U.S. dolphin-safe tuna labeling rule deemed a WTO violation
One of the environmental movement's greatest achievements has been the passage of legislation that protects dolphins from being slaughtered.
Now, U.S. dolphin protection rules have gotten slammed yet again by the WTO. GATT-zilla versus Flipper Take One Zillion: flipper goes down to defeat one more time.
We'll take you through some of the history of this battle. Worryingly, the WTO found that even purely voluntary labeling convention like the U.S. "do lphin safe" labels could be deemed mandatory (and thus give rise to a WTO violation) if they impeded non-labeled tuna's "marketing opportunities in the United States." In other words, even private consumer preferences for dolphin-safe tuna can lead to a WTO violation. This could cast a real chill on voluntary labeling practices, which a lot of supporters of free trade are in favor of.
Moreover, the Obama administration did not appear to even use all possible defenses to fight against this attack.
As Inside U.S. Trade reported today,
In a confidential interim report circulated to the United States and Mexico earlier this month, a World Trade Organization panel found that U.S. labeling requirements that preclude many Mexican tuna exports from receiving a "dolphin safe" label in the United States violate international trade rules, according to informed sources.
The interim panel report found that the U.S. requirements violate Article 2.2 of the WTO's Agreement on Technical Barriers to Trade (TBT). That article forbids WTO members from implementing "technical regulations" that are "more trade-restrictive than necessary to fulfill a legitimate objective."
The case is likely to go to the Appellate Body of the WTO. But, assuming the initial WTO panel was correctly applying the WTO's anti-environmental, pro-corporate trade rules, the U.S. will have to (again) water down its dolphin protection policies or face trade sanctions.
This case has a long and sordid history, as we documented all the way back in 2000:
In 1972, Congress passed the Marine Mammal Protection Act (MMPA), which prohibited U.S. tuna fishermen from using fishing methods that resulted in dolphin deaths. In 1988, Congress passed amendments to the MMPA banning tuna imports from countries whose fishermen used purse seine nets to catch tuna. Under the MMPA, the National Marine Fisheries Services (NMFS) studied dolphin populations in the ETP and found that three stocks of dolphins - the coastal, northeastern offshore spotted, and eastern spinner - were “depleted” due to purse seine fishing methods.
In 1990, Congress passed the Dolphin Protection Consumer Information Act (DPCIA), which created the popular “dolphin safe” label and prevented tuna sold in the U.S. from displaying this label if the tuna was caught with purse seine nets deliberately deployed to encircle dolphins. As a result of this legislation, dolphin deaths in the ETP dropped dramatically - from 423,678 deaths per year in 1972 to 15,550 per year in 1992.
In 1991, Mexico challenged the provisions of the MMPA excluding tuna from the U.S. market if it was caught using purse seine nets in a General Agreement on Tariffs and Trade (GATT) case. In 1994 the European Community (EC) brought a similar GATT challenge. In both cases, the U.S. argued that because dolphin protection is a legitimate environmental objective and the ban was applied to both domestic and foreign fishermen, the MMPA provisions were non-discriminatory and thus GATT-legal. In both cases, the GATT panel ruled that a policy which treats physically-identical goods differently based on their production or processing methods violated GATT rules. The U.S. also argued that a GATT exception allowed the U.S. to maintain the policy, but the GATT panel rejected this argument and held that the MMPA provisions were not “necessary” to protect dolphins.
In contrast to WTO rules, GATT procedures required consensus of all GATT nations to adopt a dispute panel ruling. Given the U.S. and Mexican governments agreed that adoption of a GATT panel ruling against dolphin protections would politically doom the already precarious passage of the North American Free Trade Agreement (NAFTA), the two countries jointly blocked the adoption of the ruling.
However, in 1995, after the U.S. entered the World Trade Organization (WTO), Mexico threatened a WTO enforcement case against the U.S. for refusing to implement the 1991 GATT ruling. Under WTO rules, consensus is required to stop implementation of a dispute panel ruling. Consequently, President Clinton promised Mexican President Ernesto Zedillo that weakening the dolphin protection standard was “a top priority for [his] Administration and for [him] personally.”
On August 15, 1997, after one failed attempt to implement the GATT ruling and intensified Clinton Administration lobbying, Congress passed the International Dolphin Conservation Program Act (IDCPA), which amended the MMPA to allow tuna imports from countries that permit fishermen to use purse seine nets. The amendment also allowed tuna caught with purse seine nets to be labeled “dolphin safe” if monitors on fishing boats did not actually observe any dolphins killed or seriously injured during the setting of the nets.
The original champions of the DPCIA, joined by the Dolphin Safe Fair Trade Coalition, fought against the weakening of the law. However, their warnings that observers could not possibly monitor all the activities on ships the length of football fields resulted only in the inclusion of a follow-up study as part of the law. In March 1999, Clinton's Secretary of Commerce (now President Obama's chief of staff Bill Daley) determined “that there [was] insufficient evidence that chase and encirclement by the tuna purse seine fishery ‘is having a significant adverse impact’ on depleted dolphin stocks in the ETP.” The dolphin safe tuna label regulations were changed on February 2, 2000, to allow tuna caught with purse seine nets to carry the dolphin safe label as long as the monitor on a tuna fishing vessel did not observe dolphins being killed or seriously injured during the netting.
On April 11, 2000, the U.S. District Court for the Northern District of California rejected the U.S. Department of Commerce’s attempt to weaken standards on “dolphin safe” labeling for tuna. Judge Thelton Henderson held that Commerce Secretary William Daley “acted contrary to the law and abused his discretion when he triggered a change in the dolphin safe label standard.”
The decision was hailed by environmental groups and lawmakers who had worked to establish the “dolphin safe” tuna label. David Phillips, Director of the International Marine Mammal Project at Earth Island Institute, one of the environmental groups that filed the suit, called the decision a “tremendous rebuke” of Clinton administration officials “who sold out dolphin protections to accommodate a handful of foreign fishing companies.” Senator Barbara Boxer (D-CA), co-author of the law establishing the “dolphin safe” label, said, “This is a victory for those who believe that dolphins deserve to be protected. They have insisted that the ‘dolphin safe’ label on every can of tuna must represent the highest possible level of protection for these unique and beautiful marine mammals, and they have been vindicated.”
But corporate fishergroups have never given up on trying to weaken the dolphin-safe rules. Mexico, with support from many other WTO members, filed a new WTO attack on the Dolphin Protection Consumer Information Act in 2008. Among other grounds for the attack, Mexico alleged that the U.S. dolphin protections violated the WTO's agreement on Technical Barriers to Trade, whose Article 2.2 reads:
Members shall ensure that technical regulations are not prepared, adopted or applied with a view to or with the effect of creating unnecessary obstacles to international trade. For this purpose, technical regulations shall not be more trade-restrictive than necessary to fulfil a legitimate objective, taking account of the risks non-fulfilment would create. Such legitimate objectives are, inter alia: national security requirements; the prevention of deceptive practices; protection of human health or safety, animal or plant life or health, or the environment. In assessing such risks, relevant elements of consideration are, inter alia: available scientific and technical information, related processing technology or intended end-uses of products.
To non-seasoned observers, some of this sounds pretty good. It seems like it would allow for protection of animal life. However, this is limited by the caveat that environmental "technical regulations" not have the "effect of creating unnecessary obstacles to international trade."
The concept of "necessity" in WTO jurisprudence has been interpreted in highly restrictive ways, including to mean that no less trade-restrictive policy is available.* Other WTO members could second guess democratically elected governments, brainstorming other ways to implement policies that multinationals like more (even when there's political or environmental reasons that the regulation got implemented the way it did). This in effect puts the values of maximizing corporate trade flows above all else.
It's difficult to know much more about the WTO panel finding until the confidential report is made public. But Inside U.S. Trade reports on two worrying aspects of the case. First,
Critical to the panel finding under TBT Article 2.2 was an earlier determination by the panel that the U.S. measures are "technical regulations" rather than "standards." Article 2.2 only covers "technical regulations." If the United States has succeeded in showing the measures were "standards," Mexico's claims under Article 2.2 would have failed.
Annex I.1 of the TBT Agreement defines a "technical regulation" in part as a document that "lays down product characteristics or their related processes and production methods, including the applicable administrative provisions, with which compliance is mandatory."
The United States unsuccessfully argued that its measures on tuna labeling are not "mandatory," as Mexico is free to sell tuna in the U.S. market without this label. The panel found that the labeling requirements are mandatory because failure to have a "dolphin safe" label severely impedes marketing opportunities in the United States.
This appears to suggest that non-mandatory consumer labeling adopted purely in the name of transparency can be deemed "mandatory" if it results in fewer actual sales. If this interpretation is allowed to stand, it will cast a real chill on even voluntary labeling initiatives, which even many "free traders" are in support of.
Second, the U.S. apparently decided not to invoke all the WTO environmental defenses that would be available to it. As IUT reports,
Sources said it was not immediately clear why the U.S. government chose to not make a secondary defense under GATT Article XX. One observer said there are several possible reasons, including that the United States did not want to clarify whether GATT Article XX applies outside of the GATT itself and extends to the TBT Agreement.
Translated out of GATT-ese, and if this speculation is correct, it suggests that the Obama administration did not want to set a precedent of invoking all possible defenses when environmental policies are attacked at the WTO. Indeed, the Obama administration and Japan have launched a series of worrying WTO attacks on green jobs policies abroad, and may be worried about countries using these types of defenses against them.
(* These interpretations have occasionally been more deferential to regulators, with "necessary" being interpreted as "indispensable," "making a contribution to," etc. But the impact of public policy on trade flows is always at least a major factor in the so-called "weighing and balancing" that WTO tribunals engage in.)