US Mexico WTO Dolphin Safe Tuna Labeling Dispute

¶ … Tuna-Dolphin case between Mexico and U.S. started in 1990s when Mexican fishing fleets were blamed for causing more dolphin killings than the U.S. fishing fleets. The United States imposed a trade embargo on the tuna imported from Mexico which had a negative impact on the economy of the latter. Mexico filed its complaint through the General Agreement on Tariffs and Trade (GATT) which is based in Geneva. The GATT Panel ruled against the U.S. law of blocking out imports just because it was dissatisfied with the production techniques of its supplier. U.S. law stated that it had to block out imports of countries that bought from those countries which used dolphin-unsafe fishing methods. In response to that, the EU filed a complaint against the U.S. A second GATT Panel was formed which again ruled against the United States on the grounds that a country could not impose trade embargoes on its trading partners in an attempt to pressurize them into adopting the domestic laws of the U.S. Decades later, the struggle between U.S. And Mexico continues as both parties stick strongly to their opinions. This paper investigates into the past proceedings of this issue, analyses the current situation and the effect of this measure on both the parties and steps that can be implemented for healthy trading relations between the two countries as well as protection of the natural environment and its resources.

US Mexico WTO Dolphin-Safe Tuna Labelling Dispute

Introduction

International economics studies the flow of products across international boundaries. Countries make policies for smooth execution of trade and establishment of healthy international relations with each other. The United States of America is one of the world's most important economic markets and its foreign trade consists of its imports and exports. The United States Congress has been granted the right by the constitution to make policies for the regulation of international trade.

"The core of the problem of foreign economic policy is the need to balance domestic and international concerns. Particular decisions inevitably affect both. But policy makers do not always address these concerns in a balanced way." (Destler 1)

The fight between United States and Mexico over dolphin-safe tuna started in 1990s and still has not settled down.

Background of the Tuna-Dolphin Case

In the past, fishermen used the technique of school fishing and log fishing to catch tuna. In school fishing, tuna were caught from among schools of fish that swam freely and in log fishing, tuna that had gathered beneath floating objects such as a log were caught. These are old school methods and the output was insufficient.

In eastern parts of the Pacific Ocean, schools of tuna swim beneath schools of dolphins. Fishermen had known since long that some species of dolphins were accompanied by schools of tuna. Soon, the purse seine technique was devised which let fishermen take advantage of the association between dolphin and tuna. The purse seine is a technique of fishing that is used to catch fish which are close to the surface, such as sardines, tuna, etc. The purse seine mode of fishing uses a net that is set around the tuna and dolphin. After they all are gathered, the dolphins are released and the tuna are caught but often, dolphins get stuck in the net and die as a result. In the early years of fishery, a large number of dolphins died in man's greed for commercial success. Fishermen often observe the dolphins to detect the location of the tuna. With this technique, dolphins get caught up in the net and often die unless they are released which is not possible without releasing much of the tuna as well.

Killing of dolphins is a by-product of catching tuna. At first, fishermen felt pleased at having found a useful technique to track down tuna the result of which was the death of several million dolphins since 1959 (Joseph, 1994). As time passed, fishermen began to realize that their method would work only if dolphins existed and was of no use if dolphins became extinct. Therefore, they started to devise methods to protect dolphins from getting killed while catching tuna.

The U.S. Congress passed the Marine Mammal Protection Act of 1972 (MMPA) (E. Kruis) to establish a system whereby mammals would be protected from human activities except in cases where proper authorization has been received. Amendments were made in the act over the years and the goal is to sustain an optimum level of mammals to prevent them from becoming an endangered species. The MMPA sets dolphin protection standards for American fishermen as well as other countries fishing in the eastern parts of the Pacific Ocean. The MMPA set a limit on the number of dolphins that could be taken while catching tuna; it also set the Direct Embargo Provision which prohibited the import of tuna from countries that bought tuna from other countries whose fishing standards were not in accordance with MMPA.

A number of measures were introduced by Congress in the MMPA:

1. Intermediary Nation Provision

Countries that did not catch tuna but were involved in the exporting of tuna to U.S. had to prove that they did not buy the tuna from countries that did not catch tuna according to U.S. standards.

2. Pelly Amendment

Congress gave the President of the U.S. The power to impose an embargo on fish imports for a period of time determined by him/her.

3. Dolphin Protection Consumer Information Act

The 'dolphin-safe' label could be put only on that tuna which was caught using dolphin-safe techniques.

The concerned exporting country is Mexico whose tuna exports to U.S. were banned by the U.S. In 1991 on the basis of the fact that a large number of dolphins were killed in the process of catching tuna. U.S. imposed embargo on the imports from Venezuela, Panama and Vanuatu as well for not complying with U.S. standards.

In response to the embargo imposed on Mexican exports of tuna to the United States, Mexico filed its complaint through GATT (General Agreement on Tariffs and Trade), based in Geneva. The United States of America based its argument on Article XX of GATT which is 'Allowance of trade restrictions when deemed necessary to protect human, animal or plant life or health or relating to the conservation of exhaustible natural resources.' But GATT did not accept this argument and concluded that the United States could not impose its domestic laws in another country or on the trade techniques of another country. It concluded that the U.S. could not ban Mexican imports of tuna to enforce its domestic laws in that country; U.S. could complain about the quality of tuna but not about the technique used to catch tuna. GATT rules did not allow one country to take actions to enforce its domestic laws in another country even if it was for the protection of animals, environment, natural resources, etc. The reason behind this ruling was that if U.S. arguments were accepted then any country could ban exports from another country and try to impose its domestic laws there. Every country has its own environmental, health, social, economic laws and a foreign country has no right to interfere in those laws.

"Environmentalists in the United States and Europe have been trying to promote conservation elsewhere by putting their concerns into trade laws and negotiations." (Bradsher)

Along with Mexico, 6 other countries protested to GATT about the U.S. embargo on their tuna imports. They protested that the U.S. was trying to exercise extraterritorial power by banning the imports of tuna from those countries. In 1991, Javier Trevino, minister for Press and Public Affairs at the Mexican Embassy in Washington, said that Mexico had reduced its dolphin killing by 70% in the last five years. Mexico declared the embargo on its tuna imports by U.S. As GATT-illegal. The General Agreement on Tariffs and Trade has a rule that no country has the right to instruct other countries on the production of goods for export. However, the rulings of the GATT were never adopted and the two countries settled their case out of court.

The Tuna-Dolphin Case 1 of 1991 dealt with a primary embargo on tuna exports of Mexico. The first GATT Panel ruled against U.S. trade embargo on the grounds that U.S. was attempting to protect resources that lay outside its jurisdiction and over which it had no right. The Tuna-Dolphin Case 2 of 1994 dealt with an intermediary nation embargo on the tuna exports of countries that bought from countries which did not use dolphin-safe technique for catching tuna. The second panel gathered by GATT for this issue rejected U.S. arguments on the grounds that a country could only impose trade restrictions if it was dissatisfied with the product of the exporting country and it could not interfere with the process in which the product was produced; a country could not impose trade restrictions in an attempt to pressurize foreign countries to change their policies.. A country's internal regulations cannot be applied in foreign territories.

Analysis of the Tuna-Dolphin Case

After decades, the struggle between the two countries continues as U.S. refuses to allow Mexico's dolphin-safe labeled tuna on its shelves. There is a stamp on every can of tuna imported from Mexico, certifying that no dolphins were harmed or killed in the harvesting of that tuna. Yet, U.S. refuses to let Mexican tuna be offered in its markets. Mexico claims to have taken steps to ensure the protection of dolphins during fishing. The WTO (World Trade Organization) sided with Mexico but it has had no effect on U.S.. Ban on imports of Mexican tuna has upset the economic condition of its fishermen. One of its fishermen, Guiterrez, says that in the past, a 100,000 dolphins would die annually while catching tuna but over the years, the fishermen have adopted methods to protect the dolphins by letting them escape (Kahn).

In the past, man was so interested in exploiting resources for development that he did not give a thought to the consequences. But now as people have witnessed the by-products of development and exploitation of resources, they are concerned about the quality and health of the environment. Everyone wants a balanced ecosystem and wants to preserve natural resources so that they can leave a better planet for their generations to come. The international community is becoming increasingly aware of the impacts of human activities on the natural environment and is recognizing environmental protection as a global concern. All activities have effects on the elements around them. Therefore, governments have made the making and enforcement of environmental laws their affair. The U.S. Congress passed the Marine Mammal Protection Act which laid down conditions and rules for fishing activity so that dolphins would not be endangered. Governments have passed environmental laws regarding pollution, toxic waste, etc. For example, the Government of China has strict environmental laws for prevention of pollution by solid waste. By passing and enforcing such laws, the governments of countries involve themselves in affairs of the environment and not just affairs of the state.

As well as wanting to protect the environment, people want to protect and boost their economies. Modern economies are becoming increasingly dependent on trade. Not all the regions of the world have been blessed with the same resources. Some countries are rich in natural resources, some are rich in human resources and some are rich in financial resources. For example, Pakistan is rich in natural resources but it lacks the necessary entrepreneurial skills as well as financial resources for the exploitation of its natural resources. The Middle East is rich in financial resources but it lacks natural resources of fertile soil and rain. It is trade and exchange of resources that enables economies to work to their optimum level.

Trade promotes employment, increases efficiency of production and widens the choice for consumers. But along with the positive come the negative as well for example increase in manufacturing activity has polluted the environment by letting toxic waste into water bodies, increased use of vehicles is consuming up our natural fuel resources as well as emitting fumes into the air all around us, increased production of furniture is eating up our forests, etc. Focusing entirely on any one aspect is not beneficial. Therefore, a balance must be sought.

"The question, therefore, is not whether trade or environment prevails. The question is, how can our societies effectively achieve both environmental and trade goals? Part of the answer is that measures for environmental protection that affect trade must be designed in light of trade concerns. Equally important, measures for liberalizing trade that affect environment or environmental policy must be designed and implemented consistent with environmental goals." (Downes and Van Dyke)

The market for fish has become global. From late 1950s to 1980s, the harvest from fisheries has multiplied five times. Fishery products now constitute one of the most valuable exports for developing countries (Stone 519-520). When human consumption of and demand for chicken increased, businesses found a way to increase chicken production by using artificial techniques. Unfortunately, the same cannot be done for fish. As a result, some marine fisheries have collapsed. The world's fisheries are in a crisis and fishing activities are harming the ecosystem and creating an imbalance. By catching large amounts of fish, the balance is disturbed and the big fish do not get enough to eat which will ultimately lead to their extinction. In addition to that, pollution and coastal development is also a threat to fisheries. Therefore it is important to seek and maintain a balance whereby we can leave a better planet for our generations to come. Governments give subsidies to the fishing industry which has led to the overexploitation of fisheries. By giving subsidies, governments help their fishermen by increasing their capacity for storage of fish or providing them with modern equipment, etc. In their greed to fulfill their wants, people ignore the negative impacts that they leave on their surroundings. If we do not find a way of sustaining our natural resources, our planet will eventually run out of them and be left with nothing to produce with.

Eco-labelling is placing environmental information on product packaging. It is a sort of communication between 'green' producers and 'green' customers. The World Trade Organization has little if any expertise in the field of fisheries conservation and has almost no institutional commitment to conservation (Downes and Van Dyke). Therefore, issues related to the conservation of natural resources and our environment must be settled by discussing them with environmental experts. Labeling the tuna cans did not ensure that dolphins would not be killed. At the end of the day, customer is the king and not all customers are willing to pay higher price for dolphin-safe tuna (Mitchell). Some customers would not bother about it and willingly buy tuna that is caught using dolphin-unsafe techniques. So long as the demand exists, fishermen will supply tuna.

In response to United States Congress's Marine Mammal Protection Act and the joint decision of U.S. with other countries to save dolphins, fishermen switched to catching tuna in the Western Parts of the Pacific where no association existed between tuna and dolphin. Outside the Easten Pacific, dolphins and tuna do not swim together therefore purse seine fishing is not effective. Contrary to common belief, purse seine fishing is not the only harm to dolphins. Other fishing techniques might also prove harmful for dolphins but no one is aware of that and the dolphin-safe label is not that effective and does not portray the true picture. Mexico argues that its method of purse seine fishing is far safer for dolphins than alternative methods such as Fish Aggregating Devices (Disputes Roundup: U.S. Proposes Tuna Solution in Mexico Spat; European Commission Outlines New Plans for Trade Defence Measures.) FADs are used outside the Eastern Pacific and lead to much more by-catch.

The Agreement on the International Dolphin Conservation Program (AIDCP) is an agreement which entered into force in February of 1999. The goals of AIDCP were as follows.

1. To reduce dolphin mortality rate in the purse seine fishery.

2. To seek means of capturing tuna without causing harm to dolphins.

3. To ensure sustainability of the tuna stocks as well as of other marine resources related to this fishery.

Mexico invested heavily in its tuna fleets so as to comply with international standards that is Agreement on the International Dolphin Conservation Program. Since 1990, dolphin mortality has reduced by 99%. The tuna trade with U.S. is worth billions of dollars and has great effect on the economy of Mexico which is a developing country. Mexico exports tuna to other countries as well such as Italy, Japan and France. The MMPA requires U.S. To not just ban tuna imported from Mexico but from those countries as well that buy it from Mexico. As a result of U.S. trade embargo, Mexico risks losing its export market. Mexico says that its tuna imports have been hit hard by U.S. labeling laws. Mexico argues that the U.S. law imposing trade embargo on Mexican tuna imports is an illegal means of keeping out imports. Mexico attempted to get the World Trade Organization to solve the dispute over dolphin safe labels which was blocked by the United States. In 2012, World Trade Organization said that U.S. measures were unfair because they only addressed the risks to dolphins by purse seine fishing and ignored the risks posed to dolphins by alternative fishing techniques. Mexico is the United States' third largest trading partner and United States is Mexico's largest trading partner. Also, U.S. is the largest source of Foreign Direct Investment (FDI) in Mexico.

Economy of Mexico and U.S.-Mexico relations

Located between two of the world's most important oceans, namely Pacific and Atlantic, Mexico enjoys a long coastline and a long continental shelf. Marine biology phenomena are present in its territorial waters which favors the existence of many marine ecosystems. Between 2001-02, average fishery production of Mexico stood at 1.5 million tons per annum. Among the most important species of fish that are caught for commercial purposes is tuna. Fishing activities are a significant part of Mexico's economy as it contributes to the food supply, employment and is a major source of bringing foreign exchange earnings into the country (Country Note on National Fisheries Management Systems). Due to U.S. ban on Mexico's tuna, there is not as much work to do as there was before (Kahn).

The consumption of tuna by the United States was at its peak in 1989 after which it started declining. Different causes are attributed to this decline in tuna consumption one of which is that the tuna caught in the Western Pacific is of low quality.