TWN Info Service on WTO and Trade Issues (Nov17/04)
3 November 2017
Third World Network
       
US "dolphin-safe" tuna labelling regime held to be WTO-consistent
Published in SUNS #8564 dated 31 October 2017

Geneva, 30 Oct (Kanaga Raja) - Two compliance panels at the World Trade Organisation (WTO) have ruled that the amended tuna measure adopted by the United States in 2016 is not inconsistent with Article 2.1 of the Technical Barriers to Trade (TBT) Agreement.

In rulings issued on 26 October, the Panels concluded that the 2016 Tuna Measure is inconsistent with Articles I:1 and III:4 of the GATT 1994, but that it is justified under Article XX(g) of the GATT 1994, and meets the requirements of the chapeau of Article XX of the GATT 1994.

The Panels therefore considered that the United States has implemented the recommendations and rulings of the DSB in US - Tuna II (Mexico) and US - Tuna II (Mexico) (Article 21.5 - Mexico) to bring its measure into conformity with its obligations under the WTO Agreement.

Having found that the United States has not acted inconsistently with its obligations under the WTO Agreement, the Panels considered that no recommendations under Article 19.1 of the Dispute Settlement Understanding (DSU) are necessary, and made none.

According to media reports, Mexico has said that it will appeal the ruling.

[The US civil society group, Public Citizen, in a posted reaction to the WTO compliance panels' ruling on its website, said that it "was a welcome if unexpected shift that may reflect the institution's response to intensive pressure by the Office of the US Trade Representative to reform the WTO's dispute resolution process and President Donald Trump's threats to withdraw from the body." SUNS]

Both the United States and Mexico had sought recourse to Article 21.5 of the DSU over the US measures concerning the importation, marketing and sale of tuna and tuna products.

Both the proceedings brought by the United States and those brought by Mexico concern the United States' labelling regime for dolphin-safe tuna products (the 2016 Tuna Measure).

On 11 April 2016, the United States requested the establishment of a compliance panel and at its meeting on 9 May 2016, the Dispute Settlement Body (DSB) referred this dispute to the original panel, if possible.

On 9 June 2016, Mexico requested the establishment of a compliance panel and at its meeting on 22 June 2016, the DSB referred this dispute to the original panel, if possible.

Both the panels comprised the same three panellists.

Earlier this May, the DSB approved the request by Mexico for the authorisation to suspend the application to the United States of tariff concessions and other related obligations in the amount of US$163.23 million per annum. (See SUNS #8469 dated 24 May 2017.)

In a ruling issued on 25 April 2017, an Arbitrator at the WTO had determined that Mexico may request such authorisation from the DSB.

The Arbitrator determined in its proceedings that the measure to which this interpretation directs the Arbitrator is the 2013 tuna measure, and not the 2016 measure (see SUNS #8451 dated 27 April 2017.)

In the rulings issued on 26 October, the panels said that after consulting the parties, they had decided to issue their reports in a single document, but with two separate sets of conclusions and recommendations (see SUNS #8563 dated 30 October 2017).

BACKGROUND

According to the reports of the Panels, both parties consider that the 2016 Tuna Measure comprises the following instruments:

a. Section 1385 (Dolphin Protection Consumer Information Act), as contained in Sub-chapter II (Conservation and Protection of Marine Mammals) of Chapter 31 (Marine Mammal Protection), in Title 16 of the United States Code (the DPCIA);

b. Code of Federal Regulations, Title 50, Part 216, Sub-part H (Dolphin Safe Tuna Labeling), as amended by the Enhanced Document Requirements to Support Use of the Dolphin Safe Label on Tuna Products, 78 Fed. Reg. 40,997 (July 9, 2013) (the 2013 Rule) and the Enhanced Document Requirements and Captain Training Requirements to Support Use of the Dolphin Safe Label on Tuna Products, 81 Fed. Reg. 15,444 (March 23, 2016) (the 2016 Rule) (collectively, the 2016 implementing regulations); and

c. The court ruling in Earth Island Institute v. Hogarth, 494 F.3d 757 (9th Cir. 2007) (the Hogarth ruling).

Mexico argued that the Measure also includes the following: any implementing guidance, directives, policy announcements or any other document issued in relation to instruments (a) through (c) above, including any modifications or amendments in relation to those instruments.

According to the Panels, the 2016 Tuna Measure specifies the conditions to be fulfilled in order for tuna products sold in the United States to be labelled "dolphin-safe" or to make similar claims on their labels.

Use of the term "dolphin-safe", or any other term that claims or suggests that the tuna contained in a tuna product was harvested using a method of fishing that is not harmful to dolphins, is prohibited if the tuna contained in the product was not harvested and processed in compliance with the applicable labelling conditions.

According to the Panels, there are four central elements or aspects of the 2016 Tuna Measure:

a. The "eligibility criteria", pursuant to which tuna products made from tuna caught by (a) setting on dolphins and (b) driftnets in the high seas are disqualified from accessing a dolphin-safe label, while tuna products made from tuna caught by other fishing methods are provisionally eligible;

b. The "certification requirements", which require certain documentation to accompany tuna intended to be labelled as dolphin-safe;

c. The "tracking and verification requirements", which impose certain conditions concerning the segregation of dolphin-safe and non-dolphin-safe tuna from the time of catch through off-loading, processing, and sale;

d. The "determination provisions", which allow for additional certification and tracking and verification requirements to be imposed in respect of tuna caught outside the ETP (Eastern Tropical Pacific) large purse seine fishery under certain circumstances.

CLAIM UNDER ARTICLE 2.1 OF TBT AGREEMENT

On the claim under Article 2.1 of the TBT Agreement, the Panels agreed with the parties that the 2016 Tuna Measure is a technical regulation, and that the relevant products are "like".

The Panels noted that the parties also agree that the 2016 Tuna Measure modifies the conditions of competition to the detriment of Mexican tuna products in the US market.

Specifically, the parties agree that the key elements of the original and 2013 Tuna Measures - in particular the disqualification of all tuna caught by setting on dolphins from using a dolphin-safe label, and the provisional qualification of tuna caught by other fishing methods to use such a label - and the relevant features of the US market for tuna remain unchanged, so that most Mexican tuna products are still being excluded from access to the dolphin-safe label, whereas most like products from the United States and other Members are still eligible for such label.

"Like the parties, we do not see that there has been any relevant change in these factual circumstances. Indeed, we agree with the parties that the 2016 Tuna Measure maintains the overall architecture and structure of the original and 2013 Tuna Measures - in particular, it maintains the regulatory distinction between tuna products derived from tuna caught by setting on dolphins and tuna products derived from tuna caught by other fishing methods," said the Panels.

Thus, although the 2016 Tuna Measure has introduced new requirements in respect of tuna products made from tuna caught outside the ETP, the distinction between tuna caught by setting on dolphins, which (together with tuna caught by high seas driftnet fishing) is ineligible to receive a dolphin-safe label, and tuna caught by other fishing methods, which is provisionally eligible for a dolphin-safe label, remains in effect.

"In the light of this, and given the parties' agreement that the relevant factual situation has not changed from the original or the first compliance proceedings, we find that, by excluding most Mexican tuna products from access to the dolphin-safe label, while granting conditional access to such label to like products from the United States and other countries, the 2016 Tuna Measure, similar to the original and the 2013 Tuna Measure, modifies the conditions of competition to the detriment of Mexican tuna products in the US market."

The parties' disagreement as to the WTO-consistency of the 2016 Tuna Measure centres on the question of whether the detrimental impact caused by the 2016 Tuna Measure nevertheless does not accord treatment less favourable to Mexico within the meaning of Article 2.1 of the TBT Agreement, because such detrimental impact stems exclusively from a legitimate regulatory distinction.

"This question is at the heart of these proceedings," said the Panels, adding that the parties, however, have very different understandings of the legal standard to be applied in this part of the analysis under Article 2.1 of the TBT Agreement.

FACTUAL FINDINGS

The Panels then turned to assess the evidence on the record relating to the risks to dolphins arising from the use of different fishing methods in different areas of the ocean, in order to "identify the risk profiles of different fisheries, on the basis of which we will then determine whether the 2016 Tuna Measure is calibrated to the risks to dolphins arising from the use of different fishing methods in different areas of the ocean."

(In this regard, the Panels made some rather extensive factual findings taking up some 100 pages of the 202-page document.)

The Panels (i) outlined the findings made by the Appellate Body and the panels in previous stages of this dispute regarding the appropriate methodology to be used in assessing the evidence on the risk profiles of different fishing methods, as well as their factual findings regarding the nature of the risks posed and harms done to dolphins by such methods; (ii) discussed certain preliminary issues on the methodology that the Panels used in assessing the evidence on the record; (iii) made findings about the risk profiles of individual fishing methods; and finally (iv) provided a comparative assessment of the results of the method-specific findings.

In the Panels' view, an assessment of the overall levels of relative risks attributable to different fisheries, including in respect of both observable and unobservable harms, entails a comparison of the different risks to dolphins arising from the use of different fishing methods in different parts of the ocean.

In particular, it entails an assessment of the risks to dolphins posed by the fishing method predominately used by Mexico (i.e. setting on dolphins in the large purse seine fishery in the ETP), which is ineligible for the dolphin- safe label, in comparison with the risks to dolphins posed by other fishing methods in different parts of the ocean.

As a basis to conduct this comparison, "we observe that we will need to establish the risk profiles of the relevant fishing methods in different areas of the ocean, taking into account data on both observable and unobservable harms."

Following its analysis, the Panels said that contrary to their findings regarding the PBR (Potential Biological Removal) methodology, they consider that the per set methodology sits comfortably with the design and structure of the 2016 Tuna Measure, as the latter is generally applied on a per gear deployment basis in respect of how often captains have to make non-dolphin safe certifications, or how frequently non-dolphin safe tuna must be segregated from dolphin-safe tuna.

The Panels therefore concluded that using the per set methodology is appropriate for their assessment of the overall levels of relative risks attributable to different fisheries.

The Panels then reviewed the evidence concerning the risks to dolphins caused by purse seine fishing without setting on dolphins, gillnet fishing, longline fishing, trawl fishing, tuna handlining, and by pole and line fishing.

In sum, said the Panels, "given that none of the six methods we have assessed causes the kinds of unobservable harms to dolphins that setting on dolphins causes, and considering the important differences between setting on dolphins and each of the other six methods with respect to observable harms to dolphins, we conclude that, overall, the risk profile of setting on dolphins is much higher than that of each of the other six fishing methods used to catch tuna."

On whether the 2016 Tuna Measure is consistent with Article 2.1 of the TBT Agreement, the Panels examined whether (a) the eligibility criteria, (b) the certification requirements, (c) the tracking and verification requirements, and (d) the determination provisions are calibrated to the difference in the overall risks to dolphins arising from the use of different fishing methods in different areas of the ocean.

The Panels recalled their earlier finding that setting on dolphins is significantly more dangerous to dolphins than are other fishing methods.

In reaching this conclusion, the Panels said they considered the evidence on the record concerning the existence and extent of observable harms, unobservable harms, and interaction with dolphins.

"We explained that dolphin sets necessarily interact with dolphins, and that therefore dolphins are an essential element of the method of setting on dolphins. We also explained that, because every dolphin set chases and encircles dolphins, every dolphin is at risk of both observable harms and unobservable harms, which, because of their nature, cannot be certified."

This contrasts with other fishing methods, which do not routinely and systematically interact with dolphins, which cause observable harms at a much smaller magnitude compared to setting on dolphins, and which do not cause the same kinds of unobservable harms as are caused by setting on dolphins.

"Taking into account the relative risk profiles of setting on dolphins, on the one hand, and other fishing methods on the other hand, we consider that the eligibility criteria are appropriately calibrated to the risks to dolphins arising from the use of different fishing methods in different areas of the ocean," the Panels concluded.

First, based on the data on the record, the Panels have concluded that setting on dolphins poses a much higher risk of observed dolphin mortality and serious injury, on a per set basis, than other fishing methods.

"We have found that, on a per set basis, setting of dolphins is more likely to kill or seriously injure a dolphin than any other fishing method. For instance, in the period 2009-2015, there were 91.15 dolphin mortalities per 1,000 sets in the ETP large purse seine fishery by setting on dolphins, compared to 0.20 dolphin mortalities per 1,000 sets in the ETP large purse seine fishery without setting on dolphins in the period 2009-2014, and an annual average of 2.01 dolphin mortalities per 1,000 sets in the WCPO [Western and Central Pacific Ocean] purse seine fishery without setting on dolphins in the years 2010, 2014 and 2015."

Second, the Panels said they have also concluded that the method of setting on dolphins is more likely than other fishing methods to cause unobserved mortality and serious injury.

This is because setting on dolphins routinely and systematically interacts with dolphins, meaning that there is a higher likelihood than in respect of other fishing methods that dolphins will be killed or seriously injured, even if such mortality or injury is not in fact observed.

"Finally, we have accepted, based on our assessment of the evidence on the record that setting on dolphins causes a unique kind of unobservable harm that by its nature cannot be certified. Therefore, setting on dolphins poses a risk of harms whose realization cannot be definitively established. This means that, even where no dolphins have been killed or seriously injured, there remains a risk that dolphins subject to chase and encirclement may have suffered from unobservable harms, such as continuous acute stress."

As such, a certification, even by an independent observer, that no dolphins were killed or seriously injured in a set on dolphins could not indicate, with any degree of certainty, that the tuna caught in that set was dolphin-safe, since dolphins may well have suffered unobservable harms as a result of the chase itself.

In this sense, the Panels agreed with the United States that allowing tuna caught by setting on dolphins, in a set in which no dolphins were killed or seriously injured, to access a dolphin-safe label may mislead US consumers, since it could not control for the unobservable harms that may have been caused as a result of the chase and encirclement process.

OVERALL ASSESSMENT

In their overall assessment of the consistency of the 2016 Tuna Measure with Article 2.1 of the TBT Agreement, the Panels said that they have found that the eligibility criteria and the certification and tracking and verification requirements are, considered individually, calibrated.

"We have also found that the determination provisions create flexibility that contributes to the calibration of the certification and tracking and verification requirements, and therefore of the 2016 Tuna Measure as a whole."

"As we have already indicated, following the guidance provided by the Appellate Body in the first compliance proceedings in this dispute, we are of the view that an assessment of whether the 2016 Tuna Measure is calibrated to the risks to dolphins arising from the use of different fishing methods in different areas of the ocean cannot be based on a segmented analysis of the individual elements of the Measure. We have to complement such individual analyses by an overall assessment synthesizing our findings about the various elements of the Measure, and explaining the operation of the Measure, taking into account the important inter-linkages among such elements."

The 2016 Tuna Measure is a labelling measure. It pursues two objectives: first, to ensure that consumers are not misled or deceived about whether tuna products contain tuna that was caught in a manner that adversely affects dolphins; and, second, to contribute to the protection of dolphins, by ensuring that the US market is not used to encourage fishing fleets to catch tuna in a manner that adversely affects dolphins.

"As also noted above, we see these two objectives as being mutually complementary and reinforcing, rather than distinct. Thus, the objective of the Measure is to protect dolphins from harms by providing the US consumers with accurate information as to whether any dolphins were killed or seriously injured in the harvesting of the tuna used to make the tuna products that they purchase."

To this end, the eligibility criteria, which contain the substantive conditions for access to the dolphin-safe label, make a distinction between tuna caught by certain fishing methods that are ineligible to receive a dolphin-safe label, and tuna caught by fishing methods that are provisionally eligible to receive a dolphin-safe label. Two fishing methods are disqualified: setting on dolphins, and driftnet in the high seas.

All other methods are conditionally qualified for the label: tuna products made of tuna caught by using any of these other methods are qualified to use a dolphin-safe label provided it is certified that no dolphin was killed or seriously injured in the set or gear deployment during which the tuna was caught, and that no net or other gear was intentionally deployed on or used to encircle dolphins during the fishing trip in which the tuna was caught.

"Above, we have found that the eligibility criteria are calibrated because of the significant difference in risk between setting on dolphins, on the one hand, and the fishing methods that are conditionally qualified for the label, on the other hand," said the Panels.

The Panels said without the certification, and tracking and verification requirements, as well as the determination provisions, however, the distinction made through the eligibility criteria would not have achieved the Measure's objective of dolphin protection.

"In our view, the inter-linkage among these four elements of the Measure is so crucial that without one of them the 2016 Tuna Measure, as we know it, could not function. We see the certification, and the tracking and verification requirements, as well as the determination provisions, as tools that enforce the eligibility criteria with a view to achieving the objective of protecting dolphins from harmful fishing methods."

In order to pursue its aim of protecting dolphins from harmful fishing methods, the Measure goes beyond identifying, and disqualifying from accessing a dolphin-safe label the methods that are particularly harmful to dolphins and conditionally qualifying other methods. It also establishes a mechanism to make sure that this distinction would be respected and properly enforced. This enforcement mechanism was designed in the form of certification and tracking and verification requirements, as well as the determination provisions.

The certification provisions aim to ensure that the impact on dolphins of a fishing method used in harvesting tuna is reported accurately, to help enforce the eligibility criteria and achieve the objectives of the 2016 Tuna Measure. The certification requirements create a more sensitive detection mechanism in respect of the ETP large purse seine fishery, which has a relatively high risk profile, and a less sensitive mechanism in other fisheries where the risks to dolphins are relatively lower. However, under the determination provisions, a fishery other than the ETP large purse seine fishery may be subject to more stringent certification requirements, and in particular may be required to have an observer certification, where that fishery has a regular and significant tuna-dolphin association or mortality or serious injury of dolphins. The determination provisions help to ensure that the 2016 Tuna Measure treats similar situations similarly. Working together, the certification requirements and the determination provisions help to establish a mechanism for enforcing the eligibility criteria that are properly calibrated to the different risk profiles in different fisheries.

Without certification requirements, the substantive distinction made by the eligibility criteria would have been difficult to enforce and monitor, and US consumers would not be in a position to know whether tuna used in producing tuna products was obtained by fishing methods that harmed dolphins. As a result, the objectives of the Tuna Measure would not have been achieved. The certification requirements (together with the determination provisions) thus work together with and reinforce the eligibility criteria. And like the eligibility criteria, they are calibrated to the risks to dolphins in different fisheries, since they apply more stringent criteria inside the ETP large purse seine fishery, and less stringent requirements in other fisheries that are less dangerous to dolphins.

The Panels noted that the eligibility criteria and the certification requirements, taken together, would not by themselves suffice to achieve the 2016 Tuna Measure's objectives either. This is because there would be a need to control how the tuna caught by different fishing methods is stored on board the fishing vessels, unloaded and handed over to the canneries. This function is fulfilled by the tracking and verification requirements.

"We have found, however, that, given the difference in the risk profile of the ETP large purse seine fishery compared to other fisheries, the tracking and verification requirements are calibrated despite the remaining differences between the NOAA (National Oceanic and Atmospheric Administration) and the AIDCP (Agreement on the International Dolphin Conservation Program) regimes. In our view, the tracking and verification requirements complement the eligibility criteria and the certification requirements by providing for two different regimes taking into account the differences in the risk profiles of the various fisheries."

Additionally, as is the case in the context of the certification requirements, the determination provisions allow for the imposition of more stringent tracking and verification requirements for tuna caught in a fishery that has been designated under the determination provisions as having a regular and significant tuna-dolphin association or dolphin mortality or serious injury.

The Panels recalled that the revised determination provisions introduce the necessary flexibility into the 2016 Tuna Measure to reinforce the calibration of the certification and tracking and verification requirements. More specifically, the determination provisions allow the NOAA to heighten the level of certification and tracking and verification requirements for fisheries where the Assistant Administrator of NOAA has determined that a fishery has a regular and significant tuna-dolphin association (similar to that in the ETP), or has regular and significant dolphin mortality or serious injury.

The Panels also recalled that these determination provisions have been used in respect of certain gillnet fisheries in the Indian Ocean region.

"In our view, without the determination provisions, the 2016 Tuna Measure would have been static, as there would be no mechanism to review the status of different fisheries in terms of harms caused to dolphins, and to make the necessary modifications to the relevant requirements in light of new developments in the risk profiles of such fisheries. Therefore, the determination provisions complement the structure of the 2016 Tuna Measure composed of the eligibility criteria, certification and tracking and verification requirements, and gives the Measure the flexibility to adapt itself to changing circumstances in the risk profiles of fisheries."

Working together with the eligibility, tracking and verification requirements, the determination provisions allow for the imposition of more stringent conditions in fisheries that cause dolphin mortality or serious injury at levels similar to those caused in the ETP large purse seine fishery. This ensures that similar situations are treated similarly, and that the 2016 Tuna Measure establishes a regime that is calibrated to, tailored to, and commensurate with the risks to dolphins arising from the use of different fishing methods in different areas of the ocean.

The Panels said their analysis of calibration has taken account of the objectives of the 2016 Tuna Measure, and they consider that the eligibility criteria and the certification and tracking verification requirements, together with the determination provisions, work together in a calibrated manner to further the objectives of the 2016 Tuna Measure.

On the basis of these considerations, the Panels came to the general conclusion that the 2016 Tuna Measure, as a whole, is calibrated to the risks to dolphins arising from the use of different fishing methods in different areas of the ocean.

Therefore, the Panels found that the distinctions made by that Measure between setting on dolphins and the other fishing methods (except, of course, high seas driftnet which is also disqualified from the dolphin-safe label) stem exclusively from legitimate regulatory distinctions.

Consequently, the Panels concluded that the 2016 Tuna Measure accords to Mexican tuna products treatment no less favourable than that accorded to like products from the United States and other countries, and therefore is consistent with Article 2.1 of the TBT Agreement.

On whether the 2016 Tuna Measure is consistent with Articles I:1 and III:4, and complies with the requirements of Article XX, of the GATT 1994, the Panels said that they do not consider that the Measure, which is tailored to and commensurate with the relevant risks, can be said to be applied in a manner that constitutes a means of "arbitrary or unjustifiable discrimination" within the meaning of Article XX of the GATT 1994.

"In other words, we consider that the different elements the 2016 Tuna Measure, both individually and in connection with one another, when applied to the different risks to dolphins posed by different fishing methods in different parts of the ocean, do not constitute a means of arbitrary or unjustifiable discrimination."

"On the basis of the foregoing, having found, in our analysis under Article 2.1 of the TBT Agreement, that the Measure is calibrated to different levels of risks posed to dolphins by different fishing methods in different areas of the ocean, we also find that the Measure is not applied in a manner that constitutes a means of arbitrary or unjustifiable discrimination, and is therefore justified under Article XX of the GATT 1994," said the Panels.