Disputes Roundup: Mexico Requests Compliance Consultations in Tuna Case

25 May 2016

Mexico has requested consultations with the US over the latter’s compliance with global trade rules in a long-running dispute over “dolphin-safe” tuna labels, just weeks after Washington itself requested a compliance panel be established to determine whether recent changes to the policy are in line with WTO rules.

In other dispute-related news, a debate broke out during Monday’s meeting of the WTO’s Dispute Settlement Body (DSB) over the US move to block the re-appointment of an Appellate Body member, in a move that was criticised by various other delegations as having potentially serious ramifications for the independence of that body.

Mexico requests consultations with the US in tuna case

Mexico’s request for compliance consultations in the tuna dispute (DS381) regarding the US’ latest changes on “dolphin-safe” tuna labelling, comes shortly after the DSB established a compliance panel on the same issue, following two requests by the US.

The parallel compliance panel processes, while themselves unusual on a procedural level, also come at a time when arbitration proceedings are already underway to determine the level of concessions that Mexico may suspend on a list of goods worth US$472.3 million annually against the US, following an earlier finding of WTO non-compliance. (See Bridges Weekly, 12 May 2016 and 28 April 2016)

The new interim rule issued by the US National Oceanic and Atmospheric Administration (NOAA) last March revised certain regulations implementing the Dolphin Protection Consumer Information Act (DPCIA), amending, among other provisions, the certification standards for “dolphin-safe” tuna labelling. (See Bridges Weekly, 24 March 2016)

Mexico refers in its consultations request to several policies which, in its view, constitute the “2016 Tuna Measure” and are allegedly inconsistent with the WTO agreements. According to Mexico, the US’ recent changes have not brought about any amendment to either the DPCIA or a related court ruling, both of which “remain an integral part” of the 2016 Tuna Measure. This makes the whole 2016 Tuna Measure inconsistent with world trade rules, Mexico claims.

In its consultations request, Mexico refers to the most-favoured-nation (MFN) treatment and national treatment provisions of the Agreement on Technical Barriers to Trade (TBT Agreement) and the General Agreement on Tariffs and Trade (GATT).

Mexico claims that, despite Washington’s latest changes, the measures continue to confer to tuna and tuna products from Mexico treatment which is less favourable than that conferred to similar products originating elsewhere, including those from the US itself.

The trade spat between the two countries dates back to 2008, with the Appellate Body confirming in 2012 that US’ original “dolphin-safe” labelling scheme discriminated against imported tuna and tuna products from Mexico and thus violated WTO rules. (See Bridges Weekly, 16 May 2012)

The US revised its policy in 2013, however a compliance panel found that the revision did not bring Washington’s policy in line with its WTO obligations. This finding was ultimately confirmed by the Appellate Body late last year. (See Bridges Weekly, 1 December 2015)

AB appointments in focus

The 24 May meeting of the DSB was focused mainly on appointments to the Appellate Body, which is the WTO’s highest court, trade sources said.

Specifically, WTO members sparred over both whether to re-appoint Seung Wha Chang of Korea, whose term is due to expire on 31 May, along with who to appoint to replace Yue Jiao Zhang  of China when her final term expires, also at the end of this month.

The question over whether to re-appoint Chang was reportedly one of the main focuses of debate, given the US’ decision to oppose his re-appointment. In its intervention, the US argued that it does “not consider that his service reflects the role assigned to the Appellate Body by WTO members in the WTO agreements.”

Washington claimed that reports which Chang has been involved in “do not accord with the role of the Appellate Body,” claiming that in some cases the Appellate Body has gone beyond its mandate.

The statement by the US drew strong pushback from several fellow WTO members, including Korea, which argued that the move raised “serious systemic concerns.”

Korea also stressed that no one Appellate Body member should be “singled out” for critique over reports by the court, referring also to a letter co-signed by six current Appellate Body members to Ambassador Xavier Carim of South Africa, the current DSB chair, which also made that argument.

The WTO’s Dispute Settlement Understanding (DSU), which outlines the rules and procedures governing the settlement of disputes, says that the Appellate Body shall be composed of seven persons, three of whom shall serve on any one case.

Korea further claimed that should the US succeed in blocking Chang, the move would have serious ramifications for the Appellate Body’s “independence and integrity,” essentially using re-appointment as a way to sanction individual Appellate Body members for their decisions as adjudicators.

Various other WTO members also intervened in the discussions, with all of them criticising the blocking of Chang and calling for further discussions to avoid such problems in the future. The EU, among others, called the US move “unprecedented” and warned that “the damage has already been done,” according to a copy of its statement seen by Bridges.

Regarding the other appointment issue, specifically to replace Yue Jiao Zhang of China, sources confirmed that the Selection Committee has not yet found a candidate that would have approval of all WTO members, with consultations set to continue.

The appointment and reappointment of an Appellate Body member is subject to decision by the DSB. The DSU provides that “where the rules and procedures of this Understanding provide for the DSB to take a decision, it shall do so by consensus.”

ICTSD reporting.

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