TWN Info Service on WTO and Trade Issues (May16/13)
18 May 2016
Third World Network

Compliance panel set to study US's own measures on tuna
Published in SUNS #8239 dated 12 May 2016

Geneva, 11 May (Kanaga Raja) -- The WTO Dispute Settlement Body (DSB) on Monday (9 May) agreed to establish a compliance panel, at the request of the United States, to examine its own measures adopted earlier in March to bring itself into compliance with the rulings and recommendations of the DSB in its dispute with Mexico over the US ‘dolphin-safe' labelling regime for tuna products.

This was a second-time request and panel establishment was automatic.

The European Union, Guatemala, Australia, Canada, Brazil, China, Japan, India and Norway reserved their third party rights to the dispute.

The US move has come even as the issue has been referred to arbitration over the level of authorization to be given to Mexico against the US over non-compliance, long after the expiry of the reasonable period of time given to the US to comply with the rulings and recommendations of the DSB in this ‘dolphin-safe' labelling dispute.

The arbitration panel is to rule on the level of retaliation to be allowed over a request by Mexico for authorisation to retaliate to the tune of $472.3 million annually in its dispute with the United States on its ‘dolphin-safe' labelling regime for tuna products.

The US move for a new compliance panel in the dispute, when the level of authorization to be given is before an arbitrator, is unprecedented.

Some trade observers see it as part of a delaying tactic, in the US presidential election year, when all candidates, currently engaged in party primaries, have adopted an anti-trade (plurilateral or multilateral) posture, and US- Mexico relations have also become an issue (see SUNS #8221 dated 14 April 2016).

In its communication to the DSB, the US had said that on 22 March 2016, it revised the amended tuna measure and brought the dolphin-safe labelling measure subject to the recommendations of the DSB into compliance with the Technical Barriers to Trade (TBT) Agreement and the GATT 1994.

Specifically, the US National Oceanic and Atmospheric Administration's National Marine Fisheries Service (NMFS) issued an interim final rule (2016 IFR) that revised the amended tuna measure.

According to the US, the 2016 IFR rectifies the inconsistencies of the amended tuna measure with the TBT Agreement and the GATT 1994 as found by the DSB in the proceeding under Article 21.5 of the DSU.

The 2016 IFR amends the dolphin-safe labelling regulations and brings the dolphin-safe labelling measure subject to the DSB recommendations into compliance with the TBT Agreement and the GATT 1994 by rectifying the inconsistencies of the amended tuna measure with those agreements as found by the DSB in the earlier proceedings under Article 21.5 of the DSU.

Among other changes, it revises the design of the determination provisions and certification, tracking, and verification requirements such that any detrimental impact stems exclusively from legitimate regulatory distinctions, for purposes of the second step of an analysis under Article 2.1 of the TBT Agreement, and that the measure meets the requirements of the chapeau of Article XX of the GATT 1994, said the US (see SUNS #8229 dated 26 April 2016.)

In its statement at the DSB on Monday, the US said that as discussed at the April meeting of the DSB, the rule issued by the US National Oceanic and Atmospheric Administration (NOAA) directly addresses the DSB's findings on the US dolphin-safe labelling measure, and brings the US into compliance with its WTO obligations.

The US maintained that despite discussing this rule with Mexico on a number of occasions, Mexico continues to indicate that it is not prepared to refer the matter of compliance back to a compliance panel.

Rather, said the US, Mexico continues to insist that the arbitration under Article 22.6 of the DSU to review Mexico's request for authorisation to suspend concessions must move forward immediately. At the DSB meeting on 23 March, Mexico went so far as to say that it considered that the US compliance action was not legally pertinent for the arbitration.

The US said that Mexico appears to be pursuing a course of action that would have the DSB ignore that the measure at issue is changed and that Mexico can require the WTO to act to authorise suspension of concessions even if the US has come into compliance.

"That is not correct," the US argued.

As a result, it added, the US respectfully requests that the DSB establish a compliance panel pursuant to Article 21.5 of the DSU to confirm that the US has brought its measure into compliance with the DSB's recommendations and rulings.

In its statement, Mexico said that the US has not requested consultations in this new request for the establishment of a compliance panel, and in Mexico's view this is not proper.

Even if a panel is established today, in due time it will be shown that this panel establishment is not correct, said Mexico.

Citing some previous disputes such as the 2001 Mexico corn dispute, in which the US requested a compliance panel and the Appellate Body had dealt with the matter, Mexico believes that this gives solid ground to its position.

Mexico informed the DSB that it is going to request the establishment of its own compliance panel including formal consultations.

In an intervention, Chinese Taipei, recalling that many delegations had reflected their views on this issue at the previous DSB meeting, said that it agrees with Mexico, Guatemala, Australia and certain other delegations that in the absence of an agreement between the parties, the pending Article 22.6 arbitration should not be suspended simply because of declaration of compliance by the Member concerned or the second establishment of a compliance panel under Article 21.5.

"We find no legal basis for such suspension," said Chinese Taipei.

In addition, Chinese Taipei said that it is its understanding that if the Article 21.5 compliance panel is established today, it should be carried out in parallel with, and independently from the pending Article 22.6 arbitration, unless the parties agree otherwise.

It noted in particular that paragraph 8 of the US and Mexico's sequencing agreement provides that the parties will cooperate to enable the arbitrator to circulate its decision within 60 days, that is, the 22nd of this month.

On the other hand, the panel established today will have at least 90 days to review the compliance dispute.

Chinese Taipei was of the view that neither period should be compromised for the other if there is no agreement between the parties.

It agreed with the other delegations that the most effective solution to the complex issue is an agreement between the parties. It may be further mediated by the arbitrators or the panellists, it said.

In other actions, the DSB adopted the Appellate Body and panel reports in the Argentina-Panama dispute over financial, taxation, foreign exchange, and registration measures imposed by Argentina on services and service suppliers from countries "not cooperating for tax transparency purposes". (For details of the AB ruling, see SUNS #8223 dated 18 April 2016.)

Meanwhile, the Dispute Settlement Body in Special Session, where negotiations are held on improving and clarifying the DSU rules, also met on Monday, where a new Chairman, Kenyan Ambassador Dr Stephen Ndungu Karau, was elected to replace former Costa Rican Ambassador Ronald Saborio.

According to trade officials, Ambassador Karau said that he will start exploring how to proceed and will initiate a consultation process with members to decide on the way forward. +