International Trade Daily | October 23, 2001 | By Daniel Pruzin
GENEVA--The United States secured a victory Oct. 22 in defending its controversial prohibition on shrimp imports from countries without adequate conservation policies for the protection of sea turtles after the World Trade Organization's Appellate Body rejected Malaysia's attempt to overturn the ban (United States Import Prohibition of Certain Shrimp and Shrimp Products, Recourse to Article 21.5 of the DSU by Malaysia, WT/DS58/AB/R).
The Appellate Body upheld a WTO panel ruling issued last June which found that the U.S. ban was provisionally justified under Article XX(g) of the General Agreement on Tariffs and Trade allowing trade-restrictive measures to be imposed for the purpose of conserving exhaustible natural resources and that the ban could remain in place as long as the United States showed "ongoing serious good faith efforts" to reach a multilateral agreement on the protection of sea turtles in the Indian Ocean and Southeast Asia region.
The WTO's rulings in the shrimp-turtle dispute have been viewed as landmarks in helping to clarify the extent to which Article XX of GATT can be used to defend the use of trade-restrictive measures for environmental purposes.
U.S. Trade Representative Robert Zoellick said the Appellate Body ruling "confirms that our sea turtle conservation law is consistent with WTO rules, and more generally, shows that the WTO as an institution recognizes the legitimate environmental concerns of its members."
Malaysia's ambassador to the WTO, M. Supperamaniam, declined to comment on the ruling, adding that Malaysian officials were still examining the Appellate Body's findings.
Background
Under Section 609 of Public Law 101-162, the United States bans wild shrimp imports from countries that are not certified as having comparable conservation policies for endangered sea turtles or are not certified as coming from shrimp boats equipped with so-called "turtle excluder" devices.
The devices have a trap door that lets sea turtles escape from shrimp trawling nets to reduce mortality. U.S. shrimp boats have been required to use turtle excluder devices or to take measures to reduce the accidental catch of sea turtles since 1987.
In 1996, Malaysia, India, Pakistan, and Thailand initiated a WTO complaint against Section 609, charging that the ban violated WTO provisions on the free movement of goods and nondiscrimination between member countries.
A WTO panel ruled in 1998 that, while the United States had the right under Article XX(g) to impose the shrimp-turtle ban, it failed to undertake serious negotiations with India, Malaysia, Pakistan, and Thailand on concluding a multilateral agreement for sea turtle protection before imposing it.
The WTO also faulted the United States for setting different phase-in periods for countries to meet U.S. conservation requirements, with Caribbean/Western Atlantic countries given nearly three years to comply with U.S. requirements, while all other countries were given four months.
In July 1999, the State Department issued new guidelines on the administration of the ban that allowed a shipment-by-shipment exception for shrimp imports from noncertified countries if the shrimp were caught with boats using turtle excluder devices.
The United States also initiated efforts to negotiate a sea turtle conservation agreement in the Indian Ocean region and to provide technical assistance to countries in order to meet the U.S. conservation requirements.
The United States said the changes brought it in compliance with the WTO ruling, but Malaysia said compliance could only be ensured by lifting the ban.
In October 2000, Malaysia asked the WTO to rule on whether the United States had correctly implemented the original ruling; India, Pakistan, and Thailand limited their participation to third parties in the compliance proceedings.
Both Pakistan and Thailand were among 18 countries certified by the U.S. State Department last May as meeting Section 609 requirements on the use of turtle excluder devices and are thus no longer subject to the shrimp ban.
Malaysian Arguments Rejected
On June 15 the compliance panel circulated its ruling, which found that the U.S. ban was provisionally justified under Article XX(g) of GATT provided that ongoing, good-faith efforts were made by the United States to conclude a regional agreement on the protection of sea turtles in the Indian Ocean and Southeast Asia.
In its appeal, Malaysia did not challenge the compliance panel's finding that Section 609 is provisionally justified under Article XX(g). However, it attacked the panel's conclusion that the United States only had an obligation to negotiate rather than conclude a regional agreement on the protection of sea turtles before imposing the ban.
Malaysia charged that the panel's finding results in "the absurd situation where any WTO member would be able to offer to negotiate in good faith on an agreement incorporating its unilaterally defined standards before claiming that its measure is justified under Article XX ... and in the event of failure to conclude an agreement, claim that the measure applying the unilateral standards could not constitute unjustifiable discrimination."
Comparable Effectiveness
The Appellate Body, however, said that concluding such an agreement "might nevertheless not be possible despite the serious, good faith efforts of the United States. Requiring that a multilateral agreement be concluded by the United States in order to avoid "arbitrary or unjustifiable discrimination" in applying its measure would mean that any country party to the negotiations with the United States, whether a WTO member or not, would have, in effect, a veto over whether the United States could fulfill its WTO obligations. Such a requirement would not be reasonable."
The Appellate Body also rejected Malaysia's assertion that Section 609 constitutes arbitrary or unjustified discrimination because it conditions the importation of shrimp into the United States on compliance by the exporting country with policies and standards "unilaterally" prescribed by Washington.
The Appellate Body noted that, in its earlier ruling upholding the 1998 panel decision in the original complaint filed by Malaysia, India, Pakistan, and Thailand, it had concluded that "conditioning access to a member's domestic market on whether exporting members comply with, or adopt, a policy or policies unilaterally prescribed by the importing member may, to some degree, be a common aspect of measures falling within the scope of one or another of the exceptions (a) to (j) of Article XX."
The Appellate Body also noted the compliance panel found last June that the new guidelines issued by the U.S. State Department in July 1999 on the administration of the shrimp ban were more flexible than the original measure and that the new guidelines do not condition access to the U.S. market on the adoption of sea turtle conservation measures by exporting countries that are essentially the same as that of the United States.
"In our view, there is an important difference between conditioning market access on the adoption of essentially the same program, and conditioning market access on the adoption of a program comparable in effectiveness," the Appellate Body declared. "Authorizing an importing member to condition market access on exporting members putting in place regulatory programs comparable in effectiveness to that of the importing member gives sufficient latitude to the exporting member with respect to the program it may adopt to achieve the level of effectiveness required. It allows the exporting member to adopt a regulatory program that is suitable to the specific conditions prevailing in its territory."
"As we see it, the panel correctly reasoned and concluded that conditioning market access on the adoption of a program comparable in effectiveness, allows for sufficient flexibility in the application of the measure so as to avoid 'arbitrary or unjustifiable discrimination,'" the Appellate Body concluded.
Copyright c 2001 by The Bureau of National Affairs, Inc., Washington D.C.International Trade Daily:
