEXES
ANNEX A
WORKING PROCEDURES OF THE PANEL
Contents Page
Annex A-1 Working Procedures of the Panel (DS384) as revised on 21 January 2014 A-2
Annex A-2 Working Procedures of the Panel (DS386) as revised on 21 January 2014 A-6
Annex A-3 Procedures for an open substantive meeting of the Panel (DS384) as revised on

A-10
Annex A-4 Procedures for an open substantive meeting of the Panel (DS386) as revised on

A-11
Annex A-5 Procedures of the Panel concerning business confidential information (DS384) A-12
Annex A-6 Procedures of the Panel concerning business confidential information (DS386) A-13
ANNEX B
ARGUMENTS OF THE PARTIES
Contents Page
Annex B-1 Integrated executive summary of the arguments of Canada B-2
Annex B-2 Integrated executive summary of the arguments of Mexico B-14
Annex B-3 Integrated executive summary of the arguments of the United States B-27
ANNEX C
ARGUMENTS OF THE THIRD PARTIES
Contents Page
Annex C-1 Integrated executive summary of the arguments of Brazil C-2
Annex C-2 Integrated executive summary of the arguments of China C-4
Annex C-3 Integrated executive summary of the arguments of Colombia C-7
Annex C-4 Integrated executive summary of the arguments of the European Union C-10
Annex C-5 Integrated executive summa ry of the arguments of India C-15
Annex C-6 Integrated executive summary of the arguments of Japan C-18
Annex C-7 Integrated executive summary of th e arguments of the Republic of Korea C-24
Annex C-8 Integrated executive summary of the arguments of New Zealand C-26
WT/DS384/RW/Add.1 • WT/DS386/RW/Add.1

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ANNEX A
WORKING PROCEDURES OF THE PANEL
Contents Page
Annex A-1 Working Procedures of the Panel (DS384) as revised on 21 January 2014 A-2
Annex A-2 Working Procedures of the Panel (DS386) as revised on 21 January 2014 A-6
Annex A-3 Procedures for an open substantive meeting of the Panel (DS384) as revised on
21 January 2014
A-10
Annex A-4 Procedures for an open substantive meeting of the Panel (DS386) as revised on
21 January 2014
A-11
Annex A-5 Procedures of the Panel concerning business confidential information (DS384) A-12
Annex A-6 Procedures of the Panel concerning business confidential information (DS386) A-13
WT/DS384/RW/Add.1 • WT/DS386/RW/Add.1

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ANNEX A-1
WORKING PROCEDURES OF THE PANEL (DS384)
Adopted on 25 October 2013 and revised on 21 January 2014

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

2. The deliberations of the Panel and the document s submitted to it shall be kept confidential.
Nothing in the DSU or in these Working Procedures shall preclude a party to the dispute
(hereafter "party") from disclosing statements of its own positions to the public. Members shall
treat as confidential information submitted by another Member to the Panel which the submitting
Member has designated as confidential. Where a party submits a confidential version of its written
submissions to the Panel, it shall also, upon request of a Member, provide a non-confidential
summary of the information contained in its submissions that could be disclosed to the public.
The Panel may adopt special procedures concerning Business Confidential Information after
consulting the parties.
3. The parties, and Members having notified their interest in the dispute to the Dispute Settlement
Body in accordance with Article 10 of the DSU (hereafter "third parties"), shall be present at the
meetings only when invited by the Panel to appear before it. The Panel may open its meetings with
the parties to the public, subject to appropriat e procedures to be adopted by the Panel after
consulting the parties.
4. Each party and third party has the right to determine the composition of its own delegation
when meeting with the Panel. Each party and thir d party shall have responsibility for all members
of its own delegation and shall ensure that each member of such delegation acts in accordance
with the DSU and these Working Procedures, particularly with regard to the confidentiality of the
proceedings.
Submissions

5. Before the substantive meeting of the Panel with the parties, each party shall transmit to the
Panel a first written submission, and subsequently a written rebuttal, in which it presents the facts
of the case and its arguments, and counter-arguments, respectively, in accordance with the
timetable adopted by the Panel.
6. A party shall submit any request for a preliminary ruling at the earliest possible opportunity and
in any event no later than in its first written subm ission to the Panel. If Canada requests such a
ruling, the United States shall submit its response to the request in its first written submission. If
the United States requests such a ruling, Canada shall submit its response to the request prior to
the substantive meeting of the Panel, at a time to be determined by the Panel in light of the
request. Exceptions to this procedure shall be granted upon a showing of good cause.
7. Each party shall submit all factual evidence to the Panel no later than during the substantive
meeting, except with respect to evidence necessar y for purposes of rebuttal, answers to questions
or comments on answers provided by the other party. Exceptions to this procedure shall be
granted upon a showing of good cause. Where su ch exception has been granted, the Panel shall
accord the other party a period of time for comme nt, as appropriate, on any new factual evidence
submitted after the substantive meeting.
8. Where the original language of exhibits is not a WTO working language, the submitting party or
third party shall submit a translation into the WTO working language of the submission at the
WT/DS384/RW/Add.1 • WT/DS386/RW/Add.1

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same time. The Panel may grant reasonable extensions of time for the translation of such exhibits
upon a showing of good cause. Any objection as to the accuracy of a translation should be raised
promptly in writing, no later than the next filing or meeting (whichever occurs earlier) following
the submission which contains the translation in question. Any objection shall be accompanied by a
detailed explanation of the grounds of objection and an alternative translation.
9. In order to facilitate the work of the Panel, each party and third party is invited to make its
submissions in accordance with the WTO Editorial Guide for Panel Submissions attached as
Annex 1.
10. To facilitate the maintenance of the record, and maximize the clarity of submissions, each
party and third party shall sequentially number its exhibits throughout the course of the
compliance proceedings. For example, exhibits su bmitted by Canada could be numbered CDA-1,
CDA-2, etc. If the last exhibit in connection with the first submission was numbered CDA-5,
the first exhibit of the next submission thus would be numbered CDA-6. The first time a party or
third party submits to the Panel an exhibit that co rresponds to an exhibit submitted in the original
panel proceedings, the party or third party submi tting such exhibit shall also identify the number
of the original exhibit in the original panel proceedings.
Questions

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

12. Each party shall provide to the Panel the list of members of its delegation in advance of the
meeting with the Panel and no later than 5.00 p.m. (Geneva time) on the previous working day.
13. The substantive meeting of the Panel shall be conducted as follows:
a. The Panel shall invite Canada to make an opening statement to present its case first.
Subsequently, the Panel shall invite the United States to present its point of view. Before
taking the floor, each party shall provide the Panel and other participants at the meeting
with a provisional written version of its statement. In the event that interpretation is
needed, each party shall provide additional copies to the interpreters. Each party shall
make available to the Panel and the other party the final version of its statement,
preferably at the end of the meeting, and in any event no later than 5.00 p.m. (Geneva
time) on the first working day following the meeting.
b. After the conclusion of the statements, the Panel shall give each party the opportunity to
ask questions or make comments, through the Panel. Each party shall send in writing,
within a timeframe to be determined by the Panel, any questions to the other party to
which it wishes to receive a response in writing. Each party shall be invited to respond in
writing to the other party's questions within a deadline to be determined by the Panel.
c. The Panel may subsequently pose question s to the parties. The Panel shall send in
writing, within a timeframe to be determined by it, any questions to the parties to which
it wishes to receive a response in writing. Each party shall be invited to respond in
writing to such questions within a deadline to be determined by the Panel. The Panel's
written questions to the parties and each party's written answers to questions after the
substantive meeting with the Panel shall be made available to all third parties.
d. Once the questioning has concluded, the Panel shall afford each party an opportunity to
present a brief closing statement, with Canada presenting its statement first, followed by
the United States.
WT/DS384/RW/Add.1 • WT/DS386/RW/Add.1

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Third parties

14. The Panel shall invite each third party to transmit to the Panel a written submission prior to
the substantive meeting of the Panel with the parties, in accordance with the timetable adopted by
the Panel.
15. All third parties may be present during the entirety of the substantive meeting with the
parties. During this meeting, third parties may, at the invitation of the Panel, ask questions to the
parties or the other third parties. The parties and the other third parties, however, have no
obligation to respond to these questions.
16. Each third party shall also be invited to pr esent its views orally during a session of the
substantive meeting, set aside for that purpose. Ea ch third party shall provide to the Panel the list
of members of its delegation in advance of this session and no later than 5.00 p.m. (Geneva time)
on the previous working day.
17. The third party session shall be conducted as follows:
a. All third parties may be present during the entirety of this session.
b. The Panel shall first hear the arguments of the third parties in alphabetical order. Third
parties present at the third-party session and intending to present their views orally at
that session, shall provide the Panel, the parties and other third parties with provisional
written versions of their statements before they take the floor. In the event that
interpretation is needed, each third party shall provide additional copies to the
interpreters. Third parties shall make available to the Panel, the parties and other third
parties the final versions of their statements, preferably at the end of the session, and in
any event no later than 5.00 p.m. (Geneva time) on the first working day following the
session.
c. After the third parties have made their statements, the parties may be given the
opportunity, through the Panel, to ask the third parties questions for clarification on any
matter raised in the third parties' submissions or statements. Each party shall send in
writing, within a timeframe to be determined by the Panel, any questions to a third party
to which it wishes to receive a response in writing.
d. The Panel may subsequently pose questions to the third parties. The Panel shall send in
writing, within a timeframe to be determined by it, any questions to the third parties to
which it wishes to receive a response in writing. Each third party shall be invited to
respond in writing to such questions within a deadline to be determined by the Panel.
Descriptive part

18. The description of the arguments of the parties and third parties in the descriptive part of the
Panel report shall consist of executive summaries provided by the parties and third parties, which
shall be annexed as addenda to the report. These executive summaries shall not in any way serve
as a substitute for the submissions of the parties and third parties in the Panel's examination of
the case.
19. Each party shall submit an executive summary of the facts and arguments as presented to the
Panel in its written submissions and oral statements, in accordance with the timetable adopted by
the Panel. This executive summary may also include a summary of responses to questions. The
Panel will not summarize in the descriptive part of its report, or annex to its report, the parties'
responses to questions. The executive summary provided by each party shall not exceed 15 pages.
20. Each third party shall submit an executive summary of its arguments as presented in its
written submission and statement in accordance with the timetable adopted by the Panel. This
summary may also include a summary of response s to questions, where relevant. The executive
summary to be provided by each third party shall not exceed 6 pages.
WT/DS384/RW/Add.1 • WT/DS386/RW/Add.1

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Interim review
21. Following issuance of the interim report, each party may submit a written request to review
precise aspects of the interim report and request a further meeting with the Panel in accordance
with the timetable adopted by the Panel. The right to request such a meeting shall be exercised no
later than at the time the written request for review is submitted.
22. In the event that no further meeting with the Panel is requested, each party may submit
written comments on the other party's written request for review in accordance with the timetable
adopted by the Panel. Such comments shall be limited to commenting on the other party's written
request for review.
23. The interim report, as well as the final report prior to its official circulation, shall be kept
strictly confidential and shall not be disclosed.
Service of documents

24. The following procedures regarding service of documents shall apply:
a. Each party and third party shall submit all documents to the Panel by filing them with
the DS Registry (office No. 2047).
b. Each party and third party shall file three pa per copies of all documents it submits to the
Panel. When exhibits are provided on CD-ROMS/DVDs, three CD-ROMS/DVDs and three
paper copies of those exhibits shall be filed. The DS Registrar shall stamp the documents
with the date and time of the filing. The paper version shall constitute the official version
for the purposes of the record of the dispute.
c. Each party and third party shall also provide an electronic copy of all documents it
submits to the Panel at the same time as the paper versions, in Microsoft Word format,
either on a CD-ROM, a DVD or as an e-mail attachment. If the electronic copy is
provided by e-mail, it should be addressed to *****@wto.org, and cc'd to
*****.*****@wto.org, to *****.*****@wto.org, to *****.*****@wto.org, and to
*****.*****@wto.org. If a CD-ROM or DVD is provided, it shall be filed with the
DS Registry.
d. Each party shall serve any document submitted to the Panel directly on the other party.
Each party shall, in addition, serve on all third parties its written submissions in advance
of the substantive meeting with the Panel. Each third party shall serve any document
submitted to the Panel directly on the parties and all other third parties. Each party and
third party shall confirm, in writing, that copies have been served as required at the time
it provides each document to the Panel.
e. Each party and third party shall file its do cuments with the DS Registry and serve copies
on the other party (and third parties where appropriate) by 5.00 p.m. (Geneva time) on
the due dates established by the Panel.
f. The Panel shall provide the parties with an electronic version of the descriptive part, the
interim report and the final report, as well as of other documents as appropriate. When
the Panel transmits to the parties or third parties both paper and electronic versions of a
document, the paper version shall constitute the official version for the purposes of the
record of the dispute.
25. The Panel reserves the right to modify these procedures at any time following consultations
with the parties.
WT/DS384/RW/Add.1 • WT/DS386/RW/Add.1

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ANNEX A-2
WORKING PROCEDURES OF THE PANEL (DS386)
Adopted on 25 October 2013 and revised on 21 January 2014

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

2. The deliberations of the Panel and the document s submitted to it shall be kept confidential.
Nothing in the DSU or in these Working Procedures shall preclude a party to the dispute
(hereafter "party") from disclosing statements of its own positions to the public. Members shall
treat as confidential information submitted by another Member to the Panel which the submitting
Member has designated as confidential. Where a party submits a confidential version of its written
submissions to the Panel, it shall also, upon request of a Member, provide a non-confidential
summary of the information contained in its submissions that could be disclosed to the public.
The Panel may adopt special procedures concerning Business Confidential Information after
consulting the parties.
3. The parties, and Members having notified their interest in the dispute to the Dispute Settlement
Body in accordance with Article 10 of the DSU (hereafter "third parties"), shall be present at the
meetings only when invited by the Panel to appear before it. The Panel may open its meetings with
the parties to the public, subject to appropriat e procedures to be adopted by the Panel after
consulting the parties.
4. Each party and third party has the right to determine the composition of its own delegation
when meeting with the Panel. Each party and thir d party shall have responsibility for all members
of its own delegation and shall ensure that each member of such delegation acts in accordance
with the DSU and these Working Procedures, particularly with regard to the confidentiality of the
proceedings.
Submissions

5. Before the substantive meeting of the Panel with the parties, each party shall transmit to the
Panel a first written submission, and subsequently a written rebuttal, in which it presents the facts
of the case and its arguments, and counter-arguments, respectively, in accordance with the
timetable adopted by the Panel.
6. A party shall submit any request for a preliminary ruling at the earliest possible opportunity and
in any event no later than in its first written submission to the Panel. If Mexico requests such a
ruling, the United States shall submit its response to the request in its first written submission. If
the United States requests such a ruling, Mexico shall submit its response to the request prior to
the substantive meeting of the Panel, at a time to be determined by the Panel in light of the
request. Exceptions to this procedure shall be granted upon a showing of good cause.
7. Each party shall submit all factual evidence to the Panel no later than during the substantive
meeting, except with respect to evidence necessar y for purposes of rebuttal, answers to questions
or comments on answers provided by the other party. Exceptions to this procedure shall be
granted upon a showing of good cause. Where su ch exception has been granted, the Panel shall
accord the other party a period of time for comme nt, as appropriate, on any new factual evidence
submitted after the substantive meeting.
8. Where the original language of exhibits is not a WTO working language, the submitting party or
third party shall submit a translation into the WTO working language of the submission at the
WT/DS384/RW/Add.1 • WT/DS386/RW/Add.1

- A-7 -

same time. The Panel may grant reasonable extensions of time for the translation of such exhibits
upon a showing of good cause. Any objection as to the accuracy of a translation should be raised
promptly in writing, no later than the next filing or meeting (whichever occurs earlier) following
the submission which contains the translation in question. Any objection shall be accompanied by a
detailed explanation of the grounds of objection and an alternative translation.
9. In order to facilitate the work of the Panel, each party and third party is invited to make its
submissions in accordance with the WTO Editorial Guide for Panel Submissions attached as
Annex 1.
10. To facilitate the maintenance of the record, and maximize the clarity of submissions, each
party and third party shall sequentially number its exhibits throughout the course of the
compliance proceedings. For example, exhibits su bmitted by Mexico could be numbered MEX-1,
MEX-2, etc. If the last exhibit in connection with the first submission was numbered MEX-5,
the first exhibit of the next submission thus would be numbered MEX-6. The first time a party or
third party submits to the Panel an exhibit that co rresponds to an exhibit submitted in the original
panel proceedings, the party or third party submi tting such exhibit shall also identify the number
of the original exhibit in the original panel proceedings.
Questions

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

12. Each party shall provide to the Panel the list of members of its delegation in advance of the
meeting with the Panel and no later than 5.00 p.m. (Geneva time) on the previous working day.
13. The substantive meeting of the Panel shall be conducted as follows:
a. The Panel shall invite Mexico to make an opening statement to present its case first.
Subsequently, the Panel shall invite the United States to present its point of view. Before
taking the floor, each party shall provide the Panel and other participants at the meeting
with a provisional written version of its statement. In the event that interpretation is
needed, each party shall provide additional copies to the interpreters. Each party shall
make available to the Panel and the other party the final version of its statement,
preferably at the end of the meeting, and in any event no later than 5.00 p.m. (Geneva
time) on the first working day following the meeting.
b. After the conclusion of the statements, the Panel shall give each party the opportunity to
ask questions or make comments, through the Panel. Each party shall send in writing,
within a timeframe to be determined by the Panel, any questions to the other party to
which it wishes to receive a response in writing. Each party shall be invited to respond in
writing to the other party's questions within a deadline to be determined by the Panel.
c. The Panel may subsequently pose question s to the parties. The Panel shall send in
writing, within a timeframe to be determined by it, any questions to the parties to which
it wishes to receive a response in writing. Each party shall be invited to respond in
writing to such questions within a deadline to be determined by the Panel. The Panel's
written questions to the parties and each party's written answers to questions after the
substantive meeting with the Panel shall be made available to all third parties.
d. Once the questioning has concluded, the Panel shall afford each party an opportunity to
present a brief closing statement, with Mexico presenting its statement first, followed by
the United States.
WT/DS384/RW/Add.1 • WT/DS386/RW/Add.1

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Third parties

14. The Panel shall invite each third party to transmit to the Panel a written submission prior to
the substantive meeting of the Panel with the parties, in accordance with the timetable adopted by
the Panel.
15. All third parties may be present during the entirety of the substantive meeting with the
parties. During this meeting, third parties may, at the invitation of the Panel, ask questions to the
parties or the other third parties. The parties and the other third parties, however, have no
obligation to respond to these questions.
16. Each third party shall also be invited to pr esent its views orally during a session of the
substantive meeting, set aside for that purpose. Ea ch third party shall provide to the Panel the list
of members of its delegation in advance of this session and no later than 5.00 p.m. (Geneva time)
on the previous working day.
17. The third party session shall be conducted as follows:
a. All third parties may be present during the entirety of this session.
b. The Panel shall first hear the arguments of the third parties in alphabetical order. Third
parties present at the third-party session and intending to present their views orally at
that session, shall provide the Panel, the parties and other third parties with provisional
written versions of their statements before they take the floor. In the event that
interpretation is needed, each third party shall provide additional copies to the
interpreters. Third parties shall make available to the Panel, the parties and other third
parties the final versions of their statements, preferably at the end of the session, and in
any event no later than 5.00 p.m. (Geneva time) on the first working day following the
session.
c. After the third parties have made their statements, the parties may be given the
opportunity, through the Panel, to ask the third parties questions for clarification on any
matter raised in the third parties' submissions or statements. Each party shall send in
writing, within a timeframe to be determined by the Panel, any questions to a third party
to which it wishes to receive a response in writing.
d. The Panel may subsequently pose questions to the third parties. The Panel shall send in
writing, within a timeframe to be determined by it, any questions to the third parties to
which it wishes to receive a response in writing. Each third party shall be invited to
respond in writing to such questions within a deadline to be determined by the Panel.
Descriptive part

18. The description of the arguments of the parties and third parties in the descriptive part of the
Panel report shall consist of executive summaries provided by the parties and third parties, which
shall be annexed as addenda to the report. These executive summaries shall not in any way serve
as a substitute for the submissions of the parties and third parties in the Panel's examination of
the case.
19. Each party shall submit an executive summary of the facts and arguments as presented to the
Panel in its written submissions and oral statements, in accordance with the timetable adopted by
the Panel. This executive summary may also include a summary of responses to questions. The
Panel will not summarize in the descriptive part of its report, or annex to its report, the parties'
responses to questions. The executive summary provided by each party shall not exceed 15 pages.
20. Each third party shall submit an executive summary of its arguments as presented in its
written submission and statement in accordance with the timetable adopted by the Panel. This
summary may also include a summary of response s to questions, where relevant. The executive
summary to be provided by each third party shall not exceed 6 pages.
WT/DS384/RW/Add.1 • WT/DS386/RW/Add.1

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Interim review
21. Following issuance of the interim report, each party may submit a written request to review
precise aspects of the interim report and request a further meeting with the Panel in accordance
with the timetable adopted by the Panel. The right to request such a meeting shall be exercised no
later than at the time the written request for review is submitted.
22. In the event that no further meeting with the Panel is requested, each party may submit
written comments on the other party's written request for review in accordance with the timetable
adopted by the Panel. Such comments shall be limited to commenting on the other party's written
request for review.
23. The interim report, as well as the final report prior to its official circulation, shall be kept
strictly confidential and shall not be disclosed.
Service of documents

24. The following procedures regarding service of documents shall apply:
a. Each party and third party shall submit all documents to the Panel by filing them with
the DS Registry (office No. 2047).
b. Each party and third party shall file three pa per copies of all documents it submits to the
Panel. When exhibits are provided on CD-ROMS/DVDs, three CD-ROMS/DVDs and three
paper copies of those exhibits shall be filed. The DS Registrar shall stamp the documents
with the date and time of the filing. The paper version shall constitute the official version
for the purposes of the record of the dispute.
c. Each party and third party shall also provide an electronic copy of all documents it
submits to the Panel at the same time as the paper versions, in Microsoft Word format,
either on a CD-ROM, a DVD or as an e-mail attachment. If the electronic copy is
provided by e-mail, it should be addressed to *****@wto.org, and cc'd to
*****.*****@wto.org, *****.*****@wto.org, *****.*****@wto.org, and
*****.*****@wto.org. If a CD-ROM or DVD is provided, it shall be filed with the
DS Registry.
d. Each party shall serve any document submitted to the Panel directly on the other party.
Each party shall, in addition, serve on all third parties its written submissions in advance
of the substantive meeting with the Panel. Each third party shall serve any document
submitted to the Panel directly on the parties and all other third parties. Each party and
third party shall confirm, in writing, that copies have been served as required at the time
it provides each document to the Panel.
e. Each party and third party shall file its do cuments with the DS Registry and serve copies
on the other party (and third parties where appropriate) by 5.00 p.m. (Geneva time) on
the due dates established by the Panel.
f. The Panel shall provide the parties with an electronic version of the descriptive part, the
interim report and the final report, as well as of other documents as appropriate. When
the Panel transmits to the parties or third parties both paper and electronic versions of a
document, the paper version shall constitute the official version for the purposes of the
record of the dispute.
25. The Panel reserves the right to modify these procedures at any time following consultations
with the parties.
WT/DS384/RW/Add.1 • WT/DS386/RW/Add.1

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ANNEX A-3
PROCEDURES FOR AN OPEN SUBSTANTIVE MEETING OF THE PANEL1 (DS384)
Adopted on 28 October 2013 and revised on 21 January 2014

1. The Panel shall hold a joint substantive meeting in DS384 and DS386.
2. Subject to the availability of suitable WTO meeting rooms, the Panel will start its substantive
meeting, on 18-19 February 2014, with a session with the parties open to the public. At that
session, each party will be asked to make an opening statement. After the parties have made their
statements, they will be given the opportunity to pose questions to the other party or make
comments on the other party's statement. The Panel may pose any questions or make any
comments during such session. The parties will also have an opportunity to make their closing
statement during the session open to the public.
3. To the extent that the Panel or any party considers it necessary, the Panel will also hold a
session with the parties not open to public observation during which the parties will be allowed to
make additional statements or comments, and pose questions, that involve business confidential
information. The Panel may also pose questions during such a session.
4. In addition to its sessions with the parties, at the substantive meeting the Panel will also
hold a separate session with the third parties. The Panel will start the third party session by
opening a portion of this session to the public. At this portion of the third party session, any third
party wishing to make its oral statement in a publ ic session shall do so. Following the third party
open session, the Panel will proceed to a third party closed session during which any other third
party shall make its oral statement. At each of th ese third party open or closed sessions, after the
third parties' statements, the Panel or any party may pose questions to any third party or make
comments concerning these statements. Third parties may also ask questions to the parties or
other third parties at the invitation of the Panel; however, the parties and the other third parties
have no obligation to respond to these questions by third parties.
5. The following persons will be admitted into the meeting room during all sessions of the
Panel's substantive meeting, whether open or closed to the public:
– the members of the Panel;
– all members of the delegations of the parties to DS384 and DS386;
– all members of the delegations of th e third parties to DS384 and DS386; and
– WTO Secretariat staff assisting the Panel.

6. No person shall disclose any business confidential information at any session open to the
public.
7. WTO Members and Observers and the public ma y observe the Panel's sessions that are open
to the public by means of a real time closed-circuit television broadcast to a separate viewing
room. The broadcasts will be open to officials of WTO Members and Observers upon presentation
of their official badges. Accredited journalists and representatives of relevant non-governmental
organizations may indicate to the Secretariat their interest in attending the broadcasts
(Information and External Relations Division). Members of the general public will be invited to
register their interest in attending each broadc ast via the WTO website, by close of business on
7 February 2014.

1 These procedures are adopted according to, and are an integral part of, the Panel's Working
Procedures of 25 October 2013.
WT/DS384/RW/Add.1 • WT/DS386/RW/Add.1

- A-11 -

ANNEX A-4
PROCEDURES FOR AN OPEN SUBSTANTIVE MEETING OF THE PANEL1 (DS386)
Adopted on 28 October 2013 and revised on 21 January 2014

1. The Panel shall hold a joint substantive meeting in DS386 and DS384.
2. Subject to the availability of suitable WTO meeting rooms, the Panel will start its substantive
meeting, on 18-19 February 2014, with a session wi th the parties open to the public. At that
session, each party will be asked to make an opening statement. After the parties have made
their statements, they will be given the opportunity to pose questions to the other party or make
comments on the other party's statement. The Panel may pose any questions or make any
comments during such session. The parties will also have an opportunity to make their closing
statement during the session open to the public.
3. To the extent that the Panel or any party considers it necessary, the Panel will also hold a
session with the parties not open to public observation during which the parties will be allowed to
make additional statements or comments, and pose questions, that involve business confidential
information. The Panel may also pose questions during such a session.
4. In addition to its sessions with the parties, at the substantive meeting the Panel will also
hold a separate session with the third parties. The Panel will start the third party session by
opening a portion of this session to the public. At this portion of the third party session, any third
party wishing to make its oral statement in a public session shall do so. Following the third party
open session, the Panel will proceed to a third party closed session during which any other third
party shall make its oral statement. At each of these third party open or closed sessions, after the
third parties' statements, the Panel or any party may pose questions to any third party or make
comments concerning these statements. Third parties may also ask questions to the parties or
other third parties at the invitation of the Panel; however, the parties and the other third parties
have no obligation to respond to these questions by third parties.
5. The following persons will be admitted into the meeting room during all sessions of the
Panel's substantive meeting, whether open or closed to the public:
– the members of the Panel;
– all members of the delegations of the parties to DS386 and DS384;
– all members of the delegations of th e third parties to DS384 and DS386; and
– WTO Secretariat staff assisting the Panel.

6. No person shall disclose any business confidential information at any session open to the
public.
7. WTO Members and Observers and the public ma y observe the Panel's sessions that are open
to the public by means of a real time closed-circuit television broadcast to a separate viewing
room. The broadcasts will be open to officials of WTO Members and Observers upon presentation
of their official badges. Accredited journalists and representatives of relevant non-governmental
organizations may indicate to the Secretariat their interest in attending the broadcasts
(Information and External Relations Division). Me mbers of the general public will be invited to
register their interest in attending each broadc ast via the WTO website, by close of business on
7 February 2014.

1 These procedures are adopted according to, and are an integral part of, the Panel's Working
Procedures of 25 October 2013.
WT/DS384/RW/Add.1 • WT/DS386/RW/Add.1

- A-12 -

ANNEX A-5
PROCEDURES OF THE PANEL CONCERNING BUSINESS CONFIDENTIAL INFORMATION1 (DS384)
Adopted on 28 October 2013

1. These procedures apply to any business confid ential information (BCI) that a party submits
to the Panel.
2. For the purposes of these procedures, BCI is defined as any information that has been
designated as such by the Party submitting the information, that is not available in the public
domain and the release of which could reasonably be considered to cause or threaten to cause
harm to an interest of the person or entity that supplied the business information to the Party.
3. No person may have access to BCI except a member of the Secretariat or the Panel, a
party's or third party's employee participating in the dispute, and a party's or third party's outside
advisor for purposes of this dispute. However, an outside advisor is not permitted access to BCI if
that advisor is an officer or employee of an enterprise engaged in the production, export, or import
of cattle, swine, beef, or pork. When a party or third party provides BCI to an outside advisor who
is an employee or officer of an industry associatio n of such enterprises, that party or third party
shall obtain written assurances from such advisor that he or she has read and understands these
Working Procedures and will not disclose any BCI in contravention of the Working Procedures.
4. A party or third party obtaining access to BCI as a result of the BCI being submitted in this
dispute shall treat it as confidential, i.e. shall not disclose that information other than to those
persons authorized to receive it pursuant to these procedures. Each party and third party shall
have responsibility in this regard for its employees as well as any outside advisors for the purposes
of this dispute. BCI obtained under these procedures may be used only for the purpose of
providing information and argumentation in this dispute.
5. A party or third party submitting or referring to BCI in a document shall mark the cover and
each page of the document to indicate the presence of BCI in the document as follows: BCI shall
be placed between double brackets (for exampl e, [[xx,xxx.xx]]). The cover and the top of each
page of the document shall contain the notice "Contains Business Confidential Information". Any
BCI that is submitted in electronic form shall be clearly marked with the phrase "Contains BCI" on
a label on the storage medium, and clearly mark ed with the phrase "Contains BCI" in the
electronic file name.
6. In the case of an oral statement containing BCI to be delivered in the session not open to
public observation as foreseen in paragraph 2 of the "Procedures for an open substantive meeting
of the Panel," the Panel should ensure that only persons authorized to have access to BCI pursuant
to these procedures are permitted to hear the statement.
7. The parties, third parties, and the Panel sha ll store all documents containing BCI so as to
prevent unauthorized access to such information.
8. The Panel shall not disclose BCI, in its report or in any other way, to persons not authorized
under these procedures to have access to BCI. The Panel may, however, make statements of
conclusion drawn from such information. Before the Panel makes its final report publicly available,
the Panel shall give each party an opportunity to ensure that the report does not contain any
information that it has designated as BCI.
9. Submissions containing BCI will be included in the record forwarded to the Appellate Body in
the event of an appeal of the Panel's Report.

1 These procedures are adopted according to, and are an integral part of, the Panel's Working
Procedures of 25 October 2013.
WT/DS384/RW/Add.1 • WT/DS386/RW/Add.1

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ANNEX A-6
PROCEDURES OF THE PANEL CONCERNING BUSINESS CONFIDENTIAL INFORMATION1 (DS386)
Adopted on 28 October 2013

1. These procedures apply to any business confid ential information (BCI) that a party submits
to the Panel.
2. For the purposes of these procedures, BCI is defined as any information that has been
designated as such by the Party submitting the information, that is not available in the public
domain and the release of which could reasonably be considered to cause or threaten to cause
harm to an interest of the person or entity that supplied the business information to the Party.
3. No person may have access to BCI except a member of the Secretariat or the Panel, a
party's or third party's employee participating in the dispute, and a party's or third party's outside
advisor for purposes of this dispute. However, an outside advisor is not permitted access to BCI if
that advisor is an officer or employee of an enterprise engaged in the production, export, or import
of cattle, swine, beef, or pork. When a party or third party provides BCI to an outside advisor who
is an employee or officer of an industry associatio n of such enterprises, that party or third party
shall obtain written assurances from such advisor that he or she has read and understands these
Working Procedures and will not disclose any BCI in contravention of the Working Procedures.
4. A party or third party obtaining access to BCI as a result of the BCI being submitted in this
dispute shall treat it as confidential, i.e. shall not disclose that information other than to those
persons authorized to receive it pursuant to these procedures. Each party and third party shall
have responsibility in this regard for its employees as well as any outside advisors for the purposes
of this dispute. BCI obtained under these procedures may be used only for the purpose of
providing information and argumentation in this dispute.
5. A party or third party submitting or referring to BCI in a document shall mark the cover and
each page of the document to indicate the presence of BCI in the document as follows: BCI shall
be placed between double brackets (for exampl e, [[xx,xxx.xx]]). The cover and the top of each
page of the document shall contain the notice "Contains Business Confidential Information". Any
BCI that is submitted in electronic form shall be clearly marked with the phrase "Contains BCI" on
a label on the storage medium, and clearly mark ed with the phrase "Contains BCI" in the
electronic file name.
6. In the case of an oral statement containing BCI to be delivered in the session not open to
public observation as foreseen in paragraph 2 of the "Procedures for an open substantive meeting
of the Panel," the Panel should ensure that only persons authorized to have access to BCI pursuant
to these procedures are permitted to hear the statement.
7. The parties, third parties, and the Panel sha ll store all documents containing BCI so as to
prevent unauthorized access to such information.
8. The Panel shall not disclose BCI, in its report or in any other way, to persons not authorized
under these procedures to have access to BCI. The Panel may, however, make statements of
conclusion drawn from such information. Before the Panel makes its final report publicly available,
the Panel shall give each party an opportunity to ensure that the report does not contain any
information that it has designated as BCI.
9. Submissions containing BCI will be included in the record forwarded to the Appellate Body in
the event of an appeal of the Panel's Report.

1 These procedures are adopted according to, and are an integral part of, the Panel's Working
Procedures of 25 October 2013.
WT/DS384/RW/Add.1 • WT/DS386/RW/Add.1

- B-1 -

ANNEX B
ARGUMENTS OF THE PARTIES
Contents Page
Annex B-1 Integrated executive summary of the arguments of Canada B-2
Annex B-2 Integrated executive summary of the arguments of Mexico B-14
Annex B-3 Integrated executive summary of the arguments of the United States B-27
WT/DS384/RW/Add.1 • WT/DS386/RW/Add.1

- B-2 -

ANNEX B-1
INTEGRATED EXECUTIVE SUMMARY OF THE ARGUMENT OF CANADA
I. INTRODUCTION

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

A. The original COOL measure

2. The original COOL measure provided that retailers licensed under the Perishable Agricultural
Commodities Act, 1930 were required to provide consumers with origin information on pork and
beef muscle cuts that was loosely based on the location of three production steps undergone by
livestock: birth, raising, and slaughter. Muscle cuts of pork and beef were divided into the
following four categories:
Category A Meat from animals born, raised, and slaughtered in the
United States, or from animals present in the
United States on or prior to 15 July 2008
Product of the U.S.
Category B Meat from animals born in Country X and raised and
slaughtered in the United States. (These animals were not
exclusively born, raised and slaughtered in the
United States or imported for immediate slaughter.)
Product of the U.S., Country X,
Country Y (if applicable; can
appear in any order)
Category C Meat from animals imported in to the United States for
immediate slaughter
Product of Country X, U.S.
Category D Foreign meat imported into the United States Product of Country X

3. The original COOL measure permitted the commingling of muscle cuts derived from
categories A, B, and C on a single production day. Where commingling occurred, the muscle cuts
could be labelled under a common, mixed-origin label (e.g. "Product of Canada, United States").
Imported muscle cuts were labeled so as to indica te that they were a product of the country in
which the animal from which they were produced was slaughtered (e.g. "Product of Canada"),
regardless of where the birth and raising steps occurred.
4. In addition, the original COOL measure perm itted labels that applied to ground beef and
pork to list countries if "raw material" from those countries was in a processor's inventory less
than 60 days prior to the ground meat's production. This "60-day inventory allowance" flexibility
was available for market participants at every stage of meat supply and distribution.
5. Large amounts of pork and beef consumed in the United States were exempted from the
scope of the original COOL measure's application. Specifically, food service establishments, all
processed pork and beef, and retailers that eith er purchased less than $230,000 worth of fresh
fruits and vegetables annually or that did not ship, receive, or contract to be shipped or received
fresh fruits and vegetables in quantities exceeding 2,000 pounds (one ton) in a single day were
exempt from the original COOL measure's labelling requirements.
WT/DS384/RW/Add.1 • WT/DS386/RW/Add.1

- B-3 -

B. The amended COOL measure

6. The amendments to the original COOL me asure introduced two major changes: (1) the
commingling flexibility, which had somewhat mitigated the original COOL measure's segregation
requirements, was eliminated; and (2) subject to certain exceptions, labels applying to muscle
cuts of beef and pork were required to name the country (countries) in which the animal from
which the muscle cut was derived was born, was raised, and was slaughtered.
7. The amended COOL measure provides that if an animal was raised in part in the
United States and in part outside the United States, the label may treat the animal as if it was
raised entirely in the United States, unless the animal was imported for immediate slaughter
(when it is consigned directly from a port of entry to a recognized slaughtering establishment and
slaughtered within two weeks from its date of en try) or where by doing so the muscle cut covered
commodity would be designated as having a United States country of origin.
8. The amended COOL measure did not modify the original COOL measure's extensive
exclusions and exemptions, the labelling of imported muscle cuts, or the 60-day inventory
allowance that applies to ground beef and pork.
III. THE SCOPE OF CANADA'S CHALLENGE

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

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

10. The Panel concluded that the original COOL measure was a technical regulation. The
United States did not appeal this finding and this aspect did not become an issue in the current
compliance proceedings. The amended COOL measure equally qualifies as a technical regulation.
In the original proceedings, the Panel concluded that Canadian cattle and hogs are "like" U.S.
cattle and hogs. This was not appealed in the previous proceedings and this aspect did not become
an issue in the current compliance proceedings either.
B. The amended COOL measure violates TBT Article 2.1

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

11. TBT Article 2.1 imposes a national treatment obligation on WTO Members with respect to
technical regulations. The analysis of whether a technical regulation is de facto inconsistent with
TBT Article 2.1 consists of the following two inquiries: (i) whether the technical regulation at issue
modifies the conditions of competition in the relevant market to the detriment of imported
products compared to like domestic products; and, if so, (ii) whether the detrimental impact on
imported products stems exclusively from a legitimate regulatory distinction (LRD).
12. The assessment under element (i) is the same test as that which applies under GATT
Article III:4 for determining whether a measure accords less favourable treatment to imported
products. The legal test under element (ii) assesses both whether the regulatory distinction and
technical regulation in issue are designed and applied in an even-handed manner. In assessing
even-handedness, a panel must carefully scrutinize the particular circumstances of the case, that
is, the design, architecture, revealing structure, operation and application of the technical
regulation at issue.
WT/DS384/RW/Add.1 • WT/DS386/RW/Add.1

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13. As a result of the removal of the comminglin g flexibility and the introduction of point-of-
production labelling through the 2013 Final Rule, the amended COOL measure's labelling,
recordkeeping, and segregation requirements are more onerous than those that prevailed under
the original COOL measure.
14. Throughout the original proceedings, the Un ited States argued that the original COOL
measure did not require the segregation of animal s on the basis of their origin because of the
availability of commingling, which was alleged by the United States to be widely used by
producers. The elimination of the commingling flex ibility removes any pretence that segregation is
not necessary under the COOL regime. This view is confirmed by comments on the amended COOL
measure that were submitted by industry actors to the U.S. Department of Agriculture (USDA) and
referred to by Canada in these proceedings.
15. Basic economic logic suggests that the elimination of commingling and the resulting
additional recordkeeping and segregation requirements will further deter market actors from
handling Canadian livestock and the muscle cuts de rived therefrom. The United States resorts to
both bald assertions regarding what it now considers to have been the limited extent to which
commingling occurred and criticism directed at industry actors for failing to provide evidence
regarding the extent of commingling in practice.
16. The United States further contends that Canada's claim regarding the amended COOL
measure's detrimental impact is based on the elimination of commingling. This contention is
without merit. While the prohibition of commingling has exacerbated the original COOL measure's
significant and negative impact, this is by no means the sole basis for Canada's argument
regarding the amended COOL measure's detrimen tal impact. The amended COOL measure does
nothing to alter the elements of the original C OOL measure that were responsible for undermining
the competitive position of Canadian cattle and hogs in the U.S. market.
17. The amended COOL measure has increased the recordkeeping and verification requirements
that cause the segregation that is the source of the detrimental impact on Canadian cattle and
hogs.
18. As a result of the commingling flexibility that applied under the original COOL measure,
producers could affix a common label to muscle cuts derived from combinations of commingled
Category A, B, and C animals. Both the provisions on commingling that were set out in the 2009
Final Rule and the USDA's commentary on that Rule reveal that the original COOL measure
provided flexibility for upstream producers that reduced the records that had to be kept in the case
of commingled muscle cuts. This flexibility has been eliminated by the amended COOL measure.
19. Furthermore, the original COOL measure permitted Category B muscle cuts to bear Label C,
even where no commingling occurred. In practical terms, only one set of records was necessary to
track Category B and C animals and the muscle cuts derived therefrom. The elimination of this
flexibility means that two sets of records will now be required.
20. Canada has submitted evidence that demonstrates the widespread expectation among a
wide range of industry actors, that recordkeeping will increase under the amended COOL measure,
and has provided practical examples that demonstrate the reasons for this expectation.
21. The United States acknowledges that compliance costs will rise as a result of the changes
introduced through the amended COOL measure but fails to recognize that it is the structure of the
North American markets for beef and pork muscle cuts that ensures that Canadian cattle and hogs
will bear a disproportionate burden of those compliance costs.
22. The U.S. market for cattle and hogs is domina ted by U.S. animals. As a result, U.S. market
actors can usually avoid the segregation requirements of the amended COOL measure by handling
exclusively U.S. animals and muscle cuts derive d therefrom. In order to compete with these
entities, market actors selling muscle cuts or animals that have undergone a production step in
Canada must pass the higher costs of segregatin g and tracking Canadian cattle and hogs and the
muscle cuts derived therefrom up the supply chain to Canadian cattle and hog producers. The
amended COOL measure not only perpetuates this situation but adds to the higher costs arising
WT/DS384/RW/Add.1 • WT/DS386/RW/Add.1

- B-5 -

from the use of imported livestock, thereby strengthening the incentive for U.S. producers to
handle exclusively domestic livestock.
23. Canada has submitted extensive evidence de monstrating the detrimental impact that the
amended COOL measure has had on Canadian cattl e and hogs, even with the six-month delay in
the amended COOL measure's enforcement. This evidence is consistent both with basic economic
logic, which is elaborated upon by Dr. Sumner in his report on the amended COOL measure's
economic impact on Canadian livestock, and the expectations of industry actors that are
documented by Canada.
24. Canada has shown that the amended COOL measure does not stem exclusively from a LRD,
in that the measure is arbitrary, lacks even-handedness, and results in unjustifiable discrimination
against Canadian livestock.
25. The United States attempts to limit the scope of the Panel's analysis under TBT Article 2.1,
adopting the position that the distinctions between the categories of meat and the different labels
should be considered in the abstract, divorced from the amended COOL measure's overall
architecture and application. In so doing, the United States advocates an approach that runs
directly counter to both the analytical framew ork that the Appellate Body has developed and
applied under the LRD component of the TBT Article 2.1 test and to the analysis conducted by the
Appellate Body in this case.
26. At the core of the Appellate Body's approa ch are assessments of the even-handedness of
both the challenged technical regulation and the relevant regulatory distinction(s). These
assessments require close scrutiny of the particular circumstances of the case, that is, the design,
architecture, revealing structure, operation, and application of the technical regulation at issue.
27. An important panel finding supporting the Ap pellate Body's conclusion that the detrimental
impact on Canadian cattle and hogs caused by the COOL measure did not stem from a LRD was
the "considerable proportion" of beef and pork th at is exempt from labelling requirements. The
amended COOL measure does not address the scope of the extensive exemptions to the original
COOL measure in any way.
28. Canada has demonstrated that approximately 33% of beef and 9% of pork that is consumed
in the United States is subject to the amende d COOL measure's labelling requirements. These
figures are broadly consistent with the findings of the U.S. Congressional Research Service in its
report on COOL and this WTO dispute. Furthermore, factoring ground beef into this consideration
shows that approximately only 16% of all beef that is consumed in the U.S. bears labels that
provide origin information regarding the place of birth, raising, and slaughter.
29. Thus, despite the fact that information regarding the origin of all livestock must be
identified, tracked, and transmitted throughout th e chain of production by producers, processors,
and retailers, the amended COOL measure conveys in formation regarding the location of the three
production steps on only a fraction of the meat that is derived from this livestock. This reveals that
a lack of correspondence between the recordkeeping and verification requirements, on the one
hand, and the limited information provided to consumers, on the other hand, persists under the
amended COOL measure. Consequently, the detrim ental impact on Canadian cattle and hogs
cannot be explained by the need to provide origin information to consumers and, therefore,
reflects arbitrary and unjustifiable discrimination.
30. The amended COOL measure purports to a ddress the lack of correspondence between the
recordkeeping and verification requirements and the limited information conveyed to consumers.
However, the requirements of the latter half of this ratio have been expanded by the amended
COOL measure. Moreover, the increased record keeping and verification requirements apply
throughout the entire beef and pork muscle cu t supply chains, while the information conveyed
through the new labels is limited to the much smaller segment of beef and pork that is subject to
point-of-production labelling. This more than offsets the contribution that any additional
information provided to consumers under the amended COOL measure makes to the rectification
of the imbalance described above.
WT/DS384/RW/Add.1 • WT/DS386/RW/Add.1

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31. The Appellate Body considered that Label A was capable of conveying to consumers that the
livestock used to produce muscle cuts were born, raised, and slaughtered in the United States.
Label D remains unchanged under the amended COOL measure. Therefore, any additional
meaningful information provided to consumers by the amended COOL measure is limited to those
muscle cuts to which Labels B and C were previously applied.
32. Even if the United States' assertion that roughly 27 to 28% of pork and beef muscle cuts
that were subject to the original COOL measure bore Label B or C is accepted, this means that the
additional information provided to U.S. consumer s by the amended COOL measure applies to less
than a third of all muscle cuts that are su bject to the amended COOL measure's labelling
requirements.
33. The information conveyed to consumers by the amended COOL measure may be incomplete
or misleading, particularly with respect to the labels that apply to muscle cuts that are derived
from animals that do not satisfy the definition of U.S. origin. For example: (1) Imported muscle
cuts may be labeled as "Product of Canada" even if the animal used to produce the muscle cut was
born and raised in the United States; (2) Muscle cuts may be labelled as "Born in Canada, Raised
and Slaughtered in the United States" even if the animal from which the muscle cut is derived
spends as little as 15 days in the United States pr ior to slaughter; (3) Labels affixed to an animal
that spends a short time in Canada prior to being exported to the United States for immediate
slaughter must be labelled as "Born and Raised in Canada, Slaughtered in the United States".
34. The United States describes the objective of the amended COOL measure as the provision of
accurate origin information to consumers. Yet, consideration of the amended COOL measure's
design, architecture, and revealing structure demonstrates that significant dissonance exists
between this objective and the measure's operation and application. The following aspects of the
amended COOL measure's treatment of meat consumed in the United States illustrate this point:
(1) The only information on the location of the production steps that can be relied on by U.S.
consumers as accurate is that which is conveyed in respect of muscle cuts that are derived from
animals that satisfy the measure's definition of U.S. origin; (2) As a result of the 60-day inventory
allowance that applies to ground beef and pork, consumers are only informed of the countries of
origin "that may be reasonably contained therein". The USDA simply asserts that this is reasonable
because precise labelling for ground meat would be burdensome for industry, ignoring the
contradiction with its approach to muscle cut labels, which is also burdensome for industry; (3)
The amended COOL measure permits the omission of information on the raising production step
occurring in a foreign country if an animal is raised in both the United States and a foreign
country. However, this flexibility is unavailable if an animal is born and raised in the United States,
raised in another country, and then raised and slaughtered in the United States. The United States
offers no explanation that accounts for this clear contradiction that prioritizes U.S. origin
information; (4) The amended COOL measure cont inues to exempt food service establishments,
processed foods, and retailers that either do not purchase $230,000 worth of fresh fruit and
vegetables annually or do not ship, receive, or contract to be shipped or received quantities of
fresh fruit and vegetables in quantities exceeding 2,000 pounds (one ton) in a single day. This
means that butcher shops, i.e. shops that specialize in selling meat products do not provide
consumers with origin information.
35. These elements of the amended COOL measure reveal the uneven manner of its operation
and application to meat products and the animals from which they are produced. This uneven
application in turn demonstrates that the amende d COOL measure and its regulatory distinctions
are arbitrary, and that the discrimination against Canadian cattle is unjustifiable.
36. The Panel's findings in respect of Label D were a factor in the Appellate Body's analysis of
the legitimacy of the original COOL measure's regulatory distinctions. Furthermore, Label D is part
of the amended COOL measure's design, architecture, and revealing structure that affects its
operation and application. Therefore, Label D must factor into the Panel's LRD analysis.
37. Canada is not challenging the consistency of the ground meat label with the WTO obligations
of the United States. However, the logic that underpinned the Appellate Body's analysis weighs in
favour of the amended COOL measure's treatment of ground meat being regarded as a relevant
factor in assessing the measure's consistency with TBT Article 2.1.
WT/DS384/RW/Add.1 • WT/DS386/RW/Add.1

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38. Cattle and hogs, which are used to produce both muscle cuts and ground meat, are subject
to the amended COOL measure's onerous tracking and verification requirements, despite the fact
that a large portion of the meat derived from these animals (i.e. ground meat) does not convey
the information that must be tracked and tran smitted upstream. This element of the amended
COOL measure supports the following conclusions: (i) the detrimental impact on Canadian cattle
and hogs that results from the recordkeeping and verification requirements cannot be explained by
the need to provide origin information on the loca tion of the three production steps; and (ii) the
amended COOL measure, therefore, reflects discrimination.
39. The prohibition of trace-back is a relevant consideration in assessing whether the amended
COOL measure's detrimental impact on Canadian livestock reflects discrimination. This prohibition,
coupled with a mandate for the Secretary of Agriculture to audit retailers to verify compliance,
necessitates the implementation of the amended COOL measure's labelling requirements through
the system of recordkeeping and verification th at is the cause of the detrimental impact on
Canadian livestock. Therefore, the prohibition on trace-back is a critical element in demonstrating
that the detrimental impact on Canadian livestock does not stem exclusively from a LRD.
C. The amended COOL measur e violates GATT Article III:4

40. The Appellate body has clarified that the na tional treatment obligations in TBT Article 2.1
and GATT Article III:4 differ in scope and content. As a result, Canada requests that, regardless of
the Panel's findings under TBT Article 2.1, the Panel address Canada's claim under GATT III:4.
41. According "treatment no less favourable" in the context of a de facto violation of GATT
Article III:4 means according conditions of competition no less favourable to the imported product
than to the like domestic product. The analysis of a measure's effect on the conditions of
competition in the context of TBT Article 2.1 applies equally to GATT Article III:4.
42. Notwithstanding the long line of jurispru dence that has applied the GATT Article III:4
analysis, the United States seeks to import the LR D component of the TBT Article 2.1 test into this
analysis. There is no textual basis for the position of the United States, which disregards the
specific context in which the LRD analysis was developed and the context provided for in the
GATT 1994 itself.
43. The genesis of the LRD analysis is the balance between the right to regulate and the
commitment to liberalize trade that is provided fo r in the context of the TBT Agreement and also
reflected in GATT Articles III and XX. That balance is reflected in both GATT Articles III and XX (as
well as in the two-step TBT Article 2.1 test) accounts for the Appellate Body's clarification that the
scope and context of TBT Article 2.1 and GATT Article III:4 are not the same.
44. The United States fails to explain how an assessment of whether a challenged technical
regulation is applied in a manner that would constitute a means of arbitrary or unjustifiable
discrimination, as is required in the LRD analysis under the TBT Agreement would somehow apply
under GATT 1994. In particular, the United States does not explain how the assessment of
arbitrary or unjustifiable discrimination that it proposes to read into GATT Article III:4 would
interact with the assessment under the chapeau of GATT Article XX of whether the challenged
measure is "applied in a manner that would constitute arbitrary or unjustifiable discrimination
between countries where the same conditions prevail".
45. The extensive jurisprudence interpreting th e relationship between GATT Article III and XX
should not be jettisoned through the importation of the interpretation of TBT Article 2.1 into the
GATT. Accepting the United States' position on th is point would defy basic principles of treaty
interpretation and create uncertainty amon g Members about the scope of both the WTO
commitments that they have agreed to and that are under negotiation.
46. If the United States had legitimate regulatory purposes relevant for an analysis under the
GATT 1994, it should have put forward a GATT Article XX defence. Having failed to do so, it cannot
now seek to twist the GATT Article III:4 test to pretend that it does not need Article XX of
GATT 1994.
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D. The amended COOL measure violates TBT Article 2.2

47. Two issues are in dispute: (i) the identification of the objective, and; (ii) the necessity of the
trade-restrictiveness of the amended COOL measure.
48. The objective of a measure is the benchmark on a scale against which to assess the actual
contribution of the measure to the fulfilment of th e objective. If defined too narrowly, an objective
may more easily correlate with the measure that is being challenged and, as a result, affect the
comparison with alternative measures by reducing the possibility of formulating measures that
achieve a level of fulfilment of the objective that is equivalent to that achieved by the challenged
measure.
49. In the original proceedings, the Appellate Body confirmed the Panel's finding that the
United States' objective was "the provision of consumer information on origin". The United States
nevertheless contends that its objective may be stated in a number of ways, including more
narrowly as "to provide consumers with information on the countries in which the livestock from
which the meat they purchase is produced were born, raised and slaughtered". The Panel should
reject the United States' attempt to reformulate its objective in an artificially narrow and self-
serving manner, all the more because the United States has conceded that its objective remains
the provision of consumer information on origin.
50. Assessing the necessity of the trade-restrict iveness of a measure involves the consideration
of the following factors: (i) the trade-restrictiveness of the regulation; (ii) the degree of
contribution the regulation makes to the achievemen t of the objective, and (iii) the nature of the
risks are issue and the gravity of the consequences that would arise from non-fulfilment of the
objective pursued through the measure. In most cases, the analysis involves a comparison with
alternative measures.
51. A measure is trade-restrictive if it has a limiting effect on trade. A measure that affects the
conditions of competition to the detriment of imported products is trade-restrictive. An actual
reduction in trade flows is not a conditio sine qua non for a measure to be considered trade-
restrictive. A technical regulation that increases compliance costs in a non-discriminatory manner,
but does not otherwise modify the conditions of competition to the detriment of imported products,
may nevertheless be trade-restrictive if the cost increase has the effect of reducing trade flows or
reducing prices of both imported and domestic products. The amended COOL measure is highly
trade-restrictive.
52. WTO jurisprudence recognizes that panels enjoy a certain latitude in choosing and designing
the methodology to assess the contribution of a measure to the fulfilment of the measure's
objective. There is no reason why panels should not enjoy the same latitude in choosing the
methodology to assess the trade-restrictiveness of a measure. Contrary to the position expressed
by the United States, trade-restrictiveness is not exclusively concerned with trade volumes. The
assessment of trade-restrictiveness is concerned with the impact of a measure on imports. Such
an impact may be, inter alia, a reduction in prices or quantities or both, as in this case.
53. The assessment of the contribution is concer ned with the degree of contribution that the
technical regulation actually makes towards the achievement of the objective. There is no
requirement for a panel to identify, in the abstract, the level at which a responding Member aims
to achieve that objective. The Appellate Body has explained that a Member, "by preparing,
adopting, and applying a measure in order to pursue a legitimate objective, articulates either
implicitly or explicitly the level at which it seeks to pursue that particular legitimate objective".
54. Contrary to the contention of the United States, whether an alternative measure provides an
equivalent "amount" of information on the countries where the animal was born, raised and
slaughtered is not the "only question". Further, de termining the actual degree of contribution of a
measure does not preclude characterizing that degree as, for instance, "low" or "limited". Such
characterization allows comparing the degree of contribution of the challenged measure with
alternative measures that contribute to the objective in a different way.
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55. The amended COOL measure is capable of contributing towards its objective to a very
limited degree. A considerable proportion of beef and pork sold in the United States continues to
be exempted from the labelling requirements.
56. The obligation to consider the "risks non-fulfilment would create" means that the comparison
of the challenged measure with a possible alternative measure should be made in the light of the
nature of the risks at issue and the gravity of the consequences that would arise from non-
fulfilment of the legitimate objective. In this case, the consequence that would arise from non-
fulfilment would be that those consumers who want information on the origin of source livestock
might not be able to get it. The Appellate Body has already found that the consequences that may
arise from non-fulfilment of the objective would not be particularly grave.
57. The comparison with possible alternative measures is a conceptual tool for ascertaining
whether the challenged measure is more trade-restrictive than necessary. As with any analytical
tool, it must not be applied in a mechanistic fashion. It is relevant to determine whether the
alternative is less trade-restrictive, whether it would make an equivalent contribution to the
relevant objective, taking into account the risks non-fulfilment would create, and whether it is
reasonably available. An alternative measure is not reasonably available if it imposes an undue
burden on the responding Member, such as prohibitive costs or substantial technical difficulties.
The reasonable availability of an alternative measure must be assessed in relation to the capacity
of the responding Member to implement it.
58. A comparison with an alternative measure that is less trade-restrictive than the challenged
measure but fulfils the responding Party's objective to a lesser extent does not preclude a finding
that the challenged measure is more trade-restrictive than necessary. Such a finding would require
that the consequences that would arise from non-fulfilment of the objective would not be grave.
59. Turning to the comparative analysis, Canada submitted a detailed analysis prepared by Dr.
Sumner to assist the Panel in making a determination on the trade-restrictiveness element (Exhibit
CDA-126). That analysis calculates the magnitude of compliance costs required for a non-
discriminatory alternative measure to cause an impact on trade equal to the impact of the original
COOL measure. The impact is calculated in terms of export revenue losses in dollar amounts. The
concept of export revenue losses captures the meaning of trade restrictiveness because it is a
measurement of the magnitude of the impact of a measure on imports. Dr. Sumner used the costs
of the original COOL measure to Canadian producers – in the sense of the losses that the measure
has caused them, both in terms of reduced prices and quantities – to calculate how much tracing
livestock and meat, labelling meat and keeping records would need to cost to market participants
under a non-discriminatory measure to cause Canadian producers the same export losses as under
the original COOL measure. In Exhibit CDA-126, Dr. Sumner has demonstrated that a
non-discriminatory alternative measure would have to entail implausibly high compliance costs to
cause such losses. These already implausibly high minimum amounts of compliance costs are even
much higher when calculated based on the expo rt revenue losses caused by the amended COOL
measure or on quantities alone, further to the Un ited States' conception of trade-restrictiveness.
None of the alternative measures could possibly entail compliance costs of the magnitude
calculated.
60. The United States has not rebutted Canada's prima facie case that any one of the proposed
alternative measures would be less trade-restrictive than the amended COOL measure.
61. First alternative measure – Mandatory labelling of muscle cuts of beef and pork based on
substantial transformation could be implemente d, combined with voluntary labelling for the
production steps of birth and raising. This measure would be significantly less trade-restrictive
than the amended COOL measure because it would not require segregation of livestock and muscle
cuts for that segment of the market that does not voluntarily provide consumer information on
where livestock were born and raised. The United States has not contested that this alternative
measure is reasonably available.
62. While this alternative measure might not contribute to the fulfilment of the objective to the
exact same degree as the amended COOL measure, that consideration does not preclude the Panel
from finding that the amended COOL measure is more trade-restrictive than necessary. This is so
because the consequences that may arise from non-fulfilment of the objective of the amended
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COOL measure are not particularly grave. Based on the following factors, considered in
conjunction, the Panel should find that the amende d COOL measure is more trade-restrictive than
necessary: the amended COOL measure is capable of contributing towards its objective to a very
limited degree; the amended COOL measure is hi ghly trade-restrictive; any difference in the
degrees of fulfilment of the objective between the two measures is not considerable, given that the
alternative measure would have a broader scope of application than the amended COOL measure,
and; the alternative measure would be significan tly less trade restrictive than the amended COOL
measure.
63. Second alternative measure – The 60-day inventory allowance flexibility applicable to
ground meat could be extended to muscle cuts of beef and pork. This alternative measure would
be significantly less trade-restrictive than the amended COOL measure, because market
participants throughout the meat supply chain would have sufficient flexibility as a result of less
intense segregation requirements. Also, the alternative measure could not possibly entail costs of
the magnitude calculated by Dr. Sumner to track livestock and meat, label meat and keep records.
This alternative measure is reasonably available. While this alternative measure, like the first
alternative measure, might not contribute to the fulfilment of the objective to the exact same
degree as the amended COOL measure, that consideration does not preclude the Panel from
finding that the amended COOL measure is more trade-restrictive than necessary for the same
reasons Canada provided with respect to the first alternative measure.
64. Third alternative measure – A mandatory trace-back system could be implemented to
provide information, with respect to covered muscle cuts derived from livestock slaughtered in the
United States, on where the production steps took place for the relevant source animal or group of
animals. Tellingly, the amended COOL measure prohibits the USDA from using a trace-back
system.
65. The first stage of a trace-back system involves the establishment of an animal identification
and traceability system. Several WTO Members have established such a system. The United States
once had a comprehensive voluntary system – the National Animal Identification System (NAIS) –
that could have been maintained and made mandatory to provide information to consumers. The
second stage of a trace-back system occurs at the slaughterhouse, where processors have to
preserve the link between the animal, or group of animals, and the muscle cuts. Preserving the
link between the animal, or groups of animals, and the muscle cuts is done on a country-wide and
commercial basis in at least two WTO Members, namely Japan and Uruguay; various supply chains
elsewhere on the globe also preserve that link. Most of the compliance costs under a trace-back
system would be incurred at that stage. The th ird stage of a trace-back system involves the
distributors and the retailers, who have to preserve the information about the muscle cut.
66. A trace-back system would achieve a contributi on to the fulfilment of the objective that is
equal to or greater than the contribution achiev ed by the amended COOL measure. The label on a
muscle cut could indicate the precise name an d address of the facility where each of the
production steps took place. However, as an alternative, the labelling requirements under a trace-
back system could be the same as those under the amended COOL measure, provided that market
participants be able to demonstrate, if audited, that a muscle cut has been derived from an
animal, or group of animals, that was born, raised and slaughtered at a specific location.
67. Also, a trace-back system would be less trad e-restrictive than the amended COOL measure.
This is so because it could be implemented in such a way as to avoid modifying the conditions of
competition to the detriment of imported livestock and it could not possibly entail the minimum
amounts of compliance costs calculated by Dr. Sumner.
68. Further, a trace-back system is a reasonab ly available alternative measure. It would be
unreasonable for the United States to expect Canadian producers to continue shouldering the
burden of a measure that affects the competitive conditions of imported livestock when all market
participants could share equally the burden of providing consumer information on origin. Further,
there is no evidence that the first stage of a trace-back system would reward vertical integration at
the expense of family farms in the United States. While a trace-back system would likely increase
compliance costs for U.S. producers (and would lower the overall enormous costs borne by
Canadian producers), these costs would not be prohibitive; the U.S. industry would remain
profitable. The experience of other countries' industries demonstrates that changes in production
practices are well within the capacity of the U.S. industry. Finally, given that the United States has
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asserted that providing consumer information on origin is very important, the United States should
be expected to use its capabilities to implement its objective consistently with its WTO obligations.
69. Fourth alternative measure – In addition to the existing requirements of the amended COOL
measure to designate the country or countries where production steps occurred on labels of
muscle cuts of beef and pork derived from liv estock slaughtered in the United States, the
designation of the state(s) and/or province(s) wh ere each of those steps occurred could also be
required on those labels.
70. The proposed alternative measure would achieve a greater degree of fulfilment than that
achieved by the amended COOL measure, be cause it would provide the same consumer
information as that provided under the amende d COOL measure, with the addition of other
information.
71. The proposed alternative would also be less trade-restrictive than the amended COOL
measure. This is so because it could be implem ented in such a way as to avoid modifying the
conditions of competition to the detriment of imported livestock and it could not possibly entail the
minimum amounts of compliance costs calculated by Dr. Sumner.
72. The proposed alternative measure is reasonably available. State/province designations may
already be used in lieu of country of origin labeling for, inter alia , perishable agricultural
commodities. Also, the alternative measure is based on the principle that animals should be
traceable when in interstate commerce in the United States, which is operationalized in the Final
Rule on Traceability for Livestock Moving Interstate (Final Rule on Traceability). The fourth
alternative measure would entail lower compliance costs than a trace-back system. Further,
animals would not need to have been raised in all the same states or provinces; it would be
sufficient that they have the last state/province in common. The United States could rely on the
segregation of animals on a state/province basi s and on documents generated pursuant to, or
required under, the Final Rule on Traceability, combined with requirements for producer's affidavits
for elements that are not currently fully covered under that Rule, to implement the fourth
alternative measure. Alternatively, the United States could implement a national animal
identification and traceability system, as many other WTO Members have done. The United States
once had such a system – i.e. the NAIS – but deci ded not to make it mandatory. Neither solution
proposed by Canada to implement the fourth alternative measure would represent an undue
burden for the United States.
E. The COOL measure nullifies or impairs benefits that have accrued to Canada
within the meaning of GATT Article XXIII:1(b)

73. The amended COOL measure also nullifies or impairs benefits that have accrued to Canada
on the basis of tariff concessions made by the Unit ed States in respect of live cattle and hogs as
part of the Uruguay Round. These tariff concessions apply on a most-favoured-nation (MFN) basis.
74. The three elements that, according to the WTO jurisprudence, must exist for a finding of
non-violation nullification or impairment in the sense of GATT Article XXIII:1(b), are all present in
this case: (1) The application of the amended CO OL measure by the United States has deprived
Canada of benefits; (2) The benefits that have accrued to Canada from which Canada has been
deprived are tariff concessions made by the United States in the Uruguay Round, on the basis of
which Canada is entitled to rely for its expectation that its live cattle and hogs will have unimpeded
access to the U.S. market; and (3) By applying the requirements of the amended COOL measure,
the United States has upset the competitive relationship between U.S. and Canadian livestock, and
has nullified or impaired the benefits accruing to Canada under the GATT 1994.
75. The benefits concerned accrued to Canada under the WTO Agreement, regardless of the
operation of the Canada-United States Free Trade Agreement (Canada-United States FTA) and of
the North American Free Trade Agreement (NAFTA), by virtue of which Canadian live cattle and
hogs are entitled to duty-free entry into the United States.
76. The current MFN rate of the United States under the WTO Agreement for cattle other than
for dairy or breeding is US $ 0.01 per kilogr am. The duty-free import of hogs into the
United States pre-dates the WTO Agreement (as well as the Canada-United States FTA and the
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NAFTA). These tariff concessions would apply if in the future Canada or the United States were to
withdraw from the NAFTA or if the NAFTA were to be suspended by agreement between Canada
and the United States.
77. Canada provided detailed justification for it s claim under GATT Article XXIII:1(b), in paras.
182-190 of its first written submission and in paras. 154-157 of its second written submission. In
addition, Canada has placed on the record extens ive evidence on the upset by the COOL measure,
both in its original and amended form, of the conditions of competition between Canadian and US
cattle and hogs. Canada has established a prima facie case, which the United States has failed to
rebut.
78. Meat from Canadian cattle and hogs imported into the United States and subsequently
slaughtered there was considered, until the adoption of the COOL measure, to be a U.S. product
and was allowed to be marketed as such in th e United States. The upset of the competitive
relationship between Canadian livestock and U.S. livestock caused by the original COOL measure
and continued and aggravated by the amended C OOL measure could not reasonably have been
anticipated by Canada.
79. The United States tries to confuse the issue by referring to its meat labelling legislation of
the U.S. Tariff Act of 1930 , which concerns only the labelling of imported muscle cuts. Therefore,
this Act is irrelevant in terms of Canada's reasonable expectations as to the importation of
Canadian cattle and hogs into the United States and their competitive position in the U.S. market.
80. The issue of the origin labelling of muscle cuts derived from imported animals that were
subsequently slaughtered in the United States did not arise before 2003, when a Proposed Rule
was published under the 2002 Farm Bill, well afte r the conclusion of the Uruguay Round and the
entry into force of the WTO Agreement. It is the rejection of the long-standing principle of
substantial transformation in the COOL measure that has upset the competitive position of
Canadian cattle and hogs in the U.S. market. There is no merit in the suggestion of the
United States that because of the U.S. Tariff Act of 1930 Canada could have foreseen the COOL
measure and its effects on muscle cuts derived from Canadian cattle and hogs slaughtered in the
United States. Even under the original and amended COOL measure the United States has
continued to apply substantial transformation in respect of imported muscle cuts (Label D) and
muscle cuts from animals slaughtered in the United States destined for export from the
United States.
81. As to the assertion of the United States that the Panel lacks jurisdiction to deal with the
claim of non-violation under GATT Article XXIII:1(b), Canada refers to the words "consistency with
a covered agreement" in Article 21.5 of the Unde rstanding on Rules and Procedures Governing the
Settlement of Disputes (DSU). The terms "consi stency with a covered agreement" are broad
enough to cover a non-violation case because "consistency" can have a meaning that is broader
than a violation or infringement of a covered agreement.
82. Article 26.1 of the DSU sets out a series of special rules that apply to non-violation claims
under GATT Article XXIII:1(b). The jurisdiction of a compliance panel to make findings of non-
violations was not ousted by DSU Article 26.1. To the contrary, the first sentence of DSU
Article 26.1 confirms the jurisdiction of "a panel" in general to make such a finding. This applies
equally to a panel acting under DSU Article 21.5. Furthermore, from a systemic perspective, there
is no good reason why a non-violation claim could not be heard by the Panel, particularly in a case
like this, in which a similar claim was made in respect of the original COOL measure in the
previous phase of the litigation but no finding was made in respect of that claim.
83. Because the COOL measure was adopted well after the conclusion of the Uruguay Round and
the entry into force of the WTO Agreement, Canada is entitled to benefit from the presumption
articulated by the panel in Japan-Film, at para. 10.79 of its Report, i.e. that a measure that was
adopted following the conclusion of tariff negotiations could not have been foreseen by the
complaining Member and that it is up to the defending Member to rebut that presumption. Canada
has established a prima facie case of non-violation, which has not been rebutted by the
United States.
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V. REQUEST FOR RELIEF

84. Canada requests the Panel to find that the amended COOL measure: (i) continues the
violation of Article 2.1 of the TBT Agreement prev iously found in respect of the original COOL
measure; (ii) violates Article III:4 of the GA TT 1994; and (iii) violates Article 2.2 of the
TBT Agreement. Canada also request the Panel to find that the amended COOL measure nullifies
or impairs benefits accruing to Canada under the GATT 1994, within the meaning of
Article XXIII:1(b) of that Agreement.
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ANNEX B-2
INTEGRATED EXECUTIVE SUMMARY OF THE ARGUMENTS OF MEXICO
I. INTRODUCTION AND BACKGROUND INFORMATION

1. This proceeding, under Article 21.5 of th e DSU, concerns a disagreement as to the
consistency with the covered agreements of measures taken to comply with the recommendations
and rulings of the DSB in the dispute United States – Certain Country of Origin Labelling (COOL)
Requirements.

2. Mexico has initiated this proceeding to address the failure of the United States to comply
with its WTO obligations in relation to its mandatory "country of origin" labeling system ("COOL")
for muscle cuts of beef. A measure that is found to be inconsistent with a core non-discrimination
provision cannot later be found by a compliance Panel to be consistent with that obligation if the
arbitrary and unjustifiable discriminatory effects of the measure have not been removed, or, as in
the present case, have been increased.

3. This dispute was initiated by Mexico in December 2008 and it has been ongoing for more
than five years without a positive resolution. It is now 2014, and Mexico's cattle producers face
even worse discrimination and trade restrictio ns than they did in 2010. The Amended COOL
Measure still has the effect of requiring all imported cattle to be segregated. The measure
continues to discourage the use of imported cattle in meat production and there is still a "COOL
discount" imposed on Mexican cattle. There are still restrictions on the number of U.S. processing
plants that will accept Mexican cattle and on the days at which Mexican cattle can be delivered.

4. The Panel and Appellate Body ("AB") Reports found that the "COOL Measure", particularly in
regard to the muscle cut meat labels, is incons istent with Article 2.1 of the TBT Agreement
because it accords less favourable treatment to imported livestock than to like domestic livestock.
The DSB recommended that the United States bring the COOL Measure into conformity with the
United States' obligations under the covered agreements.

5. The reasonable period of time was determined through binding arbitration under
Article 21.3(c) of the DSU, to be the 23 May 2013. On 12 March 2013, the United States published
in the Federal Register a proposed rule to amend the COOL regulations. On 23 May 2013 USDA
published the "Final Rule on Mandatory Country of Origin Labeling of Beef, Pork, Lamb, Chicken,
Goat Meat, Wild and Farm-Raised Fish and Shellfish, Perishable Agricultural Commodities, Peanuts,
Pecans, Ginseng, and Macadamia Nuts" (the "2013 Final Rule"), which made only minor changes
to the proposed rule. The Final Rule purportedly entered into force on that same date, although
the notice published with the rule indicates that the new regulation would not actually be enforced
for an additional six months. Although the COOL Statute was part of the measure found by the
Panel and the AB to be inconsistent with Article 2.1 of the TBT Agreement, the United States did
not modify the Statute. In this sense, the United States has failed to bring the COOL Measure – as
a whole – into compliance.

6. The Amended COOL Measure has in fact strengthened the incentive to favour domestic
livestock in meat production by imposing higher segregation costs and further adversely affecting
competitive conditions in the U.S. market to the detriment of imported livestock. The measure
continues to discourage the use of imported cattle in meat production and there is still a "COOL
discount" imposed on Mexican cattle.

II. THE AMENDED COOL MEASURE

7. The Amended COOL Measure includes the COOL Statute and the 2009 Final Rule, as
amended by the 2013 Final Rule. As stated by th e Panel and confirmed by the AB the statutory
and regulatory provisions were an integral part of one single COOL measure. The COOL Statute
maintains a close legal and substantive link with the 2013 Final Rule and remains an integral part
of the Amended COOL Measure.
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8. The Amended COOL Measure entailed changes on ly in the implementing regulations, and not
in the COOL Statute. The COOL Statute is contai ned in the Agricultural Marketing Act of 1946, as
amended by the Farm Bill 2002 and the Farm Bill 2008. These provisions were codified in the
United States Code ("U.S.C."), in Title 7 (Agriculture), Chapter 38 (Distribution and Marketing of
Agricultural Products), Subchapter IV (Country of Origin Labeling) (hereinafter the "COOL
Statute").

9. The COOL Statute excludes from the scope of the COOL requirements covered commodities
that are used as an ingredient in a processed food item, those that are served or sold in "food
service establishments" (e.g., restaurants, cafeterias, etc.). The law also does not apply to
retailers who do not sell fruits and/or vegetables (e.g., butcher shops) or to products destined for
export.

10. The 2009 Final Rule repeated the requirements from the statute for origin labeling for
covered beef products. As described by the Panel, the options were as follows. For a product to be
eligible to be labelled as U.S. origin – the animals from which the meat was derived must have
been born, raised and slaughtered in the United States (known as "Label A"). For products made
from animals born in another country/ies, and raised and slaughtered in the United States, the
regulations authorized the use of a label that would say "Product of the United States, Country X
and (as applicable) Country Y" (known as "Label B"). For products made from animals born and
raised in another country and imported for immediately slaughter, the regulations required that
the name of the foreign country be listed first: "Product of Country X and the United States"
(known as "Label C").

11. The 2009 Final Rule added a feature to the rules that was not addressed by the statute.
Specifically, the commingling provisions allows that muscle cuts processed on the same production
day contained meat from animals born in another country and animals born in the United States
could be labelled "Product of the United States, Country X, and (as applicable) Country Y." The
2013 Final Rule eliminated these flexibilities.

12. For ground beef, the label must list all countries of origin contained therein or that may be
reasonably contained therein. In determining what is considered reasonable, when a raw material
from a specific origin is not in a processor's inventrory for more than 60 days, that country may no
longer be included as a possible country of origin. Mexico is not challenging the application of the
Amended COOL Measure to ground beef.

13. The Amended COOL Measure has not changed in relation to the scope of coverage, the
definitions of "origin," the labeling requirements for imported meat products, the recordkeeping,
verification and enforcement provisions, or the labelling rules for ground meat. As with the original
COOL Measure, the Amended COOL Measure applies only to: (i) meat in the form of muscle cuts
and ground beef, and not to other edible portions of the animal such as the liver, tongue and
head; (ii) only to covered products sold in major grocery stores, and not to such items sold in food
service establishments (e.g., restaurants and cafeterias) and smaller retailers, including butcher
shops; and does not apply to: (i) covered products that are an ingredient in a processed food
item; and (ii) to exported products, which in the case of beef constitutes about 10 percent of total
U.S. production.

III. LEGAL ARGUMENT

14. The Amended COOL Measure is inconsistent wi th the obligations of the United States under
Articles 2.1 and 2.2 of the TBT Agreement, and Ar ticle III:4 of the GATT 1994. It also nullifies or
impairs benefits that accrue to Mexico under the GATT 1994 within the meaning of
Article XXIII:1(b). Mexico requests that the Panel rule on each of Mexico's claims and avoid
exercising judicial economy. This is necessary to achieve a satisfactory resolution of this dispute.

A. TERMS OF REFERENCE OF THE PANEL

15. It is necessary for the Panel to rule on all of Mexico's claims under Articles 2.1 and 2.2 of the
TBT Agreement and Article III:4 of the GATT 1994, its obligations scope and content are not the
same.
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16. In US – Tuna II (Mexico) , the AB clarified the boundaries of judicial economy. It criticized
the panel for exercising false judicial economy by not ruling on Mexico's claims under Articles I and
III:4 of the GATT 1994 ("panels may refrain from ruling on every claim as long as it does not lead
to a "partial resolution of the matter"). This finding is particularly relevant given the differences of
Articles 2.1 and 2.2 of the TBT Agreement and Article III:4 of the GATT 1994.

17. If the Panel does not make all findings under Mexico's other claims and there is an appeal,
the AB would be unable to complete the analysis of those claims, and there would only be a partial
resolution. Taking into account that in the original proceedings the AB was unable to complete the
legal analysis under Article 2.2 of the TBT Agreement due to the absence of relevant factual
findings by the Panel and of sufficient undisputed facts on the record, the Panel should make clear
findings regarding all factors of the Amended COOL Measure and proposed less trade-restrictive
alternative measure.

18. The claims advanced by Mexico are raised exclusively in respect of the measure "taken to
comply" –"that is, in principle, a new and different measure" –and do not, as the United States
alleges, constitute attempts to re-open the adopte d findings of the DSB. Further to the original
proceedings, the DSB adopted the finding that the original COOL Measure was inconsistent with
Article 2.1 of the TBT Agreement, but as for Article 2.2 there were insufficient factual findings and
undisputed evidence on the record for the AB to complete the analysis.

19. Similarly, no findings were made in respect of Mexico's claims under Articles III:4 and
XXIII:1(b) of the GATT 1994 due to th e exercise of judicial economy. None of the claims raised by
Mexico against the Amended COOL Measure under Articles 2.1 and 2.2 of the TBT Agreement and
Articles III:4 and XXIII:1(b) of the GATT 1994 impinge on the finality of any findings,
recommendations, or rulings adopted by the DSB in relation to the original proceedings. Hence,
nothing precludes the Panel from considering these claims in respect of the Amended COOL
Measure in the present proceedings.

B. THE AMENDED COOL MEASURE IS INCONSISTENT WITH ARTICLE 2.1 OF THE
TBT AGREEMENT

20. For a violation of the national treatment oblig ation in Article 2.1 to be established, three
elements must be satisfied: (i) the measure at issue must be a "technical regulation"; (ii) the
imported and domestic products at issue must be like products; and (iii) the treatment accorded to
imported products must be less favourable than that accorded to like domestic products.

1. Technical Regulation

21. In order to qualify as a "technical regulation" within the meaning of the definition in Annex
1.1, a document must: (i) apply to an identifiable product or group of products; (ii) lay down one
or more characteristics of the product; and (iii) require mandatory compliance with the product
characteristics.

22. The Amended COOL Measure is a "technical re gulation". The AB acknowledged the Panel's
finding that the original COOL Measure is a "technical regulation" which is subject to the
requirements of Article 2 of the TBT Agreement, and observed that this finding was not challenged
in the appeal. For the same reasons as those on which the Panel's finding was based in respect of
the COOL Measure, the Amended COOL Measure continues to be a "technical regulation" for the
purposes of the TBT Agreement.

2. Like Products

23. The relevant imported and domestic products – in the case of Mexico's cattle, in particular
feeder cattle – also continue to be "like". Althou gh the labeling requirements at issue apply to
muscle cuts of beef, by its structure and design, the Amended COOL Measure applies indirectly to
cattle. The effect of that measure –indeed its core purpose– is to regulate the inputs to muscle
cuts –namely, cattle.

24. Before the Panel, the United States did not contest the arguments presented by the
complainants that the products at issue are "like" and did not dispute the proposition that the only
basis of distinction between the products at issue is that of origin. The factual circumstances of the
WT/DS384/RW/Add.1 • WT/DS386/RW/Add.1

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relevant imported and domestic products have neither changed nor been affected in any way by
the adoption of the Amended COOL Measure. The same kinds of Mexican cattle and the same kinds
of U.S. cattle remain the products at issue. Hence, the relevant imported and domestic products
continue to be "like".

3. Treatment no Less Favourable

25. The AB has established a two-step approach for assessing whether a technical regulation
accords less favourable treatment under Article 2.1: (i) whether the measure at issue modifies the
conditions of competition in the relevant market to the detriment of imported products as
compared to like domestic products or products originating in any other Member; and (ii) whether
any detrimental impact reflects discrimination against the imported products.

a. The Amended COOL Measure Modi fies Competitive Opportunities
to the Detriment of Imports

26. As explained by the AB in US – COOL, when a panel determines whether the operation of a
measure, in the relevant market, has a de facto detrimental impact on the group of like imported
products, its analysis must take into consideration the totality of the facts and circumstances
before it, including any implications for competitive conditions discernible from the design and
structure of the measure itself, as well as all featur es of the market at issue that are relevant to
the measure's operation within that market.

27. There have been no material changes made in the Amended COOL Measure to the design
and structure of the COOL Measure that were found by the Panel and the AB to modify the
competitive opportunities in the U.S. market to the detriment of the imported products at issue.
The key elements of the design and structure of the measure that operated together to deny
competitive opportunities were: (i) the mandatory labelling requirement, (ii) the "born, raised and
slaughtered" requirement to determine origin, (iii ) the recordkeeping requirement and verification
requirement, and (iv) the enforcement requiremen t. These elements remain integral components
of the Amended COOL Measure.

28. Although the Panel and the AB highlighted th e recordkeeping and verification requirements
of the COOL Measure, it was not these requiremen ts, in isolation, that modified the competitive
opportunities. These requirements operate in conj unction with other important elements of the
measure explained below, that collectively deny competitive opportunities. Accordingly, as was the
case with the original COOL Measure, it is the collective effect of the foregoing four elements of the
Amended COOL Measure that continues to deny competitive opportunities.

29. Because the features of the relevant ma rket also remain unchanged, the denial of
competitive opportunities for Mexican cattle that the Panel and the AB found to be caused by the
COOL Measure has continued unabated under the Amended COOL Measure. Moreover, the
available evidence indicates that the Amended CO OL Measure is exacerbating the discriminatory
impact of the original COOL Measure. The impact of the Amended COOL Measure can be separated
into two categories of analysis: (i) the failure to eliminate the discriminatory impact of the original
measure and (ii) the increase in discriminatory effects caused by the new regulations.

30. The Panel in the original proceedings undertook a detailed examination of the impact of the
COOL Measure on imported livestock. The Panel found that competitive opportunities were reduced
in significant ways. No aspect of the new regulations is aimed at eliminating or reducing the
burdens and discriminatory impact of the COOL Measure. Thus, it is reasonable to assume that all
of these instances of the denial of competitiv e opportunities continue under the Amended COOL
Measure.

31. For the second category of the impact analysis, the three major areas in which increased
effects are expected are (i) increased requirements to segregate cattle of different nationalities;
(ii) greater reductions in the value of Mexican cattle resulting directly from the Amended COOL
Measure; and (iii) heightened disincentives to purchase Mexican cattle.
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b. The Detrimental Impact Reflects Discrimination against Imports

32. Based on the two-step approach of the AB in US-COOL, the Panel must analyze whether the
above-noted detrimental impact on imports stems exclusively from a legitimate regulatory
distinction rather than reflecting discrimination ag ainst the group of imported products. In making
this determination, the Panel must carefully scrutinize the particular circumstances of this dispute -
the design, architecture, revealing structure, operation, and application of the Amended COOL
Measure- and, in particular, whether it is even-handed, in order to determine whether it
discriminates against the group of imported products.

c. Relevant Regulatory Distinctions

33. In conducting its assessment of the COOL Measure, the AB first identified the relevant
regulatory distinctions made by the COOL Measure, namely the distinctions between the three
production steps, as well as between the types of country of origin labels that must be affixed to
muscle cuts of beef and pork. The Amended COOL Measure makes the same distinctions among
the three production steps.

34. The Panel must examine, based on the particul ar circumstances of this dispute, whether the
distinctions (i.e., born, raised and slaughtere d) are designed and applied in an even-handed
manner, or whether they lack even-handedness because, for example, they are designed or
applied in a manner that constitutes arbitrary or unjustifiable discrimination.

35. The AB found that the COOL Measure is inconsistent with Article 2.1 on the basis that the
regulatory distinctions imposed by the COOL Measure amount to arbitrary and unjustifiable
discrimination against imported livestock, such that the distinctions could not be said to be applied
in an even-handed manner. On this basis, it found that the detrimental impact on imported
livestock did not stem exclusively from a legitimate regulatory distinction but, instead, reflected
discrimination in violation of Article 2.1. In particular, the AB considered that the manner in which
the COOL measure seeks to provide information to consumers on origin, through the regulatory
distinctions described above, to be arbitrary, and the disproportionate burden imposed on
upstream producers and processors to be unjustifiable.

36. This finding was anchored in the AB's finding that the detrimental impact caused by the
COOL Measure could not be explained by the need to provide origin information to consumers. This
finding, in turn, was based on the existence of two major information asymmetries between the
origin information collected and the origin information communicated to the consumer. First, the
COOL Measure did not impose labelling requirements for meat products that provide consumers
with origin information commensurate with the type of origin information that upstream livestock
producers and processors were required to maintain and transmit. Second, information regarding
the origin of all livestock had to be identified, tracked, and transmitted along the chain of
production by upstream producers in accordance with the recordkeeping and verification
requirements of the COOL Measure, even though a considerable proportion of the beef derived
from this livestock was ultimately exempted from the COOL requirements under the exclusions for
processed food items, food service establishments, and other establishments that are not a
"retailer" within the meaning of the COOL Measure.

d. The Distinctions are not applied in an Even-Handed Manner

37. The factors raised by Mexico that demonstr ate a lack of even-handedness relate to the
"facts and circumstances related to the design and application of the relevant regulatory
distinctions of the COOL Measure" found by the AB.

38. In US -COOL, the AB applied its reasoning from US – Tuna II (Mexico) when it found that
the COOL measure modifies the conditions of competition in the U.S. market to the detriment of
imported livestock by creating an incentive in favour of processing exclusively domestic livestock
and a disincentive against handling imported livestock (para. 292). The AB concluded that the
original COOL Measure was not even-handed beca use of the two information asymmetries. These
information asymmetries are "facts and circumstances" related to the design and application of the
"relevant regulatory distinctions". They are not, in themselves, relevant regulatory distinctions.
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39. The two information asymmetries identified by the AB demonstrate the expansive nature of
the inquiry into the "facts and circumstances" rela ted to the design and application of the relevant
regulatory distinctions. In principle, every fact or circumstance that can demonstrate that the
relevant regulatory distinctions are not even-hande d should be covered by this expansive inquiry.
The four additional factors raised by Mexico to demonstrate that the measure is not even handed
clearly fall within this scope.

e. Additional factors that demo nstrate that the Amended COOL
Measure is not Even-Handed

40. In addition to the two information asymmetries, Mexico identified four additional factors to
demonstrate that the discrimination is against imported products.

41. First, according to the United States, a key justification for the COOL label is to avoid
"consumer confusion" it claims is caused by the USDA's own grade labelling system. To the extent
that the Amended COOL Measure is designed to ove rride the positive impression for beef products
with a USDA Prime, Choice or Select label when the product is made from imported cattle, the
Amended COOL Measure is intentionally discriminatory and not even-handed. Second, the
Amended COOL Measure maintains different label ling rules for different forms of beef, namely
muscle cuts of beef and ground beef. Specifically, it allows a processor to reference a country of
origin on its ground meat label even if the processor has not had ground meat from that particular
country in its inventory for the last 60 days or less. Thus, the allegedly needed consumer
information is provided with the flexibility of a 60-day inventory allowance for ground beef but with
no inventory allowance for muscle cuts of beef. Third, "Trace-back", a less trade restrictive
alternative measure is prohibited under the Amended COOL Measure. Such a system would
accurately track information on where the livestock contained in beef were born, raised and
slaughtered, and it would do so in a less trade restrictive manner. The Amended COOL Measure,
like the COOL Measure, employs a certification and audit compliance mechanism that inherently
shifts the costs of complying with the COOL Measur e to imported cattle. The fact that a trace-back
alternative is expressly prohibited demonstrates that the detrimental impact on imported livestock
does not stem exclusively from a legitimate regulatory distinction. The exclusion is arbitrary and,
because it prohibits the substitution of the certification and audit compliance mechanism with a
less trade restrictive mechanism and even the simple consideration of such an alternative, is
evidence that the Amended COOL Measure is a disguised restriction on international trade. It is
therefore not even-handed.

42. Finally, only a very small sub-set of U.S. consumers is interested in information on the origin
of beef. To the extent that the Amended COOL Measure mandates the communication of origin
information to a broader group of U.S. consumer s, those additional consumers will not pay any
attention to the information and will not benefit from it. The only beneficiary of this unnecessary
additional coverage is the U.S. cattle industry, which directly benefits from the discriminatory
effects of the measure. In this sense, this unnecessary additional coverage is further evidence that
the Amended COOL Measure is a disguised restrictio n on international trade. It is therefore not
even-handed.

43. For the above reasons, the detrimental impact that continues to be caused by the Amended
COOL Measure cannot be explained or justified by the need to provide origin information to
consumers.

C. ARTICLE III:4 OF THE GATT 1994

44. The Amended COOL Measure accords Mexican cattle treatment less favourable than that
accorded to U.S. feeder cattle in a manner that is inconsistent with Article III:4. The AB has made
clear that the scope and content of the provis ions of Article III:4 and Article 2.1 of the
TBT Agreement are different. Accordingly, the Panel' s decision on Mexico's claim under Article 2.1
will not necessarily resolve Mexico's Article III:4 claim, and it is therefore crucial the Panel's
findings on the Article III:4 claim.

45. In Korea – Various Measures on Beef , the AB explained that a Member's measure is
inconsistent with Article III:4 if three elements are met: (i) the imported and domestic products at
issue are "like products"; (ii) the measure at issue is a law, regulation or requirement affecting
their internal sale, offering for sale, purchase, transportation, distribution, or use; and (iii) the
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imported products are accorded "less favourable" treatment than that accorded to like domestic
products.

1. Like Products

46. The imported and domestic products at issue (i.e., Mexican and U.S. cattle) are like
products.

2. Laws, Regulations and Requiremen ts Affecting Their Internal Sale,
Offering for Sale, Purchase, Transportation, Distribution or Use

47. Article III:4 applies to those "laws, regulation s and requirements" that affect "the internal
sale, offering for sale, purchase, transportation, distribution or use" of the products at issue. The
Amended COOL Measure, which comprises a group of laws and regulations that set out the country
of origin labeling requirement, pertains to the ca tegory of "laws, regulations and requirements".
These instruments include the COOL Statute th e 2009 Final Rule (AMS); and the 2013 Final Rule,
which "affect the internal sale, offering for sale, purchase, transportation, distribution or use" of
feeder cattle.

3. Less Favourable Treatment

48. The collective effect of the four elements of the Amended COOL Measure identified above
(i.e., the mandatory requirement, the born/raised/slaughtered requirement, the recordkeeping and
verification requirement, and the enforcement requirement) continue to deny competitive
opportunities to imported cattle. In particular , the failure of the Amended COOL Measure to
eliminate the various discriminatory effects of the original measure and the increase in
discriminatory effects caused by the new regulations.

49. In the original proceedings, the Panel observed that in the absence of a large share of US
consumers willing to pay a price premium for country of origin labelling, the cheapest way to
comply with the COOL Measure is to process only US-origin livestock, all other things being equal,
that the other possibility is to continue processi ng imported livestock through segregation, which
entails additional costs in virtually all cases and that either process configuration is likely to cause
a decrease in the volume and price of imported livestock. Those effects continue under the
Amended COOL Measure, and indeed are becoming worse.

50. The Amended COOL Measure accords less favourable treatment to Mexican cattle compared
to U.S. cattle, providing U.S. cattle with a competitive advantage in the U.S. market.

4. Article 2.1 of the TBT Agreement and Article III:4 of the GATT

51. The United States and the European Union ar gue that the meaning of "treatment no less
favourable" should be the same in Article 2.1 and Article III:4. In their view, the two-step
approach to determining treatment no less favour able under Article 2.1 should be applied when
interpreting "treatment no less favourable" under Article III:4. This interpretation is incorrect.

52. In the recent disputes US – Clove Cigarettes, US – Tuna II and US –COOL, the AB provided
useful guidance on the relationship between th e non-discrimination provisions – Article 2.1 and
Article III.4 –. The AB noted that both provisions ma intain some close similarities in terms of their
language, but at the same time recognized that "the scope and the content" of both provisions are
not the same.

53. Mexico's interpretation of Article III:4 follows the interpretation developed in a long series of
WTO and GATT 1947 reports i.e., a measure confers less favourable treatment under Article III:4
where it modifies conditions of competition in the relevant market to the detriment of imported
products compared to like domestic products. Therefore, in order to analyze whether the amended
COOL measure accords "less favorable treatment" to imported livestock under GATT Article III:4,
the only relevant inquiry is whether the measure modifies the conditions of competition in the
relevant market to the detriment of the group of imported products vis-à-vis the group of domestic
like products.
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D. THE AMENDED COOL MEASURE IS INCONSISTENT WITH ARTICLE 2.2 OF THE
TBT AGREEMENT

54. In ruling on the claims raised by Canada and Mexico under Article 2.2 in the original
proceedings, the Panel found that the COOL meas ure is "trade-restrictive"; that the objective
pursued by the United States through the COOL measure is "to provide consumer information on
origin" and that this objective is "legitimate" within the meaning of Article 2.2. The AB confirmed
these findings.

55. Ultimately, the Panel found that the COOL measure does not fulfil the identified objective
within the meaning of Article 2.2 and therefore violated Article 2.2. The AB reversed the ultimate
finding and attempted to complete the legal analysis under Article 2.2, but found it could not do so
because the Panel had not made relevant factual findings and there were not sufficient
uncontested facts.

56. In this proceeding, therefore, it is crucial that the Panel make "clear and precise" findings, in
particular, with respect to: (i) the Amended COOL Measure: the degree of its contribution to the
objective of providing consumers with information on origin, the degree of its trade-restrictiveness,
the relative importance of the common interests or values furthered by the challenged measure,
the nature of the risks at issue and the gravit y of consequences that would arise from non-
fulfilment of the legitimate objective; and (ii) each proposed alternative measure: the degree of its
contribution to the objective of providing consumers with information on origin, taking account of
the risks non-fulfilment would create, the degree of its trade-restrictiveness and whether it is
reasonably available.

57. The United States misinterprets the Panel's an d the AB's findings when it states that the
objective pursued through the original COOL Measure was to provide consumers with information
on origin, namely, with respect to meat, where th e animal was born, raised and slaughtered. This
misinterpretation should be rejected. The original Panel and the AB found that the objective
pursued by the United States through the COOL Measure was "to provide consumer information on
origin".

58. The new United States' argument that the objective of the Amended COOL Measure is
specifically to provide information on where the livestock from which muscle cuts are produced
were born, raised and slaughtered is contradict ed by the facts, including the Amended COOL
Measure itself. The United States attempts to redefine the objective to an artificially narrow and
self-serving one.

1. The Two-Step Necessity Test under Article 2.2 of the TBT Agreement

59. Article 2.2 requires a two-step analysis: fi rst, examination of the measure at issue and
second, comparison of this measure with the id entified alternative measures. The Panel should
objectively examine the trade-restrictiveness of the Amended COOL Measure to determine whether
it is "necessary", in itself and independently of less trade restrictive alternative measures. Before
moving to the second step of the legal analysis and conducting an assessment of each proposed
alternative measure, the Panel should assess the Amended COOL Measure.

a. Application of the First Step of the Necessity Test to the Amended
COOL Measure

60. Under the first step of the necessity test, th e following factors are relevant to the weighing
and balancing analysis in respect of the Amended COOL Measure: (i) the "relative importance" of
the interests or values furthered by the Amended COOL Measure; (ii) the degree of contribution
made by the Amended COOL Measure to the legi timate objective at issue; (iii) the trade-
restrictiveness of the Amended COOL Measure; and (iv) the nature of the risks at issue and the
gravity of consequences that would arise from non-fulfilment of the objective(s) pursued by the
United States through the Amended COOL Measure. In conducting this holistic analysis, the Panel
should find that the trade restrictiveness of th e Amended COOL Measure is not necessary because
it is disproportionate to the risk non-fulfilment would create.

61. The interests and values furthered by the Am ended COOL Measure fall on the low end of the
spectrum of importance. The relative importance of the provision of consumer information is
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substantially lower than protecting the environment or protecting human beings from health risks,
both of which are vital and important in the high est degree; and protecting public morals, which a
panel observed ranks among the most important values or interests pursued by Members as a
matter of public policy. Importantly, the intere sts or values furthered by the Amended COOL
Measure are not common. The USDA has acknowledged that there is "interest by certain U.S.
consumers in information disclosing the countries of birth, raising and slaughter on muscle cut
product labels".

62. The following facts demonstrate that the Am ended COOL Measure has a very low degree of
contribution to the objective of providing consumer information on origin: (i) the Panel and AB
already determined that the labelling scheme fo r muscle cuts under the COOL Measure did not
provide clear and accurate information, (ii) the Amended COOL Measure does not apply to all beef
sold within the United States because the measure's labelling requirements do not apply to all
entities that sell beef or to all beef products, the labeling requirements apply only to a very limited
portion of the meat products produced in the United States – about 18 to 21 percent, (iii) like the
COOL Measure, the Amended COOL Measure continues to provide unclear, imperfect, or inaccurate
information to consumers, the information conveyed by the point of production information will not
in all cases be accurate. It is questionable whether consumers will understand the meaning of a
label that says "brn in Mexico, rsd and slghtrd in US". The COOL information is normally printed in
very small typeface on labels, and often is on the bottom (rear) of the packaging; (iv) Mexico is
not aware of any information published by USDA to educate consumers on what the COOL labelling
information means.

63. The Amended COOL Measure does nothing to eliminate these negative effects on
competitive opportunities of imported livestock. The U.S. meat processing industry has stated that
the Amended COOL Measure, through its prohibition of commingling, will increase the burdens of
using imported cattle even more. There will be increased burdens and effects relating to the need
to segregate, the application of the "COOL disco unt" to Mexican cattle, and the disincentive to
purchase Mexican cattle.

64. The risks at issue and the consequences that may arise from non-fulfilment of the objective
are certainly very minor, in light of the following facts: (i) the COOL Measure is not a food safety
measure, only a small percentage of U.S. cons umers are even aware of the measure, (ii) the
meaning of the labels is unclear, (iii) consumers value a label that says "Product of North America"
at least as much as a label that says "Product of United States, (iv) the COOL Measure has not
affected sales of meat products, (v) USDA itself sees little economic value in the COOL Measure
and the Amended COOL Measure, (vi) USDA has reported that a comprehensive analysis of
consumer reaction to COOL requirements for shrimp – implemented in 2005 – shows that COOL
had no effect on consumer behavior.

65. In conducting the first step of the necessity te st, it is clear from these factors that the trade-
restrictiveness of the Amended COOL Measure is disproportionate to the risks that non-fulfilment
would create. The fact that the Amended COOL Measure might make some contribution to the
objective does not outweigh the other relevant fa ctors. Accordingly, the trade-restrictiveness of
the Amended COOL Measure is unnecessary and it is inconsistent with Article 2.2 of the
TBT Agreement.

b. Application of the Second Step of the Necessity Test to the
Amended COOL Measure: Evaluation of the Alternative measures
proposed by Mexico

66. If the Panel finds that the trade-restrictiv eness of the Amended COOL Measure is necessary,
under the second step, all relevant factors of each alternative measure are considered and a
comparison is undertaken between the challenged measure and each possible alternative measure.
The Panel must consider whether the proposed alternative is less trade restrictive, whether it
would make an equivalent contribution to the relevant legitimate objective, taking account of the
risks non-fulfilment would create, and whether it is reasonably available.

67. As in the case of the COOL Measure, al ternative measures exist that are less trade-
restrictive than the Amended COOL measure, make an equivalent contribution to the legitimate
objective of providing consumer information on origin taking account of the risks non-fulfilment
would create, and are reasonably available to the United States. The alternatives are: (i)
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mandatory labeling based on a substantial transformation rule of origin combined with voluntary
labelling of specific information (i.e., born, raised and slaughtered); (ii) mandatory labeling based
on the 60-day inventory allowance rule currently used for ground beef; (iii) mandatory labelling of
more specific information (i.e., born, raised and slaughtered) using a "trace-back" system under
which the precise source of each animal and muscle cut must be traceable through the production
process, and (iv) a state/province labeling presented by Canada and adopted by Mexico.

68. The first proposed alternative will provide all consumers with mandatory required
information on the origin of beef products based on the substantive transformation rule and those
consumers, who are interested in further details, with voluntary information on where livestock
were born, raised and slaughtered. Under this al ternative, the exemptions of products (i.e.,
processed food items) and market segments (i.e., beef sold in food service establishments and
retailers) are eliminated, giving the mandatory labelling element of this alternative labelling a
broader scope of application than the Amended CO OL Measure. This alternative measure is not
trade restrictive.

69. It would have a greater contribution to the provision of origin information to consumers than
the Amended COOL Measure. At the very leas t, through the combination of mandatory and
voluntary labelling requirements, this alternative measure would make an equivalent contribution
to the objective of providing consumers with information on origin, taking account of the risks non-
fulfilment would create. A weighing and balancing of the relevant factors of both the Amended
COOL Measure and the alternative measure demonstrates that compared to the challenged
measure, this alternative is less-trade restrictive and more proportionate to the risks non-
fulfilment would create. The voluntary labelling element of this alternative is reasonably available
and is used in the United States in many other contexts.

70. The second proposed alternative is to extend the mandatory country of origin labelling rule
that is currently applied to ground beef to apply to muscle cuts of beef and to processed food
items made of beef. Under this alternative, the exemptions of products (i.e., processed food items)
and market segments (i.e., beef sold in food service establishments and small retailers) are
eliminated, giving the mandatory labelling a broader scope of application. For ground beef, the
label must list all countries of origin contained therein or that may be reasonably contained
therein. In determining what is considered reasonable, when a raw material from a specific origin
is not in a processor's inventory for more than 60 days, that country may no longer be included as
a possible country of origin. By extending this ru le to muscle cuts of beef and processed food
items, such products must be labeled in a manner that lists all countries of origin contained therein
or that may be reasonably contained therein in accordance with the 60-day inventory allowance.
The COOL rules for ground beef are less trade restrictive than the Amended COOL Measure for
muscle cuts, because they provide more flexibility to cattle producers and meat processors. Since
the flexibility relates to the inputs in meat processing, the same beneficial effects will occur if the
ground beef rules are applied to muscle cuts and processed food items. This alternative is
reasonably available. The ground beef requirement fulfils this objective for 40 percent of the beef
products consumed in the United States, and there is no objective basis for distinguishing between
ground beef and muscle cuts and processed food items in this context.

71. The third proposed alternative measure is a trace-back system. During the original
proceedings, Mexico and Canada proposed a trac e-back system as a reasonably available less
trade-restrictive alternative. This alternative would accurately and comprehensively fulfil the
objective of the COOL Measure and yet not discrimin ate against imports in the sense that it would
eliminate the option of restricting trade in imports and as well as the option of discounting the
price of imports as the most commercially viable option to comply with the Amended COOL
Measure. Thus, costs of the mandatory labelling would be spread evenly throughout the market.
The employment of a trace-back system to meet the objectives of the COOL measure is discussed
in a paper written by Dermot J. Hayes and Steve R. Meyer entitled Impact of Mandatory Country of
Origin Labeling on U.S. Pork Exports ("Hayes and Meyer Paper"). Although it focuses on pork, its
analysis and conclusions apply equally to beef. The authors discuss this system as a potential
method to implement COOL.

72. In Mexico's view, if there were trace-back sy stem in place, there would be no incentive to
exclude imported Mexican cattle or shift the cost of compliance solely to Mexican animals. A
mandatory trace-back alternative will provide detailed information on where the animals were
born, raised and slaughtered on all beef covered commodities. The Hayes and Meyer Paper
WT/DS384/RW/Add.1 • WT/DS386/RW/Add.1

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suggests that trace-back is technically and economically feasible in the United States and,
therefore, is a reasonably available alternative. Trace-back systems are used in the EU, Korea,
Japan and other countries. For example, Uruguay has implemented a comprehensive trace back
system which allows tracking livestock and the meat derived from those animals. The Mexican
system provides all the information needed for a trace-back system for Mexican cattle. The
applicable rules require that cattle exported to the United States bear an ear-tag that can be used
to trace the animal, including the State of origin, the ranch which the cattle belongs to, and
complete information about its producer.

73. Finally, Canada presented a fourth alternative measure which involves state/province
labelling. Mexico acknowledged to the Panel that Canada presented this fourth alterative measure
and Mexico endorsed and adopted this alternative by agreeing with Canada's submissions on this
alternative and the fact it (i) would provide a greater contribution to the objective than the
Amended COOL Measure, (ii) would be less trade restrictive and (iii) is reasonably available. The
arguments and evidence that were endorsed and ad opted by Mexico were presented by Canada in
its Second Written Submission. Given that Mexico and Canada have separately filed submissions
rather than a single joint submission, Mexico endorsed and adopted the arguments and evidence
at the first available opportunity in its Opening Statement to the Panel. Thus, Mexico is clearly
entitled to endorse and incorporate the arguments and evidence of Canada pertaining to the third
and fourth alternative measures.

74. A weighing and balancing the relevant fact ors of both the Amended COOL Measure and the
alternative measure demonstrates that the Amended COOL Measure is more trade-restrictive than
necessary within the meaning of Article 2.2 and is, therefore, inconsistent with that provision.

2. Allocation of the Burden of Proof under Article 2.2

75. It is clear that, in addition to making a prima facie case that the challenged measure is more
trade restrictive than necessary to achieve the contribution it make to the legitimate objective,
taking account of the risks non-fulfilment would create, a complainant may seek "to identify" a
possible alternative measure. Mexico's burden is si mply to "identify possible alternatives", which it
has done so. In this dispute, Mexico has identified three possible alternative measures that are
less trade restrictive, make an equivalent contribution to the relevant objective, taking account of
the risks non-fulfilment would create, and are reasonably available. The burden is on the
United States to present sufficient evidence and arguments showing that these alternative
measures are not less trade restrictive, do not make an equivalent contribution to the objective
pursued, taking account of the risks non-fulfilment would crate and are not reasonably available.
The United States failed to do so.

3. The Test of Article 5.6 of the SPS Agreement is Not Applicable to
Article 2.2 of the TBT Agreement

76. As in the original proceedings, the United States attempts to incorporate Article 5.6 of the
SPS Agreement into Article 2.2 of the TBT Agreemen t, by arguing that the test of Article 2.2 was
equivalent to Article 5.6 and that an alternative measure should be significantly less trade
restrictive as required by footnote 3 of Articl e 5.6. These arguments failed in the original
proceedings. The test described in paragraph 378 of the AB Report clearly indicates that: (i)
Article 2.2 requires evaluation of the challenged measure, and in some cases a comparative
analysis with a proposed alternative; and (ii) when comparing with an alternative measure, it may
be relevant to consider "whether the proposed alternative is less trade restrictive".

77. Second, Article 2.2 neither contains the word "significant" nor a footnote similar to footnote
3 to Article 5.6 of the SPS Agreement. Third, Ar ticle 1.4 of the SPS Agreement provides that the
different regimes, rules and the scope of application of it and that of the TBT Agreement are
mutually exclusive, and therefore provisions of the SPS Agreement cannot be incorporated into the
provisions of the TBT Agreement. Fourth, with re gard to the letter from Peter D. Sutherland to
John Schmidt on December 15, 1993, offered by the United States, Mexico considers that it is not
relevant because there is no footnote in Article 2.2 that clarifies the meaning of the phrase "more
trade-restrictive than necessary". Such letter ca nnot be considered as a supplementary means of
interpretation within the meaning of Article 32 of the Vienna Convention on the Law of Treaties.
WT/DS384/RW/Add.1 • WT/DS386/RW/Add.1

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E. ARTICLE XXIII:1(B) (NON-VIOLATION NULLIFICATION OR IMPAIRMENT) OF
THE GATT 1994

78. The Amended COOL Measure nullifies or impairs benefits accruing to Mexico based on tariff
concessions made by the United States in respect of live cattle at the end of successive
multilateral rounds of trade negotiations, in a manner that is inconsistent with Article XXIII:1(b).

79. The Panel in Japan – Film dispute summarized the elements of a non-violation nullification
and impairment claim, and stated that in order to make out a cognizable claim under
Article XXIII:1(b) the complaining party must demonstrate the following three elements: (i) an
application of any measure by a WTO Member; (ii) a benefit accruing under the relevant
agreement; and (iii) nullification or impairment of the benefit as a result of the application of the
measure.

80. The first element relates to the phrase "the application by another Member of any measure",
the word "any" indicates that Article XXIII:1(b) do es not distinguish between, or exclude, certain
types of measures. The United States enacte d and implemented the COOL Measure and the
Amended COOL Measure through a series measures including statutory provision, regulations and
other implementing guidance, directives of policy announcements issued in relation to those
measures. The application of such measures by the United States meets this element of Mexico's
claim under Article XXIII:1(b).

81. The second element requires demonstrating the existence of a "benefit accruing" to the
complaining Member. This benefit can be measured in terms of "legitimate expectations" of
improved market-access opportunities. An expectation is considered to be legitimate if the
challenged measure could not have been "reasonably anticipated" at the time the tariff concession
was negotiated.

82. Although the tariff concessions between Mexico and the United States are currently based on
the NAFTA, Mexico is entitled under Article XXIII:I(b) to expect market access to the United States
for its feeder cattle that is related to the tariff concessions that would apply, on a Most-Favoured-
Nation (MFN) basis, between Mexico and the Unit ed States under the WTO Agreement. The extent
of the restrictions on market access resulting from the Amended COOL Measure clearly could not
have been expected. Mexico was entitled to expect for exports of its feeder cattle.

83. The third required element is that the benefit accruing to the WTO Member (e.g., improved
market access from tariff concessions) is nullified or impaired as the result of the application of a
measure by another WTO Member. In this sense, the Panel affirmed that it must be demonstrated
that the competitive position of the imported products subject to and benefitting from a relevant
market access (tariff) concession is being upset by ("nullified or impaired ... as the result of") the
application of a measure not reasonably anticipate d. Given the low U.S. MFN rates in respect of
feeder cattle, Mexico reasonably expected that its access to the U.S. market for feeder cattle
would be unrestricted. The Amended COOL measure drastically restricts this access in a manner
that could not have been anticipated at the time of the conclusion of the Uruguay Round.

F. MEXICO'S CLAIM UNDER ARTICLE XX III:1(B) OF THE GATT 1994 IS WITHIN
THE SCOPE OF THE PANEL'S TERMS OF REFERENCE

84. Mexico's non-violation nullification or impairment ("NVNI") claim raised under
Article XXIII:1(b) is within this Panel's terms of reference in these Article 21.5 proceedings. The
purpose of Article 21.5 proceedings is to resolve, on an expedited basis, "disagreement as to the
existence or consistency with a covered agreem ent of measures taken to comply with the
recommendations and rulings" adopted by the DS B. This mandate encompasses claims by the
complaining party that a measure "taken to comply" is inconsistent with a covered agreement. A
measure "taken to comply" that results in the non-violation nullification or impairment of any
benefit which accrues to a party under the GATT 1994 is no less inconsistent with the GATT 1994
than a measure which results in a violation of one or more provisions. The mere existence and
operation of Article XXIII:1(b) indicates that the ap plication of a measure does not need to result
in a violation of a provision of the GATT 1994 to be considered inconsistent with the GATT 1994 if
it nullifies or impairs a benefit accruing under th e GATT 1994. Hence, a claim to this effect under
Article XXIII:1(b) is entirely within the scope of Article 21.5 proceedings.
WT/DS384/RW/Add.1 • WT/DS386/RW/Add.1

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85. Article 26.1 of the DSU clearly establishes that a panel or the AB has jurisdiction to consider
and resolve claims under Article XXIII:1(b), "whether or not" the measure at issue conflicts with
the provisions of the relevant covered agreem ent, and provides additional guidance for
circumstances in which the measure at issue does not conflict with the provisions of the relevant
covered agreement.

IV. CONCLUSION

86. As Mexico has shown, the Amended COOL Measure is inconsistent with the national
treatment obligation under 2.1 of the TBT Ag reement and Article III:4 of the GATT, also
constitutes an unnecessary obstacle to trade in viol ation of Article 2.2. of the TBT Agreement, and
nullifies and impairs benefits accruing to Mexi co under the GATT 1994, within the meaning of
Article XXIII:1(b). United States has not brought itself into compliance with its obligations through
the adoption of the Amended COOL Measure.
WT/DS384/RW/Add.1 • WT/DS386/RW/Add.1

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ANNEX B-3
INTEGRATED EXECUTIVE SUMMARY OF THE ARGUMENTS OF THE UNITED STATES
A. Complainants Have Failed to Establish That the Amended COOL Measure Is
Inconsistent with Article 2.1 of the TBT Agreement

1. The United States has taken a measure to comply that directly addresses the concerns in
the Appellate Body reports. The amended COOL measure increases the information provided and
sets out what is in effect a single label – disclosing the country of birth, raising, and slaughter – for
the three categories of meat that impact complainants' livestock imports (i.e., categories A, B, and
C). The single label affixed to those categories of meat is even-handed. As such, any detrimental
impact resulting from the amended COOL meas ure now stems exclusively from legitimate
regulatory distinctions.

2. What complainants primarily contest, however, is a series of regulatory distinctions that has
nothing to do with the detrimental impact at all. The sum result of complainants' arguments
appears to be an attempt to convince the Panels that proof of a detrimental impact alone proves a
technical regulation to be discriminatory, despite the Appellate Body's statements to the contrary.
And, of course, this insistence that a detrimental impact is enough to prove a technical regulation
discriminatory is the foundation of complainants' claim under GATT Article III:4.

3. Complainants' approach, if successful, would render a great many regulatory measures
vulnerable to WTO challenge for the first time. All a complainant would need to prove to
successfully make a national treatment claim would be that a majority of the domestic producers
satisfy a particular standard, while a majority of the complainants' producers do not, a fact pattern
that surely repeats itself many times over throughout the WTO membership.

4. However, the Appellate Body has confirmed that technical regulations are not discriminatory
where they draw legitimate, even-handed re gulatory distinctions, even where they
disproportionately impact the complaining party's producers. And complainants' arguments fail on
this very point. The regulatory distinctions ma de in the amended COOL measure are, in fact,
legitimate distinctions. In particular, the label that is now affixed to A, B, and C meat explicitly
references the location where each of the three pr oduction steps took place, and provides equally
meaningful and accurate origin information for all three categories of meat. Moreover, because the
2013 Final Rule eliminates the allowance for commingling, the information provided for each of the
three categories of meat is equally accurate.

5. Complainants thus fail to prove their case that any detrimental impact "reflect[s]
discrimination." Accordingly, the amended COOL measure does not accord less favorable
treatment to imported livestock within the meaning of Article 2.1 of the TBT Agreement.

1. The Complaining Parties Have Failed to Show That Any Detrimental Impact
Caused by the Amended COOL Measure Does Not Stem Exclusively From
Legitimate Regulatory Distinctions

a. DSB Recommendations and Rulings Regarding Legitimate Regulatory
Distinctions

6. To prove that the measure accords less favorable treatment, and therefore discriminates
de facto against imports from the complaining parties, complainants must prove that it "modifies
the conditions of competition in the relevant ma rket to the detriment of the group of imported
products vis-à-vis the group of like domestic products." The Appellate Body has further clarified
that a party must demonstrate (1) that the measure has a "detrimental impact on imported
livestock;" and, if so, (2) that this detrimental impact does not stem exclusively from a legitimate
regulatory distinction, but rather reflects discrimination or a lack of even-handedness. While the
parties agree on that general framework, they a ppear to agree on little else. In particular, the
parties disagree as to (1) which regulatory distinctions are relevant to the Article 2.1 analysis, and
(2) what analysis should be performed with regard to the relevant regulatory distinctions.
WT/DS384/RW/Add.1 • WT/DS386/RW/Add.1

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7. As to the first point, the Appellate Body ha s stated that because "technical regulations are
measures that, by their very nature, establish distinctions between products according to their
characteristics, or related processes and production methods," not every distinction a measure
makes is relevant to the inquiry. Rather , "in an analysis under Article 2.1, we only need to
examine the distinction that accounts for the detrimental impact on [imported] products as
compared to [domestic] products." As to the second point, the Appellate Body has also been clear
that a panel should examine whether the regulatory distinction is "even-handed" or not.
8. Neither complainant incorporates this analytical framework into their arguments. While
Canada "agrees that the regulatory distinct ion that must be examined to determine the
consistency with TBT Article 2.1 is the distinction that causes the detrimental impact on imported
products," Canada argues that that is not the entirety of the analysis. Rather, Canada contends
that "panels are not precluded from considering elements of the challenged technical regulation
that do not specifically cause the detrimental impact but nevertheless demonstrate that the
relevant regulatory distinction(s) reflect discrimination." But the test is not whether the relevant
regulatory distinctions reflect discrimination, but whether the detrimental impact reflects
discrimination – a point that the Appellate Body ha s made repeatedly. Canada provides no support
for its preferred analytic framework. Mexico ignores this part of the analysis entirely.
9. Moreover, complainants largely ignore whether the regulatory distinctions they focus on are
even-handed or not, preferring to criticize the dist inctions as not constituting "significant" enough
change, or being "arbitrary," or that the information is not "intelligible." In so arguing, they
appear to apply the wrong test. The test under Article 2.1 is not whether another Member thinks
that the measure could be designed better, or more clearly, or otherwise improved upon. The test
is whether the measure treats imported products less favorably than like products of another
origin. And as the Appellate Body has explained, this means whether any detrimental impact on
imported products stems exclusively from legitimate regulatory distinctions.
10. The question then is whether the regulatory distinctions being made are legitimate, not
whether the technical regulation could, in the opinion of another Member, be better designed.

b. The Complaining Parties Fail to Establish a Prima Facie Case That Any
Detrimental Impact Caused by the Amended COOL Measure Does Not
Stem Exclusively From Legitimate Regulatory Distinctions

11. First, Canada wrongly argues that the B and C labels have the "potential [for] inaccuracy"
where the animal "spends as little as 15 days in the United States" and where animals "spend a
short time in Canada prior to export for slaughter in the United States."

12. Distinguishing between the three stages of pr oduction necessarily entails defining when each
stage ends. And any definition will always be open to criticism that it could be done differently or
better, or that product on one side of the defined line between stages is not sufficiently distinct
from product on the other. Complainants must rely on exotic hypotheticals because the new
labeling requirements do, in fact, provide the same accurate and meaningful origin information on
A, B, and C categories of meat resulting from animals actually being produced in the three
countries. But as to animals actually traded , neither complainant disputes that the origin
information provided regarding the meat produced from feeder cattle actually traded is inaccurate
(e.g., "Born in Mexico, Raised and Slaughtered in the U.S."), and certainly not less accurate than
the information provided for A category meat. Similarly, Canada makes no claim that the origin
information provided for fed cattle actually traded ( i.e., "Born and Raised in Canada, Slaughtered
in the United States") is inaccurate, and certainly not less accurate than the information provided
for A category meat. The analysis should end there. The fact that complainants are forced to rely
on hypothetical scenarios not related to actual products being traded and sold reveals that there is
no basis for the complainants' de facto claims.

13. Of course, no actual labeling situation will be able to address every hypothetical a clever
lawyer can invent, or every unusual circumstance that may occur. Rather, the labelling system
should address what is happening in the real world. And the amended COOL measure does just
that. The origin information regarding meat produced from all (or virtually all) animals actually
traded by Canada and Mexico is as meaningful and as accurate as the origin information regarding
A meat, and neither Canada nor Mexico dispute that fact.
WT/DS384/RW/Add.1 • WT/DS386/RW/Add.1

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14. Second, Canada (but not Mexico) contends that because B and C meat only constitute
approximately a third of the COOL labeled meat, any "new accurate information conveyed by the
amended COOL measure cannot be regarded as sign ificant." By adding the production steps to
the label and eliminating the allowance for commingling, the amended COOL measure provides a
single label that provides for the same level of origin information for A, B, and C category meat,
which constitutes approximately 99.7 percent of COOL labeled muscle cuts sold in the
United States. The United States has thus directly responded to the concerns in the Appellate Body
reports regarding the original COOL measure, which was not just limited to the B and C labels, but
included a concern that the previous A label did not explicitly list the three production steps either.

15. Third, Mexico (but not Canada) again argues that the labels being used by retailers to
provide origin information (both in terms of the size of the font and the abbreviations allowed)
does not provide "information that is accessible by or intelligible to consumers." Mexico makes no
claim that that the label affixed to the B or C meat is less intelligible than the label affixed to A
meat. Indeed, Mexico and the United States agree that a "single label" is now used to provide
origin information regarding A, B, and C category COOL-labelled meat. Accordingly, we understand
Mexico to concede that the design and application of the label itself is even-handed. Further,
Mexico does not establish a prima facie case by merely making bare allegations that it "submits"
are true.

16. Fourth, Mexico criticizes the six month period of education and outreach that USDA provided
for in the 2013 Final Rule, although it remains unclear what legal significance Mexico attributes to
its argument. However, Mexico does not appear to contest that the six month period of education
and outreach is even-handed (if, it could even be considered a regulatory distinction at all). Mexico
further concedes that retailers are complying with the new rule and provides photographs from
retailers to prove this point.

17. Fifth, Canada argues, incorrectly, that the elimination of the commingling will dramatically
increase the record keeping requirements and the overall detrimental impact on Canadian livestock
imports. To be clear, the United States has always taken the position that the allowance of
commingling reduced costs for those producers that handle both U.S. origin and mixed origin
animals or meat. However, as discussed in the U.S. First Written 21.5 Submission, only three beef
processors, and zero pork processors, stated for the record that they commingle different origin
animals. Accordingly, the administrative record of the 2013 Final Rule suggests that a limited
number of processors have been actually making use of this flexibility, and that the adjustment
costs due to the elimination of commingling are lo w. Notably, Canada puts forward no evidence
that any additional beef processors (other than three already on the record) or any pork
processors at all have been commingling.

c. None of the Complaining Parties' Other Criticisms Undermines the
Conclusion That Any Detrimental Impact Caused by the Amended COOL
Measure Stems Exclusively From Legitimate Regulatory Distinctions

18. First, it is clear that the D Label is affixed to imported meat, and therefore does not cause
any detrimental impact on imported livestock. Neither complaining party contests this fact. It
should be quite clear, therefore, that any exam ination of the D Label will simply not explain
whether the detrimental impact on imported livestock reflects discrimination. Moreover, Canada
does not even allege – much less prove – that th e content of the D Label disadvantages Canadian
producers while benefiting U.S. producers. Indeed, Canada (and Mexico) believe the opposite –
that it is categories A, B, and C that disadvantage their producers, not Category D.

19. Canada also argues that Label D has the "potential to mislead consumers" where the meat
was produced from animals that were born and raised in a different country than the exporting
one. Yet imported meat is typically – if not always – produced entirely within the exporting country
as few countries around the world import significant quantities of live cattle and hogs, and even
fewer represent major beef or pork suppliers to the United States. Canada is further unable to say
whether any meat derived from those imported cattle is actually exported back into the
United States (much less sold as D labeled-meat by a retailer). Accordingly, Canada is forced to
argue that the D Label merely has the "potential to mislead consumers" because Canada has no
evidence that the Canadian D labeled meat ( i.e., "Product of Canada") is actually misleading. It is
clear that requiring the additional production st ep information to be provided would not provide
the consumer much, if any, additional origin information as all (or virtually all) imported meat sold
WT/DS384/RW/Add.1 • WT/DS386/RW/Add.1

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by U.S. retailers will be derived from animals bo rn, raised, and slaughtered in the country denoted
on the label ( e.g., "Product of Canada"). In other words, "Product of Canada" means, for all
practical purposes, "born, raised, and slaughtered in Canada."

20. Second, complainants argue that the three exemptions from the COOL measure prove that
the amended COOL measure is discriminatory in that the detrimental impact does not stem
exclusively from legitimate regu latory distinctions. Neither party asserts that the design and
operation of the three exemptions has any nexus to any detrimental impact. In fact, Canada
affirmatively argues that such exemptions do not cause the detrimental impact at all. As such, it
would appear that all parties agree with the original panel's finding that the "exact proportion or
magnitude of the exceptions and exclusions is irrelevant" for purposes of the detrimental impact
analysis. It is also clear that the exemptions themselves are perfectly even-handed. That is to say,
nothing in the design or operation of the exempt ions that define the scope of the amended COOL
measure disadvantage Canadian and Mexican livestock exports. Mexico also argues that the
exemptions prove that the amended COOL measure itself is not even-handed. But, Mexico, like
Canada, fails to explain why a measure that required small businesses and restaurants to label
their muscle cuts would make the measure, as a whole, more even-handed in the measure's
treatment of imported livestock on the one hand an d U.S. livestock on the other. The fact of the
matter is that it would not. Complainants also argue that the "disconnect" between the amended
COOL measure's "very limited coverage" and the upstream costs of the amended COOL measure
proves that the detrimental impact reflects discrimination. Of course, neither Canada nor Mexico
can explain why exemptions that do not cause the detrimental impact, and are, themselves,
entirely even-handed, mean that the measure is discriminatory. The United States, of course,
disagrees with this approach – complainants must prove that the detrimental impact reflects
discrimination because it does not stem exclusively from legitimate regulatory distinctions.
Moreover, the coverage of COOL is hardly limited. The measure constitutes a major policy decision
to require over 30,000 grocery stores and other retailers throughout the United States to provide
country of origin information to their customers on the $38.5 billion worth of beef and $8.0 billion
worth of pork they sell annually.

21. Third, complainants argue that the rules re garding ground meat (Category E) prove that
rules for muscle cuts are discriminatory without providing any basis for that argument. In fact, the
original panel has already found that the ground meat labeling rule does not have a detrimental
impact on imported livestock. As such, it simply cannot be that any detrimental impact from the
COOL measure stems from the ground meat labeling rules. Further, USDA created the separate
labeling rules for ground meat based on the unique attributes regarding the production of ground
meat, which differs substantially from the production of muscle cuts. Canada also contends that
while it "is not challenging the consistency of the ground meat label," it also claims that the
ground meat label provides origin information that "is far less detailed than that which is required
to be tracked and verified," and, therefore, not legitimate. The ground meat rule does not cause a
detrimental impact and therefore it is impossible to say that the detrimental impact does not stem
from a legitimate regulatory distinction because the ground meat rule provides a different level of
information. Moreover, nothing about the ground meat rule could be said not to be "even-handed."
The rule operates exactly the same – not only between the products of Canada, Mexico and the
United States, but between the products of all countries that are used by U.S. ground meat
producers.

22. Mexico appears to argue that the ground me at rule does not provide consumer information
on origin. Mexico is wrong, of course. The ground meat rule does provide consumer information on
origin, but does so differently than the rules governing muscle cuts, a point that Mexico itself
concedes in the final sentence of its argument. Mexico also argues that it is "arbitrary" for the
United States to set forth different origin labeling rules for ground meat than for muscle cuts. But
Article 2.1 disciplines discriminatory measures, not arbitrary measures, and as discussed above,
the analysis of whether a measure provides less favorable treatment to imported products does
not call for an analysis of arbitrariness – standing alone – as Mexico appears to contend.

23. Fourth, complainants argue that the statutory prohibition of USDA implementing a "farm to
fork" traceability regime proves that the amended COOL measure is discriminatory. This statutory
provision (7 U.S.C. § 1638A(f)(1)) is an unchanged part of the amended COOL measure, which
does not cause any detrimental impact, and, as such, is not relevant for purposes of this analysis.
WT/DS384/RW/Add.1 • WT/DS386/RW/Add.1

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24. Canada now argues that "the prohibition [of a "farm to fork" traceability system], coupled
with a mandate for the Secretary of Agriculture to audit retailers to verify compliance, necessitates
the implementation of the amended COOL measure's labelling requirements through the system of
recordkeeping and verification that is the cause of the detrimental impact on Canadian livestock."
Mexico appears to take a similar position, contending that "the prohibition is a disguised restriction
on international trade," and establishes that the entire measure "is not even-handed." Again, the
prohibition contained in 7 U.S.C. § 1638A(f)(1) is not the cause of the detrimental impact. The
original panel made no such finding, and neither did the Appellate Body. Rather, the Appellate
Body determined that the detrimental impact stemmed from the distinctions between the
production steps and the distinctions between the different types of labels. Those distinctions are
set out in other parts of the statute and the 2009 Fi nal Rule, and it is those parts – not 7 U.S.C. §
1638A(f)(1) – that are relevant to this inquiry.

B. Complainants Have Failed To Estab lish That the Amended COOL Measure is
Inconsistent with Article III:4 of the GATT 1994

25. Despite arguing repeatedly in the original pr oceeding that the national treatment provisions
contained in the TBT Agreement and the GATT 1 994 should be given the same interpretation,
complainants now encourage these Panels to judge as to whether the amended COOL measure is
discriminatory under two entirely different legal standards. For purposes of Article III:4,
complainants contend that "treatment no less favourable" is established solely based on proof that
the technical regulation results in a detrimental impact on imported products. This analysis is
incorrect.

26. The phrase "treatment less favourable" as used in Article III:4 has always provided
regulatory space for the Member to take otherwis e legitimate measures that may restrict trade
unevenly across the membership. Complainants disagree, arguing that once a detrimental impact
is established, the reasons underlying the requirements of the technical regulation are irrelevant to
the analysis. The WTO has never adopted as narrow of an interpretation as complainants assert
here. It has long been understood that, consistent with Article III:4, "a Member may draw
distinctions between products which have been found to be ‘like,' without, for this reason alone ,
according to the group of ‘like' imported products ‘less favourable treatment' than that accorded to
the group of ‘like' domestic products." Thus, th e existence of distinctions between imported and
domestic products is not enough. Any Article III:4 analysis must include an examination of
whether such distinctions are evidence that the measure is discriminatory or not. Given this, the
Appellate Body's approach to Article 2.1 is not su rprising. The Appellate Body has noted: "the two
Agreements should be interpreted in a coherent and consistent manner" in light of the fact that the
Members intended the TBT Agreement "to further the objectives of the GATT 1994."

27. Complainants argue that the sole relevant consideration is the effect of the measure. Any
examination of whether the technical regulation draws legitimate, even-handed distinctions is
deferred to the analysis of whether the "discrimination" is "arbitrary or unjustified" under
Article XX. Of course, for technical regulations that pursue legitimate objectives not listed in
Article XX, the matter would end there. As to these measures, the question of whether a measure
is discriminatory turns only on whether a majority of the domestic products satisfy a particular
technical regulation, while a majority of the like foreign products do not. A responding Member is
simply not afforded the opportunity to explain, nor would a panel have the ability to examine, the
underlying rationale and operation of the standard. The legitimacy – even the correctness – of the
requirements is wholly immaterial to the national treatment analysis.

28. Complainants' overly narrow interpretation of Article III:4 greatly undermines a Member's
ability to regulate in the public interest, particularly where the Member pursues legitimate
governmental objectives not listed in Article XX. What complainants' approach suggests is that a
Member must, prior to applying a technical regu lation, survey all current and potential trading
partners of products affected by the measure to determine whether the affected products of those
countries either meet that standard (or whether its producers are willing to adapt to the new
standard). Where a particular country's products do not meet that standard (and that country's
producers are not willing to adapt), the Member must lower its standards to avoid creating an
obstacle to trade. This "least common denominator" analysis approach would undermine entirely
the fact that the Member may take technical regulations "necessary to achieve its legitimate
objectives ‘at the levels it considers appropriate.'"
WT/DS384/RW/Add.1 • WT/DS386/RW/Add.1

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29. Each criticism of the U.S. approach fails. First, Canada challenges that the United States has
"no textual basis" for claiming that the Article III:4 analysis "necessarily entails an examination of
whether the regulation makes distinctions that could not be considered even-handed as to the
group of ‘like' imported products versus the grou p of ‘like' domestic products . . ." But what
Canada ignores is that this conclusion is built upon the Appellate Body's interpretation of the text
of Article III. Moreover, Canada is simply wrong to argue that the United States ignores the
context of the TBT Agreement and the GATT 1994. The context supports the U.S. interpretation.
While it is unquestioned that Article III:4 provides relevant context for the interpretation of
Article 2.1, Article 2.1, in fact, provides releva nt context for the interpretation of Article III:4,
especially where the measure at issue is a technical regulation.

30. Second, complainants criticize the U.S. interpre tation as trying to alter the "balance" set out
between Article III:4 and Article XX. The United States is not contending that the Panel must "read
into" Article III:4 an assessment of whether the discrimination is "arbitrary or unjustifiable," as
Canada alleges. Rather, what the United States is saying is that the appropriate interpretation of
whether a technical regulation is discriminatory must necessarily include an examination of the
basis for the regulatory distinctions that cause the detrimental impact. Furthermore, in light of
their view that Article 2.1 sets a much higher bar for a discrimination claim, complainants fail to
explain how their approach interprets the two agreements "in a coherent and consistent manner."
Just the opposite would appear to be the case. Complainants' artificially narrow interpretation of
Article III:4 renders Article 2.1 a nullity.

31. The ultimate goal of complainants is clear. While they no longer directly challenge the
proposition that providing consumer information on origin as to where the animal is born, raised,
and slaughtered is a legitimate governmental objective, complainants' overly narrow construction
of Article III:4 would prevent the United States from doing just that, short of fundamentally
altering how the entire U.S. meat industry operates. To accept complainants' approach would be to
accept that there is no practical and reasonable way for the United States to provide accurate
origin information to its consumers, even where the meat was derived from an animal that spent
less than a day in the United States before being slaughtered.

C. Complainants Have Failed to Estab lish That the Amended COOL Measure is
Inconsistent with Article 2.2 of the TBT Agreement

1. The DS386 Panel Should Reject Me xico's "Two Step Necessity" Test

32. Mexico argues that the DS386 Panel should adopt a "two step necessity" test, comprising
what Mexico calls a "relational analysis" and a "comparative analysis." Mexico fails to explain why
the Appellate Body did not engage in this "two step necessity" test in the one dispute where it
examined the merits of the claim, US – Tuna II (Mexico) . Indeed, in US – Tuna II (Mexico) , the
Appellate Body does not even acknowledge the possibility of such an approach.

33. Mexico tries to ground its approach in the fact that the Appellate Body acknowledges that
there may be instances where a comparison between the challenged measure and an alternative
measure would not be needed. But what Mexico cannot explain – and, in fact, studiously ignores –
is why the Appellate Body determined in the original US – COOL proceeding that, in fact, the
original panel should have made this comparison. Indeed, the Appellate Body reversed the original
panel's Article 2.2 finding on this very point. It is clear that Mexico's "two step" invention is
designed to lessen its own burden of proof. Mexico was quite explicit in this regard in its first
submission, arguing that the DS386 Panel could find the amended COOL measure inconsistent with
Article 2.2 without making a comparison to an alternative measure. Under Article 2.2 the
complaining party must establish that an alternative measure exists that "is less trade restrictive,
makes an equivalent contribution to the relevant objective, and is reasonably available." The
arguments by either complaining party that seek to relieve themselves of any part of this burden
should be rejected.

2. Factors to Consider in Comparison Between the Amended COOL Measure and
an Alternative Measure

34. First, the objective of the amended C OOL measure was "to provide consumers with
information on the countries in which the livestock from which the meat they purchase is produced
were born, raised, and slaughtered," quoting the Appellate Body. Complainants disagree,
WT/DS384/RW/Add.1 • WT/DS386/RW/Add.1

- B-33 -

contending that the United States has taken the quote out of context and that the Appellate Body
made that statement in the context of whethe r the objective was legitimate, and not in its
identification. As such, complainants appear to argue that the Appellate Body, in evaluating
whether the COOL measure's objective was legitimate, analyzed the wrong objective. That is
clearly incorrect. As the Panels are well aware, the relevant objective can be stated in a number of
ways. Certainly, it could be stated as "to provide consumer information on origin," which is how
both the Appellate Body and the Panel has characte rized it. Of course, that same objective can be
stated in more specific terms, such as how the A ppellate Body has also stated it. They are simply
two formulations of the same objective. Comp lainants disagree with the Appellate Body's
formulation because that formulation mentions the three production steps. Although they do not
say so directly, it would appear that complainants view such a formulation as undermining their
first two alternatives, neither of which provide much, if any, origin information on the three
production steps. Complainants would simply prefer that providing consumers with information
about the production steps not factor into the analysis.

35. But this is where the flaw of complainants' approach is truly exposed. For the real issue is
not what the objective is – that has been decided – but, as the Appellate Body explains, what "is
the degree of contribution to the objective that a measure actually achieves." And what the
amended COOL measure actually achieves is that it provides meaningful and accurate information
on origin for muscle cuts sold at retail as to where the animal was born, raised, and slaughtered. It
is thus immaterial whether the objective is characterized as "to provide consumer information on
origin," on the one hand, or it is "to provide consumers with information on the countries in which
the livestock from which the meat they purchase is produced were born, raised, and slaughtered,"
on the other. The degree of contribution to the objective that the measure actually achieves is the
same under either formulation.

36. Second, Canada and (sometimes) Mexico continue to equate the phrase "less trade
restrictive" with the phrase "less discriminatory." The term "trade restrictive" "means something
h a v i n g a l i m i t i n g e f f e c t o n t r a d e . " A c c o r d i n g l y , t h e A p p e l l a t e B o d y i n US – Tuna II (Mexico)
concluded that "Article 2.2 does not prohibit measures that have any trade-restrictive effect. It
refers to ‘unnecessary obstacles' to trade and thus allows for some trade-restrictiveness …" In
light of that guidance, it simply cannot be that Article 2.2 allows for some discrimination. Indeed,
the Appellate Body's statement that what Article 2.2 disciplines is "trade-restrictive effect" only
makes sense when "trade restrictive" is under stood to refer to limiting trade effects, i.e., limiting
market access.

37. Canada requests that the DS384 Panel "be sufficiently flexible" in its interpretation of the
agreement "to account for elements that are difficult to quantify, such as practical difficulties in
selling or handling imported products" under the amended COOL measure. Yet the difficult
question here is not what the trade effects of the amended COOL measure are. The question is
what will be the trade effects of the "farm to fork" traceability regime, and it is that burden that
complainants fail to meet.

38. Mexico attempts to lessen its burden by contending that it does not have the burden of proof
with regard to any alternative measures it proposes. Canada appears to take a similar, albeit more
limited approach, contending that it should not have to carry this burden where it is difficult to do
so. Yet the Appellate Body has been clear on this point – the allocation of the burden of proof does
not depend on how difficult it is for the complainant to prove its case.

39. The United States agrees with Canada that it may very well be difficult to establish that a
"farm to fork" traceability regime (or the state/province alternative) is actually less trade
restrictive than the amended COOL measure. The reason for this is fairly obvious – determining
how a complicated regulatory mechanism would affect the complex U.S. livestock and meat
industries is not easily done. Indeed, Canada may understand this problem better than most,
given that it has failed to completely implement its own "farm to fork" traceability regime in
Canada despite examining the issue for over a decade. But this is the complainants' burden.

40. Third, complainants appear to accept the framework for evaluating whether a measure could
be considered to be "reasonably available." However, neither party satisfies its burden in this
regard, particularly with regard to the "farm to fork" traceability alternative and state/province
designation alternative.
WT/DS384/RW/Add.1 • WT/DS386/RW/Add.1

- B-34 -

3. The Complaining Parties Have Failed to Establish a Prima Facie Case That an
Alternative Measure Exists That Proves the Amended COOL Measure Is
Inconsistent With Article 2.2

a. The Burden of Proof

41. Mexico contends that it does not have the burden of proving that an alternative measure
exists that establishes that the amended COOL measure is inconsistent with Article 2.2. Mexico's
position directly contradicts its own position before the Appellate Body in this very dispute where it
accepted that, as a complainant, it is Mexico that carries "the burden of proof with respect to such
alternative measures." It has been long understood that complainants carry the burden of proof
for their claims under those rules, and respondents carry the burden of proof for their affirmative
defenses. Mexico's argument is just the latest a ttempt by the complainants to relieve themselves
of their own burden of proof. The United States re quests both Panels to reject arguments of the
complaining parties that seek to relieve themselves of their own burden.

b. First Alternative Measure

42. The design, structure, and operation of the amended COOL measure indicates that the
degree to which it actually contributes to its objective of providing consumer information on origin:
it provides meaningful and accurate information on origin for muscle cuts sold at retail as to where
the animal was born, raised, and slaughtered. Alternative measures that contribute to the
objective at a lesser degree do not prove a challenged measure inconsistent with Article 2.2. This
is the only logical interpretation of the TBT Agreement whose 6
th preambular recital acknowledges
that the Member "shall not be prevented from taki ng measures necessary to achieve its legitimate
objectives ‘at the levels it considers appropriate ,'" a point that the Appellate Body has repeatedly
emphasized. Complainants' analyses are directly contradictory to both the applicable agreement
and the Appellate Body's interpretation of that agreement. Complainants' proposed first alternative
unquestionably fails the legal test of Article 2.2.

43. Rather than acknowledging these problems directly, complainants discuss the labeling
differences between Categories A, B, and C, on the one hand, and Categories D and E, on the
other. First, Canada appears to argue that they have satisfied their own burden of proof because
the United States "has not explained why it considers that Label D and Label E fulfil its objective."
Notwithstanding the obvious burden of proof problem, what should be obvious to all participants in
this dispute is that this is not the test for Article 2.2 – none of the parties need to prove that a
label does or does not "fulfill" the U.S. objectiv e in the abstract. The question is rather, whether
complainants have established a prima facie case that an alternative measure exists "that is less
trade restrictive, makes an equivalent contribution to the relevant objective, and is reasonably
available." Second, Mexico argues that "[t]he United States has not provided a basis for
distinguishing consumers' desires for origin information as between muscle cuts, ground beef and
imported meat products." But again Mexico, like Canada, fails to explain how the existence or
non-existence of such a basis is relevant to the required prima facie case for this claim. Third, the
phrase "risks non-fulfilment would create" does not provide a different conclusion. What
complainants are essentially arguing here is that the objective of consumer information is simply
not "legitimate" or "important" enough to rebut an Article 2.2 challenge. As should be clear, the
United States considers that providing consumers with this information is very important. And
nothing in the TBT Agreement generally, or Article 2.2, requires the United States to re-order its
objectives to conform to the policy priorities of its trading partners.

c. Second Alternative Measure

44. Complainants continue to maintain that applying the ground meat rules to all muscle cuts
without exemptions proves the amended COOL me asure inconsistent with Article 2.2. This
argument is in error. The ground meat rules provide limited origin information as to where the
animal was born, raised, and slaughtered, and, therefore, cannot be considered to make an
equivalent contribution to the objective that the amended COOL measure does – namely, to
provide meaningful and accurate information on origin for muscle cuts sold at retail as to where
the animal was born, raised, and slaughtered.
WT/DS384/RW/Add.1 • WT/DS386/RW/Add.1

- B-35 -

d. Third Alternative Measure

45. Third, complainants maintain that the altern ative of a "farm to fork" traceability regime
proves the amended COOL measure inconsistent with Article 2.2. This argument is in error. A
complaining party does not discharge its burden of proof by putting forward an alternative that is
"merely theoretical in nature." The party must ba se its alternative on "sufficient evidence," which
"substantiat[es] the likely nature or magnitude of the costs that would be associated with the
proposed alternative, as compared to the current system." Bare allegations that the Member could
adopt the alternative are simply not enough to establish a prima facie case.

46. Canada now argues that "farm to fork" traceability is less trade restrictive for two reasons:
1) the alternative is non-discriminatory; and 2) the alternative "could not possibly entail" the same
costs that the amended COOL measure does with respect to Canadian producers. Canada
continues to decline to examine what effects a "farm to fork" traceability system would actually
have on trade. Mexico provides no additional time ly evidence, simply alleging that such a system
"would not impose material new costs on Mexican producers."
47. As to Canada's first argument, the TBT Agreement cannot be read to mean that a "less trade
restrictive" measure is one that is simply "less discriminatory." Rather, a "less trade restrictive"
measure is one that will permit greater market access for goods than the challenged measure.
Moreover, in EC – Seals , Canada appears to agree with the United States that trade flows, not
discrimination, is the touchstone of trade restrictiveness.

48. As explained previously, the central question h e r e i s w h a t e f f e c t t h e a d o p t i o n o f t h i s
alternative will have on trade. And as to this central question, neither complainant even alleges
that trade would increase under a trace-back regime.

49. As to Canada's second argument, Canada relies on Dr. Sumner's analyses of the original
COOL regime, which Canada claims to prove a "farm to fork" traceability regime to be less trade
restrictive because it "could not possibly entail" the same amount of costs to Canadian industry as
the original COOL measure has allegedly imposed, an impact which Dr. Sumner estimates to be
the equivalent of increasing processing and marketing costs by $608 per head of cattle and $116
per hog on all livestock processed in the United States. However, the conclusions drawn from the
previous econometric models are not credible, highly inflated (to say the least), and suffer from
numerous data and methodological shortcomings.

50. However, even setting aside the inaccuracies and discrepancies, then Dr. Sumner's
conclusions should be readily observable in today's market for Canadian cattle in the
United States, given that the original COOL measure is imposing costs of approximately $600 per
head, in the form of increased processing and marketing costs, on Canadian exported cattle. Under
these circumstances, one would expect to see drastic differences between Canadian and U.S. steer
prices to account for such an effect. To the contrary, there has been minimal change between the
prices and the difference between them has actually narrowed.

51. Given these minimal changes in Canadian steer prices in respect of U.S. steer prices, Dr.
Sumner's model, if appropriate, implies that Canadian cattle producers and U.S. packers and
feedlots purchasing Canadian livestock are internalizing the majority of the estimated equivalent
costs (which, according to Dr. Sumner, at a minimum, are equivalent to 39 percent of the average
wholesale steer price). But to do so would be prohibitively expensive and should cause the
Canadian live cattle export market to the United States to disappear entirely. But this is not
occurring. In fact, the quantity and price of cattle exported from Canada into the United States has
remained relatively consistent, accounting for normal fluctuations since the implementation of the
2009 Final Rule. In short, Dr. Sumner's analysis is simply not credible and is not borne out by the
facts and data in the market.

52. Mexico's "adoption" of Dr. Sumner's calculations contained in CDA-126 were untimely, and
inconsistent with paragraph 7 of the Working Procedures of the Panel and DSU Article 12.4.

53. While complainants appear to accept the Appellate Body's view in US – Gambling that an
alternative measure is not "reasonably available" where it "imposes an undue burden on that
Member, such as prohibitive costs or substantial technical difficulties," neither complainant
WT/DS384/RW/Add.1 • WT/DS386/RW/Add.1

- B-36 -

provides any evidence to establish a prima facie case that the measure is, in fact, reasonably
available.

54. First, Mexico contends that it does not shoulder the burden in this regard, and (presumably)
in light of that position, provides no additional cost analysis, nor responds to any of the U.S.
criticisms of the sole piece of evidence that Mexico relies on, the ten year old Hayes & Meyer
article. As discussed above, it is clear that Mexico, as the complaining party, has the burden of
proof with regard to the alternatives it proposes. It is equally clear that Mexico has failed to satisfy
that burden of proof.

5 5 . S e c o n d , w h i l e C a n a d a a p p e a r s t o a c c e p t t h a t i t h a s t h e b u r d e n o f p r o o f t o p r o v e t h a t a
"farm to fork" traceability regime is "reasonably available," Canada does not put forward sufficient
evidence to establish a prima facie case in this regard, relying solely on a cost estimate done in
relation to the NAIS.

56. As to the costs of the alternative itself, as noted above, Canada misleadingly relies on a cost
analysis commissioned by APHIS and performed by a consortium of non-government researchers
in connection with the NAIS. The NAIS Study did no t evaluate a trace-back system from farm to
retail. Rather, it only evaluated traceability up to the point of slaughter, since it was focused on
animal disease status, not consumer information. Yet the implementation of animal traceability
would create heavy costs after the animal has been slaughtered at the processing and retail levels
where workers are forced to keep meat from each animal segregated and attached to data
generated at the farm and intermediary production steps. As such, it is clear that Canada has not
put forward a complete cost analysis.

57. USDA has never produced an analysis of the costs of implementing a farm to retail trace-
back regime for beef and pork, and, as discussed ab ove, it is not the U.S. burden to do so for
purposes of this proceeding. As is clear, howeve r, the costs of implementing such a regime would
be high indeed, and would likely have dramatic effects on the industry. By moving from a COOL
regime to a traceability regime that is concerned with the life history of each animal, animals are
forced to move in batches of one animal ( i.e., animal by animal) through the slaughter facility, in
the packaging process, and at the retail level, as meat cutters are forced to segregate each animal
and the meat for each animal from other animals to ensure the label finally placed at retail has
accurate detailed information about place of birt h, development, and slaughter. Those procedures
would require dramatic slowdowns in the meat cutting process, and would add substantial burdens
to retailers and other vendors who must associate particular cuts of meat with labels that
correspond to the individual animal. In this regard, the U.S. industry differs greatly from the two
examples Canada cites to, Japan and Uruguay, both of which have much smaller industries than
the United States does.

58. It is, of course, telling that Canada cannot cite itself as an example of a country that has
implemented a "farm to fork" traceability regime, despite studying the issue since 2003. All
Canada can say is that it and its stakeholders "are working towards a practical phased-in strategy
for tracking animal movements." The fact that Canada has been "working towards" full national
traceability for over a decade now, without being able to implement (or even being able to state
when it will implement), underscores just how difficult it is for a country to implement this
extremely expensive system. And if that is true for Canada then it means it will be even more true
for the United States, which has much larger herds than does Canada, and whose individual
animals appear to move much more frequently domestically than do Canadian animals.

e. Fourth Alternative Measure

59. Canada puts forward a fourth alternative measure: a labeling regime whereby the label
would inform consumers as to the state or province from which an animal was born, raised, and
slaughtered. Canada puts forward no (or virtually no) evidence to support this alternative, and it is
abundantly clear that Canada has not established a prima facie case that that this alternative
proves that the amended COOL measure is inconsis tent with Article 2.2. Canada merely alleges,
without support, that the alternative would provide a "greater degree of fulfillment" than the
amended COOL measure and would be less trade-restrictive. Importantly, however, it does not
appear to the United States that this alternative is any more reasonably available or any less
trade-restrictive than the "farm to fork" traceability regime. As such, the United States considers
that this alternative does not present an entirely new alternative at all.
WT/DS384/RW/Add.1 • WT/DS386/RW/Add.1

- B-37 -

60. Cattle production in the United States is widely dispersed throughout the entire country.
However, because it is often less expensive to move animals than feed, the U.S. industry is
characterized by a large amount of interstate movement of animals. This is particularly true for
cattle, 57 percent of which move interstate, but it is true for hogs as well. As such, the U.S.
industry has evolved such that different regions of the country have specialized in certain aspects
of livestock production system. As an individual cow moves through its lifecycle it would not be
unusual for it to move through multiple states as it goes to different specialized feed lots, etc.
Moreover, the overwhelming majority of cattle (85 percent) are sold and resold in local auctions,
often several times, where they are "sorted an d mixed with calves from other areas before
ultimately arriving at pastures or feedlots." This repeated intermingling of cattle from different
states between multiple auction houses commonplace within the cattle industry would necessitate
that each individual head of cattle be tracked as it goes through the livestock production process.
As such, it would appear to the United States that the recordkeeping that would need to be
required in any such system would need to track the individual animal, no different from the "farm
to fork" traceability system.

6 1 . W e d o n o t e , h o w e v e r , t h a t U . S . c a t t l e p r o d u c t i o n i s i n s t a r k c o n t r a s t t o C a n a d i a n c a t t l e
production, which is highly concentrated in Western Canada, with nearly 86.6 percent of all beef
cows within this region. Additionally, the remaining cattle not produced in Western Canada are
exceptionally concentrated, with 91 percent of all beef cattle raised in Eastern Canada occurring in
the provinces Ontario and Quebec. It does not appear to the United States that there is the same
amount of inter-province movement of cattle (or hogs) as there is in the United States.

62. Mexico's "adoption" of this argument was untimely, and inconsistent with paragraph 7 of the
Working Procedures of the Panel and Article 12.4 of the DSU.

D. Complainant's Claims Under Article XX III:(1)(b) of the GATT 1994 Are Outside the
Terms of Reference of these Panels and Otherwise Fail

1. NVNI Claims Are Outside the Terms of Reference of These Proceedings

63. Under the plain text of DSU Article 21.5, the terms of reference of a compliance panel do not
include a claim that a measure taken to comply causes NVNI. This is because the questions
presented are either: (1) whether a measure taken to comply exists (an issue not presented in
the current proceeding); or (2) whether a measure ta ken to comply is inconsistent with a covered
agreement. The first question is inapplicable in this case since the United States has taken a
measure to comply. The second question by definition concerns the inconsistency of a measure,
and therefore excludes a claim of NVNI.

64. Complainants respond that "‘consistency' can have a meaning that is broader than a
violation or infringement of a covered agreemen t" or, perhaps even more surprisingly, that a
"measure ‘taken to comply' that results in the non-violation nullification or impairment of any
benefit which accrues to a party under the GATT 1994 is no less inconsistent with the GATT 1994
than a measure which results in a violation of one or more provisions." Neither approach can be
reconciled with the text of the DSU or with the complainants' own claims.

65. DSU Articles 19.1 and 26.1(b) make clear that if a measure is inconsistent with the covered
agreements, then Article 19.1 applies and Article 26 .1(b) does not, and the converse is also true.
Contrary to what the complainants assert, the term "inconsistent" does not encompass measures
that are both consistent and inconsistent with the covered agreements.
66. The NVNI claims of the complainants appear to be claims in the alternative. Essentially, the
complainants are claiming that, if the Panels find that the amended COOL measure is not
inconsistent with one of the provisions of a covered agreement cited by a complainant in its panel
request, then the amended COOL measure nonetheless nullifies or impairs the benefits of Canada
or Mexico. However, complainants' own claims demonstrate that their NVNI claims do not involve
a "disagreement as to the … consistency with a co vered agreement of measures taken to comply."
Rather, at the point their NVNI claims would beco me relevant, there is no longer a disagreement
as to consistency, and the issue involves instea d the issue of whether, despite the lack of any
inconsistency, the amended COOL measure nullifies or impairs benefits. This latter question is not
within the terms of reference of Article 21.5 of the DSU.
WT/DS384/RW/Add.1 • WT/DS386/RW/Add.1

- B-38 -

2. Complainants' NVNI Claims Otherwise Fail

67. Complainants appear to agree that they need to demonstrate that the amended COOL
measure nullifies or impairs benefits accruing to them under the WTO Agreement. However, they
fundamentally misunderstand what this demonstration entails. First, they have only generally
referred to "tariff concessions" under the GATT 1994 without ever specifying what they are in
detail. This general reference is not sufficient to meet the requirement in Article 26.1(a) that "the
complaining party shall present a detailed justification in support of any complaint relating to a
measure which does not conflict with the relevant covered agreement."

68. But even more importantly, the complain ants do not explain how the amended COOL
measure can nullify or impair any benefits under these unspecified tariff concessions when they
concede that currently their trade is governed by, and benefitting from, tariff concessions under
the NAFTA. If their trade is not benefitting from WTO tariff concessions, then the benefits under
those tariff concessions are being neither nullified nor impaired.

69. Complainants also appear to misunderstand the aspect of an NVNI claim relating to
reasonable expectations. Complainants state that they could not have anticipated the "upset of the
competitive relationship" or "a change to the labe lling regime that is designed and implemented in
a manner which results in severe discriminatory treatment and the modification of competitive
opportunities in the U.S. market to the detriment of Mexican cattle." In both cases, however,
complainants appear to be arguing that they did not anticipate a measure in breach of the covered
agreements. This argument does not, however, address NVNI claims.

70. Furthermore, the complainants do not address the evidence put forward by the
United States that the complainants had a reasonable expectation that the United States could
require more information be provided to consumers as to the origin of the meat they purchased.

WT/DS384/RW/Add.1 • WT/DS386/RW/Add.1

- C-1 -

ANNEX C
ARGUMENTS OF THIRD PARTIES
Contents Page
Annex C-1 Integrated executive summary of the arguments of Brazil C-2
Annex C-2 Integrated executive summary of the arguments of China C-4
Annex C-3 Integrated executive summary of the arguments of Colombia C-7
Annex C-4 Integrated executive summary of the arguments of the European Union C-10
Annex C-5 Integrated executive summa ry of the arguments of India C-15
Annex C-6 Integrated executive summary of the arguments of Japan C-18
Annex C-7 Integrated executive summary of th e arguments of the Republic of Korea C-24
Annex C-8 Integrated executive summary of the arguments of New Zealand C-26
WT/DS384/RW/Add.1 • WT/DS386/RW/Add.1

- C-2 -

ANNEX C-1
INTEGRATED EXECUTIVE SUMMARY OF THE ARGUMENTS OF BRAZIL
1. Brazil hereby presents its integrated executive summary, where it provides a brief
description of the main points it submitted to the Panel in its Third Party Submission and Oral
Statement.

(a) The legitimacy of the objective of a te chnical regulation does not constitute a
waiver to illegitimate regulatory discri mination that is detrimental to the
conditions of competition of imported products

2. Brazil agrees that in the pursuit of a legiti mate objective, adopted technical regulations may
have an adverse impact on imports inasmuch as compliance with such regulations is mandatory.
Accordingly, it has been clarified that Article 2.1 of the TBT Agreement does not prohibit measures
that result in a detrimental impact on imports, provided that such impact stems exclusively from a
legitimate regulatory distinction.
1 However, in Brazil's understanding, the fact that the objective of
the measure is legitimate has no bearing on the determination of the legitimacy of the regulatory
distinction under Article 2.1 of the TBT.
2 Rather, the legitimacy and the legality of the distinction
itself must be assessed separately.

3. In addition, for the assessment of the consistency of the measure taken to comply with
Article 2.1 of the TBT Agreement, Brazil recalls the approach taken by the Appellate Body in the
original proceeding. While verifying whether a treatment no less favorable is accorded to like
imported products, it is relevant to consider the effect of the measure on the competitive
opportunities in the market.
3 As Brazil stated in its Third Party Submission, the market conditions
prevailing before and after the measure taken to comply can be informative to such assessment.

(b) The assessment on whether a technical regulation is no more trade restrictive
than necessary must encompass not only th e analysis of the intrinsic features of
the measure, but also a comparative anal ysis of other available substitutable
measures.

4. While assessing whether the changes in the COOL measure contributed to restore the
aforementioned conditions of competition, the Panel may also look into its effects on international
trade, in light of Article 2.2 of the TBT Agreement.

5. As the Appellate Body has already stated, the determination of whether a measure is more
restrictive to trade than necessary involves a process of weighting and balancing a series of
factors, including the impact of the regulation on imports or exports.
4 In addition, a comparison
with reasonably available alternative measures is a conceptual tool for the purpose of ascertaining
whether a challenged measure is more trade restrictive than necessary in the light of the nature of
the risks at issue and the gravity of the consequenc es that would arise from non-fulfilment of the
legitimate objective.
5

6. Once a measure is found to genuinely contri bute to the fulfilment of its legitimate policy
objectives, the analysis should turn to the effects of the measure itself, taking into account the
contribution it makes to the objective and the risks that the non-fulfilment of the objective would
create. Brazil agrees with the Parties that this assessment cannot be done in abstract; rather, it
has to be discerned from the design and operation of the measure itself. This involves necessarily
an analysis of ends and means and, from the comparison between ends and means and less trade-
restrictive alternatives, what could be considered technically and economically feasible.

1 US – Clove Cigarettes (Appellate Body Report, para. 174)
2 EC – Seal Products (Panel Report, para. 7.278-7.278)
3 US – COOL (AB Reports, paragraph 270). Emphasis added.
4 Korea – Various Measures on Beef (AB Report, paragraph 164)
5 US-Tuna II (Appellate Body Report paragraph 321)
WT/DS384/RW/Add.1 • WT/DS386/RW/Add.1

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7. Assuming that the COOL measure, if properly applied, could contribute to the legitimate
objective of providing meaningful information to consumers, the focus of the inquiry, in the
context of an Article 21.5 panel procedure, should be on whether the changes introduced in the
measure by the United States can achieve this ve ry objective in a manner consistent with the DSB
recommendations and rulings. The changes must ensure that the same conditions of competition
prevail between imported and national products . The degree of trade-restrictiveness of the
amended COOL measure may serve as useful guidance to the panel's assessment.

(c) The scope of compliance proceedings incl udes not only newly adopted measures,
but also any unmodified part of the original challenged measure

8. Brazil understands that compliance with DSB's recommendations and rulings must be
assessed through the examination of the measures taken to comply broadly understood, i.e.
including not only new administrative and legal measures but also omissions and relevant
measures in force before the adoption of the report(s) by the DSB. This means that such
assessment must encompass the effects of both the amendments and the unaltered parts of the
original challenged measure as they operate jointly.

9. Were unaltered parts of the original challe nged measure outside the jurisdiction of the
compliance panel, this would mean that the responding party would be able to circumvent the
DSB's recommendations and rulings by complying with only selected parts of challenged
measures, while evading compliance with all the rest, as these would be immune to further
challenge.
6

6 Appellate Body Report, US – Softwood Lumber IV (Article 21.5 – Canada), para. 71.
WT/DS384/RW/Add.1 • WT/DS386/RW/Add.1

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ANNEX C-2
INTEGRATED EXECUTIVE SUMMARY OF THE ARGUMENTS OF CHINA
1. Whether the Amended COOL measure is consistent with Article 2.1 of the
TBT Agreement

- Exemptions Granted by the Amended COOL Measure

1. In the original proceeding, the Appellate Body found "the Panel's legal approach to assessing
detrimental impact was correct", 1 but the Panel shall not end its analysis under Article 2.1 of the
TBT Agreement there, and leave its legal analysis under Article 2.1 incomplete. Instead, "the Panel
should have continued its examination and determined whether the circumstances of this case
indicate that the detrimental impact stems exclusively from a legitimate regulatory distinction, or
whether the COOL measure lacks even-handedness".2

2. The Appellate Body further stated that "A re gulatory distinction is not designed and applied
in an even-handed manner—for ex ample, because it is designed or applied in a manner that
constitutes a means of arbitrary or unjustifiable discrimination—that distinction cannot be
considered legitimate and, thus, the detrimental impact will reflect discrimination prohibited under
Article 2.1."3

3. China understands there are two respects of fa ct leading to the conclusion of the Appellate
Body that regulatory distinctions imposed by the COOL measure are arbitrary and unjustifiable:
(1) prescribed labels do not expressly identify specific production steps, in particular for Labels B
and C; (2) considerable proportion of beef and pork is exempted from the COOL requirements.

4. As demonstrated by the complaining partie s, it seems that the Amended COOL Measure
does not address the scope of the extensive exemptions to the COOL measure in any way, the
only modification is a slight change to the definition of "retailer" to include any person subject to
be licensed as a retailer under the PACA.
4 The US itself does not contend this argument, and the
US admits that the Amended COOL measure "m akes no change to the scope of the COOL
measure".5

5. In its first written submission, the US provid ed three arguments to prove that revising the
scope of the COOL measure is not necessary, which China does not agree.

6. Firstly, the US relies on the finding of the Panel that the exemptions that define the scope of
the Amended COOL measure were simply "irrelevant" to the detrimental impact
analysis.
6However, the US seems to ignore the fact that the Appellate Body has revised the
reasoning of the Panel as to Article 2.1 of the TB T Agreement, and it made extensive findings in
terms of the scope of the COOL measure. Contra ry to the US's argument, the Appellate Body
emphasizes that "this lack of correspondence between the recordkeeping and verification
requirements, on the one hand, and the limited consumer information conveyed through the retail
labelling requirements and exemptions therefrom, on the other hand, is of central importance to
our overall analysis under Article 2.1 of the TBT Agreement".7

7. Secondly, the US argues that the challenged measure is not unusual at all – in fact it is
firmly in the majority, since even the complaining parties' own COOL measures do have
limitations.
8 This logic is problematic. If the US believes that measures of other complaining
parties also accorded less favorable treatments to the imported product from the US than those

1 Appellate Body Report, US – COOL, para. 293.
2 Ibid.
3 Ibid.
4 Canada's First Written Submission, US – COOL (21.5), para. 69.
5 US's First Written Submission, US – COOL (21.5), para. 87.
6 US's First Written Submission, US – COOL (21.5), para. 88.
7 Appellate Body Report, US – COOL, para. 348.
8 US's First Written Submission, US – COOL (21.5), para. 90.
WT/DS384/RW/Add.1 • WT/DS386/RW/Add.1

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domestic products, it is entitled to challenge, as it often did in the past, in the dispute settlement
procedure. Nevertheless, the fact that other WTO Members keep similar measures can not be an
excuse for the US to adopt measures violating its WTO obligations, no matter to what extent those
measures are "similar".

8. Thirdly, the US argues that the statistics pr ovided by the complainants are not correct. As
demonstrated by the complaining parties, the Amended COOL Measure provides information to
consumers on only 30% of the U.S. beef supply and on 11% of this pork supply – figures that
include ground beef and pork.
9 According to the US, the statistics are not very accurate and miss
some amounts which have been included in the 2013 Final Rule. However, even using the figures
provided by the US, there are still over 50% percent of the beef supply that are not covered by the
COOL measure. China is of the view that, althou gh necessary exemption could be allowed in order
to reflect the complexity of economy, significant percentage of exemption would likely show that
the objective of a technical regulation is arbitrary and not even-handed. And what is important is
that the exemption has been found by the Appellate Body to constitute a very important element
demonstrating that the legal disctiction is arbitr ary and not even-handed, but it remains in the
place.

9. China notes the US repeatedly argued in the second submission that the design and
operation of the three exemptions does not have any nexus to any detrimental impact and the
exemptions themselves are perfectly even-handed.

10. However, China is not persuaded by the US's argument. The asymmetry between the
coverage of the Amended COOL Measure and th e burdens it imposes on all imports was an
important evidence for the Appellate Body to conclude that the COOL Measure is not even-handed.
The US tends to argue that only those exemptions that directly discriminate the imported products
need to be revised in the implementation stage. But the Appellate Body has made it clear: "In
assessing even-handedness, a panel must ‘carefully scrutinize the particular circumstances of the
case, that is, the design, architecture, revealing structure, operation, and application of the
technical regulation at issue'." In this regard, we agree with Canada that those exemptions are
elements of the original COOL measure, and form part of the measure's "overall architecture" that
the Appellate Body considered in its analysis. Therefore, China is of the view that, without taking
any measure to change the scope and remove or minimize the exemptions of the COOL measure,
it will be very difficult to imagine how the Amended COOL Measure may cure the inconsistency
found by the Panel and Appellate Body in particular.

2. Whether the Amended COOL measure is consistent with Article 2.2 of the
TBT Agreement

- Whether the "two-step necessity" test under Article 2.2 of the TBT Agreement
alleged by Mexico is correct

11. In its first written submission, Mexico submits in its explanation of Article 2.2 that the
Appellate Body effectively established a two-step test to determine whether a measure is more
trade-restrictive than necessary. According to Mexico, "The first step starts with the statement ‘[a]
panel should begin by considering factors that include'"
10: "(i) the degree of contribution made by
the measure to the legitimate objective at issue; (ii) the trade-restrictiveness of the measure; and
(iii) the nature of the risks at issue and the gr avity of consequences that would arise from non-
fulfilment of the objective(s) pursued by the Member through the measure".11 According to Mexico,
the first step "requires a weighing and balancing of relevant factors in respect of the challenged
measure itself"
12. And according to Mexcio, there is also a second step, which "starts with the
statement ‘[i]n most cases, a comparison of the challenged measure and possible alternative
measures should be undertaken'". 13 According to Mexico, this step "involves a weighing and
balancing analysis similar to that under the first step, except that it is undertaken in respect of a

9 US's First Written Submission, US – COOL (21.5), para. 92.
10 Mexico's First Written Submission, US – COOL (21.5), para. 153,
11 Appellate Body Reports, US – COOL, para. 378 (quoting Appellate Body Report, US – Tuna (II)
Mexico, para. 322)
12 Mexico's First Written Submission, US – COOL (21.5), para. 153,
13 Ibid.
WT/DS384/RW/Add.1 • WT/DS386/RW/Add.1

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comparison between the challenged measure and each reasonably available less trade-restrictive
alternative measure."14

12. Mexico also submits that "when weighed and balanced in a holistic manner, it is clear from
these factors that the trade-restrictiveness of th e Amended COOL Measure is disproportionate to
the risks that non-fulfilment would create."
15 Mexico believes "the fact that the Amended COOL
Measure might make some contribution to the objective does not outweigh the other relevant
factors."16 Accordingly, Mexico thinks "the trade-rest rictiveness of the Amended COOL Measure is
unnecessary and it is inconsistent with Article 2.2 of the TBT Agreement."17

13. China is of the view that the comparison of the challenged measure and possible alternative
measures is a integrated part of analysis of whether the technical regulation is more trade
restrictive than necessary to fulfill its legitimate objective instead of a standalone analysis due to
the following reasons.

14. Firstly, the phrase "comparison of the challenged measure and possible alternative
measures" is not the language appearing in the text of Article 2.2 of the TBT Agreement, instead,
it is developed by the Panel and Appellate Body in the interpretation of the second sentence of
Article 2.2. Therefore, it can only be part of the te st instead of an addition to the interpretation of
the second sentence.

15. Secondly, the language of Article 2.2 of the TBT Agreement suggests that the technical
regulations have inherent characteristics of trade restrictiveness. Therefore, what is important is
not whether the trade restiveness of a measure is necessary, but whether it exceeds the extent to
fulfil a legitimate objective. Without weighting the factors contributing to the legitimate objective
and trade-restiveness, it will be hard to come to the conclusion. In most cases, it could be very
difficult to quantify the extent of contribution to the legitimate objective and trade-restiveness,
and therefore, it is useful to examine the availability of alternative measures.

16. Thirdly, the Panel report on EC-Seal Products also confirms that the Mexico' interpretation is
not appropriate. The Panel states "an examination of the obligations under Article 2.2 requires a
relational analysis of all of the following elements: (a) trade-restrictiveness of the EU Seal Regime;
(b) degree of the measure's contribution to the identified objective; and (c) availability of
alternative measures."
18 Therefore, the discussion on alternative measure should be part of
analysis if a measure is more trade restrictive than necessary to fulfil a legitimate objective.

17. China notes that Mexico has retreated from its previous position in its second written
submission, and Mexico stated "even if the Pa nel decides that the Amended COOL Measure is
inconsistent with Article 2.2 on the basis of the relational weighing and balancing test discussed
above, it should make a comparative analysis of challenged measure and each alternative measure
to ensure that the record is complete in the even t of a review by the Appellate Body". Therefore,
China is of the view that the discussion on alternative measure should be part of analysis if a
measure is more trade restrictive than necessary to fulfill a legitimate objective and that "there are
not two steps, but one." And the "two-step" approa ch indeed has risk of lessening the burden of
proof and loosening the conditions under Article 2.2.

18. To sum up, China believes that the unchang ed significant exemptions under the Amended
COOL Measure sheds lights on the analysis of cons istency of the measure with Article 2.1 of the
TBT Agreement, and that the "two-step necessity" test is not a correct approach for Article 2.2
test.

14 Ibid.
15 Mexico's First Written Submission, US – COOL (21.5), para. 178,
16 Ibid.
17 Ibid.
18 Panel report, EC-Seal Products, para 7.467.
WT/DS384/RW/Add.1 • WT/DS386/RW/Add.1

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ANNEX C-3
INTEGRATED EXECUTIVE SUMMARY OF COLOMBIA
I. INTRODUCTION

1. Colombia, as a Member of the WTO, had a systemic interest in the application of Article 2.2
of the TBT Agreement. In its intervention Colomb ia wanted to reiterate what was expressed in
previous opportunities during the present dispute, in the sense that an appropriate interpretation
of this provision is essential to avoid unnecessary barriers to trade.

II. INTERPRETATION OF ARTICLE 2.2 OF THE TBT

2. First, Colombia considered important to high light that the debate in the present issue was
not whether the objective pursued by the amended COOL measure was legitimate or not. In fact,
previous Panels and the Appellate Body have found that consumer's information is a legitimate
objective under Article 2 of the TBT Agreement
1. Colombia's submission related to the standard
that the Panel must apply in order to determine if the adopted measure is in accordance with
Article 2.2 of the TBT. As Colombia stated in its submission, Article 2.2 "more restrictive than
necessary" standard might imply either a complex or a simple approach to the standard on
necessity.

3. Colombia considered that the construction of a proper standard for assessing whether a
technical regulation "is more trade-restrictive than necessary to achieve the contribution it makes
to the legitimate objective", seems extremely relevant in the process of designing, adopting and
assessing a TBT measure. Therefore, Colombia resp ectfully suggested the Panel in this case to
take into account the fold arguments in order to clarify the "more trade-restrictive than necessary"
standard of article 2.2 of the TBT.

4. However, in Colombia's opinion a Member could also proceed in a simpler way, proving
necessity by showing that a trade restrictive measure, as such, was either a proportional or a
proper response to achieve a legitimate policy objective. Thus, in this vein, the definition of
proportional also means that a measure corresponds, matches or is equivalent in size or amount to
something else; in this case, to achieve a legitimate objective.
2 According to Colombia, it is a
matter of reasonability used by several courts around the World, and by the WTO legal texts. 3 In
the end, the fact that a measure is proportional to achieve a legitimate objective means that such
a measure is reasonable, and not more trade restrictive than necessary to achieve such a
legitimate objective.

5. In other words, rather than demanding a unique assessment involving, among other
elements, the pondering of a measure's "degree of contribution of the TBT to the legitimate
objective", article 2.2 allows Members to construe the "more trade restrictive than necessary"
standard under two scopes: a complex approach or a more simple one, that allow to analyze
whether the measure was, at the moment of its adoption, either an appropriate, a proportional or
a reasonable policy response to achieve a legitimate objective.

6. As it has been pointed out by some authors, "proportionality is a trade-off-device which
helps resolve conflicts between different norms, principles, and values. It is also a determining
factor for the role of courts in reviewing administrative or legislative measures. Proportionality
thus provides a legal standard against which individual or state measures can be reviewed. From a
more procedural perspective, proportionality is closely related to the issues of intensity of review-

1 AB Report, United States – certain country of origin labelling (cool) requirements. WT/DS384/AB/R
WT/DS386/AB/R, adopted 29 June 2012.
2 According to the Oxford Dictionary definition.
3 To elaborate on this concept's application, Colombia suggests to consult Max Andenas and Stefan
Zleptnig, Proportionality: Wto Law: In Comparative Perspective Texas International Law Journal - Vol. 42 Num.
3, July 2007
WT/DS384/RW/Add.1 • WT/DS386/RW/Add.1

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the level of scrutiny exercised by judges-and whether there should be a full review on the merits
or a more deferential standard of judicial review."4

III. THE PANEL'S OBJECT IVE ASSESSMENT PERSUANT TO ARTICLE 21.5

7. Colombia recalled the Appellate Body's prev ious statements when it acknowledged, "that
Members enjoy the right to determine the legitimate policies they want to pursue".
5 Therefore
"WTO Members have a large measure of autonomy to determine their own policies (…). Colombia
highlighted that so far as it concerns the WTO, that autonomy is circumscribed only by the need to
respect the requirements of the General Agreement and the other covered agreements."
6

8. It was Colombia's position, that the Panel and the Appellate Body should show some kind of
comity when assessing a Member's public policy, and its trade restrictiveness. This applies for a
technical regulation, and the "more trade-restri ctive than necessary" standard "to achieve the
contribution it makes to the legitimate objective". Additionally, this "degree of contribution"
standard seems to be more like an ex-post review based not in the data or information available at
the moment that the measure was issued, but with the information available at the date of its
review. Hence, in Colombia's opinion that is not the appropriate comity that both, Panels and the
Appellate Body, should show to a Member's policy under the DSU.

9. According to the Black's Law Dictionary, comity stands for "courtesy; complaisance; respect;
a willingness to grant a privilege, not as a matter of right, but out of deference and good will". It
was Colombia's opinion that the WTO provides Me mbers with leeway to adopt technical measures
in order to achieve an objective. Colombia was referring to this meaning of comity. There must be
a balance in the Panel's analysis between the regulatory objective of a measure and the conformity
of such measure to WTO provisions. The purpose of Article 2.2 of the TBT is to allow a Member
certain discretion with regard to its regulatory powers, always bearing in mind that these
regulatory powers cannot amount to be unnecessary barriers to trade.

10. Pursuant to Article 11 of the DSU the Panel has to conduct an objective assessment of the
facts of the case, of the adopted measure, and of the relevant provisions under the Covered
Agreements. When considering the facts of the case the Panel does not have to do a de novo
examination, a complete repetition of the Member's fact finding, nor it has to have total deference
towards the Member's fact submission. The Panel, complying with the mandate of standard review
encompassed in Article 11 has to analyse all the relevant facts in order to determine if the adopted
measure is in compliance with the obligations under the WTO.

11. Bearing this in mind, Colombia considered that a Panel is not allowed to conduct an ex-post
review of the adopted measure in every case. This would be contrary, not only to the comity that
the Panel should show to the Member's regulatory powers, but also to Article 3.2 of the DSU in as
much as it would not provide the system with se curity and predictability. If the Panel were to
conduct its review of the facts with an ex-post perspective, depending on the factual context at the
time of the decision, then every measure adopted by a Member would be subject to a continuous
scrutiny by the DSB, depriving the system of security and predictability.

12. Therefore, in Colombia's opinion a Panel should keep a delicate balance when assessing a
measure. In principle and based in articles 11 and 3.2 of the DSU, a Panel should start considering
the factual elements that an authority of a Member had available when it was assessing the
chance of imposing a particular measure. Then, according to Colombia, a Panel should assess the
effects of a measure as such; and just in case this information is not enough in order to conduct
an objective assessment, a Panel may start examining criteria or factual findings that came after
the measure was discussed at the DSB on an ex post basis.

4 Supra Max Adenas and Stefan Zleptnig, p. 4
5 Report of the Panel. United States – Measures Concerning the Importation, Marketing and Sale of Tuna
And Tuna Product. WT/DS381/R adopted15 September 2011. Para. 7.441
6 AB. US – Gasoline, p. 28; Panel Report, US – Shrimp, para. 7.26,
Fn 629; GATT Panel Report, Japan – Alcoholic Beverages I, para. 5.13
WT/DS384/RW/Add.1 • WT/DS386/RW/Add.1

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13. Colombia considered that this case rose important questions on the interpretation and
application of Article 2.2 of the TBT. While not taking a final position on the merits of the case,
Colombia requested the Panel to carefully review the scope of the claims in light of the
observations made throughout this submission.
WT/DS384/RW/Add.1 • WT/DS386/RW/Add.1

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ANNEX C-4
INTEGRATED EXECUTIVE SUMMARY OF THE ARGUMENTS OF THE EUROPEAN UNION
1. Third party rights . Since the Panel modified the standard working procedures in
Appendix 3 DSU to permit the shifting of fact, evidence and argument to the second phase, it must
adopt re-balancing measures preserving (not enhancing) third party rights, as mandated in
Article 10 DSU, which the Panel must not diminish. The Panel does not require the parties'
agreement. This is required by the multilateral na ture of dispute settlement and the principles of
due process and consent. It is particularly important in balancing cases, such as the present one;
and where a defence has a significant role to play. It is particularly appropriate in the case of a
public hearing. Thus, third parties must have the right to: be present throughout the hearing;
comment at the invitation of the Panel; receive the questions and responses thereto; and respond
to written questions.

2. Relationship between original and compliance proceedings. There is no formal rule of
precedent in WTO law, although original proceedings and compliance proceedings are part of a
continuous process, and compliance panels are expected to be guided by their prior findings. There
is also no rule of res judicata, although compliance panels may refer to prior findings as part of
their objective assessment.

3. Scope of these compliance proceedings . The amended COOL measure is a declared
measure taken to comply within the scope of these compliance proceedings. It can only
meaningfully and reasonably be considered as a whole. The facts of EC – Bed Linen (Article 21.5 –
India) were different and the reasoning in that case does not apply.

4. Order of analysis . The Panel should begin with the more specific agreement: the
TBT Agreement. It should follow the order of anal ysis in the original proceedings: Article 2.1 then
Article 2.2.

5. Article IX GATT and Agreement on Rules of Origin . The Panel should not make any
findings regarding Article IX GATT or the Agreement on Rules of Origin, which are not before it,
and should ensure that nothing in its report prejudges the interpretation or application of those
provisions in another case.

6. Article 2.1 TBT. Several provisions of the covered agreements seek a balance between a
desire to avoid unnecessary obstacles to international trade and a recognition of a Member's right
to regulate in an even-handed manner in pursuit of a legitimate objective. The second TBT recital
confirms that the GATT and TBT overlap in scope and have similar objectives; that the TBT
expands on pre-existing GATT disciplines; and that the two should be interpreted in a coherent
and consistent manner. The national treatment obligations of Articles III:4 and 2.1 are built
around the same core terms. The balance set out in the TBT preamble, and in particular in the fifth
and sixth recitals, is not in principle different from the balance set out in the GATT, where the
national treatment obligation in Article III:4 is qualified by the general exceptions provision of
Article XX. The fifth and sixth recitals are reflected, inter alia, in Article 2.1 TBT. Article 2.2 also
informs contextually Article 2.1. Thus, in cases involving an alleged de facto breach, that same
balance is to be found in Article 2.1 TBT itself.

7. Determining the scope of the imported product and the scope of the domestic product to be
compared is about the nature and extent of any competitive relationship between the two things
being considered as potentially part of the product. Any distortive effects that the measure itself
might have are to be discounted. Regulatory distinctions are only relevant to the extent that they
find expression in the relevant competitive relationship, such as through consumer preferences.
Once the imported and domestic products have been properly identified, Article 2.1 TBT requires a
panel to compare the treatment accorded under the technical regulation to all like products
imported from the complaining Member (that is, the "group" or "universe" of imported products)
with that accorded to all like domestic products (that is, the "group" or "universe" of domestic like
products). There must be a genuine relationship between the measure and an adverse impact on
competitive opportunities for imported products – conditions resulting solely from private actions
WT/DS384/RW/Add.1 • WT/DS386/RW/Add.1

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cannot ground a breach. Measures that create incentives may breach. Asymmetrical impact
resulting from the lower market share of imports is an exacerbating element, but is not sufficient.
However, the national treatment obligation of Ar ticle 2.1 does not require Members to accord no
less favourable treatment to each and every imported product as compared to each and every
domestic like product. Regulatory distinctions that stem exclusively from the pursuit of legitimate
objectives are permissible.

8. In assessing whether or not there is less favourable treatment the existence of a detrimental
impact on competitive opportunities for the group of imported vis-à-vis the group of domestic like
products is relevant but not dispositive . A panel must further analyze whether the detrimental
impact on imports stems exclusively from a legitimate regulatory distinction rather than reflecting
discrimination. In making this determination, a panel must carefully scrutinize the particular
circumstances of the case, that is, the design, architecture, revealing structure, operation and
application of the measure, and in particular whether that measure is even-handed. There are no
facts that are per se excluded, it being for the litigant asserting such facts to persuade the
adjudicator of their relevance. The burden of proof rests in principle with the party asserting the
affirmative.

9. In this case, in assessing whether or not there is a detrimental impact, the relevant
comparison is between the situation before adoption of the original COOL measure and the present
situation. All regulatory change may involve costs that, in the short term, will inevitably be
unequally distributed amongst existing firms and Me mbers as a function of their past investment
decisions. This does not mean the measure breaches. What is important is that, in the long term,
all firms and Members can adjust to the new regulatory regime and enjoy equal competitive
opportunities. The mere fact that unit regulatory compliance costs may be higher for firms or
Members with lower production volumes or mark et share does not establish breach. Firms and
Members make their own choices about economies of scale. Propensity to breach WTO law is not a
function of the relative size of Members or their firms or their production volumes or market
shares. A measure that regulates a downstream product that has effects on upstream products, or
vice versa, justifies an assessment that encompasses all such aspects.

10. The root of the problem in this case is th at the production chain currently employed by
Canadian and Mexican firms is partly transnational, which, as a matter of fact, necessitates more
specific record keeping, segregation, and therefore higher costs. In this respect, it is helpful to
consider the situation in which birth, raising and slaughter occur only in one Member. Does this
scenario, which does not involve any transnational element in the production or processing chain,
reveal de facto discrimination? It is very difficult to see any. Furthermore, it is very difficult to see
that, in this scenario, the exemptions for restaurants, small retailers and ground meat would alter
that conclusion. It is also helpful to think about the case from the perspective of the MFN principle.
If the transnational element is determinative in concluding that there is a de facto breach of the
national treatment obligation, what would this imply with respect to possible de facto breaches of
the MFN rule? Would it not mean that, if there are two third countries, one of which maintains the
chain of production or processing entirely within its own territory, and the second of which does
not – but rather carries out some part of it in a further third country – there would also be a
breach of the MFN rule? This seems to imply that a regulating Member might find it impossible to
regulate because, whatever origin neutral rule is put in place, there would be de facto
discrimination.

11. Article 2.2 TBT Agreement . The legitimate objective of the measure is to provide
consumers with information about origin and points-of-production. There may be many reasons
why consumers might want such information. Some consumers might want to boost trade or
development. Some might have their own opinions about issues they perceive to be associated
with a particular product or production process and wish to express them when making choices
about what they consume. There is always a concern that such labels may facilitate irrational
origin-based discrimination. In an increasingly integrated global economy it may become
increasingly difficult to discern a rational link between origin described in terms of a particular
WTO Member and a particular issue. Nevertheless, the objective is legitimate. Once origin labelling
is accepted as a legitimate objective, that same approach has to be adopted for all WTO Members,
and it is problematic to go on to question the motives of particular consumers. In a very real sense
they are the market. Even if some irrational origin-based discrimination persists or re-emerges, it
is simply part of the task of firms to overcome it through information and marketing. The same
reasoning generally applies, by extension, to other types of labels. Food labelling is a particular
WT/DS384/RW/Add.1 • WT/DS386/RW/Add.1

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issue. We are speaking of what people choos e to eat, for themselves and their children.
Information and evidence about what labels consumers want may be relevant to an assessment
under Article 2.2 TBT, but not determinative. WTO Member governments also have the right to
determine what their legitimate regulatory objectives are.

12. The measure is significantly trade-restrictive , such that a consideration of the other
elements of Article 2.2 TBT is necessary. The trade-restriction must be significant. I t i s n o t
possible nor permissible to put a precise number on what this means: it is something that can only
be considered on a case-by-case basis. This is but one part of a more complex mechanism, so
precise quantification may be unnecessary. But this requirement of significance implies there is a
category of regulations that do not significan tly restrict trade and do not therefore breach
Article 2.2 TBT. To be meaningful, this category must be reasonably populated. Furthermore, this
significance requirement, as well the requirement to compare the trade-restrictiveness of
alternative measures, implies some degree of precision about what the concept of trade-restriction
means, and how it is to be generally calibrated, if not precisely measured.

13. The concept of trade-restrictiveness encomp asses what effects a measure has had, and may
have in the future. However, it may be difficult to appreciate the degree of trade-restrictiveness on
a hypothetical basis. Modelling may be used, but may be expensive, data may be difficult to
obtain, and the conclusion may be excessively de pendent on the assumptions. In a hypothetical,
attempts at precise measurement may be misplaced. At some point mooted trade-restrictiveness
may be too remote to establish breach. Under the TBT Agreement, regulations may be consistent
when adopted but become inconsistent later (and vice versa). Excessively speculative cases can be
deferred. In the short term, all regulatory change can impose one-off costs and so appear to
restrict trade. However, in the long term, once firms adapt, some regulatory change may increase
trade, or at least be fully absorbed by traders. Thus, one should not be too quick to jump to the
conclusion that a new regulation restricts trade just because there is an initial shock. A good place
to look for guidance about the meaning of trade-restrictiveness could be arbitration panel reports.
However, one should be cautious about transposin g excessively. Article 3.8 of the DSU presumes
nullification or impairment; and no special interest is required to bring a case. In short, assessing
trade-restrictiveness should be grounded in reasonable, balanced and qualitative considerations of
good sense, accessible to all Members.

14. The concept of trade-restrictiveness involv es focussing on the impact of a particular
measure on imports. If a measure has no impact on imports, it cannot be said to be trade-
restrictive. An asymmetrical distribution of co sts may be significant, but rather something to
analyse under the heading of whether or not there is a de facto breach of the national treatment
obligation in Article 2.1. Regulation is rarely an easy task, especially in a complex and more
integrated global economy, and often necessitat es the striking of reasonable compromises.
Pointing to specific inconsistencies at the margins may not always reveal much about the overall
balance of a particular regulation. It is legitimate to regulate for some of the people. A US
consumer concerned about such issues can choose. They can go to a large supermarket and read
the labels; and at the same time choose to avoid restaurants, processed foods and small retailers.
This does not make the measure WTO inconsistent. The same is true with respect to ground meat:
the measure simply allows concerned US consumers to avoid it.

15. With respect to Canada and Mexico's argument that the measure causes a reduction in the
price of their imported products, they appear to be treating the concepts of trade restriction and
nullification or impairment as being the same thing. We do not think that this is correct. However,
what they appear to be arguing is that if they do raise their prices (in order to account for their
increased costs) then, all other things being equal, they will lose volume, and that is the required
restriction of trade, albeit an anticipated one rath er than an actual one. Perhaps they are reticent
about making this clear because they are concerned about a counter-argument from the US to the
effect that what they would experience would be caused by their own actions and not by the
measure at issue. They should have no concern. If the measure is a genuine and substantial cause
of the trade restriction, that will be sufficient. There can be more than one genuine and substantial
cause. Thus, a hypothetical price rise would not break the causal link for the purposes of their
claims under Articles 2.1 and 2.2. In effect, Canada and Mexico appear to be mitigating the trade
loss (in terms of volume) that would otherwise accrue to them by reducing their prices and thus
absorbing the additional costs, at least temporarily. Mitigation of loss is foreseen in Article 39 of
the ILC Articles on the Responsibility of States for Internationally Wrongful Acts, which provides
that account shall be taken of the contribution to the injury by wilful or negligent action or
WT/DS384/RW/Add.1 • WT/DS386/RW/Add.1

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omission of the injured States. WTO Members mitigating trade loss should not, for that reason, be
precluded from pursuing a claim pursuant to Articles 2.1 or 2.2 TBT.

16. It is not for WTO adjudicators to rank in general and abstract terms the importance of
legitimate regulatory objectives, which may overlap and which are rarely comparable. In WTO law,
the fixing of the ALOP is strictly reserved to th e regulating Member. It is not for WTO adjudicators
to weigh the relative values of different WTO Members. Different WTO Members have different
values, sometimes in counterpoint to each other. Attempting to harmonise or rank them is no task
for a judge; and it is not a task that has b een conferred on WTO adjudicators. Regulatory
competition promotes efficiency and makes a positive contribution to the objectives of the WTO.
Regulatory autonomy is as much a pillar of the WTO as MFN and national treatment. The WTO has
no mandate to apply a pure proportionality test. If a particular measure is put through the
disciplines of the TBT Agreement, and no breach is found, but a WTO judge simply comes to a
point at which what appears to that judge to be a very large trade restriction is being justified by
what seems to that judge to be a matter of very small concern, the WTO judge must defer to the
national measure. It is not for WTO judges to valu e legitimate objectives: that is reserved to WTO
Members.

17. Canada and Mexico read Article 2.2 as if it refers to the consequences that non-fulfilment
would create. They have in mind the proposition that the consequence of someone being killed, for
example, is graver than the consequence of someone eating a steak without having accurate
information about the place of birth, raising and slaughter of the animal from which the steak is
derived. On this basis, they imagine that the alternative measure could make a lesser contribution
to the legitimate objective, because the consequence of non-fulfilment is, in relative terms, not so
serious. However, Article 2.2 does not refer to the consequences of non-fulfilment. It refers to the
risks non-fulfilment would create. This does not imply any diminishing of the ALOP. It merely
directs the enquiry towards the question of whether or not there is a rational relationship between
the various parts of the measure or alternative measure.

18. Although the list in the final sentence of Article 2.2 is open, the three listed items are all
technical in nature: none of them empower a panel to question the ALOP. If this provision would
be calling upon panels to provide a general ranking of the relative political values of WTO
Members, then one would expect other kinds of references, such as, for example, to the UN
Charter or other international agreements. These are referenced in many other provisions, but not
here. In short, a panel has full authority to consider whether or not the relationships between the
various moving parts of the measure or alternative measure are rational, and this is the additional
element of weighing and balancing – not a re-setting of the ALOP.

19. In the context of Article 2.2 TBT, there is no direct relationship between the degree of
asymmetry in the distribution of regulatory co sts between domestic an d foreign firms and the
legitimacy of a particular regulatory distinction or objective. That is because (1) Article 2.2 is about
necessity (not discrimination) and (2) as a matter of logic, there is no necessary connection
between the two concepts. Thus, regulatory costs could be distributed in a perfectly equal way
both in the short and long term; but the regulatory distinction or objective might nevertheless not
be legitimate. If the measure significantly restricts trade (constituting an unnecessary obstacle to
international trade) and the regulatory distinction or objective is not legitimate, Article 2.2 will be
breached. Conversely, regulatory costs could be distributed in a perfectly unequal way both in the
short term and in the long term; but the regulatory distinction or objective might nevertheless be
legitimate. Although the TBT Agreement classically applies to regulations of general application to
all WTO Members, its application is not precluded in the case of measures relating to goods
originating from a particular WTO Member. Just as under the SPS Agreement, in some instances
this might be justified or even necessary. The unequal distribution is something that may be taken
into account in the overall assessment, but it does not necessarily result in a re-opening of the
question of whether or not the objective is legitimate.

20. Similarly, in the context of Article 2.1 TBT, there is no direct relationship between the
degree of asymmetry in the distribution of regu latory costs between domestic and foreign firms
and the legitimacy of a particular regulatory distin ction or objective, because, as a matter of logic,
there is no necessary connection between the two concepts. In the context of a de facto breach of
the national treatment obligation there must be a negative impact on competitive conditions or
opportunities for foreign products, at least in the short term. What constitutes the short term is
something to be considered on a case-by-case basis. In this particular case, to the extent that the
WT/DS384/RW/Add.1 • WT/DS386/RW/Add.1

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alternatives (the importing Members conduct all operations on their own territories or establish
their own slaughterhouses in the US) may not be re asonably available, there would appear to be a
long term impact on market structures that constitutes a disincentive to the market integration
pursued by the WTO Agreement.

21. The mechanism by which the volume of im ports are reduced or suppressed compared to
domestic sales volume, on an actual or anticipated basis, classically involves an asymmetrical
incidence of costs. That is because, as their costs increase, and importing firms raise prices
relative to domestic producers, in order to remain profitable, all other things being equal, they will
lose volume. Nevertheless, as in the case of Arti cle 2.2, this does not necessarily mean that the
regulatory distinction or objective is not legitimate. Conversely, if there is no asymmetry in the
distribution of regulatory costs in the short or long term then it is difficult to see in what sense
there may be a negative impact on competitive conditions or opportunities for foreign products. In
such a case, there is no breach of Article 2.1, irre spective of the regulatory distinction or objective
being pursued.

22. The differences between claims of de facto breach of Article 2.1 and breach of Article 2.2 are
that (1) Article 2.1 focusses on discrimination whilst Article 2.2 focusses on necessity (2)
Article 2.1 requires a particular impact on the co mpetitive conditions or opportunities for imports
whilst Article 2.2 requires only a significant restriction of trade and (3) a particular issue may
appear as a fact in the Article 2.1 analysis (thus just one fact to be taken into account with all the
other facts) but as part of the operation of a particular legal rule in the Article 2.2 analysis (for
example, if a measure that significantly restricts trade makes no contribution to its objective then
Article 2.2 is breached – but this would be only one fact to consider with other facts in the context
of Article 2.1).

23. The first alternative would involve a particular origin rule: substantial transformation. This
is problematic. As the EU has explained above, the Agreement on Rules of Origin leaves this
matter open and to the discretion of WTO Members. If this would be the only alternative, then, by
a process of elimination, the US would eventually be compelled to adopt it in order to comply. The
EU considers that the TBT Agreement, which does not even refer expressly to origin, was not
adopted in order to effectively compel WTO Member s to do something that is expressly reserved
as a matter for their discretion, pursuant to the terms of the Agreement on Rules of Origin.

24. The second alternative would certainly be less restrictive of trade. Slaughterhouses could, in
effect, label all meat as originating in Canada and the US, as long as they had both types of animal
within their inventory in the last 60 days. However, it seems equally clear that this measure would
make a lesser contribution to the objective. For this reason, the EU considers that the second
alternative measure is insufficient for the purposes of establishing a breach of Article 2.2 TBT.

25. The third alternative would remove the asymmetry complained of by Canada and Mexico,
would be more trade-restrictive in the sense that it would increase costs for imports. If it would be
the only viable alternative, that would seem to imply that the only way that the US could comply
would be by adopting a heavier regulatory burden. The EU considers that it is not the task of the
WTO to impose such regulatory decisions on WTO Members. In our view, by definition, the
alternative measure should be one that imposes equivalent or fewer costs. In so far as Canada and
Mexico are concerned about asymmetry, that mate r can be addressed under Article 2.1. Thus, the
third alternative measure is insufficient for the purposes of establishing a breach of Article 2.2 TBT.

26. Article III:4 GATT. The scope and content of Article III:4 of the GATT and the scope of
Article 2.1 TBT differ. However, the basic concept of a de facto breach of a national treatment
obligation is the same whether one is in Article III:4 of the GATT or Article 2.1 TBT. It includes a
consideration of not only the impact of the measure on competitive opportunities for imports, but
also a consideration of whether the origin neutral objective or regulatory distinction is legitimate
and even-handed, rather than de facto discriminatory. If one is going to accept the concept of a
de facto breach, then the necessary quid pro quo is that one at least considers the reasons for the
origin neutral regulatory distinction.
WT/DS384/RW/Add.1 • WT/DS386/RW/Add.1

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ANNEX C-5
INTEGRATED EXECUTIVE SUMMARY OF THE ARGUMENTS OF INDIA
1. India thanks the Panel for this opportunity to present its views in the present proceedings.
India has systemic interest with respect to certain issues raised in this Article 21.5
proceeding. India does not take any position on the factual aspects of this dispute but
limits its statement only on the issue of the scope of Article 21.5 proceedings.

2. In the present proceeding, the United States has argued that the scope of a Panel request
in an Article 21.5 proceeding is only limited to the measures which has been taken to
comply with the ruling and recommendations of the DSB and has contended that:

a. GATT Article XXIII: 1(b) claim is outside the Panel's terms of reference as
Article 21.5 proceeding is limited to the issue of determining the existence of a
measure taken to comply or the consistency with a covered agreement of a
measure taken to comply whereas the claim under GATT Article XXIII:1(b)
involves a situation other than the question of consistency of a measure with a
covered agreement.

b. The claim with respect to trace back and labeling rule for ground beef is outside
the terms of reference as these two measures were not found to be inconsistent.
Thus Article 21.5 proceeding cannot be used to raise claims related to an
unchanged aspect of the original measure.

c. Lastly the United States has also argued that the complainants in the 21.5
proceedings are asserting claims with respect to issues already considered in the
original proceedings. This as per the United States is contrary to DSU which does
not allow the complaining parties to use compliance proceedings to re raise claims
and arguments which were rejected during the original proceedings.

3. Mr. Chairman, Article 21.5 proceedings are in itiated for the purpose of assessing whether
the respondent country has complied with the ruling and recommendation of the DSB.
However while making this assessment, India believes that Article 21.5 proceedings should
not be limited to evaluating the implemen ting measure only but instead should be
extended to a full consideration of the factual and legal background against which the
implementing measure is taken.
1This broad approach would ensure that a respondent
country would not be able to circumvent the ruling and recommendation of the DSB by
complying with the same through one measure, while, at the same time, negating
compliance through another.2

4. This position of India is consistent with the Appellate Body report in Canada — Aircraft
(Article 21.5 — Brazil) 3 wherein it concluded that a review by the Panel pursuant to
Article 21.5 of the DSU would not be limited to examining the measures ‘taken to comply'.
Further the Appellate Body in US Shrimp (21.5) observed that "when the issue concerns
the consistency of a new measure "taken to comply", the task of a panel in a matter
referred to it by the DSB for an Article 21.5 proceeding is to consider that new measure in
its totality. The fulfilment of this task requires that a panel consider both the measure itself
and the measure's application"
4. Therefore India believes that the scope of a Panel request
in an Article 21.5 proceeding includes not only the measure which has been taken to
comply with the ruling and recommendation of the DSB but also its application.

 India's oral statement serves as the integrated executive summary.
1 WT/DS257/AB/RW, paragraph 67-69. Also see Appellate Body report in US OCTG SSR (21.5),
WT/DS268/AB/RW, paragraph 147
2 WT/DS257/AB/RW, paragraph 71
3 WT/DS70/AB/RW, paragraph 40-42
4 US Shrimp (21.5), WT/DS58/AB/RW, paragraph 87
WT/DS384/RW/Add.1 • WT/DS386/RW/Add.1

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5. India therefore submits that pursuant to Article 11 of the DSU, the Panel in an Article 21.5
proceeding is obligated to objectively assess not only whether the respondent party has
complied with the recommendation of the DSB but also evaluate the new measure
5, if any,
taken by the respondent in its entirety. This position of India is consistent with the
objective behind Article 21.5 proceeding as highlighted by the Appellate Body in US —
Softwood Lumber IV (Article 21.5).6

6. India would now address the issue of Article XXIII:1(b) of GATT and its inclusion in an
Article 21.5 proceedings. The Appellate Body observed in US-Shrimp that a Panel in an
Article 21.5 proceeding is required to consider both the measure itself and measure's
application.
7 Therefore if the application of the new measure implemented pursuant to the
ruling and recommendation of the DSB leads to nullification or impairment as provided
under Article XXIII:1(b) of GATT, India belie ves that the same can be pursued by the
Panel in this Article 21.5 proceeding. This po sition of India is also supported by the
Appellate Body report in EC- Asbestos8 where it observed that Article XXIII:1(b) of GATT
sets forth a separate cause of action for a claim that through the application of a measure,
a member has nullified or impaired benefits accruing to another member, whether or not
that measure conflicts with the provision of GATT 1994. However whether the application
of the new implemented measure leads to nullification or impairment is a factual exercise
which has to be undertaken by the Panel.

7. With respect to the issue concerning inclusion of trace back and labeling rule for ground
beef within the Panel's terms of reference, Mexico has responded and argued that the
complainant is not challenging the rule with respect to ground beef and the rule with
respect to trace back but are using the same as an argument to compare with the
amended rule for muscle cut of beef and to establish that the amended COOL measure is a
disguised restriction on the international trade respectively.

8. In this respect, India believes that as long as the complainants in the present proceeding
are not challenging the aspect of the original measure which was not found to be
inconsistent but are simply using the same as an argument to establish their claim, the
same should be within the Panel's terms of reference.

9. With respect to the issue of re raising claims in 21.5 proceedings which were rejected in
the original proceedings, India would draw the attention of the Panel that the
United States is ambiguous in its argument as it has not explicitly identified all such
claims.

10. India would therefore respectfully request th e Panel to identify the claims which has been
re raised by the complainants in the presen t proceedings but which were rejected by the
Panel in the original proceedings. If the same relates to the claims of the complainants
under Articles III:4 and XXIII:1(b) of the GATT 1994 which the original Panel did not
address on account of judicial economy, India believes that the same can be addressed in
a Article 21.5 proceeding.

11. This position of India is supported by th e Appellate Body ruling in EC-Bed Linen (21.5)
9
wherein it was observed that in a situation where a panel, in declining to rule on a certain
claim, has provided only a partial resolution of the matter at issue, a complainant should
not be held responsible for the panel's false exercise of judicial economy, such that a
complainant would not be prevented from raising the claim in a subsequent proceeding.

Therefore India respectfully requests the Panel to take into consideration the above
jurisprudence as outlined above while assessing the issue of judicial economy, assuming
that this was the issue the United States was referring to with respect to the issue of re
raising claims in Article 21.5 proceedings which were rejected in the original proceedings.

5 US Shrimp (21.5), WT/DS58/AB/RW, paragraph 86-87
6 WT/DS257/AB/RW, paragraph 71
7 US Shrimp (21.5), WT/DS58/AB/RW, paragraph 87
8 WT/DS135/AB/R, paragraph 185
9 WT/DS141/AB/RW, footnote 115 to para 96. Also see paragraph 14 of the second written submission
by Mexico.
WT/DS384/RW/Add.1 • WT/DS386/RW/Add.1

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India thanks the Panel for the opportunity to present its views and to participate in these
proceedings.
WT/DS384/RW/Add.1 • WT/DS386/RW/Add.1

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ANNEX C-6
INTEGRATED EXECUTIVE SUMMARY OF THE ARGUMENTS OF JAPAN
Third Party Submission

I. Article 2.1 of the TBT Agreement

1. Japan wishes to address one issue relating to Article 2.1, namely, the relevance of the
exemptions under the Amended COOL measure for purposes of assessing whether there is
"treatment no less favourable."

2. Canada and Mexico explain that the Amende d COOL measure made two key changes to the
original measure: (i) the Amended COOL measure requires that retail labels for muscle cut
covered commodities list the country or countries in which the animal from which the muscle cut
was derived was born, raised, and slaughtered; and, (ii) it eliminated the commingling flexibility,
i.e., the allowance to use the mixed origin label on muscle cuts produced the same production
day.
1

3. It would appear that the first change is intended to address part of the disconnect that the
Appellate Body found between the "large amount of information … tracked and transmitted by
upstream producers for purposes of providing consumers with information on origin" and the
"small amount of this information … actually communicated to consumers in an understandable
manner, if it is communicated at all."
2 However, Japan notes that the Appellate Body also found it
difficult to reconcile that – one the one hand – information regarding the origin of all livestock had
to be identified, tracked, and transmitted through the chain of production by upstream producers,
while – on the other hand – a considerable propor tion of the beef and pork derived from that
livestock would ultimately be exempt from the COOL requirements, and therefore carry no COOL
label at all.
3 Canada and Mexico underscore the fact that these exemptions remain unchanged.4

4. Japan submits that the Amended COOL measure's exemptions are relevant to the analysis of
"treatment no less favourable" under Article 2.1, even though they are not, on their own,
dispositive of the question of whether the Amended COOL measure is "even-handed". The
exemptions may undermine the proposition that the detrimental impact caused by the
recordkeeping and verification requirements of the Amended COOL measure stems exclusively
from a legitimate regulatory distinction because the exemptions exclude "a considerable portion"
5
of meat products from the need to provide origin information to consumers. Japan encourages the
Panel to carefully scrutinize the rationale of th e exemptions provided under the Amended COOL
measure in light of, among others, the measure's objective of providing origin information to
consumers, and to determine whether the exemptio ns are consistent with the requirement that
any detrimental impact stem exclusively from a legitimate regulatory distinction.

5. In the original proceedings, the United States maintained that WTO Members should be
allowed to weigh costs and benefits in the design of their technical regulations, and explained that
the United States had decided to adopt certain exemptions and flexibilities to reduce the costs of
compliance for industry, taking into account the views of interested parties.
6 Japan accepts that
when a government designs a technical regulation, it is reasonable for that government to try to
reduce the compliance costs for market participants by allowing for reasonable exemptions and
flexibilities. This is a consideration that a government can take into account, along with other
relevant factors such as the diminished level of fu lfillment of the objective pursued as a result of
the exemptions and flexibilities, as well as consumer preferences. However, in Japan's view, if a
technical regulation modifies the conditions of competition in the market to the detriment of

1 Canada's first written submission, para. 15; Mexico's first written submission, para. 44.
2 Appellate Body Report, US – COOL, para. 347.
3 Appellate Body Report, US – COOL, para. 344.
4 Canada's first written submission, para.18; Mexico's first written submission, para.46.
5 Appellate Body Report, US – COOL, para. 344, quoting Panel Report, US – COOL, para. 7.417.
6 United States' second written submission to the original Panel, paras. 149, 153-154; see also Panel
Report, US – COOL, para. 7.711.
WT/DS384/RW/Add.1 • WT/DS386/RW/Add.1

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imported livestock, the government adopting it would be required to take into account the burdens
of compliance to be borne by imported products as well as those by domestic products in adopting
the technical regulation, including exemptions of the kind maintained in the Amended COOL
measure.

6. Japan observes that the Amended COOL measure does not seem to address the
disproportionate burdens of compliance that fall on the imported products. Moreover, although the
United States indicated in the original proceedings that the flexibility regarding the use of labels B
and C had been added in response to requests from Canada and its producer groups,
7 this
flexibility has been abolished in the Amended COOL measure. This Panel appears to be confronted
with a technical regulation that further increases the costs of compliance, thus exacerbating a
situation in which compliance costs were alre ady borne disproportionately by the imported
product. The Panel must "carefully scrutinize the particular circumstances of the case, that is, the
design, architecture, revealing structure, operation, and application of the technical regulation at
issue."
8

II. Article 2.2 of the TBT Agreement

7. In its Article 2.2 arguments, Mexico argues that, in these compliance proceedings, a
comparison with reasonably available alternative measures is not required given the circumstances
of the Amended COOL measure.
9 Mexico finds support for its view in the Appellate Body Report in
US – Tuna II (Mexico).10

8. Japan notes that the two instances mentioned by the Appellate Body in US – Tuna II
(Mexico) are extreme scenarios where the challenged measure is either not trade restrictive or
makes no contribution at all to achieving the relevant legitimate objective. Japan further observes
that, in the original proceedings, the Appellate Body recognized that the Panel's findings, and
undisputed facts on the record, indicated that th e labeling requirements under the COOL measure
did make some contribution to the objective of providing consumer information on origin.
11 In the
absence of evidence demonstrating that such contribution has been eliminated completely under
the Amended COOL measure, an assessment of Ar ticle 2.2 should include a comparison of the
Amended COOL measure and possible alternative measures.

9. Canada argues that a reasonably available alternative measure need not achieve "precisely
the same degree of contribution to the achievem ent of the objective as that of the challenged
measure in all cases."
12 Mexico makes a similar point.13

10. Japan recalls the Appellate Body's statement th at "the importance of a panel identifying with
sufficient clarity and consistency the objective or objectives pursued by a Member through a
technical regulation cannot be overemphasized."
14 Japan agrees with this statement, and further
observes that the greater the precision with whic h a panel identifies the objective pursued by a
government, the more accurately the panel can identify what would constitute an equivalent
contribution by a reasonably available alternative measure. If the objective is not defined with
sufficient precision, the panel may have difficulties deciding whether an alternative measure can
fulfill the objective at a level that is acceptable to the government adopting the technical
regulation.

11. In addition, Japan notes that the Appellate Body has said, in the context of evaluating
"necessity" under Article XX of the GATT 1994 and Article XIV of the GATS, that a measure
qualifies as an alternative measure if it preserves for the responding Member the right to achieve
its desired level of protection with respect to objective pursued.
15 The Appellate Body's

7 United States' second written submission to the original Panel, para.137.
8 Appellate Body Report, US – COOL, para. 271, quoting Appellate Body Report, US – Clove Cigarettes,
para. 182.
9 Mexico's first written submission, para. 155.
10 Appellate Body Report, US – Tuna II (Mexico), footnote 647 to para. 322 (emphasis omitted).
11 Appellate Body Report, US – COOL, para. 476.
12 Canada's first written submission, para. 118 (emphasis omitted).
13 Mexico's first written submission, para. 162.
14 Appellate Body Report, US – COOL, para. 387.
15 See Appellate Body Report, US – Brazil Retreated Tyres, para. 156 and Appellate Body Report, US –
Gambling, para. 308.
WT/DS384/RW/Add.1 • WT/DS386/RW/Add.1

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interpretation of the necessity test in these similar contexts would seem to require a stricter
comparison than is suggested by Canada and Mexico, between the degree of contribution achieved
by the challenged measure and the degree achieved by any alternatives raised by a complaining
party.

12. Mexico finds support for the more flexible comparison that it advocates in the language in
Article 2.2, calling for consideration of "the risks non-fulfilment would create." The Appellate Body,
however, has explained that "the risks non-fulfilment would create" is a "further element of
weighing and balancing" in the analysis under Article 2.2.
16 In other words, "the risks non-
fulfilment would create" is a factor, among others , to be considered in weighing and balancing
under Article 2.2 and does not provide a basis for a more flexible comparison between the
challenged measure and any reasonably availabl e alternatives. Therefore, a lesser degree of
contribution by the alternative measure cannot be justified in the light of the risks non-fulfilment
would create, as Mexico contends.

Third Party Oral Statement

I. "Legitimate Regulatory Distinction" Test under Article 2.1 of the TBT Agreement

1. With respect to Article 2.1 of the TBT Agr eement, the United States does not appear to
contest that the Amended COOL measure has a detrimental impact on the imported products.
Instead, the contestation centers on the second prong of the test articulated by the Appellate Body
previously,
17 that is, whether the detrimental impact stems from a legitimate regulatory
distinction. In the earlier TBT disputes, the Appellate Body initially referred to this test as involving
an inquiry about even-handedness. In a subsequent case, the Appellate Body referred to the
measure being "designed or applied in a manner that constitutes a means of arbitrary or
unjustifiable discrimination" as an example of a situation that would not be considered to be even-
handed.
18 Japan further notes that, in applying the even-handedness test, the Appellate Body has
also focused on the "calibration" of a measure as well as the proportionality of certain
requirements. Japan recalls that "even-handedness" is not treaty text and is, in fact, twice
removed from it. The concept is an elaboration or clarification of the second prong of the test
articulated by the Appellate Body. It is a useful concept and a good illustration of the type of
discrimination that is prohibited by Article 2.1 of the TBT Agreement. However, Japan would
caution against relying too rigidly on this term.

2. In Japan's view, the assessment of whether th e detrimental impact stems exclusively from a
legitimate regulatory distinction broadly encompasses consideration of two elements. The first
element relates to the legitimacy of the rational e or objective that the regulatory distinction
pursues. The second element looks more broadly at the design or manner in which the measure is
applied in the light of the rationale or objective claimed to be pursued. Whether the examination of
these two elements is part of a single, holistic assessment of "even-handedness" (or legitimacy) or
separate inquiries, in our view, both elements must be properly considered.

3. As regards the first element, Japan does not understand the Appellate Body to have
suggested that Article 2.1 allows all possible re gulatory distinctions. Rather, the regulatory
distinctions must further one of the policy objectives recognized in the TBT Agreement. This should
not be a superficial inquiry that is satisfied merely because the measure has some connection to
the objective pursued. A panel must confirm th at the regulatory distinction drawn by the
regulation in question can indeed further the objectives allegedly pursued by it.

4. In this case, the Panel must scrutinize what information, which is not already provided
voluntarily, the United States considers that consumers need in order to avoid confusion or
deception when shopping. Where certain information would be unnecessary from a consumer point
of view, the disclosure requirement merely imposes additional costs on the covered products
without providing any value or utility. In addition, the Panel must scrutinize the relationship
between the measure and the objective it pursues. Under the particular facts of this case, this

16 Appellate Body Report, US－Tuna (Mexico), para. 321; see also Appellate Body Report, US – COOL,
para. 377.
17 Appellate Body Report, US – Tuna II (Mexico), para. 215 (referring to Appellate Body Report, US –
Clove Cigarettes, paras. 180 and 215).
18 Appellate Body Report, US – COOL, para. 271.
WT/DS384/RW/Add.1 • WT/DS386/RW/Add.1

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inquiry must examine the manner in which the information is provided to consumers and whether
the measure in fact provides consumers with the information that they purportedly require.

5. With respect to the second element, the Appellate Body has stated that, in assessing
even-handedness, a panel must "carefully scrutiniz e the particular circumstances of the case, that
is, the design, architecture, revealing structure, operation, and application of the technical
regulation at issue".
19 We recall that, in this case, the United States has questioned whether the
exemptions are relevant for the assessment of less favourable treatment. Japan does not see any
reason to exclude ex ante any exemptions from the assessment of less favourable treatment. To
fully understand the scope of a measure and how it operates, it is often necessary to consider any
and all exemptions.

6. Japan understands that the particular exemptions at issue exclude certain meat products
from the scope of the Amended COOL measure. In so doing, the exemptions appear to effectively
create an additional product category of origin "unknown" or "unidentified" under the Amended
COOL measure. The existence of this category co vering a large proportion of meat products may
cast doubt on the need for the information required under the four types of labels of the Amended
COOL measure because meat products falling under that additional category do not provide origin
information to consumers. Also, by allowing certain meat products to be put in the additional
category, the exemptions appear to preclude th em from being classified in any of the four
categories on the basis of the relevant regulatory distinction, i.e. the three production steps and
the countries in which such steps take place. Under these circumstances, Japan wonders whether
the regulatory distinction can be said to be calibrated or tailored to the basis or rationale of the
distinction.

7. Therefore, Japan respectfully requests the Panel to take into account the above
considerations to examine whether the relevant regulatory distinction under the Amended COOL
measure is legitimate or designed or applied in an even-handed manner, so as to determine
whether the detrimental impact on imported livestock stems exclusively from a legitimate
regulatory distinction.

II. The Relationship Between Article 2.1 of the TBT Agreement and Article III:4 of the
GATT 1994

8. The parties would appear to hold different views as to whether the phrase "treatment no
less favourable" should be interpreted in the same manner under Article 2.1 of the TBT Agreement
and Article III:4 of the GATT 1994. Another question raised in these proceedings is whether the
second prong of the de facto discrimination test that the Appellate Body developed in the context
of Article 2.1 of the TBT Agreement
20 applies to the assessment of de facto discrimination claims
under Article III:4 of the GATT 1994.

9. At the outset, Japan recalls that the non- discrimination rule under Article 2.1 of the
TBT Agreement applies specifically "in respect of technical regulations". Thus the application of the
second prong of the test developed by the Appell ate Body is unique to technical regulations. In
contrast, Article III:4 of the GATT 1994 addresses a broad and diverse range of measures,
including technical regulations. Thus, it would arguably be prudent to exercise a degree of caution
when drawing guidance from the interpretation developed in the context of Article 2.1, even
though we also recognize that Article 2.1 provides context to the interpretation of Article III:4 "in
respect of technical regulations".

10. Japan also notes that the Appellate Body de veloped the second prong of the test at least
partly based on the "absence among the provisio ns of the TBT Agreement of a general exception
provision similar to Article XX of the GATT 1994"
21 and the structural parallel between the balance
set out in the TBT Agreement, on the one hand, and "the balance set out in the GATT 1994, where
obligations such as national treatment in Article III are qualified by the general exceptions
provision of Article XX." 22 Japan further notes that Article 2.2 also contains certain elements set

19 Appellate Body Report, US – Clove Cigarettes, para. 182.
20 Appellate Body Report, US – Tuna II (Mexico), para. 215 (referring to Appellate Body Report, US –
Clove Cigarettes, paras. 180 and 215).
21 Appellate Body Report, US – Clove Cigarettes, para.88.
22 Appellate Body Report, US – Clove Cigarettes, para.96. See also Appellate Body Report, US – Clove
Cigarettes, para.101.
WT/DS384/RW/Add.1 • WT/DS386/RW/Add.1

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out in Article XX of the GATT 1994. Therefore, although a technical regulation could be found to be
consistent with Article 2.1 of the TBT Agreemen t and yet inconsistent with Article III:4 of the
GATT 1994, under the Appellate Body's theory, th is "inconsistency" could be resolved by the
application of Article XX of the GATT 1994.

11. That being said, it is theoretically possible that some technical regulations may not find
protection under Article XX. In such a situation, Japan notes that the TBT Agreement does not
contain the same helpful guidance found in Article 2.4 of the SPS Agreement.

12. To address such interpretive discrepan cies, some Members suggest to import the
interpretation of Article 2.1 of the TBT Agreemen t directly to Article III:4 of the GATT 1994, thus
requiring the assessment of a de facto claim of less favourable treatment under Article III:4 to
follow a two-step analysis similar to the one de veloped under Article 2.1 of the TBT Agreement.
This approach has its attraction. After all, both Article III:4 of the GATT 1994 and Article 2.1 of the
TBT Agreement address "treatment no less favourable". Moreover, technical regulations in
principle are not only regulated under Article 2.1 of the TBT Agreement, but also fall among the
types of measures regulated by Article III:4 of the GATT 1994.

13. The approach that Japan has described, howeve r, is not without difficulties. For one thing,
there would appear to be some tension between th is approach and the approach followed by the
Appellate Body in earlier cases. Indeed, this would not be the first time that consideration of the
objectives pursued by the challenged measure is sought to be introduced into Article III:4, but to
date the Appellate Body apparently has been reluctant to accept such considerations, even though
the Appellate Body has taken such considerations into account when the objectives have a bearing
under one of the criteria of the "like products" analysis, as was the case in EC – Asbestos.
23 Japan
also recalls the Appellate Body's statement that, with respect to regulatory distinctions based on a
regulatory objective, such "distinctions among prod ucts that have been found to be like are better
drawn when considering subsequently, whether less favourable treatment has been accorded".
24
The other difficulty stems from Article XX itself . If some flexibility were introduced into
Article III:4, questions arise as to whether this would make Article XX meaningless. These
questions should be answered taking into consideration the fact that certain restrictions on exports
or imports of, for example, exhaustible natural resources or non-automatic import licensing
requirements, which are found to be inconsistent with GATT Article XI:1 can be justified only under
Article XX. Japan also notes that under the chap eau of Article XX, the issue is whether "the
reasons given for this discrimination bear [] rational connection to the objective falling within the
purview of a paragraph of Article XX, or would go against that objective", as found by the
Appellate Body in Brazil – Retreaded Tyres.
25

14. The Panel must carefully address these interpretive difficulties in resolving the issue of the
consistent interpretation of TBT Article 2.1 and GATT Article III:4 (in light of GATT Article XX(b))
for technical regulations raised by the parties.

III. Article 2.2 of the TBT Agreement

15. Finally, Japan wishes to address the follow ing two points regarding the analysis under
Article 2.2: (i) the scope of the concept of "trade restrictiveness", and (ii) the role of "reasonably
available alternative measures" in the Article 2.2 analysis.

16. Japan notes that despite the apparent differences in the way in which the parties define
"trade-restrictiveness", they do not essentially di sagree on the factors to examine in the "trade-
restrictiveness" analysis. Canada recalls that WTO jurisprudence interpreted the term "trade-
restrictive" to mean "having a limiting effect on trade" and argues that a measure that affects the
conditions of competition to the detriment of imported livestock is trade-restrictive.
26 Mexico takes
a similar position. The United States interprets the term "trade restrictive" as referring to
something that has a limiting effect on trade, that is, limits market access. 27 Although the
United States argues that the term "trade restrict iveness" refers to the restricting of trade flows,

23 Appellate Body Report, EC – Asbestos, paras. 113-116. See also Appellate Body Report, US – Clove
Cigarettes, paras.117-119.
24 Appellate Body Report, US – Clove Cigarettes, paras.116.
25 Appellate Body Report, Brazil – Tyres, para.227.
26 Second Written Submission of Canada, para. 71.
27 Second Written Submission of the United States of America, para. 107.
WT/DS384/RW/Add.1 • WT/DS386/RW/Add.1

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and not to the concept of discrimination, 28 it does not explicitly exclude qualitative impacts on
trade from being taken into account, along with quantitative ones, in the analysis of "trade
restrictiveness."
29

17. Japan does not see a basis for excluding discr imination from the scope of the analysis of
trade restrictiveness under Article 2.2 of the TBT Agreement. The text of Article 2.2 prohibits WTO
Members from creating "unnecessary obstacles to international trade". In Japan's view, this
language suggests a broad scope of application an d it supports the conclusion that Article 2.2
imposes a prohibition on a range of activities that are broader than the direct denial of market
access.

18. The United States highlights the separate obligations set out by Articles 2.1 and 2.2 and on
this basis argues that the term "trade restrictiveness" does not refer to the concept of
discrimination. Japan notes, in this regard, that Article 2.1 addresses whether a technical
regulation has a detrimental impact on import ed products, whereas Article 2.2 examines the
degree of impact that it has on trade.

19. In its third party submission, the European Un ion raises the question of whether the concept
of trade-restrictiveness is merely concerned with the absolute impact of a regulation on imports, or
also with its relative impact on imported and domestic products.
30 Japan observes that none of the
parties, not even the United States as the respondent, seems to confine "a limiting effect on trade"
to the absolute impact of a regulation on imports.

20. Japan turns now to the role of "reasonably available alternative measures" in the Article 2.2.
Japan recalls that except for the two extreme instances mentioned by the Appellate Body in
US
－Tuna II (Mexico) where the challenged measure is either not trade restrictive or makes no
contribution at all to achieving the relevant legi timate objective, a comparison between the trade-
restrictiveness of the technical regulation at issue and that of an alternative measures is required
under Article 2.2.

21. The comparison with alternative measures is a fundamental element of the analysis of trade-
restrictiveness under Article 2.2. The objective of this comparison is to determine whether there is
an alternative measure that has a lower impact on trade, or is more neutral as regards the
competitive opportunities of the imported products in the relevant market, than the challenged
measure. In this assessment, the removal of disproportionate compliance costs on imported
products would certainly have the effect of facilitating trade. In other circumstances, depending on
the absolute and relative costs that it imposes on imported products, a non-discriminatory
measure can have a more limiting effect on trade than a discriminatory measure. Japan considers
that this lends further support to the conclusion that the term "trade restrictive" addresses a broad
range of impacts on trade including, but not limited to, the modification in the competitive
conditions of imported products.

22. With regard to the allocation of the burden of proof under Article 2.2, Mexico contends that a
complaining party's burden is to simply "identify possible alternatives", and that the complaining
party does not have the burden of presenting evidence and arguments sufficient to demonstrate
that the alternative measure is less trade restrictive, makes an equivalent contribution to the
relevant objective pursued and is reasonably available.
31 As explained by the Appellate Body, and
as argued in this case by the United States in detail, 32 Japan believes that a complaining party
bears the burden of presenting a prima facie case that the challenged measure is inconsistent with
Article 2.2 by establishing that there is an alte rnative measure reasonably available and that this
alternative measure is less trade restrictive and makes an equivalent contribution to the relevant
objective pursued.

28 First Written Submission of United States of America, para. 153.
29 See e.g., Second Written Submission of Canada, para. 71.
30 European Union Third-Party Written Submission, para. 110.
31 Second Written Submission of the United Mexican States, paras. 114-119.
32 Second Written Submission of the United States of America, paras. 114-119.
WT/DS384/RW/Add.1 • WT/DS386/RW/Add.1

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ANNEX C-7
INTEGRATED EXECUTIVE SUMMARY OF THE ARGUMENTS
OF THE REPUBLIC OF KOREA
1. The Republic of Korea ("Korea") appreciates this opportunity to present its views to the
Panel as a third party. The decision of this Pa nel will provide important guidelines to the WTO
Members in making their policy decisions and formulating their respective government programs in
a manner consistent with the relevant rules of the WTO.

2. While the parties to the dispute and third parties raise several important issues, Korea would
like to briefly focus on certain systemic issues. First, Korea would like to share its views about
what kind of legal standard must be established with respect to the Article 21.5 panel's terms of
reference. Second, Korea would like to comment on whether the trace-back system suggested by
the complaints can be a reasonably available alternative measure consistent with Article 2.2 of the
TBT Agreement.

COMPLIANCE
 PANEL SHOULD BEAR IN MIND ‘TRUE FINALITY' OF A DISPUTE IN
DETERMINING ITS TERMS OF REFERENCE

3. To begin with, Korea observes that compliance panel's jurisdiction has become an important
systemic issue in the recent Article 21.5 proceedings. As the number of compliance disputes
increases,
1 the scope of compliance panel's terms of reference has also been in dispute as a major
systemic issue.

4. Korea has maintained that a compliance panel must possess a relatively broad authority to
identify measures taken to comply. The Appellate Body in several Article 21.5 disputes has ruled
that measures taken to comply are not confined to the declared measures by the implementing
Member.
2 The Appellate Body in Mexico – Corn Syrup (Article 21.5) has particularly ruled that
panels have a duty to examine issues of a "fundamental nature," issues that go to the root of their
jurisdiction on their own motion even if the parties to the dispute remain silent on those issues.3

5. Because the WTO jurisprudence recognizes a compliance panel's broad authority to identify
measures to comply, Korea believes that certain guiding principle to determine whether a measure
is within a compliance panel's jurisdiction would be necessary. As a guiding principle to determine
compliance panel's jurisdiction, Korea submits that the concept of ‘true finality' may assist a
compliance panel in delineating its jurisdiction. As we understand, ‘true finality' of a dispute could
be achieved when a compliance panel resolves all the disagreements between the parties to the
dispute with respect to measures taken to comply. As a practical matter, true finality of a dispute
should envisage a situation where the exporters of the aggrieved party restore their
competitiveness which they had enjoyed before the WTO inconsistent measures imposed by the
Member concerned.

6. It should be noted, however, that the concep t of ‘true finality' should not be interpreted to
include all the claims raised by the complaining party. As Korea has pointed out, if a compliance
panel's terms of reference are overly broad, it may open a possibility for the parties to the dispute
to re-litigate the issues already lost in the prior proceedings. Therefore, compliance panel must
strike a balance between the broad authority and the concerns on re-litigation.

 The Republic of Korea requested that its oral statement serve as the integrated executive summary.
1 As of 16 February 2014, 48 complaints requesting Article 21.5 panel have been filed in the DSB since
1995. In the same period, 110 disputes have been appealed. About half of the DSB decisions have not been
effectively resolved, resulting in compliance disputes. See the statistics in www.worldtradelaw.net. (last visited
on 16 February 2014).
2 E.g., Appellate Body Reports, US-Softwood Lumber IV (Article 21.5 – Canada); US-Zeroing
(Article 21.5 – EC).
3 Appellate Body Report, Mexico-Corn Syrup (Article 21.5), para. 36, quoted in US-Countervailing
Measures on Certain EC Products (Article 21.5 – EC), para. 7.35.
WT/DS384/RW/Add.1 • WT/DS386/RW/Add.1

- C-25 -

7. In this respect, Korea would like to briefly comment on certain aspects of the principle of res
judicata, although the principle is known to be inapplicable to international law. The principle of res
judicata precludes parties from re-litigating claims that have already been finally resolved in a
prior proceeding before a competent tribunal. Of course, the narrow scope of the WTO panel's
terms of reference must be distinguished from the more flexible municipal court proceedings
where the principle of res judiciata applies. Ordinarily, in the municipal court proceedings, each
party can amend its complaint as necessary with permission by the court. As we know, this kind of
flexibility is not allowed in the WTO dispute settlement procedures. Nonetheless, systemic interest
in achieving finality of disputes still exists in the WTO dispute settlement procedures.

8. For example, the Panel in India-Autos examined certain aspect of res judicata . In that
dispute, India argued that certain import licensi ng requirements that were the subject of the
dispute had already been addressed by a prior WTO proceeding, and therefore should not be
considered by the panel in the subsequent procee ding. Although the Panel did not directly touched
upon the issue of res judicata, it appeared to take the position that res judicata would apply to the
issues that were actually litigated and decided in the prior WTO dispute.
4

PANEL SHOULD EXAMINE WHETHER THE POLICY OBJECTIVE OF THE TRACE-BACK SYSTEM
WOULD BE DIFFERENT FROM THE POLICY OBJECTIVE THAT THE COOL REQUIREMENTS
PURSUE

9. One of the issues in this compliance proceed ing is whether trace-back system suggested by
the complaints as a reasonably available alternative measure is congruent with the object and
purpose under Article 2.2 of the TBT Agreement. It seems to be agreed among the parties to this
dispute that the trace-back system will apply to both domestic and imported product in a non-
discriminatory manner. However, the parties disagr ee on the question of whether the trace-back
system requiring more burden on the farms and meat producers is permissible as a reasonably
available alternative measure under Article 2.2 of the TBT Agreement.

10. To Korea's understanding, the ordinary mean ing of trade-restrictiveness would be that the
flow of goods and services between national bord ers is constrained. Considering the additional
costs and administrative burden incurred by the trace-back system, one would tend to conclude
that the alternative measure would constrain the fl ow of the goods in dispute. Therefore, without
legitimate policy objective justifying the addition al burden, the trace-back system would not seem
to be a reasonably available alternative measure.

11. In this dispute, the objective of the COOL requirements is clear: that is, to provide
consumers of certain designated products with information about country of origin in order to
enhance the consumers' right to know. Clearly, the trace-back system seems to meet this policy
objective. However, a question arises as to reasonableness of the measure. In other words, is the
trace-back system reasonably available alternat ive measure to substitute for the current COOL
requirement?

12. To Korea's understanding, there exist some what different policy objectives between the
COOL requirements and the trace-back system. No rmally, a trace-back system is known to be
adopted to ensure animal health and food safety. That being said, the policy objective of the trace-
back system would be surveillance rather than co nsumers' right to know. Therefore, this Panel
should examine whether the degree of informat ion required in the trace-back system is
appropriate and necessary to fulfill the policy objective, contemplated in the COOL requirements. If
the trade-back system incurring additional costs and administrative burden unnecessarily requires
more information than the policy objective of the COOL requirements pursues, Korea considers
that the trace-back system should not be regarded as a reasonably available alternative measure.

13. This concludes Korea's oral statement. Again, Korea appreciates this opportunity to present
its view and would be happy to take questions you might have.

4 Panel Report, India-Measures Affecting the Automotive Sector, paras. 7.62-66.
WT/DS384/RW/Add.1 • WT/DS386/RW/Add.1

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ANNEX C-8
INTEGRATED EXECUTIVE SUMMARY OF THE ARGUMENTS OF NEW ZEALAND
I. INTRODUCTION

1. New Zealand's participation as a Third Party in this dispute reflects both its systemic legal
issues arising from the amended country of origin labelling measure and its trade interest in the
United States beef market.

II. THE DISPUTE SETTLEMENT UNDERSTANDING

2. New Zealand notes that the United States' amended Country of Origin Labeling Measure
1
(amended COOL measure) was subject to a six month "education and outreach" grace period in
which it was legally in force, but was not fully enforced to allow retailers and suppliers transition to
the new rule.
2 Article 21.1 of the Understanding on Rules and Procedures Governing the
Settlement of Disputes (DSU) provides that prompt compliance with the recommendations and
rulings of the Dispute Settlement Body is essential in the effective resolution of disputes. If
compliance were achieved once a Member formally changed the law on its books, even where the
Member has stated its intention not to fully implement it until a later date, relief for Members
suffering adverse effects from a non-compliant measure would be deferred until this later date.
This would have systemic implications for the dispute settlement process. New Zealand approves
of the approach taken in previous disputes where the appropriateness and length of a grace period
was considered in a determination as to the "reasonable period of time" for compliance under
Article 21.3(c) of the DSU.
3

III. THE AGREEMENT ON TECHNICAL BARRIERS TO TRADE

A. ARTICLE 2.1: THE FRAMEWORK TO ASSESS LEGITIMA TE REGULATORY
DISTINCTIONS

3. The Appellate Body has stated that a technical regulation that detrimentally impacts on
imported products compared to like domestic products will nevertheless be consistent with
Article 2.1 of the Agreement on Technical Barriers to Trade (TBT Agreement) if this impact stems
from a legitimate regulatory distinction.
4 Jurisprudence further clarifies that a regulatory distinction
that is not designed in an even-handed manner will not be legitimate. 5 A regulatory distinction will
not be even-handed if it is designed or applied in a manner that "constitutes a means of arbitrary
or unjustifiable discrimination".6

1 As set out in §1638 of the Agricultural Marketing Act of 1946 (7 U.S.C. § 1638 (2012)) and the COOL
regulations (i.e. the Final Rule on Mandatory Country of Origin Labeling of Beef, Pork, Lamb, Chicken, Goat
Meat, Wild and Farm-Raised Fish and Shellfish, Perishable Agricultural Commodities, Peanuts, Pecans, Ginseng
and Macadamia Nuts, 74 Fed. Reg, 2658 (15 January 2009) as modified by the Final Rule on Mandatory
Country of Origin Labeling of Beef, Pork, Lamb, Chicken, Goat Meat, Wild and Farm-Raised Fish and Shellfish,
Perishable Agricultural Commodities, Peanuts, Pecans, Ginseng and Macadamia Nuts, 78 Fed. Reg, 31,367 (24
May 2013).
2 Mexico First Written Submission, 31 October 2013 (Mexico FWS), para. 51.
3 See Award of the Arbitrator, Korea – Taxe s on Alcoholic Beverages (Arbitration under
Article 21.3(c) of the Understanding on Rules and Procedures Governing the Settlement of Disputes),
WT/DS75/16 and WT/DS84/14, 4 June 1999, para. 47 where the arbitrator noted that a thirty day grace period
was required for the enforcement of certain measures under Korean law and included this additional period
after the promulgation of the amendments to the legislation as part of the reasonable period of time.
4 Appellate Body Reports, United States – Measures Affecting the Production and Sale of Clove
Cigarettes, WT/DS406/AB/R, adopted 24 April 2012, para. 181 (US – Clove Cigarettes); United States –
Measures Concerning the Importation, Marketing and Sale of Tuna and Tuna Products, WT/DS381/AB/R,
adopted 13 June 2012, para 215 (US – Tuna II (Mexico)); United States – Certain Country of Origin Labelling
(COOL) Requirements, WT/DS384/AB/R /WT/DS386/AB/R, adopted 23 July 2012 (US – COOL), para. 271.
5 Appellate Body Reports, US – Clove Cigarettes, para. 182 and US – COOL, para. 271.
6 Appellate Body Report, US – COOL, para. 271.
WT/DS384/RW/Add.1 • WT/DS386/RW/Add.1

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4. The recently published panel report in EC – Seal Products may provide a useful framework
for the Panel to consider in assessing the exce ptions and flexibilities in the amended COOL
measure.7 The Panel's approach in EC – Seal Products involves consideration of three questions:
First, is the regulatory distinction rationally connected to the objective of the overarching
measure? Second, if not, is there any cause or rationale that can justify the distinction (i.e.,
"explain the existence of the distinction") despite the absence of the connection to the objective of
the overarching measure, taking into account the particular circumstances of the instant dispute?
Third, is the distinction "designed or applied in a manner that constitutes arbitrary or unjustifiable
discrimination" such that it lacks "even-handedness"?
8

5. If this analysis concludes that individual regulatory distinctions are even-handed,
New Zealand submits that a Panel should also step back to consider the measure as a whole in
determining whether there is less favourable treatment. This additional step would prevent
Members from expressly designing measures with even-handed regulatory distinctions that, when
combined, nevertheless have an overall protectionist effect. While individual distinctions may be
even-handed, the number and/or nature of the distinctions may still accord less favourable
treatment to like imported products.

B. ARTICLE 2.2: DETERMINING WHETHER A MEASURE IS MORE TRADE-
RESTRICTIVE THAN NECESSARY

(i) It is not necessary to add the relative importance of the common interests
or values as a separate factor to the Appellate Body's test

6. The Appellate Body has set out a test for assessing whether a technical regulation is "more
trade-restrictive than necessary" under Article 2.2 of the TBT Agreement, which involves
consideration of three matters: (i) the degree of contribution made by the measure to the
legitimate objective at issue; (ii) the trade-restri ctiveness of the measure; and (iii) the nature of
the risks at issue and the gravity of consequences that would arise from non-fulfilment of the
objective(s) pursued by the Member through the measure.
9

7. Mexico has suggested that "the relative importance of the common interests or values
furthered by the challenged measure" should be a dded as an additional factor in the Article 2.2
necessity test.10 While the importance of the common interests or values at stake is an important
element under Article 2.2, this is already considered (albeit indirectly) in the assessment of the
"nature of the risks at issue and the gravity of the consequences that would arise from non-
fulfilment of the objective". To include the importance of the objective as a separate factor could
cause confusion, and may give the importance of the objective (or the lack of importance) undue
emphasis in the overall weighing and balancing process.

8. New Zealand would be concerned if this increased emphasis undermined the rights of WTO
Members to decide which legitimate policy objectives they wish to pursue, and the levels at which
they wish to pursue them.
11 Establishing the relative importance of the objective as a factor in its
own right would lead panels to difficult assessments of the hierarchy of legitimate objectives.
New Zealand considers that, beyond objectives such as the protection of human health that are
universally recognised as being of utmost importance, different Members will place importance on
different objectives based on current circumstances and their own subjective values and priorities,
all of which may change over time. New Zealand is therefore wary of any attempts to categorise or
rank the importance of legitimate objectives in advance, and in isolation from the measure and the
Member under consideration.

7 Panel Report, European Communities – Measures Prohibiting the Importation and Marketing of
Seal Products, WT/DS400/R WT/DS401/R and Add. 1, circulated to WTO Members 25 November 2013 (appeal
in progress), para. 7.259.
8 Panel Report, EC – Seal Products, para. 7.259.
9 Appellate Body Report, US – Tuna II (Mexico), para. 322.
10 Mexico FWS, paras. 156 - 157.
11 As recognised in Article 2.2 and the sixth recital to the preamble of the TBT Agreement.
WT/DS384/RW/Add.1 • WT/DS386/RW/Add.1

- C-28 -

(ii) There must be a balancing and weighing in the consideration of alternative
measures

9. The Appellate Body in US – Tuna II (Mexico) found that the text of Article 2.2 imports an
element of "weighing and balancing" into the analysis of whether a technical regulation is more
trade restrictive than necessary by requiring the risks non-fulfilment of the objective would create
to be taken into account.
12 This process will generally involve a comparative analysis of the
challenged measure against reasonably available alternatives.

10. This analysis requires the Panel to identify the legitimate objective of the challenged
measure in order to assess the contribution it makes to that objective and to assess the risks that
non-fulfilment of that objective would create. The proper identification of the legitimate objective
is therefore fundamentally important to identify these comparison points to evaluate against
proposed alternatives. A legitimate objective described in an artificially narrow manner may
prevent the formulation of reasonably available alternatives.

11. The parties differ as to the comparative contribution that an alternative measure is required
to make to the achievement of the legitimate objective. New Zealand's view is that the fact that an
alternative measure makes a lesser contribution to the legitimate objective is a highly relevant,
but not determinative, factor in this weighing and balancing process. The extent of this lesser
contribution should be balanced against the risks that non-fulfilment of the objective would create
and the trade-restrictiveness of the measure. For instance, an alternative measure that makes
only a slightly lesser contribution to the legitimate objective, but is considerably less trade
restrictive, may demonstrate that a challenged measure is more trade restrictive than necessary if
the risks that non-fulfilment of the objective would create are not particularly grave. However,
New Zealand expects that an alternative measure that makes a lesser contribution to the
legitimate objective will only very rarely demonstrate an inconsistency with Article 2.2.

12. In regard to possible alternatives, New Zealand notes Mexico's and Canada's proposed first
alternative measure that includes a mandatory COOL requirement based on substantial
transformation, complemented by a voluntary COOL scheme that provides information on where
the animal was born, raised and slaughtered.
13 New Zealand considers that voluntary COOL may
be an alternative measure where there is no health or safety objective behind the regulation. As
noted by Mexico
14 and Canada, 15 voluntary COOL can provide the same information to the
consumer if there is consumer demand for such information. Voluntary COOL allows the design
and operation of a labelling system to be developed in response to supply and demand needs.
Well-designed voluntary COOL can make an equi valent (or even better) contribution to the
objective of providing consumers with information as to origin than a mandatory COOL regime that
is peppered with exceptions.

IV. THE GENERAL AGREEMENT ON TARIFFS AND TRADE 1994

13. The complainants and respondent differ as to the correct interpretation of the term
"treatment no less favourable" in Article III:4 of the General Agreement on Tariffs and Trade 1994
(GATT 1994) as compared to the interpretation of the same term in Article 2.1 of the
TBT Agreement. The Appellate Body has found that Article III:4 of the GATT 1994 provides
relevant context for interpreting the term "treat ment no less favourable in Article 2.1 of the
TBT Agreement,
16 given the provisions are "built around the same core terms, namely ‘like
products' and ‘treatment no less favourable'".17

14. However, the legal standards for the national treatment obligations are not identical.
Article III:4 of the GATT 1994 prohibits Members from modifying the conditions of competition in
the marketplace to the detriment of the group of imported products vis-à-vis the group of

12 Appellate Body Report, US – Tuna II (Mexico), para. 321.
13 Mexico FWS, paras. 182 – 191; Canada First Written Submission, 31 October 2013 (Canada
FWS), paras. 156 – 163.
14 Mexico FWS, para. 185.
15 Canada FWS, para. 158.
16 Appellate Body Reports, US – Clove Cigarettes, paras. 100 and 180; US – Tuna II (Mexico), para.
214; US – COOL, para. 269.
17 Appellate Body Report, US – Clove Cigarettes, para. 100.
WT/DS384/RW/Add.1 • WT/DS386/RW/Add.1

- C-29 -

domestic products. 18 In contrast, as noted above at paragraph 3, the Appellate Body has
consistently maintained that the "treatment no less favourable" requirement in Article 2.1 of the
TBT Agreement does not prohibit "detrimental im pact on imports that stems exclusively from a
legitimate regulatory distinction".
19 This additional element in Article 2.1 reflects the context in
which the term "treatment no less favourable" is used, particularly the second, fifth and sixth
recitals of the preamble, the text of Article 2.2, the definition of "technical regulation", 20 and the
lack of a general exceptions clause in the TBT Agreement. 21 The United States submits 22 that
analysis under Article III:4 requires an assessment of whether distinctions can be explained by
factors or circumstances unrelated to the origin of the imported product on the basis of the
Appellate Body reports in Dominican Republic – Import and Sale of Cigarettes 23 and EC –
Asbestos.24 New Zealand notes that the Appellate Body in US – Clove Cigarettes specifically found
that Dominican Republic – Import and Sale of Cigarettes is not authority for the proposition that
panels should inquire further into whether the detrimental effect is unrelated to the foreign origin
of the product in an Article III:4 analysis.
25

15. The jurisprudence therefore provides that th e analysis under Article III:4 of the GATT 1994
focuses on the modification of the conditions of competition in the marketplace. 26 However,
New Zealand acknowledges the concern that this legal analysis could result in a technical
regulation being found consistent with the national treatment obligation in Article 2.1 of the
TBT Agreement (because the detrimental impact stems exclusively from a legitimate regulatory
distinction) but nevertheless inconsistent with Article III:4 of the GATT 1994 because the reason
for the distinction does not fall within the general exceptions in Article XX of the GATT 1994.
New Zealand expresses some unease about this potential outcome, particularly as the
TBT Agreement is the more specialised agreement dealing with technical regulations. That being
the case, the WTO-consistency or otherwise of a technical regulation should primarily be
determined by the Agreement negotiated specifically to discipline such measures. This issue is
unlikely to be resolved as a matter of strict le gal interpretation, and New Zealand supports the
complainants' view that the scope and content of the obligations in Article III:4 of the GATT 1994
and Article 2.1 of the TBT Agreement are distinct and that "treatment no less favourable" under
Article III:4 focuses on the modification of the conditions of competition in the marketplace.
27

WT/DS161/AB/R, WT/DS169/AB/R, adopted 10 January 2001 (Korea – Various Measures on Beef), para. 137);
US – COOL, para. 270.
19 Appellate Body Reports, US – Clove Cigarettes, paras. 174 and 181; US – COOL, para. 271; US –
Tuna II (Mexico), para. 215.
20 Appellate Body Reports, US – Clove Cigarettes, paras. 88-102 and 181-182; US – Tuna II
21 Appellate Body Report, US – Clove Cigarettes, para. 101.
22 United States First Written Submission, 26 November 2013, paras. 131 – 134.
23 Appellate Body Report, Dominican Republic – Measures Affecting the Importation and Internal Sale of
Cigarettes, WT/DS302/AB/R, adopted 19 May 2005.
24 Appellate Body Report, European Communities – Measures Affecting Asbestos and Asbestos-
Containing Products, WT/DS135/AB/R, adopted 5 April 2001.
25 Appellate Body Report, US – Clove Cigarettes, footnote 372 at para. 180.
26 Appellate Body Reports, US – Clove Cigarettes, para. 179; US – Tuna II (Mexico), para. 214
(citing Appellate Body Reports, Korea – Various Measures on Beef, para. 137); US – COOL, para. 270.
27 Appellate Body Reports, US – Clove Cigarettes, para. 179; US – Tuna II (Mexico), para. 214
(citing Appellate Body Reports, Korea – Various Measures on Beef, para. 137); US – COOL, para. 270.