US–COOL Retaliation: The WTO’s Article 22.6 Arbitration

The World Trade Organization’s Article 22.6 arbitration involved Canada and Mexico requesting and being granted the right to retaliate against the United States for the lost export revenue associated with the US country of origin labeling (COOL) regulation for imported meat products put into effect in late 2008, at the same time as the global trade collapse and Great Recession. A WTO Panel and the Appellate Body sided with Canada and Mexico by finding that the US COOL regulation had negatively affected their exports of livestock—cattle and hogs—to the US market. The arbitrators authorized Canada and Mexico to retaliate by over $1 billion against US exports. This amount is not only the second largest retaliation authorized by an arbitration, but also, the authors argue, is unreasonably large, given that the peak value of Canada and Mexico’s combined exports to the US market before the COOL regulation was roughly $2.5 billion in 2007. The authors describe the challenges facing arbitrators as they construct such estimates, including those likely to have arisen in this dispute.