Date: 2016
Type: Working Paper
US-COOL retaliation : the WTO's article 22.6 arbitration
Working Paper, EUI RSCAS, 2016/68, Global Governance Programme-244, Global Economics
BOWN, Chad P., BREWSTER, Rachel, US-COOL retaliation : the WTO's article 22.6 arbitration, EUI RSCAS, 2016/68, Global Governance Programme-244, Global Economics - https://hdl.handle.net/1814/44466
Retrieved from Cadmus, EUI Research Repository
This paper examines the Article 22.6 arbitration report of the WTO dispute over the United States’ country of original labeling (US-COOL) regulation for meat products. At prior phases of the legal process, a WTO Panel and the Appellate Body had sided with Canada and Mexico by finding that the US 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 is the second largest authorized retaliation on record and only the twelfth WTO dispute to reach the stage of an arbitration report. Our legal-economic analysis focuses on a number of issues that arise in the arbitration report. First, the complainants requested the arbitrators consider a new formula for computing the permissible retaliation limit that would also include the effects of domestic price suppression. We provide a simple, economics-based model explanation for the arbitrators’ rejection of such a proposal. Second, we provide market context for the $1 billion finding. While the arbitrators relied on the “trade effects” formula – which sets the retaliation limit as equivalent to the perceived loss of export revenue resulting from the WTO violation – we argue this amount to be implausibly large, given the actual conditions in the US market for cattle and hogs during this period. We then describe a number of the challenges facing arbitrators as they construct such estimates, including those likely to have arisen in this particular dispute.
Cadmus permanent link: https://hdl.handle.net/1814/44466
ISSN: 1028-3625
Series/Number: EUI RSCAS; 2016/68; Global Governance Programme-244; Global Economics
Keyword(s): WTO Dispute Arbitration Retaliation Regulation
Other topic(s): Trade, investment and international cooperation