Seafood traceability and labelling: Lessons from WTO Tuna disputes

14 October 2015

How to track fish from sea to fork to ensure positive environmental outcomes?

In the latest chapter of what is generally agreed to be the longest running international trade and environment dispute, last April a WTO compliance panel ruled in favour of Mexico’s claims that the US continues to unfairly discriminate against tuna products from its southern neighbour, particularly around the application of certification, tracking, and verification processes linked to a “dolphin-safe” label.  The April verdict by the global trade arbiter came in response to claims brought by Mexico under Article 21.5 of the Dispute Settlement Understanding (DSU) alleging that the US failed to comply with 2012 recommendations from the WTO’s highest court on the matter.  Both the US and Mexico have appealed the compliance panel ruling and a hearing was held before the Appellate Body on those appeals on 21-22 September.

The measure in question relates to the US’ “Dolphin Protection Consumer Information Act” (DPCIA), implementing regulations, and a ruling by a US federal appeals court relating to the application of the DPCIA. The measure identifies the conditions under which a tuna product can be labelled dolphin-safe – in other words, that dolphins were not killed in the process of fishing the tuna – and these varied according to area where the harvesting took place. In particular tuna caught by “setting on” dolphins, which involves circling pods with a net in order to catch the tuna that swim below, are barred from using the US’ dolphin-safe label. The measure in question does not make the use of the dolphin-safe label obligatory for the import or sale of tuna products on the US market. Mexico’s primary tuna fishing method, however, involves setting on dolphins in the Eastern Tropical Pacific (ETP) and so for more than a decade has challenged the US’ approach as discriminatory.

Compliance proceedings, a new chapter

In May 2012 the Appellate Body found that the US had violated Article 2.1 of the WTO’s Technical Barriers to Trade (TBT) Agreement, on the basis that the dolphin-safe labelling requirements for tuna products from the US and other countries were more liberal than for Mexico, and did not address mortality arising from fishing methods in other areas of ocean. The US measure was therefore not even-handed and had a detrimental impact on Mexican tuna products that did not stem from a legitimate regulatory distinction. The US and Mexico agreed that a reasonable period of time for compliance would be 13 months for the former to bring its dolphin-safe labelling measures into conformity with WTO rules. The US was not required to allow Mexican tuna products to be labelled dolphin-safe but it could not allow tuna products of other countries to have the label without comparable qualification requirements.

The US subsequently issued an amended rule in July 2013 establishing additional requirements for certification as well as tracking and verification of dolphin-safe tuna captured outside of the ETP. Accordingly, regardless of their origin, imports of tuna and tuna products claiming the dolphin-safe label had to be accompanied by certification that no nets were intentionally set on dolphins during the tuna harvest and that no dolphins were killed or seriously injured in the process. Other certification and tracking and verification processes,  however, continued to differ based on region. Tuna caught in the ETP needed both a captain and an independent observer to certify the fish was caught without causing harm to dolphins, while other fisheries only required a captain’s self-certification. In filing its claims for the non-compliance case Mexico sharply disagreed with the US that the amended rule brought it into line with the WTO’s 2012 ruling.

The main focus of the deliberations by the WTO compliance panel was on the divergent requirements between tuna caught in and outside of the ETP for verification of dolphin-safe status and traceability from capture to commercialisation. The compliance panel in April found that, while the US can disqualify from its dolphin-safe label tuna caught by setting on dolphins, different certification, tracking, and verification requirements imposed on ETP fisheries as compared with others were not linked to a legitimate regulatory distinction and were not even-handed.

The history of dolphin-tuna regulation

The ETP, where Mexico catches its tuna, is considered by many as among the most highly transparent and well-managed tuna fisheries in the world today. In 2005 the UN Food and Agriculture Organization (FAO) recognised an Agreement on the International Dolphin Conservation Program (AIDCP) in force in the region with its Margarita Lizarraga Award for its extraordinary application of the principles of the Code of Conduct for Responsible Fisheries. Under the AIDCP, there are very specific, stringent, and costly mandates on the fleets for crew training, specialised nets and gear, operational restrictions and procedures, tracking and verification of product from the moment it comes out of the water through loading, unloading, storage and processing, and, most important, all under the watchful eyes of on-board independent scientific observer coverage at sea and government regulators on shore. 

ETP dolphin mortalities in the 1980s required a collaborative and concerted response in order to be effectively addressed.  Mexico and the US took the lead in providing that response. The US joined Mexico in a series of multilateral initiatives in which the 14 member nations of the Inter-American Tropical Tuna Commission (IATTC) sought to transform the way tuna was caught in association with dolphins. Regional efforts carried out in the 1990s through the La Jolla Agreement, the Panama Declaration, and eventually the AIDCP improved fishing gear and techniques, with independent observers and comprehensive monitoring to ensure the changes were being implemented. These efforts brought about a 99.5 percent reduction in dolphin-mortality to a biologically and statistically insignificant level. Importantly this reduction first occurred in 1993, the first year of the La Jolla Agreement, and has been maintained every year since.

As a result the administrations of President Bill Clinton and President George W. Bush sought to recognise the AIDCP dolphin-safe label and permit Mexican tuna products access to the US market. However, at the insistence of certain members of Congress, the US has instead since pursued a unilateral course by enacting and maintaining its own dolphin-safe labelling scheme promulgated by private economic interests in the US market. This label is effectively unregulated, is essentially unverifiable in its claims of no harm to dolphins and, as such, is deceptive to consumers. Moreover, from its base in the US this false dolphin-safe labelling scheme has been exported internationally by some environmental groups, effectively closing those markets to Mexico's tuna products as well.

Certification, traceability, verification problems

In finding that the US had failed to comply with the earlier rulings, the WTO compliance panel determined that it had not subjected other fishing methods and fisheries to comparable standards, particularly in light of the fact the US has continued since 1991 to assert the dolphin-safe labelling measure "assures consumers" that no dolphins were harmed in the capture of tuna bearing the label. Throughout the WTO dispute, Mexico submitted a host of scientific evidence from the US itself and respected conservation groups that those other methods and non-ETP fisheries were causing tens of thousands of dolphin mortalities in the capture of tuna supplying the American market, including those covered by so-called dolphin-safe labelled products.

The US has acknowledged that the presence of independent observers increases the accuracy of a dolphin-safe certification. There are observer requirements for non-ETP area fisheries but only under certain conditions. The US does not effectively require observers for its own vessels fishing in the western and central Pacific fishery for purposes of certifying no harm to dolphins. It is therefore much more likely that tuna caught outside the ETP in unobserved fisheries will be inaccurately labelled as dolphin-safe. The compliance panel was convinced that the task of certifying that dolphins were not killed it was a complex one that captains were not necessarily qualified to handle. Without the necessary skills to certify whether dolphins had been seriously injured or killed made it difficult for the different certification requirements to be considered even-handed.  

The compliance panel identified several criteria for evaluating tracking and verification systems, namely, “depth, accuracy, and degree of government oversight.”  Interestingly, the panel found that the US has effectively allowed industry and private interests to develop the tracking and verification system behind the US dolphin-safe labelling scheme, which it does not itself find inherently problematic.  But the result is a compliance system that is much less demanding than the system Mexico must comply with inside the ETP. The compliance panel said that this architecture appeared to create, based on the evidence Mexico presented, “major gaps in coverage” in the tracking and verification system applied to non-ETP tuna fisheries.

Citing a study published last year in the ocean policy journal Marine Policy (MP) detailing estimates of illegal and unreported fish in seafood imports to the US, the compliance panel found that a significant amount of fish imported into the US by first passing through one or more intermediary countries for post-harvest processing and subsequent re-export. (Ref 1) The panel said, "The United States has not provided any evidence explaining how canneries are able to ensure that captains' certifications remain with the tuna batches they identify throughout this process."  It also said, "The US authorities are not, it seems, able to ensure that they receive information that would enable them to track the movement and dolphin safe status of tuna from the time of catch up to the point of delivery to a US cannery."

Black market tuna

According to data cited in the MP study from US federal agency the National Oceanic Atmospheric Administration (NOAA), Thailand alone accounted for 55 percent of the canned tuna imports into the US in 2011, followed by 13 percent from the Philippines, 10.5 percent from Vietnam, 5 percent from Indonesia, and 4 percent from China. Thailand imports more than 85 percent of the tuna that it processes and subsequently exports.  According to the study, “Foreign interests own the large tuna trading companies that supply the Thai canneries, and tracking the routing of seafood products through these companies remains a challenge for chain of custody and traceability issues.”  Finally, the study found that “Thailand is the major port of landing for tuna fished in the Indian Ocean, where at least 50 percent of the tuna fishery is subsistence or small scale. Tuna vessels operating in small-scale fisheries in the developing world generate significant bycatch of sea turtles and marine mammals, where such tuna catches are also beset with under-reporting problems, according to studies from FAO and the environmental group WWF. 

The MP study also found illegal tuna fishing in the Indian and Pacific Oceans is facilitated by the lack of seafood traceability when supplies are consolidated during transhipment at sea.  It said, “This appears to be the case for tuna processed in Thailand, the hub of tuna seafood processing in Southeast Asia.  Illegal activity by small and medium scale longliners and falsification of tuna documentation is also a concern.” The MP study points out that of the 85 percent of tuna imported by Thai processors, only 30 percent meets the relatively strict traceability requirements of the EU, and almost all of that raw material is used to supply tuna products to the 28-nation bloc.  Much of the untraceable balance is what finds its way into the comparatively lax US market.

The demonstrated inability of US authorities to reconcile a lack of capacity to trace and verify not only the source of tuna entering the market, but also its dolphin-safe status, is further highlighted and acknowledged by the fact that the country entered into a settlement agreement late last year on a lawsuit brought by several environmental groups before the US Court of International Trade. (Ref 2)  That lawsuit charged that, for all fisheries other than the ETP, the US has failed to implement mandates under its Marine Mammal Protection Act (MMPA) requiring traceability and proof that marine mammals were not harmed in the capture of fishery products entering the domestic market.  The US Department of Commerce has since published proposed rules to implement this settlement agreement and finally address mandates under the MMPA.  However, the draft rules suggest adding yet another five years to the compliance deadline, and also lack clarity in terms of ensuring traceability of tuna products as well as true verifiability of dolphin safe claims for imported tuna. The result of the US dolphin-safe labelling system architecture is that, while every step of the catch and canning process is traceable and verifiable for tuna caught in the ETP, tuna caught outside the ETP supplying now virtually all of the dolphin-safe tuna in the US market cannot be traced back to its point and circumstances of capture. The US has failed to either put into place a system with appropriate monitoring and tracking or to modify the content and meaning of the current label.

The Obama Administration announced an action plan this past March, meanwhile, aimed at implementing recommendations put forward by a Presidential Task Force to tackle illegal, unreported and unregulated (IUU) fishing. As part of these efforts, a process is underway to identify the types of information and operational standards needed for a seafood traceability programme, focused initially on species particularly at risk from IUU fishing. The National Ocean Council Committee (NOC Committee), now steering the regulatory process to establish the traceability programme, has sought input on the principles determining “at risk” species, as well as a draft list of species. In these documents the NOC notes that major tuna harvesting and processing nations are engaged in significant law-breaking that is defrauding the American consumer. For example, the action plan reads, “There has been a history of fisheries violations in certain tuna fisheries and in certain regions. Further, harvesting, transhipment, and trade patterns for tunas can be complex, in particular for certain value-added products. While there are multilateral management and reporting measures in place for many stocks within the tuna species group, these management and reporting mechanisms vary in terms of information standards and requirements and do not all provide a complete catch documentation scheme. Tunas are also subject to complicated processing that includes comingling of species and transhipments.”  In order to address the problem of transhipment and non-traceability of tuna the traceability programme would have to impose a comprehensive catch documentation scheme on major producers like Thailand.

Article XX

In the original case, a 2011 WTO panel had invoked the doctrine of “judicial economy” and declined to rule on Mexico’s claim under the global trade body’s General Agreement on Tariffs and Trade (GATT-1994) Articles I:1 and III:4.  The Appellate Body expressed disapproval of the panel’s approach, so in April the compliance panel ruled on those claims as well the TBT arguments.  In response the US raised an Article XX defence – general exceptions to the multilateral trade rules – arguing that its discrimination against Mexican tuna products was justifiable as necessary to protect human, animal or plant life, as well as the conservation of exhaustible natural resources.  Although the analysis under GATT Articles I:1, III:4 and XX is not completely identical to that under Article 2.1 of the TBT Agreement, the legal standards are closely similar, and the compliance therefore found violations of Articles I:1 and III:4 that could not be excused under Article XX. The panel said that the US could deny tuna caught by setting on dolphins from the dolphin-safe label as a measure justified under XX(g) but that the different certification, tracking, and verification requirements continued to be problematic.

Cooperation, market access, responsibility

Only concerted efforts by nations working together can protect the global commons. Individual countries, making different choices and pursuing policies however well-intended, cannot produce the positive progress that is urgently needed to ensure the sustainability of our resources for the generations to come.  The AIDCP is one example of an initiative by a group of countries in the area of international fisheries management. As Mexico has stated, the unilateral actions of the US on the dolphin safe labelling issue are not only inconsistent with that agreement’s objectives, they are also are undermining its effectiveness.

All the US has accomplished during the past six years of litigation at the WTO since the Mexico filed its second complaint on the subject, is to deny its consumers a meaningful and credible dolphin-safe label for canned tuna products, while providing a market incentive for the use of potentially destructive fishing practices – including fish aggregating devices (FADs) – in the fisheries that supply virtually all of the canned tuna products to the US. Mexico has made it clear that it will continue to resist the US’ efforts to force Mexico to shift to using FADs, which have been repeatedly and roundly condemned by environmental groups because of irreparable harm caused to tuna stocks, sharks, turtles, dolphins, and other marine species through wasteful bycatch and discards.

Over the past 25 years, the US has effectively either banned or restricted the access of Mexican tuna to its domestic market, denying Mexico’s tuna producers the opportunity to effectively trade its product. It has falsely stigmatised Mexican tuna before consumers by generating or allowing others to generate incorrect negative perceptions concerning the true level of protection afforded to dolphins under the AIDCP, on the one hand, and falsely positive perceptions of the true level of dolphin protection for all tuna caught outside of the ETP.

Nonetheless, the end of this process is near, as Mexico will now certainly consider petitioning the WTO for the right to impose penalties against other products entering Mexico from the United States. Mexico has made it clear that it will see this matter through to its conclusion. At stake are the principles of multilateral cooperation in the resolution of international environmental challenges and sustainable fisheries management; the responsibility of parties to international agreements to live up to their obligations; and the critical importance of nations to ensure that eco-labelling schemes are devised and regulated in a manner that ensures they are not used to deceive consumers and distort trade. A continued failure by the US to truly comply with this series of WTO rulings will severely undermine all of these important principles.

Mark Robertson, President, Potomac Global Advisors. LLC

[Ref 1] Pramod, Ganapathiraju, et al. "Estimates of illegal and unreported fish in seafood imports to the USA." Marine Policy 48 (2014): 102-113.

[Ref 2] US Court of International Trade, Center for Biological Diversity et al v Penny Pritzker, Jacob Lew, Jeh Johnson. Case 1:14-cv-00157-MAB.


This article is published under
14 October 2015
What trade tools are being deployed to tackle black market fishing activities? How can these be used more effectively? Illegal, unreported, and unregulated (IUU) fishing is a major problem with...
14 October 2015
Would carbon labelling initiatives be covered by the WTO’s Agreement on Technical Barriers to Trade? It is broadly recognised, including in the WTO, that climate change is possibly the greatest...