From our Dispute Settlement Commentary (subscribers only) for the Tuna panel report (DS381), recall the panel's key findings:
• Panel majority concluded that "the measures at issue establish labelling requirements, compliance with which is mandatory," and thus constitute "technical regulations" under TBT Agreement Annex 1.1; one panelist dissented from this finding.
• Found that Mexico has not demonstrated that the U.S. dolphin-safe labelling provisions afford less favorable treatment to Mexican tuna products within the meaning of TBT Agreement Article 2.1.
• Found that the U.S. dolphin safe labelling provisions "are more trade-restrictive than necessary to fulfil their legitimate objectives, taking account of the risks non-fulfilment would create," in violation of TBT Agreement Article 2.2.
• Found that Mexico "has failed to demonstrate that the AIDCP dolphin safe standard is an effective and appropriate means to fulfil the US objectives at the United States' chosen level of protection." Therefore, found that the U.S. dolphin-safe labelling provisions "are not inconsistent with" TBT Agreement Article 2.4.
The U.S. announced last week that it would appeal. The U.S. appellant submission is here: http://www.ustr.gov/webfm_send/3251 Here's a brief excerpt:
A. The Panel Erred in Finding That the U.S. Measure is a Technical Regulation
4. The TBT Agreement applies to three classes of measures. The two that are at issue in this dispute – technical regulations and standards – are defined in very similar terms. The primary distinction is that technical regulations are defined as a class of measures “with which compliance is mandatory,” while standards are defined as a class of measures “with which compliance is not mandatory.” In order to use a standard, an economic operator must meet the conditions for doing so. But if, in order to place its product on the market, the operator need not meet the conditions set out in the document in question, or indicate that it meets those conditions through use of label, then the measure in question is a standard. In contrast, if in order to place its product on the market, the operator must meet the conditions set out in the document or must use a label where the conditions set out in the document are met, then the document is a technical regulation. In this dispute, while there are conditions that must be met if a producer wishes to label a tuna product “dolphin safe,” there is no requirement that tuna products be dolphin safe in order to be sold in the United States, nor is there a requirement that tuna products that meet the conditions for using the label be labeled as “dolphin safe.” A minority of the Panel correctly understood this distinction and decided the U.S. measure is not a technical regulation.
5. The majority of the Panel, however, erred by finding that a labeling requirement that need not be met to place tuna products on the U.S. market was, nonetheless, a technical regulation. In reaching this finding, the majority of the Panel committed a series of legal errors including (1) failing to interpret the term “with which compliance is mandatory” in accordance with its ordinary meaning in context and in light of the object and purpose of the TBT Agreement; (2) misapplying prior Appellate Body guidance on the meaning of the phrase “with which compliance is mandatory” and the use of the so-called “positive-negative distinction” as it relates to identifying product characteristics; and (3) creating and misapplying other criteria for distinguishing technical regulations from standards.
B. The Panel Erred in Finding that the U.S. Dolphin Safe Labeling Provisions are Inconsistent with Article 2.2 of the TBT Agreement
6. The United States appeals the Panel’s finding that the U.S. Dolphin safe labeling provisions are inconsistent with Article 2.2 of the TBT Agreement. First, the Panel failed to make an objective assessment of the matter before it as called for by Article 11 of the DSU in determining the extent to which the U.S. measure fulfills its legitimate objectives. Second, the Panel erred in its conclusion that the AIDCP labeling scheme is a reasonably available, less trade-restrictive alternative that would fulfill the objectives of the U.S. measure at same level as the U.S. measure. Finally, the Panel erred in concluding that Mexico had met its burden in establishing that the AIDCP labeling regime’s coexistence with the U.S. measure constitutes a less trade-restrictive alternative.
C. The Panel Erred in Finding that the AIDCP Is an International Standardizing Organization and That the AIDCP Definition of “Dolphin Safe” Is a Relevant International Standards Within the Meaning of Article 2.4
7. Though the Panel found that the United States was not obligated to use the AIDCP “dolphin safe” definition because the definition would be ineffective for achieving the U.S. legitimate objectives, it erred in finding that the AIDCP definition is a relevant international standard. The finding was in error because the AIDCP is not an international standardizing body capable of preparing and adopting international standards. The AIDCP does not meet the TBT Agreement and ISO/IEC Guide 2 definitions of international standardizing body because the AIDCP is not (1) “international” since it is not open to at least all Members; (2) is not recognized as engaging in standardizing activity; and (3) is not a body.
We discussed the issue of "technical regulation" in some detail here: http://worldtradelaw.typepad.com/ielpblog/2011/09/technical-regulations-vs-standards-in-the-tuna-panel-report.html Also here: http://worldtradelaw.typepad.com/ielpblog/2011/10/tokyo-round-thoughts-on-mandatory-labelling.html
And here's a bit about Article 2.2: http://worldtradelaw.typepad.com/ielpblog/2011/09/the-tuna-panels-tbt-22-more-trade-restrictive-than-necessary-finding.html
It appears that Mexico will be appealing as well, presumably covering at least the discrimination finding:
Mexico announced that in the coming days it will present the World Trade Organization with a new defense of its arguments against the restrictions and “discrimination” the United States places on Mexican tuna by means of the “dolphin-safe” label.
...
“In the next five days Mexico will present a written counterappeal before the WTO,” the secretariat said.
