EU’s Proposed Animal Welfare Labeling Scheme: A Recipe for Potential New Trade Barriers (and Disputes)

The Council directed the European Commission to consider the following aspects in formulating the new EU-wide animal welfare labeling scheme:³

• development of a tiered labeling scheme “allowing for sufficient incentives for producers to improve animal welfare”
• development of EU-wide harmonized criteria that (i) go beyond current EU requirements on animal welfare, (ii) take into account specific aspects of member states’ geographies and climates, and (iii) must be satisfied to use the EU animal welfare label
• gradual inclusion of all livestock species “covering their entire lifetime, including transport and slaughter, and giving due consideration to all their living conditions”
• creation of an EU logo and protected terms

According to the Council, the new EU-wide labeling scheme should incorporate the animal welfare provisions of Regulation (EU) 2018/848 on organic production and labeling of organic products⁴ and Regulation (EU) 1308/2013 on the common organization of markets in agricultural products.⁵ The Council directed the Commission to take into account the interplay of the existing national and the EU-wide animal welfare labels.

It is possible that the final EU-wide scheme will look similar to France’s Étiquette Bien-Être Animal label, which has, for example, over 230 criteria for grading chicken from birth to slaughter.⁶ That scheme, however, is voluntary and was created by the Casino brand in partnership with several French animal protection organizations. Since 2018, many French supermarkets have adopted the scheme.

The Council stressed that the new EU-wide label, to further improve animal welfare, should “allow for market recognition and better remuneration of the additional efforts made by producers, in particular farmers.”⁷ In other words, the Council recognizes that the ability to make use of animal welfare labels would improve the competitive opportunities for products covered by that label.

As Professor Marc L. Busch of Georgetown University’s Walsh School of Foreign Service aptly pointed out, the new EU label could be vulnerable to a challenge under WTO rules if it effectively becomes a “disguised” restriction on trade.⁸ According to Professor Busch, farmers exporting to the EU “will say the record-keeping and verification requirements are onerous and disproportionate to the amount of information on the label. They’ll insist that the criteria vetted by the label are based on how European farmers do things, not science. And they’ll claim that the letters, numbers or colors on the label will be mistaken for a quality or health standard. What’s more, they’ll probably be right.”⁹

Under the standards set out by the WTO Appellate Body in United States — Certain Country of Origin Labelling (COOL) Requirements, a labeling measure may violate the WTO Agreement on Technical Barriers to Trade (TBT Agreement), where it has a detrimental effect on imports that does not stem exclusively from a legitimate regulatory distinction.¹⁰ The new EU-wide animal welfare labeling scheme could also violate the TBT Agreement if it were more trade restrictive than necessary to fulfill a legitimate objective, taking into consideration reasonably available, less trade-restrictive alternatives. Alternatively, depending on how it is prepared and implemented, the scheme could be characterized as a “sanitary or phytosanitary measure” covered by the disciplines of the Agreement on Sanitary and Phytosanitary Measures, including the requirement that any such measure be “necessary” to protect animal life or health, based on scientific principles, and not maintained without sufficient scientific evidence.

The new scheme may also violate, inter alia, the national treatment requirements of the General Agreement on Tariffs and Trade 1994 — for example, if it is drafted to include exceptions for geographical and climatic conditions in certain parts of Europe (as the Council has anticipated) that do not apply to non-EU producers.

As the European Commission works to formulate the details of this new EU-wide labeling scheme, it will be important for agribusiness companies that export to the EU to closely monitor the progress and to advocate for a scheme that does not become a form of protectionism that discriminates against their products.

Sidley’s global trade and advocacy group, working alongside our broader global agribusiness and food group, is available to assist companies and governments in understanding the potential implications of the proposed new EU-wide labeling scheme and to advocate against the potential that such regime will result in new trade barriers making it more difficult for non-EU agricultural and food companies to sell their products in Europe.

¹ See European Council, Council Supports EU-wide Animal Welfare Label, Dec. 15, 2020, https://www.consilium.europa.eu/en/press/press-releases/2020/12/15/council-supports-eu-wide-animal-welfare-label; Conclusion on an EU-wide animal welfare label (Approval), Council of the European Union, Dec. 7, 2020, https://data.consilium.europa.eu/doc/document/ST-13691-2020-INIT/en/pdf.

² The Council’s conclusions from December 2020 build on its conclusions from December 2019. European Council, Conclusions on Animal Welfare, Dec. 16, 2019 (14975/19), https://data.consilium.europa.eu/doc/document/ST-14975-2019-INIT/en/pdf. In December 2019, the Council criticized existing EU legislation on animal welfare as being “not comprehensive as it does not include specific minimum standards for the protection of many farmed animals, such as dairy cows, fattening cattle, sheep and goats, farmed fish, farmed rabbits, pullets, turkeys, geese and ducks.” Id. at p. 3, para. 4. The Council also invited the Commission in December 2019 to assess the need for new legislation on “cattle at least six months old, farmed rabbits, pullets, dogs and cats but also, turkeys, broiler and laying hen breeders, sheep, goats and farmed fish.” Id. at p. 7, para. 6.

³ Conclusion on an EU-wide animal welfare label (Approval), Council of the European Union, Dec. 7, 2020, p. 6-7, para. 12, https://data.consilium.europa.eu/doc/document/ST-13691-2020-INIT/en/pdf.

⁴ Regulation (EU) 2018/848 of the European Parliament and of the Council of 30 May 2018 on organic production and labelling of organic products and repealing Council Regulation (EC) No 834/2007 (OJ L 150, 14.6.2018, p. 1–92).

⁵ Regulation (EU) No 1308/2013 of the European Parliament and of the Council of 17 December 2013 establishing a common organisation of the markets in agricultural products and repealing Council Regulations (EEC) No 922/72, (EEC) No 234/79, (EC) No 1037/2001, and (EC) No 1234/2007 (OJ L 347, 20.12.2013, p. 671–854).

⁶ See Marc L. Busch, Europe’s Push for an Animal Welfare Label Risks an Epic Trade Dispute, The Hill, Dec. 29, 2020, https://thehill.com/opinion/international/531855-europes-push-for-an-animal-welfare-label-risks-an-epic-trade-dispute.

⁷ Conclusion on an EU-wide animal welfare label (Approval), Council of the European Union, Dec. 7, 2020, p. 6, para. 10, https://data.consilium.europa.eu/doc/document/ST-13691-2020-INIT/en/pdf.

⁸ See Marc L. Busch, Europe’s Push for an Animal Welfare Label Risks an Epic Trade Dispute, The Hill, Dec. 29, 2020, https://thehill.com/opinion/international/531855-europes-push-for-an-animal-welfare-label-risks-an-epic-trade-dispute.

⁹ Id.

¹⁰Appellate Body Reports, US – COOL, WT/DS384/AB/R, WT/DS386/AB/R, para. 271.