UNITED STATES – CERTAIN COUNTRY OF ORIGIN LABELLING (COOL) REQUIREMENTS COMMUNICATION FROM THE EUROPEAN UNION
Document: COMMUNICATION FROM
Date: 10 July 2015
Document codes: WT/DS386/38; WT/DS386/36
Complainant: Mexico
Respondent: U.S.
Third parties: Argentina, Australia, Brazil, Canada, China, Colombia, EU, Guatemala, India, Japan, South Korea, New Zealand, Peru, Taiwan
Dispute stage: Implementation & Compliance
Agreements cited: Art. III, X:3(a), IX  GATT 1994Art. 2, 12  Technical Barriers to Trade (TBT)Art. 2, 5, 7  Sanitary and Phytosanitary Measures (SPS)Art. 2  Rules of Origin

UNITED STATES – CERTAIN COUNTRY OF ORIGIN LABELLING (COOL) REQUIREMENTS
COMMUNICATION FROM THE EUROPEAN UNION
The following communication, dated 9 July 2015, was received from the delegation of the
European Union with the request that it be circulated to the Dispute Settlement Body (DSB).

The European Union would respectfully like to express its views on document of
23 June 2015 concerning certain recent procedural developments in United States – Certain
Country of Origin Labelling (COOL) Requirements . That document states that Mexico's Article 22.2
DSU request to the DSB has been referred to arbi tration, even though the DSB meeting originally
scheduled to make that referral on 29 June 2015 was cancelled. The European Union does not
agree that an Article 22.2 DSU request to the DSB may be referred to arbitration other than by the
DSB.
The European Union recalls that Article 22.6 of the DSU provides as follows:
When the situation described in paragraph 2 occurs, the DSB, upon request, shall
grant authorization to suspend concessions or other obligations within 30 days of the
expiry of the reasonable period of time unless the DSB decides by consensus to reject
the request. However, if the Member concerned objects to the level of suspension
proposed, or claims that the principles and procedures set forth in paragraph 3 have
not been followed where a complaining party has requested authorization to suspend
concessions or other obligations pursuant to paragraph 3(b) or (c), the matter shall be
referred to arbitration. Such arbitration shall be carried out by the original panel, if
members are available, or by an arbitrat or appointed by the Director-General and
shall be completed within 60 days after the da te of expiry of the reasonable period of
time. Concessions or other obligations shall not be suspended during the course of
the arbitration. (underline emphasis added) (footnote omitted)
The European Union considers that the phrase "shall be referred" indicates that there is an actor
that does the referring and that the actor is the DS B, just at the phrase "shall be established" in
Article 6 of the DSU means that the panel is esta blished by the DSB, and the phrase "shall be
adopted" in Articles 16.4 and 17.14 of the DSU me ans that panel and Appellate Body reports are
adopted by the DSB.
We consider that the term "However" at the begi nning of the second sentence of Article 22.6 of
the DSU establishes a link between the first and second sentences. The first sentence refers to
Article 22.2, which in turn refers to a complainant's request for authorization from the DSB to
suspend concessions or other obligations. The first sentence then re-iterates that it is the DSB that
shall, upon request, grant such authorization, unless the DSB decides by consensus to reject the
request. The second sentence also refers to a situation in which "a complaining party has
requested authorization" from the DSB. The final sentence of Article 22.7 re-iterates that it shall
be the DSB , upon request, that grants authorization, unless the DSB decides by consensus to
reject the request. We consider that this cont ext strongly supports the view that it is also the DSB
that refers the matter to arbitration, unless the DSB decides by consensus not to do so.

We consider that there are good reasons why the referral to arbitration of an Article 22.2 DSU
request to the DSB is done by the DSB.
First, this procedure reflects the fact that, under Article 22 of the DSU, the authority for binding
dispute settlement flows from the Members acti ng together, through the DSB, by negative
consensus, just as in the case of original panels or compliance panels.
Second, this procedure ensures that other Member s are fully informed in a timely manner of the
scope and nature of the arbitration panel proceedi ngs, as framed in the specific terms of the
Article 22.2 request to the DSB and in the specific terms of the Article 22.6 objection, considered
together, in the same way that Members are informed of panel requests leading to the
establishment by the DSB of panels in original or compliance panel proceedings.
Third, this procedure ensures that Members have an opportunity to "express their views", in
exactly the same way that they may express their views when an original or compliance panel is
established by the DSB, or when an original or compliance panel or Appellate Body report is
adopted by the DSB, these views being recorded in the minutes of the DSB.
Fourth, this procedure ensures that Members have an opportunity to consider whether or not to
seek to participate in the proceedings. That could be a matter of particular interest if there is a
significant risk that an arbitration panel might seek to consider matters of compliance, which
would not be within its jurisdiction.
The European Union recalls that Members are free to bilaterally agree to surrender their DSU
rights, but they are not free to unilaterally diminish or condition in any way the DSU rights of other
Members.
The European Union does not intend at this time to intervene further in these particular
proceedings. However, since the opportunity to express our views was lost when the scheduled
DSB was cancelled we have placed this item on the DSB agenda, and circulated this
communication.