Talking Disputes AB Report on the US Tuna II (Mexico) (Art. 21.5) Dispute

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1 TALKING DISPUTES No January 2016 Geneva, Switzerland Talking Disputes AB Report on the US Tuna II (Mexico) (Art. 21.5) Dispute Dr Lorand Bartels, University of Cambridge

2 Background At least two thirds of the Mexican tuna fleet operates the Eastern Tropical Pacific (ETP) by setting on dolphins Almost no US imports are from the ETP, or from Mexico Almost all US tuna sales are from the US (about 50%), Thailand, the Philippines, Vietnam, Ecuador, and Indonesia

3 Original measure Tuna caught by setting on dolphins may be imported into the US but cannot be labelled as dolphin safe Other tuna can be labelled dolphin safe subject to certain conditions

4 Amended measure New conditions for non-ept large purse-seine fisheries Extends to non-ept the ETP condition of vessel captain certification Extends to non-ept the ETP condition of tuna segregation Adds mechanism for US determination that a fishery has a regular tuna-dolphin association, triggering observer certification requirement (no determinations yet made)

5 Main legal issues Article 21.5 DSU measure taken to comply Article 2.1 TBT; Articles I:1 and III:4 GATT Detrimental impact/conditions of competition Article 2.1 TBT Stemming exclusively from a legitimate regulatory distinction Burden of proof Chapeau of Article XX GATT Conditions prevailing Arbitrary or unjustifiable discrimination

6 Article 21.5 DSU the measure AB Report US argument that the amended measure was solely the 2013 Rules adding new conditions AB considered the entire labelling scheme a single measure Comment AB thought necessary for a discrimination analysis Not necessarily other regulatory features can be treated as facts, just as ordinary market features are facts

7 Art 2.1/Arts I and III GATT detrimental impact/conditions of competition Appellate Body Report Panel wrong to focus on part of the like products (all tuna) This followed from a segmented analysis of the measure Comment Panel approach resembles failed attempt in Chile Alcohol to divide like product groups into subgroups

8 Article 2.1 legitimate reg distinction 1 Appellate Body Report Eligibility and certification: Panel failed to look at all risks, and at whether the amended measure was calibrated to those risks AB unable to complete legal analysis Determination mechanism: Intended but failed to extend all ETP conditions to situations with similar risk (mechanism for determining tuna-dolphin association but not for regular and significant mortality or serious injury ); therefore not even-handed

9 Article 2.1 legitimate reg distinction 2 Appellate Body Report Even-handedness: arbitrary or unjustifiable discrimination = not evenhanded but there could be other reasons Comment Determination mechanism never activated. Cf Shrimp (Art 21.5) Even-handed test = whether detrimental treatment necessary to achieve (or proportionate to) a legitimate objective?

10 Article 2.1 Burden of proof Appellate Body Report Provided that it has shown detrimental impact, a complainant may, therefore, make a prima facie showing of less favourable treatment by, for example, adducing evidence and arguments showing that the measure is not even-handed, which would suggest that the measure is inconsistent with Article 2.1. (para 7.32) [T]he responding Member will be best situated to adduce the arguments and evidence needed to explain why, contrary to the complainant's assertions, the technical regulation is even-handed and thus why the detrimental impact on imports stems exclusively from a legitimate regulatory distinction. (para 7.33)

11 Article XX GATT Chapeau: countries where same conditions prevail Appellate Body Report Conditions determined by objective of measure Conditions are the same where there is some risk; not equal risk Comment Where to draw the line? Is 1% v 100% risk same conditions? Calibration will more often depend on justification within Chapeau

12 Article XX GATT Chapeau: arbitrary or unjustifiable discrimination Appellate Body Report Eligibility and certification: Panel failed to determine risk (cf Art 2.1) Determination mechanism: Fails to extend ETP conditions to non-etp fisheries with similar risk. Hence, arbitrary/unjustified discrimination Comment AB avoids discussing arbitrary vs unjustifiable Room for a second justification? Eg Inuit/costs/technical feasibility/developing countries/ftas?

13 Assessment Overall, a convincingly reasoned report Minor implications for US Affirms that detrimental impact/discrimination is solely economic Affirms that policy justifications are to be handled under exceptions (albeit with reverse burden of proof under Art 2.1)

14 Assessment 2 Outstanding issues Relationship between Art 2.1 and Arts I/III/XX GATT? Identification of the objective justifying discrimination? Even-handedness: a useful concept? Definitions of measure and amended compliance measure? What are risks? What is the role of human agency?

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