I enjoyed reading the discussions so far related to the latest AB report on Tuna. Streamlining Tuna with Cloves, in both cases we now have:
(1) a finding of discrimination (cloves v. menthols in Cloves; stricter labeling requirements in the ETP v. outside the ETP in Tuna) and
(2) a finding that the ban on cloves / strict labeling requirements in the ETP are not more trade restrictive than necessary.
In both cases, implementation may not give anything to the complainant: A stricter regulation of menthols will not help Indonesian cloves. Additional requirements on tuna outside of the ETP will not open markets for Mexican tuna caught in the ETP.
Indeed, in Tuna, the AB (at para. 296) already acknowledged that certification by independent observers that no dolphins were killed for out-of-ETP tuna would rectify the discrimination, and even hinted at the fact that such “calibration” might already be achieved by simply asking the captain to provide such certification. In addition, the AB explicitly rejected (at para. 330) the Mexican alternative for labeling tuna in the ETP as leaving more risks for both consumer information and dolphin protection.
These are the immediate effects of this AB report, building fully on the earlier Cloves report. What interests me more here are the unique and longer term effects of Tuna, and I see two:
(1) a complete sidelining of the old PPM debate, and
(2) an enhanced role in the TBT agreement for international standards combined with an increased willingness on behalf of the AB to double check the “quality” of such standards.
The End of the PPM Distinction?
On PPMs, the US did not even appeal the Panel’s rejection of the US argument that “the US dolphin‑safe labelling provisions do not set out product characteristics for tuna products” (para. 7.66). Completely sidelining the fact that the labeling requirements have to do with how the tuna was caught without leaving any trace in the tuna as a product (non-product-related PPM), the Panel simply found that “the labelling requirements laid down in the US dolphin‑safe labelling provisions "apply to" a product, namely tuna products ... We are therefore satisfied that the measures at issue lay down labelling requirements, as they apply to a product, process or production method and that the subject-matter of the measures therefore falls within the scope of the second sentence of Annex 1.1”.
So what matters is whether a label or regulation “applies to” a “product”, here, the US label “applying to” tuna as a product; for, e.g., a carbon footprint related tax or regulation whether the measure “applies to” imported steel or cement as a product (even if the carbon emitted in making the steel or cement was emitted abroad). What does not matter, at least not at this stage of setting the scope of the TBT Agreement (and probably GATT Art. III) is the reason or purpose of the label or regulation (i.e. whether it regulates something physically in the product or how the product was produced).
In addition, both the panel and the AB (at paras. 337-339 and 242) had no difficulty accepting the following US regulatory objective as “legitimate”, namely: “contributing to the protection of dolphins, by ensuring that the US market is not used to encourage fishing fleets to catch tuna in a manner that adversely affects dolphins".
In other words, WTO members can be legitimately concerned about the welfare of animals (here dolphins) outside of their own territory – even animals that are not endangered and that are not at any point present on US territory – at least to the extent their action is limited to avoiding that their own, domestic market is used to encourage adversely affecting those animals. What many observers (and a few, unadopted GATT panels) would see as “extraterritorial legislation” thereby becomes legitimate/territorial legislation at least when it is limited to the sale of products (here tuna; in my other example, steel or cement) on the domestic market of the regulating country.
The Rise of International Standards?
The second fascinating development is the AB’s willingness to more closely examine when an instrument amounts to an “international standard”.
The AB, at one level, opens the door to international standards by broadly defining such standards, e.g. they do not need to be enacted by an “organization”, a “body” suffices, para. 355; a body can be a “standardizing body” even when it only enacted a single standard and principally does other things, para. 360.
Yet, at another level, the AB scrutinizes the “quality” of international standards more carefully before its gives them the powerful (offensive and defensive) effects under the TBT Agreement, e.g. by checking whether the body is “recognized” and therefore legitimate both “factually” and “normatively”, para. 361; whether it complies with principles of “transparency, openness, impartiality and consensus, effectiveness and relevance, coherence” and “addresses the concerns of developing countries” as reflected in the TBT Committee Guidelines in this respect, para. 376; and, most specifically, whether it is “open to all WTO Members”, the ground on which the AIDCP standard invoked by Mexico failed and was ultimately rejected by the AB as an “international standard”.
In other work, I have referred to this as the benchmark of “thick stakeholder consensus” prevalent in the standards-setting and informal lawmaking world. Curiously enough, this benchmark for informal law or soft law standards is in many respects more demanding and normatively superior to the benchmark for formal international law, including WTO law (which I have referred to as “thin state consent”).
Indeed, based on the AB’s own definition of “international”, even the WTO itself is not an open, “international” body: Mexico (see para. 398) had to “prove that the issuance of an invitation [to join the AIDCP] occurs automatically once a WTO Member has expressed interest in joining” and failed to do so on the ground that “the parties to the AIDCP have to take the decision to issue an invitation by consensus”, very much the way WTO accession depends on a consensus of the existing WTO membership …
As always, written in my personal, academic capacity.