(Courtesy:Pacific bluefin tuna caught in a net in Baja California, Mexico. Photograph: Oxford Scientific/Getty Images)
The Appellate Body (AB)decision in the Tuna case is out and is available on the WTO website here. It has already generated considerable debate in the press here and here as well as on premier international trade law blogs IELP and O'Neil Institute Trade Blog. The Eyes on Trade blog termed the ruling as a major blow to US consumer interests to make an informed choice. The AB reversed many aspects of the Panel decision and found that the US measure of "dolphin safe" labelling is inconsistent with Article 2.1 of the TBT Agreement as it accorded "less favourable treatment" to Tuna products from Mexico. It, however, reversed the Panel finding that the measure was inconsistent with Article 2.2 of the TBT on the grounds that the measure was not more trade-restrictive than necessary.
The AB finding on the violation of Article 2.1 of the TBT Agreement is interesting. Article 2.1 of the TBT Agreement states:
After a detailed analysis of the measure the AB held:
"2.1 Members shall ensure that in respect of technical regulations, products imported from the territory of any Member shall be accorded treatment no less favourable than that accorded to like products of national origin and to like products originating in any other country."
" 298. In the light of uncontested facts and factual findings made by the Panel, we consider that Mexico has established a prima facie case that the US "dolphin-safe" labelling provisions modify the conditions of competition in the US market to the detriment of Mexican tuna products and are not even-handed in the way in which they address the risks to dolphins arising from different fishing techniques in different areas of the ocean. We consider further that the United States has not met its burden of rebutting this prima facie case. Since we are not persuaded that the Panel acted inconsistently with Article 11 of the DSU in reviewing the evidence and arguments before it, we accept the Panel's conclusions that the use of certain tuna fishing methods other than setting on dolphins "outside the ETP may produce and has produced significant levels of dolphin bycatch"and that "the US dolphin-safe provisions do not address observed mortality, and any resulting adverse effects on dolphin populations, for tuna not caught by setting on dolphins or high seas driftnet fishing outside the ETP." Thus, in our view, the United States has not justified as non-discriminatory under Article 2.1 the different requirements that it applies to tuna caught by setting on dolphins inside the ETP and tuna caught by other fishing methods outside the ETP for access to the US "dolphin-safe" label. The United States has thus not demonstrated that the detrimental impact of the US measure on Mexican tuna products stems exclusively from a legitimate regulatory distinction.
299. For these reasons, we reverse the Panel's finding, in paragraphs 7.374 and 8.1(a) of the Panel Report, that the US "dolphin-safe" labelling provisions are not inconsistent with Article 2.1 of the TBT Agreement. We find, instead, that the US "dolphin-safe" labelling provisions provide "less favourable treatment" to Mexican tuna products than that accorded to tuna products of theUnited States and tuna products originating in other countries and are therefore inconsistent with Article 2.1 of the TBT Agreement."
Thus, though the measure does not specifically state that Mexican Tuna fish are subjected to the regulation, there is defacto discrimination. The measure impacts the competitive conditions for Mexico as well as being discriminatory since it has not considered the risks to Dolphins from other methods of fishing. Hence, a measure can be found to violate Article 2.1 of the TBT Agreement if it "in effect" is discriminatory and accords less favourable treatment even without specifically stating the origin of the product. This has implications of measures which overtly seem non-discriminatory but in practice, due to the reality of conditions, have a bearing on the competitive conditions of the country exporting.
The decision is in a series that have gone against the US at the WTO (COOL, Cloves Cigarettes being the other examples). What would the US reaction to this decision be? The USTR website had no official reaction yet to the decision. Would it comply with the AB decision by modifying its measure and by removing the dolphin safe labelling? Would it risk non-compliance and face retaliatory measures from Mexico? What are the options before the US? Critics of the WTO would argue that it is yet another case of domestic policy choice being regulated by international law and a challenge to US national sovereignty. Others would argue that the rule based multilateral system had delivered yet again - of providing a rational, rule based interpretation to a long standing dispute.