This is from the Tuna 21.5 WTO panel report:
7.448. Before concluding, the Panel must deal with the United States' argument that with regard to the access to the dolphin-safe label, no tuna product of a Member has a right to the label. The United States contends that no product (whether of US, Mexican, or any other origin) is entitled to be labelled dolphin-safe under US law; rather, the advantage is subject to origin-neutral eligibility requirements that all tuna products must meet in order to be labelled consistent with US law.668 According to the United States, nothing prevents Mexican canneries or Mexican vessels from producing tuna product that would be eligible for the dolphin-safe label. Indeed, other countries that fish in the ETP, and that were in the same position as Mexico when the DPCIA was passed, have chosen to do so.669
7.449. The Panel is not persuaded by the United States' argument. The Panel notes that the Appellate Body found in the original proceedings, in the context of its analysis under Article 2.1 of the TBT Agreement, that whether a measure comports with the "treatment no less favourable" requirement in Article 2.1 does not hinge on whether the imported products could somehow get access to an advantage, for example, by complying with all applicable conditions. Rather, a determination of whether imported products are accorded "less favourable treatment" within the meaning of Article 2.1 of the TBT Agreement calls for an analysis of whether the contested measure modifies the conditions of competition to the detriment of imported products. The Appellate Body further explained that the fact that a complainant could comply or could have complied with the conditions imposed by a contested measure does not mean that the challenged measure is therefore consistent with Article 2.1 of the TBT Agreement.670
7.450. In our view, the same reasoning applies with equal force in the context of Article I:1 of the GATT 1994. Where a condition attached to an advantage is found to detrimentally modify the competitive opportunities of imported like products, the fact that that the disadvantaged Member could modify its practices so as to conform to the condition in question in no way changes the fact that the condition has upset the competitive equality that Article I:1 protects. As we understand it, Article I:1 of the GATT 1994, like Article 2.1 of the TBT Agreement, is concerned with the conditions of competition as they exist, and not as they might exist if the Member whose like products have suffered a detrimental impact were to somehow modify its practices. Accordingly, the fact that a Member could modify its practices to ensure that its like products conform to the relevant conditions and thus gain access to the benefit does not mitigate the responsibility of a Member for maintaining a measure that is inconsistent with Article I:1 of the GATT 1994.
So imagine that on the day a labelling measure was enacted by Country A, none of the products from Country B or Country C are eligible for the label. No MFN violation, right? Both are treated the same.
Five years down the line, though, the producers from Country B all decide to adjust their product/production process so that it meets the labelling requirement; the producers from Country C, on the other hand, do not adjust. At that point, all products from Country B are eligible for the label, whereas all products from Country C are not. Is there an MFN violation now?
