The U.S. is now seeking WTO arbitration in response to Canada’s earlier request for retaliatory trade measures in the country-of-origin labelling (COOL) dispute. The retaliatory tariffs sought by Canada are estimated to amount to just over CAD $3 billion. The WTO, which was set to examine the approval of the proposed retaliatory tariff amounts by Canada this week must now wait for the completion of the arbitration process to deal with Canada’s retaliation request. Minister of International Trade, Ed Fast, and Gerry Ritz, Canada’s Agriculture Minister have made it clear that the U.S. will not be able to simply avoid retaliation by drawing out the process through the arbitration. In their joint statement, both Ministers stated that “the only way for the United States to avoid billions in retaliation by late summer is to ensure legislation repealing COOL passes the Senate and is signed by the President.” Although there is no set timetable for action by the U.S. Senate, a hearing on COOL has been announced for June 25,...
Read MoreUpdate on COOL – US Moving to Avoid Retaliatory Tariffs
In response to the WTO’s latest ruling on COOL, the U.S. House of Representatives recently passed legislation (H.R. 3293), otherwise known as the Country of Origin Labeling Amendments Act, to repeal country of origin labeling requirements for pork, beef and chicken with a resounding 300-131 vote. With Canada and Mexico having announced their intentions to implement retaliatory measures against the U.S. amounting to approximately $3.6 billion in annual tariffs on U.S. products including wine, cherries, beef, pork and corn, the U.S. has a rather big incentive to move quickly to bring its legislation into compliance with the WTO ruling (which made clear that COOL requirements for beef and pork were discriminatory against Canada and Mexico). As it stands, the proposed repeal legislation is now in the hands of the U.S. Senate. Lack of action or slow movement from the Senate at this point may result in the imposition of retaliatory tariffs by Canada and Mexico as soon as late...
Read MoreExporters and “Rules of Origin”: Get In On NAFTA’s Benefits and Avoid Heavy Penalties
The “Rules of Origin” under NAFTA are the criteria used to determine the country of origin of a product that is being imported or exported within the NAFTA region. As part of NAFTA, the United States, Canada and Mexico (the “Parties”) have all agreed to reduce and/or eliminate tariffs on goods that originate from their respective territories. However, the Parties continue to apply significantly higher tariffs to goods that do not originate in one of the NAFTA countries. Maximum benefits (i.e. duty free entry into the NAFTA market) are only conferred upon goods that are said to “originate” in one of the three NAFTA countries. Rules of Origin are therefore extremely important, because they act as the mechanism that determines which goods can be properly classified as “originating” in the NAFTA territory. Consequently, this decides which goods are entitled to preferential tariff treatment. Why you need to know the rules A proper understanding of the rules and their application is critical for any importer/exporter conducting business in the NAFTA region. This knowledge enables them to leverage available preferences and reduce the likelihood of stiff monetary penalties and fines. As a start, the Rules of Origin inform what information an exporter will put on their Certificate of Origin, which is a necessary document to claiming and obtaining a NAFTA tariff preference for imported goods. The Certificate of Origin requires that the exporter properly identify the Country of Origin of the goods they are shipping – in other words, the exporter is responsible for the correct determination of the “origin” of the exported goods. Invalid Certificates of Origin based on an improper or incorrect classification of the “origin” of a good, have recently become one of the largest problem areas for exporters, often resulting in significant fines and penalties. An invalid NAFTA Certificate of Origin will result in the denial of NAFTA origin duty free treatment. And be warned, duties can be applied retroactively. The complicated world of determining origin In an increasingly global marketplace, where final products are commonly composed of inputs from various geographic locations, it can often be difficult to properly determine the origin of a good. As...
Read MoreMexico v. US over Tuna Dolphin-Safe Labels – Another WTO Appeal
The newest in the ongoing dispute over dolphin-safe labels on tuna cans between Mexico and the U.S. is that the U.S. government has now decided to pursue an appeal of certain parts of the WTO ruling which considers dolphin-safe labelling on tuna cans discriminatory towards Mexican tuna. The impugned U.S. tuna measures were found to be inconsistent with Article 2.1 of the Technical Barriers to Trade (“TBT”) Agreement because they imposed differing certification and verification requirements based on the fishery where the tuna was caught. Article 2.1 of the TBT Agreement clearly states that regulations must be implemented in a non-discriminatory manner, so that foreign products are treated no less favourably than domestic products. The U.S. is basing their appeal on an erroneous legal interpretation in the WTO Panel’s report. As a result of the U.S.’ measures, the Mexican fishing industry is estimated to have lost over USD 680 million in 2014 alone. Mexico has alluded to the fact that it may eventually take retaliatory measures against the...
Read MoreThe Future of COOL
The WTO Appellate Body issued its final ruling on May 18, 2015 to the effect that COOL, otherwise known as the U.S. mandatory Country of Origin Labeling, is discriminatory against Canadian cattle and hog imports into the U.S. and is a clear violation of the U.S.’ international trade obligations. The Canadian government has sought the WTO’s authority to move to impose retaliatory tariffs on key U.S. exports. According to Canada’s Agriculture Minister Gerry Ritz, targeted U.S. imports will likely include pork, beef, California wines, mattresses, cherries and office furniture. The U.S. may be able to avoid retaliatory tariffs if they move quickly to repeal the impugned laws which currently require retailers to list the country of origin on meat. Although U.S. lawmakers seem to have signaled that they intent to repeal the laws, higher tariffs may be in place by late summer if the U.S. doesn’t move fairly...
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