UNITED STATES – CERTAIN COUNTRY OF ORIGIN LABELLING (COOL) REQUIREMENTS
Document: Panel Report
Date: 18 November 2011
Document codes: WT/DS384/R; WT/DS386/R
Complainant: Mexico
Respondent: U.S.
Third parties: Argentina, Australia, Brazil, Canada, China, Colombia, EU, Guatemala, India, Japan, South Korea, New Zealand, Peru, Taiwan
Dispute stage: Implementation & Compliance
Agreements cited: Art. III, X:3(a), IX  GATT 1994Art. 2, 12  Technical Barriers to Trade (TBT)Art. 2, 5, 7  Sanitary and Phytosanitary Measures (SPS)Art. 2  Rules of Origin

UNITED STATES – CERTAIN COUNTRY OF ORIGIN
LABELLING (COOL) REQUIREMENTS

Reports of the Panel

Note:

In the disputes WT/DS384 and WT/DS386, as explaine d in paragraph 2.11 of the Panel's Findings,
the Panel decided to issue its Reports in the form of a single document constituting two Panel Reports,
each of the Reports relating to each one of the tw o complainants in this dispute. The document
comprises a common cover page, a common Descri ptive Part and a common set of Findings in
relation to the complainants' claims that the Panel decided to address. This document also contains
Conclusions and Recommendations that, unlike the D escriptive Part and the Findings, are specific to
each complainant. In the Conclusions and Recommendations, separate document numbers/symbols
have been used for each complainant (WT/DS384 for Canada and WT/DS386 for Mexico).

I. INTRODUCTION
A. COMPLAINTS OF CANADA AND MEXICO
1.1 On 1 and 17 December 2008, respectively, Canada and Mexico independently requested
consultations with the United States, pursuant to Articles 1 and 4 of the Understanding on Rules and
Procedures Governing the Settlement of Disputes (D SU), Article XXII of the General Agreement on
Tariffs and Trade (GATT 1994), Article 14 of th e Agreement on Technical Barriers to Trade
(TBT Agreement), Article 11 of the Agreement of Sanitary and Phytosanitary Measures
(SPS Agreement) and Article 7 of the Agreement on Rules of Origin, with respect to the measures and
claims set out below.
1 On 7 May 2009, Canada and Mexi co each requested supplemental
consultations with the United States.2
1.2 Canada and Mexico requested, pursuant to Article 4.11 of the DSU, to join in each other's
consultations.3 Nicaragua and Peru requested to join in the consultations requested by Canada, and
Peru also requested to join in the consultations requested by Mexico.4 The United States informed the
Dispute Settlement Body (DSB) that it accepted the requests of Canada and Mexico.5
1.3 Consultations were held between each complaining party and the United States.
The United States and Canada held their consu ltations on 16 December 2008 and 5 June 2009.
The United States and Mexico held their consu ltations on 27 February 2009 and on 5 June 2009.
None of these consultations led to a mutually satisfactory resolution.6
B. ESTABLISHMENT AND COMPOSITION OF THE PANEL
1.4 On 7 and 9 October 2009, respectively, Canada and Mexico each requested the establishment
of a panel, pursuant to Article 6 of the DSU, with standard terms of reference.7
1.5 At its meeting on 19 November 2009, the DSB established a single panel, pursuant to the
requests of Canada in document WT/DS384/8 and Mexico in document WT/DS386/7 and Corr.1, in
accordance with Article 9.1 of the DSU.8
1.6 At that meeting, the parties to the dispute agre ed that the Panel should have standard terms of
reference. The Panel's terms of reference are the following:
"To examine, in the light of the relevant provisions of the covered agreements cited
by the parties to the dispute, the matter referred to the DSB by Canada in document
WT/DS384/8 and Mexico in document WT/D S386/7 and Corr.1, and to make such
findings as will assist the DSB in making the recommendations or in giving the
rulings provided for in those agreements."
9
1.7 On 30 April 2010, Canada and Mexico request ed the Director-General to determine the
composition of the panel, pursuant to Article 8.7 of the DSU.

1 WT/DS384/1 and WT/DS386/1.
2 WT/DS384/1/Add. 1 and WT/DS386/1/Add. 1.
3 WT/DS384/3, WT/DS384/5, WT/DS386/2 and WT/DS386/4.
4 WT/DS384/2, WT/DS384/6 and WT/DS386/5.
5 WT/DS384/4, WT/DS384/7, WT/DS386/3 and WT/DS386/6.
6 WT/DS384/8, WT/DS386/7 and WT/DS386/7/Corr.1.
7 WT/DS384/8, WT/DS386/7 and WT/DS386/7/Corr.1.
8 WT/DSB/M/276, para. 60.
9 WT/DS/384/9 and WT/DS/386/8.

1.8 On 10 May 2010, the Director-General composed the Panel as follows:
Chairman: Mr Christian Häberli

 Members: Mr Manzoor Ahmad
 Mr João Magalhães

1.9 Argentina, Australia, Brazil, Canada (for WT/DS386), China, Colombia, the European Union,
Guatemala, India, Japan, Korea, Mexico (for WT /DS384), New Zealand, Peru, and Chinese Taipei
reserved their rights to participate in the Panel proceedings as third parties.
C. P
ANEL PROCEEDINGS
1.10 The Panel held the first substantive meeti ng with the parties on 14-15 September 2010.
The second substantive meeting with the parties wa s held on 1-2 December 2010. Enhanced third
party rights granted by the Panel, after consultatio ns with the parties, allowed the third parties to
participate in both the first and second substantive meetings of the Panel. The sessions with third
parties took place on 15 September 2010 and 2 December 2010. In light of the preference expressed
by the parties during the organizational meeting with the Panel, and in accordance with the procedures
adopted on 18 June 2010, the meetings with the pa rties were open to public viewing by means of
simultaneous closed-circuit television broadcasting of the proceedings to a separate room.
1.11 On 14 January 2011, the Panel issued the descr iptive part of its Panel Reports. The Panel
issued its Interim Reports to the parties on 20 Ma y 2011. The Panel issued its Final Reports to the
parties on 29 July 2011.
II. FACTUAL ASPECTS
A. MEASURES AT ISSUE10
2.1 The claims brought by Canada and Mexico c oncern the United States' country of origin
labelling (COOL) requirements for meat products.
2.2 Canada submits that the COOL measure consists of the following provisions:11
(a) the Agricultural Marketing Act of 1946, as am ended by the Farm Security and Rural
Investment Act of 2002 ("2002 Farm Bill") and the Food, Conservation, and Energy
Act of 2008 ("2008 Farm Bill");
(b) the Interim Final Rule on Mandatory Count ry of Origin Labelling of Beef, Pork,
Lamb, Chicken, Goat Meat, Perishable Ag ricultural Commodities, Peanuts, Pecans,
Ginseng, and Macadamia Nuts, publishe d on 1 August 2008 as 7 CFR Part 65
("Interim Final Rule (AMS)") and on Manda tory Country of Origin Labelling of
Muscle Cuts of Beef (including Veal), Lamb , Chicken, Goat, and Pork, Ground Beef,
Ground Lamb, Ground Chicken, Ground Goat, and Ground Pork, published on
28 August 2008 as 9 CFR Parts 317 and 381 ("Interim Final Rule (FSIS)");

10 The Panel's adoption of the terminology – "measures at issue" – in its sub-headings of these Reports
is for convenience only and does not prejudge any disputed factual or legal issues relating to that terminology.
11 WT/DS384/8.

(c) the Final Rule on Mandatory Country of Origin Labelling of Beef, Pork, Lamb,
Chicken, Goat Meat, Perishable Agri cultural Commodities, Peanuts, Pecans,
Ginseng, and Macadamia Nuts, published on 15 January 2009 as 7 CFR Part 65 (the
"2009 Final Rule (AMS)");
(d) the letter to "Industry Representative " from the United States Secretary of
Agriculture, Thomas J. Vilsack, of 20 February 2009 (the "Vilsack letter"); and
(e) any modifications, administrative guidance, directives or policy announcements
issued in relation to items (a) through (d) above.
2.3 Mexico submits that the measures relating to the COOL provisions adopted by the
United States include the following:12
(a) the Agricultural Marketing Act of 1946 (7 U.S.C. 1621 et seq.), as amended by the
Farm Security and Rural Investment Act of 2002 (Section 10816 of Public
Law 107-171) and the Food, Conservation, and Energy Act of 2008 (Section 11002
of Public Law 110-246);
(b) Interim Final Rule – Mandatory Country of Origin Labelling of Beef, Pork, Lamb,
Chicken, Goat Meat, Perishable Agri cultural Commodities, Peanuts, Pecans,
Ginseng, and Macadamia Nuts (publis hed in 73 Federal Register 45106,
1 August 2008);
(c) Final Rule – Mandatory Country of Origin Labelling of Beef, Pork, Lamb, Chicken,
Goat Meat, Wild and Farm-Raised Fish and Shellfish, Perishable Agricultural
Commodities, Peanuts, Pecans, Ginseng, and Macadamia Nuts (7 CFR Parts 60
and 65);
(d) Interim Final Rule – Mandatory Country of Origin Labelling of Muscle Cuts of Beef
(including Veal), Lamb, Chicken, Goat and Pork, Ground Beef Ground Lamb,
Ground Chicken, Ground Goat, and Ground Pork (9 CFR Parts 317 and 381,
published in 73 Federal Register 50710, 28 August 2008);
(e) the letter from Thomas Vilsack, Secretary of Agriculture (United States Department
of Agriculture, USDA), to Industry Repr esentatives (20 February 2009), cited in
USDA News Release No. 0045.09, "Vilsack Announces Implementation of Country
of Origin Labelling Law" (20 February 2009); and
(f) any modification or amendment to measu res (i) through (v) above, including any
further implementing guidance, directives or policy announcements or any other
document issued in relation to those measures.
B. P
ROCEDURAL HISTORY
1. Additional procedures for the protectio n of business confidential information
("BCI procedures")
2.4 At the organizational meeting held on 21 Ma y 2010, Canada and Mexico mentioned the
anticipated need for special wo rking procedures to cover business confidential information. On

12 WT/DS386/7 and WT/DS386/7/Corr.1.

16 and 17 June 2010, Canada, having consulted with Mexico and the United States, submitted the
parties' proposed text for BCI procedures. After considering the proposed text, the Panel adopted BCI
procedures on 18 June 2010, thereby creating right s and obligations for all parties in these
proceedings, including third parties. These procedur es were adopted according to, and are an integral
part of, the Panel's working procedures of 18 June 2010 as attached in Annex E.
2. Procedures for open hearings
2.5 At the DSB meeting of 19 November 2009, the United States stated that it was the parties'
agreed intention to have open hearings in these proceedings.
13 Mexico, at the same meeting, did not
object to open hearings specifically for these procee dings, without prejudice to its systemic views on
open hearings. At the organizational meeting held on 21 May 2010, Canada indicated that it would
submit the parties' proposed procedures for open heari ngs to the Panel for its consideration. Having
received comments from the United States, Canada s ubmitted their proposed text on 17 June 2010.
Based on the proposed text, the Panel adopted procedures for open hearings on 18 June 2010. Mexico
had an opportunity to comment on the procedures and accepted the procedures without any changes.
A copy of the procedures for open hearings is attached in Annex F.
3. Enhanced third party rights
2.6 On 12 May 2010, Australia sent a letter to the Panel requesting enhanced third party rights in
these panel proceedings. At the organizational m eeting of 21 May 2010, all parties commented on
this request.
2.7 Having carefully considered Australia's request and the parties' comments thereon, the Panel
decided to grant the following enhanced rights to all third parties in these panel proceedings:
(a) participation in the first and second substantive meetings of the Panel;
(b) access to the parties' first and second written submissions; and
(c) the right in both the first and second substa ntive meetings to ask questions to the
parties and other third parties without any obligation to respond on the part of the
parties and other third parties.
2.8 The Panel's working procedures and the pro cedures for open hearings reflect these
enhanced third party rights. In addition to the above-listed enhanced third party rights adopted on
18 June 2010, the Panel, after havi ng consulted the parties, allowed the third parties to receive copies
of the parties' written responses to the Panel's qu estions following the first substantive meeting.
The Panel considered that this would facilitate the third parties' participation in the second substantive
meeting with the parties. The third parties were not, however, invited to submit a written submission
prior to the second substantive meeting.
4. Amicus curiae briefs
2.9 On 22 November 2010, the Panel received an unsolicited amicus curiae brief.
On 26 November 2010, the Panel forwarded the amicus curiae brief to the parties, with a copy to the
third parties. The Panel noted the information co ntained in the letter and that it was cited in the
United States' second written submission.

13 WT/DSB/M/276, para. 65.

2.10 The Panel gave the parties an opportunity to provide comments on the brief at the second
substantive meeting, both with respect to whethe r or not the Panel should accept and consider the
brief, as well as the content of the brief in terms of its relevance for the Panel in carrying out its duties
in these proceedings. The parties and several th ird parties took the occasion to comment on the
amicus curiae brief at the second substantive meeting. The Panel considered the information
contained in the brief as necessary and to the extent that it was reflected in the written submissions
and evidence submitted by the parties.
5. Request for separate reports
2.11 At the second substantive meeting on 1-2 December 2010, the United States requested,
pursuant to paragraph 18 of the Panel's working pro cedures, that the Panel issue its findings in the
form of a single document containing two separat e reports with common sections on the Panel's
findings and separate conclusions and recommendations for each complaining party. Canada agreed
and Mexico did not object to the United States' request. The Panel has prepared its Reports
accordingly.
III. PARTIES' REQUESTS FOR FINDINGS AND RECOMMENDATIONS
A. CANADA
3.1 Canada requests that the Panel find that:
(a) the COOL measure of the United States is in consistent with its obligations under the
TBT Agreement, in particular Articles 2.1 and 2.2; and
(b) the COOL measure of the United States is in consistent with its obligations under the
GATT 1994, in particular Articles III:4, X:3(a) and XXIII:1(b).
3.2 Canada therefore requests that the Panel recommend that the United States bring the
COOL measure into conformity with its obligations under the TBT Agreement and the
GATT 1994, subject to the provision of Article 26.1 of the DSU in respect of GATT
Article XXIII:1(b).
B. M
EXICO
3.3 Mexico requests that the Panel find that:
(a) the COOL measures are inconsistent with Articles III:4 and X:3 of the GATT 1994
and Articles 2.1, 2.2, 2.4 and 12 of the TBT Agreement; and
(b) the COOL measures nullify or impair be nefits accruing to Mexico under the
GATT 1994 within the meaning of Article XXIII:1(b) of the GATT 1994.
3.4 Mexico requests that the Panel make such recommendations that are necessary for the
United States to bring itself into conformity with these provisions.
C. UNITED STATES
3.5 The United States requests that the Panel reject the claims made by Canada and Mexico in
their entirety.

IV. ARGUMENTS OF THE PARTIES
4.1 The arguments of Canada, Mexico and the Un ited States, as set out in the executive
summaries of their submissions provided to the Panel in accordance with paragraph 15 of the working
procedures, are attached to these reports as annexes (see List of Annexes, pages vii-ix). They are also
referred to later in these Reports in the context of the Panel's analysis of claims and defences.
V. ARGUMENTS OF THE THIRD PARTIES
5.1 Argentina, Australia, Brazil, Canada (for WT/DS386), China, Colombia, the European Union,
Guatemala, India, Japan, Korea, Mexico (for WT /DS384), New Zealand, Peru, and Chinese Taipei
reserved their rights to participate in the Panel proceedings as third parties.
5.2 The arguments of those third parties that provided to the Panel submissions
14, executive
summaries and oral statements are attached to these Reports as annexes (see List of Annexes,
pages vi-viii). Argentina, India, Peru and Chin ese Taipei did not present written submissions to the
Panel. Argentina, India, and Chinese Taipei did not present oral statements at either substantive
meeting of the Panel. Korea and China presented or al statements at the first and second substantive
meetings respectively, but in closed session.
VI. INTERIM REVIEW
6.1 On 20 May 2011, the Panel submitted its Inte rim Panel Reports to the parties. On
17 June 2011, Canada, Mexico and the United States each submitted written requests for the review of
precise aspects of the Interim Reports. On 30 June 2011, Canada, and on 1 July 2011, Mexico and the
United States submitted comments on a number of request s for review presented by the other parties.
None of the parties requested an interim review meeting.
6.2 In accordance with Article 15.3 of the DSU, this section of the Panel's reports sets out the
Panel's response to the arguments made at the inte rim review stage, providing explanations where
necessary. The Panel has modified aspects of its repor ts in the light of the parties' comments where it
considered these appropriate, as explained below. The Panel has also made certain technical and
editorial corrections and revisions to the Inte rim Panel Reports for the purposes of clarity and
accuracy. References to sections, paragraph numbers and footnotes in this section relate to the
Interim Panel Reports, except as otherwise noted.
A. MEASURES THAT FALL WITHIN THE PANEL'S TERMS OF REFERENCE
1. "USDA's clarification documents" (paragra phs 7.22, 7.23, and relevant parts of the
Article X:3(a) section)
6.3 The United States points out that, in its second writte n submission, it objected to the
inclusion of USDA's clarification documents (Exhib its CDA-29, 30, 31), referenced by Canada in its
oral statement in the first panel meeting, within the Panel's terms of reference. 15 Accordingly, the
United States submits that paragraph 7.22 is inaccura te in stating that the United States did not object
to the inclusion of these clarification documents in the Panel's terms of reference.

14 Third party written submissions were recei ved from Australia, Brazil, Colombia, the
European Union, Japan, Korea, and New Zealand.
15 United States' comments on the Interim Panel Re ports, para. 5, referring to its second written
submission, para. 28.

6.4 Furthermore, the United States argues that these clarification documents were neither
identified in nor in effect at the time of the complainants' panel requests because they were superseded
when the 2009 Final Rule (AMS) was published and became effective. For example, the
United States argues, Mexico did not mention these documents until its second written submission. 16
The United States also asserts that non-public pressu re (Exhibits MEX-33, 55, 56, 57), as referenced
by Mexico, is neither a measure nor within the Panel's terms of reference.
6.5 Based on the above, the United States requests the Panel to modify paragraphs 7.22 and 7.23
and to change the reference in footnote 40 so as to refer to paragraph 28 of the United States' second
written submission instead of paragraph 9 of the Un ited States' first written submission. Further,
consistent with this suggested modification, the United States requests that references to non-public
pressure, implying that this constitutes a measure, be removed from the discussions of Article X:3(a)
of the GATT 1994 in the Interim Reports, including paragraphs 7.813, 7.823, 7.836, 7.837, 7.839, and
7.841.
6.6 Canada considers that these documents are covered by the terms "any modifications,
administrative guidance, directives or policy announ cements issued in relation to items (i) through
(iv) above" in its panel request.
6.7 Mexico argues that the United States' comments above are inaccurate. Mexico considers that
the terms "any further implementing guidance, di rectives or policy announcements" in its panel
request sufficiently cover the associated guidelines as well as the non-public pressure, as identified by
Mexico in its written submissions. This, accord ing to Mexico, encompasses the clarification
documents referenced by the United States. Rega rding the non-public pressure, Mexico argues that
this was part of the US government guidance associat ed with the COOL measure and thus an integral
part of the COOL measure. Mexico submits that it was evidence of the administration of the measure
within the meaning of Article X:3(a) of the GATT 1994.
6.8 The Panel considers that the United States' comments on the clarification documents
referenced by Canada are moot as Canada did not pursue the position that "any modifications,
administrative guidance, directives or policy announ cements issued in relation to items (i) through
(iv) above" form part of the COOL measure. Although Canada made a statement on the so-called
"clarification documents" in its oral statement at th e first substantive meeting, Canada, in response to
a question from the Panel after that meeting, clarified its position by focusing only on the
COOL statute, the 2008 Interim Final Rule (AMS ), the 2009 Final Rule (AMS), and the Vilsack
Letter, as instruments forming part of one single measure.
17
6.9 Regarding the United States' comments in respec t of these documents referred to by Mexico
in the context of its claim under Article X:3(a) of the GATT 1994, they are evidence submitted to
establish the USDA's acts of administering th e COOL measure, but not the measure itself. 18 As such,
documents provided as evidence to establish a claim need not be identified in the panel request. It is
the measure at issue that needs to be identified in the panel request for it to fall properly within the
Panel's terms of reference. Further, the so- called "non-public pressure" is simply Mexico's
categorization of certain types of evidence submitte d to prove the USDA's act of administering the
measure at issue rather than the measure itself. To accept the United States' argument will result in
conflating the underlying measure with the acts of ad ministration of such underling measure. In light

16 See Mexico's second written submission, para. 187, referring to Exhibit CDA-29.
17 See Canada's response to Panel question No. 1.
18 See paras. 7.836-7.847 for the Panel's discussion on whether Mexico has established based on
evidence that USDA provided administ rative guidance with respect to the COOL measure within the meaning
of Article X:3(a).

of this, and as the United States' comments are premised on a mistaken understanding that these
documents form a measure at issue that Mexico pursues separately from other identified measures at
issue, we reject the United States' request and delete paragraphs 7.21-7.24 to avoid confusion as to the
scope of the measures at issue that were properly identified and actually pur sed by the complainants
in the proceedings. We also added a footnote to th e last sentence of paragraph 7.836 to clarify the
nature of the non-public pressure referenced by Mexico in the context of its claim under
Article X:3(a) of the GATT 1994.
2. Paragraph 7.24
6.10 Mexico suggests a modification to paragraph 7.24 of the Interim Panel Reports in order to
avoid any further confusion regarding whether "a ny implementing guidance, directives or policy
announcements" are within the Pane l's terms of reference. The United States does not agree with
Mexico's suggested modification to paragraph 7.24 . The United States does not believe that "any
further implementing guidance, directives, or po licy announcements" are within the scope of the
Panel's terms of reference for the reasons set forth above in paragraphs 6.3-6.5.
6.11 The Panel need not make the change suggested by Mexico as the Panel has already modified
relevant parts of the Interim Panel Reports, including paragraph 7.24, in the context of the
United States' comments on the USDA's clarification documents.
3. "USDA's implementing guidance" (paragraphs 7.26, 7.27-7.38)
6.12 The United States submits that, in addition to the 2008 Interim Final Rule (AMS) and the
2008 Interim Final Rule (FSIS), the USDA's guidan ce (also referred to as USDA's clarification
documents) had expired at the time of the Panel's es tablishment. The United States suggests that the
Panel modify paragraph 7.26 so as to include th e implementing guidance as part of the expired
measures; address this fact in paragraphs 7.27- 7.38; and conclude that conducting a separate
examination of these instruments would not contribute to resolving the current dispute between the
parties. Mexico argues that the Panel should reject the Un ited States' suggestion. Mexico takes the
position that although some of the documents referred to by Mexico were issued before the Panel's
establishment, this does not necessarily mean that they had already expired.
6.13 The Panel rejects the United States' request because, as explained above in paragraph 6.9, the
so-called implementing guidance in this case is referred to as evidence of an act of administering the
measure at issue (i.e. COOL measure) under Article X:3(a) of the GATT 1994.
19 According to the
Appellate Body, evidence of acts of administ ration submitted in the context of a claim under
Article X:3(a) is not subject to temporal limitations.20 In the context of its claim under Article X:3(a)
of the GATT 1994 during the panel proceedings, Mexico referred to the USDA's guidance as
evidence of the United States' act of ad ministration, which is reflected in, inter alia , the associated
guidelines issued by USDA (Exhibits CDA-29; ME X-83) and the non-public pressure by the US
government on individual companies (Exhibits MEX-33, 56-57). In other words, these documents
that Mexico categorize as "associated guidelines" and "non-public pressure" are evidence of the
United States' act of administering the COOL measure (measure at issue) within the meaning of
Article X:3(a), but are not the measures at issue themselves.

19 See footnote 18.
20 Appellate Body Report in EC – Selected Customs Matters , para. 188. The Appellate Body
underlined that the Panel in that dispute was entitled to rely on evidence of acts of administration, which may
pre-date or post-date the establishment of the panel, to determine whether the measures at issue have been
administered at the time of the Panel's establishment in a manner inconsistent with Article X:(a).

4. Other comments
(a) Paragraph 7.19
6.14 The United States submits that the 2009 Final Rule (FSIS) did not affirm the 2008 Interim
Rule (FSIS). It therefore requests the Panel to m odify the second sentence of paragraph 7.19 to more
accurately describe the 2009 Final Rule (FSIS).
6.15 Mexico objects to the United States' suggestion. Mexico refers to the Federal Register
publication of 20 March 2009 (i.e. the 2009 Final Rule (FSIS)), which explicitly describes its action
as the "Affirmation of the interim final rule".
6.16 Taking into account the parties' comments, the Panel amended the text of the second sentence
of paragraph 7.19 by directly citing the la nguage of the Federal Re gister publication of
20 March 2009.
(b) Paragraph 7.28
6.17 The United States suggests a modification to the fourth sentence of paragraph 7.28 for
greater accuracy. The United States highlights that the addition of commingling flexibility is only one
change made to the 2008 Interim Final Rule (AMS). Canada and Mexico object to the United States'
suggestion as the United States' position is alrea dy stated in the first sentence of the same
paragraph and the suggested modification would c onfuse rather than incr ease the accuracy of the
paragraph.
6.18 The Panel slightly modified the text of the fourth sentence of paragraph 7.28 in light of the
parties' comments.
B. FACTUAL BACKGROUND
1. Paragraph 7.85
6.19 The United States requests a modification to the second sentence of paragraph 7.85 so as to
add a phrase that the 2002 Farm Bill delegated to USDA the decision on how to define origin for meat
products derived from mixed origin animals. Mexico objects to this suggestion because, in its view,
this additional information is irrelevant to the content of the concerned paragraph.
6.20 The Panel agrees with Mexico's view and declines the United States' request.
2. Paragraph 7.93
6.21 Canada requests the Panel to modify the description of category D meat contained in
paragraph 7.93 by deleting the words "born, raised, or" or to add a footnote to clarify the type of
animal used to produce meat marked as Label D under the COOL measure. The United States
objects to Canada's request as it believes the current language of paragraph 7.93, item (D) accurately
reflects the COOL statute. Further, Canada's s uggested footnote refers to the requirements of the
2009 Final Rule (AMS), which the United States does not understand to be within the intended scope
of this paragraph.
6.22 The Panel declines Canada's request because paragra ph 7.93 describes relevant part of the
COOL statute as the Unit ed States submits. We added quotation marks in the relevant parts of

paragraph 7.93 to indicate that the descriptions for the items listed are quoted directly from the text of
the COOL statute.
3. Paragraph 7.94
6.23 The United States requests a modification to paragraph 7. 94 to more accurately reflect the
provisions of the COOL statute and USDA's task in the rulemaking process concerning the use of four
categories of muscle cut labels.
6.24 Canada and Mexico objects to the United States' request.
6.25 The Panel declines the United States' request. As Canada points out, we consider that the
description of the 2009 Final Rule (AMS) in paragraph 7.94, in combin ation with paragraphs 7.95 to
7.106, sufficiently explains the circumstances in which the labels can be interchangeably used.
4. Paragraph 101
6.26 The United States suggests that paragraph 7.101 be modified for greater accuracy regarding
the description of the commingling permitted under th e 2009 Final Rule (AMS) of meat derived from
different categories. Mexico disagrees with this suggestion because, inter alia , the concerned
paragraph addresses a different issue and the suggested modification is confusing.
6.27 The Panel rejects the United States' suggest ion because, as Mexico points out,
paragraph 7.101 addresses a different issue, and th e United States' suggested change is already
reflected in the chart provided in paragraph 7.104.
5. Paragraph 7.126 and footnote 179
6.28 Mexico requests the Panel to modify paragraph 7. 126 and add a new sentence at the end of
footnote 179 to fully reflect Mexico's arguments on the penalties with which the COOL measure can
be enforced. The United States does not object to Mexico's request, but suggests that the
United States' position on this issue also be added.
6.29 Taking into account the comments of Mexico and the United States, the Panel made slight
adjustments to paragraph 7.126 and footnote 179.
6. Paragraphs 7.127-7.131
6.30 Mexico requests the addition of a new paragraph describing a relevant paragraph of the
Vilsack letter.
6.31 Given that the requested additional paragraph is described in paragra ph 7.182 of the Interim
Panel Reports, the Panel declines Mexico's request.

C. CLAIMS UNDER THE TBT AGREEMENT
1. Technical regulation
(a) Paragraph 7.178
6.32 Mexico requests that the first sentence of paragraph 7.178 be modified so as to avoid stating
that, on its face, the Vilsack letter is clearly not mandatory. The United States disagrees, arguing that
the Vilsack letter explicitly describes its recommendations as voluntary.
6.33 The Panel rejects Mexico's request – both in light of the US arguments and given that the
sentence in question starts with the phrase "[o]n its face".
(b) Paragraph 7.195
6.34 The United States suggests modifying paragraph 7.19 5 because the Canadian exhibits
referenced in that paragraph merely refer to the Vilsack letter without explicitly mentioning any of the
three specific suggestions contained in this letter. Canada objects to these changes suggested by the
United States, noting that the exhibits in questio n show that certain industry participants have
responded to the Vilsack letter in a way that resulte d in the rejection of Canadian-born livestock.
Canada adds that paragraph 7.195 uses the word "might".
6.35 In light of the arguments of the United States and Canada, the Panel has slightly modified
paragraph 7.195, although to a lesser extent than requested by the United States.
2. Article 2.1
(a) Introduction and legal test under Article 2.1 of the TBT Agreement – Paragraph 7.223
6.36 The United States suggests inserting the phrase "as a minimum" into the chapeau, to make
sure that the three criteria of the Article 2.1 legal test are only "minimum" criteria. Canada and
Mexico disagree with this suggested modification. Canada emphasizes that the chapeau of
paragraph 7.223 uses the word "includes", which do es not exclude additional criteria. Mexico adds
that the proposed change would describe an agreement that does not exist, for neither complainant
agrees with the United States that the three criteria are only minimum criteria.
6.37 The Panel rejects the suggestion of the United States because the chapeau of paragraph 7.223
uses the word "includes", and it also reproduces the key term "essential" from the quote that follows
in the same paragraph. Rather, the Panel has de cided to extend footnote 294 to paragraph 7.223 to
explain that, according to the United States, "[i]n a ddition to these three 'minimum' elements, the text
of TBT Article 2.1 requires the complaining party to establish that such [less favourable] treatment is
in respect of the technical regulation [at issue]."
(b) Whether the COOL measure is a technical regulation – Paragraph 7.242
6.38 The United States suggests modifying paragraph 7.2 42 to better reflect the relevant
arguments in paragraphs 196-199 of the United States' first written submission. Canada and Mexico
oppose this suggested modification, arguing that pa ragraph 7.242 properly summarises the arguments
in paragraphs 196-199 of the United States' firs t written submission. Mexico adds that the
United States has never withdrawn this argument. At the same time, Mexico concedes that the
United States made an additional argument in its opening oral statement at the Panel's first substantive

meeting. Accordingly, Mexico does not exclude a dding, with minor modifications, part of the text
that the United States would insert into paragraph 7.242.
6.39 The Panel has decided to follow largely the suggesti on of Mexico, by inserting – with minor
modifications – part of the text suggested by the United States at the end of paragraph 7.242.
(c) Whether imported products are accorded l ess favourable treatment than like domestic
products
(i) Paragraph 7.264
6.40 Canada points out that it has never argued that the COOL measure does not involve de jure
discrimination. The referenced portion of its fi rst written submission noted that the COOL measure
"does not explicitly require" less favourable treatment of imports. The United States argues that the
phrase "does not explicitly require" covers de jure discrimination, and it adds that country of origin
labelling may be origin-neutral.
6.41 Although the Panel does not consider it necessary to de termine in the abstract whether
country-of-origin labelling may be origin-neutral, it h as decided to modify paragraph 7.264, to reflect
Canada's arguments more faithfully.
(ii) Paragraph 7.267
6.42 The United States requests deleting part of the last sentence of paragraph 7.267 and replacing
it with language that would reflect more faithfully an argument made by the United States at various
points in the dispute, in particular in pa ragraph 143 of its first written submission. Mexico disagrees.
It argues that the last sentence of paragraph 7.26 7 is almost identical to the relevant portion of
paragraph 143 of the United States' first written subm ission. Mexico requests that if any changes are
made to paragraph 7.267, the same language as paragraph 143 of the United States' first written
submission should be used.
6.43 The Panel has modified paragraph 7.267 accordingly by keeping the original last sentence,
and by adding a new sentence following the arguments referenced by the United States.
(iii) Paragraph 7.276
6.44 Mexico requests the Panel to modify paragraph 7.276 by adding a sentence summarizing
Mexico's response to the US argument that it is pos sible to comply with the COOL measure without
any segregation.
6.45 In light of the United States' si lence on this Mexican request, the Panel has decided to
introduce the language suggested by Mexico, although only at the end of paragraph 7.276 and with
corrected paragraph numbers in the footnote inserted at the end of the new sentence.
(iv) Paragraph 7.290
6.46 The United States requests modifying paragraph 7.290 to indicate that Label A is the only
label with no foreign element and further that Labe l D is the only label with no domestic element.
Canada and Mexico object to these suggested modifications. Canada argues that the United States
itself recognizes that Label D does not need to list when processing steps occur in more than one
country. Thus, Label D could refe r to muscle cuts from livestock that are born and raised in the
United States and thus have some domestic element, but slaughtered abroad. As also reflected in

paragraph 7.663 of the Interim Reports, Mexico argues that the suggested modifications are inaccurate
because Label D could involve some domestic elements.
6.47 The Panel rejects the modification suggested by the United States as it would address an issue
that is not indispensable for analysing the co mplainants' claims under Article 2.1 of the
TBT Agreement.
(v) Paragraph 7.299
6.48 The United States suggests modifying paragraph 7.299, to reflect the full extent of the
commingling provisions and the differences betw een the 2008 Interim Rule (AMS) and 2009 Final
Rule (AMS) described in paragraphs 7.294-7.298 of the Interim Reports. Canada and Mexico
disagree with this suggested modi fication. The complainants argue that it is the 2009 Final Rule
(AMS) together with the COOL statute that imposes the requirements summarised in paragraph 7.299.
Mexico adds that modifying the second sentence of paragraph 7.299, as suggested by the
United States, would incorrectly indicate that the 2009 Final Rule (AMS) is the basis of the
ineligibility of imported livestock for Label A, whereas the correct basis is the 2008 Farm Bill.
6.49 Although the Panel agrees with the complainants, it has decided to make one minor
modification to paragraph 7.299 in light of one of the suggestions by the United States.
(vi) Paragraph 7.314
6.50 The United States requests modifying paragraph 7.314, to better reflect the US arguments on
the Informa Report. Canada objects to these suggested modifications, arguing that paragraph 7.314
is sufficiently clear.
6.51 The Panel has slightly modified paragraph 7.314 in light of these comments.
(vii) Paragraph 7.329
6.52 The United States suggests modifying paragraph 7.329, arguing that "US sources" in the first
sentence is used inappropriately to refer to the C ongressional Research Service, which is not part of
the US executive branch, and to the Food Marketi ng Institute, which is a private organization.
Canada and Mexico object to this suggested modification. The complainants point out that CRS is
part of the US government for the purposes of WTO law. Mexico adds that a private organization
representing three quarters of all retail food sales in the United States is also undoubtedly a
"US source". Further, Mexico disagrees with the US suggestion to delete the phrase that indicates
that the COOL measure implies segregation.
6.53 The Panel has modified paragraph 7.329 along the lines of the language suggested by the
United States. The Panel does not consider that this modification would alter the intended meaning of
the relevant sentence, or of the paragraph as a whole.
(viii) Paragraph 7.340
6.54 The United States suggests modifying the first two sente nces of paragraph 7.340. According
to the United States, some plants may not accept both domestic and imported livestock. Further,
muscle cuts processed in the United States are not eligible for Label D because they necessarily derive
from animals slaughtered in the United States. Canada and Mexico disagree with the first
modification suggested by the United States. Mexi co argues that sourcing only domestic or imported
livestock is a form of segregation. Canada adds that the first sentence of paragraph 7.340 starts with

the word "[t]his", which is a reference to the preceding paragraph. As regards the suggested
modification to the second sentence, Mexico is silent and Canada does not disagree.
6.55 The Panel agrees with Canada that the first modification suggested by the United States is
redundant. Paragraph 7.340 starts with the word "[t]his", which refers to the phrase "processing
domestic and imported livestock and meat solely according to the price and quality of the products" in
paragraph 7.335 (emphasis added). This is al so confirmed by the five scenarios outlined in
paragraph 7.337. As regards the second modificati on suggested by the United States, in the absence
of objections by the complainants, the Panel has d ecided to delete the phrase ", but possibly four" at
the end of the second sentence in paragraph 7.340.
(ix) Paragraph 7.348
6.56 The United States requests the Panel to delete paragr aph 7.348, arguing that commingling
may take place already before the processing stag e, e.g. at feedlots, as also illustrated by
Exhibit US-101. Canada and Mexico disagree. The complainants argue that the commingling
flexibility in the 2009 Final Rule (AMS) is limi ted to processing on a single production day.
As regards Exhibit US-101, Canada argues that the affidavits signify that the feedlot somehow tracked
the origin of each of its animals and ensured th at on each processing day the processor received at
least one Mexican-born or -raised, one Canadian-born or -raised, and one US-born or -raised animal.
Canada refers to its explanation earlier in the di spute as to how this tracking would need to be
accomplished. Mexico argues that the various affi davits contained in Exhibit US-101 do not provide
the option to certify that livestock were of Mexican or Canadian origin.
6.57 The Panel agrees with the complainants that the 20 09 Final Rule (AMS) does not provide an
explicit legal basis for commingling before the pr ocessing stage. At the same time, although the
Panel is not certain what conclusions it may draw from Exhibit US-101, the Panel considers it more
appropriate to delete pa ragraph 7.348. Even without paragraph 7.348, paragraph 7.349 sufficiently
justifies the statement made in paragraph 7.347.
(x) Paragraph 7.361
6.58 Mexico points out that the double square brackets marking the figure in paragraph 7.361 as
BCI are redundant as the same figure is containe d in paragraph 51 of the executive summary of
Mexico's first written submission, which is att ached to the Interim Reports as Annex A-2.
The United States and Canada do not comment on this request by Mexico.
6.59 The Panel has removed the double square brackets from paragraph 7.361.
(xi) Paragraph 7.367
6.60 The United States suggests adding a sentence at the end of paragraph 7.367 to qualify this
paragraph. The United States points out that a similar qualifier ends paragraph 7.370.
Canada and
Mexico object to this suggested addition. Canada notes that the statements referenced in
paragraph 7.367 were made after the 2008 Interim Fi nal Rule (AMS) entered into force. Mexico
argues that this qualifier might reflect the United States' views but the Panel should not agree with it.
6.61 The Panel does not believe it is necessary to modify paragraph 7.367. Instead, the Panel has
deleted the final sentence qualifying paragraph 7.370.

(xii) Paragraph 7.368
6.62 The United States suggests deleting paragraph 7.368 altogether, pointing out that it has never
argued that the evidence referenced in that paragr aph was anecdotal. The United States used the term
"anecdotal" to describe other eviden ce submitted by the complainants. Canada and Mexico disagree
with this suggested deletion. Mexico suggests de leting only the first sentence of paragraph 7.368
instead. Canada also believes that there is no need to delete the whole paragraph. Canada quotes the
relevant section of the United States' second oral st atement, noting that this statement used the word
"anecdotal" with an unqualified reference to "evi dence and economic studies that Canada and Mexico
submit[ted]."
6.63 The Panel notes that, as footnote 513 to the word "anecdotal" in paragraph 7.368 indicates,
the United States used this word four times in its opening oral statement at the second meeting.
Further, as Canada points out, the United States us ed it rather vaguely. At the same time, the
complainants' exhibits referenced in paragr aph 7.368 are not specifically mentioned in the
United States' second oral statement. Accordingl y, the Panel has deleted the first sentence of
paragraph 7.368 and kept the rest of the paragraph.
(xiii) Paragraph 7.368, footnote 515
6.64 Mexico asks the Panel to modify footnote 515 to paragraph 7.368 by adding a reference to
Exhibit MEX-111, because this latter also includes the market share information marked as BCI in
paragraph 7.368. Canada and the United States do not comment on this Mexican request.
6.65 The Panel notes that Exhibit MEX-111 includes the market share information marked as BCI
in paragraph 7.368. Accordingly, the Panel has modified footnote 515 as requested by Mexico.
In addition, the Panel has removed the brack ets around the market share information in
paragraph 7.368 as, in light of Exhibit MEX-111, it no longer qualifies as BCI.
(xiv) Paragraph 7.371
6.66 The United States suggests modifying paragraph 7.371, to reach the conclusion that a photo
of a "Product of the US, Canada and Mexico" label (Exhibit US-95) actually proves that commingling
has been taking place. Canada and Mexico disagree with the suggested changes, arguing that the
resulting paragraph would make the Panel reverse it s original conclusion about these photos. Mexico
also argues that commingling applies to muscle cuts, not to livestock. Mexico adds that
paragraph 7.371 addresses commingling of Label A and B meat, and the US comments bear no
relation to this issue.
6.67 The Panel rejects the suggested changes. Th e suggested changes would add detailed
arguments to paragraph 7.371 as to why photographs of Label B prove commingling. The Panel does
not consider it appropriate to m odify paragraph 7.371 to reach the opposite conclusion on the basis of
arguments made by the United States only at the interim review stage.
(xv) Paragraph 7.373
6.68 The United States references Exhibit US-101, and suggests modifying paragraph 7.373 to
reflect that commingling is possible at the feedlot level. Canada and Mexico object to this suggested
modification. Canada argues that the first affidavit in Exhibit US-101 only attests to the origin of
livestock when marketed to a slaughter house, ra ther than, as the United States suggests, that
commingling is occurring in either a feedlot or a slaughter house. Mexico reiterates that the
COOL measure does not explicitly provide for commingling prior to processing.

6.69 The Panel notes that paragraph 7.373 references paragraph 57 of the United States' second
written submission. As Canada points out, it is not clear that Exhibit US-101 proves what the
United States claims in paragraph 57 of its second written submission, in particular that commingling
is in fact taking place at the feedlot stage. Accordi ngly, the Panel has decided to maintain the original
text of paragraph 7.373.
(xvi) Paragraph 7.375
6.70 The United States suggests deleting the last sentence of paragraph 7.375, arguing that
commingling involving up to 14% of category A beef and up to 20% of category A pork does not
correspond to a relatively minor share of commingled meat. Mexico points out that the last sentence
of paragraph 7.375 uses the words of the United States' response to Panel question No. 91.
6.71 In light of Mexico's comment, the Panel has decided to keep the last sentence of
paragraph 7.375, although with certain modificati ons to better reflect the United States' relevant
response.
(xvii) Paragraph 7.375, footnote 527
6.72 The United States suggests deleting the reference to Exhibit US-146 from footnote 527 for
lack of relevance. According to the United States, this exhibit does not refer to the actual labels used
in the market but to the US supply of meat.
6.73 The Panel notes that the sentence of paragraph 7.375 in question refers to arguments by the
complainants. Accordingly, the Panel has decide d to delete the reference to Exhibit US-146 from
footnote 527 to paragraph 7.375.
(xviii) Paragraphs 7.385 and 7.415
6.74 The United States suggests deleting paragraphs 7.385 and 7.415, which address the exclusion
of imported products from US premium beef programm es. According to the United States, at least
two of the exhibits referenced in paragraph 7.385 pr e-date the 2009 Final Rule (AMS). Further, the
United States argues that none of the other Ca nadian and Mexican exhibits referenced in
paragraph 7.385, support the claim that Canadi an and Mexican beef are being excluded from
US premium programmes. Canada and Mexico object to these suggested deletions. Canada argues
that it is irrelevant that some exhibits pre- date the 2009 Final Rule (AMS) because the former
flexibility permitted under the 2008 Interim Final Ru le (AMS) was taken away by US governmental
action at the end of September 2008. Canada also refers to Exhibit CDA-36, in which Tyson states
that "[its] approach will be to use the 'U.S.' or Category A label on all of our premium beef programs
beginning early 2009". According to Canada, the r est of the evidence referenced in paragraph 7.385
provides the basis for a reasonable inference th at the producers in question were excluded from
premium US programmes. Mexico, in turn, references Exhibit MEX-33, which is a brochure by
Tyson dated April 2009, and which reproduces the October 2008 Tyson letter contained in
Exhibit CDA-36.
6.75 In light of the complainants' comments, the Panel has
 decided to keep paragraphs 7.385 and
7.415 unchanged.
(xix) Paragraph 7.392
6.76 The United States suggests adding a sentence to the end of paragraph 7.392 to reflect that
Canadian and Mexican livestock were discounted vis-à-vis US livestock even before the

COOL measure. Canada and Mexico disagree with the suggested new sentence. Canada argues that
neither of the paragraphs that would be referenced in the new footnote supports the statement in the
new sentence that there were consistent discounts fo r Canadian livestock "as a result of comparatively
higher transport costs and currency fluctuations". Th e "basis" or "spread" referenced in Canada's first
written submission applies to both Canadian and US cattle. The relevant chart in Exhibit US-30, cited
to support the United States' position that "prices are generally lower" for Canadian cattle, is a bare
chart with no indication of who prepared it or what data were used. Canada adds that both first
written submissions refer, in releva nt part, to Canadian cattle and not to hogs or to Mexican cattle.
Mexico argues that this is the first time that th e United States has argued that Mexican cattle received
lower prices than US cattle. The relevant portions of the US and Canadian written submissions do not
address Mexican cattle. Mexico refers to its submi ssions arguing that the price of Mexican cattle was
freely determined before the COOL measure. Me xico also notes that the United States has not
contested this argument. Further, Mexico argues that currency fluctuation is irrelevant as the price of
Mexican livestock for export is negotiated in US dollars. In fact, as Exhibit MEX-48 demonstrates, at
times before the COOL measure Mexican cattle receive d higher prices than US cattle. There is also
no reason to consider that transportation costs are any different for Mexican cattle than for US-born
cattle located near the US-Mexican border.
6.77 In light of the complainants' comments, the Panel has decided to keep paragraph 7.392
unchanged.
(xx) Paragraph 7.384, footnotes 556 and 557
6.78 Mexico argues that two Mexican Exhibits should be added to footnote 556 as evidence for the
statement in paragraph 7.384 that "[s]everal supp liers reported that the price difference between
imported and domestic livestock has become larger to the detriment of the latter". Further, Mexico
requests that footnote 557 reference two additiona l Mexican Exhibits to support the phrase in the
same sentence of paragraph 7.384 that "discount s for imported livestock appeared or existing ones
increased as a result of the COOL measure".
6.79 The Panel notes that the sentence in question starts w ith "[s]everal suppliers reported that…";
however, none of the four exhibits mentioned by Mexico originate from "suppliers". Accordingly, the
Panel has decided to reject Mexico's request for referencing these exhibits in footnotes 556 and 557.
(d) Actual trade effects
(i) Paragraph 7.443
6.80 The United States requests modifying paragraph 7.443 because numerous aspects of the
Panel's Article 2.1 analysis preceding paragraph 7. 443 involve looking at the trade effects of the
COOL measure. Canada and Mexico object to this suggested modification. Canada argues that the
evidence referenced by the United States is not ev idence of trade effects but of the discriminatory
impact of the COOL measure. Evidence that US industry changed their practices precisely because of
the COOL measure demonstrates ch anges in the conditions of competition to the detriment of
Canadian livestock – and not a neutral change in trade volumes that may be unconnected with the
measure at issue. Mexico argues that it is importa nt for the report to distinguish the analysis of
competitive conditions from a detailed analysis of actual trade effects.
6.81 In light of the complainants' comments and the u se of the term "in detail" in paragraph 7.443,
the Panel has decided to keep paragraph 7.443 unchanged.

(ii) Paragraph 7.462, footnote 632
6.82 The United States proposes to indicate in footnote 632 that the figures of the table in
Exhibit US-28 do not include breeding animals. Canada does not object to this additional phrase.
6.83 Accordingly, the Panel has changed footnote 632 to paragraph 7.462 as suggested by the
United States.
(iii) Paragraphs 7.464 and 7.468
6.84 The United States requests including in the analysis 2010 data which covers the first nine
months and which would suggest that Canadian feeder and slaughter cattle exports to the
United States increased by 6.8% with respect to the same time period in 2009.
21 According to the
United States this is line with data provided by Ca nada and indicating that average Canadian exports
per month were higher in 2010 compared with 2 009. Accordingly, the United States suggests
modifying paragraphs 7.464 and 7.468. Canada opposes the proposed modifications for two reasons.
First, conclusions based only on partial or extra polated data are speculative. Second, drawing a
conclusion based only on data submitted by th e United States, as does the additional sentence
proposed at the beginning of paragraph 7.464, would be inappropriate.
6.85 The Panel rejects the suggested modifications to paragraphs 7.464 and 7.468. Reaching a
conclusion based on partial data would involve introducing additional assumptions, and would render
the data comparison less objective.
(iv) Paragraph 7.478
6.86 With regard to the graph in paragraph 7.478, Canada points out that the legend does not
clearly show a dotted line for imports of slaughter hogs, and that the reference to "Series 1" and
"Series 2" is unclear.
6.87 The Panel has corrected the graph accordingly.
(v) Paragraph 7.480, footnote 669
6.88 The United States argues that since the parties did not dispute the fact that BSE restrictions
in 2005 limited Canadian exports, the word "pr obably" should be deleted from footnote 669. Canada
does not object to the suggested deletion.
6.89 The Panel has replaced "probably" with "mostly" in footnote 669 to paragraph 7.480, to
reflect that other factors could have also affected imports of Canadian cattle.
(vi) Paragraphs 7.485-7.486
6.90 The United States suggests moving to paragraph 7.523 the discussion in
paragraphs 7.485-7.486 on Canada's choice of denominator in the econometric model produced by
Professor Sumner. Canada does not object to this suggestion.
6.91 The Panel notes that footnotes 704-705 to paragraph 7.523 already reference
paragraphs 7.485-7.486. Accord ingly, the Panel does not consider it necessary to move
paragraphs 7.485-7.486 to paragraph 7.523.

21 Exhibit US-143.

(vii) Paragraph 7.513
6.92 The United States suggests changing paragraph 7.513, arguing that the effects of the
COOL measure did not start in 2008. The 2009 Fina l Rule entered into force in March 2009, and
there is no mention of the COOL measure in Exhib it US-156, which is referenced in the footnote to
paragraph 7.513. Canada disagrees with the suggested changes because the reference date is the end
of September 2008, when the COOL legislation an d the 2008 Interim Final Rule (AMS) came into
effect.
6.93 The Panel rejects the suggested modification. The United States considered, in its own
econometric study, September 2008 as the starting date for the COOL measure. In addition, the
United States never raised this issue when criticizing the Sumner Econometric Study.
(viii) Paragraph 7.514
6.94 The United States suggests using the word "attempt" inst ead of "are able" in paragraph 7.514
to define the objective of econometric studies. Ac cording to the United States, econometric studies,
such as the Sumner Econometric Study, frequently fa il to isolate and quantify the factors at play.
Canada opposes this change arguing that well-d esigned econometric studies, like the Sumner
Econometric Study, are able to isolate and quantify the various factors.
6.95 The Panel notes that statistics tests may be used to assess whether an econometric model is
flawed. Accordingly, the Panel rejects the change to paragraph 7.514 suggested by the United States.
(ix) Paragraph 7.517
6.96 The United States suggests modifying paragraph 7.517 to make clear that, unlike the
Sumner Econometric Study, the USDA Econometric Study did not analyse the hog market.
Canada recognizes that the USDA Econometric Study did not cover the hog market.
However, Canada disagrees with the change suggest ed by the United States, which could imply that
two econometric studies had been undertaken: one fo r cattle and another one for hogs. In Canada's
view, any modification to paragraph 7.517 should reflect that Canada submitted only one econometric
study, i.e. the Sumner Econometric Study.
6.97 The Panel has modified paragraph 7.517 in line with both parties' requests.
(x) Paragraph 7.522
6.98 The United States suggests modifying paragraph 7.522 to reflect that there was a
COOL impact on the price effect only for fed cattle but not for all livestock. Canada opposes the
additional wording on the ground that the current para graph correctly reflects that none of the parties
submitted evidence suggesting that there was no COOL impact on the price basis for feeder cattle or
hogs.
6.99 The Panel has modified paragraph 7.522 to clarify its language, but only to the extent that the
changes do not involve factual errors or unsubstantiated conclusions.
(xi) Paragraph 7.523
6.100 The United States suggests modifying paragraph 7.523 to reflect US concerns with Canada's
econometric models. In particular, the United Stat es questions whether it is appropriate to base a
legal analysis under Article 2.1 of the TBT Agre ement on the use of an econometric study that

purports to show trade effects. The United States also wonders whether a reduced form model, such
as Exhibit CDA-152, properly captures price and export effects in a highly complex market like the
North American livestock market. Canada disagrees with the suggested changes. Canada argues
inter alia that the objective of the Sumner Econometric Stud y is to assess the differential effect of the
COOL measure and not its "trade effect".
6.101 The Panel has slightly modified paragraph 7.523 in light of the parties' comments.
(xii) Paragraph 7.530
6.102 The United States suggests deleting the last sentence of paragraph 7.530. The United States
argues that it never proposed that Canada should use overall trade in agricultural commodities as a
(continuous) measure of economic recession. Canada disagrees with this suggested deletion,
pointing out that the United States did mention the u se of overall trade in agricultural commodities in
its comments on Canada's response to the Panel's qu estions following the second substantive meeting.
Canada suggests including a footnote at the end of the paragraph with the proper reference.
6.103 The Panel has inserted such a footnote into paragraph 7.530, and kept the last sentence of this
paragraph as is.
(xiii) Paragraph 7.532
6.104 The United States suggests modifying paragraph 7.532, to elaborate on its criticisms of the
Sumner Econometric Study in line with its comment on paragraph 7.523. Canada disagrees with the
suggested changes for the same reasons as the ones it raised in the context of paragraph 7.523.
6.105 The Panel has added a reference to paragraph 7.523 in footnote 717.
(xiv) Paragraph 7.539
6.106 The United States suggests changing a word in para graph 7.539 because a reduced form
model is obtained from a system of equations by "rewriting", not "solvi ng" the system using algebra.
Canada disagrees with the United States, and believes that the term "rewritten" would be less
accurate than "solved".
6.107 The Panel considers that, in the circumstances of the di spute, it is more appropriate to leave
paragraph 7.539 unchanged.
(xv) Paragraph 7.548
6.108 The United States suggests modifying the Panel's analysis of the econometric studies as
regards the findings of the USDA Econometric Study. In particular, the United States suggests
dropping the last sentence of pa ragraph 7.548, which explains th at potential multicollinearity calls
into question the validity of certain findings of the USDA Econometric Study. Canada disagrees
with the proposed changes, arguing that these would make the paragraph less accurate.
6.109 The Panel has slightly modified, but has not deleted, the last sentence of paragraph 7.548.

3. Article 2.2
(a) Objective pursued by the United States through the COOL measure: paragraphs 7.593, 7.624,
7.625, and 7.676
6.110 The United States submits that the objective pursued through the COOL measure, as
identified by the Panel in its Interim Report, h as two aspects – providing as much information about
origin as possible and reducing compliance costs. A ccording to the United States, it did clarify these
two aspects of the objective in the panel proceedings. 22 The United States therefore requests that both
of these aspects of the objective be reflected in the Panel Report in order to accurately portray the
United States' position throughout the dispute. Speci fically, the United States suggests that the Panel
add the fact that the United States took into account the reduction of compliance costs for the market
participants as part of the objective in the above-mentioned paragraphs.
6.111 Canada disagrees with the changes proposed by th e United States. Canada asserts that the
United States repeatedly argued throughout the pa nel proceedings that its objective for purposes of
Article 2.2 of the TBT Agreem ent was consumer information. 23 The United States, argues Canada,
never referenced an objective related to costs on dom estic industry participants. As a result, Canada
was never in a position to address whether such an objective was legitimate under Article 2.2. Canada
also points out that although the United States stated that the costs of compliance were taken into
account "in deciding how to fulfil that objective", it failed to state that those costs of compliance
formed part of the objective itself.
6.112 Mexico also objects to the United States' proposal. Mexico argues that the consideration of
reducing compliance costs on market participants is only a way in which the United States
purportedly intended to achieve the objective, but was not part of the objective itself. In Mexico's
view, the United States is confusing the objective of the measure (i.e. providing as much clear and
accurate origin information as possible to consumers) with the implementation of that measure (i.e.
reduced compliance costs).
6.113 The Panel rejects the United States' request fo r the following reasons. Based on the
United States' arguments in the panel proceedings, the Panel decided that the objective as identified
by the United States was "to provide consumer information on origin".
24 The Panel was not presented
with the argument from the United States that the reduction of compliance costs for market
participants also formed part of the objective pursued by the United States through the
COOL measure. As Mexico points out, the United States submitted that reducing compliance costs
was one of the factors that it considered in implementing the COOL measure to achieve the objective
of providing consumer information on origin.
25 Reducing compliance costs therefore cannot form
part of the objective itself.

22 The United States refers to the following parts of its submissions: United States' responses to Panel
23 Canada refers to the following parts of the United States' submissions: United States' first written
submission, heading 1, page 57, and para. 211; oral statement at the first substantive meeting, para. 37; second
written submission, heading C, page 47, and para. 118; oral statement at the second substantive meeting,
heading B, page 12, and para. 40. (Canada's comments on the United States' comments on Interim Panel
Report, para. 40)
24 See paragraphs 7.615-7.621.
25 For example, the United States' argument relating to the reduction of compliance costs is included in
paragraph 7.669 as part of the summary of the United States' argument as well as being addressed in the context
of the Panel's analysis in paragraph 7.716.

(b) Legal interpretative approach under Article 2.2 – paragraphs 7.673 and 7.674
6.114 The United States submits that a discussion of the Unite d States' position with regard to the
relationship between Article 2.2 of the TBT Agreement and Article XX of the GATT 1994 should
reflect its argument and evidence submitted in support of its position. The United States reiterates its
arguments put forward in the panel proceedings th at the Panel should apply the legal interpretative
approach under Article 5.6 of the SPS Agreement, but not that of Article XX of the GATT 1994, to
Article 2.2 of the TBT Agreement. The United States suggests that the Panel modify
paragraphs 7.673 and 7. 674, and add a new footnote to paragraph 7.673.
6.115 Canada and Mexico do not consider it necessary to include the additional detail as suggested
by the United States in paragraph 7.673, including the addition of a new footnote. Canada and
Mexico submit that the paragraph accurately summarizes the United States' position.
6.116 The Panel considers that the current texts in pa ragraphs 7.673 and 7. 674 and footnote 880
accurately summarize the United States' position. To further clarify the United States' position
however, we made slight adjustments to the text s of the concerned paragr aphs and moved footnote
880 to the end of the first sentence at paragraph 7.673. We also added a footnote to paragraph 7.675.
D. T
YPOGRAPHICAL ERRORS AND CLERICAL OBSERVATIONS
6.117 The Panel has worked from the original version of the Interim Panel Reports. Further, as
noted above, the Panel has incorporated all other comments by the parties on typographical errors in
the Interim Panel Reports and has modified the Reports to the extent it deemed necessary.
VII. FINDINGS
A. OVERVIEW OF THE MATTERS BEFORE THE PANEL
7.1 In this dispute, Canada and Mexico advan ce claims against the United States' measures
governing the country of origin labelling ("COOL") requirements with respect to meat products. The
complainants claim that the measures are inc onsistent with Articles 2.1 and 2.2 of the
TBT Agreement, and Articles III:4 and X:3(a) of the GATT 1994. The complainants have also
advanced a non-violation claim under Article XXIII:1(b) of the GATT 1994.
7.2 The complainants argue that the measures accord imported livestock treatment less favourable
than that accorded to like domestic livestock inconsistently with Article 2.1 of the TBT Agreement, as
well as Article III:4 of the GATT 1994. The complainan ts assert that this is because complying with
the COOL requirements results in higher segregati on costs for imported livestock, which in turn
affects the competitive conditions of imported livestock in the market.
7.3 Furthermore, the complainants claim that th e COOL requirements are inconsistent with
Article 2.2 of the TBT Agreement. According to the complainants, the true objective of the
COOL requirements is to protect domestic industry, not to provide consumer information on origin as
stated by the United States, and that, in the circum stances of this dispute, the provision of consumer
information is not legitimate. The complainants stat e that there are less trade restrictive alternatives
and, in any event, the COOL requirements do not fulfil the objective of providing consumer
information on origin because labels under the CO OL requirements convey confusing and inaccurate
information on the origin of meat products.
7.4 Finally, the complainants allege that the Un ited States administered the COOL requirements
in a manner inconsistent with Article X:3(a) of th e GATT 1994. Canada claims that the United States

administered the COOL requirements in an unreasonable manner by issuing the Vilsack letter.
Mexico submits that an unreasonable, non-un iform, and partial administration of the
COOL requirements is shown by in the shifts in the guidance provided by USDA on the
COOL requirements, as reflected in the associat ed guidelines issued by USDA, non-public pressure
by the US government on individual companies, and the Vilsack letter.
7.5 Separately, Mexico presents claims under Articles 2.4 and 12 of the TBT Agreement. Mexico
submits that the COOL measure is inconsistent w ith Article 2.4 because the United States failed to
base its regulation on the General Standard for the Labelling of Prepackaged Foods ("CODEX-STAN
1-1985"), which Mexico claims is an international st andard that is an effective and appropriate means
for the fulfilment of the legitimate objective pursued by the United States. Mexico also argues that
the COOL measure is inconsistent with Articles 12.1 and 12.3 of the TBT Agreement. It claims that
the United States did not take into account Mexico's special needs as a developing country when
preparing and applying the COOL measure, w ith a view to ensuring that no unnecessary obstacles
were created to Mexico's cattle exports to the United States.
B. P
RELIMINARY MATTERS
1. Measures at issue
(a) Introduction
7.6 The parties agreed to the standard of review by the Panel pursuant to Article 7.1 of the DSU.26
Accordingly, our terms of reference are defined by the complainants' re spective requests for the
establishment of a panel under Article 6.2 of the DSU. Canada 27 and Mexico 28 identified in their
respective panel requests a number of measures alle gedly pertaining to the mandatory country of
origin labelling requirements imposed by the United States.29
7.7 Whilst not challenging the adequacy of the complainants' panel requests under Article 6.2, the
United States questions the necessity for the Panel to examine expired measures. The parties also
dispute how the Panel should treat the measures at issue in examining the complainants' claims,
namely whether to treat them collectively as a single measure or separately as individual measures.
7.8 In light of the issues raised by the parties as well as the obligation imposed on us to make an
objective assessment of the parties' claims based on the properly identified measures, we will examine
in this section the following three matters:
 Which measures fall properly within the scope of our terms of reference;
 Whether we should examine the measures that we re no longer in effect at the time of
the Panel's establishment; and

26 See para. 1.6.
27 Canada defined the measures identified in its panel request as the provisions comprising the
"COOL measure".
28 Mexico refers to the measures identified in its pa nel request as the COOL measures (in plural). In
subsequent written submissions, however, Mexico has taken the same position as Canada and argues that these
instruments consistent one single "COOL measure".
29 See paras. 2.1-2.3.

 How we should treat the measures at issu e in examining the complainants' claims,
namely, whether to treat them collectively as a single measure or separately as
individual measures.
(b) Measures that fall within the scope of the Panel's terms of reference
7.9 We have already described the measures at issu e as identified by the complainants in their
panel requests.
30 In the course of the Panel proceedings, the complainants further elaborated on the
measures that they challenge in this dispute. 31 The following are the "provisions" 32 that both Canada
and Mexico claim constitute the "COOL measure":
 the Agricultural Marketing Act of 1946, as amended by the 2002 Farm Bill and 2008
Farm Bill;
 the Interim Final Rule33 (AMS34);
 the 2009 Final Rule (AMS); and
 the Vilsack letter.
7.10 In addition to the above listed "provisions", Mexico refers to three other measures:
 the Interim Final Rule (FSIS)35;
 the 2009 Final Rule (FSIS)36; and
 any further implementing guidance, directives or policy announcements.37
7.11 As the measures identified above consist of, inter alia, statutory and regulatory instruments
pertaining to the mandatory country of origin labe lling requirements, we will first briefly review the
legislative and rulemaking process in the United States.
7.12 Under the United States' legal system, once a bill passes through Congress and becomes law,
it is codified into the United States Code ("U.S.C."). An enacted statute then forms the legal authority

30 See paras. 2.1-2.3.
31 Canada's and Mexico's responses to Panel question Nos. 1 and 2.
32 As described in Section II above, Canada used the term "provisions" to refer to various measures
that, in its view, collectively constitute one single COOL measure.
33 See para. 7.84 for an explanation of the interim final rule in the context of the US legal system.
34 The Agricultural Marketing Service ("AMS") was vested with authority over the COOL rulemaking
process, complementing the work that the USDA's Food Safety and Inspection Service ("FSIS") had been
performing in the past. The United States explains that the "FSIS ultimately discontinued its independent
rulemaking after Congress passed the 2002 Farm Bill and the AMS took over primary responsibility for
determining when meat covered commodities could be designated as "U.S. origin", or some derivative thereof".
However, the FSIS still has the "authority within the US government for en suring that meat food products are
safe, wholesome and accurately labelled". (United States' first written submission, para. 31).
35 In its response to Panel question No. 2, Canada states that it did not include the Interim Final Rule
and the Final Rule that were adopted by the FSIS as part of the COOL measure.
36 Canada clarified that it did not include the FSIS Final Rule as part of the "COOL measure" (Canada's
responses to Panel question Nos. 1 and 2).
37 Mexico's first written submission, paras. 9, 29, 33 and 34; response to Panel question No. 1; and
second written submission, paras. 20 and 42.

and framework for a given subject matter. Subs equently, in order for the executive branch to
implement the concerned statute, relevant govern ment departments or ag encies undertake, where
necessary, the rulemaking process to introduce regulations. These regulations are codified into the
Code of Federal Regulations ("C.F.R.").
7.13 The statutory provisions enacted through the 2002 Farm Bill and 2008 Farm Bill in relation to
the COOL requirements were inserted into the Agricultural Marketing Act of 1946. 38 In other words,
the Farm Bills introduced the COOL requirements in Congress, subsequently becoming part of the US
statutes, codified in 7 U.S.C. 1621 et seq. For ease of reference, in our reports we will refer to the
Agricultural Marketing Act of 1946, as amended by the 2002 Farm Bill and 2008 Farm Bill, as the
"COOL statute".
7.14 Further, the regulatory provisions implementi ng the COOL statute were introduced by the
2009 Final Rule (AMS). Most of the provisions in the 2009 Final Rule (AMS) were carried forward
from those in the Interim Final Rule (AMS).
39 These regulatory provisions are codified in 7 C.F.R.
Parts 60 and 65. Our reference in these reports to the implementi ng regulations in relation to the
COOL requirements means the 2009 Final Rule (AMS).
7.15 To determine the scope of our terms of reference, we address, in turn, the measures identified
by both Canada and Mexico and the three additional measures referred to only by Mexico.40
7.16 Both Canada and Mexico presented the COOL statute, the 2009 Final Rule (AMS), the
Interim Final Rule (AMS) and the Vilsack letter as th e measures at issue. The complainants properly
identified these measures in their panel requests within the meaning of Article 6.2 of the DSU. In this
connection, we note that the parties have not cont ested that all these measures, including the Vilsack
letter, qualify as measures subject to WTO dispute settlement. The Appellate Body stated that, "in
principle, any act or omission attributable to a WTO Member can be a measure of that Member for
purposes of dispute settlement proceedings. The acts or omissions that are so attributable are, in the
usual case, the acts or omissions of the organs of the state, including those of the executive branch".
41
7.17 Accordingly, we conclude that the COOL stat ute, the 2009 Final Rule, the Interim Final Rule
(AMS) and the Vilsack letter are properly within the Panel's terms of reference.

38 Mexico's first written submission, para. 10; United States' first written submission, para. 33. Mexico
further states that the Agricultural Marketing Act of 1946 contains provisions regulating the system for
distributing and marketing agricultural products in the United States.
39 The 2009 Final Rule modified certain provisio ns of the Interim Final Rule (AMS). See
paras. 7.90-7.100 for more detailed discussion in this regard.
40 See paras. 7.9-7.10.
41 Appellate Body Report, US – Corrosion-Resistant Steel Sunset Review , para. 81. The panel in US –
Export Restraints also stated,
"[t]he Appellate Body [in Guatemala – Cement I ] recalled the GATT Panel in Japan –
Semiconductors that measures could consist of both binding and non-binding acts, including
non-binding administrative guidance by a government. We agree, and in particular find no
reason or basis to rule in the abstract that a given type of instrument or action cannot be
subject of claims in WTO dispute settlement. This of course does not mean, however, that all
measures are capable by themselves of giving rise to violations of WTO obligations."
(Panel Report, US – Export Restraints, paras. 8.80-8.81 (original footnote omitted), also referring to the
Appellate Body Report, Guatemala – Cement I, footnote 47)
We observe that this is also consistent with the prin ciple in the relevant provisions of the International
Law Commission Articles on Responsibility of States for Internationally Wrongful Acts, as pointed out by the
European Union, a third party participant in this dispute (European Union's third-party oral statement at the
second substantive meeting of the Panel, paras. 3-4; parties' responses to Panel question No. 97). See also
response of Canada and Mexico to Panel question No. 98.

7.18 Turning now to the additional measures challe nged only by Mexico (i.e. the Interim Final
Rule (FSIS), the 2009 Final Rule (FSIS), and any fu rther implementing guidance, directives or policy
announcements), we first find the Interim Final Rule (FSIS) 42 to be properly within the scope of our
terms of reference as it is specifically identified in Mexico's panel request.
7.19 Mexico has also invoked the 2009 Final Rule (FSIS). Mexico, however, did not identify the
2009 Final Rule (FSIS) in its panel request 43, although Mexico mentions it in its first written
submission as well as in its res ponse to a question from the Panel. 44 Through the 2009 Final Rule
(FSIS), the FSIS "[affirmed], without change, its interim final rule requiring a country of origin
statement on the label of any meat or poultry product that is a covered commodity, as defined by the
[AMS], and that is to be sold by a retailer …" 45 Mexico submitted its request for the establishment of
a panel on 9 October 2009. As of the date of Mexico's panel requ est, therefore, the 2009 Final Rule
(FSIS) had already been enacted (i.e. 15 January 2009). The 2009 Final Rule (FSIS) is therefore not a
measure that was enacted subsequent to the date of Mexico's request for the establishment of a panel,
which may have made it fall within the scope of the Panel's terms of refe rence should it be found,
inter alia, sufficiently connected to the measures at issue identified in the panel request. We conclude
that the 2009 Final Rule (FSIS) falls outside the scope of the Panel's terms of reference.46
7.20 In addition, Mexico identified "any furthe r implementing guidance, directives or policy
announcements" in its panel request.47
7.21 The table below summarizes the measures at issu e that fall within the scope of the Panel's
terms of reference for the disputes brought by Canada and Mexico, respectively:
CANADA MEXICO
THE COOL STATUTE
THE 2009 FINAL RULE (AMS)
THE VILSACK LETTER
THE INTERIM FINAL RULE (AMS)
 T HE INTERIM FINAL RULE (FSIS)
 A NY FURTHER IMPLEMENTING GUIDANCE,
DIRECTIVES OR POLICY ANNOUNCEMENTS

7.22 Among these measures, the Interim Final Rule (A MS) and the Interim Final Rule (FSIS) had
already expired at the time of the Panel's establishmen t. As explained in more detail below, the fact
that a measure ceased to exist or expired at the time of the establishment of a panel does not a priori
make that measure fall outside the scope of the pane l's terms of reference, insofar as the measure is
specifically identified within the meaning of Artic le 6.2 of the DSU. Nonetheless, the question

42 Although Canada also identified the Interim Final Rule (FSIS) in its panel request, it subsequently
submits that it "did not include the Interim Final Rule and the Final Rule that were adopted by the FSIS as part
of the COOL measure" in its response to Panel question No. 2. We understand this statement to mean that it has
decided not to pursue the Interim Final Rule (FSIS) as part of the measures at issue in this proceeding regardless
of the fact that it was identified in its panel request.
43 WT/DS386/7 and WT/DS386/7/Corr.1.
44 Mexico's first written submission, para. 9, referri ng to Exhibit MEX-6; response to Panel question
No. 1.
45 Exhibit MEX-6.
46 We note that the United States has not objected to Mexico's addressing the 2009 Final Rule (FSIS) in
its submissions. This does not, however, cure the defect in Mexico's panel request that the concerned instrument
was not identified as required by Article 6.2 of the DSU.
47 Mexico's first written submission, paras. 9, 29, 33 and 34; response to Panel question No. 1; and
second written submission, paras. 20 and 42.

remains whether it is even necessary for us to exam ine the expired measures in pursuing the objective
of bringing prompt resolution to the current disput e. We consider this question in the following
section.
(c) Measures that were no longer in force at the tim e of the establishment of the Panel – Interim
Final Rule (AMS) and Interim Final Rule (FSIS)48
(i) Main arguments of the parties
7.23 The United States argues that both the Interim Final Ru le (AMS) and the Interim Final Rule
(FSIS) have no effect in US law because they we re superseded by the 2009 Final Rule (AMS) on
16 March 2009 and the 2009 Final Rule (FSIS) on 20 March 2009, respectively, and did not exist at
the time of the establishment of the Panel.49
7.24 The United States asserts that an examination of the Interim Final Rule (AMS), which did not
exist at the time of the establishment of the Panel, would not help achieve a satisfactory settlement of
the matter at issue. 50 The Interim Final Rule (AMS) does not provide evidence of the administration
of the 2009 Final Rule (AMS) because of the subs tantive difference between these two instruments.
Further, the United States subm its that the differenc es between the 2009 Final Rule (AMS) and the
Interim Final Rule (AMS) are significant. Among these differences, the United States highlights the
flexibility provided under the 2009 Final Rule (AMS)
51 with regard to the use of B and C labels that
did not exist under the Interim Final Rule (AMS): (i ) a C label can be used on meat derived from a B
animal in any circumstances; and (ii) B and C labels can be used when meat pertaining to category A,
B, or C is commingled within a single production day in any combination. 52 The United States,
however, agrees that the 2009 Final Rule (AMS) do es not allow the use of B labels on category A
meat when it is not commingled.53
7.25 Regarding the Interim Final Rule (FSIS), the Un ited States argues that Mexico has failed to
make a prima facie case.54 The United States also reiterates that the Interim Final Rule (FSIS) is no
longer in force.
7.26 Canada agrees that the Interim Final Rule (AMS) expired on 15 March 2009. 55 Canada
underlines, however, that the contents of the Inte rim Final Rule (AMS) were carried forward, with
minor modifications, into the 2009 Final Rule (AMS ), which became effective on 16 March 2009. In
Canada's view, both the Interim Final Rule (AMS ) and the 2009 Final Rule (AMS) implement the

48 The Interim Final Rule (FSIS) is relevant only for the dispute brought by Mexico.
49 United States' first written submission, paras. 46 and 69-71.
50 United States' second written submission, paras. 23-25.
51 See Section VII.C.1(b)(i).
52 Exhibit CDA-5, p. 2706. The United States also refers to other differences between the 2009 Final
Rule (AMS) and the Interim Final Rule (AMS) in para. 25 of its second written submission (footnotes 34-38)
(Exhibit CDA-5, p. 2659-2660).
53 The United States explains in footnote 33 in its second written submission that this change was made
at the request of consumer groups, among other interested parties, who believed that meat derived from animals
born, raised, and slaughtered in the United States should largely be labelled as US-origin.
54 Canada clarified that it did not include either the 2009 Final Rule (FSIS) or the Interim Final Rule
(FSIS) as part of the measures at issue.
As for Mexico's claim in respect of the 2009 Final Rule (FSIS), we concluded above that it is not
within the scope of our review in this dispute as that specific instrument was not identified in Mexico's panel
request.
55 Canada's response to Panel question No. 2.

COOL statute.
56 According to Canada, as the overall effect of the Interim Final Rule (AMS) was the
same as that of the 2009 Final Rule (AMS), the Pane l must take into account the effects of the Interim
Final Rule (AMS) although it has expired.57
7.27 Mexico also agrees that both the Interim Final Rule (AMS) and the Interim Final Rule (FSIS)
have been superseded by the 2009 Final Rule (AMS ) and the 2009 Final Rule (FSIS) respectively and
therefore have no legal effect under US law. 58 However, for the purposes of its challenge, Mexico
submits that the Interim Final Rules are evidence of the implementation, operation and administration
of the COOL measure in a manner that unjustifiabl y discriminates against and restricts imports of
Mexican cattle into the United States. Specifically, Mexico refers to the decrease of Mexican feeder
cattle imports into the United States
59 and the increase in the average price differential between
Mexican and like US cattle after the issu ance of the Interim Final Rule (AMS). 60 Mexico also points
to announcements that were made at the end of 2008 concerning the reduction in plants accepting
Mexican cattle.61
(ii) Analysis by the Panel
Interim Final Rule (AMS)
7.28 We recall that the Interim Final Rule (AMS) wa s specifically identified in the complainants'
panel requests and thus falls within the scope of the Panel's terms of reference. 62 All parties also
agree that the Interim Final Rule (AMS) had expire d at the time of the establishment of the Panel and
currently has no legal effect under US law. 63 The complainants are not requesting us to make a
finding or recommendation with regard to the Interi m Final Rule (AMS). The contention between the
complainants and the United States concerning this instrument is, therefore, whether the Panel should
even examine it for the purpose of this dispute.

56 Canada agrees that compared to the Interim Fina l Rule (AMS), the 2009 Final Rule (AMS) provides
more flexibility with respect to the use of Label B on meat from animals imported directly for slaughter and
commingled with US origin animals or mixed origin animals during a single production day (Canada's first
written submission, para. 26; response to Panel question No. 2). At the same time, however, the 2009 Final
Rule (AMS) removed the flexibility of labelling products from US origin animals as Label B, unless there is
commingling with non-US origin animals during a single production day.
57 Canada's response to Panel question No. 2.
58 Mexico's response to Panel question No. 2. Mexico states that it "recognizes that these instruments
are not currently nullifying or impairing benefits accrui ng to Mexico under the WTO Agreements since they
have been superseded by the 2009 Final Rules".
59 Mexico's first written submission, para. 163; response to Panel question No. 2, citing to the
24 February 2009 report by the Congressional Research Service (Exhibit MEX-53).
60 Mexico's first written submission, para. 164; response to Panel question No. 2, citing to USDA price
data contained in Exhibit MEX-47 and summarized in Exhibit MEX-48.
61 Mexico's first written submission, para. 157; response to Panel question No. 2, citing to Tyson letter
of 24 December 2008 (Exhibit MEX-42) and Affidavit (Exhibit MEX-37).
62 We recall the Appellate Body's clarification in US – Upland Cotton that the text of Article 6.2 does
not preclude a Member from making representations with respect to measures whose legislative basis has
expired. The Appellate Body further stated that the fact that a measure has expired is not dispositive of the
preliminary question of whether a panel can address claims in respect of that meas ure although it may affect
whether, and if so, what recommendation a panel should make in respect of such a measure. (Appellate Body
Report, US – Upland Cotton , para. 270) See also the Panel Report, Thailand – Cigarettes (Philippines) ,
paras. 7.42-7.43.
63 Canada's response to Panel question No. 2; Mexico's response to Panel question No. 2;
United States' first written submission, paras. 13,46, 59.

7.29 Specifically, the complainants take the position that the Panel should consider the Interim
Final Rule (AMS) regardless of its legal status under US law. In support of its position, Canada
points to the similarities between the Interim Fina l Rule (AMS) and the 2009 Final Rule (AMS) in
substance as well as in their overall effect: both sets of regulations implement the COOL legislation.
Mexico alleges that the effect it had on importe d livestock during the implementation period (i.e.
September 2008–March 2009) forms evidence of its claim in respect of the COOL requirements.64
7.30 The fact that a measure has already expired or ceased to exist at the time of a panel's
establishment does not make it fall a priori outside the scope of a panel's terms of reference. 65 Insofar
as a measure is clearly identified in the complainan t's panel request in accordance with Article 6.2 of
the DSU, such a measure falls within the scope of the panel's terms of reference. It is another matter,
however, whether the panel should examine a measure that, although procedurally properly before it,
had already expired at the time of the panel's estab lishment. A panel is called upon to consider the
nature of the dispute before it to determine whet her an examination of such a measure, despite its
expired status, would still be necessary to assist the r esolution of the dispute. We also find relevant
the Appellate Body's clarification in EC – Selected Customs Matters that "evidence in support of a
claim challenging measures that are within a panel's terms of reference may pre-date or post-date the
establishment of the panel"66 and that "a panel is not precluded from assessing a piece of evidence for
the mere reason that it pre-dates or post-dates its establishment".67
7.31 In these circumstances and given the legal a nd substantive connection between the Interim
Final Rule (AMS) and the 2009 Final Rule (AMS) 68, as explained in paragraph 7.61, we will take into
consideration the Interim Final Rule (AMS) in exam ining the measures at issue that are currently in
force.
7.32 We note the United States' argument that the Interim Final Rule (AMS) does not provide
evidence of the administration of the 2009 Final Ru le (AMS) because of wh at the United States
alleges to be significant substantive differences be tween these two instruments. In our view, the
substantive differences between these two instruments do not necessarily affect the conclusion that the
Interim Final Rule (AMS) can be examined in the context of the complainants' arguments in respect
of the instruments that are curren tly in force. Particularly, the evolution of the COOL implementing
regulations, shown through the rulemaking process, can assist us in understanding the overall
operation of the COOL requirements. We will ther efore take the Interim Final Rule (AMS) into
consideration in our examination of the instruments that are currently in force, bearing in mind its
substantive similarities to, as well as differences from, the 2009 Final Rule (AMS).
The Interim Final Rule (FSIS)
7.33 Our considerations above with respect to the Interim Final Rule (AMS) apply equally to the
Interim Final Rule (FSIS). Therefore, we will cons ider the Interim Final Rule (FSIS), to the extent
appropriate, in our examination of the COOL statute, the 2009 Final Rule (AMS), and the
Vilsack letter.

64 Mexico's response to Panel question No. 2.
65 See the Appellate Body Reports, US – Upland Cotton , paras. 271-272 and EC – Selected Customs
Matters, paras. 134-135.
66 Appellate Body Report, EC – Selected Customs Matters, para. 188.
67 Appellate Body Report, EC – Selected Customs Matters, para. 188.
68 The summary part of the 2009 Final Rule (AMS) explains the nature of the Interim Final Rule
(AMS) as follows: "[i]n order to meet the September 30, 2008, implementation date [the date designated under
the COOL statute] and to provide the newly affected industries the opportunity to provide comments prior to
issuing a final rule, on August 1, 2008, the Department published an interim final rule with a request for
comments for all of the covered commodities…" (74 FR 2658, Exhibits CDA-5 and MEX-7)

Conclusion
7.34 In light of the above considerations, among the five categories of measures that are within the
scope of the Panel's terms of re ference, namely the COOL statut e, the 2009 Final Rule (AMS), the
Vilsack letter, the Interim Final Rule (AMS), and the Interim Final Rule (FSIS), we will examine and
make findings and recommendations with respect to the first three, namely the COOL statute, the
2009 Final Rule (AMS) and the Vilsack letter. We will not make findings or recommendations on the
Interim Final Rule (AMS) and the Interim Final Rule (FSIS). However, we will consider them, where
relevant, in the context of our examination of the pa rties' claims with regard to the measures that are
currently in force. In the factua l circumstances of this dispute, we do not consider that conducting a
separate examination of these interim measures, or making a finding or recommendation with respect
to such measures, would contribute to resolving the current dispute between the parties.
(d) Treatment of the measures at issue – as a single measure or as several distinct measures
(i) Main arguments of the parties
7.35 Canada and Mexico argue that the Panel must consider the instruments at issue that fall within
the Panel's terms of reference as a single measure consisting of various components, rather than as a
series of independent measures.69
7.36 Canada submits that, while the COOL statute, th e 2009 Final Rule (AMS), and the Vilsack
letter are separate instruments in US law that does not prevent the Panel from considering the
different components, which operate in concer t to achieve a common policy objective of the
United States, as one measure. It would be a mistake to consider each component instrument as a
separate measure.
7.37 Mexico also submits that the COOL statute, the 2009 Final Rule (AMS), the Vilsack letter,
and the administrative guidance, directives and polic y announcements are elements or components of
a single measure (i.e. the COOL measure). 70 Mexico argues that the COOL measure comprises
various closely connected instruments and that each instrument is dependent upon others, starting
with the 2002 Farm Bill. It is the collection of instruments as a whole that creates the measure being
challenged by Mexico. Mexico asserts that the Vils ack letter, administrative guidance, directives and
policy announcements build on the 2009 Final Rules wh ich in turn build on the relevant provisions of
the 2008 and 2002 Farm Bills.71

69 Canada's first written submission, footnote 1 to pa ra. 1; response to Panel question Nos. 1 and 89.
Mexico's response to Panel question Nos. 1 and 89. Canada refers to the Appellate Body Report, EC –
As discussed in Section VII.B.1, both Canada and Mexico include the Interim Final Rule (AMS) as
part of the elements comprising the COOL measure in this regard (complainants' responses to Panel question
No. 1). Mexico additionally refers to the Interim Final Rule (FSIS). We concluded that we would consider,
without making findings or recommendations, these Interim Final Rules, which had already expired at the time
of the Panel's establishment, to the extent relevant and useful for our examination of and findings with respect to
the instruments that are currently in force. Therefore, the question addressed in this section concerns only those
instruments that are within the Panel's terms of reference and currently in force.
70 Mexico also includes both the Interim Final Rule (FSIS) and the 2009 Final Rule (FSIS) as part of
elements comprising the COOL measure. For the reasons that are explained in Section VII.B.1 and footnote 69
above, the question addressed in this section concerns only those instruments that are within the Panel's terms of
reference and currently in force.
71 Mexico's second written submission, para. 20; response to Panel question No. 1.

7.38 Mexico argues that Japan – Film and Turkey – Rice are not applicable to the facts of this
dispute.72 According to Mexico, this is because, unlike the various instruments at issue in this dispute,
each of the measures at issue in Japan – Film and Turkey – Rice had an autonomous existence and
independent effect.
7.39 The United States does not agree with Canada and Me xico that the various measures
described above together form one single COOL m easure. The United States submits that the Panel
should reject the complainants' attempt to charact erize all of the instruments at issue as a single
COOL measure given, among other factors, the substantive differences between the various
instruments challenged in this dispute. 73 Moreover, the United States argues that combining separate
instruments in a single measure has important impli cations for Canada's and Mexico's legal claims.
For example, neither party's arguments address how the COOL statute, apart from the 2009 Final
Rule, is inconsistent with the United States' obliga tions. Therefore, the United States contends that
"each document cited by Canada a nd Mexico should be assessed on its own merits in relation to each
of Canada and Mexico's claims, consistent with the approach used by panels in previous disputes".
74
7.40 In particular, concerning the Vilsack letter, the United States underlines that it is substantively
different from the COOL statute and 2009 Final Rule (AMS). Further, unlike the COOL statute and
2009 Final Rule (AMS), the Vilsack letter, contai ning voluntary suggestions , is not mandatory and
has no legal status under US law. 75 Any review of Canada's and Mexico's claims with respect to the
Vilsack letter would therefore need to take into account these differences in its status under US law.
The United States submits that this, together with th e letter's lack of substantive content, argue in
favour of a separate examination altogether.
7.41 The United States also points out that neither Ca nada nor Mexico attempt to explain how "the
US instruments have operated and continue to operate in conjunction with each other". 76 T h e
United States argues that the complainants ignore the Interim Final Rule (AMS), the Interim Final
Rule (FSIS), and the 2009 Final Rule (FSIS) a ltogether, failing to substantively address these
instruments in any of their submissions. The compla inants also fail to explain how the COOL statute
breaches United States' WTO obligations alone or in conjunction with the 2009 Final Rule (AMS).
This is particularly in light of the fact that the implementing regulations could have been designed in a
manner that, as Canada appears to concede, woul d be WTO-consistent. Thus, according to the
United States, Canada's and Mexico's arguments es sentially boil down to arguments against the 2009
Final Rule (AMS) and the Vilsack letter.
7.42 The United States further submits that the compla inants have failed to demonstrate that the
Vilsack letter operates in conjunction with the 2009 Final Rule (AMS). In light of this and given that
the Vilsack letter has no operative effect at all, the 2009 Final Ru le (AMS) and the Vilsack letter
should be examined separately.77 The United States further argues for a separate examination because
the Vilsack letter does not fall within the scope of the WTO provisions under which Canada and
Mexico challenge the so-called "COOL measure". The Vilsack letter is not a technical regulation
within the meaning of the TBT Agreement and it is not a "law, regulation, or requirement" within the
meaning of the GATT 1994. Therefore, according to the United States, it does not make sense to

72 Mexico's response to Panel question No. 1.
73 United States' second written submission, paras. 11-28; response to Panel question No. 89; and
comments on each other's response to Panel question No. 89.
74 United States' first written submission, paras. 129-130, referring to the Panel Reports on Japan –
Film, paras. 10.88-10.89 and Turkey – Rice, paras. 7.279-7.281.
75 United States' second written submission, para. 12.
76 United States' comments on each other's responses to Panel question No. 89.
77 United States' comments on each other's responses to Panel question No. 89.

examine this instrument under provisions that do not apply to it along with an instrument that falls
within the scope of these provisions.
7.43 The United States argues that the facts in this di spute must be distingui shed from the facts in
EC – Asbestos and Japan – Apples . Unlike in EC – Asbestos , the so-called measures at issue in this
dispute are not contained in a single instrument. Further, contrary to Japan – Apples , the facts and
applicable obligations in this dispute are not identical for each instrument.
(ii) Analysis by the Panel
7.44 We concluded above that the measures at issue in this dispute comprise the COOL statute, the
2009 Final Rule (AMS), and the Vilsack letter. Th e parties disagree whether the Panel should treat
and examine these measures collectively as one single measure or individually as separate measures.
7.45 Specifically, while not disputing that these meas ures are formally separate instruments, the
complainants assert that they should be examined as a single measure because they operate together as
components constituting one single COOL measure. The complainants do not argue, however, that
these measures, if considered individually, are not capable of violating relevant provisions of the
WTO Agreements. In our understanding, their argument is that it would be more appropriate for the
Panel to approach the examination of the instruments at issue in their entirety as one measure. This is
because the instruments operate in conjunction with each other to ach ieve certain policy objectives,
and because they depend on each other as elements or components of a single measure.
7.46 The United States, however, emphasizes that the instruments must be considered as distinct
measures because of their substantive and legal differences.
7.47 In considering whether to examine the instrume nts at issue as one single measure or several
distinct measures, we recall the panel's statement in Japan – Apples regarding the relevance of the
question of how to treat measures: the objective of findings by panels and the Appellate Body is to
"assist the DSB in making sufficiently precise recommendations and rulings so as to allow for prompt
compliance, in order to ensure effective resolution of the dispute".
78
7.48 Our decision here will also affect how they are examined – as one single measure or
individual separate measures – in respect of the pa rties' substantive claims under the TBT Agreement
and the GATT 1994.79 Therefore, a proper characterization of the measures at issue will enable us to
make findings that can assist the DSB in making "sufficiently precise recommendations and rulings"
to ensure effective resolution of the dispute.
7.49 Bearing the above in mind, we start our analys is by observing that questions relating to the
characterization of measures have arisen in previous disputes. In particular, the complainants refer to
disputes such as Japan – Apples , EC – Asbestos , and US – Export Restraints , where several legal
requirements or legal provisions were treated as a single measure. The United States, on the other
hand, refers to the disputes on Japan – Film and Turkey – Rice where several legal requirements were
examined as separate individual measures.
7.50 Although the nature of the questions raised in these disputes was similar, namely whether to
treat several requirements or provisions as a single or multiple measures, the facts specific to each
dispute, examined in light of certain factors, led the panels and the Appellate Body to adopt different

78 Panel Report, Japan – Apples, para. 8.10, referring to the Appellate Body's statement in Australia –
Salmon (para. 223).
79 Canada also points this out in its response to Panel question No. 89.

approaches to the examination of the measures. 80 Among the main factors considered by panels and
the Appellate Body in relation to this question in clude the following: (i) the manner in which the
complainant presented its claim(s) in respect of the concerned instruments 81; (ii) the respondent's
position; and (iii) the legal status of the requirements or instrument(s), including the operation of, and
the relationship between, the requirements or instru ments, namely whether a certain requirement or
instrument has autonomous status.82 We will consider the measures at issue in the present disputes in
light of these factors.
7.51 In the current dispute, Canada and Mexico, as the complainants, argue that the instruments
must be examined as one single measure, whereas the United States, as the respondent, argues that
they must be examined separately. In contrast, the panel in Japan – Apples followed the approach
suggested by Japan, the respondent, that the numerous phytosanitary requirements presented in that
dispute should be examined as a single phytosanitary measure. 83 The panel noted, among other

80 For example, in EC – Asbestos, the issue before the Appellate Body was whether it was appropriate
for the panel to consider the measure at issue in two parts (elements) in assessing the applicability of the
TBT Agreement (i.e. technical regulations) to the meas ure. The Appellate Body found that "the proper
character of the measure at issue [c ould not] be determined unless the m easure [was] examined as a whole".
(Appellate Body Report, EC – Asbestos, paras. 59-65). The facts of that dispute are slightly different from the
current dispute in that the instruments at issue in this dispute are separate instruments, and not elements of the
same instrument. See also Appellate Body Report, Australia – Salmon, paras. 103-104.
In Turkey – Rice , the United States claimed that the concer ned measures were in violation of the
covered agreements, both considered separately and in conjunction. As the panel found that the measures were
each individually inconsistent with Turkey's obligations under covered ag reements, it did not see the need to
reach a separate conclusion on those measures considered jointly, for the resolution of that dispute. (Panel
Report, Turkey – Rice, paras. 7.280-7.281).
81 In US – Export Restraints , the panel describes Canada's, the complainant in that dispute, arguments
as follows: "each of the elements th at [Canada] cites (the statute, the SAA; the Preamble, and US practice)
individually constitutes a measure that is susceptible to dispute settlement, and that, 'taken together' as well,
these elements constitute a measure. Further, ... these measures individually and collectively require a particular
treatment of export restraints". The United States, as the respondent, disagreed with Canada and argued that "it
is dangerous for the Panel to seek to analyse an ill-defined 'measure' as a 'package'". In light of Canada's
position, the Panel decided to first analyse each concerned measure separately and subsequently in light of other
measures to the extent necessary. (Panel Report, US – Export Restraints, paras. 8.82-8.131)
In Japan – Film, the United States argued that Japan's application of the eight distribution "measures"
encouraged and facilitated the creation of a market struct ure for photographic film and paper in Japan in which
imports are excluded from traditional di stribution channel. Japan was of th e view that each measure must be
examined on its own merit. The panel proceeded to examine each of the ei ght distribution measures
individually. Regarding the United States' claim that certa in measures in combination nullify or impair benefits
accruing to the United States, the panel noted that for US theory to have factual relevance in that case, it must be
based on a detailed justification and convincing evid ence of record. But the panel considered that the
United States failed to make such a showing. (Panel Report, Japan – Film, paras. 10.90-10.94, 10.350-10.367).
82 Appellate Body Report, EC – Asbestos , para. 64; Panel Report, US – Export Restraints , para. 8.85.
The panel in US – Export Restraints explains that "it would have to do something concrete, independently of
any other instruments, for it to be able to give rise independently to a violation of WTO obligations". It then
examined the status of each measure under US law to determine whether such measure is operational on its own.
83 In contrast, in Japan – Apples (21.5), the United States "has requested that we treat each requirement
imposed by Japan as a separate measure," and that Japan "also requests us to make specific findings on each of
the requirements that it maintains". The panel, however, decided "to treat all the requirements imposed by
Japan as elements of one measure" because "many elem ents of the compliance meas ure are interrelated and
justified on the basis of the same scientific evidence". Thus, the panel said, "[t]reating them as separate
measures could give the impression that they can apply independently of each other, which may not always be
the case". The panel nonetheless noted, "we may make sp ecific findings on the diff erent elements of this
measure if we believe this will assist in the pr ompt resolution of the dispute". (Panel Report, Japan – Apples
(Article 21.5 – US), paras. 8.28-8.30).

factors, that the United States, the complainant in that dispute, did not consider it inappropriate for the
panel to treat the requirements the United Stat es identified as one single measure, whereas Japan
objected to the panel's reviewing each of these requirements separately.
84 The panel therefore
considered that there was no legal, logical or factual obstacle to treating the requirements as one
single phytosanitary measure. The parties' starkly contrasting views on this matter in the present
dispute, on the other hand, require us to make a critical review of the nature of the measures at issue.
7.52 We will now examine whether and, if so, to what extent the measures operate, legally or
substantively, in conjunc tion with each other or depend on each ot her. In doing so, we will not be
addressing in detail the substantive country of origin requirements contained in these measures. Such
an analysis is provided in Section VII.C.1.
7.53 First, the legal status of the COOL statute and the 2009 Final Rule (AMS) under US law is
distinguishable from that of the Vilsack Letter: the former are the instruments of statutory and
regulatory authorities respectively, whereas the la tter does not have such legal status. The
complainants do not contest this aspect of the Vilsack letter. The parties, however, disagree on
whether the measures, in particular, the Vilsack lette r, should be examined as part of a single measure
together with the COOL statute and the 2009 Final Rule (AMS).
7.54 As explained in detail in para graphs 7.83-7.86, the COOL statute forms the framework and
foundation for the 2009 Final Rule (AMS). Following the completion of the legislative process for
the COOL statute, the 2009 Final Rule (AMS) was subsequently adopted to implement the country of
origin labelling requirements embodied in the COOL st atute according to the authority granted to the
Secretary of Agriculture.85 Legally, therefore, the 2009 Final Rule (AMS) does not have autonomous
status; it lays out the specificities pertaining to th e country of origin labelling requirements that are
necessary to implement the contents of the COOL st atute. The COOL statute and the Final Rule are
thus closely connected to each other in terms of le gal status. This has not been contested by the
United States.86
7.55 On the other hand, the Vilsack letter 87 does not have a formal legal link to either the
COOL statute or the 2009 Final Rule (AMS). In stating this, we are awar e of the disagreement
between the parties regarding the existence of a factual link between the Vilsack letter, on the one
hand, and the COOL statute and the 2009 Final Rule (AMS) on the other, particularly based on the
impact of the letter on the industry. 88 The specific nature of the letter is examined in

84 Panel Report, Japan – Apples, para. 8.15. The panel also considered that the concerned requirements
cumulatively constituted the measures actually applied by Japan to imported apple fruit. (para. 8.16) (emphasis
in original).
85 See paras. 7.83-7.86.
86 United States' first written submission, para. 46.
87 Letter from USDA Secretary Thomas Vilsack to Industry (20 February 2009) (Exhibits CDA-6 and
MEX-8). On the same day, USDA also issued a press release indicating that the COOL regulations would be
implemented as expected on 16 March 2009 (Exhibit MEX-23).
The parties do not dispute that the Vilsack letter falls within the scope of the Panel's terms of reference.
The Vilsack letter was specifically identified in the co mplainants' panel requests and thus is subject to the
Panel's review.
88 In particular, the United States explained that "[u]nlike the Statute and the 2009 Final Rule,
Secretary's Vilsack letter contains no requirements and has no legal status" (United States' first written
submission, para. 84) and that even if the Vilsack letter were to qualify as a measure, it does not constitute a
technical regulation (United States' first written submission, para. 129). The complainants emphasize the letter's
practical impact on industry: Canada argues that "the Vilsack letter contributed to the market uncertainty that
resulted in reduced demand for Canadian livestock from U.S. slaughterhouses and feeding operations" (Canada's
first written submission, para. 138), whereas Mexico asserts that the Vilsack letter has had the effect of

Section VII.D.1(a) in the context of the parties' s ubstantive claims. What is relevant for the question
we are addressing here is that the Vilsack letter does not have the same statutory or regulatory status
as the COOL statute or the 2009 Final Rule (AMS).
7.56 We now turn to the existence of a substantiv e connection among the instruments at issue. At
the core of the complainants' cases are the United States' mandatory country of origin labelling
requirements for meat products as contained in the framework of the COOL statute and the 2009
Final Rule (AMS). 89 As described in Section VII.C.1, the provisions in the COOL statute and the
2009 Final Rule (AMS) are closely linked in the ope ration of the specific COOL requirements. For
example, the basic framework relating to the COOL re quirements laid out in the statute, including the
scope of the specific categories of labels applied to meat products, remains the same in the 2009 Final
Rule (AMS). The 2009 Final Rule (AMS) then further expands the rules on how these different
categories can be flexibly used by entities subj ect to the COOL requirements through the so-called
commingling provisions.90
7.57 The panel's statement in US – Section 301 Trade Act is helpful in this relation:
"[i]n evaluating the conformity of S ections 301-310 with the relevant WTO
provisions we must, thus, be cognizant of th is multi-layered character of the national
law under consideration which includes statutory language as well as other
institutional and administrative elements [i ncluding regulations and administrative
procedures]. The elements of this type of national law are, as is the case here, often
inseparable and should not be read indepe ndently from each other when evaluating
the overall conformity of the law with WTO obligations."
91
7.58 The panel further elaborated:
"Accordingly, in examining the relevant pr ovisions of Sections 301-310 we first look
at the statutory language itself, severed from all other elements of the law. We then
look at the other elements of Sections 301-310 which, in our view, constitute an
integral part of the Measure in question and make our final evaluation based on all
elements taken together."92
7.59 We consider the Panel's approach in US – Section 301 Trade Act to be equally applicable to
the situation here. In our view, the COOL st atute and the 2009 Final Interim Rule (AMS) are
"inseparable and should not be read independent ly from each other" when evaluating the overall
conformity of country of origin requirements, as a pplicable to meat products, with the United States'
WTO obligations.

encouraging US packing plants, backgrounders and feed lots to impose stricter conditions for purchasing
Mexican cattle (Mexico's first written submission, paras. 221-225).
89 See paras. 7.77-7.122.
90 See paras. 7.87-7.100.
91 Panel Report, US – Section 301 Trade Act , paras. 7.26 and 7.27. That Panel further stated, "For
example, even though the statutory language granting specific powers to a government agency may be prima
facie consistent with WTO rules, the agency responsible, within the discretion given to it, may adopt internal
criteria or administrative procedures inconsistent with WTO obligations which would, as a result, render the
overall law in violation. The opposite may be equally true: though the statutory language as such may be prima
facie inconsistent, such inconsistency may be lawfully removed upon examination of other administrative or
institutional elements of the same law". (para. 7.27)
92 Panel Report, US – Section 301 Trade Act, para. 7.28.

7.60 We note that the United States emphasizes th e differences in substance between the
COOL statute and the 2009 Final Rule (AMS). In the United States' view, such differences
necessitate an examination of the instruments as separate measures. The differences as pointed out by
the United States, however, are those arising from their differing legal structure: one (the
COOL statute) is the statutory legal authority and the other (the 2009 Fina l Rule (AMS)) is the
regulation adopted to implement the statute. We do not find any significant difference between these
two instruments in substance that could render them separate and distinct measures. They both
pertain to the country of origin labelling require ments. The 2009 Final Rule (AMS) elaborates on the
specific manner in which subject entities must co mply with the labelling rules embodied in the
COOL statute.
7.61 Given the above considerations, in particular the close legal and substantive link between the
COOL statute and the 2009 Final Rule (AMS), we consider it appropriate to examine the relevant
elements of both the COOL statute and the 2009 Final Rule (AMS) pertaining to the
COOL requirements for meat products "as an integral part" of one single COOL measure. In reaching
this conclusion, we find sufficient "legal, logical and factual" bases to treat the COOL statute and
2009 Final Rule (AMS) as the COOL measure.
93 In this connection, we observe the Appellate Body's
statement in US – Gambling that "the 'total prohibition' described by Antigua does not, in itself,
constitute a 'measure'. ... the 'total prohibition' is th e collective effect of the operation of several state
and federal laws of the United States. And it is th e 'total prohibition' itself – as the effect of the
underlying laws – that constitutes the alleged im pairment of Antigua's benefits under the GATS". 94
Similarly, we consider that the so-called "COOL measure", although used as the term for referring to
the COOL statute and 2009 Final Rule (AMS) in th ese reports, does not constitute a measure in itself,
but reflects the collective effect of the operation of the COOL statute and the 2009 Final Rule (AMS)
in respect of the country of origin labelling requirements contained in those instruments.
7.62 On the other hand, the Vilsack letter's substan tive connection to the COOL statute and 2009
Final Rule (AMS) is not clear. The Vilsack letter st arts with the statement that it pertains to the
implementation of the Final Rule (AMS). 95 It also contains matters relating to the mandatory country
of origin labelling requirements, including concerns of the Secretary of Agriculture himself regarding
the contents of the Final Rule at issue. The f act that the letter was issu ed by the Secretary of
Agriculture – the top authority heading the USDA – gives the letter a certain level of significance.
There are therefore aspects of the letter, including its reference to implementation and the authority
who issued the letter, that connect it to the COOL statute and 2009 Final Rule (AMS). However, we
are not presented with any solid evidence showi ng that the Vilsack letter is connected to the
COOL statute or the 2009 Final Rule (AMS) such that they, in combination, form the substantive
legal basis for the country of origin labelling requirements as set out in the COOL measure.
7.63 In light of its distinct legal and substantive na ture, we consider that the Vilsack letter should
be considered as a separate measure distinguishab le from the COOL statute and the 2009 Final Rule
(AMS). Despite this conclusion, we will be referring to the Vilsack letter to the extent relevant and
necessary for the examination of the COOL st atute and the 2009 Final Rule (AMS), and vice versa.
Further, we do not exclude at this stage of the anal ysis the possibility that when examined on its own,
the Vilsack letter could fall within the scope of the TBT Agreement or the GATT 1994.

94 Appellate Body Report, US – Gambling, para. 124.
95 See para. 7.123 and Section VII.D.1.

2. Products at issue
7.64 The complainants submit that the products at i ssue in this case are imported Canadian cattle
and hogs and imported Mexican cattle, which are used in the United States to produce beef and pork,
commodities covered by the COOL measure.
7.65 Specifically, Canada submits that its complaint concerns the application of the
COOL measure to "beef and pork produced in th e United States from cattle and hogs imported from
Canada".96 In response to a question from the Panel, Canada elaborates that this dispute concerns
Canadian cattle and hogs, whether for immediate slaughter or for feeding in the United States, and not
imports of Canadian beef or pork into the United States. Canada further defines the imported
products at issue as cattle and hogs falling into one of the following categories: (i) born in Canada
and raised in the United States; (ii) born and raised in Canada; or (iii) born in the United States and
raised in Canada. Domestic cattle and hogs, argues Canada, are those born, raised and slaughtered in
the United States.97
7.66 Mexico also specifies that its clai ms relate to exports of Mexican live feeder cattle (i.e. cattle
born in Mexico, and then raised and slaughtered in the United States, including cattle partially fed in
Mexico and subsequently raised and slaughtered in the United States).98
7.67 The fact that the COOL measure formally a pplies to commodities such as beef and pork,
and not livestock (products at issue in this dispute) per se , is addressed in the context of our
examination of the complainants' claim under Article 2.1 of the TBT Agreement.99
3. Order of analysis
7.68 As indicated above 100, Canada's and Mexico's claims re late to specific provisions of the
TBT Agreement and the GATT 1994. In particular , both complainants make national treatment
claims under Article 2.1 of the TBT Agreement and Article III:4 of the GATT 1994. They have also
brought claims under Article 2.2 of the TBT Agreemen t, as well as Articles X:3(a) and XXIII:1(b) of
the GATT 1994. In addition, Mexico advances clai ms under Articles 2.4, 12.1 and 12.3(a) of the
TBT Agreement.
7.69 In their first written submissions, the complain ants addressed their claims in a slightly
different sequence. Canada devel oped arguments for its claims in th e sequential order of the relevant
provisions of the TBT Agreement, followed by th e GATT 1994. On the other hand, Mexico started
with its claim under Article III:4 of the GATT 1994, followed by its claims under the relevant
provisions of the TBT Agreement in sequential order, and by the remaining relevant provisions of the
GATT 1994 also in sequential order. Mexico, however, stated in its first oral statement that it
recognizes that it is accepted practice to first address claims under the TBT Agreement and then under
the GATT 1994.101
7.70 In their second written submissions, both complain ants dealt with their national treatment
claims under Article 2.1 of the TBT Agreement a nd Article III:4 of the GATT 1994 jointly, followed

96 Canada's first written submission, para. 1 (emphasis added).
97 Canada's response to Panel question No. 47.
98 Mexico's first written submission, paras. 193, 199, 261 and 273.
99 See para. 7.246.
100 See Sections III and VII.A.
101 Mexico's opening oral statement at the first substantive meeting of the Panel, para. 26. Mexico then
addressed its national treatment claims under Article 2.1 of the TBT Agreement and Article III:4 of the
GATT 1994 together in its first oral statement.

by their claims under the relevant provisions of the TBT Agreement and then the GATT 1994 in
sequential order.
7.71 For the reasons explained below, we will first address their claims under the provisions of the
TBT Agreement, followed by the claims under the GATT 1994.
7.72 In the appeals procedure in US – Zeroing (EC) (Article 21.5 – EC) the
European Communities referenced the finding by the panel in EC – Sardines
102 as well as the
Appellate Body report on US – Shrimp 103, arguing that the panel made an error by failing to analyse
the European Communities' claims in the order set out in the European Communities' submissions.
The Appellate Body, however, rejected the idea of panels having an obligation to follow the sequence
in which complainants address their claims:
"In our view, these decisions do not support the proposition that panels are 'bound' by
the order of claims made by the complaini ng party. To the contrary, they confirm
that, although panels may decide to follo w the particular order of legal claims
suggested by the complaining party, they may also follow a different order of analysis
so as to apply the correct interpretation of the WTO law at issue. Indeed, we consider
that, in fulfilling its duties under Article 11 of the DSU, a panel may depart from the
sequential order suggested by the complaini ng party, in particular, when this is
required by the correct interpretation or application of the legal provisions at
issue."104
7.73 Furthermore, the Appellate Body established that a claim under the more specific and detailed
agreement should be addressed first over a cl aim under a similar provision in the GATT 1994. 105
Based on the guidance from the Appellate Body, the panel in EC – Sardines considered that "if the
[measure at issue] is a technical regulation, then the analysis under the TBT Agreement would
precede any examination under the GATT 1994".106
7.74 We will start our analysis of the claims under the TBT Agreement with the question of
whether the COOL measure and the Vilsack letter qualify as technical regulations.107

103 Appellate Body Report, US – Shrimp, para. 120.
104 Appellate Body Report, US – Zeroing (EC) (Article 21.5 – EC), para. 277.
105 The Appellate Body in EC – Bananas III stated:
"Although Article X:3(a) of the GATT 1994 and Article 1.3 of the Licensing Agreement both
apply, the Panel, in our view, should have a pplied the Licensing Agreement first, since this
agreement deals specifically, and in detail, with the administration of import licensing
procedures. If the Panel had done so, then there would have been no need for it to address the
alleged inconsistency with Article X:3(a) of the GATT 1994". (Appellate Body Report, EC –
Bananas III, para. 204)
See also Panel Report, EC – Sardines , paras. 7.15-7.16 and Panel Report, EC – Asbestos ,
paras. 8.16-8.17.
106 Panel Report, EC – Sardines, para. 7.16. See also Panel Report, EC – Asbestos, paras. 8.16-8.17.
107 This is also in line with EC – Sardines where the panel held that "only if it is established that the
[measure at issue] constitutes a techni cal regulation within the meaning of Annex 1.1 of the TBT Agreement,
will we then proceed to consider the consistency of the [measure at issue] with the substantive obligations set
out in Articles 2.4, 2.2 and 2.1 of the TBT Agreement". (Panel Report, EC – Sardines, para. 7.20) In the words
of the panel in EC – Sardines, "[a]s the drafters of the TBT Agreement intended to further the objective of the
GATT 1994 with a specialized legal regime that applies only to a limited class of measures, it is necessary to
commence our analysis by examining whether the EC Regulation constitutes a technical regulation within the
meaning of the TBT Agreement".

C. FACTUAL BACKGROUND
7.75 Before commencing our review of the parties' claims, it is useful to recall the legislative
history of the COOL measure (i.e. the COOL stat ute and the 2009 Final Rule (AMS)); the main
obligations and features pertaining to the COOL re quirements under the COOL measure; the Vilsack
letter; and, the main features of the North American livestock and meat industries and trade.
1. The COOL measure
(a) Recent legislative history of the COOL measure
7.76 The following table summarizes the sequence of events relating to the COOL measure:
DATE LAWS AND REGULATIONS OTHERS
13 May 2002 2002 Farm Bill enacted
22 May 2008 2008 Farm Bill enacted
1 August 2008 Interim Final Rule (AMS) issued
28 August 2008 Interim Final Rule (FSIS) issued
11 September 2008 USDA Guidelines (FAQ) 108
30 September 2008 Interim Final Rule (AMS) and Interim
Final Rule (FSIS) entered into force
October 2008 Industry letters to customers 109
15 January 2009 2009 Final Rule (AMS) issued
20 January 2009 Change of the administration in
the United States
20 February 2009 Vilsack letter to industry
16 March 2009 2009 Final Rule (AMS) entered into force
20 March 2009 2009 Final Rule (FSIS) issued and entered
into force

(i) The COOL statute
7.77 As explained above, the statutory provisions of the COOL measure are contained in
section 1638 of the Agricultural Marketing Act of 1946. These provisions were introduced in the
US Congress through the 2002 Farm Bill, which was subsequently amended by the 2008 Farm Bill.
The legislative history of the COOL statute is briefly described below.
7.78 Congress introduced two main mandatory country of origin labelling requirements through
the 2002 Farm Bill. 110 First, the obligation for retailers to provide country of origin information on
the covered commodities, namely beef, pork, lamb, perishable agricultural commodities, peanuts, and
wild and farm-raised fish and shellfish. 111 Second, the criteria that n eed to be met for the covered

108 Exhibit CDA-29.
109 Exhibit CDA-24 (BCI); CDA-36 to 39, CDA-107 (BCI); Exhibit MEX-33, MEX-57.
110 Farm Security and Rural Investment Act of 2002 ("the 2002 Farm Bill") (Public Law 107-171)
(Exhibits CDA-1 and MEX-2). The 2002 Farm Bill was enacted by the United States Congress on 13 May 2002
and amended the Agricultural Marketing Act of 1946.
111 7 U.S.C. 1638 (2)(A) and 1638a (a)(1) (Exhibits CDA-1 and MEX-2).

commodities to be labelled as US origin. In the ca se of beef and pork, the 2002 Farm Bill establishes
the general rule that US origin can only be granted to meat derived from an animal that is exclusively
born, raised and slaughtered in the United States.
112 The 2002 Farm Bill, however, does not stipulate
how to label products derived from animals originating in countries other than the United States.113
7.79 The 2002 Farm Bill specifies that the country of origin labelling requirements would be
applied at the retail level as of 30 September 2004.114 Additionally, the Bill mandates the Secretary of
Agriculture to promulgate, through the AMS 115, the regulations necessary to implement the
requirements contained in the Bill. The deadlin e for issuing the implementing regulations was,
however, delayed on two occasions. 116 First, on 23 January 2004, Section 749 of the Consolidated
Appropriations Act of 2004 117 amended Section 285 of the Agricu ltural Marketing Act, extending the
date of the implementation to 30 September 2006. 118 The second extension was inscribed in
Section 792 of the Agriculture, Rural Developmen t, Food and Drug Administration, and Related
Agencies Appropriations Act of 2006 119, which set the new deadline for issuing the regulations on
30 September 2008.
7.80 The United States explains that "Congress dete rmined that the best way to balance the
concerns of interested parties while achieving the po licy objective of providing consumer information
was to revisit the COOL statute in the 2008 Farm Bill". 120 Accordingly, the 2008 Farm Bill was
introduced by the United States on 22 May 2008, modifying certain aspects of the 2002 Farm Bill.
7.81 The 2008 Farm Bill sets out new rules for determ ining the origin of meat where animals from
several countries are involved in the meat production process. Such rules were not contained in the
2002 Farm Bill. Specifically, the 2008 Farm Bill created four different labelling categories for muscle
cut meat and also one for ground meat. In additi on, the 2008 Farm Bill introduced the possibility of
commingling meat of different origins, broadene d the exemptions for processed foods, and lessened
the record keeping requirements and enforcement fi nes. Finally, the 2008 Farm Bill added chicken to
the list of covered commodities.121
7.82 Provisions pertaining to the COOL requireme nts introduced by the 2008 Farm Bill were
subsequently codified into Subtitle D of the Ag ricultural Marketing Act of 1946 (7 U.S.C. 1621
et seq.).122
(ii) Regulations implementing the COOL statute
7.83 As described above, the 2002 Farm Bill mandat es the Secretary of Agriculture, through the
AMS, to promulgate the regulations necessary to implement the COOL requirements contained in the
Bill.123

112 7 U.S.C. 1638a (a)(2) (Exhibits CDA-1 and MEX-2).
113 Canada's first written submission, para. 14.
114 7 U.S.C. 1638d.
115 See footnote 34 above.
116 Mexico's first written submission, paras. 29-32; United States' first written submission, para. 67.
117 Public Law 108-119, 118 Stat. 3 (23 January 2004).
118 This extension, however, did not apply to "farm-raised fish" and "wild fish". Consequently, the
implementing regulations for these two categories of products were enacted on 5 October 2004. (Mandatory
Country of Origin Labeling of Fish and Shellfish; Interim Rule, 7 C.F.R. Part 60 (Exhibit MEX-17).
119 Public Law 109-97, 119 Stat. 2120 (10 November 2005).
120 United States' first written submission, para. 68.
121 United States' first written submission, paras. 73-83.
122 Food, Conservation and Energy Act of 2008 ("the 2008 Farm Bill") (Public Law 110-234)
(Exhibits CDA-2 and MEX-3).

7.84 The rulemaking process in the United States gene rally involves the issu ance of an interim
final rule which is open for comments during a period usually lasting 60 days. 124 Accordingly, on
1 August 2008 the AMS published the Interim Final Rule, which entered into force on
30 September 2008.125 The Interim Final Rule (AMS) sets out the rules governing the use of the four
labelling categories of muscle cut meat.126
7.85 Subsequently, the 2009 Final Rule (AMS) was enacted on 15 January 2009 and entered into
force on 16 March 2009. 127 The 2009 Final Rule (AMS) thus superseded the Interim Final Rule
(AMS). Substantively, the 2009 Final Rule (AMS ) contains provisions permitting the commingling
of meat of different origin during a single production day and, thus, using certain labels
interchangeably. On the other hand, it removes th e possibility contained in the Interim Final Rule
(AMS) of labelling meat derived exclusively from US-origin animals as meat of multiple origins
without any commingling involved.
128
7.86 To be in conformity with the Interim Final Rule (AMS), FSIS published on 28 August 2008
an interim final rule on mandatory country of or igin labelling for the commodities covered by the
2008 Farm Bill. Subsequently, to be in accordance with the changes introduced by the 2009 Final
Rule (AMS), FSIS enacted the 2009 Final Rule (FSIS) which entered into force on 20 March 2009.129
(b) Country of origin labelling requirements for meat products
(i) Main requirements
The COOL statute
7.87 Section 1638a (a)(1) of the COOL statute estab lishes the main obligation concerning country
of origin information:
"Except as provided in subsection (b) of this section, a retailer of a covered
commodity shall inform consumers, at the final point of sale of the covered
commodity to consumers, of the country of origin of the covered commodity".
130
7.88 Thus, the main obligation to provide the country of origin of meat falls on the retailer.
However, "any person engaged in the business of supplying a covered commodity to a retailer shall
provide information to the retailer indicating the country of origin of the covered commodity".131

123 7 U.S.C. 1638, 1638a (a)(1) and 1638d (b). United States' first written submission, paras. 30-31.
124 U.S.C. Title 5, Part I, Chapter 5, Subchapter II, §553 (c).
125 Exhibits CDA-3 and MEX-4.
126 United States' first written submission, paras. 69-7 0. These four labelling categories for muscle cut
meat products will be explained in detail in section (c)( i) which deals with the specific obligations set forth by
the COOL Statute and the 2009 Final Rule (AMS).
127 The 2009 Final Rule (AMS) was codified in the Code of Federal Regulations (C.F.R) in Title 7
(Agriculture), Chapter 1 (Agricultura l Marketing Service, Department of Agriculture), Part 65 (Country of
Origin Labelling of Beef, Lamb, Chicken, Goat Meat, Wild and Farm-raised Fish and Shellfish, Perishable
Agricultural Commodities, Macadamia Nu ts and Peanuts) (i.e. 7 C.F.R. Pa rts 60 and 65) (Exhibits CDA-5 and
MEX-7).
128 Canada's first written submission, para. 26.
129 Mexico's first written submission, para. 43 (E xhibit MEX-6). According to para. 30 of the
United States' first written submission, the "FSIS has primary authority within the U.S. government for ensuring
that meat and meat food products are safe, wholesome, and accurately labelled".
130 7 U.S.C. 1638a (a)(1), (Exhibit MEX-9).
131 7 U.S.C. 1638a (e).

7.89 The COOL statute establishes four categories
132 to classify the products at issue (muscle cut
meat) and one additional category for ground meat:133
(A) United States country of origin ("U.S. origin" – Category A 134) – meat
derived from animals:
(1) "exclusively born, raised, and slaughtered in the
United States";
(2) "born and raised in Alaska or Hawaii and transported for a
period not more than 60 days through Canada to the
United States and slaughtered in the United States"; or
(3) "present in the United States on or before 15 June 2008".
(B) Multiple countries of origin (Category B
135) – meat derived from animals:
(1) "not exclusively born, raised, and slaughtered in the
United States"; or
(2) "born, raised, or slaughtered in the United States"; and
(3) "not imported into the United States for immediate
slaughter".
The retailer may designate the country of origin as all of the countries
in which the animal may have been born, raised, and slaughtered.
(C) Imported for immediate slaughter (Category C 136) – meat derived from
animals
– "imported into the United St ates for immediate slaughter".
(D) Foreign country origin (Category D 137) – meat derived from animals
– "not born, raised, or slaughtered in the United States".
(E) Ground meat products (Category E 138) – the notice of country of origin
includes
(1) "a list of all countries of origin …"; or
(2) "a list of all 'reasonably possible' countries of origin …".

132 The parties refer to the categories as A, B, C, D and E, which corresponds to the literals used in the
COOL Statute.
133 The descriptions in this paragraph of the categories of meat for labelling purposes are based on the
text of the COOL statute.
134 7 U.S.C. 1638a (2)(A).
135 7 U.S.C. 1638a (2)(B).
136 7 U.S.C. 1638a (2)(C).
137 7 U.S.C 1638a (2)(D).
138 7 U.S.C. 1638a(2)(E).

The 2009 Final Rule (AMS)
7.90 The 2009 Final Rule (AMS) first lays do wn rules governing how the labels under
categories A, B and C can be interchangeably used wh en meat of different origins is commingled in
the production process.
7.91 Section 65.125 of the 2009 Final Rule (AMS ) defines the term "commingled covered
commodities" as:
"[C]overed commodities (of the same type) presented for retail sale in a consumer
package that have been prepared from raw material sources having different
origins."139
7.92 The 2009 Final Rule (AMS) also defines the terms "raised" and "imported for immediate
slaughter".140 Categories B and C are distinguished based on whether animals were raised in the
United States (category B), instead of being importe d right before slaughter (category C). The term
"raised" is considered to be the "period of time from birth until slaughter or in the case of animals
imported for immediate slaughter as defined in secti on 65.180, the period of time from birth until date
of entry into the United States". 141 Further, section 65.180 refers to "imported for immediate
slaughter" as "that term is defined in 9 C.F.R. §93 .400, i.e. consignment directly from the port of
entry to a recognized slaughtering establishment a nd slaughtered within 2 weeks from the date of
entry".142
7.93 The 2009 Final Rule (AMS) sets forth two differe nt provisions regulating the commingling of
meat in a single production day, depending on the origin of animals from which the meat is derived.143
7.94 Section 65.300(e)(2) of the 2009 Final Rule (A MS) provides the following with regard to
categories A and B:
"For muscle cut covered commodities deri ved from animals born, raised, and
slaughtered in the U.S. that are commingled during a production day with muscle cut
covered commodities described in § 65.300(e)(1), the origin may be designated as
Product of the United States, Country X, and (as applicable) Country Y."
144
7.95 With regard to categories B and C, Section 65.300(e)(4) of the 2009 Final Rule (AMS) states:
"For muscle cut covered commodities derived from animals that are born in
Country X or Y, raised and slaughtered in the United States, that are commingled

139 2009 Final Rule (AMS), 7 C.F.R. §65.125 (Exhibits CDA-5 and MEX-7).
140 The 2009 Final Rule (AMS) removes the possibility of using Label B for exclusively US-origin
animals, as was initially foreseen in the Interim Final Rule (AMS). The Interim Final Rule (AMS) provided that
category B would be applicable when an animal was born, raised, and/or slaughtered in the United States.
Accordingly, the inclusion of the term and/or made it possible to conclude that an animal that was born, raised
and slaughtered in the United States (and thus, would in principle be subject to category A) could also fall under
category B.
141 7 C.F.R. §65.235.
142 7 C.F.R. §65.180.
143 In response to Panel question No. 29 from the First Substantive Meeting, the United States explains
that US meat processors tend to op erate one or two production shifts each day followed by a clean up shift and
thus, "a single production day" is generally understood in the industry as the period of production between the
two clean up shifts.
144 7 C.F.R. §65.300 (e)(2).

during a production day with muscle cut c overed commodities that are derived from
animals that are imported into the United St ates for immediate slaughter as defined in
§ 65.180, the origin may be designated as Product of the United States, Country X,
and (as applicable) Country Y. ..."
145
7.96 When meat falling under categories A, B or C is commingled on a single production day, the
resulting meat might carry a different label from the one it should in principle be subject to under the
categories set out in the COOL measure. 146 As shown in the above provisions, the first possibility is
the commingling of meat under categories A and B, which allows the resulting meat to use Label B
even if a particular piece of meat may have been derived from a category A animal. Under the second
provision, when meat under categories B and C are commingled during a single production day, the
meat derived therefrom may use Label B.147
7.97 The 2009 Final Rule (AMS) further provides that the labelled countries may be listed in any
order when the meat is derived from animals classified as category B, or when meat falling under
categories A and B, as well as B and C, is commingled during a single production day.148
7.98 In essence, the 2009 Final Rule (AMS) allows the use of Label B or C when meat falling
under category A, B, and/or C is commingled in a single production day.149
7.99 The United States 150 has provided the following table illustrating the requirements for each
label with the respective country of origin notification in the right-hand column:
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 US, Country X,
Country Y (if applicable)
Category C Meat from animals imported in to the United States for
immediate slaughter
Product of Country X, US
Category D Foreign meat imported into the United States Product of Country X

7.100 Based on the parties' submissi ons, we understand that the different labelling possibilities as
prescribed under the 2009 Final Rule (AMS) are as follows:

145 7 C.F.R. §65.300 (e)(4).
146 To illustrate, when meat classified under category A is commingled during a single production day
with meat falling under category B, the resulting meat can use Label B.
147 7 C.F.R. §65.300 (e)(4).
148 The text of this provision contained in the 2009 Final Rule (AMS). 7 C.F.R. §65.300 (e)(4) states
the following: "In each case of paragraphs (e)(1), (e)(2), and (e)(4) of this section, the countries may be listed in
any order".
149 United States' first written submission, para. 77.
150 United States' first written submission, para. 54. Canada and Mexico provided similar tables which
do not differ substantially from the one presented by the United States.
Product of
the US
Label A When 100% of the meat is derived from category A animals

(ii) Entities subject to the country of origin labelling requirements
7.101 Under both the COOL statute
151 and the 2009 Final Rule (AMS) 152, the entities subject to the
COOL requirements are "retailers". Section 1(b) of the Perishable Agricultural Commodities Act of
1930 (the "PACA") defines "retailer" as "a person th at is a dealer engaged in the business of selling
any perishable agricultural commodity at retail". 153 The term "dealer" is limited since "no person
buying any such commodity solely for sale at reta il shall be considered as a 'dealer' until the invoice
costs of his purchases of perishable agricultural co mmodities in any calendar year are in excess of
US $230,000".154 In sum, for the purposes of the COOL measure, a retailer means an entity selling
perishable agricultural commodities (i.e. fruits and vegetables, including cherries in brine155) at a level
above USD 230,000 per year.156

151 7 U.S.C. 1638 (6).
152 7 C.F.R. §65.240.
153 United States' first written submission, para. 34, referring to 7 U.S.C. 499a(b).
154 United States' first written submission, para. 34, referring to 7 U.S.C. 499a(b)(6).
155 7 C.F.R. §65.205.
156 Mexico's first written submission, paras. 7-10; United States first written submission, para. 49.
According to Mexico, the PACA (7 U.S.C. 499a(b)(11)) de fines a retailer as "a person that is a dealer engaged
Label C
Label D
1) When 100% of the meat is derived from category C animals
2) When A and B meat is commingled on a single production
day, meat may be labelled as C
3) When A and C meat is commingled on a single production
day
4) When 100% of the meat is de rived from category B animals,
meat may be labelled as C
5) When B and C meat is commingled on a single production
day
6) When A, B and C meat is commingled on a single production
day
When it is 100% imported foreign meat
Product of
country X,
product of
the US
Product of
country X
Product of
the US,
product of
country X
Label B
1) When 100% of the meat is derived from category B animals
2) When A and B meat is commingled on a single production
day
3) When A and C meat is commingled on a single production
day
4) When B and C meat is commingled on a single production
day
5) When A, B and C meat is commingled on a single production
day

7.102 Nevertheless, as mentioned above, any person that supplied a covered commodity to a retailer
must provide information on the country of origin to the retailer.
157
(iii) Exemptions from the scope of the COOL requirements
7.103 The COOL measure has certain exemptions in terms of the products and the entities covered.
Products exempted
7.104 The COOL statute 158 excludes from its scope any of the covered commodities that are an
"ingredient in a processed food item".159
7.105 The 2009 Final Rule (AMS) adds that processing resulting in a change of the character of a
covered commodity includes cooking, curing, smoking and restructuring.160
Entities exempted
7.106 The COOL statute also establishes that the obligation of providing country of origin
information shall not apply to food service establishments:
"if the covered commodity is –
(1) prepared or served in a food service establishment; and
(2) (A) offered for sale or sold at the food service establishment in normal
retail quantities; or
 (B) served to consumers at the food service establishment."
161
7.107 The COOL statute defines the term "food servi ce establishment" as "a restaurant, cafeteria,
lunch room, food stand, saloon, tavern , bar, lounge, or other similar facility operated as an enterprise
engaged in the business of selling food to the public".162
7.108 The 2009 Final Rule (AMS) further develops th at definition by adding that "[s]imilar food
service facilities include salad bars, delicatessens, and other food enterprises located within retail

in the business of selling any perishable agricultural commodity at retail". Mexico adds that 7 U.S.C.
499a(b)(6) provides in defining the term "dealer" that "(B) no person buying any such commodity solely for sale
at retail shall be considered as a 'dealer' until the invo ice costs of his purchases of perishable agricultural
commodities in any calendar year are in excess of [US] $230,000".
157 7 U.S.C. §1638a (e).
158 7 U.S.C. §1638a (e).
159 According to §65.220 of the 2009 Final Rule (AMS) a processed food item means: "a retail item
derived from a covered commodity that has undergone sp ecific processing resulting in a change in the character
of the covered commodity, or that has been combined with at least one other covered commodity or other
substantive food component (e.g. choc olate, breading, tomato sauce), excep t that the addition of a component
(such as water, salt, or sugar) that enhances or represents a further step in the preparation of the product for
consumption, would not in itself result in a processed food item".
160 7 C.F.R. §65.220.
161 7 U.S.C. §1638a (b).
162 7 U.S.C. §1638 (4).

establishments that provide ready-to-eat foods that are consumed either on or outside of the retailer's
premises".163
(iv) Other obligations
7.109 The COOL measure additionally sets forth obligations with respect to (a) the methods of
notification of the country of origin information to the consumer; (b) the audit verification system to
ensure compliance with the COOL requirements; (c) the certification of origin; and (d) the
enforcement of the statute and regulation.
The methods of notification
7.110 The COOL requirements prescribe in detail the methods of notifying the country of origin
information to the consumer. The COOL statute provi des that the country of origin information may
be conveyed to consumers "by means of a label, st amp, mark, placard, or other clear and visible sign
on the covered commodity or on the package, display, holding unit, or bin containing the commodity
at the final point of sale to consumers".
164 The 2009 Final Rule (AMS) additionally sets forth that the
notification can be in "the form of a placard, sign, label, sticker, band, twis t tie, pin tag, or other
format that allows consumers to identify the country of origin".165
7.111 The 2009 Final Rule (AMS) prescribes that the declaration made in any of the mentioned
forms can be "typed, printed or handwritten" 166 and "must be legible and placed in a conspicuous
location, so as to render it likely to be read a nd understood by a customer under normal conditions of
purchase".167
7.112 Furthermore, the 2009 Final Rule (AMS) establish es that the declaration of the country of
origin may be in the form of a statement such as "product of USA", "produce of the USA", "grown in
Mexico", or may only contain the name of the country (e.g. "USA" or "Mexico"). 168 The 2009 Final
Rule (AMS) also states that, as a general rule, count ry abbreviations are not acceptable. However, the
abbreviations accepted under the US Customs and Border Protection (CBP) rules are deemed to
comply with the COOL requirements (e.g. "U.K." for "The United Kingdom of Great Britain and
Northern Ireland" or "U.S." and "USA" for the "United States of America").
169

163 7 C.F.R. §65.140.
164 7 U.S.C. 1638a (c) (1).
165 7 C.F.R. § 65.400 (a).
166 7 C.F.R. § 65.400 (c).
167 7 C.F.R. § 65.400 (b).
168 7 C.F.R. § 65.400 (a).
169 7 C.F.R. § 65.400 (e).

7.113 In response to a question from the Panel, th e parties submitted photographs of muscle cut
labels taken in 2010.
170 For instance, Mexico and the United States submitted the following
photographs of Label A171:

7.114 As regards mixed-origin labels , Canada submitted, for instance, a photograph containing the
following label172:

7.115 Likewise, the United States submitted the fo llowing photographs as an example of Label B 173
and an example of Label C as affixed on a retail shelf174:

170 See Canada's, Mexico's and the United States' responses to Panel question No. 23. See also
Exhibits CDA–161, MEX–71 and US–67, US-94, US-95, US-96, US-97 and US-98.
171 Exhibit MEX–71 and US-67.
172 Exhibit CDA-161.
173 Exhibit US-67.
174 Exhibit US-67.

The audit verification system
7.116 With respect to the audit verification system , the COOL statute grants authority to the
Secretary of Agriculture to "conduct an audit of any person that prepares, stores, handles, or
distributes a covered commodity for retail sale to verify compliance"175 with the COOL requirements.
7.117 This audit verification system imposes certa in recordkeeping requirements for producers
along the meat production chain. The COOL statute est ablishes that a person subject to an audit must
provide to the Secretary country of origin records, including animal health papers, import or customs
documents, or producer affidavits. The Secretary is prohibited from requiring any record other than
those maintained in the course of the normal conduct of business of the audited person.176
7.118 The 2009 Final Rule (AMS) specifies that any person engaged in the business of supplying a
covered commodity to a retailer, whether directly or indirectly, must maintain records to establish and
identify the immediate previous source (if applic able) and immediate subsequent recipient of a
covered commodity for a period of one year from the date of transaction. 177 In the case of beef and
pork, the 2009 Final Rule (AMS) provides that the slaughterhouse is the supplier responsible for
initiating a claim of country of origin. Therefore, such supplier must posse ss the records that are
necessary to substantiate the country of origin cl aim for a period of one year from the date of the
transaction.178
7.119 With respect to imported commodities that fall under category D (e.g. meat imported from
Canada or Mexico)179, the 2009 Final Rule (AMS) requires that records provide clear product tracking
from the port of entry into the United States to th e immediate subsequent recipient, and accurately
reflect the country of origin as identified in rele vant CBP entry documents. Such records must be
maintained for a period of one year from the date of transaction.180
7.120 The 2009 Final Rule (AMS) further elaborates on the implementation details that such a
verification system requires. Section 65.500(a)(1) pr ovides that all records must be legible, and can
be maintained in either electronic or hard-copy formats. Due to the variation in inventory and
accounting documentary systems, various forms of documentation and records are acceptable.
Moreover, Section 65.500(a)(2) establishes that or igin-related records maintained in the normal
course of business must be available to USDA re presentatives within five business days of the
request.
The certification of origin
7.121 The COOL statute provides that the Secretar y of Agriculture shall not use a mandatory
identification system to verify the country of or igin of a covered commodity. For the purpose of
certifying the country of origin of a covered commodity, the Secretary can use, as a model,

175 Mexico's first written submission, para. 25, referring to 7 U.S.C. 1638a (d)(1) (Exhibit MEX-9).
176 United States' first written submission, para. 81; Mexico's first written submission, para. 25,
referring to 7 U.S.C. 1638a (d)(2).
177 7 C.F.R. § 65.500(b)(3).
178 7 C.F.R. § 65.500(b)(1).
179 § 65.300(f) of the 2009 Final Rule (AMS) provides that category D meat shall be labelled in the
following manner: "(f) Labeling Imported Covered Commodities. Imported covered commodities for which
origin has already been established as defined by this law (e.g., born, raised, and slaughtered or produced) and
for which no production steps have occurred in the United States, shall retain their or igin, as declared to U.S.
Customs and Border Protection at the time the product entered the United States, through retail sale".
180 7 C.F.R. § 65.500(b)(4).

certification programmes in existence on the date of enactment of the Agricultural Marketing Act of
1946 (e.g. the carcass grading and certification system effectuated under the Act, the voluntary
country of origin beef labelling system containe d in the Act, voluntary programmes established to
certify certain premium beef cuts, the origin veri fication system established for the child and adult
care food programme under Section 17 of the Richar d B. Russell National School Lunch Act, or the
origin verification system established for the market access program under Section 203 of the
Agricultural Trade Act of 1978 (7 U.S.C. 5623)).
181
The enforcement of the COOL requirements
7.122 In situations where a violation of the compliance with the COOL requirements is found, the
COOL statute establishes a two-step approach for enforcing the COOL requirements. First, the
Secretary of Agriculture notifies the retailer or s upplier to a retailer found in violation and provides
the retailer or supplier a thirty–day period for co mplying with the COOL statute and regulations. 182
Second, after that thirty–day period, if the retaile r or supplier has not made a good faith effort to
comply with the COOL requirements and continues to wilfully violate them, the Secretary may fine
the retailer or supplier up to USD 1,000 per violation. 183 The United States explains that as part of the
evolution of the COOL legislative process the fi nes decreased from USD 10,000 per violation in the
2002 Farm Bill to USD 1,000 per vi olation in the 2008 Farm Bill. 184 The United States explains that
as of October 2010 no fines 185 for failure to comply with the 2009 Final Rule (AMS) had been
imposed.186
2. The Vilsack letter
7.123 In Section VII.B.1(d)(ii) above, we briefly described the Vilsack letter, a letter sent to
industry representatives by the US Secretary of Agriculture, Thomas J. Vilsack. The Vilsack letter, in
relevant part, states:
"This letter pertains to the implementation of the ... (COOL) Final Rule. ... I am
suggesting ... that the industry voluntarily adopt the following practices to ensure that
consumers are adequately informed about the source of food products: … processors
should voluntarily include information about what production steps occurred in each
country when multiple countries appear on each label. … Even if products [that are
otherwise exempt] are subject to curing, smoking, broiling, grilling, or steaming,
voluntary labeling would be appropriate. … Re ducing the time allowance [during
which a processor is allowed to reference all of the reasonable possible countries of

181 7 U.S.C. 1638a(f).
182 7 U.S.C. 1638b(a).
183 7 U.S.C. 1638b(b).
184 United States' first written submission, para. 82.
185 According to the United States (response to Panel question No. 27) the USDA has identified a few
violations at the retail level during its usual review period, but all of the retailers cited for non-compliance
demonstrated to the USDA that they had addressed their violation within 30 days. Therefore, no fines were
imposed. As a result, the USDA has not yet made a determination as to how to apply the fines related to the
COOL requirements. In the event that USDA determines to impose a fine, submits the United States, the size of
the fine would depend on the particular facts and circumstances of a violation, and in general, USDA does not
intend to automatically apply the fine to each individual package that is not labelled or mis-labelled.
Mexico argued that because of th e possibility that USDA could impose fines on a per-item basis, there
is a perceived risk of very large fines that makes it rational for U.S. industry to attempt to avoid any possibilities
of violations by limiting the use of Mexican and Canadian cattle (footnote 71 in Mexico's second written
submission).
186 United States' response to Panel question No. 27.

origin on its ground meat] to ten days woul d enhance the credibility of the label."
(emphasis added)
7.124 The Vilsack letter thus suggests the industry voluntarily follow three practices.
7.125 First, the letter recommends that "processors should voluntarily include information about
what production step occurred in each country wh en multiple countries appear on the label". 187 For
instance this would imply informing on the label: "Born in country X, Raised and Slaughtered in
Country Y". This goes beyond the above mentione d obligations contained in the 2009 Final Rule
(AMS), where the production step is not explic itly mentioned in the label and the commingling
flexibilities provide a leeway for interchanging the order in which the countries are listed.
7.126 Second, Secretary Vilsack takes the view that the definition of "processed foods", a category
that is exempted from the COOL requirements, may be too broadly drafted. Therefore, he
recommends that the industry voluntarily provide country of origin information when the products are
subject to curing, smoking, broiling, grilling or steaming.
7.127 Finally, the 2009 Final Rule (AMS) provides that ground meat should bear the name of all the
countries of origin of meat that may have reasona bly been in a processor's inventory over a period of
60 days. In this regard, the Vilsack letter recomme nds that this period be reduced from 60 to 10 days.
The alleged objective of such a recommendation is to enhance the credibility of the label.188
7.128 The specific aspects of the Vilsack letter, as descr ibed above, will be examined in more detail
in Section VII.D.1(a) where we address whether the measures at issue in these disputes fall within the
scope of the TBT Agreement.
3. The North American livestock and meat industries and trade
(a) Stages of livestock and meat production
(i) Cattle and beef
7.129 In general, the production process from cattle to beef consists of four stages: (i) the cow/calf
stage; (ii) the backgrounding stage; (iii) the feed ing stage; and (iv) the slaughtering, cutting and
packing stage. The production of cattle covers th e first three stages, and takes approximately 33
months from conception to slaughter weight.189
7.130 The production of cattle begins in the cow/calf stage . This stage involves the breeding of
cows and the subsequent removal of the calves from the cow. A calf is a young bovine animal under
one year of age.190 At the end of the cow-calf stage, the calf weighs between 160 and 300 kilograms,
and is sold for backgrounding or directly to feeding operations.191
7.131 Backgrounding involves feeding calves on a forage-based diet (e.g. grass, hay, clover, alfalfa)
to increase their weight to 300-350 kilograms. 192 The length of time during which an animal is fed a
forage-based diet is based on several factors, such as the cost of f eed, the availability of pasture and

187 Vilsack letter, page 1 (Exhibits CDA-6 and MEX-8).
188 Vilsack letter, pages 1-2 (Exhibits CDA-6 and MEX-8).
189 Canada's first written submission, para. 42 and Annex I (Exhibit CDA-51); Mexico's first written
submission, paras. 116-148.
190 Canada's first written submission, Annex III.
191 Canada's first written submission, paras. 43-46; Mexico's first written submission, paras. 116-121.
192 Canada's first written submission, para. 47; Mexico's first written submission, paras. 137-139.

the expected future price of fed cattle.
193 At the end of the backgrounding stage, calves are sold to
feeding operations.
7.132 The feeding stage takes place in feeding operations or feedlots. Feeding operators purchase
cattle at a weight of approximately 350 kilogram s from backgrounders a nd cow/calf operations and
feed them intensively on a grain-based diet until they reach slaughter weight (550-600 kilograms) and
are then sold to slaughterhouses.194
7.133 The slaughtering, cutting and packing stage completes the meat production process. Once the
animal is slaughtered, the carcass is obtained by separating the body from the head, the organs and the
hide. The carcass is broken down into muscle cuts of meat, which are packed and then sold to
wholesalers, retailers and others.195
(ii) Hogs and pork196
7.134 Unlike cattle, the production process of hogs is continuous. Hogs cannot be put out to pasture
to slow down their growth rate. Once hogs reach sl aughter weight, they cannot remain in the growing
and feeding facilities for more than a few additional days due to animal welfare concerns.197
7.135 The production process from hogs to pork involves four stages: (i) the farrowing stage; (ii)
the nursery stage; (iii) the feeding stage; and (iv) the slaughtering, cutting and packing stage.
The production of hogs covers the first three st ages, and takes approximately ten months from
conception until slaughter weight.198
7.136 During the farrowing stage a sow gives birth to a litter of nine to eleven piglets, each
weighing 1-2 kilograms.199 The piglets are separated from the so w between 21 to 28 days after birth,
when they weigh 6-8 kilograms.200
7.137 After the farrowing stage, piglets are moved to nurseries for nearly seven weeks until they
reach the weight of a "feeder pig" (25-28 kilograms).201
7.138 During the feeding stage, feeder pigs are transferred to feeder barns , where they are fed a
high-energy concentrated grain diet (e.g. corn, soyb eans barley or wheat) until they become slaughter
hogs with a slaughter weight of approximately 115 kilograms.202
7.139 The slaughtering, cutting and packing stage completes the pork production process. Once the
hogs are slaughtered , they are turned into carcasses separa ted from the head and the organs.

193 Canada's first written submission, para. 48.
194 Canada's first written submission, paras. 43-50 (Exhibit CDA-51); Mexico's first written
submission, paras. 140-143.
195 Canada's first written submission, para. 100; Mexico's first written submission, paras. 144-147.
196 Hogs and pork are relevant only to the dispute by Canada.
197 Canada's first written submission, paras. 64-66. The United States has not commented on this
description presented by Canada.
198 Canada's first written submission, paras. 59-68 and Annex II.
199 Canada's first written submission, Annex III.
200 Canada's first written submission, para. 60.
201 Canada's first written submission, para. 61.
202 Canada's first written submission, paras. 59-63 and Annex II; Exhibit CDA-61.

The carcasses are further processed into pork chops, which are packed and then sold to wholesalers,
retailers and others.203
(b) Integrated nature of the North American livestock trade
7.140 The market for livestock and meat of Cana da, Mexico and the United States is highly
integrated. Different stages of the North American livestock and meat production are often performed
in more than one country. Trade in livestock ta kes place between, on the one hand, the United States
and Canada and, on the other hand, the United Stat es and Mexico. Both Ca nada and Mexico export
cattle to the United States to be processed into meat. Canada additiona lly exports hogs to the
United States.204 The United States also exports a very limited amount of livestock to Mexico and
Canada205, but this is not at issue in the current dispute.206
7.141 Livestock are classified as fed or feeder depending on whether they are ready for slaughter,
or are still at the backgrounding or feeding operations stage. Most of the Canadian cattle exported to
the United States are fed cattle: these usually go through the first three stages in Canada and are only
exported to the United States for immediate sla ughter. A smaller but considerable portion of
Canadian cattle are feeder cattle : these are exported to the United States directly after the
backgrounding stage. 207 Conversely, Mexico generally exports feeder cattle immediately after the
cow/calf stage to US backgrounding and feeding operations 208, because of a lack of sufficient
grasslands in Mexico and the general lack of we ll-developed feed grains and cattle-feedlot sectors. 209
As regards Canadian hog exports to the Unite d States, these involve a larger proportion of feeder than
fed hogs.210
7.142 The vast majority of Canadian and Mexican livestock exports ar e destined for the
United States.211 However, as specified further below livestock imports from Canada and Mexico
only account for a small percentage of total livestock slaughter in the United States.212
D. CLAIMS UNDER THE TBT AGREEMENT
7.143 Both Canada and Mexico have brought cl aims under Articles 2.1 and 2.2 of the
TBT Agreement. In addition, Mexico has advanced claims under Articles 2.4, 12.1 and 12.3(a) of this
Agreement. As indicated above, we deal with these claims in sequential order.
7.144 We begin our analysis of the above-listed claims with an assessment of whether the
COOL measure and the Vilsack letter qualify as tec hnical regulations within the meaning of the
TBT Agreement. As the Appellate Body explained, "if the measure ... is not a 'technical regulation',

203 Canada's first written submission, paras. 100-103.
204 Canada's first written submission, para. 37; Mexico 's first written submission, paras. 109 and 114;
United States' first written submission, paras. 88, 115 and 107.
205 Canada maintains a voluntary country of origin labelling scheme for the "Product of Canada" and
"Made in Canada" claims (Exhibit CDA-163).
206 Exhibits US-150 and 151.
207 United States' first written submission, para. 89; Exhibit US-28, Table 3; Exhibit CDA-196.
208 Mexico's first written submission, paras. 137-138; United States' first written submission, para. 107.
209 Mexico's first written submission, paras. 120-121; Exhibit MEX-35.
210 Exhibit CDA-196.
211 Canada's first written submission, para. 35; Mexico's first written submission, paras. 109
and 120-121.
212 Canada's first written submission, paras. 34 and 36; United States' first written submission, para. 89
(Exhibit US-86).

then it does not fall within the scope of the TBT Agreement".
213 Thus, the question of technical
regulations is a threshold issue for all of the complainants' claims under the TBT Agreement.
7.145 Specifically, Articles 2.1, 2.2 and 2.4 of the TBT Agreement apply only to
"technical regulations". In turn, Article 12.3 applies to "technical regulations, standards and
conformity assessment procedures". Since Mexico h as not contended that the COOL measure or the
Vilsack letter would qualify as standards or conf ormity assessment procedures, the COOL measure
and the Vilsack letter need to qualify as technical regulations for Mexico's Article 12.3 claim to
potentially succeed in this dispute. Article 12.1 of the TBT Agreement does not specifically mention
technical regulations; however, Mexico explains th at it does not claim an independent breach of that
provision by the United States, but rather a c onsequential violation through the breach of
Article 12.3.214 Hence, a successful Mexican claim under Ar ticle 12.1 of the TBT Agreement in this
dispute also presupposes that the COOL requirements qualify as technical regulations.
1. Technical regulation
7.146 The term "technical regulation" is defined by Annex 1.1 to the TBT Agreement as follows:
"Document which lays down product characteristics or their related processes and
production methods, including the applicable administrative provisions, with which
compliance is mandatory. It may also include or deal exclusively with terminology,
symbols, packaging, marking or labelling requirements as they apply to a product,
process or production method." (explanatory note omitted)
7.147 Based on this definition, the Appellate Body developed the following three-pronged test to
establish whether a document qualifies as a technical regulation:
"[There are] three criteria that a document must meet to fall within the definition of
'technical regulation' in the TBT Agreement. First, the document must apply to an
identifiable product or group of products. The identifiable product or group of
products need not, however, be expressly identified in the document. Second, the
document must lay down one or more char acteristics of the product. These product
characteristics may be intrinsic, or they ma y be related to the product. They may be
prescribed or imposed in either a positive or a negative form. Third, compliance with
the product characteristics must be mandatory . ... [T]hese three criteria are derived
from the wording of the definition in Annex 1.1."
215 (emphasis original)
7.148 We apply this test in turn to the two categor ies of instruments potentially at issue in the
context of the TBT Agreement: (i) the instrument s we found constitute the COOL measure (i.e. the
COOL statute and the 2009 Final Rule (AMS)); and ( ii) the Vilsack letter. We concluded above that

213 Appellate Body Report, EC – Sardines, para. 175. See also Appellate Body Report, EC – Asbestos,
214 See Mexico's first written submission, para. 372.
215 Appellate Body Report, EC – Sardines, para. 176. See also Appellate Body Report, EC – Asbestos,
paras. 66-70. The parties refer to the definition of technical regulation contained in Annex 1.1 to the
TBT Agreement. See Canada's first written submission, para. 69, Mexico's first written submission, para. 235
and United States' first written submission, para. 133). Further, Canada and Mexico argue that the
COOL requirements, including the Vilsack letter, are "documents" within the definition developed by the
Appellate Body. See Canada's first written submissi on, para. 74 and Mexico's first written submission,
para. 236.

because of its distinctive nature, the Vilsack letter should be examined separately from the
COOL measure.216
(a) Whether compliance with the COOL measure and the Vilsack letter is mandatory
7.149 We start our analysis with the last criterion of the above three-pronged test, namely whether
compliance with the COOL measure and the Vilsack le tter is mandatory. It is this criterion that is
most vigorously disputed between the parties. Starting with this criterion does not jeopardize the
objective assessment of the matter before us as the three criteria under the technical regulation test are
cumulative and, therefore, need not be applied in any particular order.
7.150 As the panel in EC – Trademarks and Geographical Indications (Australia) noted,
"[t]he ordinary meaning of the word 'mandatory' can be defined in the case of an action as 'obligatory
in consequence of a command, compulsory. (Foll. by upon)'.
217"218 The Appellate Body in EC –
 Asbestos also clarified the concept "mandatory" w ithin the meaning of Annex 1.1 of the
TBT Agreement:
"A 'technical regulation' must ... regulate th e 'characteristics' of products in a binding
or compulsory fashion. It follows that, with respect to products,
a 'technical regulation' has the effect of prescribing or imposing one or more
'characteristics' – 'features', 'qualities', 'a ttributes', or other 'distinguishing mark'." 219
(emphasis original)
7.151 In light of the Appellate Body's interpretation of the term "mandatory", we examine whether
the COOL measure and the Vilsack letter regulate th e country of origin labelling requirement in a
binding or compulsory manner or have the effect of prescribing or imposing country of origin
labelling requirements.
(i) Whether compliance with the COOL measure is mandatory
Main arguments of the parties
7.152 The complainants argue that the COOL measure 220 is mandatory because, in the words of the
Appellate Body in EC – Asbestos 221, it regulates the labelling of the covered commodities "in a
binding or compulsory fashion".222
7.153 According to Canada, the COOL measure establishes labelling requirements for all covered
commodities, and failure to comply with these requi rements may lead to the imposition of a fine.
Further, according to Canada, the United States has acknowledged that the COOL measure is a
technical regulation through its notifications to the TBT Committee.223

216 See para. 7.55 above.
217 (footnote original) The New Shorter Oxford English Dictionary (1993).
218 Panel Report, EC – Trademarks and Geographical Indications (Australia), para. 7.453.
219 Appellate Body Report, EC – Asbestos, para. 68.
220 For the purpose of the sections on the main argum ents of the parties in these reports, we use the
term "the COOL measure" and "the COOL measures" as presented by the parties in their written submissions.
The use of these terms in the parties' arguments section of the reports, therefore, does not reflect the Panel's
conclusion above in Section VII.B.1 on the characterization of the instruments at issue.
221 See Canada's first written submission, para. 73 and Mexico's first written submission, para. 246.
222 Appellate Body Report, EC – Asbestos, para. 68.
223 See Canada's first written submission, paras. 73-74.

7.154 Likewise, Mexico argues that it is clear from the statutory COOL provisions that the
United States imposes a mandatory scheme, by requi ring retailers to inform consumers about the
country of origin of the covered commodities.
224 The Agricultural Marketing Act of 1946 prescribes
this by using the word "shall". Mexico adds th at the USDA itself refers to COOL as "MCOOL" or
"Mandatory" COOL. Further, Mexico argues, ther e is an enforcement procedure applicable to
retailers and any person engaged in supplying the covered commodity to a retailer. This procedure
may lead to the imposition of a fine for those who wilfully violate the COOL provisions or who do
not make a good faith effort to comply with them.
7.155 With respect to this element of the legal test, the United States limits its arguments to the
Vilsack letter; it does not contest the mandatory nature of the COOL measure.
225
Analysis by the Panel
7.156 As noted, the United States does not contest th at compliance with the COOL measure is
mandatory.
7.157 Indeed, the COOL measure is composed of classi c legal instruments that are legally binding
in US law. Moreover, the COOL statute sets out the core country of origin labelling requirement by
using the word "shall":
"Except as provided in subsection (b), a retailer of a covered commodity shall inform
consumers, at the final point of sale of th e covered commodity to consumers, of the
country of origin of the covered commodity".226 (emphasis added)
7.158 The COOL statute also uses the word "shall" in laying down the requirement for "any person
engaged in the business of supplying a covered commodi ty to a retailer" to provide country of origin
information to retailers.227
7.159 Further, the COOL measure is suppor ted by an "enforcement" mechanism.228 In the case of a
"violation" of the above obligations by a retailer or by any other person engaged in the business of
supplying a covered commodity to a retailer, th e enforcement mechanism of the COOL measure
foresees the possibility of the Secretary of Agriculture imposing a "fine ... for each violation".229
7.160 The panel in EC – Trademarks and Geographical Indications (Australia) considered that the
use of the word "shall" is indicative of mandatory compliance 230, and in EC – Asbestos
the Appellate Body also found that enfor ceability through sanctions indicates mandatory
compliance.231 Both of these features are present in the COOL measure.
7.161 Further, the COOL statute refe rs to the core country of or igin labelling requirement as
"the mandatory country of origin requirement". 232 (emphasis added) Similarly, the 2009 Final Rule

224 See Mexico's first written submission, paras. 247-250.
225 See United States' first written submission, paras. 132-136.
226 7 U.S.C. § 1638a(a)(1).
227 7 U.S.C. § 1638a(e).
228 7 U.S.C. § 1638b. See also 74 FR 2664 (Exhibits CDA-5 and MEX-7).
229 7 U.S.C. § 1638b.
230 Panel Report, EC – Trademarks and Geographical Indications (Australia) , para. 7.453. See also
Appellate Body Report, EC – Sardines, para. 194, footnote 111.
231 Appellate Body Report, EC – Asbestos, para. 72.
232 7 U.S.C. § 1638a(a)(2)(B)(ii).

(AMS) contains the word "mandatory" in its very title, and consistently refers to the essence of the
COOL measure as "mandatory COOL".
7.162 Accordingly, we find that compliance with th e COOL measure is mandatory, and thus the
COOL measure fulfils the third criterion of the legal test under Annex 1.1 to the TBT Agreement.
(ii) Whether compliance with the Vilsack letter is mandatory
Main arguments of the parties
7.163 As regards the Vilsack letter, Canada argues that its evidence in the form of witness
statements, letters and econometric analyses show s a shift by US industry from Canadian-born
livestock towards livestock born, raised and slaughter ed in the United States. This demonstrates
compliance with the instructions of Secretary Vil sack. The reference in the Vilsack letter to the
"intent of Congress" 233, coupled with the threat to reopen the 2009 Final Rule (AMS), demonstrate
that the letter is mandatory.234
7.164 Canada further submits that an instrument whic h is non-binding in the domestic legal system
of a WTO Member may nevertheless be "mandatory" under the TBT Agre ement. This is the case of
the Vilsack letter, argues Canada, because it interp rets the statutory COOL provisions, which are
binding in US law, and as such derives its mandato ry nature from the "core" instruments that make up
the COOL measure.235
7.165 Canada argues that if the Panel were to decide that the Vilsack letter should be considered in
isolation from other component parts of the COOL measure, it should in so doing take into account
that the authorship of the Secretary of Agriculture lends great weight to ensure that the US industry
will listen and be inclined to comply. Canada fo cuses on a particular element of the letter: the
direction of the industry towards point-of-production labelling, i.e. the specification of where the
animal was born, raised and slaughtered. As a resu lt, Canada argues, the industry has shifted towards
the production of Label A meat, wh ich is an effective form of compliance with the Vilsack letter.
236
However, Canada clarifies that it does not have an y data that would quantify the amount of the shift
away from labels B and C towards an increased use of Label A.237
7.166 Mexico argues that the Vilsack letter has a mandatory nature in spite of the use of the word
"voluntary".238 However, whether the letter is mandatory or not, should not be decided according to
the characterization given by the issuing authority to its own measure. According to Mexico, the last
paragraph of the Vilsack letter makes possible r estrictive modifications to the COOL measure
contingent on whether the industry complies with the suggested practices. Mexico adds that the
mandatory nature of the Vilsack letter and its rela ted press release is evident from the "clear threat"
implied therein. Mexico refers to a letter issued just prior to the issuance of the Vilsack letter by
Tyson Foods and JBS, two US meat producers, to illu strate that "threats" like the one included in the
Vilsack letter are taken seriously by US industry.239

233 See Canada's response to Panel question No. 7 and Canada's second written submission, para. 107.
234 See Canada's second written submission, paras. 106-107 and Canada's response to Panel question
Nos. 7 and 8.
235 See Canada's response to Panel question No. 95.
236 See Canada's response to Panel question No. 95.
237 See Canada's response to Panel question No. 99.
238 See Mexico's first written submission, paras. 252-258.
239 See para. 258.

7.167 Mexico contends that the Vilsack letter is not an isolated act of the US government but part of
the COOL measure and mandatory as such.
240 In fact, the inconsistencies of the COOL measure are
created by the wording of the statute and regulati ons as interpreted and applied by the administering
authorities.241 The Vilsack letter references the intent of Congress and it is signed by the head of the
USDA. Thus, it reflects the viewpoint of the US executive branch on the correct implementation of
the COOL measure. 242 At the very least, the Vilsack letter confirms the strict interpretation of the
COOL measure that has been applied by the USDA. 243 Mexico adds, however, that it does not have
any first-hand evidence demonstrating that the Vilsac k letter resulted in a change in the proportion of
meat eligible for Label A that actually carries Labels B or C due to the commingling flexibility.244
7.168 The United States submits that the Vilsack letter does not meet the definition of
"technical regulation" in the TBT Agreement beca use, by its terms, compliance with it is not
mandatory.245 The letter does not contain binding obliga tions; it uses the word "voluntary" several
times in describing the suggestions of Secretary V ilsack. Further, the Vilsack letter contains no
requirements and has no legal status in the United States. 246 Thus, the letter does not meet the
definition accorded to the term "m andatory" by the Appellate Body: 247 It does not regulate the
characteristics of products in a binding or compulsory fashion.248
7.169 Further, the United States points out, the Vil sack letter lacks any enforcement mechanism to
ensure that companies follow its suggestions. As the Vilsack letter was not adopted through the
procedures established by the Administrative Proc edure Act (APA), USDA could not enforce the
letter as a matter of US law even if it wanted to do so . The last paragraph of the letter merely reflects
the fact that USDA, like any other regulator, has the ability to revisit its rule-making.249
7.170 The United States rejects the argument presented by the complainants that the Vilsack letter
derives its mandatory nature from being part of a broader COOL measure. According to the
United States, as the Vilsack letter's recommendati ons are inconsistent with the 2009 Final Rule
(AMS), a binding instrument, this precludes the possibility that the Vilsack letter derives the
mandatory nature from it.250
7.171 The United States argues that the complainants have not offered any evidence demonstrating
that the industry is following the letter's suggesti ons, even though 18 months have passed since the
letter was issued. Rather, the United States alleg es, there is hard evidence that US slaughterhouses
continue to process Label B meat and US retailers con tinue to display Label B meat in grocery stores.
According to the United States, Mexico submits tw o exhibits, MEX-33 and MEX-67, in an attempt to
show that the US industry modified its practices in response to the Vilsack letter. However, the letter
in exhibit MEX-33 precedes the Vilsack letter by nearly six months and concerns issues unrelated to
the letter. The article in exhibit MEX-67, argu es the United States, demons trates that the industry

240 See Mexico's response to Panel question No. 7.
241 See Mexico's second written submission, para. 38.
242 See Mexico's response to Panel question No. 8 and 96.
243 See Mexico's second written submission, paras. 35, 37.
244 See Mexico's response to Panel question No. 99.
245 See United States' first written submission, para. 134.
246 See United States' first written submission, para. 84.
247 See Appellate Body Report, EC – Asbestos, para. 68.
248 See United States' first written submission, para. 134-136 and United States' opening oral statement
at the second substantive meeting of the Panel, paras. 16-17.
249 See United States' first written submission, para. 135 and United States' comments on Canada's and
Mexico's responses to Panel question No. 96.
250 See United States' comments on Canada's and Mexico's responses to Panel question No. 96.

sees the Vilsack letter as voluntary. Moreover, none of the exhibits cited by Canada in this regard 251
actually prove the existence of a relationship between the Vilsack letter and any rejection of Canadian
livestock by the US industry. Since the release of the letter, USDA has take n no action to revisit the
COOL measures.252
7.172 Further, in response to a question from the Pa nel, the United States explains that USDA has
been monitoring compliance with the 2009 Final Rule, while it has not done the same with regard to
the Vilsack letter.253
Analysis by the Panel
7.173 As regards the Vilsack letter, the question of compliance is more complex than for the
COOL measure.
7.174 On its face, the Vilsack letter is clearly not mandatory. Unlike the instruments composing the
COOL measure, the Vilsack letter is not a piece of legislation or regulation legally binding in US
law.254 In outlining action by industry, the Vilsack le tter uses permissive, hortatory terms such as
"might", "should" and "would"; it mentions the word "voluntary" at least four times; and it notes that
it contains "suggestions for voluntary action". It is also not followed up by a classic legal
enforcement mechanism.
7.175 But the nature of compliance with the Vilsack le tter is not a merely formalistic question.
We agree with the complainants that this matter should not be decided purely on the basis of the
language in the Vilsack letter, in particular the u se of the word "voluntary". Adopting a formalistic
interpretation of the phrase "with which complianc e is mandatory" would allow Members to escape
the coverage of large portions of the TBT Agre ement merely by qualifying their own measures as
non-mandatory, or compliance with such measures as voluntary. This would strip Annex 1.1 and
ultimately large portions of the TBT Agreement of their effet utile.
7.176 It would also be contrary to the clarification made by the Appellate Body with respect to the
mandatory compliance criterion of a technical regulation: a regulation that has the effect of
prescribing or imposing one or more "characteris tics" could also qualify as a technical regulation
under Annex 1.1.255 The question therefore remains whether compliance with the Vilsack letter may
be considered de facto mandatory; namely, whether, in the words of the Appellate Body, "with
respect to products" the Vilsack letter "has the effect of prescribing or imposing one or more
'characteristics' – 'features', 'qualities', 'attributes', or other 'distinguishing mark'".256
7.177 The complainants invoke various aspects of the Vilsack letter to demonstrate that this is the
case. They argue that the Vilsack letter creates a link to the COOL statute by referencing the need
"to achieve the intent of Congress". They also cont end that the Vilsack letter creates a link to the
2009 Final Rule (AMS) by stating that it "pertains to the implementation of [the 2009 Final Rule]",
and by using the phrase "after the effective date of th e final rule" to link the letter's suggestions to the
entry into force of the 2009 Final Rule (AMS).

251 The United States refers to Exhibits CDA-67, 83, 86, and 92 in this context.
252 See United States' first written submission, para. 13 7, United States' opening oral statement at the
first substantive meeting of the Panel, para. 19, United States' opening oral statement at the se cond substantive
meeting of the Panel, para. 17, United States' response to Panel question No. 99 and United States' comments on
Canada's and Mexico's responses to Panel question No. 99.
253 See United States' response to Panel question No. 6.
254 See para. 7.55 above.
256 Appellate Body Report, EC – Asbestos, para. 68 (emphasis added).

7.178 Further, the complainants point out that the Vilsack letter was issued by the Secretary of
Agriculture, who retains the power to modify the 2009 Final Rule (AMS) within the framework of the
statutory elements of the COOL measure. According to the complainants, this is particularly relevant
since the Vilsack letter is supported by the "threat" of the Secretary of Agri culture actually changing
the 2009 Final Rule (AMS) along the lines of the s uggestions contained in his letter. Indeed,
Secretary Vilsack states in concluding his letter that:
"[t]he Department of Agriculture will be closely reviewing industry compliance with
the regulation and its performance in re lation to these suggestions for voluntary
action. Depending on this performance, I will carefully consider whether
modifications to the rule will be necessary to achieve the intent of Congress."
7.179 For the reasons explained below, however, we do not find that these aspects of the Vilsack
letter demonstrate that compliance with the letter is de facto mandatory within the meaning of
Annex 1.1 to the TBT Agreement by having the eff ect of prescribing or imposing country of origin
labelling requirements.
7.180 We agree that the Vilsack letter creates certain linkages to the COOL measure.
257 But this, in
itself, is not sufficient to qualify compliance with the Vilsack letter as mandatory. As explained
above258, the Vilsack letter remains distinct from the COOL measure. The essence of the Vilsack
letter is that, while Secretary Vilsack does not bloc k the entry into force of the 2009 Final Rule
(AMS) on the originally foreseen date of 16 Marc h 2009, he suggests additional and more stringent
industry action in three specific areas, based on "concerns" about the requirements set out in the
COOL measure. The USDA news release accompanying the Vilsack letter states:
"Agriculture Secretary Tom Vilsack today announced that the final rule for the
Country of Origin Labeling (COOL) program will go into effect as scheduled on
March 16th. He also released a letter[ i.e. the Vilsack letter] inviting stakeholders to
follow additional voluntary labelling requirements."
259 (emphasis added)
7.181 The complainants do not contest that the ac tions suggested by Secretary Vilsack are
substantively different from, additional to, or more stringent than, the requirements in the
COOL measure.260
7.182 Further, the complainants underline that the Vilsack letter was issued by a high-ranking
United States government official. Yet, this in itself does not turn the Vilsack letter into an instrument
requiring mandatory compliance. Not all communications by government officials involve mandatory
compliance. In their relations with the genera l public and specific stakeholder groups, high-ranking
government officials regularly issue non-mandatory oral and written communications.
7.183 It is undisputed that Secretary Vilsack has the power to promulgate regulations necessary to
implement the country of origin labe lling provisions of the COOL statute 261, which entails the power
to modify the 2009 Final Rule (AMS) within the frame work of the COOL statute. This, indeed, gives
a certain weight to what the complainants descr ibed as the "threat" contained in the concluding
section of the Vilsack letter.

257 See para. 7.177 above.
258 See para. 7.55 above.
259 Exhibits CDA-42 and MEX-23.
260 See Canada's first written submission, para. 28 and Mexico's first written submission, para. 225.
261 See 7 U.S.C. § 1638c(b).

7.184 However, there is no compelling evidence be fore us showing that this "threat" has
materialized.
7.185 We have evidence before us showing that USDA conducted surveys on the implementation of
the COOL requirements in March 2009 (i.e. around the entry into force of the 2009 Final Rule
(AMS)), and in July 2009. 262 The March 2009 survey is, however, largely irrelevant to the question
here, as it does not even refer to the Vilsack letter.
7.186 The July 2009 survey 263 shows that USDA did look into industry's "performance" of one of
the suggestions contained in the Vilsack letter. However, this survey involved "152 randomly
selected retail stores in seven [US] states"264 and focussed on industry compliance with the 2009 Final
Rule (AMS). In fact, it covere d only one of the three specific s uggestions of the Vilsack letter,
namely "to assess whether labels included additi onal information about pr oduction steps for meat
covered commodities as requested by the Secretary in a letter to the industry on February 20, 2009".265
In this regard, the July 2009 survey found:
"[O]nly four stores (all in California) mark ed veal items with production steps out of
53 stores that carried veal ('Born in Cana da, Processed in the U.S.'). Production steps
were not found on any other covered commodity.
Retailers were – for the mo st part – labeling covered commodities for country of
origin."266
7.187 Canada adds that "[t]he survey did not fi nd any other meat commodities with voluntary
labeling of production steps (born, raised, and slaughtered, or processed)".267
7.188 In essence, therefore, the two surveys before us fail to demonstrate industry's actual
compliance with Secretary Vilsack's suggestion co ncerning "[l]abelling of product[s] from multiple
countries of origin" by "includ[ing] informa tion about what production step occurred in each
country". Photos of the labels actually used by retailers under the COOL measure, submitted by the
parties upon our request268, also do not indicate any compliance with Secretary Vilsack's suggestion to
"include information about what production step occurred in each country when multiple countries
appear on the label". While multiple countries do appear on the labels on some of these photos, we
cannot find any indication of where specific production steps took place.
7.189 We have no evidence before us showing comp liance with Secretary Vilsack's other two
suggestions either, namely in regard to "the definition of processed foods" and concerning less
flexibility for "inventory allowance".
7.190 Furthermore, the rest of the exhibits submitted by the complainants in this respect do not
make a convincing case. Some of the eviden ce submitted by the complainants pre-dates the Vilsack

262 See Exhibits CDA-227 and US-145 . See also United States' respon se to Panel question Nos. 6 and
90 and Canada's comments on the United States' response to Panel question No. 90.
263 See Exhibit CDA-227. See also Exhibit US-145.
264 Exhibit CDA-227.
265 Exhibit CDA-227.
266 Exhibit CDA-227.
267 Exhibit CDA-227.
268 See Exhibits CDA-161, MEX-71 and US-67.

letter, and thus cannot serve to demonstrat e the nature of compliance with the letter.
269 One piece of
evidence submitted by Mexico explicitly confirms the voluntary nature of any compliance by
individual industry participants with Secretary Vilsack's suggestions. 270 Certain other exhibits
submitted by Canada and Mexico do not reference the Vilsack letter at all or the specific suggestions
contained therein. 271 A further piece of evidence submitted by Canada, dated a few days after the
Vilsack letter, merely records the issuance of the letter, without addressing the nature of any
compliance with the letter's suggestions.272
7.191 Testimonies by individuals active in the North American meat industry that do reference the
Vilsack letter indicate that specific industry particip ants might have responded to Secretary Vilsack's
suggestions.273 However, these testimonies are not suffi cient to establish that such behaviour
amounted to more than voluntary compliance with th e Vilsack letter. Hence, we cannot read these
testimonies as proving the kind of across-the-board industry compliance that, taken together with
other evidence, could demonstrate that compliance with the Vilsack letter is de facto mandatory.
7.192 Overall, these testimonies and the above-refere nced evidence are insufficient to demonstrate
mandatory compliance with the Vilsack letter. They are also insufficient to prove that the
Vilsack letter would "regulate the 'c haracteristics' of products in a binding or compulsory fashion"274,
let alone have "the effect of prescribing or imposing one or more 'characteristics' – 'features',
'qualities', 'attributes', or other 'distinguishing mark'"275 for the products at issue.
7.193 Canada invokes four notifications by the Un ited States to the TBT Committee, arguing that
the United States has thereby acknowledged that COOL requirements qualify as a technical
regulation.276 However, only one of these notifications act ually follows the date of issuance of the
Vilsack letter, and that notification does not relate or even refer specifically to the Vilsack letter.
7.194 In light of these considerations, we conclude that the complainants have not demonstrated that
compliance with the Vilsack letter is mandatory within the meaning of Annex 1.1 to the
TBT Agreement.
7.195 Given that the three criteria under the three-pronged test for "technical regulation" are
cumulative, we need not assess the other two criteria of the test with regard to the Vilsack letter.
In fact, the panel in EC – Trademarks and Geographical Indications (Australia) held that if one of the

269 See Exhibits CDA-32 to 34, MEX-55 and MEX-57. In fact, much of this evidence relates to the
process leading to the obligations contained in the 2009 Final Rule, as opposed to the suggestions contained in
the Vilsack letter.
270 "To the extent that companies are able and elect to go beyond these federal labeling requirements,
as requested today by Agriculture Secretar y Vilsack, is an indi vidual company decision, which will have to be
made in collaboration with a company's retail grocery cu stomers, which ultimately are the entities that provide
country of origin information to their consumers". Exhibit MEX-67, emphasis added.
271 See Exhibits CDA-92 and Exhibit MEX-33 (A copy of the Country of Original Labeling manual
issued by Tyson Foods in April 2009 refers to a more frequent use of Label A for meat produced from livestock
born, raised and slaughtered in the United States; however, it does not refer specifically to any of the three
suggestions contained in the Vilsack letter); and Exhibit CDA-41 (The CANFAX Update issued in April 2009
summarizes "US procurement policies for Canadian cattle" without even referencing either the Vilsack letter or
the specific suggestions contained therein).
272 See Exhibit CDA-193.
273 See Exhibits CDA-67, 83 and 86.
274 Appellate Body Report, EC – Asbestos, para. 68 (emphasis added).
275 Appellate Body Report, EC – Asbestos, para. 68 (emphasis original).
276 See Canada's first written submission, para. 74, footnote 98.

three elements of the definition of "technical regulations" is found to be unfulfilled, there is no need to
analyse the other two elements.277
7.196 We therefore find that the complainants have not demonstrated that the Vilsack letter qualifies
as a technical regulation within the meaning of Anne x 1.1. Accordingly, we refrain from reviewing
the Vilsack letter under the provisions of the TBT Agreement invoked by the complainants in this
dispute.278
7.197 We continue our analysis of the remaining tw o criteria of the technical regulation test only
with regard to the COOL measure.
(b) Whether the COOL measure applies to an identifiable product or group of products
(i) Main arguments of the parties
7.198 According to Canada and Mexico, the COOL measure applies to an identifiable group of
products: the "covered commodities". 279 Mexico adds that by referencing the 2009 Final Rule
(AMS), which is part of the COOL measure, the Vilsack letter also applies to the same
"covered commodities".280 Thus, like other elements of the COOL measure, the Vilsack letter also
applies to an identifiable group of products.281
7.199 The United States does not specifically address this element of the definition of
"technical regulation" with regard to the COOL me asure; instead, it focuses on the Vilsack letter and
on the element addressed above, arguing that compliance with the Vilsack letter is not mandatory.
(ii) Analysis by the Panel
7.200 Whether the document at issue applies to an identifiable product or group of products is
another essential criterion for determining if a document is a technical regulation.
7.201 In EC – Asbestos , the Appellate Body explained that "[ a] 'technical regulation' must ... be
applicable to an identifiable product, or group of products" because, "[o]therwise, enforcement of the
regulation will, in practical terms, be impossible". 282 The Appellate Body added, however, that the
identifiable product or group of products need not be expressly specified in the document:
the identifiable product coverage of a measure can al so be determined according to the substance of
the measure at issue. The Appellate Body stated:
"[T]here may be perfectly sound admi nistrative reasons for formulating a
'technical regulation' in a way that does not expressly identify products by name,
but simply makes them identifiable – for inst ance, through the 'characteristic' that is
the subject of regulation."283
7.202 At first glance, the COOL measure appears to fulfil this requirement as it specifically
identifies the products to which it applies. The COOL statute explicitly defines "covered commodity"

277 See Panel Report, EC – Trademarks and Geographical Indications (Australia), para. 7.508.
278 The Vilsack letter will be analysed subsequently in the context of the claims under the GATT 1994.
279 See Canada's first written submission, para. 71 and Mexico's first written submission, para. 239.
280 See Mexico's first written submission, para. 240.
281 See Mexico's first written submission, para. 241.
282 Appellate Body Report, EC – Asbestos, para. 70 (emphasis original).
283 Appellate Body Report, EC – Asbestos, para. 70 (emphasis original, footnote omitted).

for country of origin labelling purposes as including "(i) muscle cuts of beef ... and pork" and
"(ii) ground beef ... and ground pork".
284
7.203 The question arises, however, whether the COOL measure still satisfies this criterion when
the actual products at issue in this dispute are liv estock, namely cattle and hogs from which meat is
produced.
7.204 In EC – Sardines the Appellate Body noted that the measure at issue in that dispute referred to
"preserved sardines", but not explicitly to Sardinops sagax , which was the product at issue in that
dispute.285 Yet, the Appellate Body reiterated that "a product need not be expressly identified in the
document for it to be identifiable"286 and that "the requirement that a 'technical regulation' be
applicable to identifiable products relates to aspects of compliance and enforcement". 287
The Appellate Body concluded that Sardinops sagax was an identifiable product for the purposes of
the measure since the measure at i ssue had been enforced against, a nd was thus also applicable to,
Sardinops sagax.288
7.205 Similarly, the facts of the present dispute s how that although the COOL measure identifies
inter alia beef and pork as part of the covered commodities 289, the country of origin labelling
requirement under the COOL measure is also applied to and thus enforceable against "[a]ny person
engaged in the business of supplying a covered commodity to a retailer". 290 This obligation imposed
on the upstream suppliers of meat products is indispensable for retailers' effective compliance with the
main country of origin labelling obligation under the COOL measure.
7.206 Furthermore, the Agricultural Marketing Ac t of 1946 explicitly references livestock in
defining "beef" as "meat produced from cattle"291, and "pork" as "meat produced from hogs".292
7.207 In light of the above, we find that the COOL measure applies to an identifiable product or
group of products within the meaning of Annex 1.1 to the TBT Agreement, namely (i) beef and pork,
either as muscle cuts or in ground form; and (ii) livestock (i.e. cattle and hogs), which are the input
products necessary to develop the beef and pork products explicitly covered by the COOL measure.
7.208 As explained above, we do not address whether the Vilsack letter applies to an identifiable
product or group of products, since we have held that this letter is not mandatory within the meaning
of Annex 1.1 to the TBT Agreement.
(c) Whether the COOL measure lays down one or more characteristics of the products
(i) Main arguments of the parties
7.209 Canada and Mexico argue that the COOL measure lays down product characteristics by
requiring that labels be placed on covered commod ities when they are sold at the retail level. 293

284 7 U.S.C. § 1638(2).
285 See Appellate Body Report, EC – Sardines, para. 182.
286 Appellate Body Report, EC – Sardines, para. 183 (emphasis original).
287 Appellate Body Report, EC – Sardines, para. 185 (emphasis original).
288 Appellate Body Report, EC – Sardines, para. 186.
289 See 7 U.S.C. § 1638a(a)(1).
290 7 U.S.C. § 1638a(e).
291 7 U.S.C. § 1638(1).
292 7 U.S.C. § 1638(7).
293 See Canada's first written submission, para. 72 and Mexico's first written submission,
paras. 244-245.

The complainants recall that in EC – Asbestos 294 the Appellate Body found that
"product characteristics" can include characteristics that are used as a means of identification,
presentation or the appearance of a product.295
7.210 The United States does not specifically address this element of the definition of
"technical regulation" with regard to the COOL me asure; instead, it focuses on the Vilsack letter and
on the element addressed above, arguing that compliance with the Vilsack letter is not mandatory.
(ii) Analysis by the Panel
7.211 The final criterion for the technical regulation test is that a document must lay down one or
more characteristics of the product.
7.212 There is no dispute among the parties that the COOL measure lays down a country of origin
labelling requirement. We agree that country of or igin labelling is the essence of the COOL measure.
We also find that the obligations set out by the COOL measure, including the information requirement
for "[a]ny person engaged in the business of supplying a covered commodity to a retailer" 296,
are closely related to this essential function.
7.213 In EC – Asbestos the Appellate Body found, on the basi s of the language of Annex 1.1 to the
TBT Agreement, that labelling is a product characteristic. 297 The panel in EC – Trademarks and
Geographical Indications (Australia) added that an explicit requirement to indicate country of origin
on the label of the product is indeed a labelling requirement for the purpo ses of the definition of
"technical regulation".298 The panel held that this country of origin labelling requirement addresses a
product characteristic and hence fulfils the second cr iterion of the "technical regulation" test under
Annex 1.1 to the TBT Agreement.299
7.214 We therefore find that, by imposing a country of origin labelling requirement, the
COOL measure fulfils the criterion of laying down one or more product characteristics.
7.215 As explained above, we do not discuss whet her the Vilsack lette r addresses a product
characteristic since we have held that this letter is not mandatory within the meaning of Annex 1.1 to
the TBT Agreement.
7.216 As we have found that the COOL measure fulfils all three criteria of the thee-pronged test
under Annex 1.1 to the TBT Agreement, we conc lude that the COOL measure is a technical
regulation.
7.217 Accordingly, we turn to the complainants' claims under the provisions of the TBT Agreement,
and assess these claims with regard to the COOL measure. We do not address these claims for the
Vilsack letter, which we have c oncluded is not mandator y within the meaning of Annex 1.1 to the
TBT Agreement, and is therefore not a technical regulation.

294 See Appellate Body Report, EC – Asbestos, para. 67.
295 See Canada's first written submission, para. 72 and Mexico's first written submission,
paras. 242-243.
296 7 U.S.C. § 1638a(e).
297 See Appellate Body Report, EC – Asbestos , para. 67. See also Appellate Body Report, EC –
Sardines, paras. 187-193.
298 See Panel Report, EC – Trademarks and Geographical Indications (Australia), paras. 7.447-7.448.
299 See Panel Report, EC – Trademarks and Geographical Indications (Australia), paras. 7.449-7.452.

2. Article 2.1
(a) Introduction
(i) Legal test under Article 2.1 of the TBT Agreement
7.218 Article 2.1 of the TBT Agreement provides:
"With respect to their central government bodies:
2.1 Members shall ensure that in resp ect of technical regulations, products
imported from the territory of any Member shall be accorded treatment no less
favourable than that accorded to like products of national origin and to like products
originating in any other country."
7.219 The parties agree
300 that the legal test under Article 2. 1 includes the following three essential
elements set out by the panel in EC – Trademarks and Geographical Indications (Australia):
"[T]he essential elements of an inconsiste ncy with Article 2.1 of the TBT Agreement
are, as a minimum, [i] that the measure at issu e is a 'technical regulation'; [ii] that the
imported and domestic products at issue are 'like products' within the meaning of that
provision; and [iii] that the imported products are accorded 'less favourable'
treatment than that accorded to like domestic products."301
7.220 We also consider that these three elements constitute the essence of the legal test under
Article 2.1 of the TBT Agreement.
7.221 We address the parties' arguments on these elemen ts in the order outlined by the panel in EC
– Trademarks and Geographical Indications (Australia) . In the context of this analysis, we also
address the issue raised by the United States concer ning the function of the term "in respect of
technical regulations" in Article 2.1 of the TBT Agreement.
7.222 Before turning to our analysis of the three essen tial elements of the legal test, we first assess
whether Article III:4 of the GATT 1994 may serve as context for Article 2.1 of the TBT Agreement.
(ii) Relevant context for Article 2.1 of the TBT Agreement
Main arguments of the parties
7.223 Canada and Mexico note that neither the Appellate Body nor panels have interpreted the
terms "like product" and "treatment no less favourable" in Article 2.1 of the TBT Agreement.
The complainants argue that these terms, and Article 2.1 of the TBT Agreement in general, should be
interpreted in light of Article III:4 of the GATT 1994.
302

300 Canada's first written submission, para. 77, Me xico's first written submission, para. 264 and
United States' first written submission, para. 138. We note that, according to the United States, "[i]n addition to
these three 'minimum' elements, the text of TBT Article 2.1 requires the complaining party to establish that such
[less favourable] treatment is in respect of the techni cal regulation [at issue]". (United States' first written
submission, para. 139, footnote 166)
301 Panel Report, EC – Trademarks and Geographical Indications (Australia), para. 7.444.
302 Canada's first written submission, para. 78; and Mexico's first written submission, para. 266.

7.224 In particular, Canada invokes the finding of the Appellate Body in EC – Asbestos that
"a determination of 'likeness' under Article III:4 is , fundamentally, a determination about the nature
and extent of a competitive relati onship between and among products". 303 Further, Mexico points out
that the panel in EC – Trademarks and Geographical Indications (Australia) recognized that
Article 2.1 of the TBT Agreement addresses the fundamental principle of national treatment:304
"Article 2.1 of the TBT Agreement refers to 'treatment no less favourable'.
An essential element of a claim under Article 2.1 is that, in respect of technical
regulations, the treatment accorded to imported products is 'less favourable' than that
accorded to like products of national origin."
305
7.225 Mexico adds306 that, in US – Section 211 Appropriations Act , the Appellate Body approved
the panel's reliance on jurisprudence under Article III:4 of the GATT 1994 to interpret similar terms
under Article 3.1 of the TRIPS Agreement, sin ce the latter provision also deals with national
treatment.307
7.226 Given that Article 2.1 of the TBT Agreem ent addresses both national and most-favoured-
nation treatment, the complainants argue that the Panel could choose to take into account
jurisprudence developed under similar terms in Article I:1 of the GATT 1994. 308 At the same time,
both complainants contend that the outcome of such analysis will not be any different from an
analysis which takes into account only jurisprudence developed under Article III:4 of the GATT 1994.
7.227 The United States submits that there are textual differences between Article III:4 of the
GATT 1994 and Article 2.1 of the TBT Agreement; for instance, the latter only prohibits less
favourable treatment that is "in respect of" the technical regulation in question.
309 Further, the
United States argues that the Panel is faced with a national treatment, not an MFN, claim so it should
take into account only Article III:4 of the GATT 1994.310
Analysis by the Panel
7.228 As mentioned above, "likeness" and "treatment no less favourable" are two of the three
elements of the legal test under Article 2.1 of th e TBT Agreement. The specific meaning of these
elements of Article 2.1 of the TBT Agreement h as not been reviewed in previous disputes.

303 Canada's first written submission, para. 79, referencing Appellate Body Report, EC – Asbestos ,
para. 99.
304 Mexico's first written submission, para. 263, in particular footnote 199.
305 Panel Report, EC – Trademarks and Geographical Indications (Australia), para. 7.464.
306 Mexico's first written submission, paras. 263, 266, in particular footnotes 199 and 204.
307 The Appellate Body held that "the national treatment obligation is a fundamental principle
underlying the TRIPS Agreement, just as it has been in what is now the GATT 1994.
The Panel was correct in concluding that, as the language of Article 3.1 of the
TRIPS Agreement, in particular, is similar to that of Article III:4 of the GATT 1994, the
jurisprudence on Article III:4 of the GATT 1994 may be useful in interpreting the national
treatment obligation in the TRIPS Ag reement". Appellate Body Report, US – Section 211
Appropriations Act, para. 242.
308 Canada's response to Panel question No. 42; and Mexico's response to Panel question No. 42.
309 United States' response to Panel question No. 42.
310 United States' response to Panel question No. 42.

The similar provision under the Tokyo Round Agreem ent on Technical Barriers to Trade has never
been the subject of a ruling by any GATT panel either.
311
7.229 The complainants suggest interpreting these te rms in Article 2.1 of the TBT Agreement
similarly to the meaning given to these terms under Article III:4 of the GATT 1994. This latter
provision encompasses the following national treatment obligation:
"The products of the territory of any contr acting party imported into the territory of
any other contracting party shall be accord ed treatment no less favourable than that
accorded to like products of national origin in respect of all laws, regulations and
requirements affecting their internal sale, offering for sale, purchase, transportation,
distribution or use. ..."
7.230 Article 2.1 of the TBT Agreement and Artic le III:4 of the GATT 1994 both set out, in
relevant part, a "national treatment obligation" 312 and have textual similarities. 313 They contain the
same key phrase: "treatment no less favourable than that accorded to like products of national origin".
Two parts of this phrase, "like products" and "t reatment no less favourable", serve also as key
elements of the legal test under both provisions. The above-quoted formulation of these two elements
under the legal test for Article 2.1 of the TBT Agreement314 is quite similar to relevant elements of the
legal test under Article III:4 of the GATT 1994.315
7.231 As Mexico points out, in US – Section 211 Appropriations Act the Appellate Body found that,
given the fundamental role of the national treat ment principle for the TRIPS Agreement and the
similarity in the language of the relevant provision s, "Article III:4 of the GATT 1994 may be useful
in interpreting the national treatment obligation in the TRIPS Agreement".316
7.232 Further, the panel in Japan – Film noted that the term "no less favourable treatment" is "to be
found throughout the General Agreement and later Agreements negotiated in the GATT framework as
an expression of the underlying principle of equality of treatment of imported products as compared to

311 Appellate Body Report, EC – Asbestos , para. 81. Article 2.1 of the Tokyo Round Agreement on
Technical Barriers to Trade provides:

"With respect to their central government bodies:

2.1 Parties shall ensure that technical regula tions and standards are not prepared, adopted
or applied with a view to creating obstacl es to international trade. Furthermore, products
imported from the territory of any Party shall be accorded treatment no less favourable than
that accorded to like products of national origin and to like products originating in any other
country in relation to such technical regulations or standards. They shall likewise ensure that
neither technical regulations nor standards themselves nor their application have the effect of
creating unnecessary obstacles to international trade." (emphasis added).

312 Panel Report, EC – Trademarks and Geographical Indications (Australia), para. 7.469.
313 Panel Report, EC – Trademarks and Geographical Indications (Australia), para. 7.464.
314 Panel Report, EC – Trademarks and Geographical Indications (Australia) , para. 7.444.
See para. 7.219 above.
315 The Appellate Body stated: "For a violation of Article III:4 to be established, three
elements must be satisfied: [i] that the imported and domestic products at issue are 'like
products'; [ii] that the measure at issue is a 'law, regulation, or requirement affecting their
internal sale, offering for sale, purchase, transportation, distribution, or use'; and [iii] that the
imported products are accorded 'less favourable' treatment than that accorded to like domestic
products." (Appellate Body Report, Korea – Various Measures on Beef, para. 133).
316 Appellate Body Report, US – Section 211 Appropriations Act, para. 242 (original emphasis).

the treatment given either to other foreign produc ts, under the most favoured nation standard, or to
domestic products, under the national treatment standard of Article III.317"318
7.233 According to its preamble, the TBT Agreement serves "to further the objectives of
GATT 1994".319 Also, "no conflicting, i.e. mutu ally exclusive, obligations arise" 320 from Article 2.1
of the TBT Agreement and Article III:4 of the GA TT 1994 in the sense of the General Interpretive
Note to Annex 1A to the WTO Agreement.
7.234 In light of the above similarities and linkag es between the two provisions, and taking into
account the above-quoted Appellate Bo dy and panel reports, we concl ude that Article III:4 of the
GATT 1994 provides relevant context for interpreting Article 2.1 of the TBT Agreement, in particular
for interpreting the term "no less favourable treatment than that accorded to like products of national
origin".
(b) The COOL measure's consistency with Article 2.1
7.235 As explained above, we address the complainan ts' claims under Article 2.1 by assessing the
following three elements: (i) whether the measure at issue is a "technical regulation"; (ii) whether the
imported and domestic products at issue are "like pr oducts"; and (iii) whet her the imported products
are accorded "less favourable" treatment than that accorded to like domestic products.
(i) Whether the COOL measure is a technical regulation
7.236 We have already addressed above whether the measures at issue constitute technical
regulations within the meaning of the definition contained in Annex 1.1 to the TBT Agreement.
We concluded that only the COOL measure constitutes a technical regulation; the Vilsack letter does
not.321 Accordingly, our analysis of the complainants' Article 2.1 claims is limited to the
COOL measure.
7.237 In this connection, the United States argues that the term "in respect of technical regulations"
in Article 2.1 of the TBT Agreement has a specific function. We now turn to this argument.
Main arguments of the parties
7.238 The United States considers the three elements of the legal test argued by the complainants
as "minimum" elements for showing a violation of Ar ticle 2.1 of the TBT Agreement. According to
the United States, the text of Article 2.1 of th e TBT Agreement requires the complainant to also
establish that less favourable treatment is "in respect of" the technical regulation.322 The United States
contends that "the complaining party must show th at the imported and domestic products in respect of
which the measure applies are 'like' products". 323 According to the United States, the complainants
have not demonstrated this, since they compare th e treatment accorded to cattle and hogs (livestock),
whilst the COOL measures apply to beef and pork (meat).324 The United States contends that the term
"in respect of technical regulations" in Article 2.1 of th e TBT Agreement should be interpreted on the

317 (footnote original) US – Section 337, BISD 36S/345, 386-387, paras. 5.11.
319 See also Panel Report, EC – Trademarks and Geographical Indications (Australia), para. 7.464.
320 Panel Report, EC – Bananas III, para. 7.162.
321 See paras. 7.196-7.216 above.
322 United States' first written submission, footnote 166.
323 United States' first written submission, para. 196.
324 United States' first written submission, paras. 196-199.

basis of the dictionary meaning of the term "respect".
325 According to the United States, the
COOL measures contain labelling requirements that "r elate to" the labelling of meat, but are not "in
respect of" livestock.326 The United States also argues that the language "in respect of" in Article 2.1
of the TBT Agreement means that any less favourable treatment not directly attributable to a measure,
such as that resulting from a privat e market actor's independent decision on how to comply, does not
give rise to a breach of this provision.327
7.239 The complainants reject the argument put forward by the United States. Canada argues that
Article 2.1 of the TBT Agreement does not establish that technical regulations shall accord national
treatment to the products in respect of which the technical regulations have been imposed. Rather, the
term "in respect of" contained in Article 2.1 refers to technical regulations, not to the products that are
the subject of a discrimination claim. Further, Canada argues that if the US interpretation were
accepted, a Member would be free under the TBT Agreement to discriminate, by means of a technical
regulation, against imported products that are conten ts, inputs or ingredients of a final product as long
as the technical regulation did not discriminate against the final product.
328
7.240 Likewise, Mexico argues that the term "in respect of" simply clarifies that the non-
discrimination obligation in Article 2.1 applies only to technical regulations. Further, the
COOL measure explicitly applies to both livestock and the resulting meat since it links the labelling
of meat to the country where the livestock was born, raised and slaughtered.329
Analysis by the Panel
7.241 We start our analysis with the term "in respect of". The panel in US – Section 211
Appropriations Act held that "the ordinary meaning of the te rm 'in respect of' is in 'relation [to],
connection [with], reference [to]'330".331
7.242 The clause "in respect of technical regulations" is inserted into the rest of the sentence of
Article 2.1 of the TBT Agreement. Hence, the clause "in respect of technical regulations" is a general
qualifier for the rest of Article 2.1. In this regard , the clause "in respect of technical regulations" is
similar to the qualifier contained in the chapeau of Article 2 ("[w]ith respect to their central
government bodies"), which applies to Article 2 of the TBT Agreement as a whole.
7.243 That the phrase "in respect of technical regula tions" is a general qualifier for the rest of
Article 2.1 is confirmed by the French and Spanish versions of Article 2.1, which include "pour ce qui
thus visually and functionally separating that clause from the rest of Article 2.1.
7.244 The operative obligation laid down by the r est of Article 2.1 of the TBT Agreement
establishes a clear link between "products" and "tre atment no less favourable" by requiring that the
latter be accorded to the former. This operativ e obligation does not, however, limit the scope of
products covered by Article 2.1, which implies no specific limitation on the products falling within
the scope of the provision.

325 United States' first written submission, para. 197.
326 United States' first written submission, para. 198.
327 United States' opening oral statement at the first substantive meeting of the Panel, para. 34.
328 Canada's second written submission, paras. 13-14.
329 Mexico's second written submission, paras. 117 and 120.
330 (footnote original) The New Shorter Oxford English Dictionary, (Clarendon Press, 1993), p. 2565.
331 Panel Report, US – Section 211 Appropriations Act, para. 8.30.

7.245 Accordingly, we conclude that the term "in resp ect of technical regulations" in Article 2.1 of
the TBT Agreement does not have the specific functi on suggested by the United States. This term
merely clarifies that the obligation in Article 2.1 of the TBT Agreement applies to a specific type of
measure: technical regulations. In particular, it does not serve to limit the relevance, for Article 2.1
of the TBT Agreement, of the "relatively broad product scope" 332 attached to the term "like products"
under Article III:4 of the GATT 1994.
7.246 In any event, as we shall discuss below, the COOL measure applies not only to beef and pork
but also to cattle and hogs. Formally speaking, the category of "covered commodities" under the
COOL measure includes only beef and pork, not livestock333, and the labelling requirements under the
COOL measure apply to beef and pork only "at the final point of sale of the covered commodity to
consumers".334 As we explained above 335, however, without upstream livestock producers and
processors providing the necessary information on or igin as defined by the COOL measure, these
retail labelling requirements are impossible to fulfil. The COOL measure recognizes this by creating
obligations not only for retailers of beef and por k but also for the broad category of "any person
engaged in the business of supplying [these] to a retailer".
336 The latter category of upstream market
participants "shall provide information to the retaile r indicating the country of origin of the covered
commodity".337 The COOL measure supports this obliga tion with an enforcement mechanism,
including fines – again, applicable to both retailers and their suppliers.338
(ii) Whether imported and domestic products are "like"
7.247 The second essential element of the legal test un der Article 2.1 of the TBT Agreement is
whether the products at issue are "like".
Main arguments of the parties
7.248 As already indicated, Canada and Mexico argue that the Panel should interpret the term "like
products" in Article 2.1 of the TBT Agreement in li ght of the similar term in Article III:4 of the
GATT 1994.339 In particular, according to the complainants, the Panel should apply the "like product"
test under Article 2.1 of the TBT Agreement by asse ssing the four criteria of likeness confirmed by
the Appellate Body in the context of Article III:4 of the GATT 1994340, namely:
(a) the products' properties, nature and quality;
(b) the products' end-uses in a given market;
(c) consumer tastes and habits in respect of the products; and

332 Appellate Body Report, EC – Asbestos, para. 100.
333 7 U.S.C. § 1638.
334 7 U.S.C. § 1638a.
335 See para. 7.205 above.
336 7 U.S.C. § 1638a.
337 7 U.S.C. § 1638a.
338 7 U.S.C. § 1638b.
339 Canada's response to Panel question No. 42, Mexico's response to Panel question No. 42,
United States' response to Panel question No. 42, Canada's opening oral statement at the first substantive
meeting of the Panel, para. 11 and Mexico's opening oral statement at the first substantive meeting of the Panel,
para. 29.
340 Canada's first written submission, para. 79 an d Mexico's first written submission, paras. 200
and 266.

(d) the tariff classification of the products.
341
7.249 To demonstrate that Canadian cattle and hogs are like products to US cattle and hogs, Canada
argues that: (i) cattle and hogs imported from Canada are physically indistinguishable from US-origin
cattle and hogs, they belong to the same breeds and are raised in the same way; (ii) both Canadian
and US cattle and hogs share the same end use of producing beef and pork; (iii) the consumers of
cattle and hogs in the United States, i.e. feedi ng operations and slaughterhous es, view Canadian and
US cattle and hogs as interchangeable and base their purchasing decisions on price, quality and
availability; and (iv) under the harmonized system of tariff classification, both Canadian and US
cattle are classified under subheading 0102.90. Cana dian hogs are also classified under the same
subheading as US hogs (0103.91 for live swine we ighing less than 50kg and 0103.92 for live swine
weighing more than 50kg).342
7.250 In addressing the four criteria of the likeness test, Mexico argues that: (i) the physical
properties of Mexican feeder cattle are equivalent if not identical to US feeder cattle; (ii) feeder
cattle, whether from Mexico or the United States, ar e used principally to produce beef; (iii) the
consumers of feeder cattle (US backgrounders, feed lots and ultimately, slaughterhouses) perceived
and treated Mexican and US cattle identically; an d (iv) both Mexican and US cattle are classified
under subheading 0102.90 of the Harmonized System.343
7.251 The United States invokes the same four elements of "likeness" as the complainants, but only
in its arguments under Article III:4 of the GATT 1994 344, and without addressing the complainants'
suggestion that these four elements should guide th e Panel in assessing "likeness" under Article 2.1 of
the TBT Agreement. The United States does not pr ovide a detailed rebuttal of the complainants'
arguments under the four criteria. The United States argues generally that the complainants have not
demonstrated the "likeness" of US livestock and Canadian and Mexican livestock, let alone of US and
Canadian/Mexican meat.345
Analysis by the Panel
7.252 Canada argues that for the purposes of Article 2.1 of the TBT Agreement, Canadian and US
cattle are like products, and Canadi an and US hogs are also like products,. Likewise, Mexico argues
that Mexican cattle, in particular Mexican feeder cat tle, and US cattle, in particular US feeder cattle,
are also like products. In this regard, Canada recalle d the findings of various panels to the effect that
where the only alleged distinction under a measure at issue is based on the origin of imported and
domestic products, such products should be considered "like products" for the purposes of
Article III:4 of the GATT 1994.346
7.253 In response to a question from the Panel on whet her it agrees with the complainants on the
issue of "likeness" in general, the United States i ndicated that Canada and Mexico both addressed this
issue in their first written submissions, and the United States has not contested the arguments put
forward by the complainants.347 Accordingly, we proceed on the understanding that the United States

341 See Appellate Body Report, Japan – Alcoholic Beverages II , pp. 20-21 and Appellate Body Report,
EC – Asbestos, para. 101.
342 Canada's first written submission, paras. 81-84.
343 Mexico's first written submission, paras. 199-205 and 266-267.
344 United States' first written submission, para. 281.
345 United States' first written submission, para. 282.
346 Canada's first written submission, para. 85.
347 United States' response to Panel question No. 117 (footnote omitted).

does not object to the contention that the only basis of distinction between the products at issue is that
of origin.348
7.254 We recall that, in previous disputes, products that are distinguished solely on the basis of their
origin were found to be like products within the meaning of Article III:4. 349 The guidance of these
panels is also relevant for the complainants' clai ms under Article 2.1 of the TBT Agreement in this
dispute.
7.255 Country of origin labelling, i.e. addressing and indicating "origin", is the essence and
rationale of the COOL measure. In the context of ground meat, the COOL measure refers to the
origin of the meat that has been ground. As regards muscle cuts, the COOL measure distinguishes the
products at issue according to the country in which the birth, raising and slaughtering of the animal
from which meat is derived took place. Also, under the COOL measure, the origin of meat does not
change according to the length of time an animal was raised in a specific country.
7.256 Accordingly, and in the absence of counterar guments from the United States, we need not
engage in any further analysis to conclude that th e products at issue in this dispute are "like products"
in the sense of Article 2.1 of the TBT Agreement. In particular, we find that Canadian and US cattle
are like products; moreover, Canadian and US hogs are also like products. Further, Mexican cattle,
in particular Mexican feeder cattle, and US cattle, in particular US feeder cattle, are also like products.
(iii) Whether the imported products are accorded less favourable treatment than that accorded to
like domestic products
7.257 The third essential element of the legal test under Article 2.1 of the TBT Agreement is
"treatment no less favourable", or less favourable treatment.
Main arguments of the parties
7.258 Canada argues that the COOL measure treats Cana dian cattle and hogs less favourably than
US cattle and hogs. 350 Mexico argues the same with regard to Mexican and US cattle. 351
The United States submits that Canada and Mexico have failed to show that the COOL measures
provide less favourable treatment to the imported products at issue.352
Legal test
7.259 The parties suggest that the Panel interpret th e term "less favourable treatment" contained in
Article 2.1 of the TBT Agreement in light of Article III:4 of the GATT 1994. 353 The complainants
argue354 that "treatment no less favourable" should be assessed in light of whether the measure in
question "modifies the conditions of competition in the relevant market to the detriment of imported

348 Canada's first written submission, para. 85.
349 Panel Report, Turkey – Rice , para. 7. 214. See also ibid., para. 7.216, Panel Report, Canada –
Autos, para. 10.74, Panel Report, US – FSC (Article 21.5 – EC) , para. 8.133, Panel Report, India – Autos ,
para. 7.174 and Panel Report, Canada – Wheat Exports and Grain Imports, para. 6.164 and footnote 246.
350 Canada's first written submission, para. 86.
351 Mexico's first written submission, para. 219.
352 United States' first written submission, para. 140.
353 Canada's first written submission, para. 86, Mexico's first written submission, para. 268, Canada's
Response to Panel question No. 42, Mexico's Response to Panel question No. 42, and United States' Response to
Panel question No. 42.
354 Canada's first written submission, para. 83 and Mexico's first written submission, para. 217.

products"
355, by addressing whether the measure "gives dom estic products a competitive advantage in
the market over imported like products". 356 Canada adds that, in the words of a GATT panel report,
the objective of "treatment no less favourable" is to provide "equality of opportunities"357 for imported
products.358 Also, Canada recalls that in Korea – Various Measures on Beef , the Appellate Body
upheld the violation of Article III:4 of the GATT 1994 on the basis of a "drastic reduction of
commercial opportunity"359 for imported products.360
7.260 Mexico argues that the COOL measure does not de jure distinguish between imported and US
livestock.361 In turn, Canada contends that the COOL measure does not explicitly require that
imported covered commodities be treated less favour ably than domestic co mmodities, but has that
effect.362 Thus, the complainants seek to demonstr ate that Canadian and Mexican livestock is
accorded de facto less favourable treatment than US livestock. 363 Canada and Mexico argue that
similarly to Article III:4 of the GATT 1994, Article 2.1 of the TBT Agreement should be interpreted
as applying to both de jure and de facto discrimination.364
7.261 Canada argues that the COOL measure creates ince ntives for US industry to use exclusively
US-origin animals.365 Using the words of the Appellate Body in Korea – Various Measures on Beef ,
Canada contends that the COOL measure imposes the "necessity of making a choice" 366, and argues
that "the 'intervention of some element of priv ate choice' does not absolve the United States of the
obligation to ensure that impor ted cattle and hogs are not subjec t to less favourable competitive
conditions than their like domestic counterparts".367
7.262 Mexico argues that the COOL measure de facto discriminates against Mexican cattle.
Mexico points out that a formal difference in tr eatment between imported and like domestic products
is not necessary to show a violation; rather, the question is whether the measure modifies the
conditions of competition. 368 Mexico submits that the following facts show the de facto
discriminatory effect of the COOL measure: (i) feeder cattle are a commodity product in a market
that is sensitive to increased costs; (ii) Mexican-born cattle are a small portion of the total US cattle
slaughter; (iii) prior to the COOL measure the stocks of Mexican and US cattle were normally
commingled at all stages of production; (iv) not all market participants handle both Mexican and US
cattle; and (v) the costs of compliance are highe r for participants who handle Mexican feeder
cattle.
369
7.263 The United States references the Appellate Body's report in Dominican Republic – Import
and Sale of Cigarettes on the meaning of less favourable treatment in regard to competitive
conditions, but contends that its application lead s to the opposite conclusion from that advanced by

355 Appellate Body Report, Korea – Various Measures on Beef, para. 137.
356 Appellate Body Report, Dominican Republic – Import and Sale of Cigarettes, para. 93.
357 GATT Panel Report, US – Section 337 Tariff Act, para. 5.11.
358 Canada's first written submission, para. 88.
359 Appellate Body Report, Korea – Various Measures on Beef, para. 145.
360 Canada's first written submission, para. 90.
361 Mexico's first written submission, para. 218.
362 Canada's first written submission, para. 89.
363 Canada's first written submission, paras. 91 -154 and Mexico's first written submission,
paras. 220-232 and 269.
364 Canada's response to Panel question No. 42 and Mexico's first written submission, para. 218.
365 Canada's first written submission, para. 91.
366 Appellate Body Report, Korea – Various Measures on Beef, para. 146.
367 Canada's first written submission, para. 91.
368 Mexico's first written submission, para. 218.
369 Mexico's first written submission, para. 220.

the complainants. 370 According to the United States, the COOL measures do not accord less
favourable treatment to imports. 371 The United States refers to EC – Trademarks and Geographical
Indications (Australia) 372, where the panel held that "the star ting point for this analysis [of 'less
favourable treatment'] must be whether the meas ure at issue accords any difference in treatment". 373
The United States argues that the COOL measures treat beef, pork and livestock identically,
regardless of origin, since they do not explicitly require that imported co mmodities be treated less
favourably than domestic ones. Further, the Un ited States contends that the COOL measures are
facially neutral since they require meat to be labe lled with origin information regardless of where the
livestock from which the meat was derived had been born, raised, or slaughtered.374
7.264 Further, the United States contends that it is not sufficient for the complainants to simply
demonstrate that a measure has had some detrimental effect on imported products. 375 A s t h e
Appellate Body explained, there is no less favourable treatment "if the detrimental effect is explained
by factors or circumstances unrelated to the foreign origin of the product". 376 According to the
United States, the complainants seem to acknowledge that any decision by livestock and meat
processors to change their production practices resu lts in large part from th e complainants' relatively
small market share. 377 In this regard, the United States notes that in Dominican Republic – Import
and Sale of Cigarettes , the Appellate Body found that a sma ller market share of imported products
does not turn an origin-neutral measure into on e affording less favourable treatment in the legal
sense.378 The United States additionally refers to Korea – Various Measures on Beef 379, where the
Appellate Body held that action by private actors not compelled by the measure at issue does not
result in a violation of Article III:4 of the GATT 1994.380
Whether the COOL measure involves segregation and differential costs for imported
livestock
7.265 Canada argues that the COOL measure has modifi ed the conditions of competition to the
detriment of Canadian cattle and hogs, because it imposes higher costs on the use and sale of imported
livestock.381 These higher costs are due mainly to the segregation of domestic and imported animals
and meat based on origin throughout the production chai n. The majority of animals in the US market
are of domestic origin. Hence, US feeding opera tions and slaughterhouses relying only on US-origin
livestock face much lower additional costs than feeding operations and slaughterhouses that produce
both US and mixed-origin meat.382 As they operate in a competitive market, market participants using
both domestic and imported livestock cannot pass on the additional costs resulting from the
COOL measure. Canada argues that the substantial additional costs fo r the use of Canadian livestock
resulting from the COOL measure have reduced dema nd for such livestock by US feeding operations

370 United States' first written submission, para. 147, footnote 169.
371 United States' first written submission, para. 142.
372 Panel Report, EC – Trademarks and Geographical Indications (Australia), para. 7.464.
373 United States' first written submission, para. 142.
374 United States' first written submission, paras. 142-145.
375 United States' first written submission, para. 147.
376 Appellate Body Report, Dominican Republic – Import and Sale of Cigarettes, para. 96.
377 United States' first written submission, para. 174.
378 United States' first written submission, para. 173. See also Appellate Body Report, Dominican
Republic – Import and Sale of Cigarettes, para. 9
379 Appellate Body Report, Korea – Various Measures on Beef, para. 149.
380 United States' second written submission, paras. 64-65.
381 Canada's first written submission, para. 91.
382 Canada's first written submission, paras. 92-94.

and slaughterhouses. The price basis between Ca nadian and US-fed cattle has widened, and US
imports of Canadian livestock have dramatically decreased.
383
7.266 Canada submits that the COOL measure impos es costly segregation requirements on the use
of imported cattle and hogs by reta ilers and slaughterhouses. Retailers must track the country of
origin of each piece of meat throughout retail operations. Slaughterhouses handling livestock of
multiple origins must be able to identify the anim als as they are processed into meat, which entails
segregation.384 This has resulted in a deterioration of the competitive opportunities for Canadian
livestock. In particular, the COOL measure has: (i) reduced demand for Canadian cattle and hogs
resulting from segregation costs 385; (ii) reduced the number of US feeding operations and
slaughterhouses accepting Canadian livestock 386; and (iii) resulted in restrictions on the days and
times that slaughterhouses accept Canadian animals. 387 Canada adds that there is limited consumer
demand for the kind of information provided under the COOL measure.388
7.267 Mexico submits that even the 2009 Final Rule (AMS) recognizes that costs are likely to
increase for processors handling products sourced from multiple countries, as they will probably
choose to operate separate shifts for processing th ese products or to split processing within shifts. 389
Further, US packing plants have reduced the price paid for cattle born in Mexico and raised in the
United States by applying an additional discount to the purchase price, which has been ultimately
transferred to Mexican cow-calf operators.390
7.268 Mexico adds that USDA recognized that th e COOL measure would necessarily lead to
segregation during beef production 391, and acknowledged the likelihood of additional costs generated
by segregation. 392 Mexico argues that the COOL measur e has caused US packing plants to cease
commingling cattle born in Mexico and raised in th e United States with cattle born and raised in the
United States and instead to segregate by: (i) re ducing the number of backgrounders, feedlots and
plants that raise and slaughter cattle born in Mexico and raised in the United States; (ii) reducing the
number of days per week when such cattle are sl aughtered and processed; (iii) reducing the overall
number of such cattle that are slaughtered and pr ocessed; and (iv) requiring advance notice prior to
accepting such cattle. 393 Mexico adds that USDA itself recognizes that consumers are not willing to
bear the costs of providing the kind of information required under the COOL measure.394
7.269 The United States argues that any technical regulati on, including the COOL measures,
involve compliance costs, and compliance cost s will necessarily vary for different market
participants.395 Likewise, the costs for market participants will rarely be constant over time; rather,
these costs will be higher immediately following a regulatory change, and would decline with time.396
The complainants' evidence on cost s relates to a brief period following the implementation of the
COOL measures. Further, even if certain costs of compliance with the COOL measures might not be

383 Canada's first written submission, paras. 140-154.
384 Canada's first written submission, paras. 95-106.
385 Canada's first written submission, paras. 107-112.
386 Canada's first written submission, paras. 113-117.
387 Canada's first written submission, paras. 118-124.
388 Canada's first written submission, paras. 193-195.
389 Mexico's first written submission, para. 228.
390 Mexico's first written submission, paras. 222-230.
391 Mexico's first written submission, para. 228.
392 Mexico's first written submission, para. 230.
393 Mexico's first written submission, para. 221.
394 Mexico's first written submission, para. 89.
395 United States' first written submission, para. 193.
396 United States' first written submission, para. 194.

shared equally among market players, this alone cannot support the conclusion that the measures
effectively modify the conditions of competition. To the extent the C OOL measures impose costs
these are merely costs inherent to regulating.397
7.270 The United States adds that the complainants' arguments rest on a number of erroneous
factual assertions regarding the operation of the COOL measures and their impact on the livestock
market.398 The COOL measures do not require US processors to segregate. 399 R a t h e r , t h e
COOL measures entail considerable flexibility, so feeding operations and slaughterhouses can meet
the requirements in any way they choose. 400 The United States asserts that a specific slaughterhouse
has at least five options that do not require seg regation: (i) processing livestock of exclusively
domestic origin; (ii) processing livestock of exclus ively foreign origin; ( iii) processing livestock of
exclusively mixed origin and affixing the same label on all the resulting meat; (iv) using the
commingling provisions to process domestic and mixe d-origin livestock on the same production day;
and (v) processing domestic and mixed-origin livestock on separate days. 401 In fact, argues the
United States, the evidence referen ced by the complainants shows that numerous producers continue
processing domestic and foreign-origin livestock w ithout segregating them or without limiting the
days for foreign livestock supplies. 402 These processing plants have more than enough capacity to
process all of the complainants' livestock exports.
7.271 According to the United States, to the exte nt that market players are segregating or
demanding less foreign livestock, this results from thei r independent decisions, and is not attributable
to the United States. 403 In fact, some processors had segregated their processing lines before the
COOL measures existed – in order to qualify for pr emium marketing programs, to meet third-country
import requirements and to comply with BSE-related restrictions. According to the United States, this
pre-existing segregation shows that individual mark et players have reasons for segregating products
that have nothing to do with the COOL measures a nd that, to the extent processors are segregating to
comply with the COOL measures, the costs imposed by this practice are not as high as the
complainants assert.404
7.272 Canada and Mexico reject this argument of the United States. The complainants argue that
the limited segregation prior to the COOL measure was not origin -based, but it was rather for
participating in voluntary premium programs concer ning meat quality and for exporting beef through
export verification programs. 405 Canada clarifies that there is no grade-labelling for pork. In any
event, Canada submits that the expenses of those programs are offset by the premiums paid by the
domestic or foreign consumer. 406 Moreover, any small-scale segre gation to supply meat to niche
markets is not comparable to the systematic segregation required by the COOL measure. 407 Further,

397 United States' first written submission, para. 191.
398 United States' first written submission, para. 150.
399 United States' first written submission, paras. 150, 152-159; and United States' second written
submission, paras. 42-44.
400 United States' first written submission, paras. 153-156 and 158.
401 United States' first written submission, para. 158: and United States' second written submission,
para. 43.
402 United States' first written submission, paras. 164-167; and United States' second written
submission, para. 57.
403 United States' first written submission, paras. 150 and 168-189.
404 United States' first written submission, paras. 16 8-170, United States' response to Panel question
No. 43 and United States' second written submission, para. 59.
405 Canada's second written submission, paras. 25-3 2, Canada's response to Panel question No. 120,
Mexico's response to Panel question No. 43, Mexico's response to Panel question No. 120.
406 Canada's second written submission, paras. 25-32.
407 Canada's opening oral statement at the second substantive meeting of the Panel, para. 27.

Mexico argues that although segregation is not exp licitly required by the COOL measure, in practice
it is necessary for the industry to comply with the measure and that an analysis of the options put forth
by the United States demonstrates that segregation in some form is required by the COOL measure.
408
Whether there is any incentive to process domestic livestock
7.273 The complainants argue that the COOL me asure creates incentives along the meat production
chain for participants to handle exclusively US livestock. 409 Canada argues that the possibility to
commingle does not eliminate segregation costs that create an economic disincentive to use Canadian-
born livestock throughout the supply chain.410 Mexico argues that the COOL measure is structured so
that the most commercially rational means of comp liance is to stop handling Mexican cattle or to
segregate Mexican cattle in a way that restricts trade in those cattle.411
7.274 The United States contests the complainants' arguments about the COOL measures creating
incentives for US industry to segregate and favour domestic livestock. 412 According to the
United States, the Appellate Body report in Korea – Various Measures on Beef does not support these
arguments. The dual retail system addressed in that dispute imposed "the legal necessity of making a
choice"413 between domestic and foreign pr oducts. By contrast, the complainants appear to argue that
the COOL measures create a commercial necessity for some producers to segregate products.
However, claims the United States, the fact that some processors choose not to segregate shows that
segregation is not even a commercial necessity, let alone a legal one.414
Analysis by the Panel
Introduction
Relevance of Article III:4 of the GATT 1994
7.275 We have noted the similarities between the te xt and structure of the national treatment
obligations under Article 2.1 of the TBT Agreem ent and Article III:4 of the GATT 1994, and that,
according to its preamble, the TBT Agreement serves "to further the objectives of GATT 1994". 415
Hence, we have concluded that Article III:4 of the GATT 1994 provides relevant context for
interpreting Article 2.1 of the TBT Agreement – in particular, for interpreting the term "treatment no
less favourable than that accorded to like products of national origin".416
7.276 We recall that Article III:4 of the GATT 1994 u ltimately serves to further the "equality of
competitive conditions for imported products in relation to domestic pr oducts" or "the equal
competitive relationship between imported and domestic products", rather than "expectations ... of any
particular trade volume".417 Further, in Korea – Various Measures on Beef , the Appellate Body held,
in the context of Article III:4 of the GATT 1994, that "[a]ccording 'treatment no less favourable'

408 Mexico's opening oral statement at the second substantive meeting of the Panel, paras. 20-23.
409 Canada's first written submission, para. 91 and Mexico's first written submission, para. 215.
410 Canada's opening oral statement at the second substantive meeting of the Panel, para. 23.
411 Mexico's second written submission, para. 135.
412 United States' first written submission, para. 169.
413 Appellate Body Report, Korea – Various Measures on Beef, para. 146.
414 United States' first written submission, para. 171.
415 See para. 7.233 above.
416 See para. 7.234 above.
417 Appellate Body Report, Japan – Alcoholic Beverages II, p. 16. See also Appellate Body Report, EC
– Asbestos, para. 93.

means ... according conditions of competition no less favourable to the imported product than to the
like domestic product".418
7.277 We bear this and the interpretation of Artic le III:4 of the GATT 1994 in mind in analysing
whether the COOL measure involves less favour able treatment for imported livestock under
Article 2.1 of the TBT Agreement.
Order of analysis
7.278 Our analysis of the complainants' claims of less favourable treatment starts with a review of
the statutory definition of the relevant meat labels under the COOL measure, followed by an
assessment of the country of origin labelling regi mes applicable to muscle cuts and ground meat,
respectively.
7.279 In the context of muscle cuts, we address th e following issues to determine whether the
COOL measure accords less favourable treatment to imported than to like domestic livestock:
(a) whether the different categories of labels under the COOL measure accord different
treatment to imported livestock;
(b) whether the COOL measure involves segregation and, consequently, differential costs
for imported livestock; and
(c) whether, through the compliance costs i nvolved, the COOL measure creates any
incentive to process domestic livestock, thus reducing the competitive opportunities
of imported livestock.
7.280 We also address specific arguments by the Unite d States regarding any incentive in favour of
domestic livestock or any reduction in the compe titive opportunities of imported livestock as a result
of the COOL measure. We then briefly ad dress whether the ground-meat label under the
COOL measure accords less favourable treatment to imported livestock. Finally, we turn to the
economic and econometric evidence submitted by the parti es, to complete our analysis with regard to
the complainants' claims under Article 2.1 of the TBT Agreement.
7.281 In analysing the complainants' claims under Artic le 2.1, we do not consider it necessary to
address the country of origin labelling measures of other WTO Members referenced by the parties.
419
Our findings under Article 2.1 of the TBT Agreement address only the COOL measure of the
United States as challenged by the complainants in the current proceedings.
Statutory definition of the relevant meat labels under the COOL measure
7.282 The COOL measure sets out labelling requirements at the retail stage, i.e. "at the final point of
sale to consumers".
420 The labels at issue in this dispute must be affixed on muscle cuts of meat and
on ground meat, namely beef and por k; however, there is no requirement to place labels on livestock
from which meat is produced.

418 Appellate Body Report, Korea – Various Measures on Beef, para. 135 (original emphasis). See also
ibid., paras. 136-137.
419 See Canada's second written submission, paras. 17-23 and Mexico's response to Panel question
No. 94.
420 United States' first written submission, para. 33; 7 U.S.C. § 1638a(a)(1).

7.283 Nevertheless, the COOL measure and the C OOL labels are difficult to dissociate from
upstream stages of meat production. The labels are intended to convey information on the "origin" of
meat. Under the COOL statute, the ground-meat labe l shall list "all of the countries of origin of ...
ground beef [or] ... pork" or "all of the reasonably possible countries of origin of ... ground beef [or] ...
pork".
421 According to the 2009 Final Rule (AMS), these terms refer to the origin of meat that has
been ground: "if a country of origin is utilized as a raw material source in the production of ground
meat, it must be listed on the label".422
7.284 For the four muscle cut labels, country of orig in is determined by the country in which
specific livestock production and processing steps, name ly birth, raising and slaughtering, took place.
All three of these steps precede the meat retail stage; indeed, they cover the period back to the birth
of the animal from which meat is produced. The st atutory definitions of the four muscle cut labels
determine "origin" by explicit reference to the "ani mal" which the meat subject to COOL labelling is
"derived from":
MUSCLE
CUT LABEL
REFERENCE IN THE
COOL STATUTE423 STATUTORY DEFINITION424
Label A "United States Country of Origin"
"beef [or] ... pork ... derived from an animal
that was ... exclusively born, raised, and
slaughtered in the United States"
Label B "Multiple Countries of Origin"
"beef [or] ... pork ... derived from an animal
that is –
(i) not exclusively born, raised and
slaughtered in the United States;
(ii) born, raised or slaughtered in the
United States; and
(iii) not imported into the United States for
immediate slaughter"
Label C "Imported for Immediate Slaughter"
"beef [or] ... pork ... derived from an animal
that is imported into the United States for
immediate slaughter"
Label D "Foreign Country of Origin"
"beef [or] ... pork ... derived from an animal ...
not born, raised, or slaughtered in the
United States"

7.285 Given the distinction under the COOL measure between the labelling regimes applicable to
muscle cuts and ground meat, we address these two labelling regimes separately.
Muscle cut labels
The relationship among the muscle cut labels under the COOL measure
7.286 The definitions of the four muscle cut labe ls under the COOL measure are mutually
exclusive, and they distinguish between Label A and the rest of the muscle cut labels (Labels B-D) as
regards the origin of livestock. Label A refers to muscle cuts from livestock born, raised and

421 7 U.S.C. § 1638a(a)(2)(E).
422 74 FR 2671.
423 7 U.S.C. §§ 1638a(a)(2)(A)-(D).
424 7 U.S.C. §§ 1638a(a)(2)(A)-(D).

slaughtered in the United States; in other words, livestock with no imported element. Conversely, the
other three muscle cut labels, Labels B-D, all identify livestock with some imported element.
Under these three labels, at least one (for Labels B-C) but possibly all three (for Label D) livestock
processing steps determining origin (i.e. birth, raising and slaughtering), as defined by the
United States, have taken place outside of the United States.
7.287 The COOL measure provides some – albeit limited – flexibility between the use of Label A
and the rest of the labels. First, Label A cannot be used for meat eligible for the other three labels
(Labels B-D), i.e. for meat from livestock for which at least one of the three processing steps
determining origin under the COOL measure has ta ken place outside the United States. In other
words, there is no flexibility under the COOL measure allowing for meat from imported livestock to
carry Label A. This is underscored by the word "exclusively" in the statutory definition of Label A.
7.288 As regards the other three labels, Label D is not interchangeable with any other muscle cut
labels, whereas the COOL measure allows for cer tain flexibilities betwee n Labels B and C.
Specifically, the 2009 Final Rule (AMS) explicitly allows for affixing Label B on Labels B and C
meat commingled on a single production day. 425 Further, Labels B and C may overlap in practice
since "the countries of origin may be listed in any order" 426 on Label B. Thus, specific Labels B
and C may look the same, provided that the countries involved in the production of the Label B and C
muscle cuts in question are the same.
7.289 In any event, flexibilities between Labels B and C have limited relevance for the
complainants' claims under Article 2.1 of the TB T Agreement. In the context of these claims,
the focus of our analysis is the distinction betw een Label A, defined as "United States Country of
Origin" in the COOL statute, and the rest of the labels, which all involve livestock with an imported
element.
7.290 In this regard, we note that there was a major fl exibility in that, prior to the 2009 Final Rule
(AMS), it was possible to use Label B for muscle cuts eligible for Label A (but not vice versa) – even
without commingling. By using "and/or", the In terim Final Rule (AMS) of August 2008 explicitly
allowed using Label B for Label A meat without limitations:
"If an animal was born, raised and/or slaughtered in the United States and was not
imported for immediate slaughter as defined in § 65.180, the origin of the resulting
meat products derived from that animal may be designated as Product of the
United States, Country X, and/or (as applicable) Country Y, where Country X and Y
represent the actual or possible countries of origin."
427 (emphasis added)
7.291 In fact, at least two major US meat processors declared in 2008 that they would be complying
with the COOL requirements by "offering the majo rity of [their] beef and pork cuts under the
multi-country Category B label" 428, with one of them pointing out that "the complexity, costs, and

425 74 FR 2659.
426 74 FR 2659.
427 73 C.F.R. § 65.300(e)(1)(i) (Exhibits CDA-3 and MEX-4). This was also possible in part because
the COOL statute uses the word "may" in regard to designating products with Labels A and B. Under the
COOL statute, "[a] retailer of a covered commodity may designate the covered co mmodity as exclusively
having a United States country of origin only if the covered commodity is derived from an animal that [fulfils
the requirements for Label A]." Further, "a retailer of a covered commodity that [fulfils the requirements for
Label B] may designate the country of origin of such covered commodity as all of the countries in which the
animal was born, raised or slaughtered." 7 U.S.C. §§ 1638a (a)(2)(A) and 1638a(a)(2)(B)(i) (emphasis added).
428 Exhibits CDA-36 and 38, MEX-33. See also Exhibits CDA-21 to 23, 39, 77 (BCI), MEX-55, 57
and 83.

incremental record keeping associated with sorting livestock and finished product into both categories
#1 [Label A] and #2 [Label B] [would be] extremely costly".
429
7.292 This predominantly Label-B approach involved a significant proportion of meat that would
have been otherwise only eligible for Label A. As the US Congressional Research Service explained:
"[a]fter issuance of the interim rules in August 2008, many retailers and meat
processors reportedly had planned to use the 'catch-all' label ... [i.e. Label B] on as
much meat as possible – even products that would qualify for the U.S.-only label,
because it was both permitted and the easiest requirement to meet."
430
7.293 This flexibility, however, ended with the 2009 Final Rule (AMS). The 2009 Final Rule
(AMS) recorded "extensive f eedback from livestock producers, members of Congress, and other
interested parties expressing concern about the provi sion in the [I]nterim [F]inal [R]ule [(AMS) of
August 2008] that allowed U.S. origin [i.e. Label A] product to be labeled w ith a mixed origin label
[i.e. Label B]".431 The 2009 Final Rule (AMS) added that "[ i]t was never the intent of the Agency
[i.e. USDA] for the majority of product eligible to bear a U.S. origin declaration to bear a multiple
origin designation".432
7.294 Thus, the 2009 Final Rule (AMS) removed th e unlimited possibility of using Label B for
Label A muscle cuts, and allowed such use only when the two types of meat are commingled on a
single production day:
"For muscle cut covered commodities deri ved from animals born, raised, and
slaughtered in the U.S. that are commingled during a production day with muscle cut
covered commodities derived from animals that were raised and slaughtered in the
United States, and were not derived from animals imported for immediate slaughter
as defined in § 65.300(e)(1), the origin may be designated as Product of the
United States, Country X, and (as applicable) Country Y."433
7.295 In other words, under the COOL measure, in particular the 2009 Final Rule (AMS), Label B
may be used for Label A meat but only in the case of commingling on a single production day. Under
the COOL measure, therefore, imported livestock is ineligible for the label reserved for meat from

429 Exhibit CDA-21.
430 Exhibits CDA-117, 199 and MEX-53.
431 74 FR 2659.
432 74 FR 2659.
433 74 C.F.R. § 65.300(e)(2). See also 74 FR 2659. This is also confirmed by the industry guidance
provided by USDA. In dealing with Frequently Asked Questions on COOL, USDA issued three publications on
11 (Exhibit CDA-29), 19 (Exhibit CDA-30) and 26 September 2008 (Exhibit CDA-31), respectively. The first
two publications posed the question whether "a retailer, like a meat packer, [can] label meat products derived
from livestock born, raised, and slaughtered in the United States (i.e. Product of USA) as having a mixed origin
(e.g., Product of the United States, Canada, and Mexico)?", and responded without reservations in the
affirmative: "Yes. Retailers are permitted to market U.S. produced meat products under a mixed origin label
declaration." (Exhibits CDA-29 and 30)
Conversely, in response to the same question, the third publication, dated 26 September 2008, reduced
this possibility to Label A and B meat commingled on a single production day:
"Similar to packers and intermediary suppliers, retailers are permitted to market U.S. produced
meat products under a mixed origin label (e.g., Product of U.S., Canada and Mexico) if they
are commingled with meat of mixe d origin. That is, if a retailer further processes meat at the
store and the resulting package includes meat of both U.S. origin and mixed origin
(e.g., Product of U.S., Canada and Mexico), the origin declaration can read Product of U.S.,
Canada and Mexico." (Exhibit CDA-31)

exclusively US-origin livestock, whereas in certain circumstances meat from domestic livestock is
eligible for a label that involves imported livestock.
7.296 We consider this difference only as "the starting point" 434 of our analysis of the complainants'
national treatment claims under Article 2. 1 of the TBT Agreement. Indeed, in Korea – Various
Measures on Beef, the Appellate Body held that differential treatment does not necessarily violate
Article III:4 of the GATT 1994: "[a] measure that provides treatment to imported products that is
different from that accorded to like domestic products is not necessarily inconsistent with Article III:4,
as long as the treatment provided by the measure is 'no less favourable'".435
7.297 Further, the complainants are not contesting an y formal difference in the treatment accorded
to domestic and imported livestock per se , nor the existence or exte nt of the flexibility of
commingling domestic with imported livestock. In stead, they argue that th e COOL measure accords
de facto less favourable treatment to imported livestock.436 This raises the threshold question whether
Article 2.1 of the TBT Agreement covers both de jure and de facto discrimination.
De jure versus de facto discrimination
7.298 In Canada – Autos, the Appellate Body held that "Article III:4 of the GATT 1994 covers both
de jure and de facto inconsistency.437"438 In Korea – Various Measures on Beef, the Appellate Body
added that:
"A formal difference in treatment betwee n imported and like domestic products is ...
neither necessary, nor sufficient to show a violation of Article III:4. Whether or not
imported products are treated 'less favourab ly' than like domestic products should be
assessed instead by examining whether a measure modifies the conditions of
competition in the relevant market to the detriment of imported products."439
7.299 Similarly, we read Article 2.1 of the TBT Agreement as prohibiting both de jure and de facto
less favourable treatment for like imported products . In fact, like Article III:4 of the GATT 1994,
Article 2.1 of the TBT Agreement lays down the na tional treatment obligation with language that is
silent on any distinction between de jure and de facto discrimination. In EC – Bananas III, the
Appellate Body held that Article II of the GATS covers both de jure and de facto discrimination since
that provision, in particular the phrase "treatment no less favourable", is silent on such a distinction:
"The obligation imposed by Article II is unqualified. The ordinary meaning of this
provision does not exclude de facto discrimination."440
7.300 To effectively ensure equality of competitive conditions, Article 2.1 of the TBT Agreement
cannot exclude measures that discriminate in effect . Limiting Article 2.1 of the TBT Agreement to

434 Panel Report, EC – Trademarks and Geographical Indications (Australia), para. 7.464.
435 Appellate Body Report, Korea – Various Measures on Beef, para. 135 (original emphasis). See also
ibid., paras. 136-137.
436 See Canada's response to Panel question Nos. 42 and 46 and Mexico's first written submission,
paras. 218, 220 and 263.
437 (footnote original) See, e.g. Panel Report, Italian Discrimination against Imported Agricultural
Machinery, L/833, BISD 7S/60, adopted 23 October 1958, para. 12.
439 Appellate Body Report, Korea – Various Measures on Beef, para. 137 (original emphasis).
440 Appellate Body Report, EC – Bananas III , para. 233. See also Appellate Body Report, Canada –
Autos, para. 141.

de jure discrimination would facilitate circumvention.
441 As the Appellate Body explained in EC –
Bananas III with regard to Article II of the GATS:
"[I]f Article II was not applicable to de facto discrimination, it would not be difficult
– and, indeed, it would be a good deal easier in the case of trade in services, than in
the case of trade in goods – to de vise discriminatory measures aimed at
circumventing the basic purpose of that Article."442
7.301 As the TBT Agreement serves "to further the objectives of GATT 1994", it would be
incongruous to interpret Article 2. 1 of the TBT Agreement as excluding de facto discriminatory
treatment, while the corresponding national treatment provision in Article III:4 of the GATT 1994
covers that type of discrimination.
7.302 Accordingly, we continue our analysis by a ddressing whether the muscle cut labels under the
COOL measure accord de facto less favourable treatment to import ed than to domestic livestock and
de facto modify the conditions of competition in the US market to the detriment of imported
livestock.443 The complainants allege this is the c ase because in general the COOL measure entails
higher costs for handling imported than domestic livestock. We now turn to this issue.
Costs of compliance with the COOL measure
7.303 The complainants argue, and the United Stat es does not contest, that the COOL measure
involves compliance costs. In fact, in the 200 9 Final Rule (AMS), USDA indicated that the
COOL measure entails compliance costs for all participants in the livestock and meat sector:
"[F]irms and establishments throughout th e supply chain for affected commodities
will incur costs associated with the im plementation of COOL. This includes
producers, intermediaries, and retailers."444
7.304 The 2009 Final Rule (AMS) includes a dedicated section analysing the benefits and costs of
the COOL measure for various st ages of the meat supply chain. 445 As regards cattle and beef, for
"retail stores", the USDA cost analysis identifies the following as "cost drivers": "individual package
labels or other point-of-sale materials", pot ential "additional labor and personnel training",
"modification of existing recordkeeping systems", possibly involving "software programming and ...
additional computer hardware".446
7.305 The analysis then turns to "dis tribution centers or warehouses", explaining that "[d]irect store
deliveries (such as when a local truck farmer deliver s fresh produce directly to a retail store) are an
exception". For the distribution segment, the USDA cost analysis identifies the following as cost
drivers: the "modification of existing recordkeep ing processes", "additional labor and training" and
"new processes and procedures needed to maintain the flow of country of origin ... information
through the distribution system". Moreover, accordi ng to the USDA cost analysis, "[t]here may be a

441 See Appellate Body, Canada – Autos , para. 142 and Appellate Body Report, EC – Bananas III ,
para. 233.
442 Appellate Body Report, EC – Bananas III, para. 233.
443 In light of the complainants' arguments, we re frain from addressing whether the COOL measure
involves de jure less favourable treatment for imported Canadian and Mexican livestock.
444 74 FR 2680. See also Exhibits CDA-72 (BCI) and US-18.
445 See 74 FR 2682 et seq.
446 74 FR 2684-2685.

need to further separate products within the warehouse, add storage slots, and alter product stocking,
sorting, and picking procedures".447
7.306 Turning to beef "packers and processors", the USDA cost analysis points out that
"[t]he efficiency of operations may be affected as products move through the receiving, storage,
processing, and shipping operations". 448 Finally, at "the productio n level", according to the USDA
cost analysis, "additional producer costs incl ude the cost of modifying and maintaining a
recordkeeping system for country of origin informat ion, animal or product identification, and labor
and training". The USDA cost analysis adds that:
"[T]o estimate the direct cost of this rule , the focus is on those units of production
that are affected ... For livest ock, the relevant unit of pr oduction is an animal because
there will be costs associated with maintaining country of origin information on each
animal. These costs may include recordkeep ing, ear tagging, and other related means
of identification on either an individual animal or lot basis."449
7.307 The USDA cost analysis of the COOL measur e points to increasing costs as livestock and
meat move downstream in the supply and marketing chain, based on "the expectation of relatively
small implementation costs at the cow-calf level of production, but relatively higher costs each time
cattle are resold". As regards intermediaries, the 2009 Final Rule (AMS) expects "increased costs
associated with tracking cattle and the covered beef commodities produced from these animals and
then providing this information to subsequent purchasers, which may be other intermediaries or
covered retailers". According to the 2009 Final Ru le (AMS), "[i]ncremental costs for beef packers
may include additional capital and labor expenditures to enable cattle from different origins to be
tracked for slaughter, fabrication and processing". For retailers, the 2009 Final Rule (AMS) takes into
account specific:
"[C]osts for individual package labels, m eat case segmentation, record keeping and
information technology changes, labor, trai ning, and auditing. In addition, there
likely will be increased costs for in-store butcher depart ment operations related to
cutting, repackaging, and grinding operations."450
7.308 For hogs, the 2009 Final Rule (AMS) depicts a similar situation. It estimates that "[c]osts for
all pork sector intermediaries (including handlers, processors, and wholesalers) should be similar to
costs for beef sector intermediaries". As regards pork retailers, the 2009 Final Rule (AMS) estimates
costs being "lower than for beef" retailers but this difference is primarily due to "higher costs incurred
by in-store grinding operations to produce ground beef", whereas "most ground pork is processed into
sausage and other products not covered by the [2009 Final R]ule [(AMS)]".451
7.309 Canada submitted a cost assessment of the COOL requirements prepared by a consultancy,
Sparks Companies Inc., in 2003. 452 Further, both complainants su bmitted an updated version of this
cost assessment prepared by Informa Economics, the successor to Sparks Companies Inc., in 2010 on
the basis of 2009 data.453

447 74 FR 2685.
448 74 FR 2685.
449 74 FR 2685.
450 74 FR 2687.
451 74 FR 2687.
452 See Exhibit CDA-70.
453 See Exhibits CDA-64 and MEX-24.

7.310 Although the United States has called into ques tion the underlying data and methodology of
these studies, these criticisms relate primarily to th e specific cost estimates in the studies and the
comparison between the costs incurred by handling only US-origin versus handling both domestic and
imported livestock and meat.
454 The United States has not contested the findings of the Sparks and
Informa reports regarding the existence of the co sts incurred as a result of the country of origin
labelling requirements at the various livestock and meat processing stages. Like the cost analysis of
the 2009 Final Rule (AMS), the Informa Report finds that, in general, costs of compliance with the
requirements arise at every stage of the livestock and meat supply chain, and that these costs increase
as livestock and meat move downstream in the chain. The United States has not contested these
aspects of the Informa Report. In fact, as Canada points out 455, already the 2003 Proposed Rule relied
on the Sparks Report to assess the costs associated with the adoption of country of origin labelling
requirements.456 Accordingly, we consider that these repor ts confirm the general observations of the
2009 Final Rule (AMS) with regard to the existence of costs involved in the COOL measure.457
7.311 The United States argues that any regulation potenti ally involves costs. But it is not the costs
of the COOL measure in itself that the complainants contest in this dispute. Rather, they argue that
the compliance costs of the COOL measure are di stributed differentially between domestic and like
imported livestock, to the detriment of the latter.
7.312 The United States also argues that any regulati on may involve differential costs for different
types of market participants. 458 In support of this contention, the United States references the
OECD Council Recommendation on Improving th e Quality of Government Regulation 459 and the
OECD Guiding Principles for Regulatory Quality and Performance.460
7.313 As we explained 461, like Article III:4 of the GATT 1994, Article 2.1 is concerned with the
equality of competitive conditions between domes tic and imported products. This has been
interpreted as meaning that "a measure accords less favourable treatment to imported products if it
gives domestic like products a competitive advant age in the market over imported like products". 462
The flip side of this is that, under Article III:4 of the GATT 1994 and Article 2.1 of the
TBT Agreement, no competitive disadvantage shall be accorded to imported products as compared to
like domestic products. A cost resulting from a (technical) regulation may qualify as a competitive
disadvantage if it is incurred only by importe d and not like domestic products. The OECD
Recommendation and Guiding Principles referenced by the United States do not suggest that higher
costs for foreign products are an attribute or acceptable effect of sound regulation.
7.314 Accordingly, we turn to whether the costs of the COOL measure are higher for imported than
for domestic livestock, and result in less favourable treatment for imported livestock. In light of the
complainants' arguments, we first assess whether the COOL measure involves segregation of meat
and livestock according to origin.

454 See Exhibit US-43.
455 See Canada's opening oral statement at the first substantive meeting of the Panel, para. 41.
456 See 68 FR 61962 (Exhibit CDA-11).
457 For a more detailed summary and analysis of the Informa Report, see paras. 7.489-7.499 below.
458 See United States' first written submission, paras. 193-194.
459 See Exhibit US-45. See also Exhibit US-66.
460 See Exhibit US-44.
461 See para. 7.276 above.
462 Appellate Body Report, Dominican Republic – Import and Sale of Cigarettes , para. 93. See also
Panel Report, Mexico – Taxes on Soft Drinks, para. 8.117.

Segregation
7.315 Turning to whether the COOL measure requires segregation according to origin, we note that
the COOL measure does not explicitly require segre gation, let alone the segregation of domestic and
imported livestock. In relevant part, it sets out labelling requirements for muscle cuts of meat, namely
beef and pork, at the retail stage, i.e. "at the final point of sale to consumers". 463 However, as we
explained above, the COOL measure requires labelling of meat based on the origin of an animal from
which meat is derived, and upstream stages of livest ock and meat production are directly relevant for
determining the origin of meat.
7.316 To accurately label muscle cuts under the COOL measure, a covered retailer needs to possess
information on where livestock processing steps dete rmining origin under the COOL measure have
taken place with regard to each muscle cut. This information can be obtained only from the upstream
livestock and meat supply chain. This is why, as explained above 464, the COOL measure establishes
recordkeeping requirements – as well as sanctions fo r violating these – for both retailers and any
"person engaged in the business of supplying a c overed commodity to a retailer". In fact, the
2009 Final Rule (AMS) elaborates on the "Responsibilities of Retailers and Suppliers" and references
a "recordkeeping provision concerning livestock".465 In addition, the COOL measure requires "[a]ny
person engaged in the business of supplying a c overed commodity to a retailer [to] provide
information to the retailer indicating the country of origin of the covered commodity".466
7.317 Hence, as a matter of principle, the COOL m easure prescribes an unbroken chain of reliable
country of origin information with regard to every an imal and muscle cut. In other words, to comply
with the COOL measure, livestock and meat processors need to possess, at each and every stage of the
supply and distribution chain, the kind of origin in formation required by the various COOL labels for
which each animal or portion of meat is eligible, a nd they need to transmit such information to the
next processing stage. The 2009 Final Rule (AMS) str esses that "it is necessary to ensure information
accurately reflects the origin of any group, lot, bo x, or package in accordance with the intent of the
statute ...". 467 Further, under the 2009 Final Rule (AMS), as a general rule, "[l]abeling of covered
commodities offered for sale whether individually, in a bulk bin, carton, crate, barrel, cluster, or
consumer package must contain country of origin as set forth in this regulation".468
7.318 Further, in its analysis of the costs and be nefits of the COOL measure, the 2009 Final Rule
(AMS) points out that the COOL measure creates costs throughout the supply chain by requiring an
unbroken chain of reliable country of origin information:
"[T]his [Final R]ule directly regulates the activities of retailers (as defined by the law)
and their suppliers. Retailers are required by the rule to provide country of origin
information for the covered commodities that they sell, and firms that supply covered
commodities to these retailers must provide them with this information. In addition,
virtually all other firms in the supply chain for the covered commodities are
potentially affected by the rule because country of origin information will need to be
maintained and transferred along the entire supply chain."469

463 7 U.S.C. § 1638a(a)(1).
464 See paras. 7.116-7.122 above.
465 74 FR 2660 (emphasis added).
466 7 U.S.C. § 1638a(e).
467 74 FR 2684.
468 74 C.F.R § 65.300(a).
469 74 FR 2684.

7.319 As regards ensuring this unbroken chain of relia ble country of origin information, the 2009
Final Rule (AMS) explains that "the COOL program is ... [not] a traceability program"
470, and the
COOL statute prohibits USDA from imposing "a mandatory identification system to verify the
country of origin of a covered commodity".
471 Further, the recordkeeping obligations for retailers and
their suppliers under the COOL statute are limited to "records maintained in the normal conduct of the
business of such person, including animal health papers, import or customs documents, or producer
affidavits"472, and the COOL statute explicitly prohibits USDA from requiring retailers and suppliers
to maintain any "additional records". 473 For instance, the COOL measure allows the use of
established identification numbers or ear tags to identify the origin of live animals.474
7.320 Accordingly, a practical way to ensure that the chain of reliable information on country of
origin required by the COOL measure remains unbroken is the segregation of meat and livestock
according to origin as defined by the COOL measure.
7.321 This is confirmed by the Country of Origin Labeling Compliance Guide revised by USDA in
May 2009, which was issued after the entry into force of the 2009 Final Rule (AMS). This USDA
Compliance Guide mentions a " segregation plan" as one of the "examples of records and activities
that may be useful" to comply with the COOL measure.475
7.322 In regard to "Cattle, Beef, Muscle Cuts of Beef, Ground Beef ", the same USDA Compliance
Guide references a "segregation plan " specifically for each type of participant in the meat supply
chain from "[s]eed [s]tock/[c]ow [c]alf" all the way to "[d]istributor". 476 Further, it refers to the
"[r]esponsibility" of each type of participant fo r identifying the origin of all products processed,
including meat and animals, and segregating or at least providing or maintaining origin information:
TYPE OF PARTICIPANT RESPONSIBILITY
"Seed Stock/Cow Calf" "Provide enough information for an auditor to verify
the origin and ownership of the animals identified and
to verify the stated designation. Properly identify and
record all animals according to the designation."
"Stocker/Backgrounder" "Identify and segregate animals as to the origin
designation. Properly identify all animals sold.
Maintain the integrity of the identification. Maintain
ownership transfer."
"Preconditioning/Feedlot" " Upon receipt properly identify animals according to
their designation. Segregate and control animals.
Properly identify all animals sold. Maintain
ownership records."

470 74 FR 2679.
471 7 U.S.C. § 1638a(f)(1). See also Exhibit MEX-101.
472 7 U.S.C. § 1638a(d)(2)(A).
473 7 U.S.C. § 1638a(d)(2)(B).
474 See 74 FR 2660.
475 Exhibits CDA-65 and MEX-41.
476 Exhibits CDA-65 and MEX-41.

TYPE OF PARTICIPANT RESPONSIBILITY
"Slaughter/Fabricator" " Segregate animals according to the country
designation. Segregate and control carcasses
throughout the system and properly label product
according to the country designation. Document
origin of all products."
"Fabricator/Processor" " Transfer labels and identification of all products
processed. Operate under a labeling program.
Inventory all products according the origin."
"Distributor" " Maintain the integrity of labeled product.
If repackaged, transfer the original identification."477

7.323 For "Hogs, Pork, Muscle Cuts of Pork, Ground Pork", the USDA Compliance Guide similarly
refers to "segregation plans" in regard to partic ipants in the meat supply chain from "Feeder/Finish"
onward. In addition, the USDA Compliance Guide lists the following as the "[r]esponsibility" of each
type of participant:
TYPE OF PARTICIPANT RESPONSIBILITY
"Nursery" "Identify animals as to the sow/farrow origin.
Maintain the integrity of the identification system.
Document all movements of animals."
"Feeder/Finish" " Upon receipt properly identify animals according to
their designation. Segregate and control animals.
Properly identify all animals sold. Maintain
ownership records."
"Slaughter/Processor" " Segregate animals according to the country
designation. Segregate and control carcasses
throughout the system and properly label product
according to the country designation. Document
origin of all products."
"Processor" " Transfer labels and identification of all products
processed. Operate under a SOP the [sic] addresses
labeling. Inventory all products according to the
origin."
"Distributor" " Maintain the integrity of the product. If repackaged,
transfer the original identification."478

7.324 These passages also underscore that the COOL measure involves not only initial adjustment
costs but also regular costs that participants in the supply and distribution chain will incur in their
daily operations. As the 2009 Final Rule (AMS) e xplains, "[t]he costs of production for directly
affected firms increase due to the costs of implementing the COOL programme" 479, and "[t]he rule
increases the operating costs for the supply chains of the covered commodities".480

477 Exhibits CDA-65 and MEX-41 (emphasis added).
478 Exhibit CDA-65 (emphasis added).
479 74 FR 2683.
480 74 FR 2691.

7.325 Various entities in the United States have expr essed the view that the COOL measure will
necessarily lead to segregation in the meat suppl y chain. The US Congressional Research Service
explained that among the various commodities covere d by the COOL measure, "[t]he meat labeling
requirements have proven to be among the most co mplex and controversial areas of rulemaking, in
large part because of the steps that U.S. feeding operations and packing plants must adopt to
segregate, hold, and slaughter foreign-origin livestock from U.S. livestock".
481 Further, a
backgrounder on the COOL measure by the Food Marketing Institute (FMI), whose members
represent "three-quarters of all retail food store sales in the United States", explains that "[t]he law
requires the entire supply chain — from the farm to the retail store — to segregate, track and
document the origin of hundreds of foods, including those produced in the U.S. and imported from
more than 50 countries". 482 The same FMI backgrounder adds that "[the] labeling and segregation
systems [entailed in the COOL measure] will be extremely costly and complex for the large quantities
of beef and produce that are multinational in their origin, processing and packaging".483
7.326 Under the provisions of the COOL statute, th e COOL requirements are enforced by USDA,
which can eventually also impose a fine "for each violation" on a retailer or a person engaged in the
business of supplying the covered commodity to a retailer. 484 Lack of segregation is not identified as
a violation of the COOL measure subject to a fine. Yet, the COOL measure does set out the
possibility of USDA imposing a fine on a reta iler or supplier breaching the recordkeeping
requirements (which may be complied with, for instance, by means of a "segregation plan") or on a
supplier breaching the requirement to provide accurate information on country of origin.
485
7.327 In light of these considerations, we c onclude that, for all practical purposes,
the COOL measure necessitates segregation of meat and livestock according to origin, even though
this segregation is subject to certain flexibilities, which we have described above, and the cost
implications of which we address in more detail further below.
7.328 In any event, the complainants are not ar guing, and we do not find, that segregation per se
would be a violation of Article 2.1 of the TBT Agreement. As the Appellate Body held in Korea –
Various Measures on Beef, the "separation [of imported and domestic products], in and of itself, does
not necessarily compel the conclusion that the treatment thus accorded to imported [products] is less
favourable than the treatment accorded to domestic [products]". 486 Rather, the question is whether
such separation "modifies the conditions of competition ... to the disadvantage of the imported
product"487 by imposing higher costs on imported than on domestic livestock.
7.329 We therefore turn to whether the segregation of livestock – to the exte nt it is necessitated by
the COOL measure, and taking also into consid eration the commingling flexibility – imposes higher
costs on imported livestock than on like domestic livestock.

481 Exhibits CDA-117, CDA-199 and MEX-53 (emphasis added).
482 Exhibit CDA-192 (emphasis added). See also Exhibits CDA-69, 75, 76, 81, 90 (all BCI),
MEX-37 and 97 (both BCI).
483 Exhibit CDA-192. See also Exhibits CDA-69, 75, 76, 81, 90 (all BCI). Exhibits MEX-33 and 55.
See also Exhibits, MEX-37, 42 and 97 (all BCI).
484 See 7 U.S.C. § 1638b(b).
485 See also the USDA Compliance Guide, which explicitly identifies "Failure to Maintain Records"
and "Failure to Provide COOL Information" as violations, and explicitly references the table listing
"segregation plans" as one of the "examples of the types of records that may be useful to comply with the record
keeping requirements for County of Origin labeling." (Exhibit CDA-65).
486 Appellate Body Report, Korea – Various Measures on Beef, para. 144 (original emphasis).
487 Appellate Body Report, Korea – Various Measures on Beef, para. 144 (original emphasis).

Whether segregation entails higher costs for imported livestock
7.330 The segregation involved in the COOL measu re does not necessarily impose differential
implementation costs on imported and domestic products. If importe d and domestic livestock are
being processed, in principle, these need to be equally segregated from each other according to origin.
In principle, the resulting implementation costs are the same for both imported and domestic products.
7.331 Yet, it is evident that the more origins and the more types of muscle cut labels involved, the
more intensive the need for segregation throughout the livestock and meat supply and distribution
chain. In turn, more intensive segregation leads to higher compliance costs with the COOL measure.
7.332 As the Chief Economist of USDA explained in his statement to the Committee on Agriculture
of the US House of Representatives:
"Regarding the costs of country of origin labeling, they depend on the extent to which
firms have to implement new control and verification systems including
recordkeeping, reconfiguring processing and handling, producing signage and labels
and training and educating their staff.

Several studies have estimated the costs fo r the cattle/beef and hog/pork sectors at up
to several billion dollars annually, after examining all costs for the entire supply
chain, including segregation and identity preservation."
488
Segregation costs under five business scenarios
7.333 In the context of the COOL measure, there ar e five possible business scenarios in terms of
whether the livestock being processed has domestic or imported origin:
(a) processing domestic and imported livestock and meat irrespective of origin and solely
according to price and quality;
(b) processing meat from exclusively domestic livestock;
(c) processing meat from exclusively imported livestock;
(d) processing exclusively domestic and exclusively imported livestock at different
times; or
(e) processing both domestic and imported meat by commingling the two on the same
production day.
7.334 These business scenarios involve different levels of segregation and, accordingly, different
relative compliance costs.

488 Exhibit MEX-51.

Processing domestic and imported livestock and meat solely
according to price and quality
7.335 The COOL measure does not prohibit processing domestic and imported livestock and meat
solely according to the price and quality of the products, i.e. based on purely competitive
considerations and irrespective of the origin of livestock.
7.336 This, however, seems a rather costly way of complying with the COOL measure. Muscle cuts
processed under this scenario are eligible for at le ast two different labels. To ensure the unbroken
chain of reliable country of origin informati on required under the COOL measure, this business
scenario involves the identification by origin of each and every livestock and piece of meat
throughout the supply and distribution chain. This entails extensive segregation, and relatively high
compliance costs at every stage.
Processing exclusively domestic or exclusively imported livestock
7.337 The United States argues that segregation for muscle cuts may be avoided by processing
livestock of either exclusively domestic or exclusively foreign origin.
489 Yet, these two scenarios are
forms of separating imported and do mestic products. Indeed, either scenario involves an absolute
form of segregation in that it reflects a choice of not processing any domestic or foreign livestock at
all.
7.338 Undoubtedly, these two business scenarios involve lower costs of compliance with the
COOL measure, since there are fewer origins in volved, and thus less intensive segregation is
necessary throughout the operation of the market pa rticipant in question. Further reductions of
compliance costs may be realized if entire supply chains switch to processing livestock and meat of
exclusively domestic or exclusively foreign origin.
Processing exclusively domestic and exclusively imported livestock at
different times
7.339 Market participants might also choose to segregate imported and domestic livestock
according to time, namely by processing exclus ively domestic livestock at certain times, and
processing exclusively imported livestock at other times. Under this scenario, segregation takes place
by shifts or days.
7.340 This approach, however, appears more costly than processing either exclusively foreign or
domestic livestock. Overall, this scenario still invol ves processing more than one origin by the same
market participant. Further, while segregation by time might reduce COOL compliance costs for
individual market participants, e.g. a slaughterhou se, it does not reduce costs for suppliers, who need
to segregate livestock by origin to allow meaningful segregation by time at a later stage. In fact, one
US hogs processor procuring imported hogs on specific days of the week indicated to its livestock
suppliers that "[t]o clarify these limited delivery times , if you have Canadian born hogs, they must be
segregated, therefore we can only accept them certain times during the week as listed".490
7.341 This business scenario involves additional cost s for livestock suppliers as they can only
supply specific origin meat at specific times. As explained further below 491, the complainants have

489 See United States' first written submission, para. 159.
490 Exhibit CDA-105. See also Exhibit MEX-106 (BCI).
491 See paras. 7.345-7.372 below.

submitted extensive evidence of the negative impact s of segregating imported livestock by time under
the COOL measure.
7.342 Nor is this scenario less costly for downstream market participants, e.g. distributors and
retailers, who need to segregate if they choose to handle the different origin meat processed at
different times and carrying different labels.
Commingling domestic and imported livestock and meat on the same
production day
7.343 Market participants might also benefit from the above-mentioned commingling flexibility.
This, however, allows the reduction of segregation costs only to a certain extent.
7.344 Even at the stage where commingling takes plac e, it is limited to a single production day.
Any commingled meat carrying, for instance, Labe l B still needs to be segregated at the processing
stage and further downstream from Label A meat that was processed by the same slaughterhouse on
another day. Also, commingling still requires keep ing "accurate records" as well as maintaining the
accuracy of country of origin information on mixe d-origin labels. As the 2009 Final Rule (AMS)
explains:
"[t]he initiator may elect to segregate and specifically classify each different category
within a production day or mix different sources and provide a mixed label as long as
accurate records are kept. Likewise, if a retailer wants to mix product from multiple
categories, it can only be done in multi- product packages and then only when product
from the different categories is represented in each package in order to correctly label
the product."492
Overall assessment of the costs of segregation under the different business
scenarios
Incentive to process domestic livestock
7.345 The above five business scenarios involve segrega tion of livestock and meat of domestic and
imported origin at different levels of intensity and at different compliance costs. Three of the five
scenarios involve processing meat from both domestic and imported livestock; one involves meat
from exclusively domestic livestock; and another involves meat from exclusively imported livestock.
7.346 As noted above, the more origins and labels i nvolved, the more intensive the segregation and
the higher the compliance costs with the COOL measure throughout the livestock and meat supply
chain. Commingling might reduce these costs at specific stages, but overall it still involves higher
costs than processing single origin livestock only.
7.347 Accordingly, as a direct result of the COOL measure, business scenarios involving more than
one origin or muscle cut label result in genera lly higher costs than scenarios involving only one
origin. The relatively less costly business scenar ios are the ones that in volve processing meat from
either exclusively domestic or exclusively foreign livestock at all times.
7.348 As the 2009 Final Rule (AMS) explained:

492 74 FR 2670.

"[I]n the case where products of different origins are segregated, our analysis
indicates costs are likely to increase. The rule requires that records be maintained to
ensure that accurate country of origin in formation is retained throughout the process
and available to permit compliance and enforcement reviews.
Processors handling only domestic origin products or products from a single country
of origin may have lower implementation costs compared with processors handling
products from multiple origins, although such costs would likely be mitigated in those
cases where firms are only using covered commodities which are multiple-origin
labeled."
493
7.349 Turning to the scenario s involving either exclusively domestic or exclusively imported
livestock, it seems logical that the scenario of pro cessing exclusively domestic livestock and meat is
in general less costly and more viable th an processing exclusively imported livestock.
Livestock imports have been a nd remain small compared to overall US livestock production and
demand, and US livestock demand cannot be fulfilled with exclusively foreign livestock.494 And even
if it could be, in light of the evidence before us, it appears that this scenario would in all likelihood
involve more than one foreign origin, and thus in general more segregati on and higher compliance
costs than processing exclusively domestic livestoc k, which by definition has one single origin.
Also, in general, US livestock is often geographically closer to most if not all US domestic markets,
so processing exclusively imported livestock and meat remains a relatively less competitive option.
7.350 As a result, overall, the least costly way of complying with the COOL measure is to rely on
exclusively domestic livestock. Thus, in genera l, business scenarios involving imported livestock,
including the scenario involving exclusively impor ted products, are overall more costly than the
exclusively Label A approach.
7.351 Livestock and muscle cuts are agricultural commodity products, and the various business
scenarios are in competition with each other. Th e compliance costs of the COOL measure, in
particular the higher costs arising from the use of imported livestock, are at least in part passed on to
upstream or downstream market participants, or both. As a major US meat processor explained, when
moving from a predominantly Label B to a mostly Label A approach:
"[I]ncreased costs will resu lt from these changes. Ultimately, we believe these
additional expenses will have to be passed on through higher finished product prices
or reduced prices for livestock."495
7.352 In other words, under the COOL measure and all other things being equal, either consumers
pay more or livestock producers receive less for the livestock they sell to processors.
7.353 Indeed, it appears that the additional costs of the COOL measure cannot be fully passed on to
consumers.496 As the 2009 Final Rule (AMS) explains, at least some of the compliance costs of the
COOL measure will arise at the level of suppliers of covered commodities: "[w]hile some of the
increase in their costs will be offset by reduced production and higher prices over the longer term, the
suppliers of the covered commodities will still bear direct implementation costs".497

493 74 FR 2685.
494 See 74 FR 2690.
495 Exhibits CDA-36 to 38, CDA-24 (BCI), MEX-33, 35, 55, 56 and 57.
496 See, for instance, Exhibits MEX-58, 70 and 101.
497 74 FR 2690.

7.354 The fact that consumers are not ready to bear all the costs of country of origin labelling of
beef and pork is also demonstrated by the lack of interest in a voluntary COOL regime. This is
acknowledged by USDA itself in the 2009 Final Rule (AMS):
"While USDA recognizes that there appears to be consumer interest in knowing the
origin of food based on the comments r eceived, USDA finds little evidence that
private firms are unable to provide cons umers with country of origin labeling
(COOL) consistent with this regulation, if consumers are willing to pay a price
premium for it. USDA also finds little evid ence that consumers are likely to increase
their purchase of food items bearing the Unite d States origin label as a result of this
rulemaking. Current evidence does not s uggest that United States producers will
receive sufficiently higher prices for Unite d States-labeled products to cover the
labeling, recordkeeping, and other related costs. The lack of widespread participation
in voluntary programs for labeling products of United States origin provides evidence
that consumers do not have strong enough pr eferences for products of United States
origin to support price premiums sufficient to recoup the costs of labeling."
498
7.355 In his statement to the Committee on Agriculture of the US House of Representatives, the
Chief Economist of USDA offered a similar explanation on the lack of consumer interest in voluntary
country of origin labelling. 499 He pointed out that at least some of the compliance costs of the
COOL measure would be borne by livestock producers:
"Generally, when there is an increase in ma rketing costs like this rule would require,
those costs would get passed on to consumers, and they would get passed back to
suppliers – passed back to suppliers in the form of decreased demand for their
product. That is one possible conseque nce livestock producers face, decreased
demand because of increased marketing costs. Then they have their own direct
increase in costs themselves that will be for ced on them by suppliers. The prospect is
that livestock prices would be the same or d ecline and profits probably decline. The
only thing that would overcome that is de mand in retail expands far out to overcome
these effects, and as I stated, I think the prospects of that are low."
500
7.356 In fact, there is direct evidence of ma jor slaughterhouses applying a considerable
COOL discount of USD 40-60 per head for imported livestock. 501 This proves that major processors
are passing on at least some of the additional cost s of the COOL measure upstream to suppliers of
imported livestock. 502 We have no evidence of a similar di scount being applied to suppliers of
domestic livestock, nor has the United States res ponded to the evidence submitted by Canada and
Mexico in this respect.

498 74 FR 2682.
499 The Chief Economist of USDA stated that "the re is evidence that consumer preference for
domestic product is weak. This evidence is the lack of voluntary programs that provide
products labeled as domestic origin. USDA has been offering the opportunity for a
U.S.-origin meat labeling program for years and there have been no takers.
If consumers distinguish goods depending on their country of origin, mark et incentives exist
for suppliers to act without Government intervention, just as they do under voluntary
certification programs such as for organic food s. There, consumers willing to pay a premium
sufficient to cover the additional costs of the program. [ sic] While the market has given us
evidence that consumers would be willing to pay for organic, if [ sic] has not done so for
U.S. origin." Exhibit MEX-51.
500 Exhibit MEX-51.
501 See Exhibits CDA-57 and 81 (both BCI), MEX-37, 46, 64, 97 and 105 (all BCI).
502 See Exhibits MEX-37, 46, 97 and 105 (all BCI). See also Exhibit MEX-101.

7.357 The COOL measure creates an incentive for pa rticipants to process domestic rather than
imported livestock because, under the COOL meas ure, processing meat from exclusively domestic
livestock is less costly than other business scenario s. Passing on these costs at least in part to
imported livestock in turn creates a reduction in the competitive opportunities of imported livestock,
relative to domestic livestock.
7.358 In previous disputes, government measures creating an incentive to use domestic over
imported input products were found inconsistent with Article III:4 of the GATT 1994. In US – FSC
(Article 21.5 – EC) , for example, the Appellate Body reviewed a "beneficial tax exemption" under a
government measure "provid[ing] a considerable impe tus, and, in some circumstances, in effect, a
requirement, for manufacturers to use domestic i nput products, rather than like imported ones".
The Appellate Body concluded that this measure "treats imported products less favourably than like
domestic products".
503 Likewise, in China – Auto Parts, the Appellate Body held that a government
measure that created an incentive for automobile manufacturers to use exclusively domestic auto parts
was inconsistent with Article III:4 of the GATT 1994.504 Further, the panel in Mexico – Taxes on Soft
Drinks reviewed a government measure "creating an economic incentive for producers to use cane
sugar as a sweetener in the production of soft dr inks and syrups, instead of other non-cane sugar
sweeteners such as beet sugar or HFCS". 505 Since "[d]omestically produced sweeteners in Mexico
consist overwhelmingly of cane sugar", that pa nel concluded that, "although on their face the
challenged measures do not distingui sh between imported and domestic sweeteners, the distinction
they make between the use of cane sugar and n on-cane sugar sweeteners is, in fact, one that
distinguishes between imported and domestic sweeteners".506
7.359 A similar incentive to use dom estic input exists under the COOL measure, as explained
above.
7.360 The existence of such an incentive is confirme d by evidence on the relative use of the muscle
cut labels under the COOL measure. As described below 507, several leading cattle and hog processors
in the United States decided to affix exclusively Label A on their meat products as a result of the
labelling requirements under the COOL measure, desp ite the limited commingling flexibility. This
appears to have been the case particularly after the unqualified flexibility to use Label B for Label A
meat, originally contained in the Interim Final Rule (AMS) of August 2008, was removed.
7.361 In fact, several major US meat processors indicated that they would move to using Label A
for the vast majority of their beef and pork pr oducts, given the end of the previous unqualified

503 Appellate Body Report, US – FSC (Article 21.5 – EC), para. 220.
504 The Appellate Body held that "[t]he use by an automobile manufacturer, in a given vehicle
model, of certain key assemblies or combinations of assemblies that are imported means that a
higher (25%) charge will be payable on all imported parts than would be the case if those
combinations of imported assemblies were not used and the thresholds were not met, in which
case any imported parts used in the vehicle model would be subject to only a 10% duty. This
creates an incentive for manufacturers to limit their use of imported parts relative to domestic
parts. In addition, the measures at issue in this dispute impose administrative procedures, and
associated delays, on automobile manufacturers using imported parts, which could be avoided
entirely if a manufacturer were to use exclusively domestic auto parts. These incentives
'affect' the conditions of competition for imported auto parts on the Chinese internal market."
Appellate Body Report, China – Auto Parts, para. 195 (original emphasis; footnote omitted).
505 Panel Report, Mexico – Taxes on Soft Drinks, para. 8.117.
506 Panel Report, Mexico – Taxes on Soft Drinks, para. 8.119.
507 See paras. 7.361-7.363 below.

flexibility to use Label B for Label A meat and its replacement with the commingling flexibility.508
For instance, Tyson notified its fresh meats hog a nd cattle suppliers that "[its] goal is to label
substantially all beef and pork from livestock born, raised and processed in the U.S. with the
Category A label by the middle of 2009", and "estim ate[d] around 90% of all of the fresh, retail beef
and pork cuts produced in the U.S. w ould qualify for the Category A label". 509 Cargill was reported
as moving in the same direction, with around 70% of its meat carrying Label A. 510 JBS indicated in a
standard letter addressed to its customers that it woul d "transition[] to a 'Product of U.S.A.' label [i.e.
Label A] on the majority of [its] beef products", a nd that "[t]he majority of [its] pork products will
continue to be produced as 'Product of U.S.A'". 511 Smithfield, a major pork processor, even
announced that "effective April 2009 [it] intends to procure only hogs born and raised in the U.S. for
processing at its U.S. fresh meat facilities and will label fresh pork for retail as born, raised and
processed in the USA".512
7.362 Whilst most of these major US meat processors indicated that they would continue processing
"some" Label B and C meat, they are silent on any intention of commingling. Rather, the chief
executives of these three US meat producers are repor ted to have expressed at the annual convention
of the Texas Cattle Feeders' Association held in November 2008 that their "chief concern was the
ability to ensure that cattle coming into their plants are properly segregated".513 The chief executive of
the meat processor with the highest market share among the three top US beef packers 514 expressed in
the press release of the Texas Cattle Feeders' Associ ation that in order "to avoid passing higher costs
[of the COOL measure] onto consumers", the three beef packers in question "[we]re going to ask your
(cattlemen's) help to make sure that cattle are not commingled when they get to us". 515 The same
chief executive added that "[w]hen they get to the plants, we have to make sure that we can keep them
separate, so that we can run th e cattle as cheaply as we can to get (product) to the consumers". 516
The chief executive of the sec ond biggest US beef packer 517 explained that the major outstanding
question was whether segregation under the COOL law would happen in terms of place or time. He is
reported as having said that one of the uncertainties associated with the COOL law, is whether the
effort to minimize costs will "require segmentation of plants or days to harvest".518
7.363 Even by the United States' own indication, Ca rgill, JBS and Tyson were the three top beef
packers in 2009 519, representing a total market share of above 65% in 2008. 520 Further, Smithfield
described itself as "the leading processor and mark eter of fresh pork and packaged meats in the
United States, as well as the largest producer of hogs" 521, and the United States identified Smithfield,

508 This commingling flexibility was mentioned for the first time in the above-mentioned USDA FAQ
Publication of 26 September 2008. See Exhibit CDA-31.
509 See Exhibits CDA-36 to 38 and CDA-24 (BCI). See also Exhibits CDA-71 (BCI), MEX-33, 55 and
64 (BCI).
510 See Exhibits CDA-41 and CDA-77 (BCI).
511 Exhibits CDA-39 and MEX-57.
512 Exhibit CDA-40.
513 Exhibit CDA-71.
514 See Exhibit US-37. See also Exhibit US-152 (BCI).
515 Exhibit CDA-71.
516 Exhibit CDA-71.
517 See Exhibit US-37. See also Exhibit US-152 (BCI).
518 Exhibit CDA-71.
519 See Exhibit US-37. See also Exhibit US-152 (BCI).
520 See Exhibits US-152 (BCI) and MEX-111. See also Exhibit MEX-55.
521 Exhibit CDA-40. See also Exhibit CDA-215.

Tyson, JBS, and Cargill as the top four commercia l hog packers for most of the period between 2002
and 2008.
522
7.364 Although it appears that some commingling is taking place, it is difficult to establish its
precise extent. The United States submitted an a ffidavit from a person working in the US meat
industry indicating that at least one major US processor is commingling Canadian, Mexican and US
origin meat at one of its facilities. 523 We accept this as showing that commingling has been taking
place, although we note that this piece of evidence do es not specify the extent of commingling either
at the facility in question, let alone by the US processor concerned or in the US meat industry at large.
7.365 All three parties reference a letter from the Amer ican Meat Institute (AMI) anticipating that
"[w]hen the final rule becomes effective, ... almost 95% of beef and pork products eligible to bear a
'Product of the USA' label will bear such labeling". 524 This AMI letter indicates that even by the US
meat industry's calculations, only some 5% of domestic meat might actually be commingled with
imported meat. However, this evidence is silent on whether in practice less than 5% of domestic meat
ends up being commingled. It does not specify eith er in what proportion such domestic meat might
be commingled with imported meat, i.e. the quantities and share of non-US origin meat involved in
any commingling.
7.366 The United States submitted photographs of Labe l B suggesting that these labels had been
affixed on commingled meat.
525 However, photographs of Label B merely demonstrate that there are
muscle cuts carrying Label B. Labe l B, and in particular the photos of such labels submitted by the
United States, provide no information on whet her the muscle cuts in question result from
commingling Label A and B meat on a single production day.
7.367 Further, the United States references an exhib it submitted by Canada to demonstrate that one
of the complainants even recognizes that commingling is actually taking place. 526 However, the
Canadian exhibit in question onl y indicates that some US processing plants are accepting Label B
meat, but not that these plants are necessarily co mmingling it with Label A meat. As regards
commingling proper, this Canadian exhibit refers only to the commingling "flexibility" between meat
eligible for Labels B and C, but not for Label A meat.
7.368 Finally, the United States submitted a producer affidavit declaring that livestock supplied to a
major US meat processor is eligible for Label B. 527 This affidavit, however, is silent on whether such
Label B livestock ends up being commingled, or whet her livestock eligible for Labels A and B are
being processed on separate production days.
7.369 The above relative proportions of the use of the various labels are largely confirmed by the
United States, as well. In response to a question from the Panel, the United States explained that
"approximately 71 percent of the beef sold at th e retail level is being labeled as Category A", and
"70 percent of the pork sold at the reta il level is being labeled as Category A". 528 The United States

522 See Exhibit US-38. See also Exhibits MEX-43, 44 and 45.
523 See United States' second written submission, para. 57 and Exhibit US-102 (BCI).
524 Exhibit MEX-67. See also United States' second written submission, para. 57, Canada's response to
Panel question No. 91, Mexico's response to Panel question No. 91 and United States' response to Panel
question No. 91.
525 See Exhibits US-95, 96 and 98.
526 See Exhibit CDA-41.
527 See United States' second written submission, para. 57 and Exhibit US-101 (BCI).
528 United States' response to Panel question No. 91. See also United States' response to Panel question
No. 90.

added that "up to 14 percent of Category A beef muscle cuts might be labeled as Category B or C beef
and up to 20 percent of Category A muscle cuts might be labeled as Category B or C pork".529
7.370 The complainants contest the US figures arguing that the US estimates on the use of Label A
are too low and that those on commingling are exaggerated. 530 According to the complainants, the
proportion of meat that carries Label A is closer to 90%. 531 Indeed, several major US meat processors
indicated that, with the entry into force of the 2009 Final Rule (AMS), "around 90 percent of all of the
fresh, retail beef and pork cuts produced in th e U.S. would qualify for the Category A label". 532
Nonetheless, the complainants do not contest the US argument that, despite commingling, the use of
Label A affects the vast majority of meat labelled under the COOL requirements.533
7.371 Likewise, the complainants do not contest the US argument that the use of category C and D
labels remains "small".534 Rather, Mexico contests the justifi cation advanced by the United States for
the limited use of Label D.535
7.372 In light of the foregoing, we preliminarily conclude that the COOL measure creates an
incentive to use domestic livestock – and a disin centive to handle imported livestock – by imposing
higher segregation costs on imported livestock th an on domestic livestock. Consequently,
the COOL measure affects competitive conditions in the US market to the detriment of imported
livestock.
Reduction in the competitive opportunities of imported livestock
7.373 As noted above, in Korea – Various Measures on Beef , the Appellate Body found a
"reduction of competitive opportunit[ies]"536 for imported products relative to domestic like products.
7.374 We are faced with the same situation in the current dispute. The competitive opportunities of
imported livestock are reduced as the additional costs of compliance with the COOL measure incurred
when handling imported livestock are, at least in part, passed on to suppliers of imported livestock.
We referenced in this regard direct evidence of a considerable COOL discount being applied by
several major processors to imported livestock and the absence of evidence of a similar discount being
applied to domestic livestock.537
7.375 Further evidence of the reduction of competitive opportunities for imported livestock includes
statements by imported livestock suppliers that some plants and companies are simply refusing to
process any imported livestock any more. 538 For instance, a major US hog processor informed its

529 United States' response to Panel question No. 91. See also United States' response to Panel question
No. 90.
530 See Mexico's comments on United States' response to Panel question Nos. 90 and 91 and Canada's
comments on United States' response to Panel question Nos. 90 and 91.
531 See Canada's response to Panel question No. 90 and Mexico's response to Panel question No. 90.
See also Exhibits CDA-198 (BCI) and CDA-211.
532 Exhibits CDA-36 to 38 and CDA-24 (BCI). See also Exhibit MEX-33.
533 United States' response to Panel question No. 91.
534 United States' response to Panel question No. 90. See also Exhibit US-146.
535 Mexico's comments on United States' response to Panel question No. 90.
536 Appellate Body Report, Korea – Various Measures on Beef, para. 147. See also ibid., para. 146.
537 See para. 7.363 above.
538 See Exhibits CDA-56 (non-BCI), CDA-57, 66 to 69, 76, 81, 88 (all BCI). See also
Exhibit CDA-89.

Canadian livestock suppliers that "[d]ue to Coun try of Origin Labeling (COOL)", it will only process
US-born, raised and slaughtered hogs.
539
7.376 Moreover, as a result of the COOL measure, fewer US processing plants are accepting
imported livestock than before. 540 The complainants have submitted maps and lists of US processing
facilities showing how US processing plants have be come less accessible for imported cattle and hogs
under the COOL measure. 541 Although the United States contests the specific figures submitted by
the complainants in this regard 542, it does not call into question the complainants' case on the overall
reduction in the number of plants processing imported livestock as a result of the COOL measure.
7.377 We also have evidence before us showing th at, as a result of the reduction of available
processing plants, certain suppliers had to transpor t imported livestock longer distances than before
the COOL measure. 543 Further, several plants that conti nue to process imported livestock do so at
specific, limited times544, namely only on specific days of the week (typically at most one or two days
per week)545, or only after specific hours of the day. 546 Processing imported livestock only at specific
times as a result of the COOL measure has created l ogistical problems and additional costs for certain
imported livestock suppliers.547 Due to the congestion resulting from limited specific-time deliveries,
certain imported livestock suppliers find it more difficu lt to obtain trucks for their deliveries or to use
their trucks in an efficient way. 548 Congestion has also increased waiting time for imported livestock
crossing the border, and thus created transporta tion delays for certain suppliers of imported
livestock.549 In turn, these have increased the transporta tion costs of certain suppliers of imported
livestock550, and have had a negative impact on the we lfare and quality of imported livestock as a
result of long waiting times in extreme temperatures and shrinkage 551, sometimes leading even to
increased mortality. 552 Also, transportation of imported livestock has become less efficient in that
certain suppliers can make fewer deliveries due to longer distance transpor t and less turn-around
time.553 Further, certain slaughterhouses accepting imported livestock only on Monday has resulted in
increased costs for veterinary checks of imported livestock on Sunday.554
7.378 Contractual terms for suppliers of imported livestock have also changed as a result of the
COOL measure. We have evidence that several major processors introduced a COOL opt-out clause
allowing them to unilaterally terminate or ame nd their contracts with suppliers of imported
livestock.555 In certain other situations, supply contr acts for imported livestock have been cancelled
or terminated556, or simply not renewed. 557 Sometimes, the contractual relationship has survived the

539 See Exhibit CDA-92. See also Exhibits CDA-107 (BCI) and CDA-109.
540 See Exhibits CDA-56 (non-BCI), CDA-57, 72, 75, 80, 81 and 94 (all BCI), MEX-37, 42, 97 and
106 (all BCI). See also Exhibit CDA-90 (BCI).
541 See Exhibits CDA-95 to 103 and MEX-98.
542 See Exhibits CDA-41, US-102 and 152 (both BCI).
543 See Exhibits CDA-57, 66, 67, 69, 81, and 85 to 87 (all BCI).
544 See Exhibits CDA-77, 87 and 88 (all BCI).
545 See Exhibits CDA-55, 57, 66, 75, 80, 84, 90 (all BCI) and CDA-105 (non-BCI), MEX-97 and
106 (both BCI).
546 See Exhibit CDA-85 (BCI).
547 See Exhibit CDA-57 (BCI).
548 See Exhibits CDA-55 to 57 and 80 (all BCI).
549 See Exhibits CDA-55, 57, 66, 80 and 85 (all BCI).
550 See Exhibits CDA-57, 67, 68, 75, 80, 81, 85 and 87 (all BCI).
551 See Exhibits CDA-55, 66 and 85 (all BCI). See also Exhibits CDA-93 and CDA-106.
552 See Exhibit CDA-85 (BCI).
553 See Exhibit CDA-68 (BCI).
554 See Exhibit CDA-80 (BCI).
555 See Exhibits CDA-67 and CDA-108 (both BCI).
556 See Exhibits CDA-86, 88 (BCI) and 108 (all BCI).

COOL measure, although at terms less fa vourable for imported livestock suppliers. 558 For instance,
in certain cases, former long-term contracts have be en replaced with spot contracts at lower purchase
prices.559 In at least one case, a former automatically renewed, "evergreen" contract was replaced
with a contract involving less favourable terms. 560 Further, we have evidence of 14 days' advance
notice being required for supplies of Mexican cattle at various US processing facilities.561
7.379 Certain suppliers of imported liv estock have also suffered significant financial disadvantages
resulting from the COOL measure. Several supplie rs reported that the price difference between
imported and domestic livestock has become larger to the detriment of domestic livestock 562, and that
discounts for imported livestock appeared or existing ones increased as a result of the
COOL measure.563 Further, in several cases, financial in stitutions are reported to have refused to
provide credits and loans to Canadian livestoc k producers due to the risks resulting from the
COOL measure.564
7.380 Finally, we have evidence before us – undisput ed by the United States – that imported cattle
have been excluded from premium beef programmes, such as the Certifie d Angus Beef programme
and other programmes, as a result of the COOL measure. 565 In general, these premium programmes
are particularly profitable for operators in the supply chain, including livestock suppliers.
7.381 In light of the above considerations, we pr eliminarily conclude that the COOL measure
reduces the competitive opportunities of imported livest ock relative to domestic livestock. Before
making a definitive finding on this matter, though, we need to address the counterarguments advanced
by the United States in this regard.
Arguments by the United States
7.382 The United States argues that various phenom ena prevent the COOL measure from creating
the above-described negative incentives and from reducing the competitive opportunities of imported
livestock. We have already addressed some of these arguments, e.g. the United States' arguments that
any (technical) regulation creates cost s and that costs might be distributed differently among market
participants. We now turn to the additional arguments raised by the United States, namely:
(a) the continued processing of imported livestock;
(b) the lack of a legal necessity for private market participants to choose Label A;
(c) the influence of factors distinct from the COOL measure;
(d) pre-existing segregation programmes; and
(e) exceptions from the COOL measure.

557 See Exhibits CDA-67 and 88 (both BCI).
558 See Exhibit CDA-56 (BCI).
559 See Exhibits CDA-68, 69, 82, 88 (all BCI). See also Exhibit CDA-66 (BCI).
560 See Exhibit CDA-86 (BCI).
561 See Exhibits MEX-37, 46 , 97 and 105 (all BCI).
562 See Exhibits CDA-55 and 94 (both BCI).
563 See Exhibits CDA-55 to 57, 66 to 69, 75, 80, 83, 84, 86, 87, 89, 94, 108, 198 (all BCI), MEX-37,
97 and 105 (all BCI).
564 See Exhibits CDA-67, 69, 83, 85 and 86 (all BCI).
565 See Exhibits CDA-36 and 38 and MEX-33. See also Exhibits CDA-41, 55 to 57, 81 (all BCI),
MEX-57 and 64 (both BCI).

The continued processing of imported livestock
7.383 The United States argues that not all beef and pork covered by the COOL measure carries
Label A, as there is continued processing of imported livestock. We do not see the need to assess
whether this contention is in fact supported by the evidence, for even if the US argument is correct, it
would not change our preliminary conclusion that the COOL measure creates an incentive to process
exclusively domestic livestock and reduces the competitive opportunities of imported livestock.
7.384 As the Appellate Body explained in US – FSC (Article 21.5 – EC) , less favourable treatment
of imported products may exist even if a measure "will not give rise to less favourable treatment for
like imported products in each and every case".
566 Further, like Article III:4 of the GATT 1994,
Article 2.1 of the TBT Agreement does not serve to protect "expectations ... of any particular trade
volume".567
7.385 The United States also argues that even if th e number of US plants processing Canadian and
Mexican livestock has diminished, these plants have the capacity to process all the livestock that
Canada and Mexico export to the United States. 568 We do not consider that the capacity of the
US plants in question is particularly re levant. As the Appellate Body held in Korea – Various
Measures on Beef , "the reduction of competitive opportunity through the restriction of access to
consumers .... is not a function of the limited vol ume of foreign [products] actually imported":
"the fact the that the WTO-consistent quota ... has ... been fully utilized does not detract from the lack
of equality of competitive conditions entailed by the [measure]".569
The legal necessity of making a choice
7.386 The United States argues that the COOL measu re does not create a legal necessity for
differential and less favourable treatment; if i ndividual market participants happen to process
predominantly Label A meat, that is due to their private business decisions.570
7.387 We note that the United States does not contest the complainants' description of the situation
preceding the COOL measure. According to the complainants, prior to the COOL measure,
conditions of competition were the same for imported and domestic products: 571 there was an
integrated NAFTA livestock and meat market, in which livestock and meat products were processed
together, without any major segregation due to orig in but purely on the basis of considerations of
price and quality.572
7.388 The US Congressional Research Service described the pre-COOL North American livestock
and meat market as follows:
"The animal products industries have become increasingly integrated across all three
North American countries in recent years, particularly after the onset in 1994 of the
North American Free Trade Agreement (NAFTA) and, before that, the Canada-U.S.
Free Trade Agreement in 1988. These agreements, along with the global Uruguay
Round Agreements under the World Trade Organization (WTO), by helping to

566 Appellate Body Report, US – FSC (Article 21.5 – EC), para. 221.
567 Appellate Body Report, Japan – Alcoholic Beverages II, p. 16. See also Appellate Body Report, EC
– Asbestos, para. 93.
568 See United States' opening oral statement at the first substantive meeting of the Panel, para. 25.
569 Appellate Body Report, Korea – Various Measures on Beef, para. 147.
570 See United States' first written submission, paras. 147 and 150.
571 See Appellate Body Report, Korea – Various Measures on Beef, para. 145.
572 See Exhibit CDA-50, p. 20. See also See Exhibits CDA-192, MEX-35, and 37 (BCI).

reduce tariff and nontariff barriers to trade, have enabled animals or their products to
move across borders more freely, based on market demands."573 (emphasis added)
7.389 Likewise, a backgrounder on the COOL measure by the Food Marketing Institute, whose
members represent "three-quarters of all retail food store sales in the United States", explained that
"[e]ver since the North American Free Trade Agreement was ratified in 1993, cattle and produce have
moved freely among Canada, Mexico and the U.S".574
7.390 It is the COOL measure, and not solely the priv ate decisions of market participants, that has
had a decisive impact in changing this pattern , by creating an economic incentive to process
exclusively domestic livestock. In this regard, th e COOL measure is similar to the dual beef retail
distribution system reviewed in Korea – Various Measures on Beef . In that dispute, the
Appellate Body made a distinction between the "leg al necessity of making the choice imposed by the
measure itself" and differential treatment that is "solely the result of private entrepreneurs acting on
their own calculations of comparative costs and benefits of differentiated distribution systems":
"We are aware that the dramatic reduction in number of retail outlets for imported
beef followed from the decisions of individual retailers who could choose freely to
sell the domestic product or the imported pr oduct. The legal necessity of making a
choice was, however, imposed by the measure itself. The restricted nature of that
choice should be noted. The choice given to the meat retailers was not an option
between remaining with the pre-existing unified distribution set-up or going to a dual
retail system. The choice was limited to selling domestic beef only or imported beef
only. Thus, the reduction of access to normal retail channels is, in legal
contemplation, the effect of that measure. In these circumstances, the intervention of
some element of private choice does not relieve Korea of responsibility under the
GATT 1994 for the resulting establishment of competitive conditions less favourable
for the imported product than for the domestic product.

We are not holding that a dual or parallel distribution system that is not imposed
directly or indirectly by law or governmental regulation, but is rather solely the result
of private entrepreneurs acting on their own calculations of comparative costs and
benefits of differentiated distribution syst ems, is unlawful under Article III:4 of the
GATT 1994. What is addressed by Article III:4 is merely the governmental
intervention that affects the conditio ns under which like goods, domestic and
imported, compete in the market within a Member's territory."
575
7.391 Indeed in the dispute before us, like in Korea – Various Measures on Beef , the
COOL measure does not allow non-compliance. A lthough, as explained above, the COOL measure
does not prohibit the processing of domestic and imported livestock irrespective of origin,
the COOL measure itself makes this business scenar io more costly than other business scenarios. 576
Further, in the dispute before us, like in Korea – Various Measures on Beef , any decisions by private
market participants are not "solely" the result of their independent business calculations, but are
attributable in large part to the economic incentiv e and disincentive created by the provisions of the
COOL measure.

573 Exhibits CDA-117, 199 and MEX-53.
574 Exhibit CDA-192. See also Exhibits CDA-69, 75, 76, 81, 90 (all BCI), MEX-37 and 97 (both BCI).
575 Appellate Body Report, Korea – Various Measures on Beef, paras. 146 and 149 (original emphasis).
576 See para. 7.333.

7.392 In particular, we disagree with the Un ited States that the distinction under Korea – Various
Measures on Beef is between legal and economic aspects of a measure. We have already noted that
the complainants argue de facto discrimination in this dispute. In the context of such a claim of
de facto discrimination, contrary to what the United States suggests, the distinction should be made
between (i) a measure of a WTO Member creating a sufficiently strong incentive, including possibly
an economic incentive, for private market participants to act in a particular way; and (ii) business
decisions of private market participants based "solely" on private economic considerations.
577
Factors distinct from the COOL measure
7.393 The United States argues, referencing the Appellate Body report in Dominican Republic –
Import and Sale of Cigarettes , that the COOL measure does not involve less favourable treatment
because any detrimental effects on imported livestock ar e attributable to economic factors, and not to
the foreign origin of such livestock per se.578
7.394 Unlike in Dominican Republic – Import and Sale of Cigarettes , the current dispute does not
focus on the unit costs entailed by the contest ed measure for imported and domestic products.
The complainants do not claim less favourable tr eatment due to increased unit costs for imported
livestock. Likewise, our analysis concentrates on the relative overall costs of the different business
scenarios that market participants may choose in order to comply with the COOL measure.
Further, unlike the bond requirement review ed in the Appellate Body report in Dominican Republic –
Import and Sale of Cigarettes , the COOL measure is directly concerned with the origin of meat and
livestock. Thus, the incentive created by the COOL measure in favour of processing domestic-origin
meat is clearly related to the origin of livestock.
7.395 We agree that this incentive is partly due to the relatively small market share of imported
livestock compared to domestic livestock. In f act, as we explained above, faced with the choice
between the two business scenarios of absolute segregation, namely the scenario involving
exclusively domestic livestock and the scenario i nvolving exclusively imported livestock, one reason
for choosing the former scenario is that in most cases the latter is not viable due to the smaller
proportion of imported livestock.
7.396 It is appropriate to consider this economic factor in determ ining whether the COOL measure
has a de facto negative impact on the competitive conditions of imported livestock. The dictionary
defines "de facto" by creating a link to factual circumstances: "in fact, in reality, in actual existence,
force, or possession, whether by right or not".
579 Likewise, the Appellate Body defined de facto

577 See Panel Report, Mexico – Taxes on Soft Drinks, paras. 8.116-8.117.
578 United States' first written submission, para. 146. In Dominican Republic – Import and Sale of
Cigarettes the Appellate Body stated:
"The Appellate Body indicated in Korea – Various Measures on Beef that imported products
are treated less favourably th an like products if a measure modifies the conditions of
competition in the relevant market to the detriment of imported products . However, the
existence of a detrimental effect on a given imported product resulting from a measure does
not necessarily imply that this measure accords less favourable treatment to imports if the
detrimental effect is explained by factors or ci rcumstances unrelated to the foreign origin of
the product, such as the market share of the importer in this case." (Appellate Body Report,
Dominican Republic – Import and Sale of Cigarettes , para. 96 (footnote omitted; original
emphasis)).
579 The Shorter Oxford English Dictionary , (Sixth Edition) Oxford Univer sity Press, Vol. I, p. 626
(2007).

discrimination under Article III:4 of the GATT 1994 by referring to conditions "in the relevant
market".580
7.397 The very essence of the de jure / de facto dichotomy is that the first involves an analysis
focussing on the language of the measure at i ssue, whereas the second entails assessing how a
measure with language that is not discriminatory on its face plays out in actual circumstances. In the
context of Article III:4 of the GATT 1994 and Article 2.1 of the TBT Agreement, assessing whether a
measure has actual discriminatory effects cannot be dissociated from the circumstances prevailing in
the market at issue. Indeed, taking into account th e circumstances in which the measure in question is
applied is essential for an objective assessment of a claim of de facto discrimination.
7.398 The COOL measure creates a de facto incentive in favour of domestic, and to the detriment of
imported, livestock in the particular circumstances of the US livestock and meat market. The small
market share of imported livestock is an element of these market circumstances.
7.399 As explained, before the COOL measure, the North American livestock and meat market was
highly integrated. In the US market, domestic a nd imported livestock were processed according to
competitive considerations of price and quality, irrespective of origin.
7.400 The Interim Final Rule (AMS) of August 2008 did not completely disrupt this pattern, even if
it introduced certain compliance costs. This is because, under the Interim Final Rule (AMS),
it remained possible to process domestic and importe d livestock together on a large scale and to affix
one single label, Label B, on these products. As rega rds the magnitude of this flexibility, it is telling
that the National Farmers Union criticised it as "a loophole big enough to drive a truck through".
581
Since a single-label approach is in general less co stly than business scenarios involving more labels,
as explained above 582, industry chose to follow a predominantly Label B approach for all livestock,
including both imported livestock and the majority of livestock that would have otherwise qualified
for Label A.
7.401 The 2009 Final Rule (AMS) changed this by reducing the unqualified possibility of affixing
Label B on meat otherwise eligible for Label A to the limited flexibility of commingling on a single
production day. Indeed, the 2009 Final Rule (AMS) i ndicates that the majority of meat eligible for
Label A should be carrying that label: "[i]t was ne ver the intent of the Agency for the majority of
product eligible to bear a U.S. origin declaration to bear a multiple origin designation".583
7.402 As a result of the 2009 Final Rule (AMS), the meat supply chain is faced with the
requirement to affix Label A on the majority of meat eligible for that label, which involves a
significant reduction in the amount of domestic me at and livestock being processed together with
imported meat and livestock. This, in turn, cr eates the necessity for the supply chain to choose
between a single-origin, Label A business scenario and the scenario of processing both Label A and
imported meat and livestock. A single-origin approach is less costly, and given the high market share
of domestic livestock, it is also generally viable.
7.403 It is the result of the COOL measure, in par ticular the 2009 Final Rule (AMS), that in the
circumstances of the US market, market participan ts, when faced with the choice between a scenario
involving exclusively domestic livestock and a scenario involving both domestic and imported

580 Appellate Body Report, Korea – Various Measures on Beef , para. 137. See also Panel Report,
Canada – Pharmaceutical Patents, para. 7.101.
581 Exhibit CDA-28.
582 See para. 7.357 above.
583 74 FR 2659.

livestock, opted predominantly for the former. Wh ile the small market share of imported livestock
influenced this choice, that very choice was ma de necessary by the COOL measure. Indeed, as the
history of the COOL measure shows, market partic ipants would not have opted this way, and the
small market share of imported livestock per se did not dictate such an option either.
7.404 Thus, in the circumstances of the US market, the COOL measure, in particular the 2009 Final
Rule (AMS), creates an incentive in favour of domestic livestock and negatively affects the
competitive conditions of imported livestock. Hence, we disagree with the United States that this
effect is attributable exclusively to factors distinct from the COOL measure.
Pre-existing segregation
7.405 The United States argues that various pre-existing segregation programmes preceded the
COOL measure, namely USDA grade labels, priv ate premium label programmes, animal production
and raising label programmes, and export market requirements. According to the United States, these
programmes allowed market participants to gain experience with segregation, and their continued
existence reduces the costs of any additional segregation under the COOL measure.
584
7.406 While pre-existing segregation might have allo wed certain market participants to gain
experience with segregation, we observe that not all market participants are necessarily involved in all
of the pre-existing segregation programmes evoke d by the United States. Whereas USDA grade
labels are affixed on the majority of beef slaughter ed in the United States, private premium labels and
animal production and raising labels affect a smaller proportion of beef marketed in the United States.
Likewise, given the small proportion of US exports relative to US beef consumption 585, export
programmes do not involve the majority of beef marketed in the United States.
7.407 More importantly, most pre-existing segregati on programmes are not concerned with country
of origin but rather with quality or producti on processes. Even among the export programmes,
which involve some segregation according to origin, not all are foreclosed for Canadian or Mexican
livestock and beef. In fact, some export programme s allow Canadian or Mexican-origin beef to be
exported along with US beef586, whereas some other export programmes cover cattle that spent at least
100 days before slaughter in the United States, including feeder cattle born in Canada and Mexico.587
7.408 As most pre-existing programmes do not necessa rily entail segregation of Canadian and
Mexican beef from US beef, the COOL measure adds an additional layer of segregation to
pre-existing segregation programmes. In practice, after the COOL measure, beef that qualifies, for
instance, for a specific premium programme needs to be additionally segregated according to origin as
defined by the COOL measure. This involves additional segregation and costs specific to the
COOL measure.
7.409 The 2009 Final Rule (AMS) explains that:
"[I]n [certain] cases ... firms may need to revamp current operating processes to
implement the rule. For example, a pro cessing or packing plant may need to sort
incoming products by country of origin and, if applicable, method of production, in

584 See United States' first written submission, para. 169, United States' second written submission,
paras. 59-60, and United States' response to Panel question No. 46. See also Exhibit US-43.
585 See Exhibits US-28 and 71. See also Exhibits CDA-207 and 209, Canada's response to Panel
question No. 109, Exhibit MEX-104, Mexico's response to Panel question No. 109, Exhibits US-150 and 151,
United States' response to Panel question Nos. 30 and 109.
586 See Exhibits MEX-75 and US-81.
587 See Exhibits MEX-76, 77 and US-82.

addition to weight, grade, color, or other quality factors. This may require
adjustments to plant operations, line processing, product handling, and storage."588
7.410 Several major US beef processors declined to b ear such additional costs, and informed their
suppliers that, due to the entry into force of the COOL measure 589, they would not include Canadian
and Mexican beef in their Certified Angus Beef an d other premium beef programmes. For instance,
Tyson issued a standard letter to its fresh meat ca ttle suppliers informing them that "[o]ur approach
will be to use the 'U.S.' or Category A label on all of our premium beef programs beginning early
2009", following the replacement of the former unqua lified possibility of affixing Label B on Label A
meat with the more restrictive commingling flexibility.590
7.411 Further, unlike the COOL measure, the pre- existing segregation programmes evoked by the
United States are voluntary and exist to the extent that they meet consumer demand, i.e. they are also
contingent upon consumers' willingness to pay for the type and quality of beef covered by such
programmes.
7.412 Finally, as Canada points out, none of the pre-existing segregation programmes evoked by the
United States relates to hogs.591
7.413 Accordingly, we are not persuaded by the ar gument that the pre-existence of segregation
programmes reduces the costs of any additional orig in-based segregation under the COOL measure.
Thus, we maintain our view that the COOL measu re involves costs that are apportioned differently
between the business scenario involving only domestic livestock and the scenarios involving imported
livestock.
Exceptions under the COOL measure
7.414 The United States argues that it had narrowed th e originally envisaged coverage of the
COOL measure to reduce compliance costs.592
7.415 The COOL measure requires "retailers" to affix labels on the "covered commodity" 593, which
in relevant part is defined as "muscle cuts of beef... and pork" and "ground beef ... and ground
pork".594 However, as the United States points out, th e COOL measure excludes from its scope any
otherwise covered commodities that serve as an "ingredient to a processed food item".595
7.416 Further, not all actors selling beef and pork at retail level are subject to the COOL measure.
As described above596, in the context of the COOL measure, an individual "retailer" is covered only
when the invoice cost of all of its purchases of perishable agricultural commodities exceeds $230,000
during a calendar year.597 "Food service establishments" are also exempt from the COOL measure.598

588 74 FR 2689.
589 See CDA-56 (BCI).
590 See Exhibits CDA-36, 38 and MEX-33. See also Exhibits CDA-41, 55, 56, 57 and 81 (all BCI),
MEX-57 and 64 (both BCI).
591 See Canada's response to Panel question No. 43. See also Exhibit CDA-179.
592 See United States' second written submission, para. 153. See also United States' first written
submission, para. 185; United States' second written submission, para. 89; and Exhibit US-43.
593 7 U.S.C. §§ 1638(2) and 1638a(a)(1).
594 7 U.S.C. §§ 1638(2)(A)(i) and (ii).
595 7 U.S.C. § 1638(2)(B) and 74 C.F.R § 65.135(b).
596 See paras. 7.101, 7.106 above.
597 See Exhibit CDA-7. See also 74 C.F.R. § 65.240.

7.417 Evidence submitted by the parties indicates that, as a result of these exceptions, a
considerable proportion of beef and pork is exempted from the COOL measure.
599 The exact
proportion or magnitude of the exceptions and excl usions is irrelevant for our review of the
complainants' claims under Article 2.1 of the TBT Agreement. In fact, when asked about the
relevance of these exceptions in terms of pr actical compliance with the COOL measure,
the United States indicated that:
"[It] is not aware of any evidence to sugg est that meat producers in the distribution
chain – feed lot operators and slaughterhou ses – are systematically separating source
animals or meat products depending on wh ether the ultimate meat products derived
from those animals are subject to the 2009 Final Rule. This is due to the fact that the
ultimate disposition of a meat product is of ten not known at any particular stage of
the production chain."600
7.418 The complainants' answers to the same ques tion confirm that there is no systematic
differentiation based on the ultimate destination of the meat produced.601
7.419 Accordingly, we conclude that the exceptions to the coverage of the COOL measure do not
alter the distribution of compliance costs for liv estock and meat producers and processors in a way
that would modify the incentives created by the COOL measure.
Conclusion with regard to the muscle cut labels
7.420 In light of our analysis of the parties' argumen ts, we find that, in the context of the muscle cut
labels, the COOL measure creates an incentive in favour of processing exclusively domestic livestock
and a disincentive against handling imported livestock. Accordingly, we also find that, in the context
of muscle cut labels, the COOL measure de facto discriminates against imported livestock by
according less favourable treatment to Canadian cat tle and hogs, and to Mexican cattle, especially
Mexican feeder cattle, than to like domestic livestock.
Ground meat label
7.421 Unlike for muscle cuts, there is one single la bel for ground meat under the COOL measure.
This label applies equally to ground meat of imported and domestic origin.
7.422 Pursuant to the COOL measure, the ground meat la bel must list "all of the countries of origin
of ... ground beef [or] ... pork". 602 According to the 2009 Final Rule (AMS), this means that "if a
country of origin is utilized as a raw material s ource in the production of ground meat, it must be
listed on the label".603
7.423 To ensure that the ground meat label carries this information, the meat which has been ground
needs to be segregated according to origin. In fact, the above-quoted COOL Compliance Guide
issued by USDA references "segregation" and a "seg regation plan" not just for muscle cuts, but also
in the context of ground meat. Like for muscle cuts, this segregation involves costs and, as a matter

598 7 U.S.C. § 1638a(b).
599 See Canada's response to Panel question No. 92, Exhibit CDA-199, Mexico's response to Panel
question No. 92, Exhibits MEX-99, MEX-100 and MEX-101, United States' response to Panel question
Nos. 92-101, Exhibits US-147 and 148.
600 United States' response to Panel question No. 93.
601 See Canada's response to Panel question No. 93 and Mexico's response to Panel question No. 93.
602 7 U.S.C. § 1638a(a)(2)(E).
603 74 FR 2671.

of logic, the fewer origins involved, the less co stly compliance with the COOL measure is in the
context of ground meat.
7.424 The United States explains that in its final form, the COOL measure does not prescribe any
order for listing the countries of origin of ground meat. 604 The complainants have not contested this.
In fact, evidence from Canada confirms this.605
7.425 Further, the ground meat label might list "all of the reasonably possible countries of origin of
... ground beef [or] ... pork". 606 The 2009 Final Rule (AMS) defines this as follows: "when a raw
material from a specific origin is not in a processor's inventory for more than 60 days, that country
shall no longer be included as a possible country of origin".607
7.426 The 2009 Final Rule (AMS) explains that:
"[t]he 60-day in inventory allowance speaks only to when countries may no longer be
listed. The 60-day inventory allowance is an allowance for th e Agency' enforcement
purposes for when the Agency would deem ground meat products as no longer
accurately labeled."608
7.427 This 60-day "inventory allowance" allows fl exibility from the segregation involved in the
ground meat label under the COOL measure. In effe ct, it allows a processor to reference a country of
origin on its ground meat label even if the pro cessor has not had ground meat from that particular
country in its inventory for the last 60 days or l ess. Thus, a processor may use the same label for all
of its ground meat, provided that the label lists all countries of origin of the meat ground by the
processor, and that the processor has had in its inve ntory meat for grinding of each origin at least
every 60 days.
7.428 In fact, comments on the 60-day "inventory a llowance" under the Interim Final Rule (AMS)
of August 2008 included the following:
"The commenters stated that in practical terms, this provision appears to allow a
processor to have 60 days to correct the label of a product to delete specific
country(s), even though that country's product may no longer exist in its inventory.
The commenters provided the example that a processor on day one could have
product from the U.S. and Canada, and th en on day 7 run out of product from the
U.S., and yet could continue using the 'Pr oduct of U.S. and Canada' label for another
53 days. Commenters feared this provision could be easily abused by meat
processors."
609
7.429 In response, USDA did not deny this possibility or that the provision might be "abused" in
specific instances. USDA merely indicated that "it does not believe widespread abuses of this
provision will occur and will address any issues with this provision during routine compliance
reviews".610 There is no indication in the evidence pl aced before us of USDA having addressed any
potential "abuses" of the 60-day "inventory allowan ce" in any routine compliance reviews it might
have conducted.

604 See United States' first written submission, para. 78.
605 See Exhibit CDA-41.
606 7 U.S.C. § 1638a(a)(2)(E).
607 74 C.F.R. § 65.300(h).
608 74 FR 2671.
609 74 FR 2670.
610 74 FR 2671 (emphasis added).

7.430 The flexibility under the 60-day "inventory allowance" was also confirmed by
Secretary Vilsack, who explained in his letter that:
"[t]he language in the Final Rule allows a label for ground meat product to bear the
name of a country, even if product from that country was not present in a processor's
inventory, for up to 60 days. This provision allows for labels to be used in a way that
does not clearly indicate the product's country of origin."
611
7.431 Another commenter on the Interim Final Rule (AMS) of August 2008 argued that the 60-day
"inventory allowance" "was intended to reflect th e sourcing processes of commercial grinders and not
to require them to change their labels simply because the market had changed and source product was
more expensive from one country than another".612 USDA essentially confirmed this:
"The Agency arrived at the 60-day allowance during its analysis of the ground meat
industry. In this analysis, the Agency determined that in the ground beef industry a
common practice is to purchase lean beef trimmings from foreign countries and mix
those with domestic beef trimmings before grinding into a final product. Often those
imported beef trimmings are not purchased w ith any particular regard to the foreign
country, but the cost of the trimmings due to currency exchange rates or availability
due to production output capacity of that fo reign market at any particular time.
Because of that, over a period of time, the imported beef trimmings being utilized in
the manufacture of ground beef can and does change between various foreign
countries.
As large scale beef grinders can have in inventory at any one time, several days'
worth of beef trimmings (materials to be processed into ground beef) from several
different countries and have orders from ye t other foreign markets, or from domestic
importers, trimmings from several foreign countries that will fu lfill several weeks'
worth of ground beef production, the Agency determined that it was reasonable to
allow the industry to utilize labels representing that mix of countries that were
commonly coming through their inventory during what was determined to be a
60-day product inventory and on order supply."
613 (emphasis added)
7.432 Further, USDA explained that it did not consid er it necessary to change the existing "normal
business practices" in the grinding industry:
"To require beef grinders to completely change their production system into grinding
beef based on specific batches was determ ined to be overly burdensome and not
conducive to normal business practices, which the Agency believes was not the intent
of the statute."614
7.433 USDA added that it did not intend to modify the grinding industry's pre-existing bulk
labelling policies:
"[B]ecause beef grinders often purchase thei r labeling material in bulk, if a given
foreign market that a beef grinder is s ourcing from is no longer capable of supplying

611 Vilsack letter, pages 1-2.
612 74 FR 2671.
613 74 FR 2671.
614 74 FR 2671.

product, the interim final rule allowed that grinder a period of time to obtain new
labels with that given country of origin removed from the label."615
7.434 Finally, in response to another comment, USDA confirmed that the 60-day "inventory
allowance" flexibility is available not only for meat grinders, but for market participants at every stage
of meat supply and distribution:
"With regard to if this 60-day inventor y allowance is made for retailers or for
suppliers of covered commodities, the Agency has made no distinction in this final
rule and, as such, the same requirements would apply."616
7.435 Thus, the 60-day "inventory allowance" provides for significant flexibility with respect to the
segregation entailed by the ground meat label under the COOL measure. This flexibility appears to us
to render redundant certain aspects of ground meat segr egation, and thus limits any additional costs of
implementing the COOL measure with regard to ground meat.
7.436 The complainants have not made specific ar guments in response to the United States'
contentions regarding this flexibility, nor as to how any remaining costs would affect imported
livestock less favourably in the context of ground meat.617
7.437 Accordingly, we find that the complainants have not demonstrated that the ground meat label
under the COOL measure results in less favourable treatment for imported livestock.
(c) Actual trade effects
7.438 We have reached our conclusi ons on less favourable treatment under Article 2.1 of the
TBT Agreement without examining in detail the act ual trade effects of the muscle cuts and ground
meat labels under the COOL measure. Instead , by assessing segregation and the resulting cost
implications of the COOL measure, we have followed the Appellate Body's approach in Korea –
Various Measures on Beef . As suggested by the Appellate Body in that dispute, there is a "more
direct, and perhaps simpler approach" to assessing a national treatment claim by "focus[sing] on what
appears ... to be the fundamental thrust and effect of the measure itself".
618
7.439 As the Appellate Body explained in US – FSC (Article 21.5 – EC) this examination does not
involve the actual effects of the measure in the marketplace:
"This examination cannot rest on simple assertion, but must be founded on a careful
analysis of the contested measure and of its implications in the marketplace. At the
same time, however, the examination need not be based on the actual effects of the
contested measure in the marketplace."
619
7.440 Further, the Appellate Body noted in EC – Bananas III (Article 21.5 – US) that the absence of
"actual trade effects" of a measure does not prevent a Member from bringing a successful claim of

615 74 FR 2671.
616 74 FR 2671.
617 See United States' first written submission, paras. 78 and 159.
618 Appellate Body Report, Korea – Various Measures on Beef, para. 142.
619 Appellate Body Report, US – FSC (Article 21.5 – EC), para. 215 (footnote omitted).

violation under the covered agreements.
620 Likewise, the GATT panel in US – Superfund held in
regard to the national treatment provision of the first sentence of Article III:2 of the GATT that:
"[It] cannot be interpreted to protect e xpectations on export volumes; it protects
expectations on the competitive relati onship between imported and domestic
products. A change in the competitive rela tionship contrary to that provision must
consequently be regarded ipso facto as a nullification or impairment of benefits
accruing under the General Agreement."621
7.441 The GATT panel based this finding on the fact that "[u]nlike some other provisions in the
General Agreement, [the first sentence of Article III:2] does not refer to trade effects". 622 T h i s i s
equally valid for Article III:4 of the GATT and Article 2.1 of the TBT Agreement. In fact, in the
context of Article III:4 of the GATT, the panel in Korea – Various Measures on Beef held that
"the jurisprudence on Article III makes it clear that no consideration needs to be given to the effects of
any less favourable treatment or the impact of such discriminatory regulation on trade volume".623
7.442 The parties agree that we do not need to verify the actual trade effects of the COOL measure
in assessing the complainants' claims under Article 2.1 of the TBT Agreement.624
7.443 Yet, the parties have extensively argued the alleged actual economic and trade effects of the
COOL measure, and whether such effects are attribut able to the COOL measure or to other factors.
For this purpose, they have submitted economic figures and analyses as well as econometric studies,
which we consider relevant factual evidence in this dispute.
7.444 Whether the COOL measure has negative trade a nd economic effects is an important factual
matter in this dispute. It is linked to the conclusions of our above analysis in regard to a violation of
Article 2.1 of the TBT Agreement.
7.445 Accordingly, we consider it important to ma ke findings on the actual trade effects of the
COOL measure, even if, under the legal standard we have identified for Article 2.1 of the
TBT Agreement, these findings are not indispensable for the analysis of the complainants' claims.
7.446 Indeed in Korea – Dairy, the Appellate Body emphasised the unique role of panels in making
factual findings by reviewing the totality of the evidence in the panel record:
"[U]nder Article 11 of the DSU, a panel is charged with the mandate to determine the
facts of the case and to arrive at factual findings. In carrying out this mandate, a
panel has the duty to examine and consider all the evidence before it, not just the
evidence submitted by one or the other part y, and to evaluate the relevance and
probative force of each piece thereof.
In European Communities – Hormones, we had occasion to stress that:

620 Appellate Body Report, EC – Bananas III (Article 21.5 – US) , para. 469. See also Appellate Body
Report, EC – Bananas III (Article 21.5 – Ecuador II), para. 469.
621 GATT Panel Report, US – Superfund, para. 5.1.9.
622 GATT Panel Report, US – Superfund, para. 5.1.9.
623 Panel Report, Korea – Various Measures on Beef, para. 637.
624 See Canada's opening oral statement at the first substantive meeting of the Panel, para. 19, Mexico's
response to Panel question No. 21 and United States' response to the Panel's second set of questions to the
parties, para. 34.

'The duty to make an objective assessment of the facts is, among
other things, an obligation to c onsider the evidence presented to a
panel and to make factual findings on the basis of that evidence.
The deliberate disregard of, or re fusal to consider, the evidence
submitted to a panel is incompatible with a panel's duty to make an
objective assessment of the facts.625' "626
7.447 Importantly, this review of the factual eviden ce does not mean that "panels ... are ... required
to accord factual evidence the same m eaning and weight as do the parties". 627 Further, as the
Appellate Body explained in EC – Hormones , "it is generally within the discretion of the Panel to
decide which evidence it chooses to utilize in making findings".628
7.448 The United States contends that our review of the econometric studies submitted by Canada
raises systemic concerns, as traditionally econometri c analysis has been employed in arbitrations
under Article 22.6 of the DSU to determine the level of nullification or impairment of benefits as a
result of a WTO-inconsistent measure. According to the United States, Canada's approach risks
conflating these two different inquiries and processes. In particular, the United States questions
whether panel findings with respect to such an econometric model might prejudice any findings by the
same persons possibly acting as arbitrators under Article 22.6 of the DSU.629
7.449 Clearly, panels are not arbitrators and arbitrator s are not panels, even if in a given dispute
these bodies might comprise the same persons. Panels and Article 22.6 arbitrators operate on the
basis of different procedures and legal provisions, a nd at different stages of WTO dispute settlement.
Their roles and mandates are also different. As the arbitrator in EC – Hormones (Article 22.6 – EC)
pointed out, panels and arbitrators have different tasks:
"There is ... a difference between our task here and the task given to a panel. In the
event we decide that the [original compla inant's] proposal [concerning the level of
suspension of concessions or other obligations] is not WTO consistent, i.e. that the
suggested amount is too high, we should not end our examination the way panels do,
namely by requesting the DSB to reco mmend that the measure be brought into
conformity with WTO obligations. Following the approach of the arbitrators in the
Bananas case – where the proposed amount of US$ 520 million was reduced to
US$ 191.4 million – we would be called upon to go further. In pursuit of the basic
DSU objectives of prompt and positive settle ment of disputes, we would have to
estimate the level of suspension we consider to be equivalent to the impairment
suffered. This is the essential task and responsibility conferred on the arbitrators in
order to settle the dispute. In our view, such approach is implicitly called for in
Article 22.7."
630
7.450 In light of the above-quoted interpretation of Article 11 of the DSU, entitled "Function of
Panels", we consider that we have the right, a nd in fact the duty, to make the factual findings
necessary to carry out an objective analysis of the dispute and all of the evidence before us.

625 (footnote original) Appellate Body Report, EC – Measures Concerning Meat and Meat Products
(Hormones) (" European Communities – Hormones "), WT/DS26/AB/R, WT/DS48/AB/R, adopted
13 February 1998, para. 133.
626 Appellate Body Report, Korea – Dairy, para. 137.
627 Appellate Body Report, Australia – Salmon, para. 267.
628 Appellate Body Report, EC – Hormones, para. 135.
629 See United States' response to the Panel's second set of questions to the parties, para. 33.
630 Decision by the Arbitrators, EC – Hormones (US) (Article 22.6 – EC) , para. 12 (footnotes omitted)
and Decision by the Arbitrators, EC – Hormones (Canada) (Article 22.6 – EC), para. 12 (footnotes omitted).

7.451 In doing so, we certainly do not intend to usur p the role of arbitrators under Article 22.6 of
the DSU. We are not assessing any level of nullification or impairment, let alone whether there is any
equivalence with any suggested level of suspension of concessions or other obligations. We have no
mandate to do so – either under the DSU, or according to our own specific terms of reference.
631
These matters are left to be decided by an eventual arbitration under Article 22.6 of the DSU and on
the basis of evidence submitted in the context of such arbitration – provided such arbitration actually
becomes necessary.
7.452 Also, there is no reason to consider ec onomic or econometric evidence inappropriate per se ,
let alone exempt from panels' review. The ultimate role of panels is to conduct the necessary factual
and legal review of the arguments and evidence adva nced by the parties, and thus to carry out an
objective assessment of the matter brought before the panel. This basic function of panels does not
exclude – and may, in fact, necessitate – the review of economic and econometric evidence and
arguments.
7.453 Accordingly, in the following sections we exam ine the basic trade flows in livestock between
Canada and the United States, and Mexico and the Unite d States. In particular, we cover fluctuations
in import volumes and shares betwee n 2000 and 2010, with particular emphasis on the second half of
this period. Subsequently, we examine the cost s involved in the COOL measure in light of the
economic studies submitted by the parties. Finally, we assess whether, in light of the econometric
studies submitted by Canada and the United States, the COOL measure had a negative and significant
impact on the price and volume of imported livestock.
(i) Trade volumes in the North American livestock market
Cattle
7.454 The parties provide figures on the import volum e of Canadian and Mexican cattle into the
United States during the last five to ten years. Despite certain divergences among some of these
figures, it is possible to establish the main tre nds of overall US cattle imports from Canada and
Mexico.
Imports of Canadian cattle into the United States
Overall imports from 2000 to 2009
7.455 Between 2000 and 2009, Canada exported to the United States an annual average of about
950,000632 or 1,000,000 633 head of cattle, according to the Unite d States and Canada, respectively.
There were significant fluctuations in annual export fi gures. In particular, in 2004 overall imports of
Canadian cattle dipped to a few thousand 634 or a few hundred 635 head of cattle, according to the
United States and Canada, respectively. This was mainly due to the discovery of
Bovine Spongiform Encephalopathy ("BSE") in Ca nada, which resulted in significant US import
restrictions for Canadian cattle from 2003 to 2005.
636
7.456 Canada and the United States provide figures of US imports of Canadian cattle using statistics
from the Animal and Plant Health Inspection Service ("US APHIS") and the US Bureau of the Census

631 See para. 1.6 above.
632 United States' first written submission, para. 89 (Exhibit US-28, table 3).
633 Exhibit CDA-208.
634 See Exhibit US-28, table 3.
635 See Exhibit CDA-208.
636 United States' first written submission, paras. 99-105 (Exhibit US-28, table 3; Exhibit CDA-208).

("US Census Bureau") for the period starting in 20 05. The parties' figures from the two sources, and
in certain cases even from the same source, are not identical. However, the figures show similar
overall patterns in the development of the imports of Canadian cattle into the United States.
7.457 Both parties' statistics show an increase in imports of Canadian cattle between 2005 and 2007
and a considerable decrease in 2009 vis-à-vis 2008. The main difference is that the data submitted by
Canada show a decline in the number of cattle im ports starting already in 2008, whereas the data
submitted by the United States point to a decrease only for 2009.
Imports of Canadian cattle
Source: US APHIS 2005 2006 2007 2008 2009
Data submitted by Canada637 518,287 1,025,522 1,379,105 1,252,279 797,638
Data submitted by the United States638 518,287 993,620 1,397,156 1,407,081 999,045

Imports of Canadian cattle
Source: US Census Bureau 2005 2006 2007 2008 2009
Data submitted by Canada639 555,528 1,030,790 1,386,745 1,301,910 812,108
Data submitted by the United States640 559,134 1,031,870 1,404,871 1,581,303 1,061,005

637 Exhibit CDA-223. This information presented by Canada excludes cows, bulls and breeding
animals.
638 Exhibit US-28, Table 3. This information presented by the United States excludes breeding
animals.
639 Exhibit CDA-223. This information presented by Canada excludes cows, bulls and breeding
animals.
640 Exhibit US-150.

Overall imports during 2010
7.458 Canada and the United States have only submitte d partial import volume figures for the year
2010 as this period partly coincided with the proceedi ngs of this dispute. The United States compares
the import volume of Canadian cattle from January to September 2010 with figures for the
corresponding period of 2009. This comparison s hows that the number of imported Canadian cattle
increased from 809,513 head between January and Se ptember 2009 to 864,579 in the same period of
2010.641 There is, however, no evidence before us on whether this upward trend continued in the
remaining months of 2010.
7.459 In the absence of data for the corresponding period of 2009, no similar comparison is possible
for the other partial import figures submitted by Cana da and the United States for specific periods of
2010. Canada has submitted US APHIS statistics showing 765,248 heads of imported Canadian cattle
in the first 11 months of 2010. 642 Further, on the basis of data from the US Census Bureau, Canada
submits that imports of Canadian cattle from January to October 2010 reached 756,275 animals,
whereas the United States argues that from January to September 2010 Canadi an cattle imports were
864,579.643 All these partial data for 2010 show that in the first 11 months of 2010 imports of
Canadian cattle did not surpass the import levels for 2009 as a whole.
Further data
7.460 Canada also presents more detailed data sp ecifying the import volume depending on the
category of animal examined, i.e. feeder or fed cattle, cows, bulls and, in general, animals for
breeding purposes. This is because Canada and th e United States disagree whether certain categories
of cattle should be excluded from the data set used to measure import volume fluctuations.
Canada argues that its economic evidence appropria tely excludes cows and bulls from the data set

641 Exhibit US-150.
642 Exhibit CDA-223.
643 Exhibit US-150.

because these animals are used primarily for breeding, rather than for producing muscle cuts of meat
subject to the COOL measure. 644 The United States submits that cows and bulls over 30 months of
age account for a large portion of Canada's exports to the United States.645
7.461 Canada files evidence from Agriculture and Agri-Food Canada 646 showing that the number of
Canadian animals imported into the United States, excluding animals for breeding, from 2006 to 2009
gradually increased until 2008, followed by a significant reduction in 2009.
 2006 2007 2008 2009
Imports of Canadian cattle
excluding animals for breeding
(Source: Agriculture and Agri-Food
Canada)647
1,031,767 1,402,172 1,557,910 1,054,596

7.462 Canada also submits statistics from US APHIS and the US Census Bureau to compare data
including and excluding cows and bulls. For that purpose, the information is subdivided into
slaughter cattle, a category potentially including cows and bulls over 30 months of age, and feeder
cattle imports:
648
 2007 2008 2009 2010
(Jan.-Aug.)
Imports of Canadian slaughter cattle
not including cows and bulls
(US APHIS)
840,015 644,360 523,635 418,864
Imports of Canadian slaughter cattle
not including cows and bulls
(US Census Bureau)
838,495 661,028 523,474 437,375
Imports of Canadian slaughter cattle
including cows and bulls
(US APHIS)
858,060 844,667 755,817 565,305
Imports of Canadian slaughter cattle
including cows and bulls
(US Census Bureau)
849,315 895,643 763,145 588,810
Imports of Canadian feeder cattle
(US APHIS) 539,090 607,919 274,003 158,785
Imports of Canadian feeder cattle
(US Census Bureau) 548,250 640,882 288,634 180,779

7.463 Based on the above data, we find that the main trend of imports of Canadian cattle is not
affected by whether cows and bulls are included or not. In fact, imports of slaughter and feeder cattle,
whether cows and bulls are included or excluded, follow the same general trend from year to year
under the US APHIS and US Census Bureau data. The only exception in the comparison is the data
on slaughter cattle including cows and bulls in 20 07 and 2008; APHIS figures, which follow the
trend shown in the other slaughter cattle data, decrease during that period, whereas US Census Bureau
data show an increase. Importantly, all the sources and data in the above table show a substantial
decrease in imports of Canadian cattle in 2009, wh ether it involves feeder or slaughter cattle, and

644 Canada's opening oral statement at the second substantive meeting of the Panel, para. 43.
645 United States' second written submission, para. 95.
646 Exhibit CDA-110.
647 Exhibit CDA-110.
648 Exhibit CDA-196.

whether or not the latter excludes cows and bulls. Be ing limited to the first eight months, the data for
2010 do not show a clear trend in the absence of data for the same period of previous years.
Imports of Mexican cattle into the United States
Overall imports from 2000 to 2009
7.464 From 2000 to 2009, Mexico exported to the Un ited States an average of approximately
1.1-1.2 million head of cattle per year.
649
7.465 The data presented by Mexico and the United States for the period starting in 2003 show a
similar trend in the development of import volum es of Mexican cattle into the United States.
Imports of Mexican cattle fluctuated between approximately 1,239,000 and 1,370,000 head during the
2003-2006 period.650 In 2007 the import volume decreased below 1,100,000 head of Mexican cattle,
with a further drop to 700,000 head in 2008. In 2009 the number of Mexican cattle imported into the
United States increased to 940,000.651
Imports of
Mexican cattle 2003 2004 2005 2006 2007 2008 2009
Data submitted
by Mexico
(US International
Trade
Commission)652
1,239,220 1,370,259 1,256,351 1,256,996 1,090,094 702,651 940,851
Data submitted
by the US
(US Census
Bureau)653
1,239,531 1,370,476 1,256,404 1,256,973 1,090,094 702,661 940,869

649 Mexico's first written submission, para. 114 and United States' first written submission, para. 108
(Exhibits MEX-36, 79, 104; US-28, table 13, US-150).
650 Exhibits MEX-36 and US-150.
651 Exhibits MEX-36 and US-150.
652 Exhibit MEX-36.
653 Exhibit US-150.

Imports during 2010
7.466 Mexico and the United States compare import volumes of Mexican cattle during the first
seven months of 2009 and 2010 on the basis of data from the Mexican Secretaría de Hacienda y
Crédito Público and the US Census Bureau, respectively. These figures show an increase in the
import volume of Mexican cattle between January and July 2010 with respect to the same period in
2009.
7.467 Mexico provides January-July data since 2007, which allows for a more thorough comparison
with the figures for the same period in 2010. Th is comparison shows that Mexican cattle imports
have increased during the first seven months of 2010 vis-à-vis the same period in all three previous
years.
Imports of
Mexican cattle
2007
(Jan.-Jul.)
2008
(Jan.-Jul.)
2009
(Jan.-Jul.)
2010
(Jan.-Jul.)
Data submitted
by Mexico654 583,829 421,266 496,214 648,143
Data submitted by
the United States655 478,694 628,817

7.468 The United States also provides US Census Bur eau data comparing the number of Mexican
cattle head imports from January to September of 2009 and 2010. Accordi ng to this data, import
volumes increased from 569,405 in the first nine months of 2009 to 737,644 in the same period of

654 Exhibit MEX-79.
655 Exhibit US-71.

2010.
656 This confirms the above upward trend from the relevant period of 2009 to the same period in
2010.
Canadian hogs
Overall imports from 2000 to 2009
7.469 Imports of Canadian hogs into the United States increased from 4.2 million head in 2000 to
approximately 4.7 million head in the first ten months of 2010657, peaking at approximately 10 million
head in 2007 658, with a continuous increase from 2000 to 2007. Imports of Canadian hogs slightly
dropped in 2008 and further declined in 2009.
7.470 Canada's statistics from Agriculture and Agri-Food659 and data submitted by the United States
from US APHIS and the US Census Bureau for th e period starting in 2005 provide further detail on
the evolution of imports of Canadian hogs. Although the data are not identical, they show an increase
in imports of Canadian hogs between 2005 and 2007, followed by a two-year decrease in 2008 and
2009.
Imports of Canadian
hogs 2005 2006 2007 2008 2009
Canada's Agriculture
and Agri-food660 8,647,391 9,894,930 9,270,268 6,306,919
US APHIS661 7,911,137 8,494,939 9,907,316 9,072,783 6,169,537
US Census Bureau662 8,190,467 8,763,378 10,004,317 9,347,951 6,364,553

Imports during 2010
7.471 Evidence submitted by the United States shows th at imports of Canadian hogs from January
to September 2010 remain slightly below the leve ls of the same period in 2009. Specifically, the
number of Canadian hogs imported into the Unite d States from January to September in 2009 was
4,892,846, compared to 4,332,342 during the same period of 2010.663
7.472 Canada provides further evidence showing that during the January-October period, imports of
Canadian hog reached 4,788,520. 664 However, Canada has not submitted comparable data for the
same ten-month period of calendar years preceding 2010.
Further data
7.473 Canada also submits data including figures for slaughter hog 665 and feeder hog imports, and
comparable data from US APHIS and the US Census Bureau. 666 This comparison shows that

656 Exhibit US-150.
657 Exhibits CDA-210 and US-151.
658 Canada's first written submission, para. 34 and United States' first written submission, para. 116
(Exhibits CDA-47, 49 and 111; US-28, table 10 and US-72).
659 The figures from Agriculture and Agri-Food Canada exclude Canadian breeding hogs imported into
the United States.
660 Exhibit CDA-111.
661 Exhibit US-28, Table 10.
662 Exhibit US-151.
663 Exhibit US-151.
664 Exhibit CDA-210.
665 The slaughter hog category includes sows and boars.

slaughter hog imports started decreasing in 2008, whereas feeder hog imports only dropped in 2009.
Being limited to the first eight months, the data for 2010 do not show a clear trend in the absence of
data for the same period in previous years.
 2007 2008 2009 2010
(Jan-Aug.)
Imports of Canadian slaughter hogs
(US APHIS)667 3,292,100 2,334,367 1,191,944 673,250
Imports of Canadian slaughter hogs
(US Census Bureau)668 3,174,415 2,234,238 1,085,480 641,126
Imports of Canadian feeder hogs
(US APHIS)669 6,602,321 7,065,734 5,099,259 2,962,822
Imports of Canadian feeder hogs
(US Census Bureau)670 6,736,221 7,055,529 5,246,057 3,143,804

(ii) Share of imported livestock in the United States
7.474 Overall, the share of Canadian and Mexican livestock in the United States has been small
between 2005 and 2010. Canadian cattle im ports as a share of US cattle slaughter 671 and Mexican

666 Exhibit CDA-196.
667 Exhibit CDA-196.
668 Exhibit CDA-196.
669 Exhibit CDA-196. US APHIS provides statistics both with and without an eight-week lag. The
figures provided in the table are the ones without an eight-week lag.
670 Exhibit CDA-196.
671 Exhibit CDA-46.

cattle imports as a share of US feed placements
672 during that period have been below 5% for each
category. Canadian hogs imported into the United States never exceeded a 10% share of US hog
slaughter between 2005 and 2009.
673
Cattle
Share of Canadian cattle imports in the United States
Overall share of Canadian cattle imports
7.475 The share of Canadian cattle imports to the United States has been small over the past decade.
On the basis of APHIS statistics, Canada submits information on the total im ports of Canadian cattle
as a share of US cattle slaughter, showing an upward trend from 2005 to 2008, followed by a drop in
2009.674
Source: US APHIS 2005675 2006 2007 2008 2009
Total imports of Canadian cattle
as a share of US slaughter676 0.016% 3.1% 4.2% 4.2% 3.1%

672 Exhibit US-86. This exhibit contains a chart showing the monthly fluctuations on imports of
Mexican feeder cattle as a share of US feed placemen ts. The Panel calculates the annual average from 2007 to
2009 on the basis of this information.
673 Exhibit US-86. This exhibit contains a chart showing the monthly fluctuations on imports of
Mexican feeder cattle as a share of US feed placemen ts. The Panel calculates the annual average from 2007 to
2009 on the basis of this information.
674 Exhibit CDA-46.
675 The low figure for 2005 is mostly due to the impor t restrictions of Canadian cattle imposed by the
United States between 2003 and 2005 because of Bovine Spongiform Encephalopathy (BSE) being detected in
Canada.
676 Exhibit CDA-46.

7.476 Canada and the United States have also submitte d figures on feeder and fed cattle as a share
of US feed placements and US slaughter placements, respectively. The data show that the share of
imports of Canadian feeder cattle compared to US feed placements increased from 2007 to 2008, but
dropped considerably in 2009.
Source: USDA/USDC 2007 2008 2009 2010
(Jan.-Aug.)
Imports of Canadian feeder
cattle as a share of US feed
placements (Canada)677
2.29% 2.71% 1.22% 1.14%
Imports of Canadian feeder
cattle as a share of US feed
placements (US)678
2.65% 3% 1.41%

7.477 The share of Canadian fed cattle compared to US cattle slaughter placements has steadily
decreased since at least 2008.
Source: USDA/USDC 2007 2008 2009 2010
(Jan.-Aug.)
Imports of Canadian fed cattle
as a share of US slaughter
(Canada)679
3.1% 2.4% 2% 2.4%
Imports of Canadian fed cattle
as a share of US slaughter
(US)680
2.54% 1.86% 1.73%

7.478 As regards the first eight months of 2010, data submitted by Canada indicates that the share of
Canadian feeder cattle dropped vis-à-vis 2009, while the share of Canadian fed cattle recouped to the
level of 2008.
Concerns raised by the parties
7.479 Canada and the United States disagree on two aspects of the methodological approach for
calculating the share of Canadian cattle and hog imports in the US livestock market: the choice of the
denominator and the unit of time.
7.480 As regards the denominator, the United States ar gues that "the import ratio that Canada uses
to illustrate market share uses the amount of U.S. slaughter or placements in any given year as the

677 Exhibit CDA-159.
678 Exhibit US-86. This exhibit contains two charts showing the monthly fluctuations on imports of
Canadian feeder and fed cattle as a share of US feed placements and US cattle slaughter, respectively.
The Panel calculates the annual average from 2007 to 2009 on the basis of this information.
679 Exhibit CDA-159.
680 Exhibit US-86. This exhibit contains two charts showing the monthly fluctuations on imports of
Canadian feeder and fed cattle as a share of US feed placements and US cattle slaughter, respectively.
The Panel calculates the annual average from 2007 to 2009 on the basis of this information.

denominator, and thus, captures larger trends in the U.S. market that have nothing to do with
Canadian imports".
681 Canada justifies this with the need to disregard market factors that do not have
a differential impact on imported livestock, such as a general increase in grain prices. 682 We note that
the United States did not provide any alternative methodology for calculating the shares, and its own
evidence uses the same denominator as Canada's. In any event, given the use of the same numerator
and denominator, the data allow for a useful comparison, irrespective of the parties' disagreement on
the denominator.
7.481 As regards the unit of time, the United States submits that the data presented by Canada
"is inappropriate because of the significant 'noise ' associated with using weekly data instead of
monthly data".
683 Accordingly, the United States presents estimates on the basis of monthly data.
Canada replies that "[b]y using monthly observations rather than weekly data from the U.S.-APHIS,
the United States reduces the size of the available data set and reduces the precision with which the
effects of the COOL measure may be measured". 684 Canada further submits that the statistics
prepared by US APHIS and the US Census Bureau are similar, with an expected variation attributable
to weekly data not aligning exactly with monthly data. 685 As explained above, the general trend
shown by both parties' data is quite similar, irrespective of the unit of time chosen.
Share of Mexican cattle imports in the United States
7.482 The share of Mexican cattle imports in the Un ited States has remained small over the past
decade. According to the United States, imports of Mexican cattle as a share of US slaughter have
represented between 3% and 5% from 2000 to 2009.686
7.483 Data submitted by the United States for the period between 2007 and 2009 show that imports
of Mexican feeder cattle as a share of US feed placements have fluctuated in the same range:687
Source: Department of
Commerce and USDA 2007 2008 2009
Imports of Mexican feeder
cattle as a share of US feed
placements
4.75% 3.6% 4.95%

681 United States' second written submission, para. 73.
682 Canada's opening oral statement at the second substantive meeting of the Panel, para. 49.
683 United States' second written submission, para. 74.
684 Canada's second written submission, para. 42.
685 Canada's opening oral statement at the second substantive meeting of the Panel, para. 43.
686 United States' first written submission, para. 108 (Exhibit US-28, Tables 5 and 13).
687 Exhibit US-86. This exhibit contains a chart showing the monthly fluctuations on imports of
Mexican feeder cattle as a share of US feed placemen ts. The Panel calculates the annual average from 2007 to
2009 on the basis of this information.

Canadian hogs
7.484 Canada provides data showing that total impor ts of Canadian hogs as a share of US hog
slaughter increased continuously between 2005 and 2007, followed by two consecutive years of
reduction:688
Source: US APHIS 2005 2006 2007 2008 2009
Total imports of Canadian
hogs as a share of US
slaughter
7.7% 8.3% 9.2% 7.8% 5.5%

688 Exhibit CDA-47.

7.485 Canada also submits more deta iled data showing that Canadian feeder hogs as a share of US
hog production 689 declined in 2009 and in the first eight months of 2010, and that the number of
Canadian slaughter hogs as a share of US hog sl aughter has been steadily decreasing since at least
2008:690
Source: USDA 2007 2008 2009 2010
(Jan.-Aug.)
Imports of Canadian feeder hogs
as a share of US hog production 4.9% 5% 3.6% 3%
Imports of Canadian slaughter
hogs as a share of US hog
slaughter
3.1% 2% 1.1% 1%

(iii) Costs of the COOL measure
7.486 As explained above, the COOL measure enta ils compliance costs, including segregation
costs.691 In fact, all parties agree on the existence of compliance costs associated with the introduction
of the COOL measure. However, parties' views differ on the extent of these costs. While Canada and
Mexico argue that the costs of segregation are signi ficant, the United States claims they remain small
thanks to the flexibilities contained in the COOL requirements.

689 Canada provides this information with and without an eight-week lag between the imports of
Canadian hog and total US hog production. According to Canada's response to Panel question No. 21, Canadian
hogs are approximately eight weeks older than the US pig crop as a whole. Therefore, argues Canada, in order
to compare the two groups of hogs with greater accuracy, it is necessary to use the eight-week lag. As an
example, Canada states that under this scenario Cana dian hog exports to the United States in week 9 are
compared to the US hog crop in week 1.
690 Exhibit CDA-159.
691 See paras. 7.330-7.372 above.

7.487 The structure of segregation costs can be comple x depending on whether the structure of the
supply chain is highly integrated and on consumers' willingness to pay a premium for country of
origin labelling. These costs have to be covered by some participants along the supply chain either by
setting a higher sale price or by imposing a discounted purchasing price. As a result, prices and
quantities are likely to be affected.
7.488 Besides affidavits indicating price discounts for imported animal and meat as a result of the
COOL requirements
692, Canada provides two economic studies on the segregation costs of the
COOL measure. The first one, prepared by Informa Economics 693 ("Informa Report") in June 2010,
assesses the implementation costs of the supply chai n in the United States. The second one is an
economic simulation model by Professor Sumner ("Sumner Simulation Study") published in
June 2010, which measures the impact of the C OOL measure on the willingness of operators along
the supply chain to pay for imported Canadian an imals based on the estimated segregation costs
provided by the Informa Report.
Informa Report
Summary of the study
7.489 The Informa Report provides a descriptive asse ssment of the costs associated with the
implementation of the 2009 Final Rule (AMS). It updates a previous assessment of the country of
origin labelling as established in the 2002 Farm Bill published in April 2003.
694 The report analyses
the US cattle and beef supply chain as well as th e hog and pork supply chain, by comparing two
supply chain configurations: production processes in volving only US-origin animals or mixed-origin
animals.
7.490 The Informa Report identifies various types of compliance costs of the COOL measure and it
provides figures suggesting that the costs under th e mixed origin configuration are substantially
higher than the ones associated with the supply chain configured to handle only US-origin products.
These costs flow from the adaptations which operators in the supply chain need to make to comply
with the COOL measure.
7.491 The Informa Report explains that the magnitude of these costs depends on the stage of the
supply chain and whether mixed-origin products are being processed. The segregation costs are
particularly high at the packer/processing and distribution/retail level for operators accepting
mixed-origin livestock and meat.
7.492 The Informa Report compares the estimated co sts under the 2002 Farm Bill and the costs
under the 2009 Final Rule (AMS) and finds that de spite the flexibilities under the latter instrument,
e.g. the possibility of commingling and the interc hangeable use of Labels B and C, operators
processing animals and products with mixed origin c ontinue to bear additional costs of segregation
and compliance compared with a supply chain configured to process only US-origin animals.
7.493 Based on an industry survey and an analysis of the retail meat sector, the Informa Report
concludes that the COOL measure had different cost impacts in the beef and pork sectors.
7.494 In the supply chain of cattle and beef, a large number of operators adopted a configuration
that can handle one or more of the labels desp ite high segregation costs associated with the use of

692 See para. 7.356 above.
693 Exhibit CDA-64.
694 Exhibit CDA-70.

animals and products of mixed origin. Concerns over long-term supply availability explain why
operators decided to bear the segregation costs. Slaughterhouses were aware that there might not be
enough US-born animals to satisfy a high utiliza tion rate necessary to ensure minimum production
costs and, thus, decided to handle both domestic and foreign-born cattle.
7.495 The Informa Report indicates that, unlike the b eef sector, the costs of segregation in the hog
industry are particularly complex and depend on the type of production configuration and the degree
of vertical integration. In fact, the Informa Report distinguishes between integrated hog production
and packer/processor, large scale production not in tegrated into the packer/processor, and small
independent hog producers. The report concludes that many operators in the hog and pork supply
chain opted to handle only US-origin hogs to avoi d large and complex segregation costs and, thus,
remain competitive.
Criticisms by the United States
7.496 The United States argues that the lack of tran sparency of the methodology of the Informa
Report calls into question the validity of the estimated costs presented by the report.
695 Further,
according to the United States, the Informa Re port failed to account for previously occurring
segregation and for the flexibilities provided by th e 2009 Final Rule (AMS). The Informa Report
suggests that no livestock imports should occur but this is rebutted by actual market trends.
Accordingly, the United States argues, the Informa Report overestimates the costs of compliance with
the COOL requirements.
7.497 In response, Canada submits a follow-up letter from the Vice President of Informa
Economics, explaining that the Informa Report is based on information gather ed from interviews and
firm-level cost data.696 The sensitive nature of the data and the confidentiality agreements with survey
participants explain why the sources cannot be di sclosed. According to the follow-up letter, the
Informa Report was able to distinguish between the costs associated with the COOL measure and
those occurring for other reasons like the BSE, other labels or export requirements. The flexibilities
provided for in the 2009 Final Rule (AMS) were also included in the cost estimates and explain why
some compliance costs decreased.
Analysis by the Panel
7.498 The Informa Report provides insights on how the different types of compliance and
segregation costs are allocated in the supply chain. The Report demonstrates that compliance costs of
the COOL measure faced by operators depend on a large number of determinants, including the
decision to process only US-origin or mixed-origin pr oducts, the stage of the supply chain, the size of
the firm, the geographical location of operators and the time of the year. The Report also shows that,
in general, COOL costs arise at every stage of the livestock and meat supply chain, and that these
costs increase as livestock and meat move downstream on the chain.
7.499 However, the Informa Report is silent on its methodology and the sample considered
(i.e. time period, geographical zone, number of firms surveyed). Accordingly, we cannot assess with
sufficient certainty whether the Informa Report is reliable and precise as regards its exact
quantification of the costs of the COOL measure.

695 Exhibit US-43.
696 Exhibit CDA-174.

Sumner Simulation Study
Summary of the Study
7.500 The economic simulation study undertaken by Professor Daniel A. Sumner 697 applies
economic reasoning to explain some of the descripti ve facts on segregation costs highlighted in the
Informa Report. In particular, Professor Sumner compares the situations with and without the
COOL measure, and develops an economic model of the US livestock sector (feeder pigs, fed hogs
and pork, feeder cattle, fed cattle and beef) to illust rate how the differential implementation costs of
the COOL measure are distributed among market pa rticipants through market forces. Like the
Informa Report, the Sumner Simulation Study consid ers operators that process either only US-origin
or mixed-origin animals. The Study presents the results of the economic model simulation which
assesses the reduction in the demand for Canadian lives tock, in terms of willingness to pay, following
the implementation of the COOL measure.
7.501 The Sumner Simulation Study lays down the economic competitive mechanism that explains
how the implementation of the COOL measure affect s Canadian cattle and hogs compared with US
domestic production. According to the Study, the competitive market pressure of the
COOL requirements starts at the end of the supply chain. Retailers who propose mixed-origin meat
need to sell this meat at a price at least equal or lower than the price of US-origin meat in order to
remain competitive with other retailers selling only US-origin meat. Yet, retailers selling mixed-
origin meat face additional labelling costs related to segregation by origin. According to the Study,
these additional costs cannot be passed on to custom ers, who can buy US-origin meat that does not
face segregation costs. Thus, the Study considers th at the only option for these retailers is to pay to
their suppliers, i.e. feeding operators and packers, a price for mixed-origin meat below the price paid
for US-origin meat. Faced with this market pressu re, the Study considers that feeding operators and
packers processing Canadian cattle and hogs are unable to pass their additional segregation and
compliance costs on to the retailer s or the suppliers of US cattle and hogs. In order to remain
competitive, the Study concludes that the only opti on for these operators is to either avoid using
imported feeder and fed animals or to request a lo wer import price for Canadian livestock and meat in
order to offset additional segregation and complia nce costs. In both cases, strong market pressure
leads most implementation costs of the COOL measure to be borne by livestock and meat
importers/suppliers through a reducti on of Canadian imports and/or price. Since Canadian livestock
already represented a small share in the US market before the implementation of the COOL measure,
and the switch to only US-origin products can be done at little or no cost, the Study expects the
reduction of Canadian imports and/or price to be significant.
698
7.502 The Sumner Simulation Study proceeds with the derivation of a mathematical representation
of the economic competitive mechanisms. In order fo r the model to remain tractable and to limit the
number of equations involved, Professor Sumner introduces several assumptions to define the
relationship of market forces in the supply chai n and to isolate the changes caused by the
implementation of the COOL requirements. Ulti mately, the economic model depends on a set of
parameters representing the market shares, the techni cal mark-up (i.e. difference between the cost and
the selling price of the product) and the costs of segregation. To quantify the impacts of the

697 Professor Daniel A. Sumner is Director of the University of California Agricultural Issues Center
and the Frank H. Buck Jr. Professor in the Department of Agricultural and Resource Economics, University of
California, Davis.
698 Similar economic reasoning is described in a spring 2003 economic study provided by Mexico
(cf. Exhibit MEX-88). This study assesses the implemen tation costs associated with the 2002 Farm Bill based
on two methods of implementation: a "certification with an audit" or a "traceback" system. We are not
reviewing this study.

COOL measure at each stage of the supply chain, the model is then simulated by introducing data
from the Informa Report, USDA and Statistics Cana da. The results of the Study show how the
implementation of the COOL requirements, thr ough market forces, leads to a reduction of the
willingness to pay by the operators along the supply chain for given quantities of Canadian cattle and
hogs
Criticisms by the United States
7.503 The United States questions the accuracy of the simulated figures of the Study, since it relies
extensively on data from the Informa Report, which, according to the United States, lacks
transparency and relies on a model based on too restrictive and unrealistic assumptions.
699
For instance, according to the Unite d States, the Sumner Simulation Study failed to account for the
increase in the cost of procuring cattle resulting from the switch to a US-only process. 700 Fu r t h e r ,
according to recent trade data, the United States cont inues to import Canadian and Mexican livestock,
which suggests that the additional costs resulting from the COOL measure are being absorbed.701
7.504 The US criticisms relating to the use of the Informa Report are addressed by Canada in the
follow-up letter from the Vice President of Informa Economics.702 However, Canada does not address
in detail the United States' criticisms relating to the assumptions of the model in the Sumner
Simulation Study.
Analysis by the Panel
7.505 As explained in the Sumner Simulation Study, the simulation results cannot be viewed as
projections of market price outcomes. Rather, the study provides an example of how demand for
imported products compared to demand for US-o rigin products could be affected by the
COOL measure at each stage of the supply chain. Although it is reasonable to expect that operators
processing only US-origin products face lower complian ce costs of COOL, it is extremely difficult to
draw reliable conclusions from the Sumner Si mulation Study as regards the precise level of
segregation costs and their specific impact on price and quantities. In fact, the economic model
derived by Professor Sumner is a simplificati on to illustrate the complex economic mechanism
underlying the impact of the COOL measure, whic h by definition introduces additional uncertainty
into the estimated figures.
Conclusion on the Informa Report and the Sumner Simulation Study
7.506 Although we cannot rely directly on the figures included in the Informa Report and the
Sumner Simulation Study, both studies shed some light on the different types of segregation and
compliance costs encountered at different stages of the supply chain. Given that these costs have to
be borne somewhere in the system, it all comes down to economic competition pressure. The Sumner
Simulation Study shows how market-force mechanisms allocate these costs along the supply chain.
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. The other possib ility is to continue processing imported livestock
through segregation, which entails additional costs in virtually all cases. Either process configuration
is likely to cause a decrease in the volume and price of imported livestock.

699 See Exhibit US-43; United States' first written submission, para. 188; and United States' second
written submission, para. 91.
700 See Exhibit US-43.
701 See Exhibit US-43.
702 See Exhibit CDA-174.

(iv) Whether the COOL measure had a negative and significant impact on imported Canadian
livestock volumes and prices
Introduction
7.507 Canada and the United States also submit eco nometric analyses to determine if the
implementation of the COOL measure affected prices and shares of imported livestock.
7.508 As discussed above, the economic analyses submitted by Canada and the United States cannot
be relied upon exclusively in order to establish whether any negative trade and economic effects are
attributable specifically to the COOL measure. We have found that these descriptive analyses have
shortcomings both in terms of the reliability of the underlying data and in the methodological
approach. Although tables and graphs provide some insights, making an inference of the impact of
the COOL measure based solely on this type of in formation can be misleading or inaccurate. This is
because, as the United States argues, many factors can explain the evolution of market shares and
prices, including the general economic situation, a specific event (e.g. BSE), seasonal effects, changes
in transportation costs, fuel prices and livestock i nventories, and exchange ra te fluctuations. Failing
to consider and give proper weight to these factor s would invalidate any conc lusions with regard to
whether any negative effects on the price and shar e of imported livestock are attributable to the
COOL measure. This is particularly important because the COOL measure started to develop its
effect in 2008, shortly after the US economic recession started in December 2007.703
7.509 Unlike descriptive analyses, econometric studies are able to isolate and quantify the different
factors at play. Specifically, the econometric appr oach permits a distinction and assessment of the
impact of the COOL measure, economic recession and other determinants on the quantity and price of
imported livestock. To be accurate, the assessment of the estimated causal relationship between two
given variables should rely on the level of statis tical significance. Statistical significance provides
information on the degree of confidence and reliability of the estimated value of each parameter.
7.510 The level of significance is important because th e sign of the estimated coefficient of the
variable is not sufficient to interpret the empi rical results. Technically speaking, statistical
significance is a mathematical t ool to assess the probability that the relationship between specific
variables (for instance the impact of the COOL m easure on the import share or price basis) is the
result of chance. 704 Typically, a variable is said to be st atistically significant when there is a 95%
probability that the coefficient of a given variable (for instance the COOL measure) is different from
zero. Conversely, there is only a 5% probability that the value of the estimated coefficient is due to
chance or random error. The 95% probability has been widely adopted to accept or reject the
reliability of estimates.705
7.511 In order to infer any conclusion on the empirica l estimates, the results should also remain
qualitatively similar to a series of robustness checks, such as the inclusion of additional explanatory
variables or the extension of the time period.
General observations on the econometric studies submitted by Canada and the United States
7.512 Both Canada and the United States submitted an econometric study to assess the impact of the
COOL measure on the imports of Canadian cattle as a share of US feed or slaughter placements and
on the price difference between imported Canadi an and US livestock (also known as the "price

703 Exhibit US-156.
704 R.A. Fisher, Statistical Methods for Research Workers, 1st ed. (Oliver & Boyd, 1925).
705 R.A. Fisher, Statistical Methods for Research Workers, 1st ed. (Oliver & Boyd, 1925).

basis"). In addition, the econometric study submit ted by Canada also analyses the impact of the
COOL measure on the imports of Canadian hogs as a sh are of US feed or slaughter placements. Both
econometric studies are based on an equation, where the dependent variable, namely the import ratio
or the price difference, is a function of several e xplanatory variables and an error term. The error
term reflects the fact that the model does not fully represent the actual relationship between the
dependent variables and the explanatory variables. In other words, all the factors not explicitly
controlled in the model specification are included in what is called the error term. The estimation in
the two econometric studies submitted by Canada and the United States consists of minimizing such
error term.
7.513 Although the econometric studies submitted by Ca nada and the United States estimate the
same types of impact of the COOL measure, they reach different conclusions. Since both studies rely
on the same standard estimation method (i.e . so-called "ordinary least squares method"
706), these
opposite estimates result from the us e of different types of data (weekly or monthly), time period and
model specifications. It is not our task to establish a unified econometric report or to conduct our own
econometric assessment; instead we will assess the robustness of each study.
Summary of the Sumner Econometric Study submitted by Canada
Main findings of the Sumner Econometric Study
7.514 The econometric study prepared by Professor Sumner on behalf of Canada
("Sumner Econometric Study") is composed of two elements: a theoretical economic model and an
empirical econometric study.707
7.515 The theoretical economic model part of the Sumner Econometric Study derives a partial
equilibrium model of the impact of the COOL m easure on the US market for Canadian fed cattle,
feeder cattle, fed hogs and feeder pigs. The partial equilibrium nature of the model implies that the
impact of the COOL measure in a given market, in this case the US market, is analysed independently
from prices and quantities demanded and supplied in ot her markets, e.g. the Canadian market. The
model suggests that, under perfect competition, the impact of the implementation of the
COOL measure will depend on the price elasticity of Canadian import suppl y, which corresponds to
the responsiveness of the import quantity to a change in the import price. Based on the actual market
conditions determining the price elasticity of th e cattle and hog sectors, the Sumner Econometric
Study concludes that the implementation of the COOL measure is more likely to lead to a decrease in
Canadian imports than to a price reduction. The Sumner Econometric Study expects a significant
price reduction only in the US fed cattle market. These theoretical findings are used by Professor
Sumner to interpret the empirical findings of the econometric model.
7.516 The second part of the Sumner Econometric Stud y estimates empirically the impact of the
COOL measure on the share of Canadian cattle and hogs relative to US feed or slaughter placements
and price basis based on weekly data. Unlike a th eoretical model, this econometric model does not
rely on any specific assumptions on market structure and consumer or producer behaviour. The study
performs its econometric estimations separately for the US fed cattle, feeder cattle, fed hogs and
feeder pigs markets for the period between September 2005 and September 2009. The impact of the
COOL measure is represented by a so-called dummy variable, which is an indicator variable that
takes the value of zero before the implementation of the COOL measure and one afterwards to
represent its existence in the model.

706 William H. Greene, Econometric Analysis, 5th ed. (Prentice Hall, 2000), pp. 19-38.
707 Exhibits CDA-64, 174.

7.517 The empirical findings suggest that the COOL measure did have a negative and significant
impact on the import share of Canadian livestock and the price basis of Canadian fed cattle. In other
words, the introduction of the COOL measure seem s to have reduced significantly the share of
imports of Canadian cattle and hogs as well as the price of Canadian fe d cattle with respect to the US
livestock. These results suggest th at in the absence of the COOL measure and all other things being
equal, the price basis for Canadian fed cattle w ould have been smaller and the import share of
Canadian cattle and hogs would have been higher. The evidence of a negative impact of the
COOL measure on the price basis is partially in lin e with the empirical findings provided by another
econometric study from CanFax submitted by Canada.708
Criticisms by the United States
7.518 The United States raised some concerns relating to certain aspects of the Sumner Econometric
Study, which in their view invalidate the study's main findings. 709 Besides the issues related to the
choice of the denominator of the import share 710 and the unit of time (monthly instead of weekly) 711,
the United States questioned the use of a redu ced form model to determine whether the
COOL measure had price and export effects given the complexity of the North American livestock
market. In particular, the United States argued that the Study yields misleading results because it fails
to account for important factors unrelated to the C OOL measure, such as exchange rate fluctuations,
changes in livestock inventories, transport costs and fuel prices. Further, the United States argued that
the negative impact established by the Study is at tributable to economic recession and not to the
COOL measure. The United States added that the Study fails to address the BSE period between
2003 and 2005 and the long-term structural change until November 2007, when imports of Canadian
cattle over 30 months were allowed again. As a result, according to the United States, the conclusions
reached by the Sumner Econometric Study are unreliable and misleading.
Canada's response
7.519 Although Canada argues that the US criticisms are unfounded, in response to these criticisms,
Canada updates its econometric analysis to include more recent data and account for transport costs.712
Since these updated empirical results remain qualitativ ely similar to the initial estimates, Canada
argues that the impact of the COOL measure con tinues to be negatively significant on import share
and price basis. 713 Canada further claims that the Sumner Econometric Study already takes into
account pre-existing trends relating to inventories. 714 More generally, Canada argues that the
inclusion in the model specification of variables th at are affected by the COOL measure/requirements
(i.e. endogenous variables) would be a mistake.715
7.520 Regarding the impact of economic recession, Cana da agrees that this can have an effect on
livestock demand in North America. Canada claims , however, that the United States failed to provide
any arguments to explain why economic recession woul d affect differentially Canadian imports with
respect to US production.716

708 Exhibit CDA-114.
709 Exhibit US-43.
711 United States' response to Panel questions following the second substantive meeting, paras. 45-46.
See para. 7.481 above.
712 Exhibit CDA-152.
713 Canada's opening oral statement at the first substantive meeting of the Panel, para. 37.
714 Canada's opening oral statement at the second substantive meeting of the Panel, para. 36.
715 Canada's opening oral statement at the second substantive meeting of the Panel, para. 52.
716 Canada's opening oral statement at the first substantive meeting of the Panel, para. 44.

7.521 Canada explains that the Sumner Econometric Study deliberately does not consider the BSE
period (2003-2005), because the integration of the Canada-US cattle market temporarily suffered
structural disruption during that period. However, Canada points out, the Study takes into account the
effects of BSE through a 0-1 indicator variable fo r the fact that between July 16, 2005 and November
19, 2007 imports of Canadian cattle over 30 months were banned.
717
Further updates of the Sumner Econometric Study
7.522 Canada submits a further updated version of the Sumner Econometric Study which addresses
economic recession and BSE more extensively. 718 The period analysis was accordingly extended
from December 2003 to November 2010 to include th e 2003-2005 BSE period a nd more recent data,
explicitly including a dummy variable equal to one until November 2007 and zero afterwards to
account for the import ban on cattle over 30 months. Economic recession is also included in the
updated model specification either through a 0-1 indicat or variable or the relative unemployment ratio
between Canada and the United States.
7.523 Canada argues that these further updated resu lts are robust and qualitatively similar to the
estimates of the original Sumner Econometric Study. In particular, the impact of the COOL measure
remains negative and significant after controlling for economic recession that started a few months
prior to the entry into force of the COOL measure . Although not always significant, BSE reduced the
Canadian import share and increased the price basis. More generally, despite economic recession, the
updated results suggest that prices and quantities of imported Canadian liv estock would have been
higher in the absence of the COOL measure.
7.524 Canada subsequently provides another set of estimates, where the import shares and price
basis are based on monthly data. 719 In most specifications, the impact of the COOL measure on price
and import quantities of Canadian livestock is negati ve and significant. According to Canada, these
findings confirm that the COOL measure affected the conditions of competition for Canadian
livestock in the US market in a negative and significant manner.
7.525 According to the United States, the adjustme nts undertaken in these further updates of the
Sumner Econometric Study do not address the flaws of the econometric model contained in the
original Sumner Econometric Study. In particular, the use of the unemployment ratio is not adequate,
because it does not capture the impact of the economic recession on the labour market
720; in addition,
it is often a lagging indicator of the economic activity. The United States also questions how weekly
unemployment rates were computed by these furthe r updates. Instead, the United States proposes to
consider overall trade in agriculture commodities as a measure of economic recession.
721
7.526 Regarding BSE, the United States argues that the period during the BSE-related US import
ban cannot be considered as normal or representative to undertake any analysis of the trade effects of
the COOL measure on the US market.722 Consequently, the United States rejects these new results.723

717 Canada's opening oral statement at the first substantive meeting of the Panel, para. 45.
718 Exhibit CDA-174.
719 Exhibit CDA-228
720 United States' comments on Canada's response to Panel questions following the second substantive
meeting, paras. 28-30.
721 United States' comments on Canada's response to Panel questions following the second substantive
meeting, para. 30.
722 United States' comments on Canada's response to Panel questions following the second substantive
meeting, paras. 32-33.

Summary of the USDA Econometric Study submitted by the United States
Main findings of the USDA Econometric Study
7.527 The United States argues that, as the respondent, it need not develop a competing econometric
model.724 Yet, the United States submits an alternativ e econometric study prepared by the Office of
the Chief Economist of USDA ("USDA Econometric Study"). 725 Unlike the Sumner Econometric
Study, the USDA Econometric Study only focuses on th e Canadian and Mexican fed and feeder cattle
import markets. The period of analysis covers July 2003 to April and May 2010 for import shares and
for price difference, respectively. Further, the USDA Econometric Study provides estimates using
data between January 199 7 and April/May 2010. Although the USDA Econometric Study considers
the same definition of the import share and price basis as the Sumner Econometric Study, it calculates
the import quantity share and price basis on monthly, not weekly data. Further, the USDA
Econometric Study includes additional explanatory variables (e.g. gasoline prices) in the model
specification not present in the initial Sumner Econ ometric Study. Nonetheless, the United States
follows the same approach as the Sumner Econometri c Study and also represents the impact of the
COOL measure as a 0-1 indicator variable.
7.528 Nonetheless, the USDA Econometric Study reaches different conclusions from the Sumner
Econometric Study regarding the impact of the COOL measure on the import ratio and the price basis
between imported Canadian and domestic US lives tock. On the one hand, the USDA Econometric
Study finds that in some specifica tions the impact of the COOL measure on the price basis is positive
and significant. This suggests that the COOL me asure reduced the price gap between the Canadian
and US livestock. The United States attributes this to the substitution effect in the US market from
more expensive high-grade US meat (Choice) to lo w-grade Canadian meat (Select) resulting from the
economic recession.
726 The higher demand for Canadian livestock led to an increase in its price and a
decrease in the price of US cattle. As a result, according to the USDA Econometric Study, the price
difference between Canadian and the US livestoc k decreased following the implementation of the
COOL measure.
7.529 The empirical results of the USDA Econometric Study indicate that there is a negative but not
significant impact of the COOL measure on the import ratio of Canadian livestock. Since this impact
is not significantly different from zero, the United St ates infers that the COOL measure had no impact
on Canadian imports. In addition, the United States argues that when the COOL variable is replaced
by an economic recession dummy variable in th e model specification, economic recession has a
significant negative impact on the import share in some specifications. This result, argues the
United States, corroborates its claim that the econo mic recession was the main determinant in any
decline in import shares.
7.530 With respect to the hogs sector, the USDA Econometric Study concludes, without providing
an econometric analysis, that the main factor e xplaining the reduction in Canadian imports is the
decline in Canadian hog inventories which began be fore the implementation of the COOL measure.
The United States claims that this factor is so strong that no econometric analysis is needed to explain
the drop in Canadian hog imports.

723 United States' comments on Canada's response to Panel questions following the second substantive
meeting, para. 34.
724 United States' response to Panel questions following the second substantive meeting, para. 35. See
also para. 7.518 above.
725 Exhibits US-42 and 149.
726 United States' response to Panel questions following the second substantive meeting, para. 49.

Canada's criticisms
7.531 Canada argues that the USDA Econometric Study has failed to address the criticisms
formulated by the United States against the Sumner Econometric Study.
727 In particular, the use of a
constant measure of economic recession, such as the dummy variable, in the USDA Econometric
Study is not appropriate, because the economic recession and its recovery fluctuate over time. 728
In addition, Canada claims that the USDA Ec onometric Study relies on a misdefined recession
dummy variable, which continues to take the value of one after the end of the economic recession in
June 2009. With respect to BSE, Canada clai ms that including the BSE period in the USDA
Econometric Study is inappropriate because the structural disruptions are associated with a large price
basis and zero import shares. 729 Canada also criticises the use of a single variable to account for the
full range of structural changes resulting from the BSE-related import ban.730
7.532 Further, Canada argues that the USDA Ec onometric Study relies on the wrong index to
measure transport costs. Instead of representing the transport costs faced by producers with the
"Producer Price Index for Trucking", the United States considers the "Consumer Price Index for
Transportation", which includes amounts paid by consumers for new cars, parking fees, airline fares
and tickets for public transport. Accordingly, Canada argues that the USDA Econometric Study
applies a wrong economic analysis.731
7.533 Turning to the hog analysis in the USDA Econometric Study, Canada rejects the gradual
decline in hog inventories in Canada as the sole explanation of the drop in Canadian hog imports. 732
Canada notes that while the decline in hog inventories began in 2005, Canadian hog imports increased
before the implementation of the COOL measure. In fact, the drop in Canadian hog imports in levels
and as a percentage of US slaughter began in 2008, at the same time as hog inventories in the
United States started to decrease.
The United States' response
7.534 The United States responds that the aim of the USDA Econometric Study was not to address
the flaws of the Sumner Econometric Study, but ra ther to demonstrate how the inclusion of more
relevant variables produced contradictory results.
733 More generally, the United States claims, the
estimation of a "reduced form model", where a system of equations (i.e. demand and supply) is solved
to express the endogenous variable (import share or price basis) as a function of explanatory
variables, is not appropriate, because the results associated with the "reduced form model" depend
mostly on the variables chosen. Moreover, a larg e number of variables are necessary to quantify any
potential effects with a sufficient level of confidence.
7.535 The United States argues that the decision to om it the empirical econometric analysis of the
hog sector from the USDA Econometric Study is based on the specific characteristics of the Canadian
hog sector. Besides the decline in Canadian hog inventories, the United States notes that the
Canadian hog price is based on the US price, thus there is not a unique "Canadian hog price" per se.
734

727 Canada's opening oral statement at the second substantive meeting of the Panel, para. 39.
728 Canada's opening oral statement at the first substantive meeting of the Panel, para. 44.
729 Canada's comments on the United States' response to Panel questions following the second
substantive meeting, para. 15.
730 Canada's opening oral statement at the first substantive meeting of the Panel, paras. 45-46.
731 Canada's opening oral statement at the first substantive meeting of the Panel, para. 47.
732 Canada's opening oral statement at the second substantive meeting of the Panel, para. 35.
733 United States' response to Panel question No. 106.
734 United States' response to Panel questions following the second substantive meeting, para. 51.

Updated USDA Econometric Study
7.536 The United States provided an updated version of the USDA Econometric Study in response
to questions from the Panel. 735 In the updated study the United States considers the same period of
analysis and specification but includes the COOL and economic recession variables at the same time.
7.537 In this modified specification, the impact of the COOL measure and economic recession are
no longer significant when both variables are included at the same time in the model specification.
The United States explains that it initially did not introduce both variables in the same specification
because the overlap between the COOL measure a nd the period of economic recession would lead to
multicollinearity.
736 (Multicollinearity arises when two or more explanatory variables convey the
same information.) According to the Un ited States, although ec onomic recession and
COOL variables represent two different events, both variables are expressed as a 0-1 indicator. The
economic recession variable takes a value of 1 af ter December 2007, while the COOL variable is
equal to 1 after August 2008. Therefore, argues the United States, the only difference between the
two variables is the value of 1 taken by the ec onomic recession variable between January and August
2008. In the presence of multicollinearity, the pred ictive power of the model remains unchanged, but
the confidence interval of the estimated coeffici ents of the variables subject to multicollinearity
becomes larger. As a consequence, the United States contends, the estimation of the impact of the
COOL measure and economic recession variables become less accurate.
7.538 According to Canada, multicollinearity is not a significant issue because the dates of the
economic recession and the implementation of the C OOL measure do not match exactly. Further, the
Sumner Econometric Study did not suffer from any multicollinearity with respect to the two dummy
variables.
737
Analysis by the Panel
7.539 As already explained, the econometric studies submitted by Canada and the United States rely
on different data and methodology, and it is not our task to establish a unified econometric report or to
conduct our own econometric assessment. Inst ead, we examine the robustness of each study
separately.
7.540 We consider that the Sumner Econometric Study is sufficiently robust for several reasons.
First, the empirical evidence of a significant negativ e impact of the COOL measure is robust due to
the inclusion of additional explanatory variables such as transport costs, the BSE import ban and
economic recession. Second, the use of a dummy variable and the unemployment ratio for measuring
the economic recession confirms that the findings ar e independent of the definition of the economic
recession variable. Third, the dynamic specification of the model through the inclusion of the lagged
dependent variable (i.e. import shares or price basis) reduces any variable omission bias, such as
changes in inventories. Fourth, the use of weekly data increases the sample size and thus reduces any
multicollinearity between the COOL and the economic re cession variables. Fifth, the inclusion of the
BSE period and the recovery period from economic recession confirms that the evidence of the impact
of the COOL measure is not specific to a given analysis period.
7.541 Overall, the updates to the Sumner Econometri c Study and Canada's responses to questions
from the Panel and to criticisms by the United Stat es improve the soundness of the Study's findings,

735 Exhibit US-149.
736 United States' response to Panel questions following the second substantive meeting, para. 42.
737 Canada's comments on the United States' response to Panel questions following the second
substantive meeting, para. 14.

namely that the COOL measure had a negative a nd significant impact on Canadian import shares and
price basis. In fact, the vast majority of th e 103 estimated equations provided in the Sumner
Econometric Study indicate a negative and significant co efficient of the COOL variable. Therefore,
the impact of the COOL measure h as been properly defined. As a result, the COOL measure still has
a negative and significant impact even if other, distinct factors may positively affect Canadian imports
and prices.
7.542 Accordingly, the Sumner Econometric Study makes a prima facie case that the
COOL measure negatively and significantly affected the import shares and price basis of Canadian
livestock.
7.543 Conversely, the USDA Econometric Study lacks sufficient robustness both taken on its own
and in comparison with the Sumner Econometric Stud y. In fact, the 13 estimated equations for the
cattle analysis do not show sufficient consistency to reach a robust conclusion. According to the
USDA Econometric study, the COOL variable and its impact are never significant. However, the
impact of economic recession is only negative a nd significant in a limited number of specifications
and even in those cases only at a relatively low level of precision, i.e. at a 90% instead of the usual
95% level of confidence. This means that the USDA Econometric Study does not provide a
sufficiently robust explanation that any negative imp act is attributable to economic recession rather
than to the COOL measure. In addition, any finding of the USDA Econometric Study with regard to
the economic recession variable and its impact is called into question by potential multicollinearity,
which the study failed to address.
7.544 As regards hogs, the USDA Econometric Study me rely refers to certain features of the hog
market, i.e. US-based pricing and Canadian hog's i nventory decline, but this cannot substitute for a
proper and robust econometric analysis.
7.545 Hence, the USDA Econometric Study does not rebut the prima facie case for a negative and
significant COOL impact established by the Sumner Econometric Study.
7.546 This significant and negative impact of the COOL measure demonstrated by the Sumner
Econometric Study, and not refuted by the USDA Econometric Study, concurs with our finding that
the COOL measure, in particular in regard to mu scle cuts, accords less fa vourable treatment within
the meaning of Article 2.1 of the TBT Agreement.
(d) Conclusion on the complainants' claims under Article 2.1 of the TBT Agreement
7.547 We have found above that the complainants have demonstrated that the COOL measure fulfils
all three elements of the legal test under Article 2.1 of the TBT Agreement.
7.548 Accordingly, we conclude that the COOL measure , in particular in regard to muscle cuts,
violates Article 2.1 of the TBT Agreement.
3. Article 2.2
(a) Legal framework for the analysis of the complainants' claim under Article 2.2
7.549 Article 2 sets out certain obligations that th e WTO Members must respect in preparing,
adopting or applying technical regulations. Article 2.2 provides:
"Members shall ensure that technical regula tions are not prepared, adopted or applied
with a view to or with the effect of creating unnecessary obstacles to international

trade. For this purpose, technical regulations shall not be more trade-restrictive than
necessary to fulfil a legitimate objective, taking account of the risks non-fulfilment
would create . Such legitimate objectives are, inter alia : national security
requirements; the prevention of deceptive practices; protection of human health or
safety, animal or plant life or health, or the environment. In assessing such risks,
relevant elements of consideration are, inter alia: available scientific and technical
information, related processing technology or intended end-uses of products."
(emphasis added)
7.550 The complainants' claim under Article 2.2 raises an initial question on the legal test to be
applied in assessing the COOL measure's compliance with the specific obligations therein. We
observe that we do not have the benefit of prior panels' or the Appellate Body's analysis on this
question.738
7.551 We understand, and the parties agree, that the first sentence of Article 2.2 sets out a general
principle, namely not to create unnecessary obstacles to international trade. The Preamble of the
TBT Agreement confirms this understanding: The 5 th recital in the Preamble states, "Desiring
however to ensure that technical regulations ... marking and labelling requirements, ... do not create
unnecessary obstacles to trade". This principle is also reflected in Article 2.5: "[W]henever a
technical regulation is prepared, adopted or appl ied for one of the legitimate objectives explicitly
mentioned in paragraph 2, and is in accordance with relevant international standards, it shall be
rebuttably presumed not to create an unnecessary obstacle to international trade".739
7.552 We consider, and the parties further agree, that the conformity of a measure with the general
principle reflected in the first sentence of Article 2. 2 must be established based on the elements of the
second sentence.740 In other words, the second sentence expl ains what the first sentence means. As
the parties observe, the phrase "[f]or this purpose" introducing the second sentence indicates that the
second sentence explains the meaning of the general pr inciple reflected in the first sentence by laying
down the specific obligation that Members must observe.741 We will therefore focus on the content of

738 Although Article 2.2 of the TBT Agreement was pr esented as a claim in several previous disputes,
neither those panels nor the Appellate Body had the opp ortunity to provide a substantive analysis of the
provision. For example, the panel in EC – Trademarks and Geographical Indications (Australia) was presented
with a claim under Article 2.2, but did not proceed with a substantive analysis of the claim because the measure
in question was found not to be a technical regulation within the m eaning of Annex I.1 of the TBT Agreement.
See also EC – Asbestos, EC – Sardines, and EC – Approval and Marketing of Biotech Products.
739 The fact that Article 2.5 refers only to the langua ge in the first sentence of Article 2.2 supports our
understanding that the first sentence embodies the general principle of the obligation under Article 2.2. In our
view, interpreting the first sentence of Article 2.2 as embodying a separate obligation would be incongruous
with Article 2.5, which serves as context, for it wo uld mean that the rebuttable presumption of compliance
prescribed under Article 2.5 is applicable only with re spect to the first sentence of Article 2.2. We do not
consider this to be a reasonable interpretation, especia lly given that the second sentence starts with the words
"For this purpose", referring back to the objective in th e first sentence of not creati ng unnecessary obstacles to
international trade.
Article 12.3 also contains a clause reflecting this general principle under Article 2.2: "Members shall,
... take account of the special development, financial an d trade needs of developing country Members, with a
view to ensuring that such technical regulations, standards and conformity assessment procedures do not create
unnecessary obstacles to exports from developing country Members." (emphasis added)
740 Parties' responses to the Panel question No. 51.
741 The European Union considers that there is a connection between th e first and the second sentences
of Article 2.2 of the TBT Agreement by the use of the term "[f]or this purpose" (European Union's third party
written submission, para.54). Australia also considers that the second sentence of Article 2.2 explains what the
first sentence means (Australia's third party written submission, para. 66).

the second sentence to derive a lega l framework necessary for the analysis of the complainants' claim
under Article 2.2.
7.553 The second sentence of Article 2.2 reads as follows: "[f]or this purpose, technical regulations
shall not be more trade-restrictive than necessary to fulfil a legitimate objective, taking account of the
risks non-fulfilment would create". The text of th e second sentence sets out an obligation that can be
parsed into several elements, each of which we discuss below. Our approach to reviewing the
COOL measure's compliance with the obligation unde r the second sentence of Article 2.2, as outlined
below, reflects to a certain extent the manner in wh ich the parties framed their arguments in light of
the facts peculiar to this dispute. While the oblig ation contained in the second sentence of Article 2.2
remains the same in all cases, we do not consider that the analysis of these elements needs to be
structured and organized in the same manner for every situation.
7.554 In this case, all parties agree that a complainan t must first demonstrate that a given technical
regulation is trade-restrictive.
742 We agree. It is self-evident that a measure must be "trade-
restrictive" in some way in order to be "more trade-restrictive than necessary".
7.555 If the technical regulation is found to be trade-r estrictive within the meaning of Article 2.2,
logically, the next step of the analysis under the second sentence will be to identify the objective
pursued by the technical regulation in question a nd examine its legitimacy within the meaning of
Article 2.2.
7.556 Subsequently, if we determine that the objectiv e of that technical regulation is legitimate
within the meaning of Article 2.2, we will address the question whether the technical regulation fulfils
the identified objective.743
7.557 If the answer is in the affirmative, we would th en proceed with an examination of whether the
technical regulation in question is not more trad e-restrictive than necessary to fulfil the objective
concerned. This would entail an analysis of th e availability of less trad e-restrictive alternative
measures that can equally fulfil the objective, taking into account the risks non-fulfilment would
create.
7.558 In the present dispute, the complainants argue that the COOL measure is inconsistent with
Article 2.2 because it fails to meet the requireme nts under the second sentence. As confirmed by the
Appellate Body in EC – Sardines , the burden of establishing a prima facie case for a measure's
inconsistency with Article 2.2 rests with the complainants.744 Therefore, based on the elements of the

742 In response to Panel question No. 52, the United St ates emphasizes that the trade-restrictiveness of
the measures at issue is a threshold matter that the compla inants must first establish and that if the measures are
not trade-restrictive, they will not breach a Member's obligations under Article 2.2.
743 The parties agree that the starting point is wh ether the technical regulation at issue fulfils a
legitimate objective, which is an analytical step require d to examine whether that t echnical regulation is more
trade-restrictive than necessary. The United States in particular explains that it is appropriate to analyse whether
the measure in question fulfils a legiti mate objective first because an analys is of "more trade-restrictive than
necessary", which often includes a consideration of the existence of alternative measures, would not be possible
without first establishing the responding party's objectiv e. Further, according to the United States, "taking
account of the risks non -fulfilment would create" in Article 2.2 is an element considered by Members in
determining the appropriate level for the particular legitimate objective at issue.
744 The Appellate Body confirmed that the same principle on the burden of proof that applies under
other WTO covered agreements is equally applicable in the context of the TBT Agreement. See the Appellate

second sentence of Article 2.2 as hi ghlighted above, we will review in this section whether the
complainants have established the following:745
 The COOL measure is trade-restrictive within the meaning of Article 2.2;
 The objective pursued by the United States through the COOL measure is not legitimate; and
 If the objective is legitimate, the COOL measure is more trade-restrictive than necessary to
fulfil a legitimate objective(s).
(b) Whether the COOL measure is trade-restrictive within the meaning of Article 2.2
(i) Main arguments of the parties
7.559 Canada submits that technical regulations are not by definition trade-restrictive and that if a
technical regulation imposes any restriction on interna tional trade, it meets this element of the test. 746
If a technical regulation does not restrict international trade, however, it cannot violate Article 2.2
since such a measure would never create "unnecessary obstacles to international trade" or be "more
trade-restrictive than necessary".
7.560 In the case of the COOL measure, there is evidence that it has restricted international trade by
reducing the possibility of livestock born in Canada to be exported to the United States. The evidence
provided by the complainants to establish that th e conditions of competition were modified by the
COOL measure shows that the COOL measure restri cts international trade for purposes of the first
step of the Article 2.2 analysis.
747 That same evidence is also relevant in assessing whether alternative
measures are available that would be less trade -restrictive, taking into account the risks of non-
fulfilment.
7.561 Mexico also submits that technical regulations ar e not by definition "trade-restrictive" under
Article 2.2 of the TBT Agreement.748 According to Mexico, certain technical regulations could in fact
facilitate trade. The COOL measure is, however, a technical regulation that restricts trade. Trade
restriction could be reflected in a reduction of competitive opportunities for imported products as well
as in restrictions on trade flows. This is consistent with the view that the GATT disciplines on the use
of restrictions are meant to protect the competitive opportunities of imported products.
7.562 Mexico is therefore of the view that the arguments and evidence raised by the complainants in
the context of their claims under Article 2.1 also demonstrate the trade-restrictiveness of the
COOL measure.749 Specifically, the COOL measure has alte red US beef production so as to restrict
Mexican feeder cattle access to th e US market and deny competitive opportunities to Mexican feeder
cattle in that market.
7.563 The United States agrees that, to establish the inconsistency of the COOL measures with
Article 2.2, the complainants must first show that the COOL measures restrict trade.750

745 Parties' responses to Panel question No. 52.
746 Canada's response to Panel question No. 66; second written submission, paras. 48-49.
747 Canada's response to Panel question No. 60.
748 Mexico's response to Panel question No. 66.
749 Mexico's response to Panel question No. 60.
750 United States' second written submission, para. 103.

7.564 The United States submits that the complainants ' arguments in this regard rest on their
erroneous assertions that the COOL measures require segregation and that high costs associated with
that practice have forced US processors to comp letely reject foreign livestock. Additionally, the
complainants ignore recent trade data that illustra te a significant increase in Canadian and Mexican
livestock exports in 2010 and thereby directly unde rmine their arguments. Thus, the complainants
have not substantiated their claims about the COOL measures' impact on trade, much less
demonstrated that any such impact restricts trade more than is necessary.
751
(ii) Analysis by the Panel
7.565 The complainants assert that the arguments and evidence submitted with regard to their claim
under Article 2.1, namely a reduction of competitiv e opportunities for imported products compared to
like domestic products as well as restrictions on trad e flows, equally establish that the COOL measure
is trade-restrictive within the meaning of Article 2.2.752
7.566 To determine whether the COOL measure is tr ade-restrictive, we will first examine the
ordinary meaning of the term "restrictive" and how the term has been understood in previous disputes.
7.567 The ordinary meaning of the term "restrictiv e" is "[i]mplying, conveying, or expressing
restriction or limitation" and "[h]aving the nature or effect of a restriction; imposing a restriction". 753
The term "restriction" in turn is defined as "[a] thing which restricts someone or something, a
limitation on action, a limiting condition or regulation".
7.568 As evidenced above, the dictionary defines "restrictive" and "restriction" broadly. There are
no specific thresholds to be met in order to characterize a certain measure as a "restriction" or qualify
it as "restrictive". A "restriction" can also be an ything which restricts something, any limitation on
action, or a limiting condition. Furthermore, based on the meaning of "restrictive", a measure "having
the nature or effect of a restriction" can be considered as a "restrictive" measure.
7.569 The broad scope of the terms "restrictive" or "r estriction" is confirmed by the findings of the
panels in previous disputes.
7.570 The panel in India – Quantitative Restrictions concluded in the context of Article XI of the
GATT 1994 that "[t]he scope of the term 'restriction' is also broad, as seen in its ordinary meaning,
which is 'a limitation on action, a limiting condition or regulation'".
754 Subsequently, the panel in
India – Autos endorsed this view in the context of the same provision. 755 More recently, in Colombia
– Ports of Entry , the panel agreed with the interpretation of the term "restriction" given by previous
panels.756
7.571 As highlighted by the panel in Colombia – Ports of Entry , previous WTO and GATT panels
also determined a measure's rest rictiveness based on the impact of the measure on the competitive
opportunities available to imported products. 757 In particular, the panel in Argentina – Hides and

751 United States' opening oral statement at the first substantive meeting of the Panel, para. 49.
752 Australia agrees with the complaining parties that trade-restrictive measures include those that
impose any form of limitation of imports, discriminate against imports or deny competitive opportunities to
imported product (Australia's third party written submission, para. 71).
753 The Shorter Oxford English Dictionary , (Sixth Edition) Oxford Univers ity Press, Vol. I, p. 2553
(2007).
754 Panel Report, India – Quantitative Restrictions, para. 5.128.
755 Panel Report, India – Autos, paras. 7.269-2.270.
756 Panel Report, Colombia – Ports of Entry, para. 7.241.
757 Panel Report, Colombia – Ports of Entry, para. 7.236.

Leather found that, in determining whether a measure ma kes effective a restriction in the context of
Articles I, II, III and XI:1 of the GATT 1994, th e focus is on the competitive opportunities of
imported products, not the trade effects. That pane l therefore considered that the complaining party
claiming the existence of a restriction need not prove actual trade effects.758
7.572 Based on the foregoing, we conclude that the scope of the term "trade-restrictive" is broad.
We also understand that the concept of "trade -restrictiveness" under provisions of the GATT 1994
does not require the demonstration of any actual trade effects, as the focus is on the competitive
opportunities available to imported products. We see no reason to depart from this understanding in
the context of reviewing the "trade-restrictiveness" of the technical regulation at issue in this dispute
under Article 2.2 of the TBT Agreement.
7.573 Having reached this conclusion, we do not find it necessary to define the exact scope of the
term "trade-restrictive" under the second sentence of Ar ticle 2.2. Particularly, we are aware that the
question remains whether a technical regulation's non- conformity with Article 2.1 has any bearing on
the trade-restrictiveness element of Article 2.2. Fo r the purpose of this dispute, we will proceed with
our analysis of the COOL measure under Article 2.2 on the assumption that a technical regulation's
non-conformity with Article 2.1 is not per se an issue for that technical regulation's conformity with
Article 2.2 in general, or the "trade-restrictive" element in particular.
7.574 Turning to the technical regulation in question in the current dispute, we found in the previous
section that the COOL measure negatively affects imported livestock's conditions of competition in
the US market in relation to like domestic livestock by imposing higher segregation costs on imported
livestock.759
7.575 We therefore conclude that the complainants have demonstrated that the COOL measure is
"trade-restrictive" within the meaning of Article 2.2 by affecting the competitive conditions of
imported livestock. In reaching this conclusion, we are not making a finding on the level of trade-
restrictiveness of the COOL measure . This question will be addressed, if necessary, in an analysis of
whether the COOL measure is more trade-restrictive than necessary.
(c) Whether the objective pursued by the United States through the COOL measure is legitimate
7.576 Canada and Mexico argue that the true objectiv e of the COOL measure is to protect domestic
industry.
7.577 The United States identifies providing consumer information on origin 760 as the objective that
it seeks to achieve through the COOL measure.
7.578 Canada submits that, even if the US stated objective were accepted as the true objective, the
United States has failed to prove why that objective is legitimate within the meaning of Article 2.2.
Mexico asserts that, in the factual circumstances of this dispute, the declared objective by the
United States is not legitimate.

758 Panel Report, Argentina – Hides and Leather, para. 11.20.
759 See Section VII.D.2. Further, we observed in Section VII.D.2(c)(iv) that the COOL measure
brought about actual negative trade effects on imported livestock as shown by a significant and negative impact
on import shares and prices.
760 See para. 7.617.

7.579 To address the issue before us, we will first ex amine whether the complainants are correct in
identifying that protection of the domestic industr y is the objective pursued by the United States
through the COOL measure. We will then review the legitimacy of the identified objective.
(i) Identification of the objective pursued by the United States through the COOL measure
Main arguments of the parties
7.580 Canada and Mexico allege that the objective of the COOL requirements is trade
protectionism.761
7.581 The United States submits that the objective it pursues through the COOL measure is to
"provide consumer info rmation about origin". 762 The United States confirms that human health and
safety are not part of the objectives pursued by the COOL measure.763
7.582 Canada submits that the Panel should determin e the objective of a measure by focusing on
the "design, the architecture and the structure" of that measure, supplemented as necessary with
additional information, including its legislative history. 764 According to Canada, the design, the
architecture and the structure of the COOL measure rev eal that its objective is protectionist in nature.
Canada submits that this is also confirmed by the in tent of legislators. Canada argues that the Panel
should consider evidence that speaks to the motiv ations of the main legislative designers and
promoters of the legislation. Unlike in the c ontext of Article III:2 of the GATT 1994, intent is
important in the context of Article 2.2 of th e TBT Agreement because Article 2.2 requires an
assessment not only of the effect of a measure, but also its "objective" – something not required in
Article III:2.765
7.583 If however the Panel were to accept the objectiv es as identified by the United States, Canada
submits that the Panel should begin its analysis w ith the idea that the objective of the COOL measure
is to "provide information to consumers about where livestock used to produce meat in the
United States was born, raised, and slaughtered so that consumers may [make decision X]". Canada
argues that the reasons for providing the information are important. 766 All evidence adduced to this
point in the current dispute shows that the few consumers who supported the COOL measure did so
because of its protectionist objectives or because of objectives not addressed by the COOL measure.

761 Canada's first written submission, paras. 158- 175; second written submission, paras. 57-68;
Mexico's first written submission, paras. 279-283.
762 United States' first written submission, paras. 206-225; second written submission, para. 106;
opening oral statement at the second substantive meeting of the Panel, para. 38. See para. 7.616-7.617.
763 United States' response to Panel question No. 17; Exhibit CDA-5, p.2677.
764 Canada's second written submission, paras. 50-54, 57-68.
765 Canada's second written submission, para. 52; respon se to Panel question No. 126. In light of this,
Canada contests the United States' proposition based on the Appellate Body's findings in Chile – Alcoholic
Beverages and Japan – Alcoholic Beverages that statements of intent by legislators and regulators should be
ignored in determining the objective in this dispute. Further, in response to the United States' reference to
certain decisions from US courts for the proposition that domestic tribunals refuse to look to statements of
legislators in interpreting statutes, Canada asserts that us e of legislative history in statutory interpretation is not
the same as using legislative history to determine the objective of a measure for purposes of Article 2.2. To the
extent that there is an anal ogy, the use of legislative history, Canada argues, is in keeping with the modern
practice of statutory interpretation of many domestic tribunals as well as the interpretation of treaty obligations
in international law (Canada's second written submission, para. 53).
766 Canada's opening oral statement at the first substantive meeting of the Panel, paras. 49-53; second
written submission, para. 69.

7.584 Mexico asserts that an objective of a Member in the context of Article 2.2 is not self judging
and is part of a Panel's obj ective assessment of facts. 767 Accordingly, the Panel must determine all
relevant details of the objectives of the technical regulation, not just its stated objective, as reflected in
the design and structure of the measure and co rroborated by other evidence. While Mexico
acknowledges the right of every WTO Member to est ablish for itself the objectives of its technical
regulations, this does not mean that another Memb er cannot question the "stated" or "acknowledged"
objectives or challenge those stated or acknowle dged objectives before a panel and request an
objective assessment of the relevant facts.768
7.585 Mexico argues that the design, architecture and structure of the COOL measure show that its
objective is not to provide consumer information, but rather to protect the US cattle producers by
altering the operation of the US beef industry in fav our of US feeder cattle. Its protectionist purpose
is reflected in the limitation to certain commoditi es, the targeting of the principal downstream
products and distribution networks, the exclusion of small retailers and the US processed food
industry, and the departure from the established system for regulating consumer information.769
7.586 In the United States' view, the objective and the measure are distinct, as one is the objective
or goal that is sought to be achieved and the ot her is the means for doing so. The United States
therefore argues that the Panel should first assess wh ether the Member's legitimate objective is what
the Member asserts it is and then whether the technical regulation fulfils that objective.770
7.587 The United States submits that the text, design, architecture, and structure of the statute, along
with the 2009 Final Rule (AMS), all clearly indi cate that the objective is to provide consumer
information about the country of origin of the cove red commodities at the retail level and to prevent
consumer confusion regarding the origin of meat.771
7.588 Specifically, the objective of the measure is to provide consumers with as much clear and
accurate information as possible about the country or countries origin of the meat products that they
buy at the retail level.
772 This includes information on the countries, where the animal from which the
meat was derived was born, raised, and slaughtered.
7.589 Regarding prevention of consum er confusion, the United States points to two types of
consumer confusion. 773 First, many consumers in the Unite d States mistakenly believed that meat
products affixed with a USDA grade label were deri ved from animals born, raised, and slaughtered in
the United States when this was not the case. 774 Second, many US consumers may also have been
misled by the FSIS "Product of the U.S.A." labelling system, which allowed producers to voluntarily
use this label if the meat products received minimal processing in the United States. 775 To further
explain the confusion caused by the FSIS "Product of the U.S.A." labelling system, the United States

767 Mexico's response to Panel question No. 54; second written submission, paras. 155-157.
768 Mexico's response to Panel question No. 54; second written submission, paras. 149-150.
769 Mexico's first written submission, paras. 168-176; second written submission, para. 61.
770 United States' response to Panel question No. 126. See paras. 7.582-7.585 for the complainants'
contrasting view in this regard.
771 United States' response to Panel question No. 3.
772 United States' responses to Panel question Nos. 24, 58.
773 United States' response to Panel question No. 56.
774 United States' first written submission, para. 29; United States' response to Panel question No. 56;
Exhibit CDA-10, p.p. 24, 71.
775 United States' first written submission, paras. 30-31; United States' response to Panel question
No. 56; Exhibits US-17, MEX-32.

refers to a letter from the Consumers Federati on of America of the 17 September 2001 to USDA
during the FSIS rule making on "Product of U.S.A.".
776
Analysis by the Panel
7.590 In this dispute, the complainants contest the existence of a "legitimate objective" pursued by
the United States through the COOL measure. The comp lainants argue that trade protectionism is the
objective pursued by the United States through th e COOL measure, which cannot be a legitimate
objective within the meaning of Article 2.2.
7.591 The United States, on the other hand, submits that its objective is to provide consumer
information on origin.777
7.592 As recognized by the panel in EC – Sardines , a Member implementing a certain measure
would normally be in a position to identify and elaborate the objective it pursues through the measure
adopted.
778 However, given the allocation of the burden of proof under Article 2.2 as further clarified
by the Appellate Body in EC – Sardines, Canada and Mexico must identify the objective pursued by
the United States based on the information obtaine d prior to or during the dispute settlement
proceeding.
7.593 Specifically, the Appellate Body in EC – Sardines stated:
"The TBT Agreement acknowledges the right of every WTO Member to establish for
itself the objectives of its technical regula tions while affording every other Member
adequate opportunities to obtain information about these objectives. That said, part of
the reason why the Panel concluded that th e burden of proof under Article 2.4 is on
the respondent is because, in the Panel's view, the complainant cannot 'spell out' the
'legitimate objectives' of the technical regulation. ...
In our opinion, these two concerns are not justified. The TBT Agreement affords a
complainant adequate opportunities to obtain information about the objectives of
technical regulations or the specific consid erations that may be relevant to the
assessment of their appropriateness."
779
7.594 In light of the parties' contrasting views on the objective pursued by the United States through
the COOL measure, we must first determine the "objective" that the United States pursues through the
COOL measure. 780

776 United States' second written submission, para. 131; Exhibit US-84.
777 United States' first written submission, paras. 68, 201, [heading above para. 227], 228; response to
Panel question No. 17; second written submission, paras. 97, 106, 107, 147.
778 We agree with the panel's statement in EC – Sardines that "only the Member pursuing the legitimate
objective is in a position to elaborate the obj ective it is trying to accomplish." (Panel Report, EC – Sardines ,
para. 7.121)
779 Appellate Body Report, EC – Sardines, paras. 276-277.
780 The parties generally agree that the Panel shoul d determine the objective of a measure. See
Canada's second written submission, para. 50, footnote 61; Mexico's first written submission, para. 279;
United States' opening oral statement at the first substant ive meeting of the Panel, para. 39; response to Panel
question No. 3. See also the European Union's third-part y oral statement at the firs t substantive meeting of the
Panel, paras. 19-22; response to Panel question No. 10.

Nature of a legitimate "objective" under Article 2.2
7.595 To determine the objective that the United St ates pursues through the COOL measure, we
find it useful to start with a review of what is meant by a "legitimate objec tive" in the context of
Article 2.2.
7.596 The complainants' position is that the text as well as the design, architecture, and structure of
the COOL measure reveal its protectionist intent. We consider the complainants' argument to be
misplaced on several grounds.
7.597 First, in advancing this argument, the complain ants appear to conflate the objective pursued
by a technical regulation and the technical regulation itself. In fact, in response to a question from the
Panel, the complainants state that the term "object ive" in Article 2.2 refers to the objective of the
technical regulation and not to any "general policy objective" that a Member may have. 781 For the
following reasons, we consider that a legitimat e "objective" under Article 2.2 needs to be
distinguished from a specific technical regulation adopted by a Member to pursue the objective.
7.598 The distinction is important because it is the obj ective that leads to a Member's determination
to adopt a technical regulation, not vice versa.
7.599 A policy objective pursued by a government w ould normally precede the establishment of a
technical regulation to be introduced or mainta ined. Article 2.3 of the TBT Agreement provides
contextual guidance for this understanding: "[t]echni cal regulations shall not be maintained if the
circumstances or objectives giving rise to their adoption no longer exist or if the changed
circumstances or objectives can be addressed in a less trade-restrictive manner". The phrase
"circumstances or objectives giving rise to [technical regulations'] adoption" indicates that
"circumstances" or "objective(s)" are not identical to technical regulations and logically precede the
adoption of technical regulations.
7.600 The text of the preamble of the TBT Agreem ent also expresses the Members' right to adopt
technical regulations to achieve their policy objectives.
782 The Appellate Body in EC – Sardines also
confirmed that "the TBT Agreement acknowledges th e right of every WTO Member to establish for
itself the objectives of its technical regulations".783

781 Canada's response to Panel question No. 126; Mexico's response to Panel question No. 126.
782 The 6 th preambular recital states, "no country should be prevented from taking measures necessary
to ensure the quality of its exports, or for the protection of human, animal or plant life or health, of the
environment, or for the prevention of deceptive practices, at the levels it considers appropriate. ..."
The panel in EC – Sardines stated:
"Article 2.2 and this preambular text affirm that it is up to the Members to decide which
policy objectives they wish to pursue and the leve ls at which they wish to pursue them. At the
same time, these provisions impose some limits on the regulatory autonomy of Members that
decide to adopt technical regulations: ... Th us, the TBT Agreement, like the GATT 1994,
whose objective is to further, accords a degree of deference with respect to the domestic
policy objectives which Members wish to pursue. At the same time, however, the
TBT Agreement, like th e GATT 1994, shows less deferen ce to the means which Members
choose to employ to achieve their domestic policy goals. We consider that it is incumbent
upon the respondent to advance the objectives of its technical regulation which it considers
legitimate." (Panel Report, EC – Sardines, para. 7.120).
783 Appellate Body Report, EC – Sardines, para. 276.

7.601 The complainants do not contest either that th e United States has the right, in principle, to
establish for itself certain policy objectives.
784 To that extent, what the complainants actually argue is
that the United States adopted the COOL measure with the intent to protect the US domestic livestock
industry, not for consumer information.785
7.602 As noted above, a technical regulation, including the alleged intent behind the enactment of
the particular technical regulation, however must be distinguished from a policy objective that is
pursued by a Member. Whether a Member pursues a "legitimate objective" within the meaning of
Article 2.2 is a separate issue from whether the measure in question was in fact adopted to fulfil and
does fulfil that objective.
7.603 What needs to be identified as an objective within the meaning of Article 2.2, therefore, is the
objective that preceded and led to the adoption by the United States of the COOL measure.
7.604 We find support for our view in this regard in the clarification by the Appellate Body of the
relationship between the "appropriate level of protection" and the SPS measure in Australia – Salmon.
In that dispute, the Appellate Body stated that "to imply the appropriate level of protection from the
existing SPS measure would be to assume that the measure always achieves the appropriate level of
protection determined by the Member". 786 Similarly, in our view, the objective pursued through a
technical regulation cannot be necessarily implied from that technical regulation itself.

784 The panel in Brazil – Retreaded Tyres stated in para. 7.97:
"[W]e note that we are not, in our view, required to examine the desirability of the declared
policy goal as such. In other words, we are not required to assess the policy choice declared
by Brazil to protect human, animal or plant life or health against certain risks, nor the level of
protection that Brazil wishes to achieve."
We also recall in this respect that in the EC – Asbestos case, the Appellate Body asserted clearly that it
was each WTO Member's "... right to dete rmine the level of protection of health that [it] consider[s] appropriate
in a given situation." (Panel Report, Brazil – Retreaded Tyres, para. 7.97, citing to the Appellate Body Report,
EC – Asbestos, para. 168.) The Appellate Body stated:
"[A]s to Canada's third argument, relating to the level of protection, we note that it is
undisputed that WTO Members have the right to determine the level of protection of health
that they consider appropriate in a given s ituation. France has determined, and the Panel
accepted, that the chosen level of health protec tion by France is a "halt" to the spread of
asbestos-related health risks. By prohibiting all forms of amphibole asbestos, and by severely
restricting the use of chrysotile asbestos, the measure at issue is clearly designed and apt to
achieve that level of health protection. ...".
785 Canada's first written submission, paras. 160-161; Mexico's first written submission,
paras. 279-283.
786 The Appellate Body in Australia – Salmon states:
"The correlation between the "appropriate leve l of protection" and the "SPS measure" is
perhaps shown most clearly in Article 5.6 of the SPS Agreement which reads: ... when
establishing or maintaining sanitary or phytosanitary measur es to achieve the appropriate
level of sanitary or phytosanitary protection, Members shall ensure that such measures are not
more trade-restrictive than required to achie ve their appropriate level of sanitary or
phytosanitary protection ... (emphasis added) The words of Article 5.6, in particular the terms
"when establishing or maintaining sanitary ... protection", demonstrate that the determination
of the level of protection is an element in the decisionmaking process which logically
precedes and is separate from the establishment or maintenanc e of the SPS measure. It is the
appropriate level of protection which determin es the SPS measure to be introduced or
maintained, not the SPS measure introduced or maintained which determines the appropriate
level of protection. To imply the appropria te level of protection from the existing SPS
measure would be to assume that the measur e always achieves the appropriate level of
protection determined by the Member. That clearly cannot be the case. (para. 203)"

7.605 Second, the complainants' argument implies that what the United States has expressly
identified as the objective pursued in its official WT O notification of the COOL measure is not true.
The United States' notification to the TBT Comm ittee of the COOL measure indicates "consumer
information" as the objective. 787 While we are not saying that this constitutes definite and
determinative evidence that the objective pursu ed through the COOL measure is not trade
protectionism, we do consider that it is one of the objective circumstances that will inform the
complainants of the objective of the COOL measu re. Moreover, according to the Appellate Body,
under the principle of good faith under general in ternational law as embodied in Article 26 of the
Vienna Convention on the Law of Treaties, parties to an international agreement enjoy a presumption
that they will perform their treaty obligations in good faith, including their WTO obligations.788 Thus,
the United States must be presumed to have truthful ly notified the TBT Committee of the objective it
was seeking to pursue through its COOL measure. The presumption of good faith can, of course, be
rebutted by solid evidence, in this case demonstrati ng that trade protectionism is indeed the objective
pursued by the United States through the COOL measure. However, we have not been presented with
such evidence.
7.606 In addition to considerations of good faith, the Appellate Body recalled in EC – Sardines that
the TBT Agreement "affords a complainant adequa te opportunities to obtain information about the
objectives of technical regulations" and made specific reference to certain provisions of the
TBT Agreement requiring Members to supply informa tion about their technical regulations to other
Members. Official notifications made pursuant to Article 2.9 of the TBT Agreement (which must
contain a brief indication of the technical regulation's "objective") fall into the category of provisions
referenced by the Appellate Body.
7.607 Third, the complainants' argument regarding th e protectionist intent of the COOL measure
relates to the general principle contained in the firs t sentence of Article 2.2, read in isolation from the
second sentence of Article 2.2. The first sentence reads, "[M]embers shall ensure that technical
regulations are not prepared, adopted or applied with a view to or with the effect of creating
unnecessary obstacles to international trade". As we cl arified above, and as the parties agree, the first
sentence of Article 2.2 sets out a general principle, a separate violation of which is not required. The
second sentence of Article 2.2 sets out the specific elements of the oblig ations that must be respected
in order to comply with the general principle set out in the first sentence. The complainants'
arguments based on the "design, architecture, and structure" of the COOL measure do not have a
particular bearing on our analysis of the identif ication of the objective that gave rise to the
COOL measure.
7.608 In our view, the characteristics of the m easure, including its design, architecture, and
structure, and legislative history such as legislat ors' statements, may be more properly addressed in
the context of whether the COOL measure fulfils th e identified objectives. For example, Canada also
clarified that it is not challenging country of orig in information generally, but it is challenging the
COOL measure because of its particular characteristics including its structure and objective and the
limited information it provides.
789 As explained above, a technical regulation, including its specific
characteristics and features, must be distinguish ed from the objective pursued by the technical
regulation itself. In this respect, we note that the Appellate Body, in addressing a claim under
Article XIV(a) of the GATS in US – Gambling, also stated:
"[A] Member's characterization of a measure's objectives and of the effectiveness of
its regulatory approach – as evidenced, for ex ample, by texts of statutes, legislative

787 G/TBT/N/USA/281 and G/TBT/N/USA/281/Add.1.
788 Appellate Body Report, EC – Sardines, para. 278.
789 Canada's opening oral statement at the second substantive meeting of the Panel, para. 68.

history, and pronouncements of government ag encies or officials – will be relevant in
determining whether the measure is, objectively, 'necessary'. A panel is not bound by
these characterizations [footnote omitted], however, and may also find guidance in
the structure and operation of the measure a nd in contrary evidence proffered by the
complaining party. In any event, a pane l must, on the basis of the evidence in the
record, independently and objectively assess the 'necessity' of the measure before
it."
790
7.609 The European Union in Brazil – Retreaded Tyres made a similar argument as the
complainants in this dispute that the real objective of Brazil's import ban, the measure at issue in that
dispute, was to protect Brazil's domestic industry, and not to achieve the objectives declared by Brazil
under Article XX(b) of the GATT 1994 (i.e. to protect human, animal or plant life or health). The
panel in that dispute did not find it necessary to consider the European Union's argument "in
determining under paragraph (b) of Article XX whether the declared policy objective of a measure
falls within the range of policies under that paragraph".
791 We agree with the Brazil – Retreaded
Tyres panel and take the same approach in this case. T hus we are of the view that in identifying the
objective of the COOL measure under Article 2.2, we need not consider the alleged intent behind the
implementation of the COOL measure.
7.610 We therefore consider it inapposite to address at this stage of our analysis the complainants'
arguments in support of their position that tr ade protectionism is the objective of the
COOL measure.792 We will address these arguments, to the extent necessary, in the context of our
analysis of whether the COOL measure fulfils the identified objective.793
7.611 Fourth, the complainants' argument appears to be based on an overly liberal interpretation of
the requirement, found in Article 11 of the DSU, that the Panel conduct an "objective assessment" of
the facts of the case. The complainants emphasi ze the obligation imposed on WTO dispute panels
under Article 11 to make an objective assessment of the facts of the case, including the "objective" set
by the responding Member. To the extent that the complainants are challenging the objective(s) that
the United States has set for itself, which is separate from its legitimacy, we find no support for such
an approach in Article 11. In this regard, the Appellate Body observed in Australia – Salmon:
"We do not believe that Article 11 of the DSU, or any other provision of the DSU or
of the SPS Agreement , entitles the Panel or the Appellate Body, for the purpose of
applying Article 5.6 in the present case, to substitute its own reasoning about the
implied level of protection for that e xpressed consistently by Australia. The
determination of the appropriate level of protection, a notion defined in paragraph 5
of Annex A, as 'the level of protection deemed appropriate by the Member
establishing a sanitary … measure', is a prerogative of the Member concerned and not
of a panel or of the Appellate Body.

790 Appellate Body Report, US – Gambling , para. 304. The United States claimed in that dispute that
the measures at issue were necessary to protect public morals or maintain public order under Article XIV(a) of
the GATS.
791 Panel Report, Brazil – Retreaded Tyres , para. 7.101 (original footnote omitted). The panel stated,
"In the Panel's view, what is relevant at this stage of the analysis is the existence of a risk and whether the policy
objective to reduce such a risk, as declared by the Member taking the measure, falls within the scope of policies
to protect human, animal or plant life or health."
792 The parties do not dispute that trade protectionism, if proved to be the objective pursued through a
technical regulation, cannot be a legitimate objective within the meaning of Article 2.2.
793 See paras. 7.692-7.719.

The 'appropriate level of protection' esta blished by a Member and the 'SPS measure'
have to be clearly distinguished. They are not one and the same thing. The first is an
objective, the second is an instrument chosen to attain or implement that objective."794
7.612 Although addressed in the context of the SPS Agre ement, the Appellate Body's statement has
a bearing on the question before us. The objectiv e pursued through a technical regulation, clearly
distinguished from the technical regulation chosen to attain that objective, is a prerogative of the
Member concerned and not of a panel. The importance of recognizing the prerogative of the
Members to pursue their own policy goals has also been observed by the Appellate Body in the
context of the obligations under the GATT 1994.
795
7.613 We find no basis to deviate from the above a pproach developed by the Appellate Body in
determining the objective pursued by the United States through the COOL measure within the
meaning of Article 2.2. The TBT Agreement purpor ts to further the objectives of the GATT 1994.
The WTO Members are just as free to adopt tec hnical regulations as they are free to set the
appropriate level of protection through an SPS me asure or to legislate on internal taxation or
regulation.796 Accordingly, the identification of the obj ective pursued through a technical regulation
must be based on the information provided by the Member implementing the technical regulation
concerned.797 However, as the panel in EC – Sardines noted, the legitimacy of the objectives pursued
by a Member must be determined by panels.798
7.614 That said, we must identify the objectiv e that the United States pursues through the
COOL measure.

794 Appellate Body Report, Australia – Salmon, paras. 199-200.
795 The Appellate Body in Japan – Alcoholic Beverages observed:
"Members of the WTO are free to pursue their own domestic goals through internal taxation
or regulation so long as they do not do so in a way that violates Article III or any of the other
commitments they have made in the WTO Agreement" (emphasis added)
Moreover, the Appellate Body further stated in Chile – Alcoholic Beverages:
"Members of the WTO have sovereign authority to determine the basis or bases on which they
will tax goods, such as, for example, distilled al coholic beverages, and to classify such goods
accordingly, provided of cour se that the Members respect their WTO commitments. The
reference in Ad Article III:2, second sentence, of the GATT 1994 to "not similarly taxed" is
not in itself a prohibition against classifying goods for revenue and regulatory purposes that
Members set for themselves as legitimate and desirable . Members of the WTO are free to tax
distilled alcoholic beverages on the basis of their alcohol content and price, as long as the tax
classification is not applied so as to protect domestic production over imports. Alcohol
content, like any other basis or criterion of taxation, is subject to the legal standard embodied
in Article III:2 of the GATT 1994." (para. 60) (emphasis added)
796 Several third parties submit that WTO Members are free to decide which policy objectives they
wish to pursue. For example, Australia states: "It is Australia's view that ... it is up to the United States to decide
which policy objectives they wi sh to pursue and the levels at which they wish to pursue them..."; (Australia's
third-party oral statement at the second substantive meeting of the Panel, para. 22); Brazil establishes that "[a]
Member imposing a technical regulation is entitled to define its objective or objectives." (Brazil's third party
written submission, para. 12); and New Zealand submits that "[a]s the list in Article 2.2 is non-exhaustive, New
Zealand recognises that a Member may demonstrate that other legitimate objectives also justify technical
regulations." (New Zealand's third party written submission, para. 32).
797 The European Union is of the view that in the present dispute the Panel should not find that the
objective is something other than the provision of consumer information (European Union's third party oral
statement at the second substantive meeting of the Panel, para. 10).
798 See footnote 825 for the panel's statement in this regard in EC – Sardines.

Identification of the objective pursued by the United States through the
COOL measure
7.615 In light of our decision to accept the objective as identified by the United States, we continue
our analysis on that basis.
7.616 In the course of this proceeding, the United States has variously identified its objective as
follows: "to provide consumer information [on origin]"
799; "to achieve the legitimate objective of
providing consumer information, information th at, among other things, helps prevent consumer
confusion related to the use of USDA grade labels" 800; "providing consumer information and
preventing consumer confusion" 801; "to provide information to consumers about the origin of the
covered commodities they buy at the retail level, which for meat products includes listing the names
of the countries in which the animal was bor n, raised, and slaughtered. In doing so, the
COOL measures also help prevent consumer confusion"802.
7.617 As shown in the references a bove, the United States' formulation of its objective has varied
somewhat throughout its written submissions. We ob serve, however, that the main element that the
United States has consistently highlighted is "to provide consumer in formation on origin".
Accordingly, we will proceed on the understanding that this is the objective pursued by the
United States through the COOL measure.
7.618 In this regard, the United States further elabor ated on the identified objective with respect to
meat products. Regarding the exact information on or igin that it wants to provide to consumers, the
United States points to "information on the count ries, where the animal from which the meat was
derived was born, raised, and slaughtered". 803 Through this information, the United States also
purports to prevent confusion relating to a USDA gr ade label, which led consumers to mistakenly
believe that meat products affixed with a USDA gr ade label were derived from animals born, raised,
and slaughtered in the United States, and the prev ious FSIS "Product of the U.S.A." labelling system,
which allowed this label on meat products if su ch products received minimal processes in the
United States.804
7.619 The United States used the following descriptions to indicate the level at which it aims to
achieve the identified objective: "providing as much consumer information as possible" 805; "to
provide consumers with as much clear and accurate information as possible about the origin of the
meat products"806; "to provide as much information as possible to consumers about the country of
origin of the food products that they buy at the re tail level and to minimize confusion about the origin
of meat products to the maximum extent possible".807
7.620 Based on these references, we conclude that the objective pursued by the United States
through the COOL measure is to provide as much cl ear and accurate origin information as possible to
consumers.

799 United States' first written submission, paras. 68, 201, [heading above para. 227], 228; response to
Panel question No. 17; second written submission, paras. 97, 106, 107, 147.
800 United States' first written submission, para. 201.
801 United States' opening oral statement at the first substantive meeting of the Panel, para. 41.
802 United States' response to Panel question No. 74.
803 United States' response to Panel question No. 58.
804 United States' response to Panel question No. 56(a).
805 United States' first written submission, para. 7.
806 United States' response to Panel question No. 24.
807 United States' response to Panel question No. 142(a).

7.621 The complainants argue that, if we were to accept the objectiv e as declared by the
United States ("consumer information on origin"), such objective is not legitimate. We examine the
legitimacy of the objective as identified by the United States in the next section.
(ii) Legitimacy of the identified objective within the meaning of Article 2.2
Main arguments of the parties
7.622 Canada submits that since the alleged objective of the COOL measure is not listed in
Article 2.2, the United States must prove based on clear and compelling evidence that the concerned
objective is legitimate.808 This proof cannot be based on mere assertion and must include evidence of
a wider intent to implement a particular policy goal. 809 Canada argues that it is therefore necessary to
look to the specifically listed legitimate objectives in Article 2.2 to determine whether an objective
not specifically listed in Article 2.2 is a legitimate objective. Canada points out that, as the objectives
listed in Article 2.2 are reflected in general exce ptions in other covered agreements, it would be
reasonable to conclude that the type of items list ed covers objectives set out as general exceptions or
other similar situations in the covered agreements.810
7.623 Canada alleges that the United States has not demonstrated that providing "information about
country of origin as defined by COOL" is a legitim ate objective. Canada clarifies that it is not
challenging country of origin information on m eat generally; rather, it is challenging the
COOL measure because of its particular characteris tics including its structure and objective, and the
limited information it provides. 811 Specifically, Canada argues that the United States has not
explained why the information provided by the COOL measure is important for consumers to have or
why consumers need that information. Canada considers that there are some potential purposes for
providing information to consumers that are, or coul d be, legitimate when the objective is sufficiently
specific, such as to allow consumers to make decisions and choices based on food safety or
environmental protection considerations, obj ectives closely linked to the listed objectives. 812 Canada
contests the assertion by the United States that the reasons why consumers want information about
origin are not relevant to determine the legitimacy of the measure's objective. 813 Rather, consumers'
desire to purchase food produced in their own count ry, without evidence that consumers perceive a
qualitative difference due to that f act, cannot form the basis of a legitimate objec tive within the
meaning of Article 2.2 of the TBT Agreement.814
7.624 Mexico argues that the provision of consumer info rmation can be a legitimate objective, but
not in all circumstances. 815 Whether the objective is legitimate will depend on the specific type of
information being provided to consumers and whether the provision of that information is "justifiable"

808 Canada's second written submission, paras. 70-76. We note that Canada initially argued that it did
not take a stance on whether providing information to c onsumers is legitimate and that it was unnecessary for
the Panel to determine whether consumer information is legitimate for the purpose of examining its claim under
Article 2.2, because the measure does not satisfy othe r elements of that provision. (Canada's first written
submission, para. 176)
809 Canada refers to New Zealand's third party written submission (para. 32) and its response to Panel
question No. 24.
810 Canada's second written submission, para. 72, footnote 124. Canada refers to Colombia's third party
written submission, paras. 43-47. Colombia sugges ts GATT, GATS, and TRIPS as potential sources of
reference for determining whether an objective is legitimate.
811 Canada's opening oral statement at the second substantive meeting of the Panel, para. 68.
812 Canada's second written submission, para. 76.
813 Canada's comments on United States' response to question No. 136.
814 Canada's response to Panel question No. 136.
815 Mexico's first written submission, paras. 284-295; response to Panel question No. 55.

in the light of all relevant circumstances relating to that information. This will require an assessment
of the character and the intrinsic value of the in formation given to the consumers. According to
Mexico, the objective of consumer protection is not legitimate in the circumstances of this dispute.
816
The character of the information given to consumers unde r the COOL requirements (i.e. US origin
beef is produced from cattle that are "born, rai sed, slaughtered and processed" in the United States)
has only one purpose, which is inherently protecti onist. To support its position, Mexico distinguishes
the nature of the information provided under th e COOL measure from the type of information
required, for example, for health or safety pur poses or for making choices according to cultural or
religious beliefs or dietary choices.817
7.625 Mexico argues that the COOL measure is app lied in a manner which constitutes a means of
arbitrary or unjustifiable discrimination between c ountries where the same conditions prevail and it is
a disguised restriction on international trade, in line with the preamble to the TBT Agreement.
According to Mexico, such objectives cannot be "l egitimate" within the meaning of Article 2.2
because they go against the fundamental object an d purpose of the WTO Agreements. Further,
Mexico submits that consumer demand for the specific type of information provided by the
COOL measure is relevant to the circumstances in which the measure was introduced and, therefore,
to the protectionist intent of the measure.818
7.626 The United States submits that providing consumer in formation about origin and preventing
consumer confusion are legitimate objectiv es within the meaning of Article 2.2. 819 Specifically, the
United States asserts that providing consumers with country of origin information about the food
products they buy so as to help them make info rmed purchasing decisions is always a legitimate
objective within the meaning of Article 2.2. 820 As this provision contains a non-exhaustive list of
legitimate objectives, objectives not explicitly listed in the list may also be legitimate. Furthermore,
the legitimacy of providing consumer information a bout origin and preventing consumer confusion as
objectives are supported by their connection to an obj ective listed in TBT Article 2.2 – the prevention
of deceptive practices. 821 The United States also points out that the complaining parties have not
directly challenged the United States' argument that providing consumer information about origin and
preventing consumer confusion are legitimate objectives. 822 Neither Canada nor Mexico argues that
country of origin labelling is per se inconsistent with the WTO Agreements.
7.627 The United States further submits that the st rong consumer support for country of origin
labelling in the United States, as well as the fact that many WTO Members have notified their country
of origin labelling requirements to the TBT Co mmittee identifying their objective as consumer
information, also support the conclusion that pr oviding consumer information about origin and
preventing consumer confusion are legitimate objec tives within the meaning of Article 2.2. The
United States refers to examples of comments expr essed by certain consumer organizations in the
United States regarding country of origin information on the food products. 823 The United States
therefore contests that it attempted to "shape cons umer perception through regulatory intervention", a
concern raised by the panel in EC – Sardines .824 On the contrary, the design of the measures

816 Mexico's first written submission, para. 287; response to Panel question No. 55.
817 Mexico's first written submission, paras. 287-289; response to Panel question No. 55.
818 Mexico's second written submission, paras. 67-69;response to Panel question No. 135.
819 United States' second written submission, paras. 106-117; opening oral statement at the second
substantive meeting of the Panel, para. 38; Exhibit US-69.
820 United States' response to Panel question No. 132.
821 United States' first written submission, para. 229.
822 United States' second written submission, para. 107.
823 United States' second written submission, para. 110; response to Panel question Nos. 129 and 132;
Exhibits US-17, 49, 61, 85, 113 to 115, 119 to 125.
824 Panel Report, EC – Sardines, paras. 7.127-7.129; United States' first written submission, para. 234.

themselves and the role of consumer advocacy gr oups in urging their adoption reveal that the
regulatory intervention was a response to consumer perception and misperception.
Analysis by the Panel
7.628 Having determined the objective pursued by th e United States, we proceed to examine its
legitimacy.825 We recall that the object of our review in this context is the identified objective
(providing consumer information on origin) pursu ed through the technical regulation, not the
technical regulation itself (the COOL measure).
7.629 As a party challenging the legitimacy of the id entified objective, the complainants bear the
burden to establish that the objective concerned is not legitimate within the meaning of Article 2.2.
7.630 The word "legitimate" is defined as "2. a. Conformable to, sanctioned by or authorized by,
law or principle; lawful; justifiable; proper. b. Normal, regular; conformable to a recognized
standard type" 826 Based on the ordinary meaning, ther efore, we need to assess whether "providing
consumer information on origin " is "conformable to law or principle", "justifiable and proper", or
"conformable to a recognized standard type".
7.631 This understanding is supported by the panel's analysis in this respect in EC – Sardines .
Touching upon the meaning of the term "legitimate" in the context of a legitimate objective as
referred to in Articles 2.2 and 2.4, the panel in EC – Sardines suggested that the term "legitimate"
refers to the genuine nature of the objective.
827 It further noted the statement of the panel in Canada –
Pharmaceutical Patents, in defining the term "legitimate interest s" in the context of Article 30 of the
TRIPS Agreement, that it must be defined "as a normative claim calling for protection of interests that
are 'justifiable' in the sense that they are supporte d by relevant public policies or other social
norms".828
7.632 The third sentence of Article 2.2 provides a non-exhaustive list of legitimate objectives under
Article 2.2: national security requirements; th e prevention of deceptive practices; protection of
human health or safety; animal or plant life or h ealth; or the environment. The use of the term " inter
alia" in Article 2.2 of the TBT Agreement indi cates that the objectives covered extend beyond the
objectives specifically mentioned in Article 2.2. 829 The type of objectives explicitly listed in
Article 2.2 nonetheless demonstrates that the legitim acy of a given objective must be found in the
"genuine nature" of the objective, which is "justifiable" a nd "supported by relevant public policies or
other social norms".

825 We note that there is no dispute that panels are required to determine the legitimacy of an objective
pursued by a Member under Article 2.2 of the TBT Agreement. The panel in EC – Sardines stated that "panels
are ... required to determine the legitimacy of those objectives" (Panel Report, EC – Sardines, para. 7.121).
Australia and Peru also agree that the Panel should examine the legitimacy of the objective pursued by
the United States through the COOL measure. (Australia's third party written submission, paras. 58, 60; Peru's
third-party oral statement at the first substantive meeting of the Panel, para.7)
826 The Shorter Oxford English Dictionary , (Sixth Edition) Oxford Univers ity Press, Vol. I, p. 1577
(2007).
827 Panel Report on EC – Sardines, para. 7.121.
828 Panel Report on EC – Sardines, para. 7.121, referring to Panel Report on Canada – Pharmaceutical
Patents, para. 7.69. The Panel also refers to the Panel in US – Section 110(5) Copyright Act , which stated that
the term has "the connotation of legitimacy from a more normative perspective, in the context of calling for the
protection of interests that are justifiable in the light of the objectives that underlie the protection of exclusive
right" (para. 6.224).
829 Appellate Body Report, EC – Sardines, para. 286.

7.633 As noted by the United States, the complainants do not contest that "consumer information"
on country of origin at a general level can constitute a legitimate objective under Article 2.2.
830
Canada, however, considers that there are some potential purposes for providing information to
consumers that are, or could be, legitimate when the objective is sufficiently specific as to the purpose
of having the information, such as to allow c onsumers to make decisions and choices based on food
safety or environmental protection considerations, objectives closely linked to the listed objectives.
Mexico also agrees that the nature (character an d intrinsic value) of the information that the
United States purports to convey to consumers must be distinguished from the type of information
required, for example, for health or safety pur poses or for making choices according to cultural or
religious beliefs or dietary choices.
7.634 In addressing the complainants' position on this issue, we must bear in mind, as pointed out
above, that Article 2.2 of the TBT Agreement pr ovides a non-exhaustive, open list of legitimate
objectives. This can be contrasted, for instance, with the specific categories of policy objectives
stipulated in the subparagraphs of Article XX of the GATT 1994. In our view, the fact that
Article 2.2 refers to an open list of objectives without any modifying language initially indicates that a
wide range of objectives could potentially fall w ithin the scope of legitimate objectives under
Article 2.2. We do not find in the text of Article 2.2 or any other provision of the TBT Agreement an
explicit requirement that a policy objective pursued by a technical regulation must be specifically
linked in nature to those objectives explicitly listed in Article 2.2.
7.635 Canada submits, on the basis of the ejusdem generis principle, that, in order to be legitimate,
the objective pursued by the United States must be of the type of items specifically listed in
Article 2.2 of the TBT Agreement. Canada argues that, according to this principle, when a general
term such as "inter alia" is followed by specific terms (i.e. the list of legitimate objectives), such term
must be limited to the type of items listed in the specific terms. 831 Based on the ejusdem generis
principle, Canada further argues that the objective pursued by the United States is expressed in a level
of generality that is not as specific as the explicitly listed objectives in Article 2.2.832 According to the
evidence submitted by Canada, this principle estab lishes that when general words follow special
words, the general words are limited by the genus (class) indicated by the special words. For
example, in the phrase "any nuclear weapon test explosion or any other nuclear explosion", the scope
of the italicised words is limited by the preceding words.833

830 See, for example, Canada's opening oral statemen t at the second substantive meeting of the Panel,
paras. 58-59 ("...Canada's challenge pe rtains specifically to the COOL meas ure and its discriminatory impacts
on Canadian-born livestock. ... But a country of origin labelling measure may well be consistent with the
TBT Agreement and the GATT 1994 if ... it fulfils a legitimat e objective in the least trade-restrictive way. ...");
62, 68 ("...Canada is challe nging the COOL measure under TBT Article 2.2 because of its particular
characteristics including its structure, its objective, and the limited information it provides. ..."; Mexico's first
written submission, paras. 284-285 ("...Mexico is of the view that while in certain circumstances providing
consumer information can be a legitimate objective within the meaning of the provision, it is not a legitimate
objective in all circumstances".); Mexico's response to Panel question No. 55 ("It is not Mexico's position that
consumer information is never a legitimate objective when the information supplied pertains to origin"). We
also note the comments of third parties. Australia's thir d-party oral statement at the first substantive meeting of
the Panel, para. 22 ("In Australia's view, the United St ates, through the COOL measur e, is seeking to provide
consumers with additional useful information. Australi a considers that such an objective is a legitimate
objective, and accepts the US view that this objective is "closely related" to preventing dece ptive practices");
European Union's third-party oral statement at the second substantive meeting of the Panel, para. 12 ("We
consider that the objective of providing consumer information about origin is a legitimate one").
831 Canada's second written submission, paras. 71-72.
832 Canada's response to Panel question No. 127.
833 Exhibit CDA-186, 190-191.

7.636 In the present dispute, we do not find that the principle of ejusdem generis is helpful for
determining whether the objective pursued by the United States is legitimate. While the term
"legitimate objectives" might be regarded as a genus (or superordinate) and the list of objectives
specifically mentioned in the provision as examples (or hyponyms), all of the listed examples are
expressed at a high level of generality. Thus, assuming for the sake of argument that the ejusdem
generis principle has a bearing on the level of specificity that an objective must have in the context of
Article 2.2 of the TBT Agreement – a position the Panel doubts – it is difficult to see how the
application of this principle advances Canada's argument.
7.637 Given that legitimate objectives under Article 2.2 are not confined to those explicitly listed in
the provision. In our view, therefore, the fact that the objective of the COOL measure is not related to
health, safety or environmental objectives, does not in itself provide a sufficient basis for finding the
objective in question to be not legitimate. In this connection, the United States points out that nearly
70 other WTO Members maintain some form of mandatory country of origin labelling for food and
other products intended for human consumption.
834 Many of these mandatory labelling systems apply
to food products at the retail level.835 According to the United States, among the WTO Members with
mandatory labelling systems, many explicitly identified consumer information as the objective of their
labelling requirements in their TBT notifications. 836 The United States also notes that many other
WTO Members have also indicated that their manda tory country of origin labelling requirements for
food products were adopted to prevent deceptive practices or prevent consumers from being misled or
confused.837 The United States considers that to conclu de that consumer information and preventing
consumer confusion are not legitimate objectives would suggest that none of these regimes was
adopted to achieve a legitimate objective.
7.638 We have reviewed examples of the mandatory labelling requirements maintained by the
complainants838 and by third parties to this dispute. 839 We observe that many of these labelling

834 See Exhibit US-68 (listing Argentina, Australia, Barbados, Brazil, Canada, China, Chile, Costa
Rica, Colombia, Dominica, the Domi nican Republic, Egypt, El Salvador, the European Union and its 27
Member States (Austria, Belgium, Bu lgaria, Cyprus, the Czech Republic, Denmark, Estonia, Finland, France,
Germany, Greece, Hungary, Italy, La tvia, Lithuania, Luxembourg, Malta, the Netherlands, Poland, Portugal,
Republic of Ireland, Romania, Slovakia, Slovenia, Spain, Sweden, and the United Kingdom), Ghana, the six
members of the Gulf Cooperation Council (Bahrain, Kuwa it, Oman, Qatar, Saudi Arabia, and the United Arab
Emirates), India, Indonesia, Israel , Japan, Kenya, Korea, Malaysia, Mexico, New Zealand, Nigeria, Panama,
Peru, the Philippines, Singapore, South Africa, Switzer land, Chinese Taipei, Thailand, and Vietnam as WTO
Members with mandatory country of origin labelling requirements.) In addition to these 67 WTO Members, the
United States has learned that Guatemala also has ma ndatory country of origin labelling requirements (as
confirmed by Guatemala's responses to the Panel's questions).
835 Many of the country of origin labelling systems that the United States identified in Exhibit US-68
apply at the retail level. Among the third parties, Australia, Brazil, Colombia, the EU, Japan, Guatemala, Korea,
and Chinese Taipei all maintain mandatory country of origin labelling requirements that apply at the retail level.
Others with such requirements include Chile, Malaysia, the Philippines, and Vietnam, among other WTO
Members.
836 This includes Australia, Barbados, Brazil, Chile , Dominica, the EU, Korea, and Chinese Taipei
(Exhibit US-69).
837 Among those Members are Colombia, Dominica, the EU, Malaysia, Qatar, and Switzerland
(Exhibit US-69).
838 Canada submits that "meat that is derived from animals slaughtered in Canada is not required to
have a country of origin label"; rather, voluntary country of origin claims are governed by the "Product of
Canada guidelines (Canada's response to Panel quest ion No. 40). However, Canada maintains various
mandatory country of origin requirements for dairy products (Exhibit CDA-164), eggs (Exhibit CDA-165) and
processed eggs (Exhibit CDA-166). There are also several mandatory country of origin requirements for
imported products, such as maple products (Exhibit CDA-167), processed fish (Exhibit CDA-168), processed
products (Exhibit CDA-169), brandy (Exhibit CDA-170), organic products (Exhibit CDA-171), fresh fruit and

requirements purport to provide cons umer information on origin of food products. This suggests that
consumer information on country of origin is considered by a considerable proportion of the WTO
Membership to be a legitimate objective under th e TBT Agreement. For example, among the third
parties, Australia notified the TBT Committee of its "Final Assessment Report Proposal P292 –
Country of Origin Labelling of Food" whose objec tive is ensuring "that adequate information is
provided about the origin of food products to enable consumers to make informed choices".
840
7.639 Further support for our understanding can be f ound in the context of the GATS. Specifically,
the Accountancy Disciplines, developed in accordance with Article VI :4 of the GATS, also refers to
the "protection of consumers" as an example of "legitimate objectives" in Section II, paragraph 2
(General Provisions). The Accountancy Disciplines , as the first disciplines developed under the
mandate of Article VI:4 of the GATS, have an almost identical text to that of Article 2.2. Section II,
paragraph 2 of the Accountancy Disciplines states:
"Members shall ensure that measures ..., relating to licensing requirements and
procedures, technical standards and qualification requirements and procedures are not
prepared, adopted or applied with a view to or with the effect of creating unnecessary
barriers to trade in accountancy services . For this purpose, Members shall ensure
that such measures are not more trade-rest rictive than necessary to fulfil a legitimate
objective. Legitimate objectives are, inter alia, the protection of consumers (which
includes all users of accounting services and the public generally), the quality of the
service, professional competence, and the integrity of the profession."
841 (emphasis
added)
7.640 We are mindful that, given the different types of measures falling within the scope of the
TBT Agreement and Article VI:4 of the GATS, legitimate objectives pursued through measures

vegetables (Exhibit CDA-172) and honey (Exhibit CDA-173). With the exception of the regulation on organic
products, all of the other measures pre-date the estab lishment of the WTO. Mexico imposes certain mandatory
country of origin labelling requirements for prepackaged food and non-alcoholic beverages through the measure
Especificaciones generales de etiquetado para alimen tos y bebidas no alcohólicas preenvasados-Información
commercial y sanitaria (NOM-051-SCFI/SSA1-2010). The objective set out in the measure is to establish the
commercial and sanitary information for the labelling of prepackaged food and non-alcoholic beverages of
domestic or foreign origin (Exhibits MEX-72 and 73; G/TBT/N/MEX/178/Add.2.)
839 The European Union notified the TBT Committee of its Proposal for Regulation Establishing a
System for the Identification and Registration of Bovine Animals and Regarding the Labelling of Beef and Beef
Products and Repealing Council Regulation (EC) No 820 /97 (as amended) whose objective is establishing a
compulsory labelling system in the beef sector based on objective criteria of the origin of the beef and to
continue the voluntary labelling arrangements for labels containing indications other than those provided for in
the compulsory system (Exhibit US-68; G/TBT/Notif.00/289 (20 June 2000)). Korea has notified several
instruments to the TBT Committee establishing provisions regarding the country of origin labelling of certain
meat products sold in restaurants. Within the variou s measures notified there are four main objectives: (i)
ensuring the consumers' right-to-know and right-to-choose; (ii) the prevention of deceptive practices; (iii)
establishing market and distribution order of agricultural and livestock products and providing correct
information for purchase to consumers; and (iv) enhanci ng the credibility of beef products (Exhibit US-68;
G/TBT/N/KOR/111 (22 June 2006); G/TBT/N/KOR/156 (18 September 2007) and G/TBT/N/KOR/202 –
Addendum (20 January 2009); G/TBT/N/KOR/173 (7 May 2008); G/TBT/N/KOR/181 (7 August 2008);
G/TBT/N/KOR/202 (20 January 2009); G/TBT/N/KOR/291 (23 September 2010)).
840 The notified Proposal recommends, inter alia, expanding the scope of country of origin labelling
beyond fish, fruit and vegetables for certain processed foods, such as fruit and vegetables and pork, which are
displayed for retail sale unpackaged (Australia's third pa rty response to Panel question No. 1; Exhibit US-68;
G/TBT/N/AUS/45).
841 The Council for Trade in Se rvices adopted the concerned Accounting Disciplines on
14 December 1998.

falling under each agreement might not always be iden tical. Nonetheless, the reference to protection
of consumers as one example of legitimate object ives in the context of the GATS, which has the
language almost identical to Article 2.2, sugg ests to us that objectives relating to consumer
information or consumer protection can in prin ciple constitute a legitimate objective under the WTO
covered agreements.
7.641 As already noted above 842, there is a basic agreement among the parties that consumer
information concerning country of origin can constitute a legitimate objective. At the same time, the
complainants underline that its legitimacy should be determined based on the factual circumstances of
each case. In their view, the United States' stat ed objectives in this dispute should not be found
legitimate unless the United States can prove that it is important for consumers to be provided with
that information or why consumers need that information. Specifi cally, Canada points out that the
United States has provided very limited evidence of consumer desire for information related
specifically to the origin of meat derived from impor ted livestock. It maintain s that "[t]he 'consumer
interest' expressed in that limited evidence is prot ectionist, based on a false premise, or concerned
with an objective the COOL measure does not seek to achieve".843
7.642 The United States argues that the origin info rmation in question helps consumers make
informed choices and prevents consumer confus ion caused by the FSIS "Product of the U.S.A."
labelling system and the USDA grade labelling system.844
7.643 In addressing the parties' arguments in this regard, we recall the concern expressed by the
panel in EC – Sardines:
"If we were to accept that a WTO Member can 'create' consumer expectations and
thereafter find justification for the trade-restrictive measure which created those
consumer expectations, we w ould be endorsing the permissibility of 'self-justifying'
regulatory trade barriers. Indeed, the danger is that Members, by shaping consumer
expectations through regulatory intervention in the market, would be able to justify
thereafter the legitimacy of that very same regulatory intervention on the basis of the
governmentally created consumer expectations. ..."
845 (emphasis added)
7.644 In the context of the present dispute, the complainants are of the view that the United States is
trying to shape consumer perception through regulator y intervention and to justify the legitimacy of
this intervention on the basis of a gove rnmentally created consumer perception. 846 We bear this i n
mind in proceeding with our analysis.
7.645 The United States maintains that there is st rong evidence showing US consumer demand for
country of origin information of the kind covered by the stated objective. 847 The United States
submits that leading consumer organizations in th e United States have expressed support for country
of origin labelling for consumer information purposes and as a means of preventing consumer
confusion. As one example, the United States re fers to Consumers Federa tion of America, which
indicated that it "has long supported a mandatory country of origin labelling (COOL) program as a

842 See para. 7.633.
843 Canada's opening oral statement at the first substantive meeting of the Panel, para. 49.
844 See paras. 7.587-7.589.
846 Mexico's first written submission, paras. 294-295.
847 United States' response to Panel question No. 129; Exhibits US-17, 49, 61, 85, 113 to 115,
119 to 125.

means of providing consumers with important information about the source of their food".
848 In a
joint letter with the National Consumers League and Public Citizen – two other leading US consumer
organizations, the Consumers Federa tion of America also wrote that "[w]ithout country of origin
labelling, these consumers are unable to make an informed choice between US and imported products.
In fact, under the Agriculture Depart ment's grade stamp system, they could be misled into thinking
some imported meat is produced in this country". 849 Similarly, the Consumers Union wrote that "it is
clear that consumers desire to know where their food is coming from".850
7.646 The United States also refers to the followi ng to demonstrate consumer support for the
country of origin information of meat: (i) exhibits showing individual consumers who have expressed
support for country of origin labelling to provide consumer information and prevent consumer
confusion851; (ii) thousands of other consumers who e xpressed a similar view during the rule-making
process, urging USDA to adopt the COOL implementing regulations for these purposes 852; and (iii)
numerous polls that indicate consumer support for mandatory country of origin labelling.853
7.647 This evidence generally refers to comments ma de during the legislative process, hence it may
not necessarily prove the existence of public polici es or consumer demand calling for the pursuit of
the stated objective that led to the introduction of the COOL measure. The absence of evidence
independent of the legislative process showing c onsumer desire for the information on origin as
defined by the United States, however, is not in itself sufficient to prove that providing such consumer
information on origin is not a legitimate objective within the meaning of Article 2.2.

848 Exhibit US-5 (20 August 2007). In their comments on mandatory country of origin during the
legislative history of the COOL measure Consumers Federation of America defines itself as "a non-profit
association of more than 300 organizations with a combined membership of over 50 million Americans
nationwide (...) to a dvance the consumer interest s through research, educati on and advocacy" (Exhibit US-5,
page 1).
849 Exhibit US-61, p. S13275.
850 Exhibit US-4 (20 August 2007). The United St ates argues that the su pport of pro-consumer
organizations for country of origin labelling for consumer information purposes is also found internationally.
For example, the Trans Atlantic Consumer Dialogue ("TACD"), a forum of 27 U.S. consumer organizations
(Exhibit US-110), 49 EU consumer organizations (Exhibit US-110), and 3 observer organizations from Canada
and Australia (Exhibit US-110), adopted a resolution on country of origin labelling stating that "consumers have
repeatedly and overwhelmingly expressed their support for country of origin labelling of food products both in
the United States and in European countries." (TACD Resolution on Country of Origin Labelling, Doc. No.
Food 29-08 (March 2008) (Exhibit US-111), p. 1) TACD's objective is to develop policy recommendations for
the US government and the EU to promote consumer interest and the organizations often adopt
recommendations and resolutions by consensus of its members (TACD Annual Recommendations
(Exhibit US-112). The United States points out that in TACD's resolution on country of origin labelling, these
79 different consumer organizations espoused the benefits of country of origin labelling (Exhibit US-111, p. 2).
It states in relevant part, "[C]ountry of origin labeling can provide consumers with additional information to
make informed choices about the food they wish to purchase and consume. Many consumers may wish to
purchase food from producers in their own country or may wish to purchase food products from another country
known for producing a particular food. Reasons for this vary from environmental and ethical principles to food
quality and food standard choices. Without labeling that identifies where that food has been produced,
consumers are unable to make those choices in an informed manner when they are at the point of purchase."
851 For example, Gregory Cook of Fircrest, Washington wrote to USDA: "I am writing in support of
regulations requiring country of origin labelling (COOL) of meats sold in the U.S. I believe that we –
consumers and citizens – should be able to make informed choices when purchasing meat and other foods.
Labels stating country of origin would be a big help in those choices." (Comments submitted by Gregory Cook
to USDA (July 18, 2007) (Exhibit US-113)); and Becky McManus of Volin, South Dakota wrote to USDA: "I
completely support country of origin labelling. As c onsumers we have the right to know where the food we
consume comes from" (Comments submitted by Becky McManus to USDA (July 2007) (Exhibit US-114)).
852 Exhibits US-17, 49, 61, 85, 113 to 115, 119 to 125.
853 Exhibit US-5.

7.648 Clearly, if consumers know the country of origin, they will be able to make informed choices
with respect to origin of products, including meat . Some consumers may indeed have preferences for
products produced by or originating in particular countries for a variety of reasons.
7.649 We also acknowledge that Members have certain policy space in determining their objectives.
There are therefore circumstances in which Members may decide to a dopt particular regulations even
in the absence of a specific dema nd from their citizens, and may do so without in fact shaping
consumer expectations through regulatory intervention. We also note the panel's statement in Korea –
Various Measures on Beef that "there can be good reasons – apart from any protectionist motives –
why a WTO Member might want information to be provided as to the origin of products, and
particularly meat products, at the retail level".854
7.650 We are persuaded, based on the evidence before us regarding US consumer preferences as
well as the practice in a considerable proportion of WTO Members, that consumers generally are
interested in having information on the origin of th e products they purchase. We also observe that
many WTO Members have responded to that inter est by putting measures in place to require the
provision of such information, albeit with different definitions of "origin". In this regard, we once
again recall the words of the panel in EC – Sardines referring to the conclusion of the panel in
Canada – Pharmaceutical Patents that a legitimate objective refers to "protection of interests that are
'justifiable' in the sense that they are supported by relevant public policies or other social norms". 855
In our view, whether an objective is legitimate can not be determined in a vacuum, but must be
assessed in the context of the world in which we live.856 Social norms must be accorded due weight in
considering whether a particular objective pursued by a government can be considered legitimate. It
seems to us, based on the evidence before us, that providing consumers with information on the origin
of the products they purchase is in keeping with the requirements of current social norms in a
considerable part of the WTO Membership.
7.651 In light of the foregoing, we conclude that providing consumer information on origin is a
legitimate objective within the meaning of Article 2.2.
(d) Whether the COOL measure is more trade-rest rictive than necessary to fulfil the legitimate
objective
7.652 In this section, we assess whether the complain ants have established that the COOL measure
is more trade-restrictive than necessary to fulf il the identified objective of providing consumer
information on origin. The complainants' positi on on this issue is based on the following two
elements: (i) the COOL measure does not fulfil the objective; and (ii) even if the COOL measure
were found to fulfil the objective, it is more trade-restrictive than necessary because there are
alternative measures that are less trade-restrictiv e than the COOL measure, but which equally fulfil
the objectives.

854 Panel Report, Korea – Various Measures on Beef, para. 655.
855 Panel Report on EC – Sardines, para. 7.121, referring to Panel Report on Canada – Pharmaceutical
Patents, para. 7.69. The Panel also refers to the Panel in US – Section 110(5) Copyright Act , which stated that
the term has "the connotation of legitimacy from a more normative perspective, in the context of calling for the
protection of interests that are justifiable in the light of the objectives that underlie the protection of exclusive
rights" (para. 6.224).
856 The Appellate Body in EC – Hormones states:
"It is essential to bear in mind that the risk that is to be evaluated in a risk assessment under
Article 5.1 is not only risk ascertainable in a science laboratory operating under strictly
controlled conditions, but also risk in human societies as they actually exist, in other words,
the actual potential for adverse effects on human health in the real wo rld where people live
and work and die" (Appellate Body Report, EC – Hormones, para. 187).

(i) Main arguments of the parties
7.653 Canada submits that, to fulfil its stated objective, the information available as a result of the
COOL measure would have to be clear and accurate.
857 The COOL requirements can, however,
provide consumers with inaccurate or misleading info rmation. For example, the label information for
muscle cuts is confusing because the meaning of th e labels is not easily deciphered by consumers.
Specifically, where meat products carrying labels B and C are put next to each other at the retail level,
it is a reasonable inference that a consumer would not be able to appreciate the distinction between
them.858 Therefore, they are not provided with accurate information about the country of origin of the
muscle cuts of the meat that they are purchasing. 859 Canada asserts that, even if consumers did
understand the difference between labels A, B, and C, the information on a label provides virtually no
useful information because of the way the COOL measure operates. 860 Moreover, with regard to
ground meat, labels consistent with the requirements under the 2009 Final Rule (AMS) may indicate
that a package of ground meat contains meat from a specified country when in fact it does not.
Furthermore, the COOL measure requires limited information to be put on the labels because
countries are mentioned without any explicit link to place of birth, raising, or slaughter of the
livestock used to produce meat.
861 Specific information on the amount of time that the animal spent in
the United States is not provided.
7.654 Canada further submits that to fulfil the objec tive of providing consumers with information,
the information must be "meaningful" by providing consumers with information that is desired by
them, or at least information on which they are willing to act. 862 The COOL measure, however,
provides information that US consumers generally are not interested in knowing and thus is not
meaningful.
7.655 Canada argues that, if the commingling prov isions and exceptions were removed, the
COOL measure would come closer towards fulfilling the objective. However, the
COOL requirements would still not fulfil the objec tive because there is no evidence that consumers
understand the meaning of labels B and C.
863
7.656 Canada contests the United States' allegation that consumers of meat obtained from Canadian-
born cattle or hogs are confused by the USDA grade labelling. Canada recalls that pork is not USDA
graded and thus, any confusion could only apply to beef. Even assuming that consumers are confused
about the meaning of the USDA grading, the COOL measure will not remove that confusion.864
7.657 Mexico submits that in examining whether the me asures fulfil the objective, the Panel must
consider not only the express legal provisions of the measures, but also their design, architecture and
structure. The COOL measures have substantial ga ps in coverage and impose confusing labels which
create ambiguity and uncertainty. 865 Thus, they cannot fulfil a legitimate consumer information
objective.

857 Canada's second written submission, paras. 78-80.
858 Canada's response to Panel question No. 65; second written submission, para. 79.
859 Canada's first written submission, paras. 178-181.
860 Canada's second written submission, para. 80.
861 Canada's response to Panel question No. 64(a).
862 Canada's second written submission, paras. 81-82, referring to exhibits CDA-177, 192; US-87;
opening oral statement at the second substantive meeting, para. 69.
863 Canada's response to Panel question No. 143; second written submission, para. 79.
864 Canada's response to Panel question No. 138.
865 Mexico's first written submission, paras. 296-302; second written submission, para. 164.

7.658 Mexico asserts that while th ere have been no studies on the extent of consumer knowledge
about the labels under the COOL measure, labe ls B and C are prima facie incomplete and
misleading.866 Mexico argues that consumers would need a matrix to determine even roughly where
their meat products originated under the COOL requirements. This scheme does not and cannot
enlighten consumers. Its only consequence is to create extra costs for foreign cattle. Mexico
highlights the situation where a US consumer would not be able to tell if the animal from which the
beef was derived was born and raised in the US, an d then slaughtered in Mexico, because such beef
would be labelled as Category D ("Product of Mexico") . Mexico contends that the average consumer
would not be able to understand the exact meani ng of the information on the labels under COOL. 867
Mexico argues that the only label giving accurate information to the consumer is Label A.868
7.659 Mexico submits that the COOL measure provides inform ation on the labels with regard to the
possible origin of the product, but not specific information on the amount of time that the animal
spent in the United States.
869 Like Canada, Mexico suggests that the COOL requirements would
better fulfil the stated objective if the comming ling provisions and exceptions were removed.
However, the COOL measure would still have an illegitimate objective and would be more trade-
restrictive than necessary to fulf il that objective. In addition, the removal of the commingling
flexibilities would not remedy the modification of conditions of competition, underlying the non-
discrimination claims brought by Mexico.870
7.660 Further, the COOL measure does not alleviate the alleged consumer confusion derived from
the USDA grade label.871
7.661 The United States argues that the COOL measures fu lfil the legitimate objectives of
providing consumers with additional information about the origin of the food that they buy at the
retail level and of helping to prevent consumer c onfusion related to the la belling of certain products
not entirely produced in the United States and which still carry a USDA grade label.
7.662 Regarding the complainants' position that the m eat labels are confusing, the United States
submits that the complainants have provided no evidence demonstrating that the current labelling
scheme has caused or will cause any consumer c onfusion. Concerning whether average US
consumers are able to tell the difference between la bel categories B and C, the United States submits
that a consumer is likely to believe that the meat is most closely affiliated with the name of the
country that appears first on the label. 872 Further, USDA has undertaken several efforts to educate
consumers on the COOL requirements.873
7.663 As regards whether the COOL requirements c onvey accurate information in light of the
COOL provisions on commingled commodities, the United States emphasizes that meat derived from
livestock imported for immediate slaughter will not be labelled as solely of US origin (i.e. "Product of
the U.S.A.") regardless of whether the animal was commingled with other animals on a single

866 Mexico's response to Panel question No. 65.
867 Mexico's response to Panel question No. 75; opening oral statement at the second substantive
meeting, paras. 49-51.
868 Mexico's opening oral statement at the second substantive meeting, para. 51.
869 Mexico's response to Panel question No. 64(a).
870 Mexico's response to Panel question No. 143.
871 Mexico's response to Panel question No. 138.
872 United States' response to Panel question No. 65.
873 The United States points out that a significant amount of information on the COOL measures is
posted on USDA's website, including a brochure for consumers and retailers to educate them about the different
COOL labels (Exhibit US-88). The United States also re fers to a questions and answers page for consumers,
and an explanatory video about the programme (United States' response to Panel question No. 71).

production day.
874 Consistent with consumer expectations , only meat derived from animals that were
born, raised, and slaughtered in the United States will be designated as of US origin. The
United States concedes that while it is true that the COOL requirements could have been designed to
provide even more specific information in certa in circumstances (requiring the labelling of each
production step or not permitting commingling), it ar gues that measures designed in this way would
also have been much more burdensome.
875 The envisaged measures were altered during the rule-
making process in response to comm ents received from interested parties, including Canada and
Mexico, and added flexibilities to help reduce compliance costs while providing greater information
than previously available. Thus, the COOL measures achieve their stated objectives.
876
7.664 The United States argues that certain gaps ex isting in the coverage of products under the
measures do not mean that the measures do not fulfil the stated objective. Article 2.2 does not require
that a Member pursue the particular objective to the maximum possible degree without regard to costs
or other considerations. Nor does Article 2.2 precl ude a Member from striking a balance between the
level at which a technical regulation achieves a pa rticular legitimate objective and the costs that a
technical regulation imposes on market participants. The United States clarifies that taking costs into
consideration does not reflect a lowering of the leve l at which it decided to fulfil its objectives of
providing consumer information about orig in and preventing consumer confusion. 877 I n f a c t , t h e
commingling provisions criticized by the complainants were specifically included at the request of the
Canadian Pork Council and the Canadian government.878
7.665 Furthermore, the United States submits that th e COOL requirements help prevent consumers
from being misled about the origin of meat in two different ways. 879 First, by ensuring that all meat
sold at the retail level has an origin label, the COOL requirements prevent consumer confusion related
to the appearance of a USDA grade label on meat th at is not US origin, while also allowing both
domestic and imported products to benefit from the use of these grade labels. Second, the
COOL requirements prevent the confusion that may have occurred when produc ts that were derived
from animals born and/or raised in another country and then slaughtered in the United States were
labelled as a "Product of the U.S.A." Under the COOL requirements, these products will now be
labelled as mixed origin products a nd consumers will not mistakenly believe that they are products
derived from animals born, raised, and slaughtered in the United States when that is not the case.880
(ii) Analysis by the Panel
7.666 In assessing the COOL measure's fulfilment of the objective, we start by recalling the
objective pursued by the United States and the core features of the country of origin labelling
requirements.
7.667 In conducting this assessment, we will also refer to the legal test established under relevant
provisions of other covere d Agreements, including both Article XX of the GATT 1994 881 and

874 United States' response to Panel question No. 64(b).
875 United States' first written submission, paras. 62-66; responses to Panel questions Nos. 58, 73.
876 United States' first written submission, paras. 23 4-241; response to Panel question No. 24; second
written submission, paras. 101-102; opening oral statement at the second substantive meeting, paras. 48-49.
877 United States' response to Panel question No. 142.
878 United States' second written statement, footnot e 32; opening oral statement at the second
substantive meeting, para. 44, referring to Exhibit US-44.
879 United States' response to Panel question No. 56; Exhibit US-84.
880 United States' response to Panel question No. 56.
881 We are aware that Article 2.2 of the TBT Ag reement sets out a provision setting out specific
obligations, whereas Article XX of the GATT 1994 provides for general exceptions to obligations. This has an
important implication regarding the allocation of the burden of proof between the complainants and the

Article 5.6 of the SPS Agreement, to the extent appropriate.882 In this connection, we find support for
our approach in the Appellate Body's statement in Australia – Apples . In the context of analysing a
provision under the SPS Agreement, the Appella te Body found interpre tative assistance in the
meaning attributed to a provision of the GATT 1994, based on the fact that both provisions form
integral parts of the same Agreement by virtue of Article II:2 of the WTO Agreement.883
7.668 Although the United States agrees that the lega l interpretative approach undertaken by the
Appellate Body in the context of Article 5.6 of the SPS Agreement provides useful insights for the
interpretation of Article 2.2 of the TBT Agreement 884, it has argued that the legal interpretive
approach developed by previous panels and the Appe llate Body in the context of Article XX of the
GATT 1994 is not relevant to Artic le 2.2 in the present dispute. 885 In essence, the United States puts
forward the following arguments to support its position. First, the United States contrasts the context
in which the word "necessary" is used and the lega l question under Article 2.2 of the TBT Agreement
with that under Article XX of the GATT 1994. Specifically, the United States describes the question
under Article 2.2 of the TBT Agreement as whethe r a measure is "more trade restrictive than
necessary to fulfil a legitimate objective", where as under Article XX of the GATT 1994 the question
is whether it is necessary to br each the obligation(s) under the GATT 1994 to pursue one or more of
the policy objectives under Article XX. Second, th e United States highlights the difference in the
allocation of the burden of proof under Article 2.2 of the TBT Agreement and Article XX of the
GATT 1994.886 Third, the United States argues that the language in Article 5.6 of the SPS Agreement
is much more similar to the language in Article XX of the GATT 1994, and there is no textual basis to
apply the legal interpretive approach under Article XX to Article 2.2.
7.669 We do not consider the United States' argume nts as supporting its position that the legal
interpretive approach under Article XX is not relevant to Article 2.2. We agree that Article 2.2 of the
TBT Agreement and Article XX of the GATT 1994 are two independent provisions under two

respondent. Thus, the complainants in the current dispute must establish a prima facie case that the
COOL measure is more trade-restrictive than necessary to fulfil a le gitimate objective with in the meaning of
Article 2.2. In contrast, it would be the respondent un der Article XX of the GATT 1994 who must establish a
prima facie case that the measure is necessary to [achieve] certain objectives within the scope of the provision.
882 Several third parties submit that the Panel should refer to the extent necessary to the legal tests
developed under Article XX of the GATT 1994 or Article 5.6 of the SPS Agreement. However, all these third
parties agree that, in the context of Article 2.2 of the TBT Agreement, it is not necessary for the complainants to
provide a less trade-restrictive alternative measure which is significantly less trade-restrictive, as is the case
under Article 5.6 of the SPS Agreement. See, for example, Australia's third party written submission, paras. 74,
76; Brazil's third party written submission, paras. 7-8; Japan's third party written submission, para.27; and New
Zealand's third-party oral statement at the second substantive meeting, para. 7.
883 Appellate Body Report, Australia – Apples , para. 173, footnote 285. In finding interpretative
assistance in the meaning that has been attributed to a ph rase in Article III:1 of the GATT 1994 in relation to its
analysis of a phrase contained in Annex A(1)(a) of the SPS Agreement, the Appellate Body noted that both
provisions form part of the same Agreement by virtue of Article II:2 of the WTO Agreement and thus each
constitutes context relevant to the interpretation of the other.
884 United States' second written submission, paras. 102-105.
885 United States' second written submission, paras. 104-105, also referring to Guatemala's response to
Panel third party question No. 5.
The United States also referred to a letter from the Director-General of the GATT to the Chief
Negotiator as evidence confirming that Article 2.2 of the TBT Agreement should be interpreted similarly to
Article 5.6 of the SPS Agreement (United States' first written submission, para. 248; second written submission,
para. 105; Exhibit US-53). Although it focuses on the similar interpretive approaches that should be taken
between Article 2.2 of the TBT Agreement and Article 5.6 of the SPS Agreement, the United States has not
elaborated on how the letter supports its position that the interpretive approach under Article XX of the
GATT 1994 is irrelevant to Article 2.2 of the TBT Agreement.
886 See footnote 881 for our observation in this regard.

different WTO covered agreements. This does no t mean, however, that the legal interpretive
approach under one provision and the legal interpre tive approach under another cannot inform each
other. In our understanding, the United States hi ghlights the differences between these provisions
without explaining why such differences render the legal test under Article XX irrelevant for an
analysis under Article 2.2.
7.670 The following considerations further support th e view that the legal interpretive approach
under Article XX is relevant to Article 2.2. First, the 2
nd recital in the Preamble of the
TBT Agreement prescribes the WTO Members' desire to "further the objectives of GATT 1994".
This indicates a close connection between the TBT Agreement and the GATT 1994. Second,
Article 2.2 of the TBT Agreement is textuall y similar to Article XX of the GATT 1994. The
examples of legitimate objectives explicitly liste d in Article 2.2 resemble the types of policy
objectives prescribed under Article XX of the GATT 1994.887 Further, the wording of the 6th recital in
the Preamble of the TBT Agreement is also simila r to that of the chapeau of Article XX of the
GATT 1994. We therefore disagree with the United States.
7.671 The objective that the United States pursues through the COOL measure is to provide
consumers with information on the origin of produc ts they consume. Specifically with respect to
meat products, the United States describes its objec tive in more detail as follows: (i) consumer
information – the COOL measure purports "to provi de consumers with as much clear and accurate
information as possible about the country or countries of origin of meat products that they buy at the
retail level", particularly "information on the count ries, where the animal from which the meat was
derived was born, raised, and slaughtered"; an d (ii) prevention of consumer confusion – the
COOL measure purports to prevent confusion rela ting to a USDA grade label and the previous FSIS
"Product of the U.S.A." labelling system, which al lowed this label if the meat products received
minimal processes in the United States.
7.672 As explained in detail in Section VII.C.1(b)(i ) above, under the COOL measure, retailers of
covered commodities are required to inform consumers of the country of origin of the covered
commodity according to the labelling requirements under the measure. Muscle cuts of meat must fall
under one of the four categories for labelling (i.e. Labels A, B, C, and D) based on the countries
where the animal from which meat was derived w as born, raised, and slaughtered. The 2009 Final
Rule (AMS) allows the use of Labels B or C inte rchangeably when any combination of meat falling
under category A, B, and/or C is commingled on a single production day.
7.673 The United States defines the origin of meat based on the place where an animal from which
meat is derived was born, raised, and slaughtered.
888 In this context, the United States elaborates that
the COOL measure adopts a definition of origin that avoids misleading consum ers into believing that

887 The examples of legitimate objectives explicitly listed in Article 2.2 of the TBT Agreement are as
follows: national security requirements; the prevention of deceptive practices; protec tion of human health or
safety, animal or plant life or health, or the environmen t. The policy objectives falling within the scope of
Article XX of the GATT include the following: protection of public morals; protection of human, animal or
plant life or health; the compliance with laws or regula tions relating to customs enforcement or the prevention
of deceptive practices; and the conservation of exhaustible natural resources.
The term "necessary" in Article XX of the GATT 1994 follows the term "measures" and is followed by
the phrases such as " to protect human … life or health" and " to secure compliance with laws or regulations".
The same term "necessary" in Article 2.2 of the TBT Agre ement follows the phrase "not more trade restrictive
than" and is followed by the phrase "to fulfil a legitimate objective".
888 We are not presented with evidence showing that any other Member has adopted the same definition
of the origin of meat as the United States.

the meat they are buying was derived from an animal that was born, raised, and slaughtered in the
United States when this is not the case.889
7.674 We are aware that the US definition of orig in for labelling purposes is different from that
employed for customs purposes. For customs pur poses, the United States relies on the rules of
substantial transformation for determining the orig in of products imported into the United States. 890
For imports from a NAFTA country, there are two sets of rules regarding NAFTA qualification – one
set for preference purposes and another for marking purposes. Usually they have the same outcome.
The NAFTA Marking Rules are based on the tariff-shift principle. Thus, the tariff classification of the
imported product is compared to the tariff classificat ion of the finished product to determine whether
a sufficient shift has occurred.
7.675 There is no basis, however, for us to find th at the United States is prohibited from adopting
for labelling purposes an origin definition which is different from that for customs purposes. We thus
carry out our analysis of the COOL measure and its fulfilment of the stated objective on the basis of
the definition of origin for meat products as dete rmined by the United Stat es. We recall that the
United States defines the origin of meat based on the places where animals used to produce meat were
born, raised and slaughtered.
7.676 The complainants argue that the COOL measure was designed to protect the domestic
industry. Even if the objective were to provide consumer information on origin as claimed by the
United States, according to the complainants, th e COOL measure does not fulfil the identified
objective, essentially because the country of origin information provided according to the labelling
requirements is confusing and insufficient.
7.677 In light of the complainants' argument and of our earlier decision to examine this argument in
the context of whether the COOL meas ure fulfils the identified objective
891, we first examine whether
the identified objective is indeed the objective of the COOL measure.
Whether consumer information on origin is the objective of the COOL measure
7.678 The complainants contend that the COOL measure is designed to protect the domestic
industry. According to the complainants, this mu st be confirmed based on not only the text of the
measure, but also the design, architecture and struct ure of the COOL measure. In this context, the
complainants have also referred to various stat ements made by legislators during the legislative
process for the COOL statute. We will address the se elements in turn, starting with the text of the
COOL measure.
7.679 We first turn to the text of the COOL measure.892
7.680 The text of the COOL statute and the 2009 Fi nal Rule (AMS) contains provisions on the
country of origin labelling requirements, in cluding the product scope and nature of the
requirements.893 We find that while the text of these pr ovisions does not describe the objective of the

889 United States' opening oral statement at the second substantive meeting, para. 42.
890 Canada's response to Panel question No. 59; Mexico's response to Panel question No. 59.
891 See para. 7.608.
892 Australia agrees that the Panel should start its analysis for determining the objective of the
COOL measure with the text of the measure (Australia's third-party oral statement at the second substantive
meeting, para. 10).
893 The main requirement ("Notice of Country of Origin" – "In General") under the 2002 Farm Bill, as
amended and the 2008 Final Rule is the following: "a retailer of a covered commodity shall inform consumers,

measure, it is devoted exclusively to the labelling requirements on origin. The summary part of the
2009 Final Rule (AMS) also states that the COOL statute requires retailers to notify their customers of
the country of origin of covered commodities.
894 As part of the agency response to comments from
the public, USDA further explains that "[w]ith regard to producer benefits, while some U.S. producers
may hope to receive benefits from the COOL program for products of U.S. origin, the purpose of the
COOL program is to provide consumers with origin information". 895 Therefore, the text of the
COOL measure confirms that the objective of the CO OL measure is to provide consumer information
on origin.
7.681 To support their position that the objective of the COOL measure is not consumer information
as stated by the United States, the complainants al so point to the measure's design and structure,
particularly the coverage of commodities and exemptions, of the COOL measure.
7.682 The scope of covered commodities under the measu re is defined in 7 U.S.C. §1638(2)(A) of
as follows: "[t]he term 'covered commodity' means– (i) muscle cuts of beef, lamb, and pork; (ii)
ground beef, ground lamb, and ground pork; (iii) farm-raised fish; (iv) wild fish; (v) a perishable
agricultural commodity; (vi) peanuts; and [foot note omitted] (vii) meat produced from goats; (viii)
chicken, in whole and in part; (ix) ginseng; (x) pecans; and (xi) macadamia nuts". 896 T h e
complainants argue that the United States limite d the product scope of the COOL measure to US
products threatened by foreign competition. The complainants highlight the fact that various
products897 that are produced in the United States, but that face little or no competition, are not subject
to the COOL measure.898
7.683 The complainants further submit that the tr ue objective of the COOL measure is trade
protectionism as demonstrated by the fact that the COOL measure excludes from its scope covered
commodities that are an ingredient in a processed food item or that undergo processing 899, as well as
certain entities (e.g. se rvice food establishments 900, entities selling perishable agricultural
commodities below US$230,000 per year 901). In fact, argue the compla inants, if the objective of the
COOL measure were to provide origin information, it would have to apply on a more widespread
basis.902
7.684 We are not persuaded by the complainants' arguments. We consider that merely because the
COOL measure does not apply to all food products and all relevant entities does not necessarily mean
that the measure is designed for a protectionist purpose. In fact, it is not atypical for any kind of

at the final point of sale of the covered commodity to consumers, of the country of origin of the covered
commodity."
894 74 FR 2658.
895 74 FR 2670.
896 Exhibits CDA-1; MEX-9.
897 Canada argues that the products that face little or no import competition, include almonds (with a
market share of 99.5%), walnuts (with a market share of 99.1%), pistachio s (with a market share of 99%) and
turkey (with a market share of 99.9%).
898 Canada's first written submission, paras. 161-170; Mexico's first written submission, paras. 171-172.
899 7 C.F.R. §65.220.
900 7 U.S.C. §1638a (b).
Exhibit CDA-5, p. 2705; 7 U.S.C. 499a(b)(11) of the PACA defines a retailer as "a person that is a dealer
engaged in the business of selling any perishable agricultural commodity at retail." Then, 7 U.S.C. 499a(b)(6)
defines the term "dealer" as follows: "(B) no person buying any such commodity solely for sale at retail shall be
considered as a 'dealer' until the invoice costs of his purchases of perishable agricultural commodities in any
calendar year are in excess of $230,000".
902 Canada's second written submission, para. 57; Mexico's first written submission, paras. 173-174.

regulation to have exceptions in terms of the products and entities that are subject to it. Some of such
exceptions might be justifiable for practical reasons and simply facilitate the implementation of the
measure at issue without necessarily involving protectionist intent. We also consider that the scope of
the COOL measure is broad enough to cover a significant range of food products and entities handling
these products.
7.685 Our assessment of the COOL measure, based on its text, and design and structure, is that its
objective is consumer information on origin as declared by the United States.
7.686 Finally, we turn to the issue of meaning and legal relevance of various statements made by
legislators during the legislation process for the COOL measure to confirm its objective. 903 We are
aware of the Appellate Body's statement in Japan – Alcoholic Beverages addressing the prohibition in
Article III against applying internal taxes and other charges "so as to afford protection to domestic
production", indicating that it is "not necessary for a panel to sort through the many reasons legislators
and regulators often have for what they do and we igh the relative significance of those reasons to
establish legislative or regulatory intent". 904 I n Chile – Alcoholic Beverages , the Appellate Body
explained that "[t]he subjective intentions inhabiting the minds of individual legislators or regulators
do not bear upon the inquiry, if only because they are not accessible to treaty interpreters". 905 The
same logic could be applied to Article 2.2 of th e TBT Agreement when inquiring into a Member's
measure setting out its stated legitimate objective. In this case, we have evidence before us purporting
to demonstrate the legislators' intentions. Accord ing to the Appellate Body, it is possible to have
recourse to "the statutory purposes or objectives – that is, the purpose or objectives of a Member's
legislature and government as a whole – to the extent that they are given objective expression in the
statute itself".906 Thus, although the Appellate Body has indicated that it is not necessary for a panel
to conduct the inquiry, we will examine the statem ents referred to by the parties to assess whether
they are given objective expression in the COOL measure itself.
7.687 The complainants presented several statemen ts from Members of the US Congress with a
view to demonstrating that the objective of the COOL measure is trade protectionism. 907 T h e
United States argues in response that statements by Members of Congress confirm that the objective
of the COOL measure is "to provide consumers with additional information regarding the origin of
the covered commodities".908
7.688 Canada submits that the intent of the COOL m easure is to protect US ranchers from foreign
competition by recapturing market share for US cattle. 909 Examples of statements identified by
Canada include the following: (i) "I want to cap ture that 22 percent of the beef market for our

903 Korea considers that reference to only certain chos en statements from legislators may not be able to
convey the legislative background accurately (Korea's third party written submission, para. 18).
904 Appellate Body Report, Japan – Alcoholic Beverages, p. 27.
905 Appellate Body Report, Chile – Alcoholic Beverages , para. 62 (emphasis in or iginal). See also the
Appellate Body Report, US – Offset Act (Byrd Amendment), para. 259.
906 Appellate Body Report, Chile – Alcoholic Beverages, para. 62.
907 Canada's first written submission, paras. 13 , 172-174; Mexico's second written submission,
paras. 79-80. The complainants also refer to statements by an interest group, R-CALF. In particular, a letter
from R-CALF to the US Secretary of Agriculture and US Trade Representa tive states the following: "[l]acking
any affirmative action on the part of USDA or USTR to mitigate this untenable but prolonged trade imbalance
that continues to drive tens of thousands of U.S. cattle farmers and ranchers out of business each year, COOL is
the only available tool that the U.S. cattle industry has to even begin to rebalance the lopsided trade relationships
with Canada and Mexico." (Canada's first written subm ission, para. 171, referring to Exhibit CDA-145;
Mexico's first written submission, para. 182, referring to Exhibit MEX-50).
908 United States' first written submission, para. 28 (Exhibit US-12).
909 Canada's first written submission, paras. 13, 172-174.

American producers"
910; (ii) "I am perfectly willing to put ba rriers at the borders so I just want to
clear that up"911; (iii) "[the COOL measure would] give our independent producers a leg up".912
7.689 Mexico also puts forward statements by Member s of the US Congress in the context of the
2002 Farm Bill allegedly showing protectionist inte nt. These include the following statements: (i)
"[p]roducers pushed Congress to include a country of origin labeling and their work paid off. When
given this option, I believe consumers will pick American produce over our foreign competitors" 913;
(ii) "Western South Dakota cow-calf ranchers will be proud to know that the standard for 'U.S. beef'
under my provision will require it to come from cattle born, raised, and slaughtered in the
United States, despite a last-minute campaign by op ponents to allow foreign cattle to qualify as U.S.
beef"
914; (iii) "[t]his program will specifically inform consumers right at their local markets whether
they are eating U.S. products, or products produced under the laws of another nation (...) U.S. origin
labeling is important because it will allow consumers to vote with their wallets to support U.S.
farmers, ranchers, and fishermen" 915; (iv) "Country of Origin Labeling for fresh meats, fruits,
vegetables and fish will help Oregon's producers".916
7.690 The United States submits statements by tw o Congressmen which support their position that
the COOL measure provides information to consumers about the origin of their food. One of them
states that this legislation is important mainly917 because "[f]irst, consumers have the right to know the
origin of the meat that they buy in the grocery st ore. Second, ranchers d eserve to have their product
clearly identified. Third, current law creates a false impression about the origin of USDA grade
meat".918 Another Member of Congress advances that "[t] he country of origin of their food is as
important as knowing the country of origin of any other product they might buy as a consumer in the
United States".919
7.691 We have examined all of the statements by i ndividual legislators submitted by the parties in
this respect and conclude that, while the sentime nt in some of them finds expression in the
COOL measure, the sentiment in others does not. On balance, we do not find this evidence of
assistance in our inquiry into the objective of the COOL measure. In fact, it is not inconceivable that
parliaments and governments pursue more than one objective through a certain measure. Different
constituencies and legislators may have different objectives, which nonetheless lead to the adoption of
a particular measure. In such cases, a panel should not be second-guessing va rious intents behind the
introduction of that measure. The above statements therefore do not affect our conclusion that the
objective of the COOL measure is to provide consumer information on origin.

910 Hearing before the Sub-committee of livestock and horticulture of the Committee on Agriculture,
House of Representatives, 26 September 2000 (Exhibit CDA-10, p.6).
911 Hearing before the Sub-committee of livestock and horticulture of the Committee on Agriculture,
House of Representatives, 26 September 2000 (Exhibit CDA-10, p.42).
912 Congressional Record, Farm Security and Rural Investment Act, 7 May 2002 (Exhibit CDA-146,
S3918).
913 Mexico's second written submission, para. 80; Exhibit MEX-89.
914 Mexico's second written submission, para. 80; Exhibit MEX-91.
915 Mexico's second written submission, para. 80; Exhibit MEX-92.
916 Mexico's second written submission, para. 80; Exhibit MEX-93.
917 The same Congressman advances two additional reasons why the COOL measure should be
enacted: (i) "Most other consumer products are labeled as to country of origin. Meat should be no different";
and (ii) "Numerous countries already are imposing country of origin labeling requirements, including Canada,
Mexico, and the European Union" (Exhibit US-13).
918 United States' first written submission, footnote 31; Exhibit US-13.
919 United States' first written submission, footnote 31; Exhibit US-14.

Whether the COOL measure fulfils the objective of providing consumer information on origin
7.692 The term "fulfil" can be defined as "2. Provide fully with what is wished for; satisfy the
appetite or desire of; 3. Make complete, supply w ith what is lacking; replace (something); ... 6.
Carry out, perform, do (something prescribed)". 920 The ordinary meaning of "fulfil", therefore,
indicates that to meet the requirement in Article 2.2 of the TBT Agreement, the COOL measure must
carry out and perform the objective of providing origin information to consumers.
7.693 Before starting our analysis, it is useful to r ecall the Appellate Body's clarification in the
context of Article XX(b) of the GATT 1994 that in assessing whether a measure makes a contribution
to the objective pursued under Article XX(b), pane ls are not required to apply a particular
methodology. The Appellate Body considered that a contribution exists when there is a genuine
relationship of ends and means between the objective pursued and the measure at issue.
921 I n o u r
view, this approach is also relevant for analysin g a measure under Article 2.2 of the TBT Agreement,
specifically with respect to whether it fulfils th e objective for which it was put in place. As noted
above922, we consider that the legal interpretive a pproach under Article XX(b) of the GATT 1994 is
relevant to our analysis of Article 2.2 of the TBT Agreement.
7.694 Bearing this in mind, we now turn to the partie s' specific arguments on the fulfilment by the
COOL measure of the identified objectives.
7.695 The parties do not dispute that information on the origin of products must be clear and
accurate for it to be able to convey meaningful information to consumers.923 Under a labelling regime
adopted for this purpose, the fulfilment of this objective will depend on the capability of labels to
convey clear and accurate information on origin. To determine whether clear and accurate country of
origin information of meat produc ts is conveyed to consumers u nder the COOL measure, we must
examine how the specific labelling scheme under the COOL measure, particularly the content and
categorization of different categories of labels, is set out in the measure itself.
7.696 The complainants argue that country of orig in labels under the COOL measure can provide
consumers with inaccurate or misleading informat ion. Their position is largely based on the
following contentions: (i) the meaning of the labels , particularly labels B and C for muscle cuts, is

920 The Shorter Oxford English Dictionary , (Sixth Edition) Oxford University Press, Vol. I, p.1053
(2007).
921 The Appellate Body in Brazil – Retreaded Tyres stated:
"We turn to the methodology used by the Panel in analyzing the contribution of the Import
Ban to the achievement of its objective. Such a contribution exists when there is a genuine
relationship of ends and means between the objective pursued and the measure at issue . The
selection of a methodology to assess a measure's contribution is a function of the nature of the
risk, the objective pursued, and the level of protection sought. It ultimately also depends on
the nature, quantity, and quality of evidence existing at the time the analysis is made. Because
the Panel, as the trier of the facts, is in a position to evaluate these circumstances, it should
enjoy a certain latitude in designing the appropriate methodology to use and deciding how to
structure or organize the analysis of the contribution of the meas ure at issue to the realization
of the ends pursued by it. This latitude is not, however, boundless. Indeed, a panel must
analyze the contribution of the measure at issue to the realization of the ends pursued by it in
accordance with the requirements of Article XX of the GATT 1994 and Article 11 of the
DSU." (Appellate Body Report, Brazil – Retreaded Tyres, para. 145)
922 See paras. 7.667-7.670.
923 Canada's first written submission, paras. 178, 210-211; Mexico's response to Panel question
Nos. 64 and 105; United States' first written submission, paras. 85, 154, 155, 210-211, 240. Australia and New
Zealand agree that the information co nveyed through the COOL measure must be accurate. (Australia's third
party written submission, para. 68; New Zealand, third party written submission, para. 40.).

confusing and cannot be easily understood by cons umers; and (ii) the flexibility accorded to
processors and retailers to use labels B and C inte rchangeably for all categories of muscle cuts upon
commingling, makes origin information even more confusing for consumers.
924
7.697 We start with the meaning of different categori es of labels under the measure. We recall that
meat falling within the scope of categories B and C is required to carry labe ls indicating "product of
the US, Country X" (Label B) and "product of Count ry X, the US" (Label C). As described above in
Section VII.C.1(b)(i), Label B refers to meat deri ved from animals born in Country X, and raised and
slaughtered in the United States, whereas Label C re fers to meat derived from animals imported for
immediate slaughter (i.e. animals born and raised outside the Unite d States). Labels B and C are
therefore differentiated by the order of country names indicated on the label.
7.698 The complainants argue that the descripti on of origin under Label B and Label C are
confusing. For example, a meat product with a B or C label will indicate multiple countries of origin
(i.e. "Product of the US, Country X" and "Product of Country X, the US"). This is confusing because
consumers will not understand the meaning of these labels in terms of the countries where specific
production steps took place. 925 Particularly, in Mexico's view, a label marked with "product of the
US, Country X" might lead consumers to think th at a package contains both muscle cuts of meat
produced in the United States and muscle cuts produced in Mexico when this is not the case.926
7.699 As described above, the US definition of origin involves information on the places where
animals from which meat is derived were born, raised , and slaughtered. Thus the labels identifying
origin refer to several elements. As a result, it a ppears to us, the description of origin on Label B and
Label C does not, in fact, deliver origin informati on as defined under the measure or as the consumer
might understand it.
7.700 For example, a label "Product of the US, Mexico" does not describe what "the US and
Mexico" means as far as origin of the meat is concerned. As Mexico suggests, on its face, these
names could be understood as meaning products comprising meat originating in both the
United States and Mexico. This may be the case pa rticularly for meat sold in a bulk display.
However, confusion is also likely in a case wher e a consumer-ready package contains only a single
piece of meat, as the meaning of the two country names listed on the label is not clear. Indeed, in
order for the average consumer to understand the meaning of a specific COOL label on meat products,
he would also need to understand the definition of each category of labels as prescribed in the
measure.
7.701 Furthermore, the complainants argue that the meaning of Label B and Label C is not easily
distinguishable. The descriptions on Labels B and C are differentiated based on the order of country
name, which is determined by whether animals were raised in the United States (Label B) or whether
imported right before slaughter (Label C). For example, if an animal from which meat was derived
was raised in the United States (not born in the Un ited States), the first country name on the label is
the United States ("Product of the US, Country X"). It is far from clear to us that differentiation of
origin based on the order of country names will ind eed communicate accurate origin information. For
example, if two packages of steak on a store shelf respectively carrying the labels of "product of the

924 Most of the third parties agree with the view that certain aspects of the COOL measure might
provide inaccurate information to consumers. See, fo r example, Australia's third party written submission,
para.70; European Union's third-party oral statement at the first substantive meeting, para. 41; Guatemala's
third-party oral statement at the first substantive meeting, p. 2; Japan's third-party oral statement at the second
substantive meeting, para. 7.
925 Canada's first written submission, para. 181; Mexi co's first written submission, para. 301; second
written submission, para. 46.

US, Mexico (or Canada)" and "product of Mexico (or Canada), the US", in our view the similarity in
content between these two labels will render it very unlikely that the average consumer in the
United States will be able to distinguish between th ese two labels in terms of origin as defined under
the COOL measure. 927 The United States argues that, generally speaking, a consumer is likely to
think that the meat is most closely affiliated with the name of the country that appears first on the
label.928 We are not presented with any evidence to support this assertion and hence must set it aside
for the purpose of our decision.
7.702 Even if we were to conceive of a perfect cons umer who is fully informed of the meaning of
different categories of labels under the COOL meas ure, she may never be assured that the label
precisely reflects the origin of meat as defined und er the COOL measure. This is because of the
manner in which the labelling requirements under the measure operate, inter alia, in connection with
the interchangeable use of Label B and Label C allowed for commingled meat.929 We turn to consider
this aspect of the measure now.
7.703 Under the 2009 Final Rule (AMS), when cat egories A and B, categories A and C, or
categories A, B, and C animals are commingled in a single production day, meat produced from those
animals may be labelled as either category B or C. Mexico describes different possible combinations
of meat with different origins under the commingling provisions as follows: "A & B = B or C; A &
C = B or C; B & C = B or C; A & B & C = B or C".
930 Therefore, a B or C label affixed to a meat
product may not necessarily correspond to the definition of origin under the measure. This is the case
even with meat derived from animals born, raised, and slaughtered in the United States (i.e. category
A meat) as it may be carrying Labels B or C ra ther than Label A acco rding to the commingling
provisions.
7.704 We also note that commingling can take pl ace in multiple stages of the meat production
process (e.g. processors and packers), including at the retail level.931 This, we understand, may reduce

927 Canada submits in response to a question from the Panel that it is a reasonable inference that a
consumer would not be able to appreciate the distinction between meat products labelled as B and C
respectively (Canada's response to Pa nel question No. 65). Mexico argues that there is no evidence that US
consumers either can or do perceive the vast implications of this minute change in word order and that
consumer would need a matrix to determine even roughly where their meat products originated under the
COOL regime (Mexico's response to Panel question No. 65).
928 United States' response to Panel question No. 65. In response to a similar question from the Panel
that addressed two separate packages of beef, one labelled as "Product of the US, Canada, and Mexico" and
another labelled as "Products of Mexico, Canada, and the US", the United States referred to three circumstances
in which beef could be labelled as described in the ques tion: (i) ground beef from a processor who had all three
types of beef in its inventory in the last 60 days; (ii) a mu scle cut of beef derived from an animal that spent time
in all three countries (i.e. born in Canada, raised in Me xico, and slaughtered in the United States); or (iii) a
muscle cut of beef from a processor who commingled multiple types of animals in a single production day.
The United States adds that in none of these circumst ances does the 2009 Final Ru le (AMS) require the names
of these countries to be listed in a particular order.
We note that the United States also asserts that the USDA has provided a significant amount of
information on the COOL requirements, mainly directed to consumer education. Among the different types of
information that can be found on the website there is a brochure for consumers and retailers to educate them
about the different COOL labels (Exhibit US-88), a question and answer page for consumers and an explanatory
video about the program. (United States' response to Panel question No. 71).
929 We also note that the 2009 Final Rule (AMS) allows category B meat to list country names in any
order.
930 Mexico's second written submission, footnote 39. Mexico also provides a matrix of labels under the
COOL measure (Mexico's response Q. 65).
931 For example, a brochure on COOL prepared by USDA explains COOL for commingled
commodities as follows: "[M]eat covered commodities (e.g., rib eye steaks) derived from U.S. and mixed origin

compliance costs to a certain extent.
932 At the same time, it further diffuses the content and impact of
origin labels as defined by the measure. If a retaile r were to decide to commingle meat products that
had already been commingled during the production process, the resulting labels affixed to these
products would be even less accurate in terms of the origin of such products as defined by the
United States.
7.705 As an example, if Category A and B animals are commingled at the slaughterhouse, the meat
derived thereof should, in principle, use Label B. If this Label B meat is commingled at the retail
level with Label C meat, the resulting group can use La bel B or C. Assuming that the retailer decides
to use Label C for that group of meat, the consumer has no certainty as to the origin of meat as
defined by the United States. In this scenario, the co nsumer could alternatively believe that this meat
comes from any of the following: (i) animals born and raised in country X and slaughtered in the
United States; (ii) animals born in country X and rai sed and slaughtered in the United States that were
commingled with animals born and raised in country X and slaughtered in the United States; or (iii)
animals born in country X and raised and slaughtered in the United States that simply list the country
names in any order. As this example shows, the COOL measure creates a framework in which
consumers make their purchasing decisions with little, if any, additional certainty as to the accurate
origin of meat products.
7.706 Furthermore, as discussed in paragraphs 7.4 21-7.430 in the context of Article 2.1, the
COOL measure allows the ground meat label to list "all of the reasonably possible countries of origin
of … ground beef [or] … pork" and to reference a country of origin even if the processor has not had
ground meat from that particular country in its inventory for the last 60 days or less. Because of this
so-called "60-day inventory allowance" in the 2009 Final Rule (AMS), the ground meat label is likely
to convey inaccurate origin information as a pro cessor may use the same label for all of its ground
meat listing all countries of origin of the ground meat that the processor has had in its inventory at
least for 60 days. In other words, an origin la bel affixed on ground meat could be listing a country
name of meat that the processor might not even have used to produce the specific ground meat in that
package. In fact, the Vilsack letter contains a st atement confirming this: "[t]his provision [60-day
inventory allowance] allows for labels to be used in a way that does not clearly indicate the product's
country of origin".
7.707 Therefore, for the reasons explained above, the labelling under the COOL measure in our
view provides information on meat with regard to the possible, but not necessarily actual, or for that
matter accurate, origin as defined by the measure.
7.708 The United States points out that the complain ants provided no evidence demonstrating any
confusion was caused by the labelling scheme under the COOL measure.
933 Although quantitative
evidence based on market surveys, for example, could have been helpful in assessing consumers'
understanding of the meaning of different categori es of labels, we do not consider the presence of
such quantitative evidence necessary in assessing the m easure's contribution to the stated objective.
As noted in paragraph 7.693 above, a certain degree of latitude is afforded to panels in adopting
methodology to assess a measure's fulfilment of the obj ective. We are thus free to rely on either
quantitative or qualitative evidence, or both. We are therefore allowed to determine whether the

animals that are commingled du ring a production day may carry the mixed origin claim, Product of the U.S.,
Country X, Country Y. ..." (Exhibit, US-88)
932 See paragraph 7.343.
933 United States' first written submission, para. 239.

COOL measure fulfils the objective on the basis of the complainants' arguments on how the labelling
provisions under the COOL measure operate.934
7.709 The United States further argues that, "in general", the COOL requirements satisfy the US
definition of origin. 935 The United States explains that meat derived from mixed origin animals will
always receive either a category B or C label that informs consumers of all the countries in which the
animal from which the meat is derived had spent time.
7.710 We are not convinced by the United States' arguments. As described above, the United States
has defined the origin of meat based on the pl ace where animals from which meat was derived were
born, raised, and slaughtered. The United States fu rther submits that, in respect of meat products,
providing origin information based on this specific de finition forms part of the objective of providing
consumer information on origin within the meani ng of Article 2.2. We do not see how providing
general information about the various countries in wh ich an animal has spent time and slaughtered is
in keeping with the objective that the United States claims the measure seeks to achieve.
7.711 Further, the United States created exceptions and added flexibility into the regulations
because the United States strived to reduce the costs of compliance, and it wanted to provide as much
consumer information as possible.936 The United States argues that it had to strike a balance between
providing consumer information and reducing the compliance costs for industry. Of course, it is often
necessary and important for governments to take c onflicting interests into account in implementing
laws and regulations to fulfil policy objectives. The act of balancing conflicting interests cannot,
however, justify any inconsistency found in the impugned measure with the obligations of the
respondent under the covered agreem ents. In the factual circumstan ces of the present dispute, the
pertinent question for us is whether the COOL measure is fulfilling the identified objective in
accordance with the obligations under Article 2.2 of the TBT Agreement.
7.712 The United States further emphasizes that in no circumstances will anim als that spent their
entire life in another country before being importe d to the United States for immediate slaughter be
listed as a "Product of the US" under the measure. The United States highlights that "[c]onsistent
with the expectations of the US consumer, only meat derived from animals that were born, raised, and
slaughtered in the United States will be designated as U.S. origin". 937 This, in the United States'
view, fulfils the objective of preventing consumer confusion relating to a USDA grade label and the
previous FSIS voluntary "Product of the U.S.A." la belling system, which allowed this label if the
meat products received minimal pro cesses in the United States. Th e United States underlines that, by
ensuring that all meat sold at the retail level h as an origin label, the COOL requirements prevent
consumer confusion relating to the appearance of a USDA grade label on meat that is not US origin
while also allowing both domestic and imported pr oducts to benefit from the use of these grade
labels.938
7.713 In essence, the specific objective pursued by th e United States through the COOL measure as
explained above, namely the prevention of confusion caused by the previous COOL regime as well as
USDA grade labelling, is that the United States aims to prevent meat derived from animals of non-US
origin from carrying a US-origin label under any circ umstances. To that extent, the COOL measure
appears to fulfil the objective becau se the measure prohibits such meat from carrying a Label A even
though the same meat may still carry a USDA grade label.

934 See paragraph 7.693.
935 United States' response to Panel question No. 73.
936 United States' opening oral statement at the first substantive meeting, para. 44.
937 United States' response to Panel question No. 64(b).
938 United States' response to Panel question No. 56(d).

7.714 Finally, the United States emphasizes that th e COOL measure ensures that consumers have
much more information available to them about origin than they previously did.
939 According to the
United States, the COOL measure reduces the lik elihood of consumer confusion in certain
circumstances.940 Therefore, in the United States' view , the COOL measure fulfils the legitimate
objectives at the level that the United States deemed appropriate.
7.715 However, as clarified in paragraph 7.620 above, the United States aims to achieve its stated
objective by providing as much clear and accurate origin information as possible. Considered against
this level of fulfilment of its objective and in light of the nature of the objective (i.e. to provide
accurate origin information), merely providing more information than under the previous labelling
regime or fulfilling only a limited aspect of th e identified objective does not contribute in a
meaningful way to fulfilling the objective. As di scussed above, the different and complex categories
of labels under the COOL measure and the operati on of the COOL regime based on the commingling
provisions render origin information contained in labels inaccurate and confusing.941
Overall assessment
7.716 Overall, the mandatory labelling scheme under th e COOL measure falls short of providing
consumers with information on the country of or igin of meat products in an accurate and clear
manner.
7.717 We acknowledge that labels re quired to be affixed to meat products according to the
requirements under the measure provide additional country of origin information that was not
available prior to the COOL measure. We also agree that the labelling requirements under the
COOL measure may have reduced consumer confusion that existed under the pre-COOL measure and
USDA grade labelling system.
7.718 However, we agree with the complainants that origin information on labels as prescribed by
the measure does not ensure meaningful informa tion for consumers, except origin information on
Label A. Specifically, considered in light of the or igin definition as determined by the United States
for meat products, the description of origin for La bel B and Label C is confusing in terms of the
meaning of multiple country names listed in these labels. Moreover, the possibility of
interchangeably using Label B and Label C for all categories of meat based on commingling does not
contribute in a meaningful way to providing consum ers with accurate information on origin of meat
products.
7.719 We therefore conclude that the COOL measure does not fulfil the identified objective within
the meaning of Article 2.2 because it fails to convey meaningful origin information to consumers.
Given this conclusion, we do not consider it necessary to proceed with the next step of the analysis,

939 United States' response to Panel question Nos. 58 , 64(b). The United States emphasizes that the
COOL measure has provided millions of US consumers with information that was previously unavailable to
them (United States' opening oral statement at the first substantive meeting, para. 43).
940 United States' response to Panel question Nos. 64(b), 73. The United States characterizes country of
origin information under the COOL measure as meaningful by distinguishing it from the allegedly misleading
information that would be provided about meat products under a labelling system solely based on substantial
transformation.
941 According to Canada, data collected during the first quarter of 2010 show that the different labelling
categories for muscle cuts of beef were supplied in majo r supermarkets as follows: Label A 78.6%; Labels A
and B 6.3%; Label B 14.2%; and Labels B and C 0.9% (Exhibit CDA-211). According to the United States, as
of July 2009 the different origin declarations for muscle cuts of beef were used in the following percentages:
US 71%; US, Canada 5%; US, Mexico 0.5%; Cana da, US 0.5%; US, Canada, Mexico 22%; and foreign
(category D) 0.3% (Exhibit US-145).

namely whether the COOL measure is "more tr ade-restrictive than necessary" based on the
availability of less trade-restrictive alternativ e measures that can equally fulfil the identified
objective.942
(e) Conclusion on the complainants' claims under Article 2.2 of the TBT Agreement
7.720 For the foregoing reasons, we conclude that th e complainants have demonstrated that the
COOL measure does not fulfil the objective of providing consumer information on origin, particularly
with respect to meat products, within the meani ng of Article 2.2. We therefore find that the
United States has acted inconsistently with Article 2.2.
4. Mexico's claim under Article 2.4
(a) Introduction
7.721 Article 2.4 provides:
"Where technical regulations are required and relevant international standards exist or
their completion is imminent, Members shall use them, or the relevant parts of them,
as a basis for their technical regulations ex cept when such international standards or
relevant parts would be an ineffective or inappropriate means for the fulfilment of the
legitimate objectives pursued, for instance because of fundamental climatic or
geographical factors or fundamental technological problems."
7.722 Mexico submits that the COOL measure is inconsistent with Article 2.4 because the
United States failed to base its regulation on the Ge neral Standard for the Labelling of Prepackaged
Foods ("CODEX-STAN 1-1985"), an international standard that is an effective and appropriate means
for the fulfilment of the legitimate objective pursued by the United States.943
7.723 The United States argues that Mexico has failed to meet its burden to show that any of the
COOL measures breach Article 2.4. In particular, Mexi co has failed to show that this standard is not
an ineffective or inappropriate means for achieving the legitimate objective of the United States.944
7.724 The United States therefore does not contest that CODEX-STAN 1-1985 was not used as a
basis for the COOL measure. Given that the United States has not rebutted Mexico's argument on this
point, we will be able to find that the United Stat es acted inconsistently with its obligations under
Article 2.4 if we conclude that Mexico has estab lished that CODEX-STAN 1-1985 is an effective and
appropriate means for the fulfilment of the legitimate objective pursued by the United States.
(b) Whether CODEX-STAN 1-1985 is not an ine ffective or inappropriate means for the
fulfilment of the legitimate objective pursued
(i) Main arguments of the parties
7.725 Mexico submits that if the Panel concludes th at the COOL measure pursues a legitimate
objective, CODEX-STAN 1-1985 is an effective and appropriate means for the fulfilment of such
legitimate objective. According to Mexico, CODEX-STAN 1-1985 is an "effective" means of
fulfilling the US objective because: (i) it seeks to: protect consumers from deceptive practices; and

942 See the Appellate Body Reports, Brazil – Retreaded Tyres , paras. 156, 178; and China –
Publications and Audiovisual Products, paras. 237-249.
943 Mexico's first written submission, para. 321.
944 United States' second written submission, para. 173.

(ii) it conveys information on the c ountry of origin through a label.
945 In support of its position,
Mexico points to several comments that the USDA r eceived during the revision of the Interim Final
Rule (AMS), suggesting that CODEX-STAN 1-1985 should continue to apply instead of the proposed
COOL measure.946 Mexico adds that CODEX-STAN 1-1985 is "appropriate", because the rules on
country of origin contained therein are specially designed, and thus suitable, for achieving the purpose
of informing consumers about the country of origin of prepackaged foods.947
7.726 The United States argues that basing the COOL measures on CODEX-STAN 1-1985 is both
an "ineffective" and "inappropriate" means of fulfilling the legitimate objective of providing
consumer information on origin.948 Regarding the exact information on origin that it seeks to provide
to consumers, the United States refers to "informa tion on the countries where the animal from which
the meat was derived was born, raised and slaughtered" 949. In particular, CODEX-STAN 1-1985,
which appears to be based on substantial transfor mation, does not meet the objective of providing
information about the different countries in which an animal was born, raised and slaughtered. 950
Moreover, CODEX-STAN 1-1985 would provide misl eading information to consumers when meat
derived from an animal that spent a portion of its lif e in another country before being brought into the
United States for slaughter is labelled US-origin.951
7.727 Mexico rejects this argument and highlights that the only example of such situation provided
by the United States is when cattle enters the US te rritory one day prior to slaughter. In Mexico's
view, that is exactly the opposite situation of Mexi can cattle, which gains 70% of their weight in the
United States.952
(ii) Analysis by the Panel
7.728 In EC – Sardines , the Appellate Body established that under Article 2.4 of the
TBT Agreement the complaining party bears the burden of demonstrating that the relevant
international standard at issue is appropriate and effective to fulfil the legitimate objectives pursued
by the responding party through its regulation. 953 Thus, we will examine whether Mexico has
established that CODEX-STAN 1-1985 is an effective or appropriate means for the fulfilment of the
legitimate objectives pursued by the United States through the COOL measure.
7.729 We are mindful that the parties disagreed on whether CODEX-STAN 1-1985 is a relevant
international standard within the meaning of Article 2.4 of the TBT Agreement. In this context,
we also recall that the SPS Agreement recogni zes the relevance of the Codex Alimentarius
Commission by acknowledging that for food safety , international standards, guidelines and
recommendations are the ones established by the Codex Alimentarius Commission. 954 We also
recognize that CODEX plays a crucial role in food saf ety and quality. For our analysis of Mexico's
claim under Article 2.4 of the TBT Agreement, however, we find it sufficient to assess whether
CODEX-STAN 1-1985 is an effective and appropriate means to fulfil the identified objective pursued
by the United States. "To enhance simplicity and efficiency" in our decision-making in the present

945 Mexico's first written submission, para. 351; response to Panel question No. 78.
946 Mexico's first written submission, paras. 352-355.
947 Mexico's first written submission, para. 357; response to Panel question No. 78.
948 United States' first written submission, paras. 68, 201, 228; response to Panel question No. 17;
second written submission, paras. 97, 106, 107, 147.
949 United States' response to Panel question No. 58.
950 United States' opening oral statement at the first substantive meeting, paras. 51, 54.
952 Mexico's second written submission, paras. 176-177.
953 Appellate Body Report, EC – Sardines, para. 282.
954 Annex A(3)(a) of the SPS Agreement.

case955, we carry out this analysis on the assumption that CODEX-STAN 1-1985 is a relevant
international standard within the meaning of Article 2.4.956
7.730 The panel in EC – Sardines established that "in the context of Article 2.4, an ineffective
means is a means which does not have the function of accomplishing the legitimate objective pursued,
whereas an inappropriate means is a means which is not specially suitable for the fulfilment of the
legitimate objective pursued". 957 In that dispute, the Appellate Body found that, in that case, a
consideration of the appropriateness of the standard and a consideration of the effectiveness of the
standard were interrelated due to the nature of the objectives of the regulation under examination.958
7.731 We recall our findings above that the objective pursued by the United States through the
COOL measure is providing cons umer information on origin. 959 We also recall that the exact
information on origin that the United States wants to provide to consumers through the
COOL measure is the countries where the animal from which the meat is derived was born, raised and
slaughtered.
960
7.732 Turning to the matter of effectiveness and appropriateness, CODEX-STAN 1-1985 would be
effective if it had the capacity to accomplish the objective, and it would be appropriate if it were
suitable for the fulfilment of the objective.
7.733 We consider that in this case a consideration of the effectiveness and a consideration of the
appropriateness of CODEX-STAN 1-1985 are interrelated, due to the nature of the objective of the
COOL measure.
7.734 In our view CODEX-STAN 1-1985 does not have the function or capacity of accomplishing
the objective of providing information to consumers about the countries in which an animal was born,
raised and slaughtered. The reason is that the standard confers origin exclusively to the country where
the processing of food took place. In other word s, it is based on the principle of substantial
transformation. This means that no more than one country can claim origin under CODEX-STAN
1-1985; even when an animal is born and raised in a third country and then slaughtered in the

955 In China – Publications and Audiovisual Products , the Appellate Body provided guidance on the
use of arguendo assumptions by panels as follows:

"We observe that reliance upon an assumption arguendo is a legal technique that an
adjudicator may use in order to enhance simp licity and efficiency in decision-making.
Although panels and the Appellate Body may choose to employ this technique in particular
circumstances, it may not always provide a solid foundation upon which to rest legal
conclusions. Use of the technique may detract from a clear enunciation of the relevant WTO
law and create difficulties for implementation. Recourse to this technique may also be
problematic for certain types of legal issues, for example, issues that go to the jurisdiction of a
panel or preliminary questions on which the substance of a subsequent analysis depends."
(Appellate Body Report, China – Publications and Audiovisual Products, para. 213)

956 In light of the guidance provided by the Appellate Body, our approach will not potentially affect our
legal conclusions for two reasons. First, our assump tion creates no difficulties for the implementation of DSB
recommendations and rulings; and, second, the question of whether or not CODEX-STAN 1-1985 is an
effective and appropriate means for the fulfilment of th e objective pursued by the Un ited States does not fall
under our jurisdiction nor as a preliminary question on which the substance of our subsequent analysis depends.
958 Appellate Body Report, EC – Sardines, para. 289.
959 United States' first written submission, paras. 68, 201, 228; response to Panel question No. 17;
second written submission, paras. 97, 106, 107, 147.
960 United States' response to Panel question No. 58.

United States, the origin would exclusively be the United States. Thus, the exact information that the
United States wants to provide to consumers cannot be conveyed through CODEX-STAN 1-1985.
For the same reasons, we find that CODEX-ST AN 1-1985 is an inappropriate means for the
fulfilment of this objective, as it is not specially su itable for providing this type of information to the
consumer.
7.735 Based on the above, we find that CODEX-STAN 1-1985 is ineffective and inappropriate for
the fulfilment of the specific objective as defined by the United States.
(c) Conclusion on Mexico's claim under Article 2.4
7.736 In light of the foregoing, we find that Mexi co has not established that the COOL measure
violates Article 2.4.
5. Mexico's claims under Articles 12.1 and 12.3
(a) Main arguments of the parties
7.737 Mexico argues that the COOL measure is incons istent with Articles 12.1 and 12.3 of the
TBT Agreement. It claims that the United States did not take into account Mexico's special needs as a
developing country when preparing and applying the COOL measure, with a view to ensuring that no
unnecessary obstacles are created to Mexico's cattle exports to the United States.
7.738 According to Mexico, Article 12.3 of the TBT Agreement contains two separate obligations
in the context of the COOL measure: (i) to "tak e account of" the special development, financial and
trade needs of Mexico as a developing country Memb er; and (ii) to ensure that the COOL measure
does not create unnecessary obstacles to Mexico's cattle exports as a developing country.
961
7.739 As regards the first type of action, Mexico contends that in the preparation of the
COOL measure, the United States did not take into account the special development, financial and
trade needs of Mexico as a developing country. 962 According to Mexico, 56% of its territory
(110 million hectares, equalling 1.1 million km 2) is used for cattle production, involving over
1 million direct and over 2 million indirect j obs at 1.132 million bovine production facilities,
65 federally inspected and 940 municipal slaughter houses, and approximately 100 packing plants
specialized in processing beef. 963 Of the approximately 30 million head of Mexican domestic cattle
inventory, about 6 million are destined for domestic consumption and 1.2 million for exports to the
United States.964 Cattle production represents about 33% of Mexican agriculture and animal
production GDP, and 1.3% of Mexico's overall GDP. 965 Export sales of feeder cattle to the
United States amount to USD 400-600 million annually.966
7.740 According to Mexico, the term "take into account " means "consider", and "the requirement to
'consider' evidence would not be satisfied by simply 'receiving evidence' or merely 'tak[ing] notice of
evidence'".967 Mexico suggests that compliance with Ar ticle 12.3 of the TBT Agreement could be
proven by showing that the United States consider ed (i) "how the measure may impact developing

961 Mexico's first written submission, para. 362.
962 Mexico's first written submission, para. 364.
963 Mexico's first written submission, para. 365.
964 Mexico's first written submission, para. 366.
965 Mexico's first written submission, para. 366.
966 Mexico's first written submission, para. 366.
967 Mexico's response to Panel question No. 82, para. 218 (citing Appellate Body Report, US –
Softwood Lumber V, para. 133).

countries"; (ii) possible steps to "minimize the im pact of the measure on developing countries"; and
(iii) "discussion on less onerous alternatives considered".968
7.741 Mexico references the Summary of Comments on the Interim Final Rule (AMS) contained in
the 2009 Final Rule (AMS), arguing that USDA anticipated, but did not address, some of the potential
effects to trade of feeder cattle from Mexico. 969 Mexico alleges that it had the opportunity to
comment on the development of the 2009 Final Rule (AMS) "when the COOL provisions were
already established and only needed to be implem ented". At this stage of development of the
COOL measure, there was no flexibility for change s in the regulation. Thus, Mexico's comments
were merely received, but not "taken into account " by the United States in the preparation and
application of the COOL measure.970
7.742 Mexico adds that developing countries ha ve no obligation under Article 12.3 of the
TBT Agreement to identify and convey to the devel oped country the specific nature and character of
their special needs. Nonetheless, Mexico contends that it explained to the United States that the
COOL measure was going to have a disproportionately negative impact on Mexican cattle.971
7.743 With regard to the second type of action allegedly required under Article 12.3 of the
TBT Agreement, Mexico contends that, as expl ained in the context of Article 2.2 of the
TBT Agreement, the COOL measure creates unnecess ary obstacles to trade. Therefore, the
United States also failed to comply with its oblig ation to ensure that the COOL measure does not
create unnecessary obstacles to Mexico's exports as a developing country Member under Article 12.3.
7.744 Mexico submits a consequential claim of viol ation under Article 12.1 of the TBT Agreement
in that it argues that the COOL measure's incons istency with Article 12.3 of the TBT Agreement
results also in its inconsistency with Article 12. 1 of the TBT Agreement. According to Mexico,
Article 12.3 must be interpreted a nd applied together with Article 12.1, since "Article 12.1 requires
that the United States provide differential and more favourable treatment to Mexico through,
inter alia, Article 12.3".972
7.745 In response to Mexico's arguments, the United States contends that the COOL statute and
2009 Final Rule are not inconsistent with Article 12.1 or 12.3 of the TBT Agreement.973
7.746 According to the United States, there is one single obligation under Article 12.3 of the
TBT Agreement, and Mexico must demonstrate the fo llowing to establish a violation of that Article:
(i) "that [Mexico] is a developing country"; (ii) "that the [United States] did not take account of its
special development, financial or trade needs during the preparation and application of [the
COOL measure]"; and (iii) "that the [United States] did not take account of these needs with a view to
ensuring that the technical regulation does not create unnecessary obstacles to export".974
7.747 The United States submits that Mexico failed to prove any of these three elements. Not only
did Mexico not demonstrate that it is a developing c ountry, but it also did not show evidence that it
communicated its special needs to the United States or that the United States did not "take account of"
these needs in the preparation and application of the COOL Statute and 2009 Final Rule. Hence, and

968 Mexico's reponse to Panel question No. 82.
969 Mexico's first written submission, para. 368 (citing Exhibit MEX–7).
970 Mexico's second written submission, paras. 181-182.
971 Mexico's response to Panel question No. 154.
972 Mexico's first written submission, paras. 372-373 (original emphasis) and Mexico's response to
Panel question No. 82, paras. 216-218.
973 United States' first written submission, para. 271.
974 United States' first written submission, para. 274.

given that Mexico bears the burden of pr oof, Mexico did not establish a prima facie case of violation
under Article 12.3 of the TBT Agreement.
975
7.748 Even if Mexico had shown sufficient eviden ce for the above, the United States argues that,
in fact, Mexico had many opportunities to comment on the development of the COOL measure.
The United States responded to Mexico's co mments, and changed the 2002 Farm Bill and
implementing regulations in accordance with suggestions provided by Mexico to minimize the impact
of the COOL measures on trade and facilitate comp liance with record-keeping and audit verification
requirements.976 The United States argues that the term "take account of" in Article 12.3 of the
TBT Agreement does not require a Member to "accept every recommendation presented by the
developing country Member", and notes that "a de veloped country [Member] developing a regulation
is expected to balance developing country considerati ons against the views of other interested parties,
such as consumers and retailers".977
7.749 With regard to the alleged third element of Ar ticle 12.3, the United States contends that the
term "with a view to ensuring" does not contain a substantive obligation prohibiting the creation of
unnecessary obstacles to trade. The Member in question is required merely to attempt not to create
unnecessary obstacles to developing country exports when preparing and applying a technical
regulation. Thus, there is no obligation under Artic le 12.3 of the TBT Agreement contemplating the
actual effects of the COOL measure on developing countries' exports.
7.750 On the relationship between Articles 12.3 and 2. 2 of the TBT Agreement, the United States
explains that Article 2.2 provides for a broader oblig ation as it also uses the term "with the effect of"
creating unnecessary obstacles to trade. According to the United States, "a measure that is in
compliance with TBT Article 2.2 would also be in compliance with TBT Article 12.3"; however,
"a Member may violate TBT Article 2.2 without breaching TBT Article 12.3".
978
7.751 As a result of Mexico's failure to demonstrate that the COOL measures are inconsistent with
Article 12.3 of the TBT Agreement, the United Stat es concludes that the Panel should also reject
Mexico's consequential claim of inconsistency with Article 12.1 of the TBT Agreement.979
(b) Analysis by the Panel
7.752 In light of the parties' arguments, we turn fi rst to Mexico's claim under Article 12.3 of the
TBT Agreement. Article 12.3 reads:
"Members shall, in the preparation and app lication of technical regulations, standards
and conformity assessment procedures, take account of the special development,
financial and trade needs of developing country Members, with a view to ensuring
that such technical regulations, standards and conformity assessment procedures do
not create unnecessary obstacles to exports from developing country Members."
7.753 Before analysing the substance of Mexico's claim, we assess three points of disagreement
concerning the legal test under Article 12.3 of the TBT Agreement, namely:

975 United States' first written submission, para. 275 and United States' response to Panel question
No. 82.
976 United States' first written submission, para. 275.
977 United States second written submission, para. 185 (citing Panel Report, EC – Approval and
978 United States' response to Panel question No. 83.
979 United States' first written submission, para. 277.

(a) whether Article 12.3 involves one or two legal obligations;
(b) the distribution of the burden of proof under Article 12.3; and
(c) the meaning of the term "take account of".
(i) Whether Article 12.3 of the TBT Agreement involves one or two legal obligations
7.754 The first question regarding the legal test under Article 12.3 of the TBT Agreement is
whether, as Mexico argues, this provision invo lves two legal obligations, or only one, as the
United States contends. As an interpretive issu e, the question boils down to the function of the
following clause at the end of Article 12.3: "with a view to ensuring that such technical regulations,
standards and conformity assessment procedures do not create unnecessary obstacles to exports from
developing country Members".
7.755 The dictionary defines the term "with a view to" as "with the aim or object of attaining,
effecting, or accomplishing something". 980 Therefore, in the context of Article 12.3, the term "with a
view to" introduces an objective.
7.756 The first part of Article 12.3 prescribes that "Members shall, in the preparation and
application of technical regulations, standards and conformity assessment procedures, take account of
the special development, financial and trade needs of developing country Members". This language
uses the word "shall" and lays down an obligation addressed to all Members.
7.757 We read this first part of Article 12.3 as the operative part of that provision.
7.758 This reading of Article 12.3 is confirmed by EC – Approval and Marketing of Biotech
Products, where the panel found that the various para graphs of Article 12 contain a number of
separate obligations (as opposed to a single oblig ation), and described the "obligation" under
Article 12.3 as follows:
"Article 12.3 requires that in preparing a nd applying technical regulations, standards
and conformity assessment procedures, Member s take account of the special needs of
developing country Members."981
7.759 Further, according to the same panel, "Article 12.3 is a specific application of the obligation
in Article 12.2 to take account of developing country needs in the implementation of the
TBT Agreement at the national level".982
7.760 Indeed, the final clause of Article 12.3 starting w ith "with a view to" is a specific formulation
in favour of developing countries of the more ge neral principle expressed in the preamble to the
TBT Agreement as follows:
"Desiring … to ensure that technical regulati ons and standards, including packaging,
marking and labelling requirements, and pr ocedures for assessment of conformity
with technical regulations and standards do not create unnecessary obstacles to
international trade."

980 Mexico's response to Panel question No. 82 (citing Exhibit MEX–82).
981 Panel Report, EC – Approval and Marketing of Biotech Products, para. 7.47, subpara. 75.
982 Panel Report, EC – Approval and Marketing of Biotech Products, para. 7.47, subpara. 77.

7.761 This principle is also reflected in other provisions of the TBT Agreement.
983
7.762 In light of the above, we conclude that Artic le 12.3 of the TBT Agreement lays down only
one of the two legal obligations argued by Mexico, namely the one spelt out in the operative part of
that provision: "Members shall, in the preparation and application of technical regulations, standards
and conformity assessment procedures, take account of the special development, financial and trade
needs of developing country Members". The second half of the sentence lays down the objective of
this obligation, namely to "ensur[e] that such technical regulations, standards and conformity
assessment procedures do not create unnecessary obstacles to exports from developing country
Members".
7.763 In finding that Article 12.3 of the TBT Agreemen t lays down only one legal obligation that is
limited to the operative part of that sentence, we are not suggesting that the final clause of the
sentence starting with "with a view to" should be read out of Article 12.3 or rendered ineffective.
7.764 An assessment of a claim under Article 12.3 en tails a review of whether the respondent's
relevant action or inaction with regard to the opera tive part of Article 12.3 fulfils, or is carried out
with, the objective of ensuring that technical regulations, standards and conformity assessment
procedures do not create unnecessary obstacles to exports from developing country Members.
7.765 This assessment, however, necessa rily follows the review of whether the respondent has
complied with the operative part of Article 12.3.
7.766 Accordingly, we turn to whether the United St ates has complied with the operative part of
Article 12.3 of the TBT Agreement. We start this assessment by reviewing two major issues of
disagreement in regard to this operative part, namely: (i) the distribution of the burden of proof; and
(ii) the meaning of the term "take account of".
(ii) Burden of proof under Article 12.3 of the TBT Agreement
7.767 Mexico's claims under Articles 12.1 and 12.3 of the TBT Agreement raise the question as to
which party has the burden to prove inconsiste ncy with these provisions, in particular with
Article 12.3.
7.768 The United States suggests that the burden of proof in this regard rests with Mexico as the
complainant. In contrast, in its third-party writte n submission, Colombia argues that the burden is
entirely on the United States to prove th at it has complied with these provisions.
984 Mexico does not
explicitly argue that the burden is on the United St ates; nevertheless, it specifies the kind of evidence
the United States should be submitting in order to show that it has complied with Article 12.3.985
7.769 Articles 12.1 and 12.3 of the TBT Agreement are phrased like other classical obligations in
the covered agreements. This suggests that, in principle, the established normal approach to burden of
proof applies in regard to these provisions, too. In EC – Sardines, the Appellate Body referenced this
established approach in the context of the TBT Agreement:
"We recall that, in United States – Measure Affecting Imports of Woven Wool Shirts
and Blouses from India, we said the following about the burden of proof:

983 See, for instance, Articles 2.2, 2.4, and 5.1.2 of the TBT Agreement.
984 Colombia's third party written submission, paras. 64-65.
985 See Mexico's response to Panel question No. 82 and Mexico's second written submission, para. 183.

… the burden of proof rests upon the party, whether complaining or
defending, who asserts the affirmative of a particular claim or
defence. If that party adduces evidence sufficient to raise a
presumption that what is claimed is true, the burden then shifts to the
other party, who will fail unless it adduces sufficient evidence to
rebut the presumption.
In the context of the GATT 1994 and the WTO Agreement, precisely
how much and precisely what kind of evidence will be required to
establish such a presumption will n ecessarily vary from measure to
measure, provision to provision, and case to case.
(footnote omitted)"
986
7.770 Article 12 addresses the "Special and Differential Treatment of Developing Country
Members", and its beneficiaries are limited to a su bcategory of WTO Members. However, neither
this in itself nor the level of development of the WTO Members in the subcategory should turn around
the established normal distribution of burden of proof.
7.771 Articles 12.3 and 12.1 are not termed as ex ceptions from other obligations in the
TBT Agreement. These Articles contain obligations additional to the rest of the Articles in the
TBT Agreement. And even if Articles 12.3 and 12 .1 of the TBT Agreement could be described as
exceptions from other obligations, this in itself would not be sufficient to shift the initial burden of
proof to the respondent. As the Appellate Body e xplained in the context of the SPS Agreement, and
later confirmed in the context of the TBT Agreement:987
"The general rule in a dispute settlement proceeding requiring a complaining party to
establish a prima facie case of inconsistency with a provision of the SPS Agreement
before the burden of showing consistency with that provision is taken on by the
defending party, is not avoided by simply describing that same provision as an
'exception'."988
7.772 The panel in EC – Approval and Marketing of Biotech Products also held that in the context
of Article 10.1 of the SPS Agreem ent, which the panel described as the "equivalent provision" to
Article 12.3 of the TBT Agreement 989, the burden was clearly on the complaining party to prove that
its development needs had not been taken into account:
"Argentina argues that the European Comm unities has not provided any evidence
which would prove that it has taken into account Argentina's special needs as a
developing country Member. This argument lacks merit, for it is incumbent on
Argentina as the Complaining Party to a dduce evidence and argument sufficient to
raise a presumption that the European Communities has failed to take into account
Argentina's special needs as a developing country Member."
990
7.773 Accordingly, we see no reason to depart from the established normal distribution of burden of
proof in assessing Mexico's Article 12.1 and 12.3 claims . It is not the respondent, the United States,

986 Appellate Body Report, EC – Sardines, para. 270 (footnote omitted). See also, Panel Report, EC –
Sardines, paras. 7.48-7.50.
987 Appellate Body Report, EC – Sardines, para. 271.
988 Appellate Body Report, EC – Hormones, para. 104.
989 Panel Report, EC – Approval and Marketing of Biotech Products, footnote 1330.
990 Panel Report, EC – Approval and Marketing of Biotech Products, para. 7.1622.

that needs to establish that it has "take[n] account of [Mexico's] special development, financial and
trade needs" "in the preparation and application of [the COOL measure]". In saying this, however,
we are not calling into question that Article 12 imposes substantive obligations on the United States as
a Member, and as a respondent in the current dispute.
7.774 In line with the established normal distribution of the burden of proof, it is Mexico, the
complainant bringing a claim under Article 12.3, th at bears the initial burden to make a prima facie
case that the United States did not "take account of [Mexico's] special development, financial and
trade needs" "in the preparation and applicati on of [the COOL measure]". Once Mexico has
succeeded in making a prima facie case, the burden is on the United States, the respondent, to refute
this.
(iii) Meaning of the term "take account of"
7.775 As regards the meaning of "take account of", the first question is whether, in general,
this term involves a requirement for a Member to merely consider specific needs, views or positions,
or also to act upon, and in accordance with, them.
7.776 The dictionary defines "to take account of", as well as the similar term "to take into account"
as: "to take into consideration as an existing element, to notice".
991 This suggests that "to take
account of" and "to take into account" mean to cons ider, but not necessarily to act in line with the
specific need, view or position under consideration.
7.777 This is confirmed by the meaning the panel in US – Continued Suspension gave to the term
"take into account" in Article 5.2 of the SPS Agreement:
"As noted above in the context of risk assessment techniques, taking available
scientific evidence into account does not require that a Member conform its actions to
a particular conclusion in a particular scientific study . The available scientific
information may contain a multiplicity of views and data on a particular topic. It is
the view of the Panel that the requirement in Article 5.2 is to ensure that a Member,
when assessing risk with the aim of formulating an appropriate SPS measure, has as
wide a range as possible of scientific informa tion before it to ensure that its measure
will be based on sufficient scientific data and supported by scientific principles." 992
(emphasis added)
7.778 In EC – Approval and Marketing of Biotech Products , Argentina also made a claim under
Article 10.1 of the SPS Agreement, which the pa nel described as the "equivalent provision" to
Article 12.3 of the TBT Agreement. 993 Like Article 12.3 of the TBT Agreement, the key obligation
under Article 10.1 of the SPS Agreement is "to take account of" the special needs of developing
countries:
"In the preparation and application of sanitary or phytosanitary measures, Members
shall take account of the special needs of developing country Members, and in
particular of the least-developed country Members." (emphasis added)

991 See United States' second written submission, para. 178 and Exhibit US-140.
992 Panel Report, US – Continued Suspension, para. 7.480.
993 Panel Report, EC – Approval and Marketing of Biotech Products, footnote 1330.

7.779 The panel in EC – Approval and Marketing of Biotech Products emphasized that the
obligation in Article 10.1 of the SPS Agreement is to "take account of" the needs of developing
countries, and interpreted this term in a restrictive manner:
"Argentina's argument impli es that when an importing Member applies a measure
which (i) treats exports originating in the territory of developing country Members in
the same way as exports originating in th e territory of developed country Members
and (ii) has a significant adverse effect on the developing countries' exports, the
importing Member is acting inconsistently with its obligation under Article 10.1.
Argentina suggests that in such situations the exports of developing country Members
are entitled under Article 10.1 to sp ecial and differential treatment vis-à-vis the
exports of developed country Members. However, the obligation laid down in
Article 10.1 is for the importing Member to 'take account' of developing country
Members' needs. The dictionary defines the expression 'take account of' as 'consider
along with other factors before reaching a decision'.
994 Consistent with this,
Article 10.1 does not prescribe a specific result to be achieved. Notably, Article 10.1
does not provide that the importing Memb er must invariably accord special and
differential treatment in a case where a measure has lead [sic], or may lead, to a
decrease, or a slower increase, in developing country exports."995 (emphasis added)
7.780 The same panel added that the needs of deve loping countries may be balanced against other
interests:
"While the European Communities must take account of the interests of developing
country Members in applying its approval legislation, the European Communities
may at the same time take account of other legitimate interests, including those of its
own consumers, its environment, etc. There is nothing in Article 10.1 to suggest that
in weighing and balancing the various in terests at stake, the European Communities
must necessarily give priority to the needs of Argentina as a developing country. "
996
(emphasis added)
7.781 Based on the approach to Article 10.1 of the SPS Agreement by the panel in EC – Approval
and Marketing of Biotech Products and the interpretation of the term "take into account" by the panel
in US – Continued Suspension, we find that Article 12.3 of the TBT Agreement does not amount to a
requirement for WTO Members to conform their acti ons to the special needs of developing countries
but merely to give consideration to such needs along with other factors before reaching a decision.
7.782 We reach this conclusion in part based on the panel report in EC – Approval and Marketing of
Biotech Products . Mexico points out the textual di fference between Article 10.1 of the
SPS Agreement and Article 12.3 of the TBT Agreement, in particular the absence from the former of
the clause starting with "with a view to". Accordi ng to Mexico, this makes the findings of the panel
in EC – Approval and Marketing of Biotech Products irrelevant in the context of Mexico's claim
under Article 12.3 of the TBT Agreement in the current dispute.997
7.783 However, as we explained above, the final cl ause of Article 12.3 of the TBT Agreement
starting with the term "with a view to" is outside the operational part of that provision, and merely

994 (footnote original) The Concise Oxford Dictionary , 10th edn., J. Pearsall (ed.) (Clarendon Press,
1999), p. 8.
995 Panel Report, EC – Approval and Marketing of Biotech Products, para. 7.1620.
996 Panel Report, EC – Approval and Marketing of Biotech Products, para. 7.1621.
997 See Mexico's response to Panel question Nos. 82 and 152.

specifies the objective to be achieved by the ob ligation contained in the operational part.
Accordingly, we reach our conclusion with regard to the specific meaning of the term "take account
of" in Article 12.3 of the TBT Agreement independently of the separate, final clause of that provision.
Even considering that final clause together with the operational part does not make a difference,
in that it does not change the nature or scope of the action required under Article 12.3 but merely
specifies its objective.
7.784 Accordingly, we consider that the findings of the panel in EC – Approval and Marketing of
Biotech Products, on the meaning of "take account of the special needs of developing country
Members" in Article 10.1 of the SPS Agreement, ar e relevant for interpreting the meaning of the
clause "take account of the special development, financial and trade needs of developing country
Members", in particular the term "take account of".
7.785 As regards the practical meaning of the term "t ake account of", Mexico also references other
WTO disputes interpreting the terms "acc ount shall be taken of" and "consider".
998 In particular,
Mexico quotes US – Softwood Lumber V , where the Appellate Body held that, in the context of
Article 2.2.1.1 of the Anti-dumping Agreement, "the requirement to 'consider' evidence would not be
satisfied by simply 'receiving evidence' or merely 'tak[ing] notice of evidence'". 999 Mexico also
quotes US – Softwood Lumber VI , where the panel held that the term "consider" in Article 15.7 of the
SCM Agreement entails that "consideration must go be yond a mere recitation of the facts in question,
and put them in context". 1000 Further, Mexico quotes the follo wing passage from the panel report on
EC and certain member States – Large Civil Aircraft on the meaning of the phrase "account shall be
taken of" in Article 2.1(c) of the SCM Agreement:
"To take something into account means to take something into reckoning or
consideration; to take something on notice. 1001 Therefore, in the context of the third
specificity factor, the last sentence of Article 2.1(c) requires that the length of time
during which the relevant subsidy programme has been in operation must form part of
the consideration or reckoning of whether the amount of a subsidy granted to certain
enterprises pursuant to that same subsidy programme is disproportionately large."
1002
7.786 We agree with these interpretations of the terms "consider" and "take account of". They show
that the Member bound by these terms needs to accord active and meaningful consideration to certain
factors. Thus, in the context of Article 12.3 of th e TBT Agreement, the term "take account of" entails
that Members are obliged to accord active and meani ngful consideration to the special development,
financial and trade needs of developing country Members.
7.787 As to what such active and meaningful consideration means in practical terms, we do not read
Article 12.3 of the TBT Agreement as prescribing any specific way. In particular, while not
excluding it, Article 12.3 does not specifically require WTO Members to actively reach out to
developing countries and collect their views on their sp ecial needs. Further, we do not interpret the
term "take account of" in Article 12.3 of the TB T Agreement as an explicit requirement for Members
to document specifically in their legislative process and rule-making process how they actively
considered the special development, financial a nd trade needs of developing country Members.

998 See Mexico's response to Panel question No. 152.
999 Mexico's response to Panel question No. 82 (citing Appellate Body Report, US – Softwood
Lumber V, para. 133). See also Mexico's response to Panel question No. 152.
1000 Mexico's response to Panel question No. 82 (citing Panel Report, US – Softwood Lumber VI ,
para. 7.67). See also Mexico's response to Panel question No. 152.
1001 (footnote original) The New Shorter Oxford Dictionary, Fourth Edition, p. 15.
1002 Panel Report, EC and certain member States – Large Civil Aircraft, para. 7.969.

Indeed, the panel in EC – Approval and Marketing of Biotech Products held that "it is not sufficient,
for the purposes of establishing a claim under Article 10.1 [of the SPS Agreement], to point to the
absence in the EC approval legislation of a re ference to the needs of developing country
Members".
1003
7.788 Indeed, there are a variety of ways in whic h Members may take account of the special
development, financial and trade needs of developi ng country Members. As explained above, this
requires Members to accord active and meaningful consideration to such needs, entailing a positive
obligation for the WTO Membership. We now turn to whether the United States has fulfilled its
obligation in regard to the COOL measure.
(iv) Assessment of Mexico's claim under Article 12.3
7.789 Mexico argues that the United States breached Article 12.3 of the TBT AGREEMENT by not
having given Mexico an opportunity to comment on the preparation of the COOL measure,
in particular the 2002 Farm Bill.
7.790 As explained above, however, we do not consid er that the United States had an explicit
obligation, enforceable in WTO dispute settlement, to reach out and collect Mexico's views during the
preparation and application of the COOL measu re. The United States is merely required under
Article 12.3 to "take account of [Mexico's] special development, financial and trade needs" "in the
preparation and application of [the COOL measu re]". This means giving active and meaningful
consideration to such needs.
7.791 Mexico has not demonstrated that the United St ates failed to do this. Mexico argues that the
United States ignored Mexico's comments and the impact that it knew the COOL measure would have
on Mexican exports. 1004 However, Mexico does not prove this. In particular, we have no evidence
from Mexico demonstrating that the United States h as failed to "take account of [Mexico's] special
development, financial and trade needs" "in the pr eparation and application of [the COOL measure]"
in the above sense.
7.792 In fact, Mexico does not contest the United Stat es' arguments and evidence showing that the
United States actively reached out to discuss the de velopment of the COOL measure with Mexico at
the following occasions:
(a) at least four opportunities for interested parties to provide formal comments on the
COOL regulations1005;
(b) a USDA briefing on 27 August 2008 on th e Interim Final Rule (AMS) for embassy
officials1006;
(c) a meeting on 11 September 2008 between AMS Administrator Lloyd Day and
officials from the Mexican Embassy to discuss COOL rule-making1007;

1003 Panel Report, EC – Approval and Marketing of Biotech Products, para. 7.1623.
1004 See Mexico's opening oral statement at the fi rst substantive meeting, para. 48, opening oral
statement at the second substantive meeting. para. 62 an d closing oral statement at the second substantive
meeting, para. 39.
1005 See United States' first written submission, para . 60, United States' second written submission,
para. 183 and Exhibits CDA-13, MEX-13, MEX-14, MEX-15, MEX-16, MEX-17, MEX-18, MEX-19 and
MEX-20.
1006 See United States' first written submission, para. 274 and United States' second written submission,
para. 183.

(d) meetings of the United States – Mexico Consultative Committee on Agriculture,
chaired by USDA and USTR officials, in October 2002, April 2003, May 2004,
May 2007 and January 2008 to discuss COOL rule-making.
1008
7.793 Nor does Mexico contest the United States' arguments and evidence demonstrating that, in the
context of the above consultations, Mexico submitted comments on key elements of the
COOL measure on 23 February 2004 and 15 August 2008 1009, and that high-level USDA officials
indicated that Mexico's input will be taken into acc ount. In particular, we have evidence before us
that, in September 2003, the USDA Undersecretary sent a letter to the Secretary of Agriculture of
Mexico stating that "[w]e will fully consider your comments ... as we develop the final rule".
1010
Similarly, in October 2008, the USDA Secretary sent a letter to the Secretary of the Mexican
Association of Secretaries of Rural Development requesting additional input on the rule-making as
part of the Canada-Mexico Working Group by "e ncourag[ing] the Canada-Mexico Working Group to
submit comments on this COOL regulation so that we can implement the program in a way that
incorporates your input".
1011
7.794 Further, Mexico does not dispute that the Un ited States introduced certain modifications to
elements of the COOL measure in response to c oncerns expressed by Mexico, namely by softening
the record-keeping requirements and by introducing th e commingling flexibility in part in response to
Mexico's comments.1012
7.795 We also note that the United States made a public invitation to comment on the 2002
Guidelines for the Interim Voluntary Country of Origin Labeling of Beef, Lamb, Pork, Fish,
Perishable Agricultural Commodities, and Peanuts (AMS). The 2003 Proposed Rule (AMS) of
October 2003 records this commenting process, and references inter alia "[t]estimony [by at least one
commenter] that this law may violate United St ates trade obligations under the World Trade
Organization".1013 Further, as regards the Interim Final Rule (AMS) of August 2008 1014, the
comments section of the 2009 Final Rule (AMS) 1015 explicitly references the United States' "trading
partners" and responds to at least one concern expressed by them.1016
7.796 Mexico argues that the United States failed to "take account of [Mexico's] special
development, financial and trade needs" in partic ular in regard to the 2002 Farm Bill since the
United States did not consult Mexico when developing that bill. 1017 As we explained, however, under
Article 12.3 of the TBT Agreement, the United Stat es did not have an explicit obligation to initiate
such consultation.

1007 See United States' first written submission, para. 274 and United States' second written submission,
para. 183.
1008 See United States' second written submission, para. 183.
1009 See United States' second written submission, para. 184 and Exhibits US-19 and 127.
1010 Exhibit US-141. See also United States' second written submission, para. 183.
1011 Exhibit US-142. See also United States' second written submission, para. 183.
1012 See United States' response to Panel question No. 84, United States' second written submission,
1013 68 FR 61945. See also United States' opening or al statement at the first substantive meeting,
para. 55.
1014 See Exhibit CDA-4.
1015 74 FR 2678 and 2679.
1016 74 FR 2678. See also Mexico's first written submission, para. 368 (citing 74 FR 2669).
1017 Mexico's second written submission, paras. 180-182, opening oral statement at the second
substantive meeting, para. 61, closing oral statement at the second substantive meeting, para. 40 and Mexico's
response to Panel question Nos. 153-155.

7.797 Although the COOL measure was introduced in its initial form by the 2002 Farm Bill, it took
effect as a fully developed and enforceable legal requ irement for the products at issue in this dispute
only on 30 September 2008. Mexico does not contest that it was consulted by the United States well
before this later date. 1018 Mexico even recognizes that it expressed its views both to USDA and the
US Congress: "[d]uring the preparation process of the COOL measure, both the United States
Congress and the USDA were made aware that the COOL measure would harm imports of Mexican
feeder cattle". 1019 The 2008 Farm Bill significantly amende d the 2002 Farm Bill. Therefore, any
opportunity to comment on the 2008 Farm Bill effec tively involved an opportunity to express views
on the 2002 Farm Bill as it was being developed by the United States towards what finally became
what we address as the statutory part of the C OOL measure in this dispute. In fact, the
2002 Farm Bill introduced specific rules only with re gard to beef and pork exclusively born, raised
and slaughtered in the United States. 1020 The specific provisions on what became Labels B, C and D
and the ground meat label under the final version of the COOL measure, were introduced only by the
2008 Farm Bill, following consultations with Mexico on various occasions.1021
7.798 It is the finalized version of the COOL measure that Mexico calls into question in its claims in
the current dispute, including in its claim under Arti cle 12.3 of the TBT Agreement. In fact, Mexico
argues that we should treat the various instrument s challenged in this dispute as a single measure.
We have chosen to do that for the most part. Acco rdingly, it is inappropriate for Mexico to single out
one of the earliest instruments comprised in the C OOL measure, and it would be inadequate also for
us to review whether the United States violated Article 12.3 of the TBT Agreement with regard to that
single instrument.
7.799 In light of the above considerations a nd the various documents showing how the
United States considered Mexico's special developm ent, financial and trade needs in an active and
meaningful way, we conclude that Mexico has not demonstrated that the United States failed to "take
account of [Mexico's] special development, fina ncial and trade needs" "in the preparation and
application of [the COOL measure]".
7.800 In light of this finding, we refrain from a ddressing other aspects of Mexico's Article 12.3
claim, and turn to Mexico's claim under Article 12.1 of the TBT Agreement.
(v) Assessment of Mexico's claim under Article 12.1
7.801 Article 12.1 of the TBT Agreement stipulates that:
"Members shall provide differential and mo re favourable treatment to developing
country Members to this Agreement, th rough the following provisions as well as
through the relevant provisions of other Articles of this Agreement."
7.802 As explained above, Mexico claims that the United States violated this provision by having
breached Article 12.3 of the TBT Agreement.
7.803 Given that Mexico has failed to establish the viol ation of Article 12.3 of the TBT Agreement,
we need not pursue Mexico's claim under Article 12.1 of the TBT Agreement; we conclude that
Mexico has also failed to demonstrate the violation of Article 12.1.

1018 United States' second written submission, para. 183.
1019 Mexico's first written submission, para. 367. See also Mexico's response to Panel question No. 82.
1020 See 7 U.S.C. § 1638a(a)(2).
1021 See 7 U.S.C. § 1638a(a)(2).

(c) Conclusion on Mexico's claim under Articles 12.1 and 12.3
7.804 Accordingly, we find that Mexico has not established that the United States acted
inconsistently with Article 12.3 of the TBT Agreement.
E. C
LAIMS UNDER THE GATT 1994
1. The complainants' claims under the GATT 1994
7.805 The complainants advance claims against the measures at issue under Articles III:4
and X:3(a) of the GATT 1994.
7.806 We note that there is a distinction between Articl es III:4 and X:3(a) in respect of the type of
measures subject to the obligations under th e respective provisions. The obligation under
Article X:3(a) applies to the administration of the laws, regulations, decisions and rulings of the kind
falling within the scope of Article X:1, but not to such laws and regulations themselves. 1022 T h e
consistency of laws and regulati ons themselves should be examined under the relevant provisions of
the GATT 1994, such as Article III:4, and not Article X:3(a).1023
7.807 The complainants' claims under Article III:4 concern both the COOL measure and the Vilsack
letter.1024 In accordance with our decision to examine the COOL measure separately from the Vilsack
letter, however, we examined the COOL measure unde r Article 2.1 of the TBT Agreement. As we
found that the Vilsack letter was not a technical re gulation, we did not proceed to examine the letter
under Article 2.1. The COOL measure was then found inconsistent with the national treatment
obligation under Article 2.1. 1025 Given the close connection between Article 2.1 of the
TBT Agreement and Article III:4 of the GATT 1994 w ith respect to the nature of the obligations 1026
and in light of our findi ng under Article 2.1 of the TBT Agreement, we consider it unnecessary to
examine the complainants' claims in respect of the COOL measure under Article III:4 of the
GATT 1994.1027
7.808 As regards the Vilsack letter, Canada challenges it under Article X:3(a). Mexico also brought
a claim under Article X:3(a) against the alleged shif ts in the interpretation of the COOL measure as
reflected in the USDA's guidelines, non-public pressure by the US government on individual

1022 Appellate Body Reports, EC – Bananas III, para. 200; EC – Poultry, para. 115. In this regard, the
Appellate Body held in EC – Bananas III that "[t]he text of Article X:3(a) clearly indicates that the requirements
of "uniformity, impartiality and reasonableness" do not apply to the laws, regulations, decisions and rulings
themselves, but rather to the administration of those laws, regulations, decisions and rulings." (para. 200). The
Appellate Body reiterated this view in EC – Poultry, where it held that "Article X relates to the publication and
administration of "laws, regulations, judicial decisions and administrative rulings of general application", rather
than to the substantive content of such measures." (para.115).
1023 Appellate Body Report, EC – Bananas III, para. 200.
1024 Canada's first written submission, para. 219; Mexico's first written submission, para. 225. See
paras. 3.1-3.3.
1025 See paras. 7.420, 7.547-7.548.
1026 See Section VII.D.2.
1027 In addressing the principle of judicial economy, the Appellate Body clarified that panels need not
examine all legal claims made by a complaining party. The Appellate Body stated that, in line with the aim of
the WTO dispute settlement system as set out in Article s 3.4 and 3.7 of the DSU, panels may make findings
only on those claims that such panels concluded were necessary to resolve the particular matter (Appellate Body
Report, US – Wool Shirts and Blouses, pp. 17-20).
Considered against the standard applied for the panels' exercise of judicial economy, we consider that,
in this dispute, given our finding under Article 2.1 of the TBT Agreement, we need not make findings on the
national treatment obligation embodied in Article III:4 of the GATT 1994.

companies, and the Vilsack letter.1028 Accordingly, in this section, we will examine the complainants'
claims concerning the United States' act of admini stering the COOL measure under Article X:3(a).
If the Vilsack letter is found not to fall within the sc ope of Article X:3(a), we will proceed to examine
whether it falls within the scope of Article III:4.
2. Article X:3(a)
7.809 Canada and Mexico claim that the United States acted inconsistently with its obligations
under Article X:3(a) with respect to its administ ration of the COOL measure. Canada's claim is
confined to a "reasonable" administration of the COOL measure, whereas Mexico's claim concerns all
requirements under Article X:3(a), namely a "reasonable", "uniform", and "impartial" 1029
administration of the COOL measure.
7.810 Article X:3(a) provides:
"Each contracting party shall administer in a uniform, impartial and reasonable
manner all its laws, regulations, decisions and rulings of the kind described in
paragraph 1 of this Article."
7.811 Article X:1 in turn reads:
"Laws, regulations, judicial decisions and administrative rulings of general
application, made effective by any contracting party, pertaining to the classification
or the valuation of products for customs purposes, or to rates of duty, taxes or other
charges, or to requirements, restrictions or prohibitions on imports or exports or on
the transfer of payments therefore, or affecting their sale, distribution, transportation,
insurance, warehousing inspection, exhibition, processing, mixing or other use, ..."
7.812 To establish a violation of Article X:3(a), a co mplaining party must show that the responding
Member administers the legal instruments of the kind described in Article X:1 in a manner that does
not meet the standard of uniformity, impartiality, or reasonableness set out in Article X:3(a).
1030
7.813 In the current dispute, for the complainants to prove their claim under Article X:3(a), they
must establish the following elements: (i) the C OOL measure falls within the scope of laws,
regulations, decisions and rulings of the kind described in Article X:1; (ii) the United States
"administered" the COOL measure; and (iii) the administration of the COOL measure by the
United States was not uniform, impartial or reasonable.
(a) Laws, regulations, decisions and rulings of the kind described in Article X:1
7.814 The parties do not dispute that the COOL me asure falls within the category of "laws,
regulations, decisions and rulings of the kind d escribed in paragraph 1" of Article X of the
GATT 1994 and referenced in Article X:3(a).
1031

1028 Canada's first written submission, para. 227; opening oral statement at the first substantive
meeting, para. 2; second written submission, para. 108; opening oral statement at the second substantive
meeting, paras. 73-75. Mexico's fi rst written submission, para. 378; opening oral statement at the first
substantive meeting, paras. 49-51; second written submission, paras. 185-189; opening oral statement at the
second substantive meeting, paras. 65-68.
1029 Mexico's second written submission, paras. 18 5 and 189. Mexico's claim on the partial
administration by the United States of the COOL measure is presented for the first time in its second written
submission.
1030 Panel Report, Thailand – Cigarettes (Philippines), para. 7.866.

7.815 We agree with the parties' view on this issue. For the purposes of this dispute, we use the
term "COOL measure" to refer to the COOL statute and the 2009 Final Rule (AMS). These are
formal legal instruments, which qualify as either "laws" or "regulations" within the meaning of
Article X:1 of the GATT 1994.
7.816 We therefore proceed to the next element of Article X:3(a), namely whether the complainants
properly identified an act of the United States that amounts to the "administration" of the
COOL measure.
(b) "Administer" its laws and regulations
(i) Main arguments of the parties
7.817 Canada argues that the exact "US government act of administration" in the present case is the
Vilsack letter, because it is a means of "putting into practical effect, or applying" the 2009 Final Rule
(AMS) and the underlying statutory provisions, which corresponds to the definition of the term
"administer".
1032 The Vilsack letter created uncertainty as to the precise requirements of the
COOL measure, thereby administering the COOL measure in an unreasonable manner.1033 According
to Canada, the requirements in the Vilsack letter went be yond the requirement of the
COOL legislation and the 2009 Final Rule (AMS): 1034 it encouraged industry to take action that was
not required by the COOL legislation and the 2009 Final Rule (AMS).1035 This was accompanied by a
threat to US market participants who were followi ng the letter of the COOL legislation and the 2009
Final Rule (AMS). The threat involved the imposit ion of even more onerous requirements if market
participants did not go beyond the law's requireme nts by complying with the Vilsack letter's
"suggestions for voluntary action".1036
7.818 Mexico argues that the act of administration lies in the different changes made to the
COOL measure during the implementation of the regu lations, as reflected in the associated guidelines
issued by USDA1037, non-public pressure by the US government on individual companies 1038, and the
Vilsack letter. 1039 According to Mexico, acts taken by US DA regarding changes in the criteria of
compliance are actions taken "for purposes of the administration" of the measure. 1040 Mexico submits
that the inconsistent and unpredictable guidance from USDA was not part of the legislative or
rulemaking process, but the action of an agency not reflected in statutes or regulations. 1041 Mexico
contends that the continuing changes in USDA policy, first indicating that mi xed origin labels were
permissible, then discouraging them, contributed to the disruptions experienced by the Mexican

1031 Canada's first written submission, para. 226; Mexico's first written submission, para. 376. The
United States does not contest that the COOL measure is qualified as "laws, regulations, decisions and rulings of
the kind described in paragraph 1" of Article X of the GATT 1994.
1032 Canada's response to Panel question No. 85. (italics in the original).
1033 Canada's first written submission, paras. 228-231.
1034 Canada's first written submission, para. 228.
1035 Canada's first written submission, para. 229.
1036 Canada's first written submission, para. 230.
1037 Mexico's second written submission, para. 187, referring to Exhibit CDA-29.
1038 Mexico's first written submission, paras. 258-259; second written submission, para. 188
(Exhibits MEX-33, MEX-55, 56 and 57).
1039 Mexico's first written submission, para. 378; re sponse to Panel question No. 85; second written
submission, para. 185.
1040 Mexico's opening oral statement at the second substantive meeting, paras. 67-68.
1041 Mexico's response to Panel question No. 86.

industry.1042 The COOL measure has not been administ ered in a uniform, impartial and reasonable
manner, contrary to Article X:3(a) of the GATT 1994.1043
7.819 The United States argues that the complainants have fa iled to provide any evidence relating
to the administration of the COOL measures at all. 1044 The United States submits that the
complainants cannot base their claims on the Vilsack letter because the issuance of that letter does not
fall within the scope of Article X:3(a). 1045 That provision applies to the manner in which WTO
Members "administer" their laws, regulations, decisi ons and rulings referred to in Article X:1. The
United States contests that the Vilsack letter would ha ve "put into practical effect" or "applied" the
COOL requirements.1046 Instead of dealing with the administration of either the statute or the 2009
Final Rule, the Vilsack letter merely suggests that certain market participants can voluntarily take
actions that would go beyond what the COOL statute or 2009 Final Rule (AMS) require. 1047 The
statement in the letter that "it pertains to the implementation of the Mandatory Country of Origin
Labelling (COOL) Final Rule" merely indicates that the letter addresses the implementation of the
2009 Final Rule.
1048
7.820 The United States also calls into question Mexico's characterization of the term
"administration" because that term does not extend to the steps and actions related to the making of an
administrative decision. The actions leading to th e 2009 Final Rule (AMS) do not "put into practical
effect" or "apply" the COOL requirements, because they occurred before the enactment of the 2009
Final Rule (AMS).1049
(ii) Analysis by the Panel
Canada's argument
7.821 The term "administer" in Article X:3(a) refers to "putting into practical effect or applying" a
legal instrument of the kind described in Article X:1. 1050 We also recall the panel's observation in
Argentina – Hides and Leather regarding the proper scope of Article X:3(a) that the relevant question
is "whether the substance of such a measure is administrative in nature or, instead, involves
substantive issues more properly dealt with under other provisions of the GATT 1994".1051
7.822 Canada argues that the Vilsack letter is an act of administration because it is a means of
"putting into practical effect or applying" the COOL measure.

1042 Mexico's response to Panel question No. 85; Mexico's second written submission, para. 188.
1043 Mexico's second written submission, para. 189.
1044 United States' first written submission, para. 289.
1045 United States' first written submission, para. 291.
1046 United States' first written submission, paras, 291-292 (citing Appellate Body Report, EC –
Bananas III, para. 200); and second written submission, paras. 187-189.
1047 United States' first written submission, para. 292; opening oral statement at the first substantive
meeting, para. 59; and second written submission, paras. 187-188.
1048 United States' response to Panel question No. 87.
1049 United States' second written submission, paras. 187-189.
1050 Appellate Body Report, EC – Selected Customs Matters , para. 224. See also Canada's second
written submission, para. 108, footnote 164. In EC – Selected Customs Matters , the Appellate Body clarified
that "the term 'administer' may include administrative processes", which can be understood "as a series of steps,
actions, or events that are taken or occur in relation to the making of an administrative decision" (Appellate
Body Report, EC – Selected Customs Matters, para. 224).
1051 Panel Report, Argentina – Hides and Leather, para. 11.70 (emphasis added).

7.823 We clarified above that the legal instrument being administered within the meaning of
Article X:3(a) in this case is the COOL measu re (i.e. the COOL statute and the 2009 Final Rule
(AMS)). We must determine therefore whether Ca nada has demonstrated that the United States put
into practical effect or applied the COOL measure by issuing the Vilsack letter.
7.824 As previously noted
1052, the Vilsack letter starts with the statement that it pertains to the
implementation of the 2009 Final Rule (AMS). The essence of the Vilsack letter is that Secretary
Vilsack announced that the 2009 Final Rule (AMS) would enter into force as scheduled by the
previous administration and, at the same time , suggested that, based on "concerns" with the
requirements set out in the 2009 Final Rule (AMS), industry take more stringent voluntary actions.
7.825 Regarding the circumstances surrounding the issuan ce of the Vilsack letter, the United States
explains that, in accordance with the White Hou se directive issued by the new administration,
Secretary Vilsack reviewed the Interim Final Rule (AMS), which is one of the regulations developed
by the previous administration that had not yet taken effect.
1053 Having reviewed the 2009 Final Rule
(AMS), Secretary Vilsack sent the letter to US in dustry indicating that the 2009 Final Rule (AMS)
would take effect without modifications and in cluding certain suggestions that companies could
follow on a voluntary basis to provide even more information to consumers. Assuming that, as the
United States submits, Secretary Vilsack intended to allow the regulations to go into effect as drafted
by the previous administration, it is not clear wh y the letter included suggestions for more stringent
voluntary action by the industry than is required under the 2009 Final Rule (AMS). According to the
United States, Secretary Vilsack chose to issue th e letter instead of amending the 2009 Final Rule
(AMS), because he did not intend to change US law but to allow the regulations to go into effect as
drafted by the previous administration.
1054
7.826 The United States put forward that other US secretaries and high-ranking administration
officials have also issued letters of this kind to industry or made similar announcements to interested
parties. Such other communications as presented by the United States – a podcast by the Interior
Secretary on the importance of protecting polar bears; a letter from the Food and Drug Administration
on the potential danger of an unsafe amount of vitami n D for infants; and a letter from the Secretary
of Health and Human Services to CEOs of insura nce companies to justify premium hikes – do not
suggest, in our view, any particular similarity in nature or in content to the Vilsack letter. 1055 They
nonetheless show the authority and discretion grante d to heads of US administrative agencies in
general, and confirm the administrative authority of Secretary Vilsack.
7.827 The contents of the Vilsack letter and th e circumstances surrounding its issuance, as
explained by the United States, therefore indicate th at the issuance by Secretary Vilsack of the letter
to the US industry falls within the broad scope of administrative authority given to USDA regarding
the application of the COOL measure, including an y guidance on the specific requirements under the
measure to be provided to the public.
7.828 In fact, as noted above, the letter was issued to confirm the implementation of the 2009 Final
Rule (AMS) after having reviewed the issues of law and policy relating to the requirements, in
accordance with the mandate given by the new presi dent. The directive issued by the White House
indicates the possibility of revisiting laws and po licies of new and pending regulations, including the

1052 See para. 7.123.
1053 United States' response to Panel question No. 4, referring to the directive from the White House
(Exhibit US-62). The directive states that as way of managing the federal regulatory process at the beginning of
his Administration, President Obama sought to review and approve any new or pending regulations.
1054 United States' response to Panel question No. 4.
1055 Exhibits US-63, 65.

2009 Final Rule (AMS). Therefore, in the case of the 2009 Final Rule (AMS), the Vilsack letter
effectively confirmed the application of the 2009 Fi nal Rule (AMS), which we consider falls within
the scope of the administration of the COOL measure.
7.829 In coming to this conclusion, we are well aware that the issuance of the concerned letter is
distinguishable from situations where USDA "applies" the specific requirements under the
COOL measure in particular instances. Despite th e absence of any specific instance of application,
the context in which the letter was issued by S ecretary Vilsack to industry in general shows a
sufficient basis for the letter to constitute an act of administering the COOL measure.
7.830 We therefore conclude that the issuance of the Vilsack letter falls within the scope of the term
"administer" under Article X:3(a).
Mexico's argument
7.831 Unlike Canada, Mexico does not focus only on the Vilsack letter to identify acts of
administration of the COOL measure. It is our u nderstanding of Mexico's argument that the guidance
from USDA on the labelling requirements under th e COOL measure, which allegedly changed
throughout the rule-making process, is an act taken for the purposes of administering the
COOL measure. According to Mexico, the con cerned guidance from USDA is reflected in the
associated guidelines issued by USDA, the "non-publ ic pressure by the US government on individual
companies"1056, and the Vilsack letter.
7.832 The following table summarizes the evidence re ferenced by Mexico to demonstrate the
guidance by USDA, and how this evidence relates to the regulatory rule-making process (highlighted
in grey in the table) concerning the implementation of the COOL statute.
Categorization
by Mexico Exhibit Date Content
Interim Final Rule (AMS) issued (01/08/2008)
USDA
guidelines
USDA guidelines
(FAQ)
(CDA-29)1057
11/09/2008 USDA advised that Label B can be used for Label A meat

1056 We note that the so-called "non-public pressu re" is Mexico's own characterization of certain
evidence as described in the table in paragraph 7.832.
1057 In its second written submission, Mexico refers to the concerned exhibit submitted by Canada
(Mexico's second written submission, para. 187).

Interim Final Rule (AMS) entered into force 30/09/2008
USDA
guidelines
Farm and Dairy
website
 (MEX-83)
30/09/2008 Article referring to the US DA guidelines of 11 September 2008
Non-public
pressure
"Tyson Cool
With Federal
Labeling Law"
(MEX-55)
16/10/2008
Article referring to the USDA's intention of closing a "loophole"
that allowed meat processors to use Label B for most of their
products.
Non-public
pressure

"The Pig Site"
(MEX-56) 16/10/2008
"Reuters reports that the leading U.S. beef and No. 2 pork producer
had initially planned on categorizi ng its beef and pork cuts with
Label B, but abandoned that plan after receiving feedback from
government officials and some industry groups".
Non-public
pressure

JBS letter
(MEX-57) 23/10/2008
JBS letter to customers explaining that their initial intention was to
label the majority of their product under the category B label, but
that due to the evolving interpretation of the COOL measure they
would opt for producing the majority of meat under the category A
label.
2009 Final Rule (AMS) issued (15/01/2009)
Vilsack letter sent to industry (20/02/2009)
2009 Final Rule (AMS) entered into force (16/03/2009)
Non-public
pressure
Tyson brochure
to costumers
(MEX-33)
April 2009
Tyson letter to customers explai ning that although their initial
compliance approach was using Label B for most of their products,
input from government officials led th em to shift to Label A for the
majority of products.

7.833 We consider that the act of providing guidance on the meaning of specific requirements of a
measure amounts to an act of administering such measu re within the meaning of Article X:3(a). It is
within the right of government agencies to provi de businesses and the public with the guidance on the
meaning of the specific requirements under the releva nt regulations. In our view, USDA "put into
practical effect" the COOL measure by providing guidance on the labelling requirements. As the
authority implementing the COOL measure, USDA advised the subjects of the COOL requirements
on how to comply with the specific labelling requirements.
7.834 We proceed to examine whether Mexico has est ablished that USDA provided such guidance
with respect to the COOL measure. Specifically , Mexico submitted three categories of evidence,
namely the USDA guidelines, the non-public pressure, and the Vilsack letter, arguing that these show
the act of USDA providing guidance to the industry.
7.835 First, regarding the USDA guidelines, Mexico re fers to a list of "frequently asked questions"
published by USDA on 11 September 2008 and the Fa rm and Dairy website in which the same
guidelines were referenced. 1058 Specifically, Mexico argues that the administrative guidance at issue
is the following:
"Q. Can a retailer, like a meat packer, declar e the origin of meat products derived
from livestock born, raised, and slaughtered in the United States (i.e. Product of

1058 Exhibits CDA-29, MEX-83. Canada presents further evidence on other USDA guidelines. See
Exhibits CDA-7, 30 and 31.

USA) as a mixed origin label such as Product of the United States, Canada, and
Mexico?

A. Yes. Retailers are permitt ed to market U.S. produced meat products under a
mixed origin label declaration."
1059

7.836 As regards the second category of guidance by USDA, described by Mexico as the so-called
"non-public pressure" from the US government, Mexico refers to two articles and two letters from
meat producers. Mexico submits that these exhibits demonstrate that USDA subsequently reversed
the initial guidance provided in the USDA guidelines of 11 September 2008 and privately contacted
major US meat processors to advise th em not to use mixed origin labels. We note that the two letters
from meat producers indicate their intention to la bel the majority of their meat products under
Label A in light of certain input from the US government.
1060 Both letters show that, to comply with
the COOL requirements, these companies had initially intended to label the majority of their products
under Label B. However, this initial compliance approach changed afterwards to labelling the
majority of their meat products under Label A. Specifically, the letter from Tyson Fresh Meats, Inc.
to customers states in relevant part:
"[The initial approach] involved offering the majority of our beef and pork cuts under
the multi-country Category B label ... Based on the input we have since received from
government officials and various industr y groups, we now believe this initial
compliance approach will not be viable in the longterm. ... Our approach will be to
use the "U.S." or Category A label on a ll of our premium beef programs beginning
early 2009".1061
7.837 The letter from JBS USA, Inc. to customers similarly establishes that:
"During the development of our policy on Country of Origin Labeling (COOL) for
beef products JBS made the decision to label the majority of our products under the
Category B label ... [A]s the interpretation of Country of Origin Labeling continues to
evolve, we feel it is essential that we ad apt to the most current understanding of the
regulation. ... JBS has elected to begin tr ansitioning to a "Product of U.S.A." label on
the majority of our beef products. This change will occur during the next several
months".
1062
7.838 Mexico further refers to two press articl es, one written by Tom Johnston and another
published on a website called the "Pig Site". These articles describe the changes in Tyson's approach
in how to comply with the COOL measure. 1063 One article reports that the initial compliance
approach was abandoned after receiving feedb ack from the government and industry groups. 1064 The
other article indicates that USDA worked to clos e the "loophole" reflected in the first compliance
approach by the industry, considering that "the law seeks to differentiate US meat products from those
of other countries".1065

1059 Mexico's second written submission, para. 187, referring to Exhibit CDA-29.
1060 Exhibits MEX-33, 55, 56 and 57.
1061 Exhibit MEX-33.
1062 Exhibit MEX-57.
1063 Exhibits MEX-55 and 56.
1064 Exhibit MEX-56.
1065 Exhibits MEX-55 and 83.

7.839 Of the above evidence referenced by Mexico , the USDA guidelines of 11 September 2008
and the Vilsack letter are instruments issued by the US government, whereas press articles and letters
from meat producers are not.
7.840 We consider that the issuance by the US government of instruments such as the USDA
guidelines of 11 September 2008 and the Vilsack letter constitutes acts of administering the
COOL measure. As stated above, the act of providing guidance on the meaning of specific
requirements under a measure, for instance by publishi ng "frequently asked questions", is an act of
administering such measure within the meaning of Article X:3(a). We also recall our earlier
conclusion that the issuance of the Vilsack letter is an act of administration under Article X:3(a).
1066
7.841 We are further provided with press articles and indus try letters to their customers. In this set
of evidence, references are made to certain feedb ack and input from the US government regarding the
labelling requirements under the COOL measure. Me xico attempts to show that certain contacts
between meat producers and USDA, as referenced in these exhibits, have guided these meat
producers' decision on how to comply with the labe lling requirements. Specifically, the initial USDA
guidance as illustrated in the USDA guidelines of 11 September 2008 appears to have led meat
producers to decide to label most of their products under category B. The evidence implies that, in
light of a subsequent change in the guidance from the US government, certain producers chose to
adopt a different labelling policy, na mely to label the majority of muscle cut meats under category A.
Despite the absence of evidence demonstrating sp ecific contacts between USDA and meat producers
as referenced in these exhibits, we can noneth eless infer from them that USDA provided meat
producers with certain input or guidance on the la belling requirements. We also note that the
United States has not put forward an argument that such input or guidance from USDA as mentioned
in these exhibits did not exist.
7.842 The evidence as a whole therefore shows that USDA provided guidance to meat producers.
This, in our view, constitutes an act of administration within the meaning of Article X:3(a).
(c) "Not reasonable" administration of laws and regulations
(i) Main arguments of the parties
7.843 According to Canada, the Vilsack letter constitutes unreasonable administration of the
COOL statute and the 2009 Final Rule (AMS).1067
7.844 Canada argues that the Vilsack letter constitut es government action that lies outside of the
normal enforcement of laws and regulations in the United States and therefore is unreasonable. 1068
The Vilsack letter addresses the implementation of the Final Rule and amounts to "regulation-
making" through a public letter invoking the intent of the US Congress. 1069 Canada emphasizes that
threatening the US industry with the possibility of reopening the 2009 Final Rule (AMS) and

1066 See para. 7.830.
1067 Canada's first written submission, para. 231. Canada quotes Dominican Republic – Import and
Sales of Cigarettes , where based on the dictionary definition, the panel interpreted the term "reasonable" as
referring to notions such as "in accordance with reason", "not irrational or absurd", "proportionate", "having
sound judgement", "sensible", "not asking for too much", "within the limits of reason, not greatly less or more
than might be thought likely or appropriate", "artic ulate" (Canada's first written submission, para. 231,
footnote 262, referencing Panel Report, Dominican Republic – Import and Sales of Cigarettes , para. 7.385 and
footnote 589).
1068 Canada's first written submission, para. 231.
1069 Canada's second written submission, para. 111.

imposing more onerous requirements if the indus try did not comply with Secretary Vilsack's
"suggestions for voluntary action" amounts to unreasonable administration of the COOL measure.
7.845 Canada submits that the available evidence in th e form of witness statements, letters from US
slaughterhouses and econometric analyses demonstrates compliance with the Vilsack letter. 1070
Canada maintains that the Vilsack letter had an impact on the industry, because of its timing and
circumstances, the position of the person who signed the letter, the public nature of the letter, the
directions given to US industry, and the explicit threat backing up Secretary Vilsack's directions. 1071
Therefore, according to Canada, the United States h as violated its obligation under Article X:3(a) of
GATT 1994 to administer its laws, regulations and admini strative rulings of general application in a
reasonable manner.1072
7.846 Mexico argues that the administration of the CO OL measure, characterized by shifts in
interpretation and guidance by USDA on its statutory and regulatory provisions, has been anything
but predictable and reasonable.
1073 Mexico argues that the administration of the details of the
COOL measure changed over the course of the In terim Final Rule (AMS) and the 2009 Final Rule
(AMS) and the associated guidelines issued by USDA ove r this period. The recurrent changes of the
USDA policy, which first allowed the use of mixed or igin labels and then discouraged it, are further
evidence of unreasonable administration.1074
7.847 These uncertainties continued with the Vilsack letter, which suggested additional practices
and threatened to modify the COOL measure if such practices were not followed. Mexico contends
that the Vilsack letter is part of a series of ac tions taken by the US government to preclude the
industry from using foreign cattle. As a clear sign of effect of government input through the Vilsack
letter, certain US meat processors have cha nged their initial compliance approach to the
COOL requirements.1075 Thus, the administration of a law or regulation in such a manner cannot
amount to uniform (i.e. predictable) and reas onable administration within the meaning of
Article X:3(a) of the GATT 1994.
7.848 The United States contends that Canada and Mexico ha ve failed to demonstrate that the
COOL measures have been administered in an unreasonable manner, either through the issuance of
the Vilsack letter or via the changes made to the implementing regulations during their
development.1076 According to the United States, the complainants have not presented evidence
establishing behaviour by USDA in administering th e COOL measures that has been unreasonable in
any sense. 1077 Since the Vilsack letter does not admi nister the COOL measures at all, the
complainants are wrong to argue that the letter is an "unreasonable" administration of those measures.
Further, Mexico has adduced no evidence to suggest that any decisions made to the implementing
regulations as they evolved through the regulatory process were "irrational" or "absurd".

1070 Canada's second written submission, para. 106.
1071 Canada's second written submission, para. 103.
1072 Canada's first written submission, para. 232.
1073 Mexico's first written submission, paras. 377, 378, referring to the Panel Report, Dominican
Republic – Import and Sales of Cigarettes , para. 7.385 and footnote 589; second written submission,
paras. 185-186.
1074 Mexico's second written submission, para. 188, referring back to its first written submission,
para. 258 (Exhibits MEX-33, 55, 56, 57 and 83); opening oral statement at the second substantive meeting,
paras. 67-68.
1075 Mexico's opening oral statement at the first substantive meeting, paras. 50-51. (Exhibit MEX-33)
1076 United States' first written submission, para. 297.
1077 United States' first written submission, para. 299.

7.849 The United States considers that the complainants have failed to demonstrate that the issuance
of the Vilsack letter or the development of the 200 9 Final Rule were unreasonable. The Vilsack letter
was issued in accordance with a directive from the Obama Administration to review all pending
regulations of the previous Administration. Some of the changes during the development of the 2009
Final Rule (AMS), such as the flexibility on commi ngling, served to address the concerns of the
complainants.
1078
(ii) Analysis by the Panel
7.850 The term "reasonable" is defined as "in accordan ce with reason", "not irrational or absurd",
"proportionate", "sensible", and "within the limits of reason, not greatly less or more than might be
thought likely or appropriate". 1079 We assess the parties' claims of not reasonable administration in
light of these definitions.
7.851 In our view, whether an act of administrati on can be considered reasonable within the
meaning of Article X:3(a) entails a consideration of factual circumstances specific to each case. This
is confirmed by previous disputes where the requirement of reasonable administration was understood
as requiring the examination of the features of the ad ministrative act at issue in the light of its
objective, cause or the rationale behind it.1080
Canada's argument – the Vilsack letter
7.852 We first recall the United States' explanation on the circumstances under which the letter was
issued.1081 It was issued in the context of the Dir ective from the new administration to review the
laws and policies of the new and pending regulati ons that had been enacted by the previous
administration. In essence, the Directive indicates th at the new administration wanted to review these
regulations to decide whether to maintain them without any change. As for the 2009 Final Rule
(AMS), Secretary Vilsack confirms in the letter th e new administration's intention to implement it as
originally scheduled by the previous administration and includes certain voluntary suggestions to
industry.

1078 United States' second written submission, para. 191.
1079 Panel Report, Dominican Republic – Import and Sale of Cigarettes, para. 7.385 referring to the The
New Shorter Oxford English Dictionary, (Fifth Edition) Oxford University Press, Vol. II, p. 2482 (2002).
1080 In Argentina – Hides and Leather , for example, the panel cons idered access to confidential
information by a competitor in the market to be a relevant factor in determining reasonableness of the
administrative action in that dispute (para. 11.86). We further recall the Appellate Body's analysis in Brazil –
Retreaded Tyres that "the analysis of whether the application of a measure results in ar bitrary or unjustifiable
discrimination should focus on the cause of the discrimination, or the rationale put forward to explain its
existence" (Appellate Body Report, Brazil – Retreaded Tyres , para. 226; Panel Report, Thailand – Cigarettes,
para. 7.291). In Thailand – Cigarettes (Philippines), the Philippines claimed that the appointment of dual
function officials as directors of a company under administrative proceedings constituted unreasonable
administration because the officials were in a position where they could gather and reveal confidential
information on Philippines industries' direct competitors. The panel found that Thailand did not act
inconsistently with Article X:3(a). However, the overall delays in the administrative proceedings shown
throughout the course of the review process of customs valuation were considered by the panel " not appropriate
or proportionate" considered against the nature of the circumstances concerned, and therefore, the
administration was considered to be "unreasonable" (Panel Report, Thailand – Cigarettes , para. 7.969). In
Dominican Republic – Import and Sale of Cigarettes , the Panel found that the Dominican Republic had
administered the provisions governing the Selective Consumption Tax in a manner that was "unreasonable" and
therefore inconsistent with Article X:3(a) of GATT 1994 (paras. 7.365-7.394).
1081 See paras. 7.39-7.42 above.

7.853 The letter, however, suggests that the industry voluntarily adopt stricter labelling practices
concerning origin information than those required under the 2009 Final Rule (AMS). Specifically, the
Vilsack letter asks the industry to voluntarily foll ow three recommendations for the labelling of meat
products that are not contained in the COOL measure.
7.854 The first recommendation in the Vilsack letter is the inclusion of information about what
production step occurred in each country when multip le countries appear on the label. The Vilsack
letter gives the following examples about how such information could be included in the labels:
"Born and Raised in Country X and Slaughtered in Country Y" or "Born in Country X and Raised and
Slaughtered in Country Y". 1082 This suggestion goes beyond the la belling requirements set out in the
COOL measure. Under the COOL measure, the country of origin declaration for meat products
derived from livestock of multiple countries of origin (Label B) or imported for immediate slaughter
(Label C) need not determine the countries where su ch livestock were born, raised and slaughtered.
For Label B meat the producer only needs to labe l "Product of the United States, Product of
country X", whereas for Label C the information is "Product of country X, Product of the
United States".
1083
7.855 The second recommendation in the Vilsack letter is that even when products are subject to
curing, smoking, broiling, grilling, or steaming, voluntary labelling should be provided. This
recommendation goes beyond the COOL measure, which clearly exempts from the general obligation
of providing country of origin information c overed commodities that undergo any of the above-
mentioned processing steps.
1084
7.856 Third, as regards ground meat, the COOL measure establishes that processors shall list all
countries of origin that may have reasonably been contained in their inventory during the 60 days
prior to the country of origin declaration. The Vilsack letter suggests that the industry reduce that
time allowance from 60 days to ten days.1085
7.857 The above comparison shows that the voluntary actions suggested in the Vilsack letter go
beyond certain obligations and reduce certain flexibilities foreseen in the COOL measure.
7.858 Canada does not challenge, and we see no issue per se with a new administration reviewing
regulations and policies de veloped by a previous administration. Based on its assessment, the new
administration may decide to change existing regula tions or adopt new regula tions making use of the
latitude accorded to the executive branch of the government within the legislative framework.
7.859 However, as regards the Vilsack letter, we do not find any justifiable rationale for suggesting
stricter labelling practices than the ones required by the 2009 Final Rule (AMS) while at the same
time allowing the 2009 Final Rule (AMS) to enter into fo rce. If anything, the suggestions in the letter
– even if they concern voluntary action by indu stry – undermine the labelling requirements in the
2009 Final Rule (AMS). 1086 In fact, the letter addresses issues that do not directly emanate from the
actual labelling requirements at issue under the 2009 Fi nal Rule (AMS). Importantly, this is done in
the very same letter announcing the entry into fo rce of the 2009 Final Rule (AMS) as a result of
Secretary Vilsack's having reviewed it. Although the suggested actions in the letter are only for

1082 Vilsack letter.
1083 7 C.F.R. § 65.300 (e).
1084 7 C.F.R. § 65.220.
1085 7 C.F.R. § 65.300 (h).
1086 United States' first written submission, para. 29 3; United States' second written submission,
para. 188.
The United States itself states that the Vilsack letter's recommendations are inconsistent with the 2009
Final Rule (AMS) (United States' comments on Canada's and Mexico's responses to Panel question No. 96).

voluntary action, the language of the letter may still have caused uncertainty and confusion as to the
consequences of the letter, including possible modi fications to the 2009 Final Rule (AMS) should the
industry not follow Secretary Vilsack's suggestions for additional voluntary action.
7.860 Furthermore, the Vilsack letter was issued less th an one month prior to the entry into force of
the 2009 Final Rule (AMS). This may have caused further confusion for industry in terms of the
specific labelling requirements to be observed. In particular, what we are addressing here is a letter
issued by the head of a government agency to the industry in general. Compared to situations where
the administration applies the COOL measure to partic ular individual entities, this type of letter can,
in our view, have a broader impact on the industr y because the letter was issued to the industry in
general, not to specific entities.
7.861 Although, in general, a WTO Member has the discretion to administer its laws and
regulations in the manner it deems fit, it equally has the responsibility to respect "certain minimum
standards for transparency and pr ocedural fairness" as regards its actions. As the Appellate Body
observed, Article X:3(a) of the GATT 1994 establish es certain minimum standards for transparency
and procedural fairness in the administration of trade regulations.
1087
7.862 This responsibility, in our view, applies to all types of actions falling within the broad scope
of the term "administer" under Article X:3(a). We consider that the Vilsack letter did not meet these
minimum standards of procedural fairness in relati on to the implementation of the 2009 Final Rule by
both allowing the 2009 Final Rule (AMS) to enter into force and, at th e same time, suggesting
industry compliance with stricter labelling requireme nts than those contained in the 2009 Final Rule
(AMS).
7.863 Based on the manner in which the Secretary of Agriculture addressed the decision to
implement the 2009 Final Rule (AMS), taken togeth er with the circumstances under which the letter
was issued, we consider that the Vilsack letter was not "appropriate", and thus does not meet the
requirement of reasonable administration of the COOL measure within the meaning of Article X:3(a).
7.864 We therefore conclude that Canada has demonstrated that the United States acted
inconsistently with Article X:3(a) by failing to administer the COOL measure in a reasonable manner
through the issuance of the Vilsack letter.
Mexico's argument – shifts in interpretation and guidance by USDA
7.865 As explained above, unlike Cana da, Mexico did not focus its argument exclusively on the
issuance of the Vilsack letter. In Mexico's vi ew, the alleged unreasonable administration of the
COOL measure is reflected in shifts in the guida nce and interpretation by USDA on its statutory and
regulatory provisions, which culminated in the Vilsack letter.
7.866 To the extent that Mexico's claim is based on the issuance of the Vilsack letter, we have
already concluded that the issuance of the Vilsack letter was not a reasonable administration of the
COOL measure within the meaning of Article X:3( a). We note that Mexico did not develop its
argument relating to the Vilsack letter as extensivel y as Canada. In our view, however, Mexico has
adduced sufficient evidence to dem onstrate that the Vilsack letter created uncertainties for industry

1087 Appellate Body Report, US – Shrimp , para. 183. The Appellate Body also underlined that
"inasmuch as there are due process requirements gene rally for measures that are otherwise imposed in
compliance with WTO obligations, it is only reasonabl e that rigorous complian ce with the fundamental
requirements of due process should be required in the application and administration of a measure ... "
(Appellate Body Report, US – Shrimp, para. 182) (emphasis added).

regarding how to comply with the specific labe lling requirements contained in the 2009 Final Rule
(AMS).1088 In particular, Mexico highlights that the Vilsack letter suggested practices additional to
the ones foreseen under the 2009 Final Rule (AMS), and threatened to modify the 2009 Final Rule
(AMS) if such practices were not followed. It is essentially for these same reasons that we found that
Canada has demonstrated that the Vilsack letter is inconsistent with the requirement of reasonable
administration under Article X:3(a) of the GATT 1994. Accordingly, we find that Mexico has
demonstrated that the Vilsack letter does not meet the standard of reasonable administration of the
COOL measure within the meaning of Article X:3(a).
7.867 Regarding Mexico's argument that the Unite d States changed its interpretation of the
COOL measure too frequently to render the administration reasonable, Mexico presented the evidence
summarized in the table in paragraph 7.832 above.
7.868 In our understanding, Mexico is referring to these exhibits as a whole as evidence to assert
that USDA has been providing inconsistent implem entation guidance to industry over time. We can
infer from the content of these exhibits that th e industry was indeed provided with evolving
interpretations regarding the labelling requirements under the COOL measure.
7.869 At the same time, we note that the changes in guidance, particularly regarding the use of
different labels for different categories of meat, re flect the very modifications made to the Interim
Final Rule (AMS) prior to the issuance of th e 2009 Final Rule (AMS). As explained in
Section VII.C.1(a)(ii), the main changes from the Interim Final Rule (AMS) to the 2009 Final Rule
(AMS) are the removal of the possibility of using Label B for category A meat and the addition of the
commingling provisions. The USDA administrative gui dance, as illustrated in the USDA guidelines
of 11 September 2008 and as implied in news articles a nd industry letters after the entry into force of
the Interim Final Rule (AMS), th erefore corresponded to the chang es made to the substance of the
COOL implementing regulations during the rule-m aking process as envisaged under the US legal
system. To the extent that the differences in the guidance by USDA were due to the changes made to
the substantive law or regulations at issue, we do not find such administrative acts irrational or
inappropriate within the meaning of Article X:3( a). USDA was acting within its authority and
mandate to provide interpretations of th e labelling requirements under the applicable
COOL implementing regulations at a given time.
7.870 Accordingly, we find that, unlike with regard to the Vilsack letter, Mexico has not established
that the United States failed to administer the COOL measure in a reasonable manner through the
shifts in the guidance by USDA on the labelling requirements under the COOL measure.
(d) "Non-uniform" administration of laws and regulations
(i) Main arguments of the parties
7.871 Mexico argues that "uniform" administration requires that Members ensure that their laws are
applied consistently and predictably.
1089 Mexico affirms that the "non-uniform" administration is due
to the significant changes on requirements and in terpretation during the implementation of the
statutory and regulatory provisions. 1090 The administration of the details of the COOL measure
changed over its implementation and review process es and the associated guidelines issued by USDA

1088 See paras. 7.846-7.847.
1089 Mexico's first written submission, para. 377 (citing Panel Report, Argentina – Hides and Leather ,
para 11.83).
1090 Mexico's second written submission, paras. 188-189.

over this period created uncertainties, which c ontinued with the Vilsack letter issued on
20 February 2009.
7.872 The United States submits that Mexico has failed to demonstrate that the COOL measures
have been administered in a non-uniform manner because of changes to the rule over time.
1091
Mexico has not produced evidence to prove this asser tion either with regard to changes made to the
implementing regulations or concerning the issuance of the Vilsack letter. 1092 The changes to which
Mexico refers merely reflect the notice-and-comment system of US rule-making, and do not represent
the application of the statute or the 2009 Final Rule (AMS).
1093 The United States references the
panel report in Argentina – Hides and Leather 1094, according to which "uniform" administration
requires that Members ensure that their laws are applied consistently and predictably.1095
7.873 The United States adds that in US – Stainless Steel , the panel noted that, "the requirement of
uniform administration of laws and regulations must be understood to mean uniformity of treatment in
respect of persons similarly situated; it cannot be understood to require identical results where
relevant facts differ". That panel clarified that Ar ticle X:3(a) does not require that the administration
of a regulation be fixed and unvarying over time; the administration of a regulation must only be
uniform at a given time. 1096 The United States argues that Mexi co has not provided evidence to
demonstrate that the COOL statute or the 2009 Fina l Rule has been administered in a way that
affected similarly situated persons in a non-uniform manner. 1097 At all times the United States has
maintained a single set of regulations implementin g the COOL Statute, and these regulations have
been administered in a uniform fashion. The United States adds that Mexico has not adduced
evidence to suggest that the 2009 Final Rule has affect ed persons similarly situated in different ways
with respect to the period after that date.1098
(ii) Analysis by the Panel
7.874 Mexico claims that the alleged "non-uniform " administration arises because of the significant
changes to the guidance on the labelling requirem ents under the COOL measure. According to
Mexico, these changes contributed to disruptions experienced by Mexican industry.
7.875 The United States argues that Mexico has not provided evidence to demonstrate that the
COOL statute or the 2009 Final Rule (AMS) has been administered in a way that affected similarly
situated persons in a non-uniform manner. 1099 At all times the United St ates has maintained a single
set of regulations implementing the COOL statute, and these regulations have been administered in a
uniform fashion. The United States adds that Me xico has not adduced evid ence to suggest that the
2009 Final Rule (AMS) has affected persons similarly situated in different ways with respect to the
period after that date.
1100

1091 United States' first written submission, para. 296.
1092 United States' first written submission, para. 293.
1093 United States' opening oral statement at the first substantive meeting, para. 60.
1094 Panel Report, Argentina – Hides and Leather, para. 11.83.
1095 United States' first written submission, para. 294.
1096 Panel Report, US – Stainless Steel (Korea), para. 6.51.
1097 United States' first written submission, para. 294.
1098 United States' first written submission, para. 295.
1099 United States' first written submission, para. 294.
1100 United States' first written submission, para. 295.

7.876 The term "uniform" is defined as "of one unchanging form, character, or kind; that is or stays
the same in different places or circumstances, or at different times". 1101 We find guidance for the
meaning of "uniform" under Article X:3(a) in the findings by panels in previous disputes. For
instance, the panel in Argentina – Hides and Leather stated that "uniform administration" requires that
Members ensure that their laws are applied consistently and predictably. 1102 Additionally, in US –
Stainless Steel , the panel noted that, "the requirement of uniform administration of laws and
regulations must be understood to mean uniformity of treatment in respect of persons similarly
situated".1103 Based on the dictionary meaning and guid ance provided by previous panels, we will
assess whether Mexico has established that the con cerned shifts in the guidance provided by USDA
constitute a non-uniform administration of the COOL measure.
7.877 In the current dispute, as the United States poi nts out, Mexico has not presented facts or
evidence showing that at any specific point in tim e USDA treated persons sim ilarly situated in a non-
uniform manner when putting into practical effect the labelling requirements under the
COOL measure. Rather, the evidence submitted by Mexico shows that USDA provided guidance on
the labelling requirements which was applicable to the US industry in general.
1104
7.878 Turning to the changes in USDA guidance ove r time challenged by Mexico as being non-
uniform, we note that, as the panel in EC – Selected Customs Matters states, the interpretation of the
term "uniform" in Article X:3(a) does not nece ssarily entail instantaneous uniformity. Rather,
uniformity must be attained within a period of time that is reasonable. What is reasonable will depend
on the form, nature and scale of the administration at issue, as well as on the complexity of the factual
and legal issues raised by the act of administration that is being challenged.1105
7.879 The shifts in the guidance on the labelling re quirements under the COOL measure, evoked by
Mexico, took place between September 2008 and Apr il 2009. As observed above, these changes or
shifts during this period are related to the modifi cations made to the substance of the regulations
themselves in the context of rule-making over a relatively short period of time. The form and
structure of the changes in the guidance and interpretation, which Mexico argues culminated in the
Vilsack letter, do not demonstrate an act "of changing form" or act which is "not the same at different
times" so as to render it a "non-uniform" administration within the meaning of Article X:3(a).
7.880 In fact, the publication of the administra tion's guidance on the COOL implementing
regulation through frequently asked questions can be considered as an example of an industry-friendly
action by the administration, which can enhance the transparency of the government's administration
of the regulations.
7.881 For the foregoing reasons, we conclude that Me xico has not established that the United States
acted inconsistently with Article X:3(a) by ad ministering the COOL measure in a non-uniform
manner.

1101 The Shorter Oxford English Dictionary , (Sixth Edition) Oxford University Press, Vol. II, p. 3440
(2007); Panel Report, EC- Selected Customs Matters, para. 7.124.
1102 Panel Report, Argentina – Hides and Leather , para. 11.83. The panel found that the measures at
issue were inconsistent with Argentina's obligations under Article X:3(a) of GATT 1994.
1103 Panel Report, US – Stainless Steel (Korea), para. 6.51.
1104 See Exhibits CDA-29; MEX-33, 55, 56, 57 and 83; Table in page 182.
1105 Panel Report, EC – Selected Customs Matters, para. 7.135.

(e) "Partial" administration of laws and regulations
(i) Main arguments of the parties
7.882 Mexico argues that the administration of the COOL measure was partial as the final
interpretation of the USDA on the implementation of the regulation and its provisions was in favour
of US producers of cow-calves.
1106
7.883 The United States does not address Mexico's argument regarding the "partial" administration.
(ii) Analysis by the Panel
7.884 Mexico presented its claim on the United States' alleged partial administration of the
COOL measure for the first time in its second written submission by merely asserting the lack of
impartial administration. Mexico, however, fails to explain in what way the administration of the
COOL measure was partial by favouring US cow-calf producers.
7.885 Accordingly, we find that Mexico has not established a prima facie case that the United States
administered the COOL measure in a partial manner within the meaning of Article X:3(a).
(f) Conclusion on the complainants' claims under Article X:3(a)
7.886 In light of the foregoing, we find that Ca nada and Mexico have established that the
United States acted inconsistently with Article X:3(a) by failing to administer the COOL measure in a
reasonable manner through the issuance of the Vilsack letter.
7.887 We find, however, that Mexico has not demonstr ated that the concerned shifts in the USDA
guidance on the labelling requirements under the COOL measure is not a reasonable administration of
the COOL measure within the meaning of Article X:3( a). Further, we find that Mexico has failed to
establish that the United States ad ministered the COOL measure in a non-uniform and partial manner
inconsistently with Article X:3(a).
3. Non-violation claim under Article XXIII:1(b)
7.888 We are turning to the complainants' non-violation claims after having addressed their claims
of violation. This follows the sequence of the parties' arguments in the current dispute. It is also in
line with the general priority to be accorded to dealing with violation as opposed to non-violation
claims, enunciated by the panel in Japan – Film:
"[T]raditionally in cases involving both violation and non-violation claims, panels
first address claims of inconsistency with a covered agreement pursuant to
Article XXIII:1(a), before moving on to consider claims of non-violation nullification
or impairment under Article XXIII:1(b)."
1107
(a) Main arguments of the parties
7.889 Mexico and Canada submit that the application of the COOL requirements nullifies or
impairs benefits accruing to them under successi ve rounds of multilateral trade negotiations. 1108
According to the complainants, by applying the COOL requirements, the United States is upsetting

1106 Mexico's second written submission, paras. 185 and 189.
1108 Canada's first written submission, para. 237 and Mexico's first written submission, para. 379.

the competitive relationship and frustrating the co mplainants' legitimate market access expectations
with respect to live cattle and hogs from Canada1109, and live cattle from Mexico.1110
7.890 All three parties agree 1111 that the following three-pronged test established by the panel in
Japan – Film for addressing non-violation claims is applicable also in the current dispute:
"The text of Article XXIII:1(b) establishes three elements that a complaining party
must demonstrate in order to make out a cognizable claim under Article XXIII:1(b):
(1) application of a measure by a WTO Member; (2) a benefit accruing under the
relevant agreement; and (3) nullification or impairment of the benefit as the result of
the application of the measure."
1112
7.891 As regards the first element of this legal test, the complainants submit th at the application by
the United States of various aspects of the COOL requirements fulfils this element.1113
7.892 The United States responds that not all elements of the COOL requirements challenged by
the complainants are eligible for a non-violatio n claim. According to the United States, a non-
violation claim is possible only with regard to measures that are currently being applied;
consequently, only the COOL statute and the 2009 Final Rule (AMS) may be subject to a claim under
Article XXIII:1(b) of the GATT 1994 in this dispute.1114
7.893 As regards the second element of the legal t est under Article XXIII:1(b) of the GATT 1994,
the United States contends that the complainants have no legitimate expectations, since various
country of origin labelling rules on meat at the reta il level have existed in the United States since as
far back as the 1930s, a long time before the Urugua y Round. Thus, the complainants could have
reasonably anticipated at the time of these tariff ne gotiations that the United States would modify or
supplement country of origin labelling rules as it has been doing since the 1960s, contemplating
various pieces of legislation on country of origin labelling with additional requirements for meat at the
retail level.
1115
7.894 In response, the complainants maintain that thei r expectations of market access are legitimate
as they could not have reasonably anticipated the application by the United States of the mandatory
COOL requirements or any other measure regarding or igin labelling with such drastic implications on
the market access of cattle and hogs from Canada , and cattle from Mexico. Although there were
voluntary country of origin labelling regulations in force at the time of the negotiation of tariff
concessions subsequently incorporated in the WTO Agreement, these regulations were not specific to
cattle and hogs, and they did not have such restrictive provisions as the COOL requirements.1116
7.895 With regard to the second element of the lega l test, the United States also argues that the
benefits invoked by the complainants accrue from tariffs under NAFTA because it is not the
concessions made under the WTO that they are bene fiting from, but the lower tariff rate negotiated

1109 Canada's first written submission, para. 239.
1110 Mexico's first written submission, para. 379.
1111 Canada's first written submission, para. 235, Mexico's first written submission, para. 385 and
United States' first written submission, para. 303.
1113 Canada's first written submission, para. 235 and Mexico's first written submission, paras. 386-392.
1114 United States' first written submission, para. 305, footnote 348.
1115 United States' first written submission, paras. 309-310 and United States' second written
submission, para. 195.
1116 Canada's first written submission, paras. 237-239; Mexico's first written submission, paras. 388-390

under NAFTA, which entered into force at the beginni ng of 1994. Hence, the United States argues,
these benefits cannot be enforced under Article XXIII:1(b) of the GATT 1994.
1117
7.896 In response, the complainants assert that th ey are entitled to expect market access to the
United States in accordance with the tariff bindi ngs negotiated under the WTO, even though their
current tariff concessions for livestock are based on NAFTA. In particular, Canada points out that the
current MFN bound tariff of the United States for cattle other than dairy or breeding is 1 cent/kg for
tariff line 0102.90.40. This tariff is in the Unite d States' schedule of concessions negotiated in the
Uruguay Round. In addition, Canada notes that all 8-digit tariff lines under Live Swine (tariff
line 0103) in the same tariff schedule of the United States show an ad valorem bound duty of 0%, and
the free import of hogs to the United States pre-dates the WTO Agreement (and also the
Canada-United States Free Trade Agreement and NAFTA). 1118 Mexico adds that its non-violation
claim is based on the United States' MFN bound tariff of 1 cent/kg of cattle negotiated under
WTO.1119 Hence, the complainants had a benefit accr ued to them from legitimate market access
expectations based on the United States schedule under the WTO.
7.897 As regards the third element of the legal test under Article XXIII:1(b) of the GATT 1994,
the complainants maintain that the COOL requireme nts drastically restrict their market access as
compared to the level of market access negotia ted during the WTO Uruguay Round. Canada submits
that by requiring US retailers to label beef and pork in a manner that is fundamentally at odds with the
normal practice applied in other areas of United States customs law, the United States has nullified the
unrestricted market access that Canada was entitled to expect for its cattle and hogs exports.1120
7.898 Mexico contends that the COOL measure created a new series of restrictions to cattle
exported from Mexico. It reduced the number of US plants processing Mexican cattle, limited the
days on which those plants receive cattle from Mexico, introduced new requirements of advance
notice, and US processors imposed a discount on imports of Mexican cattle. 1121 The actual price
discount created by the COOL measure is from USD 40 to USD 60 for the same 300-400 pound
animal, and the competitive disadvantage and level of protection reflected in this price discount vastly
exceeds Mexico's legitimate expectation of USD 1.36 to 1.81 tariff per an imal negotiated under the
WTO.1122 According to Mexico, this competitive relationship with domestic livestock in the
United States was upset by the application of the COOL requirements.1123
7.899 The United States responds that the complainants failed to demonstrate, "with the required
'detailed justification'" and with clear and solid ev idence, that they have suffered a nullification or
impairment of benefits "as a result of the application" of the COOL measure. 1124 According to the
United States, the complainants did not demonstrat e or provide evidence of a "clear correlation"
between the COOL measure and the alleged adver se effects on imports of livestock from Mexico and
Canada. The United States maintains that other ma rket forces, including the financial crisis and
animal diseases, had a serious negative impact on livestock markets in the United States, Canada and

1117 United States' second written submission, para. 194.
1118 Canada's response to Panel question No. 88.
1119 Mexico's response to Panel question No. 88.
1120 Canada's first written submission, para. 239, Canada's response to Panel question No. 88 and
Canada's second written submission, paras. 45-46.
1121 Mexico's opening oral statement at the first substantive meeting of the Panel, para. 55.
1122 Mexico's response to Panel question No. 88.
1123 Mexico's first written submission, paras. 391-392, Mexico's response to Panel question No. 88 and
Mexico's second written submission, para. 191.
1124 United States' first written submission, para. 317 and United States' second written submission,
para. 196.

Mexico. Thus, the adverse effects on livestock cannot be exclusively attributed to the
COOL requirements.1125
(b) Analysis by the Panel
7.900 At the outset of our analysis of the complainants' non-violation claims, we recall that the
panel in Japan – Film explained that the non-violation nullifi cation or impairment remedy should be
treated with caution and as an exceptional concept:
"Although the non-violation remedy is an important and accepted tool of
WTO/GATT dispute settlement and has been 'on the books' for almost 50 years, we
note that there have only been eight cases in which panels or working parties have
substantively considered Article XXIII:1(b) claims.
1126 This suggests that both the
GATT contracting parties and WTO Members have approached this remedy with
caution and, indeed, have treated it as an exceptional instrument of dispute settlement.
We note in this regard that both the European Communities and the United States in
the EEC – Oilseeds case, and the two parties in this case, have confirmed that the
non-violation nullification or impairment re medy should be approached with caution
and treated as an exceptional concept.
1127 The reason for this caution is
straightforward. Members negotiate the rules that they agree to follow and only
exceptionally would expect to be challenged for actions not in contravention of those
rules."1128
7.901 The Appellate Body confirmed this in EC – Asbestos by holding that, "[l]ike the panel in ...
Japan – Film ... , we consider that the remedy in Article XXIII:1(b) 'should be approached with
caution and should remain an exceptional remedy'".1129
7.902 We also note that in Japan – Film the panel stressed that the need for analysing a non-violation
claim in a specific case "should be examined on it s own merits", and should involve a case-specific
assessment.1130

1125 United States' first written submission, paras. 314-316.
1126 (footnote original) Report of the Working Party on Australian Subsidy on Ammonium Sulphate ,
adopted on 3 April 1950, BISD II/188; Panel Report on Treatment by Germany of Imports of Sardines ("Germany
– Sardines"), G/26, adopted on 31 October 1952, BISD 1S/53; Uruguayan Recourse, adopted on 16 November
1962, BISD 11S/95; Panel Report on EC – Tariff Treatment on Imports of Citrus Products from Certain Countries
in the Mediterranean Region ("EC – Citrus Products"), GATT Doc. L/5576, dated 7 February 1985 (unadopted);
Panel Report on EEC – Production Aids Granted on Canned Peaches, Canned Pears, Canned Fruit Cocktail and
Dried Grapes ("EEC – Canned Fruit"), GATT Doc. L/5778, dated 20 February 1985 (unadopted); Japan – Semi-
conductors, adopted on 4 May 1988, BISD 35S/116; EEC – Oilseeds, adopted on 25 January 1990, BISD 37S/86;
United States – Agricultural Waiver, adopted on 7 November 1990, BISD 37S/228.
1127 (footnote original) In EEC – Oilseeds, the United States stated that it "concurred in the proposition
that non-violation nullification or impairment should remain an exceptional concept. Although this concept had
been in the text of Article XXIII of the General Agreement from the outset, a cautious approach should continue to
be taken in applying the concept". EEC – Oilseeds, BISD 37S/86, 118, para. 114. The EEC in that case stated that
"recourse to the 'non-violation' concept under Article XXIII:1(b) should remain exceptional, since otherwise the
trading world would be plunged into a state of precariousness and uncertainty". Ibid, para. 113.
1129 Appellate Body Report, EC – Asbestos, para. 186 (footnote omitted).

7.903 In the current dispute, we have already found that the COOL measure violates Articles 2.1 and
2.2 of the TBT Agreement, and that the Vilsack letter is in violation of Article X:3(a) of the
GATT 1994.
7.904 The GATT panel in EEC – Oilseeds I set out the following test for assessing whether it is
necessary to turn to the complainant's non-violation claim in light of a finding of inconsistency with
Article III:4 of the GATT:
"The Panel first examined whether its finding that the payments to the processors are
inconsistent with the Genera l Agreement might make an examination of the question
of the nullification or impairment of the tariff concessions unnecessary. The Panel
noted that this would be the case if compliance by the Community with the finding on
Article III:4 would necessarily remove th e basis of the United States claim of
nullification or impairment."
1131 (emphasis added)
7.905 In the current dispute, compliance by the Un ited States with the above-mentioned findings of
violation would remove the basis of the compla inants' non-violation claims of nullification or
impairment. Indeed, the panel in Japan – Film identified a parallelism between key elements of the
legal tests under Articles III:4 and XXIII:1(b) of the GATT 1994:
"[I]t could be argued that the sta ndard we enunciate d and applied under
Article XXIII:1(b) – that of 'upsetting the competitive relationship' – may be different
from the standard of 'upsetting effectiv e equality of competitive opportunities'
applicable to Article III:4. However, we do not see any significant distinction
between the two standards apart from the fact that this Article III:4 standard calls for
no less favourable treatment for imported products in general, whereas the
Article XXIII:1(b) standard calls for a comparison of the competitive relationship
between foreign and domestic products at tw o specific points in time, i.e. when the
concession was granted and currently."
1132
7.906 Arguably, a similar relationship exists be tween Article XXIII:1(b) of the GATT 1994 and
Article 2.1 of the TBT Agreement. Indeed, we ha ve noted the resemblance between key language in
Article III:4 of the GATT 1994 and Article 2.1 of th e TBT Agreement; hence, we have recognized a
similarity between relevant portions of the legal tests under these two provisions.1133
7.907 Accordingly, we stop our analysis of the complainants' non-violation claims here.
Compliance by the United States with our findi ng of violation under Article 2.1 of the
TBT Agreement would remove the basis of the comp lainants' non-violation claims of nullification or
impairment. This also would be ensured by US compliance with our findings of violation under
Article 2.2 of the TBT Agreement and Article X:3(a) of the GATT 1994.

1131 GATT Panel Report, ECC – Oilseeds I, para. 142.
1133 See paras. 7.228-7.234 above.

VIII. FINDINGS AND RECOMMENDATIONS
8.1 We recall the United States' request that we issue our findings in the form of a single
document containing two separate reports with se parate findings and recommendations for each
complainant. We also recall that Canada agreed , and Mexico did not object, to the United States'
request.1134 Accordingly, we provide two separate sets of findings and recommendations, with
separate numbers/symbols for each complainant (WT/DS384 for Canada and WT/DS386 for Mexico).

1134 See para. 2.11 above.

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A. C
OMPLAINT BY CANADA (DS384): FINDINGS AND RECOMMENDATION

8.2 Canada has made claims with regard to the COOL measure and the Vilsack letter under
Articles 2.1 and 2.2 of the TBT Agreement and Articles III:4, X:3(a) and XXIII:1(b) of the
GATT 1994.
8.3 With respect to Canada's claims under the TBT Agreement, we conclude that:
(a) the COOL measure is a "technical regulation" within the meaning of Annex 1.1 to the
TBT Agreement, whereas the Vilsack letter is not;
(b) the COOL measure, particularly in regard to the muscle cut meat labels, violates
Article 2.1 because it affords imported livest ock treatment less favourable than that
accorded to like domestic livestock; and
(c) the COOL measure violates Article 2.2 b ecause it does not fulfil the objective of
providing consumer information on origin with respect to meat products.
8.4 With respect to Canada's claims under the GATT 1994, we conclude that:
(a) we need not make a finding on the COOL measure under Article III:4 in light of our
finding that the same measure violated the national treatment obligation under
Article 2.1 of the TBT Agreement;
(b) the Vilsack letter violates Article X:3(a) because it does not constitute a reasonable
administration of the COOL measure; and
(c) having found that the Vilsack letter falls within the scope of Article X:3(a), we refrain
from examining whether it is inconsistent with Article III:4.
8.5 Finally, in light of the above findings of violation, we have refrained from examining
Canada's non-violation claim under Article XXIII:1(b) of the GATT 1994.
8.6 Under Article 3.8 of the DSU, in cases where there is an infringement of the obligations
assumed under a covered agreement, the action is considered prima facie to constitute a case of
nullification or impairment of bene fits under that agreement. Accord ingly, we conclude that to the
extent that the United States has acted inconsistent ly with Articles 2.1 and 2.2 of the TBT Agreement
and Article X:3(a) of the GATT 1994, it has nullifie d or impaired benefits accruing to Canada under
these agreements.
8.7 Pursuant to Article 19.1 of the DSU, having found that the United States has acted
inconsistently with Articles 2.1 and 2.2 of the TBT Agreement and Article X:3(a) of the GATT 1994,
we recommend that the Dispute Settlement Body requ est the United States to bring the inconsistent
measures into conformity with its obligations under the TBT Agreement and the GATT 1994.

 Page 214B

A. C OMPLAINT BY MEXICO (DS386): FINDINGS AND RECOMMENDATION

8.2 Mexico has made claims with regard to the COOL measure and the Vilsack letter under
Articles 2.1, 2.2, 2.4, 12.1 and 12.3 of the TBT Agreement and Articles III:4, X:3(a) and XXIII:1(b)
of the GATT 1994.
8.3 With respect to Mexico's claims under the TBT Agreement, we conclude that:
(a) the COOL measure is a "technical regulation" within the meaning of Annex 1.1 to the
TBT Agreement, whereas the Vilsack letter is not;
(b) the COOL measure, in particular in regard to the muscle cut meat labels, violates
Article 2.1 because it affords imported livest ock treatment less favourable than that
accorded to like domestic livestock;
(c) the COOL measure violates Article 2.2 b ecause it does not fulfil the objective of
providing consumer information on origin with respect to meat products;
(d) Mexico has not established that the COOL measure violates Article 2.4;
(e) Mexico has not established that the Un ited States acted inconsistently with
Article 12.3; and
(f) in light of our finding on Mexico's claim under Article 12.3, Mexico has not
established its claim under Article 12.1.
8.4 With respect to Mexico's claims under the GATT 1994, we conclude that:
(a) we need not make a finding on the COOL measure under Article III:4 in light of our
finding of violation by the same measure of the more specific national treatment
obligation under Article 2.1 of the TBT Agreement;
(b) the Vilsack letter violates Article X:3(a) because it does not constitute a reasonable
administration of the COOL measure;
(c) Mexico has not established that the United States administered the COOL measure in
a non-uniform and partial manner inconsistently with Article X:3(a) through the shifts
in the guidance by USDA on the COOL measure; and
(d) having found that the Vilsack letter falls within the scope of Article X:3(a), we refrain
from examining whether it is inconsistent with Article III:4.
8.5 Finally, in light of the above findings of violation, we have refrained from examining
Mexico's non-violation claim under Article XXIII:1(b) of the GATT 1994.
8.6 Under Article 3.8 of the DSU, in cases where there is infringement of the obligations assumed
under a covered agreement, the action is considered prima facie to cons titute a case of nullification or
impairment of benefits under that agreement. Acco rdingly, we conclude that to the extent that the
United States has acted inconsistently with Articles 2.1 and 2.2 of the TBT Agreement
and Article X:3(a) of the GATT 1994, it has nullifie d or impaired benefits accruing to Mexico under
these agreements.

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8.7 Pursuant to Article 19.1 of the DSU, having found that the United States has acted
inconsistently with Articles 2.1 and 2.2 of the TBT Agreement and Article X:3(a) of the GATT 1994,
we recommend that the Dispute Settlement Body requ est the United States to bring the inconsistent
measures into conformity with its obligations under the TBT Agreement and the GATT 1994.