New Tuna-Dolphin ruling, importance for future eco-labelling?

The WTO Appellate Body just came out with its latest ruling in the long-ongoing US-Mexico tuna dispute.

Now, tuna-dolphin has a pretty bad connotation in the environmental community, where it primarily brings to mind attempts from the WTO to undermine national regulations for consumer protection and environmental improvement. This is probably not an entirely fair characterization, but let’s just say thank goodness that Shrimp-Turtle came along and restored much of the environmental community’s faith in the Appellate Body’s ability to reach reasonable decisions that involved environmental overtones.

So what does the latest part in the Tuna-Dolphin saga has to say? Well, quite some interesting stuff since it actually goes into things of systemic relevance. Most talked about is what this will mean for so called “eco-labelling” schemes going forward.

ICTSD puts it succinctly in their reporting:

Labelling policy “mandatory”, though no import pre-condition

Of greater systemic importance is the Appellate Body’s general finding that the measure at issue – the US label, which also does not permit labels that deploy another standard – is a mandatory technical regulation and thus subject to the TBT Agreement. The US had disputed this position, pointing to the fact that eligibility for the label was not an importation or marketing requirement. Instead, Washington maintained, the importance of the label was exclusively the result of consumer preference.

In siding with the panel experts, the judges criticised the US measure for establishing a single and legally mandated definition of the term “dolphin-safe”, whatever context it may be used in. “In doing so, the US measure prescribes in a broad and exhaustive manner the conditions that apply for making any assertion on a tuna product as to its ‘dolphin-safety’, regardless of the manner in which that statement is made,” the ruling concludes, referring to the question of whether the measure is mandatory and voluntary.

The ramifications of this finding for other labels are yet to be seen. But experts immediately point to the dispute of what the term “organic” means and whether organic can include genetically-modified organisms. With another label dispute in the pipeline – an Appellate Body decision in the COOL dispute is set to be released this summer – this year is set to enlighten the critical relationship of trade, market access, and labels.

Clearly, the importance of this label in terms of market impact was given quite some weight. The US probably thought they had a pretty strong case when being able to show that importation was not dependant on the label, but the AB seems to think these initiatives run deeper than that, as do arguably their effects so perhaps it is appropriate (though setting up for a more complicated analysis). Put simply, the scope for what constitutes a mandatory technical regulation seems to be nuanced with this ruling. Interestingly, this is about “owning the concept”, as much as it is about regulation. The US clearly sought to control the “dolphin safe” label, and with that will for control came WTO responsibility that the AB apparently did not think they fulfilled in a satisfactory manner.

So yes, what this means for eco-labelling remains to be seen, but perhaps something can be tentatively teased out already: These labels are certainly not regarded as some fringe activity, with clear competitive advantages being acknowledged by the AB. This is obviously dependant on the support and ambition of the label, but the focus on the attempt to control the conceptual basis of the label puts an abstract twist on eco-labelling that will make it harder to weasel ones way out of WTO responsibility through regulatory wizardry. Thus, due to their market impact, the AB seems to require a deeper approach to labelling that go beyond just importation requirements, which of course will be important if other environmental labelling schemes ramp up in speed and importance. That is to say the voluntary nature of these labels cannot necessarily just be a legalistic construction, with recognition that the economic and competitive implications might nevertheless make them “mandatory” and thus subject to TBT.

Definitely an interesting ruling coming out of the AB. I haven’t really gone into detail, but it seems to me that the decision to reject the AIDCP as an international standard still leaves the door open for more stringent and fairer labelling schemes that are more generally applicable. It’s above all the even-handedness of the US labelling measure, or rather the lack of it, that seems to have bothered the AB in reaching the conclusion that it had discriminatory effects. And indeed this would be entirely in line with the mission of the multilateral trade body.

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