May the Enforcement Be With You: Insights from the US – Tuna II (21.5)

At the end of 2015, after 7 years of intense litigation, the Appellate Body issued one of the most consequential pieces of WTO jurisprudence, i.e. the Appellate Body’s implementation report in the US – Tuna II case (see here an overview of the case). As the corollary of a very controversial dispute regarding whether Mexican tuna products were entitled to carry the US dolphin-safe label, the WTO highest judicial instance determined that the US measure controlling the use of that label was discriminatory. According to the Appellate Body, despite the United States’ efforts to correct its measure, it still discriminatorily regards the fishing methods used by the Mexican tuna fleet as riskier for dolphins than those employed by other fleets fishing in different oceanic regions. In other words, the Appellate Body concluded that the tuna caught outside the Eastern Tropical Pacific –where the Mexican tuna fishers operate– should also be subject to strict labeling requirements where the risk for dolphins so demands.

This is not, however, the first time that the US dolphin-safe measure was found inconsistent with WTO rules. Before this recent implementation ruling, a previous WTO panel and the Appellate Body came to the conclusion that the original version of the US dolphin-safe requirements was in violation of the nondiscrimination discipline contained in the Agreement on Technical Barriers to Trade (the TBT Agreement). During those original proceedings, several very interesting and highly debated issues were addressed. For instance, what is the difference between voluntary and mandatory labeling requirements? According to the US dolphin-safe measure, tuna products may be sold in the US market without the dolphin-safe label.  However, if tuna producers choose to use such label, they must fulfill the necessary conditions. From a certain point of view, this type of labeling scheme is voluntary. However, according to the panel and the Appellate Body in the original phase of this case, the US dolphin-safe measure should be considered as mandatory labeling requirements, and therefore subject to the stringent disciplines of Article 2 of the TBT Agreement. Some experts considered this decision as an egregious mistake that blurred the difference between voluntary and mandatory labeling requirements: how come that a measure that does not condition the entrance of tuna products into the US market to the use of the dolphin-safe label may be considered as mandatory?

In my view, an important pillar supporting the Appellate Body’s decision is the fact that the measure in question went beyond simply establishing the conditions for the use of the dolphin-safe label. This measure also forbids tuna producers whose products do not qualify for the authorized use of such label, to truthfully communicate the consequences –either positive or negative– that their fishing techniques entail for dolphins. In other words, if tuna producers choose not to use the US dolphin-safe label, they are prohibited from using alternative labels, even if they accurately describe the risk profile of their fishing methods. It is probably this aspect of the measure what endows it with a mandatory character.

Defining what types of technical measures (such as labeling requirements) are subject to the TBT Agreement has important economic and regulatory consequences around the world. Perhaps the greatest contribution of the US – Tuna II case to the WTO jurisprudence is the clarification of the content and boundaries of the obligations established not only by the sophisticated and relatively modern TBT Agreement but also by the General Agreement on Tariffs and Trade (the GATT). For instance, an important issue solved during this long saga was whether the discrimination prohibited by the national treatment and the most favored nation disciplines contained in Article 2.1 of the TBT Agreement could be justified by legitimate public objectives. The basic analytical obstacle towards answering this question in the affirmative is the absence of a provision equivalent to Article XX of the GATT (General Exceptions) in the TBT Agreement. Such absence raises the question of whether discriminating against foreign products is justifiable based on legitimate reasons, even though neither Article 2.1 nor any other TBT Agreement provision expressly authorizes such discrimination if the measure pursues one or more legitimate objectives. In this and other similar –almost simultaneously solved– disputes, i.e. US-Clove Cigarettes and US-COOL, the Appellate Body ingeniously read the text of Article 2 of the TBT Agreement, the need to conduct a test that involves assessing whether discrimination arising from a measure is “evenhanded” and therefore justifiable. This language, by the way, does not appear anywhere in the text of that agreement. In other words, the Appellate Body imported into Article 2.1 of TBT, all the investigative steps that an analysis of Articles I:1, III:4 and XX of the GATT requires, including whether the discriminatory treatment in question should be accepted for good reasons. Furthermore, in its recent implementation report, the Appellate Body found that if as a result of its analysis under Article 2.1 of the TBT Agreement, a panel concludes that a discriminatory measure is justified under legitimate reasons, it is not “inappropriate” for that panel to rely on such substantive and factual analysis to determine whether the same measure is also justified under XX of the GATT.

Another result of the analytical cross-insemination between the TBT Agreement and the GATT is the appearance of the “calibration test” in both contexts. According to the implementation findings of the Appellate Body in this dispute, after concluding that the discrimination arising from a measure is connected to a legitimate objective, a panel must determine whether such discrimination, i.e. the detrimental impact of that measure against imported products, is adequately “calibrated” to the legitimate objective that the measure was found to pursue. Thus, the “calibration test” essentially requires an assessment of whether failing to introduce a regulatory distinction, i.e. failing to afford differential treatment to certain products, would result in an inadequate attempt to achieve a legitimate objective. This test – that again does not appears neither in the TBT Agreement nor in the GATT– is required not only under Article 2.1 of the TBT Agreement, but also under the chapeau of Article XX of the GATT. Therefore, this test plays an important role in preventing abuse of the legitimate exceptions to key WTO obligations.

Yet, the calibration test raises some interesting questions. For instance, what are the differences between the “calibration test” and the obligation imposed by Article 2.2 of the TBT Agreement? Article 2.2 states that technical regulations should not be “more trade-restrictive than necessary”. Thus, except for the fact that Article 2.1 involves discrimination and Article 2.2 does not, it seems that the calibration test, which is only one of the steps in an analysis under Article 2.1, closely resembles the analysis required under Article 2.2 of the TBT Agreement. Indeed, maybe the obligation contained in Article 2.2 could be described as mandating that trade-restrictive measures should be calibrated to the legitimate objectives that they allegedly pursue, even if they are not discriminatory at all.

Another interesting contribution of the recent US – Tuna II 21.5 report is the clarification of the contours of the implementation panels’ mandate. The primary goal of an implementation proceeding is essentially evaluating if the respondent followed the recommendations adopted by the WTO dispute settlement body after the litigation was completed. The question this report helped to answer is whether the measures reviewed in the panels’ and the Appellate Body’s original reports may be scrutinized again in the implementation phase, even though their consistency with the obligations in question was already determined. According to the Appellate Body, changing one part of the original measure that is inseparable from other aspects of the modified measure may bring the entire design and application of the new measure under the implementation panel’s microscope, including those aspects that were already present in the original measure and therefore reviewed. Thus, introducing a change to the original measure may be the spark that transforms an untouchable settled matter into an issue that fits within the scope of an implementation panel.

In sum, not only is Appellate Body’s US – Tuna II 21.5 report a reflection of the ability of the WTO dispute settlement mechanism to induce Members to effectively bring their measures into compliance, but it is also a very valuable attempt to shed light on one of the most relevant areas of international law these days. We have long abandoned the age when the most frequent concern regarding international trade was the adoption of open import blockages. These days, frequently used trade-related measures take the form of regulatory maneuvers in pursuit of public objectives, such as regulations controlling the use of green labels. Thus, the Appellate Body’s recent contribution to answering the question of when a discriminatory measure is allowed under WTO law, especially under the TBT Agreement, significantly facilitates the work of regulators around the world, i.e. achieving legitimate public objectives through the adoption of technical trade regulations that would pass the non-discrimination test.

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