September 29, 2010
The US government has called for the creation of a dispute settlement panel under the North American Free Trade Agreement to rule on Mexico’s decision to pursue a complaint about US labelling rules for ‘dolphin safe’ tuna at the WTO rather than under NAFTA.
Washington contends that Mexico’s decision to pursue the case at the WTO violates a NAFTA clause allowing the US, as the target of a case concerning matters addressed by WTO and NAFTA rules on the protection of human or animal life or the environment, to choose to have the dispute considered solely under NAFTA procedures (NAFTA Article 2005).
The US trade representative’s office announced on 24 September that Washington had petitioned the NAFTA Free Trade Commission, a group of senior officials that meets yearly to oversee the agreement’s functioning and to resolve disputes, to establish a dispute settlement panel to examine Mexico’s choice of forum.
The most recent episode in two decades of disagreements between Mexico and the US on tuna trade and the protection of dolphins stems from a March 2009 request by Mexico for a WTO panel to be established to examine the WTO-compliance of US requirements for tuna to be labelled as “dolphin safe” (see Bridges Trade BioRes, 20 March 2009, http://ictsd.org/i/news/biores/43657/). The current case is not directly related to the 1990s disputes over a US embargo on dolphin-unsafe tuna that produced a series of controversial rulings.
At issue now is a US regulation stating that tuna caught in encircling, or “purse-seine”, nets, which often trap dolphins along with the fish, may not carry the label “dolphin safe.” The US has argued that the policy is a conservation measure. Mexico argues that its fishing fleet uses new techniques that allow purse-seine nets to be used without killing any dolphins, and that the US labelling requirement therefore needs to be changed, lest it unfairly discriminate against dolphin-safe Mexican exports (see Bridges Trade BioRes, December 2008, http://ictsd.org/i/news/bioresreview/34812/).
A Mexican official told Bridges that the US and Mexico already had a labelling agreement allowing Mexican tuna to be imported into the US. However, consumer preferences in the US meant that any tuna without the “dolphin-safe” label would not sell.
The US has invoked its right to move the dispute to a NAFTA panel under NAFTA Article 2005. NAFTA normally gives complainants the right to pick a dispute settlement forum. However, a clause in that article states that in the case of disputes pertaining to standards or sanitary and phytosanitary measures, involving factual concerns over measures taken to protect a party’s environment or human and animal health, if “the responding party requests in writing that the matter be considered under [NAFTA], the complaining party may, in respect of that matter, thereafter have recourse to dispute settlement procedures solely under [NAFTA].”
US officials claim that “NAFTA rules provide that once a responding party invokes the choice of forum provision, the complaining party must withdraw from the WTO proceedings and may pursue the dispute solely under the NAFTA.”
Mexican officials believe that the US wants to move the dispute to NAFTA in order to avoid “multilateral elements” in the WTO process, such as the presence of third parties. They report that Mexico has not yet agreed to the US’s choice of forum, and that a 7 May meeting of the NAFTA Free Trade Commission was also unable to resolve the question.
Asked to speculate on Washington’s potential motivations for seeking to shift the dispute to NAFTA, Simon Lester, of WorldTradeLaw.net, suggested that the US may simply be trying to buy time: starting up a new dispute procedure takes time, and the NAFTA dispute process, with fewer automatic steps than WTO procedures, provides more opportunity for delay. In addition, the US might find NAFTA rules more favourable to their argument than WTO ones. While WTO rules say that technical regulations “shall not be more trade-restrictive than necessary to fulfil a legitimate objective” (TBT Article 2.2), the equivalent clause in NAFTA states that “an unnecessary obstacle to trade shall not be deemed to be created where… the demonstrable purpose of the measure is to achieve a legitimate objective.”
The WTO panel was composed on 14 December 2009; its ruling is scheduled to come out in February 2011.