Bridges Weekly Trade News DigestVolume 16Number 19 • 16th May 2012

WTO Appellate Body: US “Dolphin-Safe” Label Discriminates Against Mexican Tuna

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The WTO’s highest court ruled on Wednesday 16 May that the US “dolphin-safe” label violates WTO law, marking another step in a decade-old dispute between the US and Mexico (DS381). Notable is the landmark finding that a non-binding label can be a prohibited technical regulation - a point that could have ramifications for consumer labels addressing anything from organic food to fair trade.

US dolphin-safe labelling practices under scrutiny

While the three judges sided with a previous WTO panel in their overall conclusion that the US label is inconsistent with the WTO’s Agreement on Technical Barriers to Trade (TBT), they overruled the earlier report on important points. Both parties had appealed the September 2011 panel ruling, challenging certain issues of law and legal interpretation by the panel. (See Bridges Weekly, 25 January 2012)

According to the three Appellate Body judges, the label discriminates against Mexican tuna by banning a fishing practice known as “purse-seine” nets - encircling nets that temporarily set on dolphins to attract the tuna that swim below - which are used almost exclusively by Mexican fisheries. In other parts of the world, purse-seine nets are of no use, as tuna and dolphin swarms only swim together in the Eastern Pacific. In effect, this means that the majority of Mexican tuna is not eligible for “dolphin-safe” labels, even where independent veterinarians certify that no dolphins were killed or injured during the specific catch.

Mexico’s tuna fleet continues to use purse-seine nets, but is nonetheless compliant with international standards - most notably the Agreement on the International Dolphin Conservation Program (AIDCP). Mexico, the US, and others had negotiated the AIDCP in response to an earlier international trade dispute between the countries over a similar issue.

Unlike the previous panel, the Appellate Body sided with Mexico in finding that the differential treatment affects Mexico’s export competitiveness. The judges further denied Washington’s claim that the differential treatment was exclusively due to a legitimate regulatory requirement.

In relying heavily on the panel’s earlier assessment of marine science, the Appellate Body came to the conclusion that there is no regulatory justification for the label to ban exclusively purse-seine nets and no other fishing practices. In fact, the Appellate Body found that the existing requirements of the US dolphin-safe label are insufficient to address dolphins harmed outside the Eastern Pacific by countries using other fishing techniques.

“The measure at issue does not address adverse effects on dolphins resulting from the use of fishing methods predominantly employed by fishing fleets supplying the United States’ and other countries’ tuna producers,” the judges said in their finding.

While the court ruling only requires the US to bring its labelling practice into compliance, without specifying the conditions, the legal assessment makes clear that cosmetic changes will not be sufficient. Ultimately, the measure will have to apply in an even-handed manner to all fishing techniques and regions.

“Risks to dolphins resulting from fishing methods other than setting on dolphins could only be monitored by imposing a different substantive requirement, i.e. that no dolphins were killed or seriously injured in the sets in which the tuna was caught,” the judges said.

However, Mexico failed to convince the court that the AIDCP qualified as an international standard and thus appropriate benchmark. The TBT Agreement mandates that, where relevant international standards exist, technical regulations must adopt their design. In overruling the panel, the Appellate Body disagreed that the AIDCP was an international standard, criticising that its membership is only open to non-member countries upon invitation.

Labelling policy “mandatory”, though no import pre-condition

Of greater systemic importance is the Appellate Body’s general finding that the measure at issue - the US label, which also does not permit labels that deploy another standard - is a mandatory technical regulation and thus subject to the TBT Agreement. The US had disputed this position, pointing to the fact that eligibility for the label was not an importation or marketing requirement. Instead, Washington maintained, the importance of the label was exclusively the result of consumer preference.

In siding with the panel experts, the judges criticised the US measure for establishing a single and legally mandated definition of the term “dolphin-safe”, whatever context it may be used in. “In doing so, the US measure prescribes in a broad and exhaustive manner the conditions that apply for making any assertion on a tuna product as to its ‘dolphin-safety’, regardless of the manner in which that statement is made,” the ruling concludes, referring to the question of whether the measure is mandatory and voluntary.

The ramifications of this finding for other labels are yet to be seen. But experts immediately point to the dispute of what the term “organic” means and whether organic can include genetically-modified organisms. With another label dispute in the pipeline - an Appellate Body decision in the COOL dispute is set to be released this summer - this year is set to enlighten the critical relationship of trade, market access, and labels.

Further analysis on the US-Tuna II Appellate Body ruling will be made available in next week’s Bridges.

ICTSD reporting.

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