The Country of Origin Labels (COOL) dispute was decided by the Appellate Body against the US in July 2012 in DS384 and DS386.Thereafter on 21 August 2012, the United States informed the DSB that it intended to implement the DSB recommendations and rulings in a manner that respects its WTO obligations and that they would need a reasonable period of time to do so.
On 13 September 2012, Canada requested that the reasonable period of time be determined through binding arbitration pursuant to Article 21.3(c) of the DSU. On 26 September 2012, Canada requested the Director-General to appoint the arbitrator. On 4 October 2012, the Director-General appointed Mr Giorgio Sacerdoti to act as arbitrator under Article 21.3(c) of the DSU.
The Arbitrator issued his award in November 2012 essentially giving the US a "reasonable period" of 10 months from the date of the Appellate Body decision to comply with the DSB decision. i.e. until May 2013.
The Arbitrators detailed Award is found here.
Some interesting aspects of the Award:
1. Arbitration awards of the WTO under the DSU are also detailed decisions involving questions of law and interpretation.
2. They involve jurisprudential issues and interesting legal reasoning.
3. This Award brought out the process of US law and regulatory processes and gave precedence to domestic procedures and processes n coming to the conclusion of what constitutes a reasonable period of time.
4. Withdawal of a measure may not be the only way to comply with a WTO ruling. Modification too is an option. As stated by the Arbitrator in para 77 of the Award:
"In my view, withdrawal, in the sense of repealing, is not the only way to comply with the DSB's recommendations and rulings. I note that the arbitrator in Colombia – Ports of Entry observed that "withdrawal of the inconsistent measures is the 'preferred' means of implementation", but that "modification [of the inconsistent measure] is within the 'range of permissible actions' available" to the implementing Member. I agree that a Member whose measure has been found to be inconsistent with the covered agreements may generally choose either to repeal or modify the inconsistent measure. Therefore,I consider that the reasonable period of time that I have to determine in this arbitration should allow the United States to comply with the DSB's recommendations and rulings either by modifying the COOL measure, or by repealing it with regard to muscle cuts of beef and pork."
5. And finally, compliance in WTO cases can be not only highly complex issues of legal and factual interpretation but also very time consuming. It also underscores the necessity of strong legal capacity to wade though the legal labyrinth to justify a modification or a measure as being compliant to a decision or also to seek a reasonable period to implement a decision.
6.I found the interests of "developing countries" being taken in deciding the reasonable period particularly relevant in para 71:
"Finally, I am mindful that Article 21.2 of the DSU provides that "[p]articular attention should be paid to matters affecting the interests of developing country Members with respect to measures which have been subject to dispute settlement." Moreover, it has been recognized in past arbitrations that Article 21.2 directs the arbitrator acting pursuant to Article 21.3(c) to pay particular attention "to 'matters affecting the interests' of both an implementing and complaining developing country Member or Members". Therefore, as in the present case Mexico is a complaining developing country Member, the matters affecting its interests in this arbitration should be the object of my "particular attention".
7. I found the Arbitrator's Award extremely engaging, well written, simple and explicit.
Is the Clove Cigarettes case too going the Arbitration way with a modification of the measure? Also there will be many domestic reactions to this Award in the US. Will be interesting to see the domestic dynamics of all this.
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