Last week the second 21.5 compliance panel report was released in the long-running Tuna/Dolphin, or Tuna II, dispute between Mexico and the United States. Finally after two rounds of the US tweaking of the measure, the WTO panel gave the voluntary labeling scheme for Dolphin-Safe tuna a clean bill of health. The panel report is composed almost entirely of findings of fact, and these findings, and the evidence behind them, are presented with a clarity and rigor truly exceptional for WTO panels. The chances of reversal on appeal are close to nil, since the Appellate Body will impugn findings of fact only in the most egregious instances of panel misconduct (the failure to make an objective assessment).
But understanding this final happy episode in the Tuna II saga requires some background on the dispute and so let's start with that.
The Tortured Path of the Tuna II Proceeding
In an article for the World Trade Review, Meredith Crowley and I summarized the original dispute, up to the first Appellate Body Report, as follows:
Mexico argued that by not allowing tuna fished through setting upon dolphins to be certified as dolphin-safe, even if no actual dolphin was killed in any particular case, the United States violated 2.1 of TBT; since this was a method typically used by Mexican fishers, not allowing it to qualify for “dolphin-safe” labeling de facto limited the competitive opportunities for Mexican tuna in the United States....Secondly, Mexico ...claimed that while the United States had a strict monitoring and enforcement scheme for tuna originating in the ETP [with virtually no monitoring or enforcement in non-ETP waters].... , Mexico did produce some credible evidence that there was genuine harm to dolphins from tuna-fishing outside the ETP, thus putting into question the justification for treating tuna from the two geographic regions so different. Since the United States made a distinction based upon geographical origin of the tuna, requiring much stricter regulatory enforcement within the ETP, the area where Mexican tuna was sourced, Mexico argued that there was a national-treatment violation. The Panel tended to conflate these rather different claims[ the one concerning setting upon dolphins and the other concerning different levels of monitoring and compliance) into a single claim of de facto discrimination with respect to the requirement of not setting on dolphins. While finding that Mexican “tuna” and US “tuna” were like products, the Panel rejected the conflated claim, based on the observation that at the time the measure was introduced, both US and Mexican fishing boats were using the method of setting upon dolphins, and thus the initial competitive effect on US and Mexican tuna of the banning of this method was the same...
Mexico also argued that there was a violation of TBT 2.2 ("unnecessary obstacle to trade" because the US objective of informing consumers and protecting dolphins could be achieved if the United States were to permit both the label that it was now, in effect, imposing as the sole label and the alternative AIDCP dolphin-safe label, the latter allowing tuna to be caught in setting upon dolphins. According to Mexico, consumers could make an informed choice and if they wanted to ensure that tuna was not caught through setting upon dolphins, they could always choose the label certifying to that effect. The Panel held that, while having both labels freely available could create consumer confusion, it would be a less-trade- restrictive alternative provided that this confusion was avoided through a requirement that the label on each can of tuna be accompanied by explanatory language that indicated the precise claims behind the particular label at issue....
Finally, Mexico claimed that the United States was in violation of TBT 2.4 (the requirement to use international standards) because it did not use the AIDCP alternative labeling scheme as a basis for its regulation. Mexico argued that the AIDCP was an international standard within the meaning of TBT 2.4. The Panel held that the AIDCP was an international standardization body, even though it is a regional organization to which only a small subset of WTO adhere, because at a particular point in time in the history of this organization there was a possibility for interested states outside the region to join it as parties to the treaty (this window had long passed). However, the Panel ultimately determined that there was no violation based on the finding that the standard was inappropriate and ineffective to achieve the US objective, since that objective concerned avoiding harms to dolphins explicitly connected to the technique of setting upon them such as stress and trauma.
The First AB Report
The Appellate Body reversed the Panel’s finding of a violation of TBT 2.2 and significantly altered its analysis of 2.1 and 2.4 (finding that the AIDCP did not meet the criteria for an international standardization body). However, the AB did find a single violation of 2.1; given the rather sharp discrepancy of treatment in the US scheme between tuna fished in the ETP (the operating zone of Mexican tuna fishers) and outside the ETP, the AB held that there was a lack of evenhandedness from the divergence in monitoring and compliance requirements. This constituted a violation of 2.1 based upon the methodology the AB had set out in Cloves.
I summarized the AB's logic in an earlier post on this blog:
How could the US justify a strict approach to risk of tuna being "dolphin unsafe" within the ETP, while taking no steps to ensure the integrity of the claim with respect to non-ETP tuna? Thus, the AB suggested that the US must do something to address the verification of the claim of "dolphin safe" in the case of non-ETP tuna [even if the US would be justified in using less strict methods given the overall lower risk in the non-ETP fishery]. It noted that one available option was certification by the ship's captain....The "calibration" logic of the AB was watertight:...
The First 21.5 Compliance Proceeding
In response to the original AB Report, the United States did exactly what the AB suggested was a WTO-consistent option: introduce as a general practice certification by the ship's captain in the case of non-ETP Tuna. One would have thought this would be the end of the matter. But, as I described in that earlier post, Mexico tried for another kick at the can through 21.5 compliance proceedings. Briefly, Mexico sought to challenge aspects of the original measure that were not at issue in the original dispute, on grounds that these also represented non-calibration between the actual risk to dolphins in particular situations, on the one hand, and the monitoring and compliance burden, on the other. This was, arguably, an abuse of the 21.5 process, which is not intended as a means of relitigating the original measure. The first 21.5 panel allowed Mexico to get away with this stunt, however, and it found that there were a number of aspects of the original measure suggesting non-calibration (besides the aspect that the AB had focused on that the US had corrected through ship's captain's certification).
Much of the first 21.5 panel was reversed by the AB, noting that the panel had not in fact made a comparative assessment of the different risks to dolphins in different situations based on the scientific evidence. Yet the AB found that the US measure continued to violate TBT 2.1, because of concerns that the captains were not qualified for the certification activities, that record-keeping and verification formalities were much less burdensome or strict in the case of non-ETP tuna, and finally that there was a lack of even-handedness in the treatment of certain other situations. This last finding is highly obscure, but it is perhaps worth explaining it, since the the reader has managed to get this far. The US tuna labeling scheme created presumptions that risks to dolphins are high in some fisheries and low in others, and based the approach to monitoring and enforcement on these presumptions. Yet the US also recognized that there could be some situations where these presumptions were not correct, i.e. where despite the presumption of low risk, there was actually evidence of higher risk in a specific siuation; in those circumstances the monitoring and compliance approach for high-risk fisheries was to be applied, despite the presumption. However, the circumstances in which a presumption of lower risk would be defeated by evidence of specific high risk were different in the case of certain lower-risk ETP fisheries vs. non-ETP fisheries. In some cases, the presumption of lower risk for a particular fishery would be defeated where “regular and significant association between dolphins and tuna” was found to occur, but in other cases, what defeated the lower risk presumption was evidence of “regular and significant mortality or serious injury to dolphins.” Somehow it appeared to the AB that this constituted discrimination, even though it is unclear, and remains unclear to me, whether the one or the other situation is an easier trigger for shifting to the strictest level of monitoring and compliance.
The Second 21.5 Compliance Proceeding: Last week's ruling
This brings us to last week's second compliance panel ruling.
After the AB 21.5 decision, the United States did some further tweaking of the labeling scheme: The US 1) introduced a training course for captains who would be doing certification in non-ETP waters; 2) tightened up some aspects of the record-keeping and verification requirements in the case of non-ETP tuna (or at least clarified them); 3) established a single criterion for exercise of regulatory discretion to defeat the presumption of lower risk to dolphins so as to apply the stricter monitoring and compliance requirements to situations in a fishery that would otherwise be considered lower-risk. In other words, as with the first round, the US followed the AB literally and addressed with precision each of its remaining TBT 2.1 concerns with the labeling scheme.
The new compliance report, last week's decision, found-on the basis of a very extensive analysis of the variation of risks in different fisheries and the calibration of the scheme to these differences in risk-that the US had brought itself into compliance after the 2016 tweaks to the labeling scheme. But the new compliance panel (the chair was different) was also meticulous in its appreciation of what was res judicata. The panel, this time, resisted Mexico's demands to re-open matters already decided or which concerned previously unimpugned elements of the original measure not properly a matter for the compliance panel. The panel also resisted Mexico's efforts to have it replace the legal framework that the AB had used for this dispute with one more favorable to Mexico's claim. (A final note: while there was also a claim in the compliance stages of this dispute concerning Article XX of the GATT, the evenhandeness analysis under 2.1 TBT was applied to the Article XX chapeau with respect to the existence of "arbitrary or unjustifiable discrimination, using the standard AB framework for interpreting the chapeau; thus in the end the Article XX claim was also dismissed). The upshot of this long saga is good for both consumers and dolphins:the overall approach of the US to the Dolphin-Safe label is definitively found WTO-compliant, while tighter surveillance in non-ETP fisheries will, if anything, make consumers more assured of the integrity of the label and also result perhaps in fewer dolphins being killed.
