D. C LAIMS UNDER THE TBT A GREEMENT
4. Mexico's claim under Article 2.4
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 except 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 General 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, Mexico 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 States acted inconsistently with its obligations under Article 2.4 if we conclude that Mexico has established 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 ineffective 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 that 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 country of origin through a label.945 In support of its position, Mexico points to several comments that the USDA received 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 "information 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 transformation, 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 misleading information to consumers when meat derived from an animal that spent a portion of its life 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 territory one day prior to slaughter. In Mexico's view, that is exactly the opposite situation of Mexican 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 recognizes 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 safety 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.
951 United States' first written submission, para. 268; second written submission, para. 176.
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 consumer 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 words, 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 simplicity 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 assumption 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 the objective pursued by the United States does not fall under our jurisdiction nor as a preliminary question on which the substance of our subsequent analysis depends.
957 Panel Report, EC – Sardines, para. 7.116.
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-STAN 1-1985 is an inappropriate means for the fulfilment of this objective, as it is not specially suitable 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 Mexico has not established that the COOL measure violates Article 2.4.
5. Mexico's claims under Articles 12.1 and 12.3