UNITED STATES – MEASURES CONCERNING THE IMPORTATION, MARKETING AND SALE OF TUNA AND TUNA PRODUCTS RECOURSE TO ARTICLE 21.5 OF THE DSU BY MEXICO REPORT OF THE PANEL
Document: Addendum
Date: 14 April 2015
Document codes: WT/DS381/RW/Add.1; WT/DS381/RW.
Complainant: Mexico
Respondent: U.S.
Third parties: Australia, Brazil, Canada, China, Ecuador, EU, Guatemala, India, Japan, South Korea, New Zealand, Norway
Dispute stage: Implementation & Compliance
Agreements cited: Art. I:1, III:4  GATT 1994Art. 2.1, 2.2, 2.3, 2.4  Technical Barriers to Trade (TBT)

UNITED STATES – MEASURES CONCERNING THE IMPORTATION,
MARKETING AND SALE OF TUNA AND TUNA PRODUCTS
RECOURSE TO ARTICLE 21.5 OF THE DSU BY MEXICO
REPORT OF THE PANEL
Addendum
This addendum contains Annexes A to C to the Report of the Panel to be found in document

LIST OF ANNEXES

ANNEX A
WORKING PROCEDURES OF THE PANEL
Contents Page
Annex A Working Procedures of the Panel A-1
ANNEX B
ARGUMENTS OF THE PARTIES
MEXICO
Contents Page
Annex B-1 Executive summary of the first written submission of Mexico B-2
Annex B-2 Executive summary of the second written submission of Mexico B-14
Annex B-3 Executive summary of the opening oral statement of Mexico at the meeting of the
panel
B-21

UNITED STATES
Contents Page
Annex B-4 Executive summary of the first written submission of the United States B-26
Annex B-5 Executive summary of the second written submission of the United States B-34
Annex B-6 Executive summary of the opening oral statement of the United States at the
meeting of the panel
B-42
ANNEX C
ARGUMENTS OF THE THIRD PARTIES
Contents Page
Annex C-1 Executive summary of the third-party submission of Australia C-2
Annex C-2 Executive summary of the oral statement of Australia at the meeting of the panel,
and responses to Panel questions
C-6
Annex C-3 Executive summary of the th ird-party submission of Canada C-8
Annex C-4 Executive summary of the oral statement of Canada at the meeting of the panel C-11
Annex C-5 Integrated executive summary of the arguments of the European Union C-13
Annex C-6 Executive summary of the third-party submission of Japan C-18
Annex C-7 Executive summary of the oral statem ent of the Republic of Korea at the meeting
of the panel
C-22
Annex C-8 Integrated executive summary of the arguments of New Zealand C-24
Annex C-9 Executive summary of the thir d-party submission of Norway C-28
Annex C-10 Executive summary of the oral statement of Norway at the meeting of the panel C-31

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ANNEX A
WORKING PROCEDURES OF THE PANEL
Adopted on 19 February 2014

1. In its proceedings, the Panel shall follow the relevant provisions of the Understanding on Rules
and Procedures Governing the Settlement of Disput es (DSU). In addition, the following Working
Procedures shall apply.
General

2. The deliberations of the Panel and the docume nts submitted to it shall be kept confidential.
Nothing in the DSU or in these Working Procedures shall preclude a party to the dispute (hereafter
"party") from disclosing statements of its own positions to the public. Members shall treat as
confidential information submitted by another Member to the Panel which the submitting Member
has designated as confidential. Where a party submits a confidential version of its written
submissions to the Panel, it shall also, upon request of a Member, provide a non-confidential
summary of the information contained in its submissions that could be disclosed to the public.
3. The Panel shall meet in closed session. The parties, and Members having notified their interest
in the dispute to the Dispute Settlement Body in accordance with Article 10 of the DSU (hereafter
"third parties"), shall be present at the meetings only when invited by the Panel to appear before
it.
4. Each party and third party has the right to determine the composition of its own delegation
when meeting with the Panel. Each party and thir d party shall have responsibility for all members
of its own delegation and shall ensure that each member of such delegation acts in accordance
with the DSU and these Working Procedures, particularly with regard to the confidentiality of the
proceedings.
Submissions

5. Before the substantive meeting of the Panel with the parties, each party shall transmit to the
Panel a first written submission, and subsequently a written rebuttal, in which it presents the facts
of the case and its arguments, and counter-arguments, respectively, in accordance with the
timetable adopted by the Panel.
6. A party shall submit any request for a preliminary ruling at the earliest possible opportunity
and in any event no later than in its first written submission to the Panel. If Mexico requests such
a ruling, the United States shall submit its response to the request in its first written submission. If
the United States requests such a ruling, Mexico shall submit its response to the request prior to
the substantive meeting of the Panel, at a time to be determined by the Panel in light of the
request. Exceptions to this procedure shall be granted upon a showing of good cause.
7. Each party shall submit all factual evidence to the Panel no later than during the substantive
meeting, except with respect to evidence necessar y for purposes of rebuttal, answers to questions
or comments on answers provided by the other party. Exceptions to this procedure shall be
granted upon a showing of good cause. Where su ch exception has been granted, the Panel shall
accord the other party a period of time for comme nt, as appropriate, on any new factual evidence
submitted after the substantive meeting.
8. Where an original exhibit is not in the language of the submitting party's written submissions,
that party shall also submit a translation in the language of its written submissions. The Panel may
grant reasonable extensions of time for the transl ation of such exhibits upon a showing of good
cause. Any objection as to the accuracy of a translation should be raised promptly in writing. Any
objection shall be accompanied by a detailed ex planation of the grounds of objection and an
alternative translation.

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9. To facilitate the maintenance of the record of the dispute, and maximize the clarity of
submissions, each party and third party shall sequentially number its exhibits throughout the
course of the compliance proceedings. For exam ple, exhibits submitted by Mexico could be
numbered MEX-1, MEX-2, etc. If the last exhibit in connection with the first submission was
numbered MEX-5, the first exhibit of the next submission thus would be numbered MEX-6.
The first time a party or third party submits to the Panel an exhibit that corresponds to an exhibit
submitted in the original panel proceedings, the pa rty or third party submitting such exhibit shall
also identify the number of the original exhibit in the original panel proceedings.
Questions

10. The Panel may at any time pose questions to the parties and third parties, orally in the course
of the substantive meeting or in writing.
Substantive meeting

11. Each party shall provide to the Panel the list of members of its delegation in advance of the
meeting with the Panel and no later than 6.00 p.m. the previous working day.
12. The substantive meeting of the Panel shall be conducted as follows:
a. The Panel shall invite Mexico to make an opening statement to present its case first.
Subsequently, the Panel shall invite the United States to present its point of view. Before
each party takes the floor, it shall provide the Panel and other participants at the
meeting with a provisional written version of its statement. In the event that
interpretation is needed, each party shall provide additional copies to the interpreters.
Each party shall make available to the Panel and the other party the final version of its
statement, preferably at the end of the meeting, and in any event no later than
6.00 p.m. on the first working day following the meeting.
b. After the conclusion of the statements, the Panel shall give each party the opportunity to
ask questions or make comments, through the Panel. Each party shall send in writing,
within a timeframe to be determined by the Panel, any questions to the other party to
which it wishes to receive a response in writing. Each party shall be invited to respond in
writing to the other party's questions within a deadline to be determined by the Panel.
c. The Panel may subsequently pose question s to the parties. The Panel shall send in
writing, within a timeframe to be determined by it, any questions to the parties to which
it wishes to receive a response in writing. Each party shall be invited to respond in
writing to such questions within a deadline to be determined by the Panel.
d. Once the questioning has concluded, the Panel shall afford each party an opportunity to
present a brief closing statement, with Mexico presenting its statement first.
Third parties

13. The Panel shall invite each third party to transmit to the Panel a written submission prior to
the substantive meeting of the Panel with the parties, in accordance with the timetable adopted by
the Panel.
14. Each third party shall also be invited to present its views orally during a session of the
substantive meeting, set aside for that purpose. Ea ch third party shall provide to the Panel the list
of members of its delegation in advance of this session and no later than 6.00 p.m. the previous
working day.
15. The third party session shall be conducted as follows:
a. All third parties may be present during the entirety of this session.
b. The Panel shall first hear the arguments of the third parties in alphabetical order. Third
parties present at the third-party session and intending to present their views orally at

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that session, shall provide the Panel, the parties and other third parties with provisional
written versions of their statements before they take the floor. Third parties shall make
available to the Panel, the parties and other third parties the final versions of their
statements, preferably at the end of the session, and in any event no later than
6.00 p.m. of the first working day following the session.
c. After the third parties have made their statements, the parties may be given the
opportunity, through the Panel, to ask the third parties questions for clarification on any
matter raised in the third parties' submissions or statements. Each party shall send in
writing, within a timeframe to be determined by the Panel, any questions to a third party
to which it wishes to receive a response in writing.
d. The Panel may subsequently pose questions to the third parties. The Panel shall send in
writing, within a timeframe to be determined by it, any questions to the third parties to
which it wishes to receive a response in writing. Each third party shall be invited to
respond in writing to such questions within a deadline to be determined by the Panel.
Descriptive part

16. The description of the arguments of the parties and third parties in the descriptive part of the
Panel report shall consist of executive summaries provided by the parties and third parties, which
shall be annexed as addenda to the report. These executive summaries shall not in any way serve
as a substitute for the submissions of the parties and third parties in the Panel's examination of
the case.
17. Each party shall submit an executive summa ry of each of its written submissions and a
consolidated executive summary of its opening and closing oral statements, as applicable, at the
latest 7 calendar days following the delivery to the Panel of the written version of the relevant
submission or statement. A party may include its responses to questions in the executive summary
of its statements. In that case, the executive summary, covering the party's statements and
responses to questions, shall be submitted at the latest 7 calendar days following the delivery to
the Panel of its written responses to questions. The Panel will not summarize in the descriptive
part of its report, or annex to its report, the parties' responses to questions. The total length of
these summaries shall not exceed 30 pages.
18. The third parties shall submit executive su mmaries of their written submission and oral
statements at the latest 7 calendar days following the delivery to the Panel of the written version
of the relevant submission or statement. A third party may include its responses to questions in
the executive summary of its statement. In that case, the executive summary, covering the third
party's statement and responses to questions, shal l be submitted at the latest 7 calendar days
following the delivery to the Panel of its written re sponses to questions. The total length of these
summaries shall not exceed 6 pages.
Interim review
19. Following issuance of the interim report, each party may submit a written request to review
precise aspects of the interim report and request a further meeting with the Panel in accordance
with the timetable adopted by the Panel. The right to request such a meeting shall be exercised no
later than at the time the written request for review is submitted.
20. In the event that no further meeting with the Panel is requested, each party may submit
written comments on the other party's written request for review in accordance with the timetable
adopted by the Panel. Such comments shall be limited to commenting on the other party's written
request for review.
21. The interim report, as well as the final report prior to its official circulation, shall be kept
strictly confidential and shall not be disclosed.

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Service of documents

22. The following procedures regarding service of documents shall apply:
a. Each party and third party shall submit all documents to the Panel by filing them with
the DS Registry (office No. 2047).
b. Each party and third party shall file 3 paper copies of all documents it submits to the
Panel. However, when exhibits are provided on CD-ROMS/DVDs, 5 CD-ROMS/DVDs and
2 paper copies of those exhibits shall be filed. The DS Registrar shall stamp the
documents with the date and time of the filing. The paper version shall constitute the
official version for the purposes of the record of the dispute.
c. Each party and third party shall also provide an electronic copy of all documents it
submits to the Panel at the same time as the paper versions, in Microsoft Word format,
either on a CD-ROM, a DVD or as an e-mail attachment. If the electronic copy is
provided by e-mail, it should be addressed to *****@wto.org, with a copy to
*****.*****@wto.org, *****.*****@wto.org and *****.*****@wto.org. If a CD-ROM
or DVD is provided, it shall be filed with the DS Registry.
d. Each party shall serve any document submitted to the Panel directly on the other party.
Each party shall, in addition, serve on all third parties its written submissions in advance
of the substantive meeting with the Panel. Each third party shall serve any document
submitted to the Panel directly on the parties and all other third parties. Each party and
third party shall confirm, in writing, that copies have been served as required at the time
it provides each document to the Panel.
e. Each party and third party shall file its do cuments with the DS Registry and serve copies
on the other party (and third parties where appropriate) by 6.00 p.m. (Geneva time) on
the due dates established by the Panel.
f. The Panel shall provide the parties with an electronic version of the descriptive part, the
interim report and the final report, as well as of other documents as appropriate. When
the Panel transmits to the parties or third parties both paper and electronic versions of a
document, the paper version shall constitute the official version for the purposes of the
record of the dispute.
Modification of working procedures

23. The Panel may modify these working procedures after consulting with the parties.

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ANNEX B
ARGUMENTS OF THE PARTIES
MEXICO
Contents Page
Annex B-1 Executive summary of the first written submission of Mexico B-2
Annex B-2 Executive summary of the second written submission of Mexico B-14
Annex B-3 Executive summary of the opening oral statement of Mexico at the meeting of the
panel
B-21

UNITED STATES
Contents Page
Annex B-4 Executive summary of the first written submission of the United States B-26
Annex B-5 Executive summary of the second written submission of the United States B-34
Annex B-6 Executive summary of the opening oral statement of the United States at the
meeting of the panel
B-42

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ANNEX B-1
EXECUTIVE SUMMARY OF THE FIRST WRITTEN SUBMISSION OF MEXICO
I. INTRODUCTION

1. This proceeding concerns a disagreement as to the consistency with the WTO covered
agreements of measures taken to comply with the recommendations and rulings of the Dispute
Settlement Body (DSB) in the dispute United States – Measures Concerning the Importation,
Marketing and Sale of Tuna and Tuna Products (Tuna dispute).

2. In the original proceedings, Mexico demonstrated that the multilateral Agreement on
International Dolphin Conservation Program (AIDCP) has been a tremendous success, reducing
dolphin mortality in the Eastern Tropical Pacific (ETP). Mexico also showed that the alternative
method of fishing on fish aggregating devices (FAD s) promoted by the United States is extremely
harmful to tuna stocks because that method captures juvenile tuna. FAD fishing also results in
highly destructive bycatch of billfish, turtles, sharks, and other species.

3. On 13 June 2012, the DSB adopted the report s and ruled that the U.S. "dolphin-safe"
labelling provisions were inconsistent with Article 2.1 of the Agreement on Technical Barriers to
Trade (TBT Agreement) and recommended that the United States bring its measure into
conformity with its obligations under that Agreement.

4. On 9 July 2013, the United States published in its Federal Register a Final Rule entitled
"Enhanced Document Requirements to Support Use of the Dolphin Safe Label on Tuna Products"
(2013 Final Rule). The action taken by the United States does not bring its measure into
compliance with the WTO Agreements, and also perpetuates a tragic situation for dolphins
worldwide and the global marine environment. Although the "effective date" of the Final Rule was
stated to be July 13, 2013, the notice accompanying its publication also stated that the
United States would not require compliance until 1 January 2014.

5. The "measure taken to comply with the recommendations and rulings" of the DSB (Amended
Tuna Measure) comprises: (a) Section 1385 ("Dolphin Protection Consumer Information Act"
(DPCIA)), as contained in Subchapter II ("Conservation and Protection of Marine Mammals") of
Chapter 31 ("Marine Mammal Protection"), in Title 16 of the U.S. Code; (b) U.S. Code of Federal
Regulations, Title 50, Part 216, Subpart H ("Dolphin Safe Tuna Labeling"), as amended by the
2013 Final Rule; (c) The court ruling in Earth Island Institute v. Hogarth, 494 F.3d 757
(9th Cir. 2007); and (d) any implementing guidan ce, directives, policy announcements or any
other document issued in relation to instruments (a) through (c) above, including any
modifications or amendments in relation to those instruments.

6. The Amended Tuna Measure, like the original Tuna Measure, imposes discriminatory
requirements for access to the United States' "dolph in-safe" label in violation of Article 2.1 of the
TBT Agreement, and Articles I:1 and III:4 of the GATT 1994.

II. THE AMENDED TUNA MEASURE

7. The Amended Tuna Measure entailed changes on ly to the implementing regulations, and not
to either the DPCIA or the Hogarth ruling. Key aspects of the original Tuna Measure were
maintained in the Amended Tuna Measure, particularly that tuna caught by setting on dolphins is
not eligible for a dolphin-safe label.

A. The Dolphin Protection Consumer Information Act

8. In the original proceeding, the Panel reviewed the most pertinent aspects of the DPCIA.
Those provisions remain unchanged. The three majo r categories of requirements of the DPCIA are
(i) the definition/scope of "dolphin-safe," (ii) the obligation to have independent observers
ensuring compliance, and (iii) specification of the documentation needed to support the
certification.

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9. In accordance with subsection (d)(1)(C) of the statute, a tuna product containing tuna
caught inside the ETP can be labeled as dolphin-safe only if the product is supported by: (a) a
statement by the vessel's captain providing certification under subsection (h), i.e., that no tuna
were caught on the trip in which such tuna were harvested using a purse-seine net intentionally
deployed on or to encircle dolphins, and that no dolphins were killed or seriously injured during the
sets in which the tuna were caught; (b) a statement by the onboard, independent and AIDCP-
approved observer, also providing certificatio n under subsection (h); (c) a statement by the
Secretary of Commerce, a Secretary's designee, a representative of the Inter-American Tropical
Tuna Commission (IATTC), or a representative of a nation whose national program meets the
requirements of the AIDCP, stating that an AI DCP-approved observer was onboard during the
entire trip.

10. The statute contemplated the possibility that the U.S. definition of "dolphin-safe tuna" could
be made consistent with the definition in the AI DCP. This potential change in the dolphin-safe
labelling standard for the ETP was made contingent on the outcome of studies of dolphin
populations in the ETP. In 1999, the U.S. Department of Commerce (USDOC) made an Initial
Finding that determined that there was insufficient evidence to conclude that intentional
encirclement of dolphins with purse-seine nets was having a significant adverse effect on what the
United States labeled as "depleted" dolphin stocks in the ETP. The USDOC then did additional
studies and, in a Final Finding issued in December 2002, reached the same conclusion that it had
previously reached in the Initial Finding. These findings should have allowed the U.S. definition of
"dolphin-safe" to be amended to allow tuna caught in compliance with the AIDCP to bear the
dolphin-safe label. However, the U.S. courts, in the Hogarth case, held that the USDOC's findings
were not in accordance with the statute's requ irements, and ordered that the definition of
"dolphin-safe" continue to ban the use of dolphin sets entirely. The statute does not permit that
determination to be re-evaluated at any time in the future.For tuna caught outside the ETP using
purse seine nets, the statute only requires a self-certification by the captain of the vessel that a
purse seine net was not intentionally deployed on or used to encircle dolphins during the particular
voyage on which the tuna was harvested. For tuna caught without the use of purse seine nets
(e.g., longline or trawl), no certification is required at all. For tuna by a vessel less than 400 short
tons, no certification is required at all. These requirements have been modified by the 2013 Final
Rule.

11. In addition, the DPCIA purports to prohibit the use of the "dolphin-safe" label on tuna caught
"on the high seas by a vessel engaged in driftnet fishing." However, in actual operation this
restriction has no meaning, because it has never been implemented by the Department of
Commerce. Indeed, the United States itself allows fishing with driftnets in its Exclusive Economic
Zone.

12. The DPCIA designates when a dolphin-safe certification must be supported by an
independent observer. The DPCIA does not require independent observers outside the ETP, except
where the USDOC has designated a purse seine fishery as having a regular and significant
association between tuna and dolphins or a non-purse seine fishery as having regular and
significant dolphin mortality. The USDOC has not designated any fishery under these categories,
so observers are not required for any fishery other than the ETP.

13. In the case of a tuna product containing t una harvested in the ETP by a purse seine vessel,
the DPCIA states that the certifications by the captain and observer must "comply with regulations
promulgated by the Secretary which provide for the ve rification of tuna products as dolphin safe."
Those regulations incorporate the requirements fo r tuna tracking to which the members of the
AIDCP have agreed. For other tuna products (i .e., non-ETP tuna), the DPCIA contains no
requirement to verify the products as dolphin-safe.

14. Under U.S. law, implementing regulations ma y not change any of the requirements set out
in the authorizing statute. Accordingly, all of th e DPCIA's requirements that were the subject of
review by the Panel and Appellate Body remain in effect today, unchanged. The statute is
therefore an integral element of the Amended Tuna Measure.

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 B. U.S. Code of Federal Regulati ons, Title 50, Part 216, Subpart H

15. The implementing regulations for the DPCIA a ddress the certifications for "dolphin-safe" and
also impose specific requirements, which vary de pending on whether the tuna is sourced from the
ETP or elsewhere, for: segregating tuna; having independent observers on board vessels; and
documenting and verifying compliance.

16. For tuna products made from tuna caught by large purse seine vessels in the ETP, the
content of the certification requirement is the same as set forth in the DPCIA. For tuna products
containing tuna caught outside the ETP with purse seine nets, the 2013 Final Rule changed the
certification to require an additional statement from the captain of the vessel that no dolphins
were killed or seriously injured in the sets in which the tuna were caught.

17. For tuna products containing tuna caught (i) not using purse seine nets or (ii) by smaller
vessels, that did not require any certification, the 2013 Final Rule requires that all such tuna be
supported by a captain's statement that that no dolphins were killed or seriously injured in the sets
or other gear deployments in which the tuna were caught. Note that if the dolphin-set fishing
method is used even a single time during a voyage, none of the tuna caught during the voyage
may be designated as dolphin-safe, including tuna caught without using dolphin sets. The three
major tuna products in the U.S. market – Starkist, Chicken of the Sea and Bumble Bee – jointly
submitted comments on the new requirement for captains' certifications from vessels not using
purse seine nets, saying that such certificates will not be credible.

18. Under the original Tuna Measure, for tuna caught by large purse seine vessels in the ETP
only, tuna caught in sets designated as dolphin-safe by the vessel observer must be stored
separately from tuna caught in non-dolphin-safe sets from the time of capture through unloading
at port. For tuna caught outside the ETP, there were no such requirements. Under the Amended
Tuna Measure, similar requirements for segregat ing purportedly now apply to all tuna and tuna
products. However, because of the absence of moni toring, verification, and tracking requirements
for non-ETP tuna products, the separation-of-tuna obligations for non-ETP tuna are unenforceable
and meaningless.

19. For tuna caught by large purse seine vessels in the ETP, including vessels of the Mexican
fleet, the original Tuna Measure requires an independent observer on every vessel to monitor
compliance with dolphin-safe requirements. The AIDCP requires that every large purse seine
vessel carry an independent observer, and Mexi co has implemented that requirement in its
domestic regulations (NOM-001-SAG/PESC-2013).

20. Under the Tuna Measure, no requirements for independent observers were imposed other
than for large purse seine vessels fishing in the ETP. The 2013 Final Rule appears to create the
possibility that the USDOC could require independent observer verification of dolphin-safe
certifications. However, the USDOC has neither made a determination that observers participating
in any non-ETP observer program are so qualified and authorized, nor has it announced plans to
even consider doing so.

21. Under the original Tuna Measure, tuna products containing tuna harvested in the ETP have
to be supported not only by the required certification, but also by "the documentation
requirements for dolphin-safe tuna under § 216.92 and 216.93". These requirements have been
maintained under the Amended Tuna Measure. There are no documentation requirements, other
than a captain's self-certification, for other tuna products.

22. For U.S. tuna products, section 216.93 establishes a "tracking and verification program" for
large U.S. purse seine vessels fishing in the ETP (but not elsewhere) which is designed to be
consistent with the AIDCP. U.S. statistics indicate that in 2013 tuna from the ETP constituted about
one percent of the tuna used to make tuna products in U.S. canneries. Accordingly, the
requirement for ETP tuna tracking forms impose s extremely little, if any, burden on the
U.S. processing industry.

23. Compliance with the AIDCP brings with it strict obligations to comply with the tuna tracking
system of the AIDCP – the same tracking system that the U.S. regulations implement for
U.S. vessels through section 216.93(a). The rules for tracking dolphin-safe tuna are very detailed
and comprehensive, and apply from the moment of capture of the tuna all the way through

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unloading of the tuna, and then to the processing and marketing of the tuna products containing
that tuna. Mexico implemented the AIDCP tuna tracking requirements through the regulation NOM-
EM-002-PESC-1999, which was issued in December 1999 and subsequently updated through NOM-
001-SAG/PESC-2013. The United States has verified Mexico's compliance with the AIDCP
continuously since 2000.

24. For Mexican tuna products to be eligible for the dolphin-safe label under the Amended Tuna
Measure: the tuna must be certified as having being been caught without killing or seriously
injuring a dolphin in the set in which the tuna was caught and that dolphin sets have not been
used during the entire voyage in which the tuna was caught; an independent observer must verify
that the certification is accurate; and the certification must be supported by the above-described
extensive tracking system, which is audited by the Mexican government.

25. There are no documentation requirements for any type of non-ETP tuna products other than
the captain's self-certification.

C. The Hogarth Ruling

26. The Ninth Circuit Court of Appeals has the effect of permanently denying Mexican tuna
products the benefit of the "dolphin-safe" label in the U.S. marketplace, and this ruling remains an
integral element of the Amended Tuna Measure.

D. The 2013 Final Rule

27. The United States did not modify the DPCIA. The revised regulations made only a few
changes to the prior regulations. An important feature of the new regulations is that they delayed
implementation of the changes. In effect, therefor e, the United States unilaterally granted itself a
further extension to the RPT by not enforcing the measure that it has introduced for the purpose of
bringing itself into compliance. The captains' certifications are not publically available, and there is
no transparency regarding how non-ETP vessels and processors verify compliance. A key aspect of
the Amended Tuna Measure is that, for tuna caught outside the ETP, the United States still allows
the use of the dolphin-safe label when dolphins we re killed and seriously injured, and even when
nets were set around dolphins.

III. BACKGROUND INFORMATION ON THE GLOBAL TUNA INDU STRY, ALTERNATIVE
FISHING METHODS, AND STATUS OF DOLPHIN POPULATIONS IN THE ETP

28. Dolphin mortalities are a significant problem outside the ETP. Fishers set nets on dolphins
outside the ETP, and fishing methods other than the dolphin set method kill and seriously injure
dolphins. Moreover, outside the ETP, tuna is freq uently brokered through intermediaries and there
are no mandatory procedures for tracking the dolphin-safe status of tuna. Meanwhile, the latest
evidence indicates that the dolphin stocks in the ETP that the United States designated as
"depleted" are actually growing at their maximum expected rates, contrary to what the
United States believed in 2002, when the Department of Commerce made its "Final Findings."

A. Fishers Set Nets on Dolphins Outsid e the ETP, and Other Fishing Methods Kill
and Seriously Injure Dolphins

29. During the original proceedings, the Panel found that there were associations between
dolphins and tuna outside the ETP, and that methods of fishing other than dolphin sets cause
dolphin mortalities. Mexico has collected substantial additional evidence showing that (i) tuna
fishers intentionally set nets on marine mammals outside the ETP, and (ii) other methods of
fishing for tuna are causing many thousands of dolphin mortalities.

1. Fishers Intentionally Set Purse Se ine Nets on Marine Mammals outside
the ETP

30. There has been a widely repeated claim that the association between dolphins and tuna in
the ETP is "unique", and that dolphin sets rare ly occur elsewhere. The evidence demonstrates
otherwise.

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31. An Administrative Report of the National Oceanic and Atmospheric Administration (NOAA)
states that "an obvious problem with concluding … that incidental mortality of dolphins in tuna
purse-seines outside the ETP is minimal is that ma ny of the existing reports have been produced
by groups with vested interests in one or anothe r viewpoint: groups related to commercial fishing
interests will obviously hope to find little evidence of tuna-dolphin problems similar those occurring
in the ETP …".

32. More recently, the Secretariat of the Pacific ha s published an evaluation of the impact of the
Western and Central Pacific Ocean (WCPO) fishery on cetaceans. No data have been made publicly
available on the overall interaction of this fishery with marine mammals. Nonetheless, the key
point is that observers witnessed dolphin and whal e sets being made, indicating that there is an
association between tuna and marine mammals in the WCPO. Accordingly, there are good reasons
to believe that these figures are significantly underestimated.

33. Other sources confirm that nets are intentionally set on marine mammals in the WCPO. In
2012, the WCPFC adopted a measure to protect whale sharks. In April 2013, Australia and the
Maldives presented a proposal to the IOTC to adopt a measure to protect whale sharks.

34. The fact that vessels claim to fish only on FADs does not mean that dolphins are not being
harmed. For example, a report on bycatch of do lphins sponsored by the USDOC states "[i]n the
Philippines, scientists estimated that about 2,000 dolphins—primarily spinner, pan-tropical spotted,
and Fraser's—were being killed each year, probably at unsustainable levels, by a fleet of five tuna
purse-seiners using fish-aggregating devices".

35. A recent enforcement action taken by the USDOC against U.S. vessels further validates that
fishers intentionally set nets on dolphins in the WCPO. The case at issue, entitled In the Matter of
Matthew James Freitas, et al. ("Freitas case"), involved five U.S.-flagged vessels that fish in the
WCPO with FADs, and all of which are managed by the South Pacific Tuna Corporation (SPTC). Two
of the vessels were penalized for setting purse seine nets on marine mammals, in violation of the
U.S. MMPA. Although the Freitas case refers to th e animals as "whales", it also provides details
that the animals were pilot whales and false killer whales, which are species of dolphin.

2. Gillnet Fishing Kills and Injures Dolphins

36. As explained by the Fisheries and Aquacultur e Department of the United Nations Food and
Agriculture Organization (FAO), drifting gillnets are used to catch tuna. In 2004-2005, the Central
Marine Fisheries Institute in India conducted a study to quantify the number of cetaceans
incidentally caught as by-catch by local fishers. The study concluded that such fishing operations
could be killing about 10,000 cetaceans including dolphins every year, which it considered
"alarmingly high."

37. A report prepared for the IOTC in 2012 on the gillnet tuna fishery in the coastal waters of
Pakistan included the following information "[d]olphins seem to be more frequent in getting
entangled in tuna gillnets … According to fishermen, most of dolphins entangled in gillnet die
immediately … Although it is not possible to accu rately estimate the number of dolphins killed
every year in tuna gillnet fisheries of Pakistan but based on limited information collected recently
(Moazzam, 2012) it is estimated that 25- 35 dolphins are killed every month."

38. There have also been reports of substantial dolphin bycatch in tuna gillnet fishing operations
in Europe.

3. Longline Fishing Kills and Injures Dolphins

39. The association between dolphins and longline fishing is well-established. In the past,
analyses of this issue tended to focus on negative effects on fishing caused by "depredation" – i.e.,
the consuming by marine mammals of both bait and target fish on longline hooks – but it is now
widely recognized that dolphins are severely harmed by such interactions.

40. A recent study summarized that "[o]perational interactions between odontocetes [cetaceans
in the suborder Odontoceti or "toothed whales", it includes all species of dolphins and porpoises]
and the longline industry is a global problem." Another recent study examined the whale and
dolphin species involved in pelagic longline depredation in the tropical and subtropical waters of

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the western Indian Ocean. The report draws a connection between where these species are found
and where pelagic longline fishing areas exist in the Indian Ocean. Other reports confirm that
dolphins are attracted to longline fishing operations.

41. Unfortunately, there are no comprehensive programs to monitor the harm caused to
dolphins by longline fishing. Difficulties also arise from the fact that the lines can be as long as 90
miles in length, which would impair the ability of observers to see the deaths and injuries as they
are occurring. There is no doubt, however, that longline fishing operations kill and maim dolphins.

42. The United States itself has designated the long line tuna fishery in the area of the U.S. State
of Hawaii as threatening the population of false k iller whales (a species of dolphin) in that region,
which are classified as "endangered" and "depleted". Yet this tuna is eligible for a dolphin-safe
label. The United States has also designated the "Atlantic pelagic longline fishery" as a fishery
harmful to marine mammals that requires a "take reduction plan". The United States does not
maintain a comprehensive observer program for its longline fleet operating off the U.S. coast in
the Atlantic; the coverage is only eight percent.

43. A report published by the Sea Turtle Restoration Project on longline fishing estimates that
over 18,000 dolphins are killed annually by longline fishing in the Pacific Ocean. The report bases
its estimate on an extrapolation of data from the Hawaii longline fishery. The report cautions that
the number is likely underestimated.

44. Another report discusses the damage to dolphin's dorsal fins caused by longline fishing.
Longlines also get tangled on dolphins' tails. Thus, even when dolphins do not immediately die
from an interaction with a longline, they are at risk to suffer from maiming of their mouths, dorsal
fins and other body parts, as well as from even tual drowning when they cannot free themselves
from the lines.

45. Mexican longline vessels fishing in the Gulf of Mexico for tuna are subject to comprehensive
regulations (NOM-023-SAG/PESCA-2014) that require an independent observer on every vessel to
monitor fishing practices. To Mexico's knowledge, it is the only country that requires 100 percent
observer coverage of its longline vessels; the United States has no such regulation.

4. Trawl Fishing Kills and Injures Dolphins

46. Dolphins are regularly captured in trawl nets. For example, a report included in a 2004 study
prepared for the United Kingdom's House of Commons stated "an Irish study of a trial pelagic pair
trawl fishery for albacore tuna observed 30 dolphins being caught in a single haul, with
145 cetaceans caught by just four pairs of trawlers in a single season."

47. Clearly dolphins and other marine mammals ar e at grave risk in tuna fisheries outside the
ETP and from fishing methods other than dolphin sets, yet the United States has done nothing to
discourage American consumers from purchasing such tuna.

B. Tracking Procedures for Dolphin-Safe Tuna

48. To understand both the complexity and necessity of a tracking system for dolphin-safe tuna,
it is crucial to review how tuna is sourced, handled and tracked during the manufacturing process.

49. The major Mexican producers are vertically integrated. Specifically, they have their own
fishing fleets, which deliver tuna to their processing facilities within Mexico. Thus, the chain of
ownership over the tuna caught by the Mexican fleet is maintained from the time of harvesting
through the processing of the tuna into tuna products and the eventual marketing of the tuna
products.

50. Outside the ETP, because of the extensive us e of intermediaries (brokers), it would be
difficult to trace the dolphin-safe status of tuna even if there were enforceable requirements to do
so outside the ETP. There are no verifiable proc edures or requirements for such tracking for
non-ETP vessels and non-ETP tuna processors.

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51. Unlike the Mexican industry, most major tuna products companies in other countries are not
vertically integrated. They purchase tuna from third party companies, and in many cases the tuna
has passed through at least two parties before it is processed.

52. For both longline and purse seine fishing, an important role is played by refrigerated fish
carriers, who consolidate the catch of multiple fishing vessels. Some of these are believed to be
engaged in transshipment at sea. Transshipment at sea can be particularly vulnerable to "tuna
laundering," where "black boats" may conduct illegal, unauthorized and unrestricted (IUU) fishing
and then transfer their catch to licensed vessels to transship. It has been indicated that observers
likely cannot detect IUU fishing and fish laundering.

53. Importantly, the reporting required for transshipments does not address the
U.S. dolphin-safe requirements. There are no authorities with responsibility to monitor whether
captains' certificates match to a particular lot of tuna, or whether that tuna has been mixed with
uncertified tuna in a storage well.

54. Where the vessels have not caught the tuna in the ETP, there is no requirement for
dolphin-safe tuna tracking, no TTF forms, and no means to verify the accuracy of the information
about how the tuna was caught and whether or not dolphins were killed or seriously injured during
the capture of the tuna. Except for tuna caught in the ETP, there is no procedure through which
the USDOC can verify – or rely on another country to verify – that a tuna product represented to
contain dolphin-safe tuna actually does so. Other than the AIDCP the United States has no
international agreements obligating other countri es to enforce or verify compliance with
dolphin-safe standards. Other than in the ETP, there is no way to determine whether a captain's
claim not to have set nets around dolphins during an entire voyage is accurate, whether a claim
that no dolphins were killed or seriously injured in a particular set in which the tuna was caught is
accurate, whether tuna caught in a dolphin-safe set has been kept segregated from tuna caught in
a non-dolphin-safe set, or even whether a certification accompanying imported tuna products
matches up correctly to the vessel and voyage that caught the tuna.

55. Because of the absence of controls and tracking mechanisms for non-ETP vessels, tuna
processors outside of Mexico in other countries cannot verify (let alone segregate and track)
dolphin-safe tuna after they receive it.

56. The U.S. MMPA, independent of the Amended Tuna Measure, requires U.S. vessels to report
the "taking" of marine mammals outside the ETP. However, in the absence of independent
observers to monitor compliance, the effectiveness of that requirement is questionable.

57. Testimony in the recent enforcement action in the Freitas case, further validates that
without independent observers, a captain's certificate is unreliable. Thus, it is impossible for those
vessels to comply with the Amended Tuna Measure's requirement that tuna caught in a set that
harms dolphins be segregated from tuna caught in dolphin-safe sets. It is important to emphasize
that the Freitas case involved U.S.-flagged vessels. Foreign-flagged vessels are not subject to
U.S. jurisdiction and have even less incentive to comply with the Amended Tuna Measure.

58. The two canneries in American Samoa apparently receive at least some tuna directly
offloaded from the vessels that caught the tuna, and in such cases could verify that a captain's
statement matched the vessel. However, there is no tuna tracking system for such tuna, so there
is no other documentation available to verify that the tuna was caught in dolphin-safe sets, or kept
separate from non-dolphin-safe tuna. Other U.S. canneries (in California and in Georgia) import
tuna loins from Thailand, not whole fish. Because the tuna from which those loins were made were
landed, skinned and boned in another country, it wo uld be even more difficult to track them to a
specific vessel, voyage and storage well – if any effort were being made to do so.

59. Virtually no ETP tuna is used by U.S. processors and ETP tuna products have a very small
share of the U.S. market. Accordingly, the overwh elming majority of tuna products sold in the
U.S. market as "dolphin-safe" lack documentation of compliance from any moment earlier than
import into the United States.

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C. Status of Dolphin Populations in the ETP

60. The AIDCP regime remains extremely effective. The incidental mortality of dolphins in the
ETP tuna fishery in 2012 was only 870 animals, an 11.8 percent decrease from the 986 mortalities
recorded in 2011. As was addressed in the orig inal proceedings, the primary excuse of the
United States for refusing to change the definition of "dolphin-safe" to conform to the AIDCP was
that the populations of the two dolphin stocks it considers to be "depleted" were not recovering at
a rate the United States considered acceptable. In 2009, however, the United States agreed with
AIDCP to increase the DMLs for these two dolphin stocks, reflecting the more recent evidence that
the populations of the stocks are, in fact, growing.

61. Under the Amended Tuna Measure, the USDOC lacks authority to evaluate any evidence
regarding dolphin stocks and their recovery, incl uding the evidence referred to above, which has
become available since its Final Finding was published in 2002.

IV. LEGAL ARGUMENT

A. The Panel Must Rule on all of Mexico's Violation Claims

62. In order to resolve this dispute, it is necessary for the Panel to rule on all of Mexico's claims
under Article 2.1 of the TBT Agreement and Articles I:1 and III:4 of the GATT 1994. The scope and
content of the obligations under these provisions are not the same. If the Panel does not make all
of the necessary findings under Mexico's three clai ms, there would only be a partial resolution of
the dispute.

B. The Amended Tuna Measure is Inconsistent with Article 2.1 of the
TBT Agreement

63. For a violation of Article 2.1 of the TBT Agreem ent, the following elements must be satisfied:
(i) the measure at issue must be a "technical regulation" within the meaning of Annex 1.1; (ii) the
imported products at issue must be like the domestic product and the products of other origins;
and (iii) the treatment accorded to imported produc ts must be less favourable than that accorded
to like domestic products and to like products originating in other countries.

64. The Amended Tuna Measure fulfills each of the three criteria of the legal test under
Annex 1.1 the TBT Agreement, and therefore continues to qualify as a "technical regulation". Also,
the relevant imported products at issue – i.e., tuna products from Mexico – continue to be "like"
tuna products of U.S. origin and tuna products originating in any other country. The remaining
aspect to be considered is whether the Amended Tuna Measure accords to imported products less
favourable treatment.

1. Treatment no Less Favourable

65. The key elements of the design and structure of the measure that operated together to deny
competitive opportunities were set out in the provisions of the DPCIA that govern dolphin-safe
labeling. These elements remain integral components of the Amended Tuna Measure and have not
been changed.

66. The features of the relevant market remain unchanged. U.S. retailers and consumers are
sensitive to the dolphin-safe issue, and tuna products labeled "dolphin-safe" have an advantage in
the marketplace. Major U.S. grocery chains continue to refuse to buy Mexican tuna products
because they are unable to sell the brand that does not have the dolphin-safe label.

67. The situation of Mexican tuna producers continues without any material changes from the
situation they had during the original proceedings. The U.S. tuna fleet continues not to fish in the
ETP. Thus, most tuna caught by Mexican vesse ls would not be eligible for inclusion in a
dolphin-safe product under the U.S. dolphin-safe labelling provisions, while virtually all tuna
caught by U.S. vessels is potentially eligible for the label. During 2013, approximately 86 percent
of the tuna used by U.S. canners was caught in the Western Pacific. U.S. canners obtained only
about one percent of their supply from the ETP. Thus, U.S. canneries used virtually no tuna caught
in the ETP.

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68. Nothing in the Amended Tuna Measure redu ces or minimizes the detrimental impact on
imported Mexican tuna products. Accordingly, it is clear that the operation of the Amended Tuna
Measure in the relevant market has a de facto detrimental impact on the group of like imported
products.

69. Based on the two-step approach established by the Appellate Body in US – Tuna II (Mexico),
the Panel must analyze whether the above-noted de trimental impact on imports stems exclusively
from a legitimate regulatory distinction rather than reflecting discrimination against the group of
imported products.

70. The relevant regulatory distinction (i.e., the difference in labeling conditions and
requirements) includes the following conditions and requirements of the Amended Tuna Measure:
(i) the disqualification of setting on dolphins in accordance with the AIDCP as a fishing method that
can be used to catch tuna in the ETP in a dolphin-safe manner and the qualification of other fishing
methods to catch tuna in a dolphin-safe manner; (ii) the record-keeping and verification
requirements for tuna caught in the ETP by setting on dolphins in accordance with the AIDCP and
the different requirements for tuna caught outside the ETP using both the same and different
fishing methods; and (iii) the mandatory independent observer requirements for tuna caught in
the ETP by setting on dolphins in accordance with the AIDCP and the absence of such
requirements for tuna caught outside the ETP using the same and different fishing methods.

71. When the facts and circumstances related to the design and application of these conditions
and requirements are examined, it is clear that th e detrimental impact on imports of Mexican tuna
products does not stem exclusively from a legitimate regulatory distinction. Rather, the
detrimental impact reflects discrimination against the group of imported products.

(1) The Differences in Labelling Conditions and Requirements
are Not Legitimate

72. In the original dispute, the Appellate Body concluded that the United States had not
demonstrated that the difference in labelling conditions was "calibrated" to the risks to dolphins
arising from different fishing methods in different areas of the ocean. It followed from this that the
United States had not demonstrated that the detrimental impact of the U.S. measure on Mexican
tuna products stemmed exclusively from a legitima te regulatory distinction. The Appellate Body
also observed that the U.S. measure fully addressed the adverse effects on dolphins resulting from
setting on dolphins in the ETP, whereas it di d not address mortality (observed or unobserved)
arising from fishing methods other than setting on dolphins outside the ETP.

(a) Disqualification/Qualification of Fishing Methods

73. Under the Amended Tuna Measure, the labeling conditions and requirements differ
depending on the fishing method used to catch tuna. Setting on dolphins is a fishing method that
is permanently "disqualified" from being used to catch dolphin-safe tuna, even if the utilization of
this method complies with the stringent AIDCP requirements and there are no dolphin mortalities
or serious injuries in the set in which the tuna is caught, as confirmed by an independent on-board
observer and certified under the comprehensive tracking and verification system established by
the AIDCP and Mexican law.

74. The situation is different for the fishing methods used to catch tuna outside the ETP. With
the exception of driftnet fishing for tuna on the hi gh seas by the Italian fl eet, all of the other tuna
fishing methods (including other driftnet fishing) are qualified to be used to catch tuna in a
dolphin-safe manner, even though it is well documented that these methods cause substantial
dolphin mortalities and serious injuries.

75. The facts and circumstances related to the design and the application of the measure at
issue clearly establish that the regulatory distinction, i.e., the difference in these labeling
conditions and requirements, is not even-handed. As a consequence, under the approaches of both
the Appellate Body and the Panel in EC – Seal Products , the detrimental impact on Mexican
imports does not stem exclusively from a legitimate regulatory distinction.

76. The regulatory distinction is not legitimate because it is not rationally connected to the
objective of the measure. The objectives of the original Tuna Measure were: (i) "ensuring that

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consumers are not misled or deceived about whether tuna products contain tuna that was caught
in a manner that adversely affects dolphins"; and (ii) "contributing to the protection of dolphins,
by ensuring that the US market is not used to encourage fishing fleets to catch tuna in a manner
that adversely affects dolphins". The Amended Tu na Measure maintains the same objectives. The
"qualified" tuna fishing methods have substantial adverse effects on dolphins and pose substantial
risks for dolphins, therefore, their qualification for use in catching "dolphin-safe" tuna is
inconsistent with the objectives of the Amended Tuna Measure. The "disqualification" of Mexico's
principal fishing method and the "qualification" of other alternative fishing methods do not bear a
rational connection to the objectives of th e Amended Tuna Measure. There are no reasons
extraneous to the objective of dolphin protection that provide a cause or rationale to justify
allowing tuna caught by these fishing methods to be designated as "dolphin-safe". The distinction
in labelling conditions and requirements relating to the disqualification/qualification of fishing
methods is designed and applied in a manner that constitutes arbitrary or unjustifiable
discrimination, such that it lacks even-handedness.

(b) Record-keeping and Veri fication Requirements

77. The relevant regulatory distinction includes record-keeping and verification requirements.
These are important because the fundamental character of the Amended Tuna Measure is the
distinction between tuna products that are and are not dolphin-safe under the U.S. definition.
Consistent with this fundamental character, and in order to achieve the objectives of the Amended
Tuna Measure, accurate information must be provided to consumers on whether the tuna
contained in a tuna product is caught in a manner that adversely affects dolphins. It is only
through the provision of accurate information that the label can be made available exclusively to
products containing tuna that was not caught in a manner that adversely affects dolphins.

78. Under the Amended Tuna Measure, the record-k eeping and verification requirements differ
depending on the geographic area in which the tuna are caught.

79. Strict record-keeping and verification requirements and procedures are applied to tuna
caught in the ETP which provide a meticulous audit trail which ensures that the information
provided on the dolphin-safe status of Mexican tuna under the U.S. definition of dolphin-safe is
accurate. In stark contrast, similar requirements and procedures are not applied to tuna that is
caught in other geographic areas outside the ETP. The route taken by this tuna to U.S consumers
is more complex than the route taken by Mexican tuna, and there are many actions that could
occur during a fishing voyage and in the downstre am processing and distribution chain that could
eliminate the dolphin-safe status of such tuna. As a consequence, accurate information is not
being provided. The difference in record-keeping and verification requirements for tuna caught
inside and outside the ETP does not bear a rational connection to the objectives of the Amended
Tuna Measure. Inside the ETP the requirements are comprehensive and the information accurate.
Outside the ETP, the requirements are unreliable and do not provide accurate information on the
dolphin-safe status of the tuna products comprising this tuna. Thus, U.S. consumers are not
receiving accurate information on such tuna prod ucts and could be misled or deceived or could
encourage fishing fleets to catch tuna in a manner that adversely affects dolphins. . There are no
reasons extraneous to the objective of dolphin pr otection that provide a cause or rationale for
providing inaccurate information on the dolphin-safe status of tuna that is caught outside the ETP,
while only providing accurate information for tuna that is caught within the ETP. All dolphin-safe
tuna should be accurately labeled. Under the Amended Tuna Measure, differences in record-
keeping and verification requirements are design ed and applied in a manner that constitutes
arbitrary or unjustifiable discrimination, such that it lacks even-handedness.

(c) Mandatory Independent Observer Requirements

80. Mexico addresses the mandatory independent observer requirement separately because of
its fundamental importance to the designation of tuna as dolphin-safe at the time of capture.
Notwithstanding the fact that none of the tuna that is caught using "qualified" fishing methods can
be accurately designated as dolphin-safe, it will not matter if a comprehensive and meticulous
audit trail is implemented downstream to the U.S. consumer if the initial dolphin-safe designation
is inaccurate. The entire audit trail will be tainted.

81. Observers who are independent, specially trai ned, and approved by the AIDCP are mandated
for tuna fishing in the ETP, and they ensure the accuracy of information concerning the

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dolphin-safe status of tuna caught in the ETP. Outside of the ETP, there is no requirement for
independent observers. Instead, under the Amende d Tuna Measure, the dolphin-safe status of
tuna is based solely on self-certification by the captain in charge of the fishing vessel. Such self-
certification is meaningless. Captains of vessels are not qualified to make dolphin-safe
determinations and, even if they were qualified, their certifications are inherently unreliable. While
the measure contemplates the possibility of ob servers being used outside the ETP in certain
circumstances, this is meaningless because the USDOC has made no determination that the
circumstances are met, i.e., that observers are qualified and authorized in non-ETP fisheries.

82. The difference in the treatment of independen t observers inside and outside the ETP is not
rationally connected to the objective of the measure. Captain self-certification for tuna caught
outside the ETP does not provide reliable or accurate information on the dolphin-safe status of the
tuna products comprising this tuna. As a consequence, the initial designation of the dolphin-safe
status of tuna caught outside the ETP is unreliable and inaccurate. This taints all subsequent
stages in the audit trail up to the U.S. consumer. Thus, U.S. consumers are receiving unreliable
and inaccurate information on such tuna products, and they could be misled or deceived, or could
unknowingly be supporting or encouraging fishing fleets to catch tuna in a manner that adversely
affects dolphins. There are no reasons extraneous to the objective of dolphin protection that
provide a cause or rationale that can justify providing U.S. consumers with reliable and accurate
information for tuna that is caught within the ETP, while providing them with unreliable and
inaccurate information for tuna that is caught outside the ETP. The differences in the treatment of
independent observers inside and outside the ETP are designed and applied in a manner that
constitutes arbitrary or unjustifiable discrimination, such that it lacks even-handedness.

C. The Amended Tuna Measure is Inconsistent with Article I:1 of the GATT 1994

83. In the circumstances of this dispute, to dete rmine whether there is a violation of Article I:1,
three questions must be answered: (i) are the impo rted products concerned "like" products; (ii)
does the measure at issue confer an advantage, fa vour or privilege on products originating in any
other country; and (iii) was the advantage, favour or privilege granted "immediately and
unconditionally" to the like product originating in the territories of all other Members?

84. For the same reasons set out above for Mexico's claim under Article 2.1 of the
TBT Agreement, the imported products at issue are "like" domestic tuna products within the
meaning of Article I:1 of the GATT 1994.

85. The Amended Tuna Measure confers an advantag e, within the meaning of Article I:1 of the
GATT 1994, to tuna products of U.S. origin and tuna products originating in countries other than
Mexico. The advantage granted by the Amended Tuna Measure is the authorization to use
"dolphin-safe" labelling in the United States on tuna products. This advantage is granted only to
tuna products containing tuna that meets the applicable conditions and requirements set out under
the implementing regulations of the Amende d Tuna Measure. The Amended Tuna Measure
therefore affects "the internal sale, offering for sale, [and] purchase" of tuna products in the
United States. This advantage is made available to tuna products originating in other countries,
including Thailand and the Philippines, who are the largest sources of imported tuna products into
the United States.

86. The "advantage" of access to the dolphin-safe label is not accorded immediately and
unconditionally to the like tuna products originating in the territories of all other WTO Members,
namely Mexico. The Panel and Appellate Body found that most tuna caught by Mexican vessels,
being caught in the ETP by setting on dolphins, would not be eligible for inclusion in a dolphin-safe
product under the US dolphin-safe labelling provisions. This continues to be the case.

D. The Amended Tuna Measure is Inconsistent with Article III:4 of the
GATT 1994

87. The Amended Tuna Measure accords Mexican tuna products treatment less favourable than
that accorded to U.S. tuna products in a manner that is inconsistent with Article III:4 of the
GATT 1994. The Appellate Body has made clear that the scope and content of the provisions of
Article III:4 and Article 2.1 of the TBT Agreement are different. Accordingly, the Panel's decision
on Mexico's claim under Article 2.1 will not necessarily resolve Mexico's Article III:4 claim, and it is
therefore crucial that the Panel make findings on the Article III:4 claim.

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88. The Appellate Body explained that a Member's measure is inconsistent with Article III:4 if
three elements are met: (i) the imported and domestic products at issue are "like products"; (ii)
the measure at issue is a law, regulation or requirement affecting their internal sale, offering for
sale, purchase, transportation, distribution, or use; and (iii) the imported products are accorded
"less favourable" treatment than that accorded to like domestic products.

89. For the same reasons set out above for Mexico's claim under Article 2.1 of the
TBT Agreement, the imported products at issue are "like" domestic tuna products within the
meaning of Article III:4 of the GATT 1994.

90. The Amended Tuna Measure, which comprises a group of laws and regulations that set out
the dolphin-safe labeling requirements, pertains to the category of "laws, regulations and
requirements".

91. The Amended Tuna Measure clearly "affects" th e internal sale, offering for sale, purchase
and distribution of tuna products. As found by the Panel and the Appellate Body, access to the
"dolphin-safe" label constitutes an "advantage" on the US market; lack of access to the
"dolphin-safe" label has a detrimental impact on the competitive opportunities in the U.S. market;
and government intervention, in the form of adop tion and application of the U.S. "dolphin-safe"
labelling provisions, affects the conditions under which like goods, both domestic and imported,
compete in the market within a Member's territory.

92. Also, Article III:4 stipulates that WTO Members shall accord imported products "treatment
no less favourable" than the treatment accorded to like products of national origin. As explained
above, the Appellate Body found that access to the "dolphin-safe" label constitutes an "advantage"
on the US market, lack of access to the "dolphin-safe" label has a detrimental impact on the
competitive opportunities in the US market, and go vernment intervention, in the form of adoption
and application of the US "dolphin-safe" labelling provisions, affects the conditions under which
like goods, domestic and imported, compete in th e market within a Member's territory. Moreover,
the Panel and Appellate Body found that most tuna caught by Mexican vessels, being caught in the
ETP by setting on dolphins, would not be eligible for inclusion in a dolphin-safe product under the
US dolphin-safe labelling provisions, while most tuna caught by US vessels is potentially eligible for
the label. This continues to be the case.

V. CONCLUSION

93. On the basis of the foregoing, Mexico respec tfully requests that the Panel find that the
United States has failed to comply with the recommendations and rulings adopted by the DSB on
the basis that the Amended Tuna Measure remains inconsistent with Articles 2.1 of the
TBT Agreement, Article I:1 and Article III:4 of the GATT 1994.

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ANNEX B-2
EXECUTIVE SUMMARY OF THE SECOND WRITTEN SUBMISSION OF MEXICO
I. INTRODUCTION

1. In this submission, Mexico responds to th e arguments raised by the United States and
further supplements the legal and factual basis for its claims that the Amended Tuna Measure is
inconsistent with Articles 2.1 of the TBT Agreem ent, I:1 and III:4 of the GATT 1994 and, in the
case of the violations of the GATT 1994, cannot be saved by the general exceptions in Article XX.

2. Mexican tuna products continue to be denied the dolphin-safe label, while tuna products
from tuna fisheries other than the ETP can be easily labelled dolphin-safe when supported only by
an unverified copy of a simple statement from a ship's captain claiming that the tuna is
dolphin-safe, with no comparable tracking requirements to verify the source of the tuna and its
dolphin-safe status, and without accounting for the substantial adverse impact that the fishing
methods used to catch the tuna have on dolphins in non-ETP fisheries. The balance of competitive
opportunities between Mexican tuna products and like products from the United States and other
countries is being upset on the premise that these other products are dolphin-safe when, in fact,
this status cannot be proven. As a consequence, it is highly likely that tuna products containing
tuna caught outside the ETP under circumstances causing adverse effects to dolphins are entering
the U.S. market inaccurately labeled as dolphin-safe.

3. The United States has mischaracterized and disregarded Mexico's arguments and evidence.
For example, throughout its submission, the United States repeatedly states that "setting on
dolphins is particularly harmful to dolphins" (italics original), citing paragraph 289 of the Appellate
Body Report. This statement mischaracterizes the A ppellate Body's statement and quotes it out of
context.

II. RESPONSE TO U.S. DESCRIPTION OF THE RELEVANT FACTS

4. The United States argues that tuna imported from non-ETP locations is unlikely to be non-
dolphin-safe because some of the examples Mexico provided related to fishing in the waters of
countries that export relatively little tuna to th e United States, such as India and Sri Lanka. In
support of this argument, the United States relies on customs import statistics and a confidential
database of data on vessel flags and gear types purportedly derived from Form 370s and
information reported by U.S. canneries when receiving tuna from U.S.-flag vessels. The
United States also claims that Mexico has not identified any evidence of dolphin mortalities caused
by vessels of the nations that are the principal exporters of tuna products to the United States.

5. In particular, the United States asserts that vessels flagged to Thailand, the Philippines,
Vietnam, Ecuador, Indonesia and the United States catch the tuna contained in over 96 percent of
the U.S. market for canned tuna. In support of this statement, the United States cites statistics on
imports of canned and pouched tuna products. But the processing of whole tuna into loins (which
are then packed into canned or pouched tuna products) is considered under U.S. law to be a
"substantial transformation" that changes the country of origin of the fish to the country where the
processing takes place. Accordingly, the country of origin of a tuna product is the country in which
the processing took place, not the country of the vessel that caught the tuna. The fact that tuna
products have Thai origin, therefore, provides no indication of which nation's vessels caught the
tuna. This is verified by the fact that Thailand's tuna fishing fleet is capable of providing only an
extremely small portion of the tuna used in Thai-processed tuna products. Thailand imports
800,000 to 900,000 tons of frozen tuna annually to supply its canning industry, and that the
leading sources are Taiwan, the United States, South Korea, Vanuatu, Japan, and ASEAN
countries. Further, it is undisputed that as Mexico previously demonstrated, tuna processors in
Thailand obtain 80 percent of their supply from tuna trading companies, who (i) purchase tuna
from third parties and (ii) regularly consolidate catches of tuna from different vessels on carrier
ships, making it especially difficult, if not impossible, to trace the original sources of the tuna.

- B-15 -

6. The problem of accuracy is not limited to Thailand. IUU fishing is a global phenomenon. For
example, the European Union recently issued warnings to a number of countries, including South
Korea and Vanuatu (both major suppliers to Thai land) about their failure to keep up with
international obligations to fight illegal fishing.

7. Thus, the claim of the United States that all Thai-origin tuna products contain tuna caught
by Thai-flagged vessels is self-evidently and blatantly incorrect. The United States lacks
information on the sources of the tuna used in Thai tuna products, as well as in tuna products
imported from other countries that are not members of the AIDCP, including Vietnam, the
Philippines, and Indonesia. The lack of such information extends to tuna loins imported from
Thailand for use in the U.S. canneries of Bumbleb ee and Chicken of the Sea, as the origin of the
loins would be reported as Thai even though the tuna was caught, for example, by a Taiwanese- or
Sri Lankan-flagged vessel. This blatant inaccuracy in the U.S. information calls into doubt much, if
not all, of the U.S. data on the sources of tuna in non-ETP tuna products and the gear types used
to capture that tuna.

8. Mexico has previously established that many dolphins have been killed in the WCPO by
vessels fishing for tuna with purse seine nets. In addition, Mexico has established that other
fishing methods that are used globally, especially longline fishing, gillnet fishing and trawl fishing,
are highly destructive to dolphins, with both direct and indirect effects.

9. In particular, Mexico has established that U.S.-flag vessels set purse seine nets on dolphins
in the WCPO without self-reporting such events, and that U.S. longline vessels kill and injure
dolphins, both in the area of Hawaii and in the Atlantic.

10. According to a report on Vietnam presented to the WCPFC, Vietnam's fleet fishes for tuna
using longlines, purse seine nets, gillnets and hand lines; Vietnam lacks a reliable count of its tuna
fishing vessels; Vietnam lacks a reliable method to track the quantity of tuna landings; and
Vietnam has not established an observer program. In addition, Mexico submitted evidence that
Philippine tuna purse seine vessels have killed thousands of dolphins, that Philippine fishers use
gillnets to catch dolphins, and that Philippine "group seine operations" are eligible for exemption
from the WCPFC's general prohibition on transshipments at sea. Taiwan has by far the largest tuna
fishing fleet in the WCPO, and is the largest supplier of tuna to Thailand and other countries.
Mexico has established that Taiwanese vessels use gillnets to catch tuna, and that the Taiwanese
longline fleet kills dolphins.

11. The evidence clearly demonstrates that ther e are significant risks to dolphins in tuna
fisheries outside the ETP, resulting from the us e of a number of different fishing methods. The
United States has not explained why these othe r fishing methods – including the use of purse
seine nets outside the ETP, longlines, gillnets, trawls and high seas driftnets – should be
considered to be inherently dolphin-safe. As Mexico described in its first written submission, the
association of tuna and dolphins has been observed and documented in ocean regions other than
the ETP. The fact that thousands of dolphins are being killed in purse seine nets outside the ETP
suggests that vessels are regularly intentionally setting on dolphins outside the ETP, even when
claiming to be FAD fishing. On the other hand, if the thousands of dolphins are being killed
because of "accidents", as the United States alleges, the association between dolphins and purse
seine fishing outside the ETP must be especially strong.

12. Longline fishing attracts dolphins – which are drawn to the bait on the hooks – meaning that
dolphins "associate" with longline fishing. Mexico also has shown that even when dolphins do not
die immediately from an interaction with longlines, they are at risk of serious mutilation and other
harm. Mexico also has established that gillnet fishing kills hundreds of thousands of dolphins
annually, and that this fishing method is used by some of the nations that are the largest suppliers
of the tuna used in the production of tuna products. Mexico also has shown that trawl fishing kills
and injures dolphins.

13. The United States claims that a captain's self-certification is sufficient to verify compliance
with the requirements for dolphin-safe tuna prod ucts. But the record-keeping and inspections at
processing facilities – which is only required for processing facilities in the United States and in the
ETP, but not elsewhere – cannot improve the accuracy of captains' certificates. Nor can
certifications by importers and exporters, who of course are not present on the vessels when the
tuna are caught. In fact, the U.S. assertion that captain statements are a "core implementation

- B-16 -

tool" to verify compliance with all applicable fishing rules is contradicted by the widespread IUU
fishing that certain nations, including the European Union as discussed above, are attempting to
combat. Indeed, President Obama recently announced a new initiative to focus the resources of
the U.S. government in discouraging IUU fishing.

14. With regard to record-keeping, the United States agrees that detailed record-keeping
requirements exist only for the tuna caught by large purse seine vessels operating in the ETP
pursuant to the AIDCP. The United States also agrees that those requirements apply to tuna
products imported from an AIDCP country. The United States also expressly agrees that the
Amended Tuna Measure does not impose any new record-keeping or verification requirements for
non-U.S. processors. It is therefore undisputed that with regard to record-keeping, the Amended
Tuna Measure imposes different requirements on tuna products from the ETP than it does on tuna
products from other regions.

15. Also, importantly, the United States has co nfirmed that no U.S.-flagged large purse seine
vessels currently operate in the ETP. Thus, no tuna products containing U.S.-caught tuna are
subject to the extensive tracking and record-keeping requirements for ETP tuna contained in 50
CFR sections 216.92 and 216.93. When the U.S. authorities perform their "verification" of
U.S. canneries, they can only check whether a cannery maintains records of the documentation
that it receives; there is no way to check the validity of the documentation. The United States does
not perform any verification of non-U.S. canneri es, and acknowledged during the comment period
for its new regulations that the U.S. government lacks the authority or legal capacity to do so
outside of U.S. territory.

16. The evidence presented by Mexico of dolphin mortalities and injuries in tuna fisheries
outside the ETP, and mortalities and injuries caused by other fishing methods, is both substantial
and uncontested. Certainly Mexico's evidence also supports a presumption that there are genuine
concerns about harm to dolphins occurring outside the ETP.

17. Currently the value of tuna caught by a purse seine vessel during a typical voyage would
range from approximately US$1.4 million to US$2.2 million for skipjack tuna, and US$2.7 million
to US$4 million for yellowfin tuna. Because under the U.S. measure the dolphin set method may
not be used even one time during a voyage, there is an extremely strong disincentive for a captain
to self-report a dolphin set. In the unlikely event that a U.S. vessel is caught in a
misrepresentation – such as in the Freitas case – the penalty is only US$11,000 per violation,
which is de minimis in relation to the value of the catch. Non-U.S. vessels, of course, are not
subject to any penalty at all because they are not within U.S. jurisdiction. Accordingly, the
U.S. fines for setting on dolphins do not create a deterrent. Yet, tuna products containing tuna
caught in that manner, as a practical matter, can be labeled dolphin-safe if harvested outside the
ETP, because there are no independent observers to monitor the fishing practices.

III. LEGAL ARGUMENT

A. The Panel has Jurisdiction under Article 21.5 of the DSU to Rule on Mexico's
Claim under Article 2.1 of the TBT Agreement

18. The arguments raised by the United States that the Panel does not have jurisdiction to
consider Mexico's claim that the Amended Tuna Me asure is inconsistent with Article 2.1 of the
TBT Agreement unnecessarily complicate a very simple situation. The Panel clearly has jurisdiction
to rule on Mexico's Article 2.1 claim. In making its arguments, the United States conflates Mexico's
Article 2.1 "claim" with Mexico's "arguments" in support of that claim.

19. Mexico disagrees that the labelling conditions and requirements are "unchanged" from the
original Tuna Measure. In addition to the spec ific changes to the provisions of the measure,
Mexico's claim relates to the Amended Tuna Measure in its totality, which, as the measure "taken
to comply", is "in principle, a new and different measure". In the alternative, to the extent that the
Panel finds that any labelling conditions or requirements are unchanged, the Appellate Body has
held that a claim previously raised in the original proceedings may be re-asserted against an
unchanged "aspect" of the measure "taken to comply" if the claim was not resolved on the merits
in the original proceeding, such that the DSB made no findings in respect of the claim. Further, in
US – Zeroing (Article 21.5 – EC) , the Appellate Body clarified that "new claims against inseparable
aspects of a measure taken to comply, which are unchanged from the original measure" are within

- B-17 -

a panel's terms of reference under Article 21.5, ev en if such claims could have been raised, but
were not raised, in the original proceedings. Contrary to the allegations of the United States,
Mexico's claim under Article 2.1 of the TBT Agreement in respect of the Amended Tuna Measure in
no way "jeopardize[s] the principles of fundamental fairness and due process."

B. The Amended Tuna Measure is Inconsistent with Article 2.1 of the
TBT Agreement

20. There is no merit to the United States' argument that the Amended Tuna Measure does not
violate Article 2.1 because the detrimental impact on imported Mexican tuna products stems
exclusively from a legitimate regulatory distinction. Given the Appellate Body's recent ruling in EC
– Seal Products, Mexico limits its submission to the approach of the Appellate Body.

21. Contrary to the arguments of the United States, the relevant regulatory distinction
encompasses the three labelling conditions and requ irements identified by Mexico in the present
proceeding. If a regulatory distinction constitutes a means of "arbitrary discrimination" it is not
even-handed and therefore not a legitimate distin ction. In such circumstances, the detrimental
impact cannot be said to stem exclusively from a legitimate regulatory distinction. The meaning of
"arbitrary discrimination" in the chapeau of Article XX provides context for the meaning of the term
in Article 2.1. In US – Shrimp, the Appellate Body found that where the elements of a measure are
"contrary to the spirit, if not the letter, of Article X:3", which establishes certain minimum
standards for transparency and procedural fairness in the administration of trade regulations, the
measure is applied in a manner that amounts to arbitrary discrimination within the meaning of the
chapeau. The evaluation of impartial administration pursuant to Article X:3(a) of the GATT and
the evaluation of even-handedness pursuant to Article 2.1 of the TBT Agreement both depend
upon an examination of the manner in which the law or regulation in question is applied.
Moreover, as the Appellate Body held in EC – Seal Products , one of the most important factors in
the assessment of arbitrary or unjustifiable discrimination under the chapeau to Article XX is the
question of "whether the discrimination can be reconciled with, or is rationally related to," the
relevant policy objective. Accordingly, the analysis of impartial administration under Article X:3(a)
and the analysis of a rational connection under the chapeau to Article XX can be used as tools to
assess even-handedness within the meaning of Article 2.1.

22. Disqualification/Qualification of Fishing Methods . The United States has not rebutted
Mexico's prima facie case that the labelling conditions and requirements imposed by the Amended
Tuna Measure differed depending on the fishing method used to catch tuna and that this
regulatory difference – which effectively disqualifies the fishing method used by the majority of the
Mexican tuna fishing fleet from catching tuna eligible for the U.S. dolphin-safe label, while
effectively qualifying other fishing methods that are known to cause harm to dolphins – was not
even-handed.

23. The United States argues that "Mexico is unable to prove that certain other fishing
techniques have adverse effects on dolphins that are equal to or greater than what setting on
dolphins has on dolphins," but this merely highlights that the benchmark used by the
United States for qualifying or disqualifying a fishing method is entirely unclear. The changing and
inconsistent justifications given by the United States provide strong evidence of arbitrariness.
Although the United States also argues that there is "significant scientific evidence" underlying the
distinction between fishing methods, the United States has not filed any scientific evidence to
support the regulatory difference. Moreover, th e Amended Tuna Measure does not allow for a
further scientific assessment of the adverse impact on dolphin stocks in the ETP, and the National
Marine Fisheries Service has never undertaken to evaluate the risks to dolphins in other ocean
regions. Finally, the United States attempts to distinguish setting on dolphins from other fishing
methods by arguing that "setting on dolphins is the only fishing technique that specifically targets
dolphins", "is inherently harmful to dolphins" and "this harm is not replicated in other fishing
methods," while the harm caused by gillnets is "m erely by accident." This argument emphasizes
the absence of a rational connection between the difference in labelling conditions and
requirements under the Amended Tuna Measure and the objectives of that measure. Whether or
not the operators of the vessel claim mortalities or serious injury were an "accident" is not
relevant.

24. Record-keeping and Veri fication Requirements . The United States has not rebutted
Mexico's prima facie case that, under the Amended Tuna Measure, the dolphin-safe labelling

- B-18 -

conditions and requirements related to record keeping, tracking and verification differ depending
on the geographic area in which tuna are caught , and that this difference is not even-handed.
While the Amended Tuna Measure requires a comprehensive and independently-verified
record-keeping and tracking system for the dolphin-safe status of tuna caught within the ETP, it
requires neither an independent verification of the dolphin-safe status of products containing tuna
caught outside the ETP nor an effective means of tracking such status while it is stored onboard
fishing vessels, consolidated with the tuna caught by other fishing vessels, unloaded at port,
brokered through intermediaries, transshipped, partially processed into loins, processed into
finished tuna products, and imported into the United States.

25. The accuracy of the dolphin-safe status of tuna products under the Amended Tuna Measure
is central to the assessment of whether the measure is "even-handed". As Mexico explained in its
first written submission, there are insufficient requirements and procedures under the Amended
Tuna Measure to provide the necessary audit tr ail for tracking the tuna. As a consequence,
accurate information is not being provided on the dolphin-safe status of tuna products that contain
tuna caught outside the ETP. Considering that U.S. consumers are provided with accurate
information regarding the dolphin-safe status of products containing tuna caught within the ETP,
but with information that is inherently unverifiable, unreliable, and inaccurate regarding the
dolphin-safe status of products containing tuna caught outside the ETP, the labelling conditions
and requirements related to record-keeping and ve rification lack even-handedness and constitute
a means of arbitrary or unjustified discrimination. Tuna products derived from tuna caught outside
the ETP under non-dolphin-safe circumstances are highly likely if not certain to enter the
U.S. market inaccurately labelled as dolphin-safe. Such tuna products are granted an illegitimate
competitive advantage over otherwise equivalent products containing non-dolphin-safe tuna
caught in the ETP. Consistent with the Appellate Body's analysis in EC – Seal Products in the
context of the chapeau of Article XX, which found that a prima facie case was established on the
basis that seal products derived from "commercial" hunts could potentially enter the European
market inaccurately classified under the IC Exception, Mexico is only required to demonstrate that,
under the circumstances related to the design and application of the Amended Tuna Measure's
labelling conditions and requirements, tuna products containing non-dolphin-safe tuna caught
outside the ETP could potentially enter the U.S. market inaccurately labelled as dolphin-safe. The
burden then shifts to the United States to sufficiently explain how such instances can be prevented
in the application of the Amended Tuna Measure's labelling conditions and requirements. While
Mexico has exceeded the standard required to establish a prima facie case, the United States has
entirely failed to provide any explanation, much less any evidence, and has therefore failed to
meet its burden.

26. Mandatory Independent Observer Requirements . The United States has not rebutted
Mexico's prima facie case that the absence of a mandatory independent observer requirement for
tuna fishing outside the ETP meant that the detr imental impact of the Amended Tuna Measure on
imports of Mexican tuna products did not stem exclusively from a legitimate regulatory distinction
and, instead, reflects discrimination against a group of imported products. If the initial dolphin-
safe designation is inaccurate at the point when th e tuna is harvested, the entire audit trail for the
tuna products will be tainted.

27. The United States argues that it is permitted to make such an arbitrary distinction because it
in fact reflects a "calibration" of the relative threats posed to dolphins by different tuna fishing
methods. This "calibration" argument, which implies that it is acceptable to provide unreliable
information to U.S. consumers in respect of tuna caught outside the ETP, is totally inconsistent
with the primary objective of the measure, which is contingent on accurate information, and
cannot be reconciled with the relevant policy objective. The United States cannot justify self-
certification by reference to other regulatory contexts, because it is impossible to confirm or verify
the accuracy of a dolphin-safe certification by way of a post-entry audit. It is a practical reality of
tuna fishing activities that, by the time tuna arrives within U.S. territory, authorities have no
means of verifying the accuracy of a captain's dolphin-safe certification. The tuna in question is
caught and certified by the captain on the high se as, thousands of kilometers from shore, and far
from the oversight of objective and independent authorities. As the Appellate Body held in EC –
Seal Products and US – Shrimp , effective verification and auditing mechanisms are centrally
important to whether a measure can be applied in a manner that constitutes a means of arbitrary
discrimination. Further, the panels in Argentina – Hides and Leather and Thailand – Cigarettes
(Philippines) held, in the context of Article X:3(a) of the GATT 1994, that where a legal instrument
provides for a private industry party to participate in the administration of regulations which affect

- B-19 -

the party's own commercial interests, this will give rise, in the absence of adequate safeguards, to
an "inherent danger" that the party will administer the laws or regulations in a manner that is self-
interested, i.e., aligned with its own commercial interests, and therefore lacking impartiality. This
is exactly the situation with the Amended Tuna Measure's labelling conditions and requirements
related to captains' self-certifications of the "dolphin-safe" status of the tuna caught by their own
fishing vessels, and there are no safeguards to address it.

C. The Amended Tuna Measure is Inconsis tent with Articles I:1 and III:4 of the
GATT 1994

28. The United States has not rebutted Mexico's prima facie case that the Amended Tuna
Measure is inconsistent with Articles I:1 and III:4. The United States' defence consists of relaying
on certain findings of the original Panel under Article 2.1 of the TBT Agreement that were
overturned by the Appellate Body and by relying on an interpretation of Articles I:1 and III:4 that
was expressly rejected by the Appellate Body in EC – Seal Products.

29. In EC – Seal Products , the Appellate Body held that Article I:1 prohibits conditions to the
granting of an advantage – including regulatory distinctions drawn between like imported products
– that "have a detrimental impact on the competitive opportunities for like imported products from
any Member". The Appellate Body affirmed that a finding of detrimental impact is sufficient on its
own to demonstrate a violation of either or both Article I:1, or and Article III:4, and no further
analysis of whether the detrimental impact stems exclusively from a legitimate regulatory
distinction (i.e., a "discrimination analysis") is required under these provisions. Nothing in the
Amended Tuna Measure has reduced or minimized the detrimental impact on imported Mexican
tuna products caused by the regulatory distinction imposed in the original Tuna Measure. Rather,
the regulatory distinction remains substantially the same, and tuna products of Mexican origin
continue to be effectively excluded from the U.S. market.

D. The Inconsistencies with Articles I: 1 and III:4 cannot be Saved by Article XX
of the GATT 1994

30. The United States has invoked the general ex ceptions under Articles XX(b) and (g) of the
GATT 1994. Neither applies to the measure at issue.

31. The Panel in the original proceedings identified two objectives of the Amended Tuna Measure
– the "consumer information objective" (the primary objective) and the "dolphin protection
objective" (the secondary objective) – and found a direct correlation between these two
objectives. The primary "consumer information objective" bears no relationship with the
exceptions set out under subparagraphs (b) and (g) considering that it is unsuccessful in providing
accurate information to U.S. consumers about whether tuna products contain tuna that was caught
in a manner that adversely affected dolphins. Th e secondary "dolphin protection objective" is
dependent upon the achievement of the primary objective. Since the measure fails to fulfil its
primary objective, it cannot fulfil its secondary objective.

32. Article XX(b) requires the measure at issue to be "necessary" to achieve the objective that it
pursues. Due to the above-noted inaccuracies, the Amended Tuna Measure fails to address the
harm caused to dolphins as a result of tuna fishing methods outside the ETP and, therefore, it does
not contribute to the objectives that it pursues and it is not "necessary". Moreover, there are less
trade-restrictive alternative measures that are reasonably available to the United States that can
achieve the objectives that it pursues. First, establishing independent, qualified observer and tuna
tracking systems outside the ETP that are equivalent to those maintained under the AIDCP would
balance the Amended Tuna Measure's dolphin-safe conditions and requirements. This would reduce
the de facto discrimination against Mexican tuna products and would therefore be less trade-
restrictive. Second, the measure could be revised to permit the co-existence of labelling schemes
that are each required under U.S. law to provide consumers with full and accurate information
regarding: the fishing method used to catch the tuna contained in the product; the risks of bycatch
related to that fishing method; the sustainability of the fishing method; and the measures taken to
protect dolphins and the type of tracking and ve rification system that backs up the protection
scheme. This alternative would provide more reasonable opportunities for Mexican tuna products
to access the major commercial distribution channels of the U.S. market and, thus, it would be
less trade restrictive. Both alternatives would provide more accurate information to
U.S. consumers and would be reasonably available.

- B-20 -

33. Article XX(g) does not apply because the Amended Tuna Measure does not relate to the
"conservation" of dolphins. It is not intended, designed, or applied as a measure necessary to
conserve dolphin stocks in the course of tuna fishing operations in the ETP or to promote recovery
of dolphin stocks. The above-noted information inaccuracies further undermine any conservation
effect that the measure might have. Thus, the measure does not bear a "substantial relationship"
to the goal of conservation, such that it is not "merely incidentally or inadvertently aimed at"
conservation, as contemplated by the Appellate Body in US – Gasoline and the panel in China –
Rare Earths . Further, the measure is not "made effective in conjunction with restrictions on
domestic production or consumption". The United States has failed to identify any such
"restrictions on domestic production or consumption", as none can be said to exist.

34. If the Panel finds that subparagraphs (a ) and/or (g) could apply, the Amended Tuna
Measure does not meet the requirements of th e chapeau to Article XX because the measure is
designed and applied in a manner that constitutes arbitrary or unjustifiable discrimination between
countries where the same conditions prevail. Consistent with the analysis established by the
Appellate Body in EC – Seal Products , the conditions prevailing in the different countries "that are
relevant for the purpose of establishing arbitrary or unjustifiable discrimination in the light of the
specific character of the measure at issue" are relevantly "the same" within the meaning of the
chapeau of Article XX. The adverse effects on dolphins caused by commercial tuna fishing are the
same for all countries that are engaged in commercial tuna fishing and, as a consequence, for all
countries that use the tuna harvested by such commercial tuna fishing in the production of finished
tuna products. Because of these widespread effects, every country producing tuna products
produces at least some tuna products which contain tuna that was caught in a manner that caused
adverse effects on dolphins.

35. The measure is applied in a manner that constitutes arbitrary or unjustifiable discrimination
because the differing labelling conditions and requirements for tuna caught in the ETP and tuna
caught outside the ETP are designed and applie d in a manner that lacks even-handedness and
constitutes a means of arbitrary or unjustifiable discrimination, resulting in regulatory differences
that modify the conditions of competition in the U.S. market to the detriment of tuna products
from Mexico vis-à-vis like products of U.S. origin and like products originating in other countries.
While all countries produce tuna products that contain tuna that was caught in a manner that
adversely affects dolphins, the Amended Tuna Measure's differing labelling conditions and
requirements are designed and applied in a manner that de facto precludes only Mexican tuna
products from using the dolphin-safe label. This constitutes clearly differential treatment of like
products from countries in which the same conditions prevail. This necessarily results in "arbitrary
and unjustifiable discrimination" within the meanin g of the chapeau to Article XX. Moreover, this
discrimination cannot be reconciled with, or rationally related to, the Amended Tuna Measure's
objectives. Finally, the unilateral action of the United States in designing and applying the
Amended Tuna Measure's labelling conditions and requirements in a manner that contradicts and
undermines the dolphin-safe labelling regime under the AIDCP – which was multilaterally
negotiated and agreed between the United States, Mexico, and other IATTC member countries
specifically for the purpose of establishing a dolphin-safe labeling regime to protect dolphins and
other marine species in the ETP from harmful tuna fishing practices – results in arbitrary or
unjustifiable discrimination. Had the United States first tried to address its remaining concerns
within the AIDCP and been rebuffed, the legal issue in this dispute might be different. But the
United States did not even try. It simply acted on its own in applying an extraterritorial measure.

IV. CONCLUSIONS

36. On the basis of the foregoing, Mexico respec tfully requests that the Panel find that the
U.S. measures are inconsistent with Article 2.1 of the TBT Agreement and Articles I:1 and III:4 of
the GATT 1994. Mexico further requests that the Panel find that the general exceptions in
Article XX of the GATT 1994 do not apply to the violations of Articles I:1 and III:4.

- B-21 -

ANNEX B-3
EXECUTIVE SUMMARY OF THE OPENING ORAL STATEMENT OF MEXICO
AT THE MEETING OF THE PANEL
1. A quarter century ago, levels of dolphin mortalities occurring in the Eastern Tropical Pacific
(ETP) tuna fishery were universally recognized by Mexico, the United States and other countries as
being unacceptably and unsustainably high. Mexico, the United States, and the Parties to the
IATTC embarked upon a cooperative multilateral effort that led to the creation of the International
Dolphin Conservation Program (IDCP), in exchange for the United States changing its law and
definition of dolphin safe from a method of capture standard to a standard based on whether
dolphins were killed or injured. It is indisputable that no other tuna fishery in the world is as highly
and successfully regulated for dolphin safety as the ETP. But Mexican tuna products are not
allowed to be labelled dolphin-safe, while tuna products from all other fisheries are allowed use of
the dolphin-safe label, despite the fact that thousands of dolphins are killed in those other tuna
fisheries each year. This is a genuine tragedy for the world's environment and also undermines the
consumer information objectives that the United States purports to achieve. Mexico believes that
this WTO claim has helped to focus the spotlight on destructive fishing practices and lack of
protection for dolphins in all the world's fisheries.

2. At issue before this Panel is whether the Amended Tuna Measure is consistent with the
United States' non-discrimination obligations under Article 2.1 of the TBT Agreement and
Articles I:1 and III:4 of the GATT 1994 and, in the case of the GATT 1994, whether the Amended
Tuna Measure can be saved by Article XX. Mexico's written submissions present a prima facie case
in respect of all of the elements of its claims.

I. MEXICO HAS PRESENTED PRIMA FACIE EVIDENCE THAT THE UNITED STATES HAS
NOT REBUTTED

3. The United States has agreed that dolphins are susceptible to being killed in other ocean
regions, including by methods other than dolphin sets, and that such harm includes unobserved
effects. That is consistent with the Panel's findings in the original proceedings. Moreover, the
Amended Tuna Measure purports to assure consumers with absolute certainty that no dolphin was
killed or harmed in the harvesting of the tuna. However, the U.S. requirements for non-ETP tuna,
and its mechanisms for implementing those requirements, cannot provide that assurance.

4. The United States seeks to make a virtue of the fact that, outside of the ETP, no one is
carefully monitoring for harms caused to marine mammals. It argues that without detailed studies,
it must be presumed that dolphins are not being harmed outside the ETP. To the contrary, Mexico
has presented more than enough evidence to demonstrate that significant numbers of dolphins are
regularly being killed in tuna fisheries outside the ETP.

5. The United States asserts that the evidence of unobserved harm to dolphins in the ETP is
proven with certitude, when in the original proceedings, the Panel found that "there is a degree of
uncertainty in relation to the extent to which setting on dolphins may have an adverse impact on
dolphins beyond observed mortality." Meanwhile, the United States complains that Mexico's
evidence showing that thousands of dolphins have been killed or maimed outside the ETP, by
fishing methods including dolphin sets, longline fishing and FAD fishing, are "ad hoc" or too "old".
The key question raised is why the United States applies such widely different presumptions to the
evidence, depending on whether the fishing is conducted inside or outside the ETP.

6. In its first written submission, the United St ates argued that "vessels flagged to Thailand,
the Philippines, Vietnam, Ecuador, Indonesia, and the United States produce tuna products
accounting for over 96 percent of the U.S. ma rket for canned tuna". In response, Mexico
demonstrated that the U.S. assertion was wrong, in particular because Thailand does not have a
major tuna fishing fleet. In its second written submission, the United States now claims that its
confidential database indicates that Taiwan is the largest supplier of tuna for tuna products
exported to the United States, and the top su ppliers also include China, Vanuatu, and South
Korea, none of which it previously mentioned. For these reasons Mexico re-affirms its position that

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the United States has no reliable method for tracking the source of tuna contained in tuna
products made with tuna not caught in the ETP.

7. In this regard, Mexico notes that the United States defended its reliance on self-certification
by stating that captain's statements, logbooks "and the like" have "always been a core
implementation tool for Members to verify compliance with the applicable fishing rules." Mexico
submitted evidence that major suppliers of tuna and tuna products to the United States lack
logbook programs and cannot track the sources of tuna imported into their countries to be made
into tuna products. In its second written submission, the United States now says that it does not
care whether foreign governments monitor fishing practices or the sources of imported tuna,
because the United States trusts that the fishing vessels and the tuna processors have the
necessary information and are accurately reporting it. But the United States also admits that it
lacks jurisdiction over foreign vessels and processors.

8. In its Second Written Submission, the United States claims that dolphin mortalities in the
Western and Central Pacific are lower than in the ETP. But the report on which the United States
relies presents data on only a fraction of the tuna fishing in that ocean region. Moreover, there is a
long lag time in the reporting of accurate region al observer program data to the WCPFC. Mexico
believes the evidence suggests the mortalities are much higher.

9. Just a few weeks ago, the Commerce Department announced that it would require
observers, when they are already onboard U.S. tu na fishing vessels for other reasons, to support
the dolphin-safe certification. This requirement only applies to certain tuna fisheries in U.S.
domestic waters, and does not increase the level of observer coverage in any of those fisheries.
Significantly, the Commerce Department agreed that no foreign observer programs, other than the
ones operating under the auspices of the AIDCP, are qualified to make dolphin-safe certifications.

10. To justify not requiring 100 percent observer coverage for non-ETP tuna products, the
United States grossly exaggerates the costs of observer programs, and there are several problems
with its calculations. The observer costs of the AIDCP program are lower than the United States
claims. Other comparative data is provided by the costs of Mexico's observer program for longline
vessels operating in the Gulf of Mexico, which is provided in an exhibit. The fact that Mexico can
manage to pay to have independent observers sh ows that an observer program is reasonably
available. The U.S. argument that the U.S. government and U.S. industry cannot afford to do so is
not credible.

II. THE UNITED STATES HAS NOT REBUTTE D MEXICO'S CLAIM UNDER ARTICLE 2.1

11. The United States argues that Mexico's claim falls outside the Panel's terms of reference
because it is premised entirely on aspects of the measure that the DSB did not find to be in breach
of Article 2.1 in the original proceedings and that are unchanged from the original measure.

12. First, Mexico's Article 2.1 claim challenges the consistency of the Amended Tuna Measure "in
its totality." Mexico agrees with the European Union that the various aspects of the Amended
Tuna Measure are inseparable from one another, as they "can only meaningfully and reasonably be
considered as a whole." Second, the Amended Tuna Measure is, "in principle, a new and different
measure" that was not before the Panel and the A ppellate Body in the original proceedings. Third,
the Appellate Body has established that a Member is not "entitled to assume" in Article 21.5
proceedings that an aspect of the measure that was not decided on the merits in the original
proceedings is consistent with the relevant covered agreements.

13. Mexico agrees with the United States that the detrimental impact of the measure on Mexican
tuna products is caused by the fact that most Mexican tuna products contain tuna caught by
setting on dolphins in the ETP and are therefore not eligible for a dolphin-safe label, whereas most
tuna products from the United States and other countries that are sold in the US market contain
tuna caught by other fishing methods outside the ETP and are therefore eligible for a dolphin-safe
label.

14. With respect to whether this detrimental impact stems exclusively from a legitimate
regulatory distinction within the meaning of Article 2.1, it is necessary to examine the regulatory
distinction that accounts for this detrimental impact. This "relevant" regulatory distinction includes

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the differences in the three labelling conditions and requirements for tuna products identified by
Mexico:

 Mexico's primary fishing method is permanently disqualified from being used to catch
dolphin-safe tuna while the fishing methods used by the United States and other
countries are qualified to be used to catch dolphin-safe tuna;

 Mexico's tuna and tuna products are subject to strict record-keeping and verification
requirements, while tuna and tuna products from the United States and other countries
are not subject to such requirements and, therefore, can be mislabeled as dolphin-safe
when, in fact, they are not; and

 In the case of Mexican tuna, the initial designation of dolphin-safe status is subject to
mandatory independent observer requirements, while, in the case of tuna from other
countries, the initial designation of dolphin-safe status is not made by independent
observers, thereby allowing the tuna to be mislabeled as dolphin-safe when, in fact, it is
not.

15. Mexican tuna products are being detrimentally impacted because of the regulatory
differences in the above-noted labelling condit ions and requirements. The requirements and
conditions that apply to tuna fishing outside of the ETP are deficient. Thus, contrary to the position
advanced by the United States, the Amended Tuna Measure is not denying eligibility to tuna
products that contain tuna caught outside the ETP in circumstances where a dolphin was killed or
seriously injured.

16. The United States criticizes Mexico's interp retation of even-handedness because it draws on
the meaning of "arbitrary discrimination" from the chapeau of Article XX. This criticism has no
merit. In EC – Seal Products , the Appellate Body recognized that "there are important parallels
between the analyses under Article 2.1 of the TBT Agreement and the chapeau" and that the
concept of "arbitrary or unjustifiable discrimination between countries where the same conditions
prevail" is found in both. Although the scope and application of the provisions differ, it is clearly
appropriate to use the meaning of "arbitrary discrimination" developed under the chapeau of
Article XX as context when interpreting the meaning of "even-handedness" in Article 2.1 of the TBT
Agreement.

17. The United States argues that the tracking, verification and observer requirements are part
of the AIDCP and not the Amended Tuna Measure. But the tracking and verification and observer
requirements are included in the Amended Tuna Measure. They apply equally to the Amended
Tuna Measure and the AICDP. Mexico is not challenging the application of the tracking, verification
and observer requirements to the Mexican fleet. Me xico's position is that the absence of these
essential requirements for tuna products from other countries is not even-handed. Major fishing
methods other than pole and line fishing have significant adverse effects on dolphins. Given these
adverse effects, Mexico has presented a prima facie case that there is no basis for the Amended
Tuna Measure to qualify all other fishing methods to catch dolphin-safe tuna and, at the same
time, disqualify the method of setting on dolphi ns in an AIDCP-compliant manner. This different
treatment is not even-handed.

18. The United States has argued for different approaches to evaluating the even-handedness of
the distinction it makes between dolphin sets and other fishing methods. One approach is a zero
tolerance benchmark, under which a method should be disqualified if it is believed to cause
unobservable effects. Because the United States agrees that other fishing methods cause
"unobserved harm" to dolphins, if this benchmark is applied it is not even-handed for the
United States not to disqualify those methods as well.

19. The United States has also suggested that rather than zero tolerance, an approach could be
applied where the applicable criterion would be whether a fishing method is causing a certain level
of observed mortalities comparable to the ETP. With regard to using the actual level of mortalities
in the ETP as the benchmark, those mortalities have long been reduced to a statistically
insignificant level in relation to the dolphin populations in the ETP. Moreover, it is fundamentally
arbitrary to use the dolphin mortalities associated with Mexico's fishing method as the basis for
justifying the total disqualification of Mexico's fishing method. Under that test, Mexico's fishing
method can never qualify. Meanwhile, there is a reasonable basis to conclude that thousands of

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dolphins are being killed in other fisheries, but the fishing methods used in those fisheries have
not been disqualified.

20. The United States argues that "setting on dolphin is inherently dangerous to dolphins". But
virtually all the major fishing methods are dangerous to dolphins. These adverse effects are a
reflection of the characteristics of the fishing methods and, therefore, are equally inherent to those
fishing methods.

21. Finally, the United States argues that "there is only one fishing method that targets
dolphins" and that setting on dolphins involves the "intentional harassment of those dolphins".
There is no rational connection between this statement and the objective of the Amended Tuna
Measure. What matters is whether a fishing method is known to cause adverse effects on dolphins,
even if such effects are "incidental". All major fishing methods other than pole-and-line fishing
have adverse effects on dolphins. But only in the ETP have positive steps been taken to
successfully minimize the risks of dolphins.

22. Under the Amended Tuna Measure, the terms "dolphins … killed or seriously injured" are
clearly designed and applied in an absolute way in the context of observed adverse effects. Tuna
caught in a fishing set or gear deployment cannot be labelled as dolphin-safe if only a single
dolphin mortality or serious injury is observed during the set or deployment. This has important
implications for the Panel's analysis of even-handedness in light of the labelling conditions and
requirements related to tracking and verification and observers.

23. The guaranteed existence of dolphin-safe and non-dolphin-safe tuna, regardless of the
fishery in which the tuna is caught or the fishing method that is used to catch it, makes tracking
and verification requirements in all tuna fisherie s a necessity; otherwise there is no way to ensure
that tuna products are being accurately labelled. Under the Amended Tuna Measure, they are not
so applied, and for that reason the relevant regulatory distinction is not even-handed.

24. The guarantee of the label that no dolphins were killed or seriously injured incorporates a
"zero tolerance" standard. In order for the dolphin-safe certification to be anything more than an
arbitrary designation, the information upon which it is based must be accurate and verifiable. The
captain self-certification system provided under the Amended Tuna Measure is inherently flawed,
in that it creates a very real risk, if not a certainty, that inaccurate dolphin-safe certifications will
be made outside the ETP. To remedy this defici ency in the Amended Tuna Measure, the observer
conditions and requirements must be modified so that the accuracy of the dolphin-safe status of
the tuna can been guaranteed from the point of initial capture to the retail shelf.

III. THE UNITED STATES HAS NOT REBUTTE D MEXICO'S CLAIM UNDER ARTICLES I:1
AND III:4 OF THE GATT 1994

25. Mexico has demonstrated that, for its claims under Articles I:1 and III:4 of the GATT 1994,
the conditions and requirements set forth in the Amended Tuna Measure result in a de facto
detrimental impact on the competitive opportunities for Mexican tuna products in the U.S. market
vis-à-vis like tuna products originating in the United States and other countries by effectively
denying the advantage of access to the dolphin-safe label to tuna products of Mexican origin. The
Amended Tuna Measure, as a whole, is inconsistent with these provisions.

26. The United States argues that "Mexico' s approach would doom many legitimate and
genuinely non-discriminatory measures." This argument deliberately ignores the context, design
and structure of the GATT 1994 by conflating Article III:4 with Article XX. A Member's right to
draw legitimate regulatory distinctions is protected by Article XX. There is no justification for
imposing a "legitimate regulatory distinction" analysis into the assessment of discrimination under
either Article I:1 or III:4.

IV. THE AMENDED TUNA MEASURE'S VIOLATIO NS OF ARTICLES I: 1 AND III:4 OF THE
GATT ARE NOT PROVISIONALLY JUSTIFIED UNDER ARTICLE XX

27. The United States has the burden of proof to demonstrate that the labelling conditions and
requirements provided under the Amended Tuna Measure fulfil the requirements of
sub-paragraphs b) and g) of Article XX of the GATT 1994. The United States has not done so.

- B-25 -

28. If the Panel finds that the measure is provisionally justified under one of these
subparagraphs, the chapeau to Article XX prohibits measures that are "applied in a manner which
would constitute a means of arbitrary or unjustifiable discrimination between countries where the
same conditions prevail." The Amended Tuna Measure fails to comply with this requirement.

29. The U.S. claims that the relevant "condition" for the purposes of the chapeau to Article XX is
the "different harms to dolphins caused by setti ng on dolphins, on the one hand, and by purse
seine (other than setting on dolphins), longline, and pole-and-line fishing, on the other." This
argument ignores the fact that the Amended Tuna Measure is concerned with adverse effects on
dolphins; it is not concerned with the "relative" or "comparative" adverse effects of different
fishing methods. Taking the "pertinent context" of subparagraphs (b) and (g) to Article XX into
account, there are in fact two relevant prevailing conditions that the Amended Tuna Measure seeks
to address. Mexico has demonstrated that all tuna fishing methods result in harm to dolphins, with
the exception of pole-and-line fishing. As such, the first relevant prevailing condition of adverse
effects on dolphins caused by commercial tuna fishing is "the same" for all countries that engage
in commercial tuna fishing, and by extension, for all countries that use tuna harvested by such
commercial tuna fishing in the production of tuna products. Second, and as a corollary, every
country producing tuna products produces at least some tuna products that contain tuna that was
caught in a manner that caused adverse effects on dolphins.

30. Mexico has demonstrated that it is the three labelling conditions and requirements that
apply to Mexico's fishing method, and that differ from the labelling conditions and requirements
that apply to other fishing methods, that give rise to the detrimental impact that contravenes
Articles I:1 and III:4 of the GATT 1994. Consequent ly, each of the three labeling conditions and
requirements is directly relevant to the analysis under Article XX as a whole, including the
chapeau.

31. While Mexico recognizes that a violation of a substantive provision of the GATT may not be
relied upon as sufficient to prove a violation of the chapeau to Article XX, the fact remains that the
same circumstances giving rise to a violation of a substantive provision of the GATT can also result
in arbitrary or unjustifiable discrimination within the meaning of the chapeau.

32. Mexico has also established that the Am ended Tuna Measure results in arbitrary and
unjustifiable discrimination pursuant to Article 2. 1 of the TBT Agreement. In the circumstances of
this dispute, "arbitrary and unjustifiable discrimination" within the meaning of Article 2.1 amounts
to "arbitrary and unjustifiable discrimination" under the chapeau to Article XX of the GATT 1994.

33. Finally, the United States maintains that "Mexico's position simply ignores the realities of the
past and present of the ETP tuna fishery." Ironically, it is the United States that has chosen to
ignore the reality that, in all tuna fisheries, commercial tuna fishing activities have adverse effects
on dolphins, and that every country producing tuna products produces at least some tuna products
that contain tuna that was caught in a manner that caused adverse effects on dolphins. By
applying differing labelling conditions and requirements to tuna products from countries in which
these same conditions prevail, the Amended Tuna Measure discriminates against Mexican tuna
products in an arbitrary and unjustifiable manner. Accordingly, the general exceptions in Article XX
do not apply.

V. CONCLUSION

34. It is clear from the facts of this dispute and the evidence provided by Mexico that the
United States has not brought itself into compliance with its obligations under the relevant covered
agreements through the adoption of the Amended Tuna Measure.

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ANNEX B-4
EXECUTIVE SUMMARY OF THE FIRST WRITTEN SUBMISSION OF THE UNITED STATES
I. ARTICLE 2.1 OF THE TBT AGREEMENT

A. What Article 2.1 Requires

1. The question before the Panel is whether the amended measure accords less favorable
treatment to imported products "than that accorded to like domestic products and like products
from other countries." To establish this, Mexico must prove that the amended measure: 1)
"modifies the conditions of competition in the relevant market to the detriment of the group of
imported products vis-à-vis the group of like domestic products or like products originating in any
other country"; and 2) that "the detrimental impact on imports [does not] stem[] exclusively from
a legitimate regulatory distinction rather than reflecting discrimination against the group of
imported products."

2. As to the second element, it is well esta blished that the complainant must prove that the
relevant regulatory distinctions are not "even-handed." In this dispute, the Appellate Body
determined that the regulatory distinctions of the original measure were not exclusively "even-
handed" because tuna products could be labeled dolphin safe where the product contained tuna
caught outside the ETP and a dolphin was killed or seriously injured but that same allowance was
not provided to tuna products containing tuna caught inside the ETP. This analysis is consistent
with the analysis done by the Appellate Body in US – Clove Cigarettes , US – COOL , as well as in
US – Upland Cotton . Mexico errs when it urges this Panel to substitute the analysis used by the
Appellate Body in this very dispute for the one used by the panel in EC – Seal Products.

B. The 2013 Final Rule Directly Ad dresses the Concerns Identified by the
Appellate Body

3. The Appellate Body considered that the detr imental impact did not stem exclusively from
legitimate regulatory distinctions because the original measure prohibited tuna product from being
labeled "dolphin safe" if it contained tuna caught inside the ETP where a dolphin was killed or
seriously injured, but allowed tuna product to be so labeled if it contained tuna caught outside the
ETP where a dolphin was killed or seriously injured. In this context, the Appellate Body explicitly
acknowledged that the United States did not have to require observers for all vessels operating
outside the ETP for that tuna to be eligible for the label.

4. The 2013 Final Rule directly addresses the Appellate Body's concern. The original rule
already required a captain's statement for purse seine vessels operating outside the ETP "to certify
that no purse seine was intentionally deployed on or used to encircle dolphins during the particular
trip on which the tuna was harvested." The 2013 Fi nal Rule amends the original regulation to now
require "a captain's statement certifying that no dolphins were killed or seriously injured in the
sets or other gear deployments in which the tuna were caught using any fishing gear type in all
fishing locations." As to the conditions of eligibility for the dolphin safe label, the relevant
substantive requirements of the challenged measure (as amended) currently provide that: all tuna
product containing tuna caught by setting on dolphins is ineligible for the label, regardless of the
fishery, nationality of the vessel, and nationality of the processor ; and all tuna product containing
tuna caught where a dolphin was killed or seriously injured is ineligible for the label, regardless of
the fishery, gear type, nationality of the vessel, and nationality of the processor . The amended
measure's substantive requirements are even-handed.

5. Mexico does not even appear to contest that the amended measure fully addresses the
Appellate Body's analysis with regard to the on e regulatory distinction that the Appellate Body
considered relevant to its inquiry. Indeed, Mexico does not even appear to consider that whether a
dolphin is killed or injured inside or outside the ETP is, in fact, a regulatory distinction relevant to
this analysis.

- B-27 -

6. Article 17.14 of the DSU provides that adopted Appellate Reports are to be "unconditionally
accepted by the parties to the dispute, and, th erefore, must be treated by the parties to a
particular dispute as a final resolution to that dispute ." And it cannot be questioned that the
Appellate Body in this case considered that its own analysis of Article 2.1 resolved the dispute as it
relates the Article 2.1 claim. The United States accepted the Appellate Body analysis in this
dispute, studied it carefully, and designed its measure taken to comply to directly respond to that
analysis. Mexico takes a different tack, however. Not only does it not "unconditionally accept[]"
the Appellate Body's analysis, it completely ignores the analysis. Mexico does not prove its
Article 2.1 claim without putting forth a prima facie case that the United States has failed to make
"even-handed" the one regulatory distinction that the Appellate Body considered was not even-
handed in the original proceeding. Mexico has not done so – indeed, it avoids the issue entirely.

C. Mexico's Attempt to "Appeal" the Appellate Body's Report Must Fail

7. Mexico rejects the relevance of the single regulatory distinction considered by the Appellate
Body to be the relevant distinction, and argues, in effect, that the Appellate Body erred by not
considering three entirely different regulatory distinctions of the original measure, all of which are
unchanged in the amended measure. Mexico thus seeks to improperly use this compliance
proceeding as a vehicle by which to "appeal" the Appellate Body's report. Mexico's misguided
attempt to claw back what Mexico failed to achieve in its appeal of the original panel's Article 2.1
analysis should be rejected.

 1. Mexico's Claim Falls Outsid e the Panel's Terms of Reference

8. Mexico's entire Article 2.1 claim is premised on the theory that at least one of the following
elements is not even-handed: 1) the distinction between the eligibility for the dolphin safe label
for tuna product containing tuna caught by setting on dolphins in an AIDCP-consistent manner and
tuna caught by other fishing methods; 2) the di stinction between the differing record-keeping and
verification requirements required for tuna caught inside and outside the ETP; and 3) the
distinction between the differing observer requirements for tuna vessels operating inside and
outside the ETP. According to Mexico, if any one of these three elements is not even-handed, the
detrimental impact already found to exist in the original proceeding would reflect discrimination,
and Mexico's Article 2.1 claim would succeed.

9. Yet these three elements are unchanged from the original measure and the Appellate Body
did not consider that any of them proved the original measure discriminatory. The only regulatory
distinction the Appellate Body found not to be even-handed was the requirement that tuna product
containing tuna caught in the ETP is ineligible for the label where a dolphin had been killed or
seriously injured but tuna product containing tuna caught outside the ETP could be so labeled
where a dolphin had been killed or seriously injured. And it is this distinction that the 2013 Final
Rule addresses.

10. By urging the Panel to find the United States in breach of Article 2.1 on entirely different
grounds from the Appellate Body, Mexico seeks an unprecedented expansion of the terms of
reference of an Article 21.5 panel. The Appellate Bo dy's Article 2.1 analysis surveyed the original
panel's findings and uncontested facts on the record and determined that one particular regulatory
distinction was not even-handed. The Appellate Body's analysis and findings have resolved this
dispute as it pertains to the Article 2.1 claim. By urging the Panel to find the amended measure
inconsistent with Article 2.1 on entirely different grounds from the Appellate Body, Mexico
"jeopardize[s] the principles of fundamental fairness and due process" given that the United States
was "entitled to assume" that these unchanged elements are consistent with the covered
agreements.

11. Under Mexico's approach, the Appellate Body reports need not be "unconditionally accepted"
by the parties pursuant to DSU Article 17.14, and the Appellate Body report cannot be considered
a "final resolution" to the dispute. Rather, a comp lainant is allowed to raise, and re-raise claims
and arguments time and time again – without limit. Such an approach is incompatible with the
"prompt settlement of disputes," which is "essential to the effective functioning of the WTO."

- B-28 -

2. The Appellate Body Has Already Rejected the Entirety of Mexico's
Article 2.1 Claim

12. Even aside from the fact that Mexico's Article 2.1 claim falls outside the Panel's terms of
reference, Mexico's claim should be rejected on the basis that the Appellate Body has already
considered – and rejected – the entirety of the cl aim. In this dispute, the Appellate Body found
only one regulatory distinction to be relevant to the analysis, and has, thus, rejected all other
alternative legal theories relating to this claim. If this were not true, the Appellate Body's report
could not be considered a "final resolution" of Mexico's Article 2.1 claim, which it clearly is.

13. Nowhere is it clearer that the Appellate Body has already rejected Mexico's claim than it is
with regard to the first element Mexico raises – the distinction between the eligibility for the
dolphin safe label for tuna product containing tuna caught by setting on dolphins in an AIDCP-
consistent manner and by other fishing methods. While the Appellate Body agreed with Mexico
that Mexico's theory proved a detrimental impact on Mexican tuna products, it rejected Mexico's
contention that a detrimental impact alone proves a breach of Article 2.1.

14. It is also clear that the Appellate Body rejected Mexico's claim as it relates to the two other
elements: the differing record-keeping and verification requirements required for tuna caught
inside and outside the ETP, and the differing observer requirements for tuna vessels operating
inside and outside the ETP. The facts that Mexico complains of here were uncontested in the
original proceeding, and clearly fell within the A ppellate Body's review of the record. The Appellate
Body did not consider either element as proving the original measure discriminatory. This result is
unsurprising, of course, as these two elements are not relevant to the Article 2.1 analysis, and, in
any event, are completely even-handed.

3. Mexico Fails To Prove that any of These Three Elements Is Relevant to
the Article 2.1 Analysis

15. The Appellate Body has instructed that not every distinction is relevant to an Article 2.1
analysis – "we only need to examine the distinction that accounts for the detrimental impact on
Mexican tuna products as compared to US tuna products and tuna products originating in other
countries." Yet none of the three elements Mexico raises "accounts" for the detrimental impact.
Indeed, Mexico's first element is the detrimental impact. Further, the detrimental impact does not
stem from either of the other two elements that Mexico raises. That is to say, if the AIDCP parties
agreed to eliminate the record-keeping and observer requirements, the detrimental impact would
not be affected in the least bit.

4. Mexico Fails To Prove that the Detrimental Impact Does Not Stem
Exclusively from Legitimate Regulatory Distinctions

a. Mexico Fails To Prove that the Eligibility Conditions Are Not
Even-Handed

16. Mexico's first reason that the amended measure's detrimental impact reflects discrimination
is that the eligibility conditions are not even-handed. Mexico fails to prove what it asserts. On the
contrary, the relevant eligibility conditions are completely even-handed. The amended measure
contains no exceptions or carve outs, as was the case in EC – Seal Products and US – Clove
Cigarettes. The requirements are equal for all products and nothing in the design or structure of
the amended measure indicates that Mexican producers are disadvantaged in any way vis-à-vis
their competitors in the United States, Thailand, the Philippines, or elsewhere.

17. Mexico's argument – that the measure disadvantages Mexican tuna product (and is thus not
"even-handed") because tuna product containing tuna caught by setting on dolphins is ineligible
for the label while tuna product containing tuna ca ught by other methods is potentially eligible for
the label – is identical in substance to what it argued before the original panel. Yet Mexico ignores
that the original panel has already fully addressed Mexico's argument and found it lacking.

18. Those findings are undoubtedly correct. As such, it is difficult to conceive how the amended
measure's distinction between setting on dolphins and other fishing methods is anything but
"even-handed." Indeed, the Appella te Body appears to analyze whether a regulatory distinction is
even-handed in much the same way that the original panel analyzed Mexico's discrimination

- B-29 -

argument in the original proceeding. It is thus not surprising that the Appellate Body rejected
Mexico's argument that the denial of eligibility of setting on dolphins for the label disadvantages
Mexican tuna product producers, as discussed above. In contrast, Mexico constructs its entire
argument as if neither the original panel nor the Appellate Body has ever examined these issues.
It is simply improper for Mexico to set out its Article 2.1 claim in a vacuum, and urge the Panel to
ignore all of the findings and analysis of the original panel and the Appellate Body.

19. Rather than addressing the original panel's analysis, Mexico relies on the assertion that
eligible fishing methods "have adverse effects on dolphins that are equal to or greater than the
disqualified tuna fishing method of setting on dolphins in an AIDCP-compliant manner." Mexico
utterly fails to prove its assertion. Indeed, the science supports the distinctions of the amended
measure, and directly contradicts Mexico's approach. And, of course, it is this science that
underlies the Appellate Body's conclusion that "setting on dolphins is particularly harmful to
dolphins"; a finding, like so many others, that Me xico is forced to ignore. In fact, Mexico ignores
the amended measure itself – tuna products containing tuna caught by any method are ineligible
for the label where a dolphin was killed or seriously injured.

b. Mexico Fails To Prove that th e Record-Keeping and Verification
Requirements Are Not Even-Handed

20. Mexico's second reason that the amended measure's detrimental impact reflects
discrimination is that the AIDCP mandates certain record-keeping and verification requirements for
tuna caught by large purse seine vessels inside the ETP and the U.S. measure does not require
those same AIDCP-mandated requirements for all other vessels catching tuna contained in tuna
products sold labeled as "dolphin safe."

21. The relevant facts indicate that the record-k eeping and verification requirements imposed by
the challenged measure are entirely even-handed as to Mexican producers vis-à-vis tuna
producers from the United States and other Member s. These requirements are, in fact, entirely
neutral as to the nationality of vessel and origin of the tuna product. Indeed, where the regulations
draw distinctions based on nationality, it is the U.S. canneries and other processors that suffer the
greater regulatory burden, not their foreign competitors. To the extent that the regulations draw
other distinctions, they do so not between Member s, or even the fishing methods of Members, but
rather between tuna caught by AIDCP-covered large purse seine vessels and tuna caught by all
other vessels.

22. And this is where Mexico makes its argument – the AIDCP imposes requirements that are
not required of producers operating in (or sourcing) from other fisheries. The problem with this
argument is obvious – Mexico complains of a "distinction" created by the AIDCP, not the
U.S. measure. Indeed, if the United States eliminated all references to the AIDCP (and its
requirements) from the amended measure, the regulatory distinction that Mexico criticizes would
still exist.

23. But such is the impossibility of Mexico's argument. The mere fact that the U.S. measure
acknowledges the AIDCP requirements cannot be considered to be legally problematic. Indeed, it
would seem difficult to conceive of Mexico successfully arguing that the binding international legal
commitments that Mexico has made put its own tuna producers at such a disadvantage vis-à-vis
their competitors that the United States should be considered to have acted inconsistently with its
WTO obligations.

24. Moreover, Mexico puts forward no evidence to support the assertion that the
U.S. Government and its citizens have been defrauded on an industry-wide scale for over the past
two decades. And Mexico's argument fails right here. It simply cannot be the case that a
complainant establishes a prima facie case on the basis of a bare allegation – without any evidence
– a point that the Appellate Body has repeatedly found. Of course, the United States is not aware
of fraud on the industry-wide scale that Mexico suggests is occurring.

25. The fact that Mexico may consider that the U.S. law imposes "insufficient requirements and
procedures" on non-AIDCP-covered large purse seine vessels is entirely beside the point. The
Appellate Body's legitimate regulatory distinction analysis is not meant to be a vehicle for any and
all criticisms of the challenged measure that the complainant sees fit to make. Indeed, the sixth
preambular recital of the TBT Agreement "recogni zes that a Member shall not be prevented from

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taking measures necessary to achieve its legitimate objectives ' at the levels it considers
appropriate,'" a point that the Appellate Body has repeatedly affirmed.

26. Appearing to acknowledge that the United States cannot relieve Mexico of its own
international legal commitments, Mexico argues that the United States can only make this element
"even-handed" by increasing the regulatory burden outside the ETP to the level that already exists
inside the ETP. Mexico thus appears to argue that the record-keeping and verification requirements
that Mexico has agreed to form the "floor" for the requirements that the United States must
impose on itself and all other trading partners. Mexico cites no legal support for such a proposition,
and it is surely incorrect. As noted above, a Member may take measures "at the levels that it
considers appropriate," a point that Article 2.4 of the TBT Agreement confirms. However, a
Member does not act inconsistently with its WTO obligations by applying domestic measures that
reflect the international agreements (or lack thereof) of different Members. Under no
circumstances, does Mexico set the appropriate level for the United States. The United States sets
its own "floor."

c. Mexico Fails To Prove that the Requirement for an Observer
Certification Is Not Even-Handed

27. The U.S. measure's treatment of observers is entirely even-handed. The requirement for
large purse seine vessels operating in the ETP to carry observers (while other vessels are not
similarly required) stems from the AIDCP, not U.S. law. Indeed, if the United States eliminated all
references to the AIDCP-mandated observer requirement from the amended measure, the
"distinction" that Mexico criticizes would still exist. Mexico claims that requiring observers for some
vessels and not requiring it for others is "arbitrary," but, in fact, it is anything but. The amended
measure requires an observer certification where one particular international agreement requires
observers, and does not require an observer ce rtification where the relevant authority for the
fishery does not require observers to certify as to the tuna's eligibility for a "dolphin safe" label.

28. The Appellate Body was well aware of the uncontested fact that large purse seine vessels
operating in the ETP are required to carry observers while other vessels are not, and did not find
that difference proved the challenged measure discriminatory. Mexico now wrongly urges the Panel
to ignore the Appellate Body's conclusion because "n either the Panel nor the Appellate Body had
before it the facts regarding adverse effects on dolphins set out in section III of this submission or
the facts regarding the unreliability of captain certifications …" But Mexico is not free in an
Article 21.5 proceeding to "appeal" the findings of the DSB. Mexico understood the facts on the
record, and also understood that any eventual ad opted Appellate Body report would constitute a
"final resolution" in this dispute. It was Mexico's own decision to limit its discrimination claim (and
the evidence submitted in support of that clai m), and Mexico cannot now complain that it is
unsatisfied with the consequences of its own decision. Mexico should not get an unfair "second
chance" to re-argue its claim as to unchanged elements of the challenged measure.

29. Mexico appears to ground its argument on tw o assertions: 1) the tuna product containing
tuna caught by vessels other than AIDCP-covered large purse seine ones is inaccurately or
fraudulently labeled; and 2) the captain statement is "inherently unreliable" and "meaningless."
Mexico fails to prove either assertion.

30. First, Mexico puts forward not a single piece of evidence that any tuna product has been
marketed in the United States as "dolphin safe," when, in fact, it did not meet the conditions of
U.S. law. NOAA conducts extensive verification of U.S. canneries, which process both U.S. and
foreign tuna, through inspections, audits, and spot checks.

31. Second, Mexico is wrong to argue that a captain's statement is "inherently unreliable" and
otherwise "meaningless." As a general matter, the United States relies on "self-certification," as
Mexico puts it, in numerous different contexts. Mexico's suggestions – that such an approach is
inherently unreliable – would be, if true, hugely trade disruptive. Members simply do not have the
resources to require the independent verification of all the activities of domestic and foreign
producers. This is certainly the case with trade in fish where the vessels operate on the high seas
or in the territorial waters of other Members and an importing Member cannot independently verify
every action taking place (or not taking place) on every vessel that may produce fish for the
domestic market. As such, captain statements, logbooks, and the like have always been a core
implementation tool for Members to verify compliance with the applicable fishing rules. The fact is

- B-31 -

that a captain's statement is an effective vehicle to determine the eligibility of tuna for the label.
The U.S. measure has long relied on a captain statement to certify that the vessel did not set on
dolphins, and the original panel found that this certification does, in fact, address the observed and
unobserved mortality arising from setting on dolphins. This finding was not only affirmed by the
Appellate Body, it constituted the basis of the Appellate Body's finding on the Article 2.1 claim.

32. Yet, Mexico disagrees, arguing, in essence, that the original panel and Appellate Body were
incorrect, and appealing to the Panel to correct this (alleged) error. But none of Mexico's exhibits
concludes what Mexico asserts – that the captain's statement is "meaningless" – and much of what
is contained in these documents directly contradicts Mexico's own argument.

33. Mexico contends that the only way the United States can make this alleged regulatory
distinction even-handed is to unilaterally require 100 percent observer coverage throughout the
world. Again, Mexico considers that whatever commitment it has made to other AIDCP parties
must be the "floor" that all other Members must comply with for continued access to the dolphin
safe label. The tuna or tuna product produced by a Member whose producers are not in a position
to meet such an expensive requirement (becau se, for example, there is no international
organization that administers an observer program as is the case in the ETP) must be denied
access to the label, even though the tuna caught by that Member's vessels did not harm dolphins.

34. An importing Member found to have discriminated against an exporting Member's products
always has the choice as to how to come into compliance. But here Mexico claims that the
United States has no choice – the United States can only raise the requirements applied to the like
product of the other relevant Members. And the reas on that Mexico takes this position is that the
difference in requirements does not flow from the U.S. measure , but from the differing
commitments that Members have taken in different RFMOs for fishing on the high seas and in their
own municipal laws for fishing in territorial waters. Mexico's grievance is not with the challenged
law, but with the diversity of rules for fishing that exist throughout the world.

II. ARTICLE I:1 OF THE GATT 1994

35. Mexico fails to establish that the U.S. dolphin safe labeling measure is inconsistent with
Article I:1 of the GATT 1994. The United States does not contest that the first three elements of
Article I:1 are satisfied here. We do, however, disagree with Mexico that the "advantage" has not
been "immediately" and "unconditionally" accorded to like products originating in Mexico.

36. The United States considers that the "advanta ge" for purposes of Article I:1 is the access to
the dolphins safe label. No tuna product of a Member has a right to the label. Rather, the
advantage is subject to eligibility requirements that all tuna products must meet in order to be
labeled consistent with U.S. law. Those conditions are: 1) no purse seine net was intentionally
deployed on or to encircle dolphins during the fishing trip; and 2) no dolphins were killed or
seriously injured in the sets or other gear deployments in which the tuna were caught.

37. According to the Appellate Body, the "fundamental purpose" of Article I:1 is "to preserve the
equality of competitive opportunities for like imported products from all Members." However, the
Appellate Body also noted that Article I:1 do es not prohibit a Member from attaching any
conditions to the granting of an advantage, and "permits regulatory distinctions to be drawn
between like imported products, provided that such distinctions do not result in a detrimental
impact on the competitive opportunities for like imported products from any Member."

38. Mexico must, therefore, prove that the opport unity under U.S. law to label tuna product as
"dolphin safe" if certain conditions are met is not immediately and unconditionally accorded to
Mexican products. This, Mexico fails to do. In fact, the amended measure provides the same
opportunity for all tuna products to be labeled "dolphin safe." The fact that some Members elect to
take advantage of that opportunity, while others do not, does not amount to discrimination, as the
original panel correctly found. Nothing prevents Mexican vessels from fishing in a manner that
would yield tuna products eligible for the dolphin safe label, and nothing prevents vessels of other
countries from fishing in a manner that would preclude access to the label.

39. Mexico has not provided any reason that the fi ndings of either of the original panel or the
GATT 1947 panel do not control the result here. And indeed, Mexico could not do so. The fact is
that the original panel was entirely correct when it determined that any discrepancy in access to

- B-32 -

the label between Members is due to the different choices Members have made, rather than the
requirements of the challenged measure. The elig ibility condition regarding setting on dolphins
does not "discriminate[] with respect to the origin of the products."

40. The facts here are in contrast to the ones in EC – Seal Products where the Appellate Body
recently found a breach of Article I:1. There, the market access advantage was subject to
eligibility conditions related to immutable characteristics (such as the racial/cultural identity of the
seal hunters) such that while virtually all of the products of Greenland were likely to qualify for
access under the measure at issue, the vast majori ty of the products of Canada and Norway were
not. But here, fishermen have a choice about how they fish. By no means is setting on dolphins
required inside (or outside) the ETP to catch tuna. The eligibility conditions – and therefore the
opportunity for the label – are the same for everyone.

III. ARTICLE III:4 OF THE GATT 1994

41. The United States does not contest that the first two elements of Article III:4 are satisfied
here. The only question for the Panel to determine is whether the eligibility conditions of the
amended measure provides less favorable treatmen t to Mexican tuna products than to like
U.S. tuna products.

42. Mexico must prove that the U.S. measure has a "detrimental impact on the conditions of
competition" for its products, which requires a "genuine relationship between the measure at issue
and the adverse impact on competitive opportunities for imported products." Mexico fails to meet
this standard.

43. First, Mexico fails to establish the thresh old element that the challenged measure accords
different treatment to U.S. and Mexican tuna products. As discussed above, the measure sets the
same eligibility requirements for all tuna products sold in the United States – no tuna may be
caught by setting on dolphins and no tuna may be caught where a dolphin was killed or seriously
injured. Second, Mexico completely ignores the original panel's well-reasoned discrimination
analysis, which Mexico apparently considers to be entirely irrelevant to the analysis of its
Article III:4 claim. Even if Mexico did attempt to prove that the distinction that the U.S. measure
draws between setting on dolphins and other fi shing methods is unfounded, such an attempt
would surely fail. As discussed above, Mexico puts forward no evidence that setting on dolphins
could ever be considered "dolphin-safe."

44. Mexico's approach may serve Mexico's offensiv e interests in this dispute, but, if accepted,
would greatly undermine a Member's ability to regulate in the public interest. Under Mexico's
approach, the sole relevant consideration is the effect of the measure. A responding Member is
simply not afforded the opportunity to explain, nor would a panel have the ability to examine, the
underlying rationale and operation of the standard in the discrimination analysis. The basis of the
requirements – indeed, the accuracy of the label – are wholly immaterial to the national treatment
analysis. The consequences of such an approach cannot be overstated. Many legitimate measures
would be vulnerable to attack where they had not been before.

45. What Mexico's approach suggests, therefore, i s t h a t a M e m b e r m u s t , p r i o r t o a p p l y i n g a
measure that sets legitimate standards, survey all current and potential trading partners of
products affected by the measure to determine whether the affected products of those countries
either meet that standard (or whether its producers are willing to adapt to the new standard).
Where a particular country's products do not meet that standard (and that country's producers are
not willing to adapt), the Member must lower its standards to avoid breaching Article III:4. Such a
"least common denominator" approach greatly undermines a Member's ability to regulate in the
public interest generally.

46. The Appellate Body's analysis in EC – Seal Products does not suggest a different conclusion
where there were sufficient facts on the record for the panel and Appellate Body to determine that
the challenged measure was de facto inconsistent with Article III:4.

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IV. ARTICLE XX OF THE GATT 1994

47. Even if the amended dolphin safe labeling measure were found to be inconsistent with
Article I:1 or III:4 of the GATT 1994, the amen ded measure is justified under Article XX(b)
and (g).

48. As to the first element of Article XX(b), it has already been determined that one of the two
objectives of the original measure was to "contribut[e] to the protection of dolphins[] by ensuring
that the US market is not used to encourage fishing fleets to catch tuna in a manner that
adversely affects dolphins," and that the original measure "relate[d] to genuine concerns in
relation to the protection of the life or health of dolphins," and was "intended to protect animal life
or health or the environment."

49. As to the second element of Article XX(b), the amended measure easily satisfies the
"necessary" analysis. First, it is hardly debatable that the protection of dolphins is an important
objective to the United States. In any event, "the preservation of animal and plant life and health,
which constitutes an essential part of the protecti on of the environment, is an important value,
recognized in the WTO Agreement." Second, as both the original panel and Appellate Body have
confirmed, the original measure contributed to its objective. Third, the Appellate Body has already
found that the alternative measure Mexico identified for purposes of TBT Article 2.2 did not prove
the original measure "more trade restrictive than ne cessary" This is powerful evidence that Mexico
will be unable identify a suitable WTO-consistent alternative for purposes of Article XX(b).

50. The amended measure also satisfies the standard of Article XX(g). First, dolphins are a living
natural resource and, as such, are finite and ex haustible. Second, the amended measure is clearly
"relating to" the conservation of dolphins. Th e original panel found, and the Appellate Body
affirmed, that one of the original measure's objectives is the "protection" of dolphins. Third, the
amended measure imposes comparable restrictions on domestic and imported products. In fact,
the relevant requirements are the same.

51. The amended measure also satisfies the Article XX chapeau. Only where the panel finds such
"different regulatory treatment" exists, shou ld the panel analyze "whether the resulting
discrimination is 'arbitrary or unjustifiable.'" But here the eligibility conditions are the same for
everyone – the amended measure is neutral as to nationality. Any tuna product containing tuna
caught by setting on dolphins is ineligible for the label – the nationality of the vessel (or processor)
is irrelevant. Rather, whether tuna product is eligible for the dolphin safe label depends on the
choices made by vessel owners, operators, and captains. Moreover, there is no evidence to
suggest that this particular eligibility requirement singles out Mexico.

52. In any event, the eligibility conditions regarding setting on dolphins are neither arbitrary nor
unjustified. As the Appellate Body has recently em phasized, "[o]ne of the most important factors"
in making this assessment is "whether the discrimination can be reconciled with, or is rationally
related to, the policy objective with respect to which the measure has been provisionally justified
under one of the subparagraphs of Article XX." The relevant objective for both subparagraphs (b)
and (g) is to "contribut[e] to the protection of dolphins[] by ensuring that the US market is not
used to encourage fishing fleets to catch tuna in a manner that adversely affects dolphins."

53. It is without question that the two relevant eligibility conditions are rationally related to this
policy objective . First, it could hardly be questioned whether the first eligibility condition is
rationally related to the objective, and we do not read Mexico's First Written Submission to the
contrary. Second, the United States has already detailed the substantial harms that setting on
dolphins causes dolphins with regard to the second eligibility condition. By making tuna product
containing tuna caught by setting on dolphins ineligible for the dolphin safe label, the amended
measure seeks to "minimize observed and unobserved mortality and injury to dolphins." The other
fishing methods that produce tuna for the U.S. tuna product market do not cause the same level of
harm to dolphins that setting on dolphins does. Indeed, all of the potentially eligible fishing
methods capture dolphins only by accident, while the whole point of setting on dolphins is to
capture them in a purse seine net. Setting on dolphins is the only fishing method that targets
dolphins.

- B-34 -

ANNEX B-5
EXECUTIVE SUMMARY OF THE SECOND WRITTEN SUBMISSION OF THE UNITED STATES
I. MEXICO FAILS TO ESTABLISH THAT THE AMENDED DOLPHIN SAFE LABELING
MEASURE IS INCONSISTENT WITH ARTICLE 2.1 OF THE TBT AGREEMENT

A. Mexico's Claim Falls Outside the Panel's Terms of Reference

1. Mexico's Article 2.1 claim falls outside the Panel's terms of reference.

2. First, Mexico argues that the Panel should focus on the amended measure "as a whole, and
not elements comprising that measure." But in de termining its own terms of reference, the Panel
clearly can look at the specific aspects of the me asure. To say that the Panel is prevented from
doing so ignores past Appellate Body and panel reports that have consistently found that claims
against unchanged elements of the original measure fall outside the compliance panel's limited
terms of reference.

3. Second, Mexico argues that these three aspects of the measure have changed from the
original measure, implying that the line of reports cited by the United States is inapplicable to this
dispute. Mexico is mistaken. The 2013 Final Rule does not change any of the requirements in ways
that Mexico alleges prove the amended measure discriminatory.

4. Third, Mexico argues that, even if the aspects of the amended measure that it now
complains of are unchanged from the original measure, the Panel still has jurisdiction to address
Mexico's claim because it has not been resolved on the merits. But that is clearly wrong. The
original panel and Appellate Body did reach the merits of Mexico's Article 2.1 claim. And, in doing
so, the Appellate Body rejected all three elements of Mexico's Article 2.1 claim.

5. Fourth, Mexico states that "'new claims against inseparable aspects of a measure taken to
comply, which are unchanged from the original me asure' are within a panel's terms of reference
under Article 21.5." Mexico makes no actual argument that these aspects are "inseparable" from
the measure taken to comply, and all three aspects of the measure clearly fall outside the Panel's
terms of reference.

6. Finally, Mexico does not "unconditionally accept" the Appellate Body report. Such an
approach deprives the United States of the opportunity to come into compliance with its
obligations in accordance with the DSU.

B. The Appellate Body Has Already Rejected the Entirety of Mexico's Article 2.1
Claim

7. Mexico's Article 2.1 claim should be reject ed on the basis that the Appellate Body has
already considered – and rejected – the entirety of the claim.

8. First, Mexico argues that the "labelling co nditions and requirements that relate to the
qualification and disqualification of the fishing methods" are "different" in this proceeding than
they were in the original proceeding. But of course that is wrong. The eligibility condition Mexico
complains about here is the same one it complained of previously.

9. The same point holds true for the other two aspects (record-keeping/verification and
observer requirements) that Mexico raises as part of its Article 2.1 claim. The AIDCP mandates
certain record-keeping/verification and observer requirements for large purse seine vessels
operating inside the ETP that other vessels are not subject to. This "difference" was uncontested in
the original proceeding and clearly fell within the Appellate Body's review of the record. What
Mexico urges the Panel to do is accept its arguments without any regard to the DSB
recommendations and rulings in the original proceeding. That is wrong. The Panel's analysis must
be "done in the light of the evaluation of the consistency of the original measure with a covered
agreement undertaken by the original panel and subsequently by the Appellate Body."

- B-35 -

C . M e x i c o F a i l s T o P r o v e t h a t A n y o f the Three Elements Is Relevant to the
Article 2.1 Analysis

10. Not every regulatory distinction is relevant to the question of whether "the detrimental
impact on imports stems exclusively from a legiti mate regulatory distinction." According to the
Appellate Body: "[W]e only need to examine the distinction that accounts for the detrimental
impact on Mexican tuna products as compared to US tuna products and tuna products originating
in other countries. While Mexico appears to agree with this principle, it wrongly insists that the
requirements regarding record-keeping/verificatio n and observers are relevant to the Article 2.1
analysis. The source of the parties' differing views on this issue is a disagreement over what the
detrimental impact is in this dispute.

11. For the first step of its Article 2.1 analysis, Mexico relies on the Appellate Body's Article 2.1
analysis and contends that the detrimental impact is caused by the denial of "access to this label
for most Mexican tuna products." However, for the second step of its Article 2.1 analysis, Mexico
changes course and, relying heavily on the origin al panel's Article 2.2 analysis, argues that the
"accuracy" of the information is the touchstone of the detrimental impact finding. The
United States disagrees that the detrimental impa ct on the competitive opportunities can ever be
different for the two steps of the Article 2.1 analys is. Such an interpretation renders the analysis
meaningless. The entire point of the second step of the analysis is to determine whether the
detrimental impact determined to exist in the first step "reflects discrimination."

12. The Appellate Body's conclusions in para graphs 233-235 of the report show that access not
accuracy was the touchstone of its detrimental impact analysis. Thus the record-
keeping/verification and observer requirements are not relevant to this analysis, in that neither
aspect accounts for the detrimental impact. Not only does Mexico's argument contradict the DSB
recommendations and rulings, but Mexico puts forward zero evidence to prove such an assertion.
Mexico's attempt to "re-imagine" the Appellate Body's detrimental impact analysis is another
example of Mexico's attempted "appeal" of the DSB recommendations and rulings.

13. Mexico also errs in arguing that "further support" for the proposition that the detrimental
impact exists can be found in the "unilateral application" of the amended measure. First, the DSB
recommendations and rulings did not find that the detrimental impact is a factor of so-called
"unilateral" application. As such, it is unclear why Mexico considers its argument relevant to the
dispute. Second, the Appellate Body has already found that the objective of the original measure is
not to "coerce" Mexico. Third, Mexico claims that the amended measure "undermines the AIDCP
regime" but puts forward no evidence that the fu nctioning of the AIDCP has been harmed. In any
event, it simply cannot be the case that the United States has acted contrary to the
WTO Agreement by determining for itself what level of protection is appropriate for the
United States.

D. Mexico Fails To Prove that the Detrim ental Impact Does Not Stem Exclusively
from Legitimate Regulatory Distinctions

1 . M e x i c o F a i l s T o P r o v e t h a t t he Eligibility Conditions Are Not
Even-Handed

14. In its second submission, Mexico again fails to establish that the eligibility requirements
prove the amended measure inconsistent with Articl e 2.1. As the United States has explained, the
eligibility conditions are, in fact, entirely neutral, and thus even-handed. Mexico counters that the
Appellate Body determined that the eligibility conditions result in a detrimental impact on Mexican
tuna products. That is true, but it does not prove that such eligibility conditions are not even-
handed. Further, it is clear from the DSB recommendations and rulings that the Appellate Body did
not agree that the eligibility condition regarding setting on dolphins was not even-handed, and the
fact that the requirement was neutral across fisheries was key to its finding.

15. Mexico also reasserts its argument that "fis hing methods used outside the ETP have adverse
effects on dolphins equal to or greater than setting on dolphins in the ETP in an AIDCP-consistent
manner." Mexico puts forward no new evidence to support this assertion nor does it respond to the
extensive evidence that the United States put forward that proves this assertion to be unfounded.

- B-36 -

16. More fundamentally, Mexico is wrong to argue that the United States may not draw
distinctions between different fishing methods. Setting on dolphins is the only fishing method that
targets dolphins. There is nothing about it that is safe for dolphins, and the measure rightly denies
access to the label to tuna products containing tuna caught by this method.
2. Mexico Fails To Prove that the Record-Keeping and Verification
Requirements Are Not Even-Handed

17. Mexico argues that, because the AIDCP mand ates certain record-keeping and verification
requirements for tuna caught by large purse seine vessels operating inside the ETP and the
amended measure does not impose those same requirements on other tuna sold in the U.S. tuna
product market, the amended measure is not even-handed. However, the "difference" that Mexico
c o m p l a i n e d o f d o e s n o t s t e m f r o m U . S . l a w a t a l l , b u t f r o m t h e A I D C P . M e x i c o a r g u e s t h a t i t s
"claim is made in respect of the relevant regulatory distinction in the labelling conditions and
requirements of the Amended Tuna Measure, and not the AIDCP." But Mexico provides no reason
as to why this is so. The actual record-keeping and verification requirements Mexico complains of
are contained in the AIDCP. Thus it cannot be the case that the amended measure disadvantages
Mexican producers in a manner that could be considered not to be even-handed.

18. Mexico has failed to submit any evidence to support its assertion that the U.S. Government
and its citizens have been defrauded on an industry-wide scale by inaccurate labeling over the past
two decades. Mexico denies that this aspect of its claim fails for lack of evidence based on its
theory of its burden of proof. In Mexico's view, a complainant is not required to prove that this
element is not even-handed. Rather, all that is required is for Mexico to assert that: "tuna
products containing non-dolphin-safe tuna caught outside the ETP could potentially enter the
U.S. market inaccurately labeled as dolphin-safe." But the Appellate Body made clear that nothing
in its Article 2.1 analysis alters the traditional notions of burden of proof.

19. Next, Mexico fails to explain how its approach is not inconsistent with the fundamental
principle that "a Member shall not be prevented from taking measures necessary to achieve its
legitimate objectives 'at the levels it considers appropriate.'" By contending that the United States
must impose AIDCP-equivalent requirements on all its trading partners, Mexico urges this Panel to
adopt an approach whereby whatever Mexico commits to in an international agreement, the
United States must require of itself and all its other trading partners, irrespective of the science or
any other consideration. Mexico's approach is incompatible with the sixth preambular recital and,
as such, cannot establish that the amended measure is inconsistent with Article 2.1.

20. Finally, Mexico ignores the history of the AIDCP. The IATTC Members agreed to different
requirements regarding record-keeping/verification and observer coverage than other Members
have agreed to in other fisheries because the ETP is different. Nowhere else has a tuna fishery
caused the harm to dolphins that large purse seine vessels have caused in the ETP. Accordingly, it
is no surprise that tuna caught by large purse seine vessels in the ETP is now subject to different
rules than tuna caught elsewhere. The fact that the amended measure requires the AIDCP
reference number to be included on the Form 370 is not illegitimate.

3. Mexico Fails To Prove that the Requirement for an Observer
Certification Is Not Even-Handed

21. Mexico again fails to establish a prima facie case that not imposing AIDCP-equivalent
observer coverage on the rest of the world renders the amended measure discriminatory.

22. First, the specific requirements regarding the AIDCP observer program are contained in the
AIDCP and related documents. Such requirements are not repeated in U.S. law.

23. Second, Mexico's approach directly contradicts the Appellate Body's findings. The Appellate
Body was aware that large purse seine vessels op erating in the ETP carry observers while other
vessels do not. Indeed, the Appellate Body noted that the Panel did not state that imposing a
general observer certification requirement "would be the only way for the United States to
calibrate its 'dolphin safe' labeling provisions" and noted "that the measure at issue itself
contemplates the possibility" of a captain's certif ication. Consistently, the Appellate Body did not
find the aspect regarding observers and captain statements to be not even-handed. Rather, the
Appellate Body recognized that the original measure " fully addresses the adverse effects on

- B-37 -

dolphins resulting from setting on dolphins" – both inside and outside the ETP – even though a
captain statement was the certification required for tuna caught outside the ETP. Mexico now
seeks to "appeal" this finding.

24. Third, Mexico contends that captain statements are "inherently unreliable" and that the
amended measure is "designed and applied in a manner that creates the likelihood, if not the
certainty, that non-conforming tuna will be improperly certified as dolphin safe." But Mexico does
not establish a prima facie case that the amended measure is inconsistent with Article 2.1 based
on mere assertions. Mexico puts forward no evidence that any tuna that is ineligible for the label is
being illegally labeled as "dolphin safe."

25. Fourth, Mexico argues that this aspect of the measure is not even-handed because it is
"entirely inconsistent with the objective" of the measure. The Appellate Body has never mentioned
this inquiry as an element of the analysis in eith er this dispute or the other two TBT disputes. And
the Appellate Body has made clear that analyses are different under TBT Article 2.1 and the
chapeau of GATT Article XX. Therefore, this issue is not relevant to the analysis.

26. Fifth, Mexico's argument fails because it: 1) ignores why the AIDCP was agreed to in the
first place; 2) ignores the level of current harms occurring due to setting on dolphins; 3) ignores
the trade consequences of requiring 100 percent observer coverage; 4) ignores the fundamental
principle underlying the TBT Agreement that "a Member shall not be prevented from taking
measures necessary to achieve its legitimate objectives ' at the levels it considers appropriate '";
and 5) and requires the United States to impose "a rigid and unbending" observer requirement on
all of its trading partners, regardless of whether it is needed in light of harm to dolphins in that
particular fishery or feasible given the expense of the program.

II. MEXICO
 FAILS TO ESTABLISH THAT THE AMENDED MEASURE IS INCONSISTENT
WITH ARTICLE I:1 OF THE GATT 1994

27. Mexico relies entirely on the Appellate Body's conclusion in paragraphs 233-235 of its report
that the amended measure causes a detrimental impact on Mexican tuna product containing tuna
caught by setting on dolphins to prove its Arti cle I:1 claim. The Appellate Body's finding of
detrimental impact, as well as the original panel's factual findings that underlie the Appellate
Body's conclusion, is limited to the ineligibility for the label of tuna product containing tuna caught
by setting on dolphins and the potential eligibility of tuna product containing tuna caught by other
methods. Mexico neither claims nor proves that any other aspect of the amended measure,
including the requirements related to record-keeping/verification and observer coverage, are
inconsistent with Article I:1.

28. Mexico has failed to meet its burden of demonstrating that the amended measure is
inconsistent with Article I:1. The "advantage" accorded by the U.S. measure is access to the
dolphin safe label. Nothing prevents Mexican canneries or Mexican vessels from producing tuna
product that would be eligible for the dolphin safe label. Mexico asserts that the Appellate Body
has "effectively rejected the line of reasoning" on which the U.S. argument relies. We disagree.
The Appellate Body did not reject the original pa nel's characterization of the U.S. measure but,
rather, what it perceived as the original panel's assumption that regulatory distinctions not based
on "national origin per se cannot be relevant in assessing the consistency of a particular measure
with Article 2.1 of the TBT Agreement." The original panel made no findings under Article I:1, and,
therefore, the Panel should now undertake an "objective assessment of the matter."

29. Mexico asserts that "the consequences of the United States' unilateral action" in applying the
amended measure "provide further support" for the detrimental impact. This argument fails. First,
the DSB recommendations and rulings did not find that the "detrimental impact" is a factor of so-
called "unilateral" application. Second, Mexico's characterization of the measure as "intentional[ly]
exerting pressure on Mexico to change its tuna fishing practices" is incorrect. The original panel
concluded that "nothing prevents Members from using the incentives created by consumer
preferences to encourage or discourage particular behaviours that may have an impact on the
protection of animal life or health." Third, Mexico's reliance on US – Shrimp is misplaced. Fourth,
the DSB recommendations and rulings state that the AIDCP label does not fulfill the objectives of
the U.S. measure at the level the United States considers appropriate.

- B-38 -

III. MEXICO FAILS TO ESTABLISH THAT THE AMENDED MEASURE IS INCONSISTENT
WITH ARTICLE III:4 OF THE GATT 1994

30. Similar to its Article I:1 claim, Mexico relie s entirely on paragraphs 233-235 of the Appellate
Body report to argue that the amended measure provides less favorable treatment to Mexican
tuna product, inconsistently with Article III:4. The Appellate Body's findings concerning
detrimental impact are limited to the ineligibility for the label of tuna caught by setting on dolphins
and the eligibility of tuna caught by other methods. Mexico neither claims nor proves that any
other aspect of the amended measure are inconsistent with Article III:4.

31. Further, for the reasons discussed above, Mexico fails to prove that the amended measure
accords less favorable treatment to Mexican tuna products. Mexico relies heavily on the Appellate
Body's statement in EC – Seal Products that, under Article III:4, a panel is not "required to
examine whether the detrimental impact of a me asure ... stems exclusively from a legitimate
regulatory distinction," yet the analogy to this dispute is flawed. Mexico's argument concerning the
"unilateral[] design[] and appli[cation]" of the measure is not relevant and fails for reasons
discussed above.

IV. THE
 AMENDED MEASURE IS JUSTIFIED UNDER ARTICLE XX OF THE GATT 1994

A. The Scope of the Analysis

32. Mexico urges the Panel to engage in an inquiry that goes well beyond the scope of the
subparagraphs (b) and (g) analyses, as set out by the Appellate Body. Mexico relies exclusively on
paragraphs 233-235 of the Appellate Body report when it alleges that the amended measure is
inconsistent with Article I:1 and Article III:4, under the theory that the amended measure denies
"access" to the label to Mexican tuna caught by setting on dolphins while tuna caught by other
means continues to have "access" to the label. It neither claims nor proves that any other aspect
of the amended measure is GATT-inconsistent. However, in its consideration of subparagraphs (b)
and (g), Mexico argues that, because "there are no effective record-keeping, tracking and
verification requirements or procedures in relation to tuna caught by fishing vessels outside the
ETP," the amended measure does not protect animal health and life for purposes of
subparagraph (b), nor "relate to" the conservation of dolphins for purposes of subparagraph (g).

33. This is improper. The Appellate Body has made clear that "the aspects of a measure to be
justified under the subparagraphs of Article XX are those that give rise to the finding of
inconsistency under the GATT 1994." The United States need only justify the regulatory
distinctions between tuna product containing tuna caught by setting on dolphins and tuna product
containing tuna caught by other fishing methods, in light of how Mexico has framed (and
attempted to prove) its GATT claims. The portions of Mexico's Article XX response that address the
record-keeping/verification and observer requirements are irrelevant to this analysis.

B. The Amended Measure Satisfies the Conditions of Article XX(b)

1. The Amended Dolphin Safe Labe lling Measure Has a Sufficient Nexus
with an Interest Covered by Article XX(b)

34. The Appellate Body determined that the original measure had two objectives: the
"consumer information objective" and the "dolphin protection objective." The amended measure
has the same two objectives. The DSB recommendations and rulings demonstrate that there is "a
sufficient nexus" between the amended measure's do lphin protection objective and the protection
of animal life or health. The original panel found, and the Appellate Body affirmed, that the original
measure "relate[d] to genuine concerns in relation to the protection of the life or health of
dolphins," and was "intended to protect animal life or health or the environment."

35. Mexico ignores the DSB recommendations and rulings and pursues an unprecedented
alternative legal theory, arguing that the amended measure does not pursue an objective that falls
within the scope of subparagraph (b) because it does not contribute to that objective enough. This
theory fails. Mexico's focus on the contribution of the measure improperly collapses the questions
of whether the relevant objective falls within the scope of subparagraph (b), and whether the
challenged measure is "necessary" to protect animal life and health. The level at which the
measure contributes to its objective is not relevant to the former question. Further, Mexico's

- B-39 -

argument falls outside the scope of this analysis in that the entire argument is grounded in the
aspects of the measure that Mexico neither alleges nor proves are GATT-inconsistent.

2. The Amended Dolphin Safe Labe lling Measure Is "Necessary" for the
Protection of Dolphin Life or Health

36. A necessity analysis involves "a process of 'weighing and balancing' a series of factors,
including the importance of the objective, the cont ribution of the measure to that objective, and
the trade-restrictiveness of the measure." As to th e first element, the United States explained that
the protection of dolphins is an important objective. Mexico concedes this point.

37. As to the second element, the DSB recommendations and rulings established that the
original measure contributed to the dolphin protec tion objective to a certain extent. The amended
measure contributes to this same objective at an even higher level. Mexico disagrees with the
findings of the original panel and Appellate Body. Indeed, Mexico appears to go as far as to
contend that neither measure – the original one or the amended one – makes any contribution to
the dolphin protection objective. In the context of an Article 21.5 proceeding, the underlying DSB
recommendations and rulings are taken as a given. The Panel should reject Mexico's unfounded
"appeal" of the Appellate Body report.

38. As to the trade restrictiveness of the measure, the Appellate Body in this very dispute stated
that "trade-restrictiveness" "means something having a limiting effect on trade." Mexico presents
three arguments as to why the U.S. measure is "trade-restrictive." None of these relate to the
amended measure's trade-restrictiveness: the amended measure does not bar Mexico from selling
tuna product in the United States, and, indeed, Mexican non-dolphin safe tuna product continues
to be sold in the United States. The arguments regarding the other two aspects of the measure,
record-keeping/verification and observers, fall outside the scope of the inquiry as to whether the
amended measure qualifies under subparagraph (b), and it is difficult to understand how either
aspect has any impact on exports of Mexican tuna product to the United States.

39. Mexico's first alternative measure is not a "g enuine alternative." First, Mexico's description
of it is so brief and vague that it deprives the United States of the opportunity to evaluate it.
Second, the only difference between the amended measure and Mexico's first alternative is that
tuna caught by all vessels other than large purse seine vessels operating in the ETP would be
subject to AIDCP-equivalent record-keeping/verification and observer requirements. But only those
aspects of the challenged measure "that give rise to the finding of inconsistency under the GATT
1994" need be justified under the subparagraphs of Article XX. Third, Mexico has not shown that
its alternative is "less WTO-inconsistent" than the amended measure allegedly is. Fourth, Mexico's
alternative is not less trade restrictive than the amended measure. Finally, the proposed
alternative is not reasonably available. Leaving aside the start-up costs needed to establish such
programs, operating the observer coverage piece of Mexico's alternative on an annual basis would
cost at the very least hundreds of millions of U. S. dollars, if not in excess of one billion
U.S. dollars. We would further note that given the size of these costs, it would seem likewise
impossible for industry to entirely fund the costs of such programs.

40. Mexico's second proposal is for the United States to "allow alternative labeling schemes,"
including the AIDCP label, "coupled with a requirement to provide consumers detailed information
on what the labels mean." This appears to be the same alternative Mexico put forward in the
original proceeding for purposes of TBT Article 2. 2. The Appellate Body noted that, under Mexico's
alternative, tuna caught by setting on dolphins could be eligible for a dolphin safe label, whereas,
under the U.S. measure, such tuna was ineligible. Consequently, Mexico's proposal would
contribute to dolphin protection " to a lesser degree " than the U.S. measure. The Appellate Body's
finding on Mexico's Article 2.2 claim is clearly applicable to this alternative. Mexico provides no
explanation of how its second proposed alternative measure is consistent with the Appellate Body
report and, in fact, it is not.

C. The Amended Measure Satisfies the Standard of Article XX(g)

41. The amended measure satisfies Article XX(g). First, in its first written submission, the
United States explained that dolphins are an exhaustible natural resource. Mexico concedes that
this is the case.

- B-40 -

42. Second, as discussed above, the original panel found, and the Appellate Body affirmed, that
the U.S. measure pursues the above-quoted dolphin protection objective, and, in fact, does
contribute to that objective. The original panel found, and the Appellate Body affirmed, that the
original measure was capable of achieving its dolphin protection objective completely within the
ETP and partially outside the ETP. The amended measure goes farther in protecting dolphins by
applying a certification mechanism (captain's statement) that was found "capable of achieving" the
U.S. objective in the context of setting on dolphi ns outside the ETP to the certification that no
dolphin was killed or seriously injured in catching the tuna.

43. The amended measure also imposes comparable restrictions on domestic and imported
products. The amended measure imposes the same eligibility conditions and requirements on
U.S. vessels and on foreign vessels. Mexico claims that these requirements fall outside the scope
of subparagraph (g) because they do not "distrib ute the burden of conservation between foreign
and domestic consumers in an 'even-handed' or balanced manner." But such an approach is
incorrect. Under Mexico's approach and in light of its GATT 1994 Articles I:1 and III:4 claims,
subparagraph (g) would be rendered inutile. Mexi co also claims that the amended measure "does
not impose any real restrictions on the tuna that is harvested by the U.S. fleet outside the ETP."
But the Appellate Body has already found that the original measure "fully addresses" the risks
caused by the "particularly harmful" practice of setting on dolphins both inside and outside the
ETP. The 2013 Final Rule expands the certification system that supported this finding to the risk of
death and serious injury outside the ETP.

D. The Amended Measure Is Applied Consistently with the Article XX Chapeau

44. The amended measure is also not applied in a manner that constitutes a means of arbitrary
or unjustifiable discrimination or a disguised restriction on trade. Under the chapeau,
discrimination exists only where "countries in which the same conditions prevail are treated
differently." Thus, there are two questions to answer: 1) whether the amended measure provides
different regulatory treatment to the products originating from different countries; and 2) whether
the "conditions" prevailing in those countries are "the same." Neither is the case here.

45. As the United States has explained, the eligibility condition regarding setting on dolphins is
neutral as to nationality. This provision has no carve-out whereby the products of certain Members
automatically qualify for different regulatory treatment, as was the case in the measures
challenged in Brazil – Retreaded Tyres and EC – Seal Products. Whether tuna product is eligible for
the dolphin safe label depends on the choices made by vessel owners, operators, and captains. As
the United States noted previously, at the time the DPCIA was originally enacted, U.S.-flagged
vessels (as well as many other vessels) operated in the ETP and set on dolphins. The mere fact
that, over the past 20 years, vessels flagged to some Members have adopted methods of fishing
that are less harmful to dolphins (while others have not) does not mean the U.S. measure
provides different regulatory treatment to different countries.

46. Also, the conditions prevailing in the rele vant countries are not the same. Because this
eligibility condition does not distinguish between Members, or even between fisheries, but between
fishing methods, it would appear that the most appropriate "condition" to examine in this analysis
is the different harms to dolphins caused by setting on dolphins, on the one hand, and by purse
seine (other than setting on dolphins), longline , and pole-and-line fishing, on the other. That
comparison is not even close. The science re garding harms to dolphins fully supports the
distinction the measure draws between setting on dolphins and other fishing methods. As such,
with regard to the protection and conservation of dolphins, the "conditions" prevailing in a Member
whose fleet routinely sets on dolphins are not the same as those in a Member whose fleet employs
the other methods used to produce tuna for the U.S. tuna product market.

47. Mexico also appears to make a separate argument that the alleged difference in the record-
keeping/verification and observer requiremen ts also proves that the amended measure
discriminates where the conditions are the same. Th is argument fails. First, Mexico cannot explain
why such an argument is relevant to this analysis. Mexico it does not even allege, much less
prove, that the record-keeping/verification and observer coverage requirements result in a
detrimental impact on Mexican tuna product, which Mexico claims is sufficient to prove the
U.S. measure inconsistent with Articles I:1 and III:4. Second, these requirements stem from the
AIDCP, not U.S. law, and as such, no genuine relationship exists between the amended measure
and any disadvantage that Mexico perceives its tuna product industry is operating under. Third,

- B-41 -

Mexico is wrong that the "conditions," as they relate to these requirements, are the "same." The
IATTC Members agreed to different requirements regarding record-keeping/verification and
observer coverage because the ETP is different – nowhere else in the world has tuna fishing
caused the harm to dolphins that large purse seine vessels have caused in the ETP.

48. If discrimination is found, one of the "most important factors" in determining whether that
discrimination is "arbitrary or unjustifiable" is "whether the discrimination can be reconciled with,
or is rationally related to, the policy objective with respect to which the measure has been
provisionally justified under one of the subparagraphs of Article XX." The denial of eligibility for the
label to tuna product containing tuna caught by setting on dolphins is directly related to the
dolphin protection objective. As the United States has demonstrated, setting on dolphins is a
"particularly harmful" fishing method, and other fishing methods do not cause the same level of
harm to dolphins that setting on dolphins does.

49. Indeed, Mexico appears not to focus at all on whether these eligibility conditions are
rationally related to the dolphin protection objective. Rather, Mexico's focus appears to be more on
the fact that most Mexican-caught tuna, because it is harvested by a large purse seine vessel in
the ETP, is subject to AIDCP-mandated record-k eeping/verification observer requirements that
tuna caught outside the ETP is not subject to. In Mexico's view, this "difference" does not
contribute to dolphin protection outside the ETP. First, and as discussed above, Mexico's assertion
is contrary to the findings of the DSB that the original measure did contribute to dolphin protection
outside the ETP, with respect to driftnet fishin g and setting on dolphins, and to the Appellate
Body's suggestion that captain's statements would provide a suitable certification. Second, to the
extent that the record-keeping/verification and observer requirements are relevant to this
analysis, which we dispute, we note that the fact that the AIDCP imposes unique requirements
that legal regimes covering other fisheries do not replicate is indeed related to the protection and
conservation of dolphins.

50. Finally, Mexico asserts that the United States has discriminated arbitrarily and unjustifiably
by not working through the AIDCP to "address[] its remaining concerns about dolphins and tuna
fishing." Again, Mexico is wrong on the law. As noted previously, a Member may take measures "at
the levels that it considers appropriate," and nothing in covered agreements requires a Member to
adhere to an international agreement, a point that Article 2.4 of the TBT Agreement confirms.

51. Mexico is also wrong on the facts. The United States has engaged in multilateral negotiations
with Mexico through the AIDCP process. Further, the United States continued to discuss this issue
with Mexico in multiple different fora, including two meetings held in Mexico City in the latter half
of 2009. The United States would also note, as mentioned above, that Mexico's reliance on US –
Shrimp is particularly misplaced. In that dispute, the U.S. measure was initially found not to be
justified under Article XX in part because of the "rigid and unbending" nature of the measure. Yet
Mexico now claims that the United States must impose "rigid and unbending" record-
keeping/verification and observer requirements on all tuna sold as dolphin safe in the U.S. tuna
product market, regardless of where or how it was caught, in order to be justified under Article XX.
Mexico's approach turns US – Shrimp upside down.

- B-42 -

ANNEX B-6
EXECUTIVE SUMMARY OF THE OPENING ORAL STATEMENT OF THE UNITED STATES
AT THE MEETING OF THE PANEL
I. MEXICO'S CLAIM UNDER ARTICLE 2.1 OF THE TBT AGREEMENT FAILS

A. Mexico's Article 2.1 Claim Fails as It Falls Outside the Panel's Terms of
Reference

1. Mexico's Article 2.1 claim falls outside the Panel's terms of reference. Relying on US –
Zeroing (Article 21.5 – EC) , Mexico now argues that its Article 2.1 claim falls within the Panel's
terms of reference because the unchanged aspects of the amended measure at issue are
"inseparable" from something that clearly falls within the Panel's terms of reference – the U.S.
measure taken to comply. Indeed, the 2013 Final Rule amends U.S. law with regard to tuna
caught by all vessels other than those ETP vessels operating pursuant to the requirements of the
AIDCP.

2. It is certainly unfair for a complainant to intentionally stagger its argument in a particular
claim over the two proceedings, as Mexico has done here. In short, Mexico urges the Panel to fault
the United States for failing to come into compliance with an entirely different set of
recommendations and rulings from the one the DSB actually adopted – a proposition that is
blatantly unfair, and unnecessarily extends this dispute. Indeed, Mexico's approach presents
precisely the unfair "second chance" that the Appellate Body has cautioned against.

B. Mexico's Article 2.1 Claim Fails on the Merits

3. In any event, Mexico's Article 2.1 claim fails on the merits. Mexico has failed to prove that
the regulatory distinctions that account for any detrimental impact are not "even-handed." Mexico
has thus failed to prove the detrimental impact "reflects discrimination."

4. As to those relevant regulatory distinctions, it is uncontested by the parties that the
eligibility condition regarding whether a dolphin was killed or seriously injured in the harvesting of
the tuna is even-handed. And while Mexico disputes that the eligibility condition regarding setting
on dolphins is even-handed, Mexico fails to prove its assertions in this regard.

5. As should be clear, that prohibition applies to all fisheries as well. And the fact that Mexican
vessels continue to set on dolphins – and thus produce tuna product ineligible for the label – does
not mean that the regulatory distinction is not even-handed. If that was the case, all Mexico would
need to prove is that a detrimental impact exists, rendering the second step of the analysis
meaningless.

6. The fact is that it is entirely appropriate for the United States to draw a distinction between
setting on dolphins, which is inherently dangerous to dolphins, and other fishing methods. The
science supports the U.S. approach in this rega rd, and directly contradicts Mexico's approach.
Mexico has simply failed to prove what it asserts – that all other fishing techniques "have adverse
effects on dolphins that are equal to or greater" than setting on dolphins.

7. As such, Mexico is forced to rely heavily on its fall back argument that because the AIDCP
requires different requirements for record-keeping , verification, and observer coverage of large
purse seine vessels operating in the ETP than the amended measure requires of other vessels, the
amended measure is not even-handed. But these "differences" do not cause the detrimental
impact the Appellate Body found to exist, and, as such, no analysis of either aspect sheds light on
whether that detrimental impact "reflects discrimination." Moreover, Mexico fails to allege, much
less prove, that these aspects, standing alone, cause a detrimental impact on Mexican tuna
product exports to the United States.

8. Mexico argues something different, however. Mexico alleges that the fact that its
competitors operating outside the ETP do not have to comply with AIDCP-equivalent requirements

- B-43 -

means that these competitors have more opportunity than Mexican producers to illegally market
non-dolphin safe tuna product as dolphin safe. In Mexico's view, this greater opportunity to
defraud U.S. consumers means that "Mexican tuna products are losing competitive opportunities to
tuna products that may be inaccurately labeled as dolphin-safe." But Mexico puts forth zero
evidence to support its claim. In particular, th ere is no evidence that non-dolphin safe tuna
product produced outside the ETP is being illegally marketed in the United States as dolphin safe.
Nor has Mexico put forward any evidence that even if one could find any illegal marketing, this
unfortunate occurrence would be happening at a higher rate than for tuna product containing ETP
tuna.

II. MEXICO'S CLAIMS UNDER ARTICLES I:1 AND III:4 OF THE GATT 1994 FAIL

9. Mexico also fails to establish that the amended dolphin safe labeling measure is inconsistent
with Article I:1 or Article III:4 of the GATT 1994. Under Mexico's theory, it is simply irrelevant
whether the standard is entirely legitimate – or, for that matter, entirely illegitimate – the result is
the same. Given the huge diversity of production methods, environmental, health, labor standards,
and the like that exist throughout the WTO Me mbership it seems difficult to believe that any
technical regulation could survive such a test. Surely there will always be at least one Member
whose producers do not meet a foreign standard, such as for lead paint or organic produce. It is
undeniable that such a legal theory jeopardizes a wide range of legitimate regulations, and
seriously undermines Members' ability to regulate in the public interest.

10. The advantage of access to the "advantage" of the dolphin safe label, subject to origin-
neutral requirements, is "immediately and unconditionally" accorded to all Members, including
Mexico, as required by Article I:1. And Mexican tuna product is not accorded less favorable
treatment than the products of the United States, as required by Article III:4.

11. Mexico is also simply wrong to allege that this "unilateral action" intentionally puts pressure
on Mexico to change its practices through the amended measure. Such an allegation is directly
contrary t o t h e f i n d i n g s o f t h e o r i g i n a l p a n e l . M o r e o v e r , M e x i c o ' s a r g u m e n t a s s u m e s t h a t t h e
AIDCP labeling regime is sufficient to fulfill the measure's objective at the U.S. chosen level of
protection. But the Appellate Body has already found that the AIDCP label does not achieve the
U.S. chosen level of protection. Mexico is asserting that the United States must accept the AIDCP
label as sufficient to protect dolphins, but Mexico gives no reason why this should be the case, and
the argument contradicts the principle that Members can choose their own levels of protection.

III. THE AMENDED DOLPHIN SAFE LABE LING MEASURE IS JUSTIFIED UNDER
ARTICLE XX OF THE GATT 1994

12. In any case, the amended measure is justified under Article XX and therefore is not
inconsistent with the GATT 1994. The Appellate Body, in EC – Seal Products , US – Gasoline , and
other disputes, has made it clear that the focus under Article XX will be on the aspects of a
measure that give rise to the finding of an in consistency with the GATT 1994. As already noted,
Mexico only challenges one eligibility condition – no setting on dolphins – as being GATT
inconsistent. Consequently, this would be the only aspect of the measure that could be relevant to
the Panel's analysis under the Article XX subparagraphs.

A. The Amended Dolphin Safe Labeling Measure Satisfies the Conditions of
Article XX(b) and XX(g)

13. The amended dolphin safe labeling measure satisfies both prongs of the Article XX(b)
standard, namely: its objective falls within the scope of "to protect ... animal life or health," and it
is "necessary" to the achievement of that obje ctive. The original panel already found, and the
Appellate Body affirmed, that "contributing to the protection of dolphins by ensuring that the US
market is not used to encourage fishing fleets to catch tuna in a manner that adversely affects
dolphins" was an objective of the original measure. Mexico's efforts to de-emphasize the "dolphin
protection" objective of the amended measure cannot stand. The DSB recommendations and
rulings are clear – the measure "relate[s] to genuine concerns in relation to the protection of the
life or health of dolphins" and is "intended to protect animal life or health."

14. Likewise, the recommendations and rulings provide a clear pathway for the Panel to conduct
its examination of whether the amended measure is "necessary" for the protection of life and

- B-44 -

health of dolphins. The Appellate Body, relying on the original panel's findings, found that the
measure "fully address[ed] the adverse effects on dolphins resulting from setting on dolphins"
both inside and outside the ETP. That eligibility condition remains unchanged – it still relies on
captain statements – and still stands. Where the Appellate Body found fault was with the other
condition, which, in the Appellate Body's view, did not fully address "mortality ... arising from
fishing methods other than setting on dolphins outside the ETP." The 2013 Final Rule corrects
this, and, as such, the amended measure makes an even higher contribution to the dolphin
protection objective than the original measure did.

15. Finally, the DSB recommendations and rulings clearly establish that neither of Mexico's two
alternatives prove the amended measure not to be "necessary." This could not be clearer than
with regard to Mexico's second alternative, which is identical to the alternative that the Appellate
Body has already rejected for purposes of Article 2.2 as it would allow more tuna "harvested in
conditions that adversely affect dolphins," i.e., tuna caught by setting on dolphins, to be labeled
dolphin safe. The Panel should follow the DSB recommendations and rulings and reject Mexico's
second alternative.

16. Likewise, the Panel should reject Mexico's fi rst alternative, which suffers from any number of
defects. Indeed, it is so vague that the United States does not even understand what Mexico is
actually proposing as to what the programs would consist of, how expensive it would be to
implement such programs, and who would pay for them. Moreover, the proposal is not less WTO-
inconsistent (under Mexico's theory), not less trade restrictive, and not reasonably available.
Mexico's first proposal wholly fails to accomplish its declared task.

17. The amended measure is also justified under the standard of Article XX(g). As the DSB
recommendations and rulings already acknowledge, the original measure pursued the objective of
"dolphin protection" and, in fact, contributed to that objective, those recommendations and rulings
apply equally in the context of Article XX(g) as to Article XX(b). It is also clear that the original
measure contributed to that objective and that the amended measure makes an even greater
contribution – one that easily satisfies the "relating to" standard of a "close and genuine
relationship of ends and means." Furthermore, these eligibility conditions are not only comparable
– they are indeed identical – for all domestic and imported products.

B. The Amended Dolphin Safe Labeling Meas ure Is Applied Consistently with the
Article XX Chapeau

18. Finally, the amended measure meets the standard of the Article XX chapeau. First, the
amended measure is not applied in a way that gives rise to "discrimination" under the chapeau at
all, because it draws no distinctions "between coun tries where the same conditions prevail." The
setting-on-dolphins eligibility condition is completely neutral as to nationality: all tuna product
containing tuna caught by setting on dolphins is ineligible for the label. There are no carve-outs or
exceptions for particular Members' products, and Mexico has presented no evidence that the
measure is applied in a discriminatory manner.

19. Even if one were to consider that the re levant "conditions" are the choices made by a
country's tuna fishing fleet, there is no arbitrary or unjustifiable discrimination here. The harm to
dolphins posed by different fishing methods is central to the objective of the amended measure
and thus is clearly "relevant" for purposes of the chapeau. The United States has demonstrated
that setting on dolphins is uniquely dangerous to dolphins, in terms of observed and unobserved
harms. Consequently, the conditions in countries whose vessels routinely set on dolphins are not
the same for purposes of the chapeau, as the conditions in countries whose vessels employ other
methods of fishing for tuna.

20. Mexico also argues that the amended measure draws distinctions with respect to record-
keeping and observer certifications that make it inconsistent with the chapeau. This argument also
fails. First, it is irrelevant. By Mexico's own admission, the circumstances that supposedly bring
about the discrimination under the chapeau are the same as those that brought about the asserted
GATT inconsistency, i.e., the setting-on-dolphins eligibility condition. But even if the difference
between what the AIDCP parties have agreed to and what other Members have agreed to outside
the ETP were relevant, there is no genuine relationship between them and any supposed
disadvantage to Mexican tuna product, since th e amended measure's additional requirements for
the ETP stem entirely from the AIDCP. Of cour se, these differences are not between countries

- B-45 -

where the relevant conditions are "the same." The AIDCP parties have agreed to impose unique
requirements on themselves because of the catastrophic harm their vessels had done to dolphins
in the ETP since the 1950s. It should come as no surprise then that the members of regional
fisheries management organizations (RFMOs) for other fisheries have not made that same
commitment.

21. Furthermore, even if discrimination under the chapeau were found, any discrimination is not
arbitrary or unjustifiable, because the distinctions drawn by the amended measure are "compatible
with" and, indeed, "related to" the objective of the measure covered by Article XX, namely dolphin
protection.

22. The eligibility criterion relating to setting on dolphins directly relates to dolphin protection.
The evidence shows that setting on dolphins is va stly more dangerous to dolphins than other tuna
fishing methods. And it is the only fishing method that intentionally targets dolphins and,
therefore, the only fishing method where the risks to dolphins are an intrinsic p a r t o f f i s h i n g
operations. Indeed, Mexico does not even appear to contest that prohibiting tuna product
containing tuna caught by setting on dolphins from being labeled dolphin safe relates to dolphin
protection.

23. To the extent that the record-keeping an d observer requirements are relevant to the
Article XX analysis (and we do not think they are), the distinctions drawn by the amended
measure are not "arbitrary and unjustifiable." As the DSB found in the original proceeding,
captain's certifications do contribute to dolphin protection. The fact that the AIDCP parties have
chosen to impose additional record-keeping and observer requir ements on themselves, in light of
the unique harm to dolphins in the ETP, does not mean that the long-standing reliance on captain
statements is illegitimate.

24. The amended dolphin safe labeling measure imposes eligibility conditions that manifestly
relate to its objective. One condition relates to dolphin mortality and serious injury, and another
relates to fishing methods that, based on all the available scientific evidence, is not dolphin safe.
All other methods of tuna fishing are potentially eligible for the label (except large-scale high seas
driftnet fishing), and, unlike under the original US – Shrimp measure, individual canneries and
vessel operators can ensure that their product is eligible for the label based on their own
purchasing and fishing choices.

25. Mexico's final argument is that the United States discriminated arbitrarily by not working
through the AIDCP to "address its remaining concerns" about dolphin protection. This seems to be
an attempt to analogize this dispute to the original US – Shrimp proceeding, and, as such, it
utterly fails. First, nothing in the covered agreements requires Members to adopt whatever level of
protection is contained in any relevant international agreement. Second, there is no command in
the dolphin safe labeling measure, as there was in the US – Shrimp measure, to engage in
multilateral negotiations. Third, even if there were, the United States has actually been negotiating
this issue with Mexico and the other IATTC members, through the AIDCP process, for decades.

- C-1 -

ANNEX C
ARGUMENTS OF THIRD PARTIES
Contents Page
Annex C-1 Executive summary of the third-party submission of Australia C-2
Annex C-2 Executive summary of the oral statement of Australia at the meeting of the panel,
and responses to Panel questions
C-6
Annex C-3 Executive summary of the th ird-party submission of Canada C-8
Annex C-4 Executive summary of the oral statement of Canada at the meeting of the panel C-11
Annex C-5 Integrated executive summary of the arguments of the European Union C-13
Annex C-6 Executive summary of the third-party submission of Japan C-18
Annex C-7 Executive summary of the oral statem ent of the Republic of Korea at the meeting
of the panel
C-22
Annex C-8 Integrated executive summary of the arguments of New Zealand C-24
Annex C-9 Executive summary of the thir d-party submission of Norway C-28
Annex C-10 Executive summary of the oral statement of Norway at the meeting of the panel C-31

- C-2 -

ANNEX C-1
EXECUTIVE SUMMARY OF THE THIRD-PARTY SUBMISSION OF AUSTRALIA
A. THE LEGAL FRAMEWORK FOR PROVISIONAL JUSTIFICATION OF A MEASURE UNDER
PARAGRAPH (B) OF ARTICLE XX OF THE GATT 1994

1. Australia recalls the Appellate Body's guidance that a Member wishing to provisionally justify
its measure under subparagraph (b) of Article XX must demonstrate that (i) it has adopted or
enforced a measure to achieve the objective specified in that subparagraph; and (ii) that the
measure is "necessary" to fulfil that objective.1

2. To determine whether a challenged measure has been adopted to achieve the relevant
objective, a panel should examine whether the challenged measure "address[es] the particular
interest specified in that subparagraph" and whether there is "a sufficient nexus between the
measure and the interest protected".
2

3. To determine whether a challenged measure is "necessary" to achieve its objective, a panel
should "weigh and balance" a series of factors, "including the importance of the objective, the
contribution of the measure to that objective, and the trade-restrictiveness of the measure".
3 In
addition, the Appellate Body has explained that "in most cases, a comparison between the
challenged measure and possible alternatives should then be undertaken".4

B. WHETHER THE AMENDED TUNA MEASURE HAS BEEN ADOPTED "TO PROTECT
ANIMAL LIFE OR HEALTH"

4. Australia notes that Mexico's statements with respect to the United States' claimed
justification for the Amended Tuna Measure under Article XX(b) suggest that it considers an
assessment of the contribution of the Amended Tuna Measure to its objectives is relevant to
whether the Amended Tuna Measure "falls within the range of policies designed to achieve the
objective". For example, Mexico states that "[t]he Amended Tuna Measure does not fulfill the
objectives it claims to address and, therefore, it does not protect animal life or health within the
meaning of Article XX(b) of the GATT 1994".
5

5. Australia agrees with the United States' claim that "Mexico's focus on the contribution of the
measure improperly collapses the distinct questions of whether the rele vant objective falls within
the scope of subparagraph (b), and whether the challenged measure is "necessary" to protect
animal life and health. While the issue of the level at which the measure contributes to its
objective is relevant to the latter, it is not to the former , where the question is whether the
measure at issue 'address[es] the particular interest specified in [the] paragraph'".
6

6. Australia considers it would have been open to Mexico, in questioning whether the Amended
Tuna Measure falls within the scope of Article XX(b), to challenge whether the "design and
structure" of the Amended Tuna Measure indicated the policy objective of the measure was the
protection of animal life or health.
7

1 Appellate Body Report, EC – Seal Products, para. 5.169, citing Appellate Body Reports US – Gasoline,
p. 22 DSR 1996:I, p. 20; US – Shrimp, paras. 119 and 120; and US – Gambling, para. 292 (footnotes
omitted).
2 Appellate Body Report, EC – Seal Products, para. 5.169, citing Appellate Body Reports US – Gasoline,
p. 22 DSR 1996:I, p. 20; US – Shrimp, paras. 119 and 120; and US – Gambling, para. 292 (footnotes
omitted).
3 Appellate Body Report, EC – Seal Products, para. 5.169, citing Appellate Body Reports, Korea –
(footnotes omitted).
4 Appellate Body Report, EC – Seal Products, para. 5.169, citing Appellate Body Report, US – Gambling,
para. 307.
5 Mexico's Second Written Submission, para. 252 (emphasis added).
6 United States' Second Written Submission, para. 157 (emphasis added).
7 Panel Report, EC – Tariff Preferences, paras 7.201-7.202.

- C-3 -

7. However, Australia notes that this is a separate and distinct question to the contribution
made by the measure to its objectives (i.e. whether the measure "fulfils" the objectives it claims to
address).

C. WHETHER
 THE AMENDED TUNA MEASURE IS "NECESSARY" TO FULFIL ITS
OBJECTIVE

1. Mexico's arguments with respect to the trade-restrictiveness of the Amended Tuna
Measure

8. Australia notes that Mexico appears to ar gue that the Amended Tuna Measure is trade-
restrictive in part because "the Amended Tuna Measure, like the original measure, does not fulfil
the two objectives that it claims to address, as consumers cannot accurately distinguish between
dolphin-safe tuna and non-dolphin safe tuna".
8

9. In Australia's view, this approach improperly conflates the contribution of the Amended Tuna
Measure to its objectives with an assessment of the trade-restrictiveness of the measure.
Australia submits that, consistent with the Appellate Body's guidance, the contribution made by
the Amended Tuna Measure and the trade-restrictiveness of the Amended Tuna Measure should be
examined by the Panel as two distinct factors. The Panel should then examine the interaction of
these factors
9, together with the importance of the interests and values at stake, and any other
relevant factors, as part of the required "holistic weighing and balancing exercise" to determine
whether the Amended Tuna Measure is "necessary" to fulfil its objective under Article XX(b).10

2. The parties' differing interpretations of trade-restrictiveness for the purposes of
assessing the "necessity" of the Amended Tuna Measure

10. As noted above, trade-restrictiveness is one factor to be examined by a panel in the
"weighing and balancing" exercise to determine the "necessity" of a measure under Article XX(b)
of the GATT 1994.
11 Australia notes the United States' observation that "the parties differ
substantially as to the meaning of the term 'trade-restrictiveness'".12

11. Australia recalls that the Appellate Body has de scribed this factor as "the restrictive impact
of the measure on international commerce" 13. Further, in the context of Article XI:2(a) of the
GATT 1994, the Appellate Body has noted that the term 'restriction' "is defined as 'a thing which
restricts someone or something, a limitation on action, a limiting condition or regulation', and thus
refers generally to something that has a limiting effect ".
14 Finally, in considering the meaning of
trade-restrictiveness in the context of Article 2.2 of the Agreement on Technical Barriers to Trade,
the Appellate Body found that, used in conjunction with the word 'trade', "the term 'restriction'
means 'something having a limiting effect on trade'"15.

8 Mexico's Second Written Submission, para. 272, with respect to trade-restrictiveness.
9 See Appellate Body Report, EC – Seal Products, para. 5.215.
10 For example, the Appellate Body stated in Korea – Various Measures on Beef (para. 163) , that: "[a]
measure with a relatively slight impact upon imported products might more easily be considered as 'necessary'
than a measure with intense or broader restrictive effects". The Appellate Body stated in EC – Seal Products
(para. 5.215) that: "the EU Seal Regime, even if it were highly trade-restrictive in nature, could still be found
to be 'necessary' within the meaning of Article XX(a), subject to the result of a weighing and balancing exercise
under the specific circumstances of the case and in the light of the particular measure at issue".
11 Appellate Body Report, EC – Seal Products, para. 5.169, citing Appellate Body Reports US – Gasoline,
p. 22 DSR 1996:I, p. 20; US – Shrimp, paras. 119 and 120; and US – Gambling, para. 292.
12 United States' Second Written Submission, para. 164.
13 Appellate Body Report, Brazil – Retreaded Tyres, para. 143, citing Appellate Body Report, US –
Gambling, para. 306 and Korea – Various Measures on Beef, para. 163. See also Korea – Various Measures on
Beef, para. 163 (stating that in respect of a measure inconsistent with Article III:4 of the GATT 1994, it is the
extent to which the measure produces "restrictive effects on imported goods" that should be examined).
14 Appellate Body Report, China – Raw Materials, para. 319 (emphasis added); cited in Appellate Body
Report, US – Tuna II (Mexico), para. 319.
15 Appellate Body Report, US – Tuna II (Mexico), para. 319. Australia notes that, while the term
"restriction" in Article XI does not appear in Article 2.2, the Appellate Body in US – Tuna II (Mexico) relied on
the Appellate Body's interpretation of "restriction" in the context of Article XI(2)(a) to define "trade-
restrictiveness" under Article 2.2 of the TBT Agreement as "something having a limiting effect on trade".

- C-4 -

12. Australia agrees with the United States that, to the extent that Mexico argues that the
Amended Tuna Measure is trade-restrictive simply because it is discriminatory (i.e. that an
alternative measure that reduces "the de facto discrimination against Mexican tuna products …
would therefore be less trade restrictive "),16 this would introduce an incorrect legal test for
assessing the trade-restrictiveness of a measure.

13. Specifically, Australia submits that a finding of discrimination (for example, under
Article III:4 or Article I:1 of the GATT 1994) is not per se determinative of the question of the
trade-restrictiveness of a measure.
17 Thus, for the purposes of the "necessity" analysis under
Article XX(b) of GATT 1994, it is not sufficient to show that the Amended Tuna Measure modifies
the conditions of competition to the detriment of imported Mexican tuna products in the US
market, rather the measure must also have "a limiting effect on trade".
18

14. Further, Australia recalls that the interpretation of the legal standards under specific
provisions of the GATT 1994 and the covered agreem ents must be "based on the text of those
provisions, as understood in their context, and in the light of the object and purpose of the
agreements in which they appear".
19 Accordingly, where a measure is found to be inconsistent
with one of the non-discrimination provisions in the GATT 1994 (such as Article III:4 or
Article I:1), it would be inappropriate for a panel to simply transpose its finding of inconsistency
with these obligations to the consideration of the trade-restrictiveness of a measure under
Article XX of the GATT 1994.

15. However, Australia does not suggest that the facts and circumstances that result in a panel's
finding of discrimination in a particular case (that is, the basis for a finding that the measure at
issue has a detrimental impact on the competitive opportunities for imported products) are
irrelevant to the analysis of trade-restrictiveness under Article XX.
20

16. Indeed, Australia notes that panels and the Appellate Body have found a range of factors to
be relevant to the assessment of the trade-re strictiveness of a measure, depending on the
circumstances of the case, including the nature of the measure at issue and the claimed
inconsistency with WTO obligations, the arguments put forward by the parties, and the nature,
quality and quantity of the available evidence.
21 That is, the precise contours of trade-
restrictiveness may vary in any given case, and will depend largely on the nature of the specific
measure at issue and on the specific claims of inconsistency with WTO obligations.

16 Mexico's Second Written Submission, para. 281.
17 Australia considers that the same argument would apply to a finding of discrimination under
Article 2.1 of the TBT Agreement and the separate and distinct analytical enquiry of the trade-restrictiveness of
a measure under Article 2.2 of the TBT Agreement.
18 United States' Second Written Submission, para. 165.
19 Appellate Body Report, EC – Seal Products, para. 5.129.
20 To this end, Australia notes the Appellate Body's comments in US – COOL that "[a]lthough the Panel
expressed the view that a technical regulation's non-conformity with Article 2.1 is not per se an issue for that
technical regulation's conformity with Article 2.2 in general or the 'trade-restrictive' element in particular, it
nevertheless relied upon findings that it had made in its Article 2.1 analysis to find that the COOL measure is
trade-restrictive within the meaning of Article 2.2": Appellate Body Report, US – COOL, footnote 756 to
para. 381.
21 See, for example, Panel Report, India – Autos, para. 7.270 (noting the phrase "limiting condition"
suggests the need to identify "a condition that is limiting, i.e. that has a limiting effect" and "in the context of
Article XI, that limiting effect must be on importation itself” (emphasis added); Appellate Body Report, Korea –
Various Measures on Beef, para. 163 (referring to "the extent to which the compliance measure produces
restrictive effects on international commerce, that is, in respect of a measure inconsistent with Article III:4,
restrictive effects on imported goods") (emphasis added); Appellate Body Report, China – Publications and
Audio-Visual Products, para. 300 (noting the panel, in a finding upheld by the Appellate Body, considered the
"restrictive impact the measures at issue have on imports of relevant products" and on "those wishing to
engage in importing, in particular on their right to trade" (emphasis added); Appellate Body Report, Brazil –
Retreaded Tyres, para. 150 (referring to "restrictive effects on international trade as severe as those resulting
from an import ban"); Appellate Body Report, US – COOL paras. 477 and 479 (noting that the panel's findings"
suggest it considered the measure to have a considerable degree of trade-restrictiveness insofar as it has a
limiting effect on the competitive opportunities for imported livestock as compared to the situation prior to the
enactment of the COOL measure" and concluding that "[o]verall, in our view, the Panel's factual findings
suggest that the COOL measure… has a considerable degree of trade-restrictiveness") (emphasis added); Panel
Report, Colombia – Ports of Entry, para. 7.236 (noting that "panels have also considered whether a measure
makes effective a restriction by evaluating the measure's impact on competitive opportunities available to
imported products") (emphasis added).

- C-5 -

17. Thus, Australia submits that the Panel's analys is of the trade-restrictiveness of the Amended
Tuna Measure, in the context of its weighing an d balancing exercise under Article XX(b), should
focus on whether the Amended Tuna Measure has "a limiting effect on trade" or, in other words,
on the "restrictive impact of the measure on international commerce".

18. In the specific circumstances of this case (including the claimed inconsistency of the
Amended Tuna Measure with Article III:4 and Article I:1 of the GATT 1994), the effect of the
Amended Tuna Measure on the competitive opportunities available to Mexican tuna products in the
US market may be relevant to this analysis.

- C-6 -

ANNEX C-2
EXECUTIVE SUMMARY OF THE ORAL STATEMENT OF AUSTRALIA
AT THE MEETING OF THE PANEL, AND RESPONSES TO PANEL QUESTIONS
A. WHETHER THE AMENDED TUNA MEASURE HAS BEEN ADOPTED "TO PROTECT
ANIMAL LIFE OR HEALTH"

1. Australia recalls the Appellate Body's guidance that a Member seeking to justify its measure
under subparagraph (b) of Article XX must demonstr ate, first, that it has adopted or enforced a
measure to achieve the objective specified in that subparagraph and, second, that the measure is
"necessary" to fulfil that objective.
1

2. Australia notes that the question of whether a challenged measure has been adopted to
achieve a relevant objective is a separate and distinct inquiry to whether the measure is
"necessary" to fulfil that objective.

3. In determining whether the measure falls within the scope of Article XX(b), Australia
submits that, as a first step, the Panel should consider whether the Amended Tuna Measure
"addresses the particular interest specified in the paragraph", and whether there is "a sufficient
nexus between the measure and the interest protected".
2

4. Australia considers it would be open to the Panel, in considering whether the Amended Tuna
Measure falls within the scope of Article XX(b), to consider whether the "design and structure" of
the Amended Tuna Measure indicates the policy ob jective of the measure was the protection of
animal life or health.
3

5. With respect to the United States' claimed justification for the Amended Tuna Measure under
Article XX(b), Mexico suggests in its written submission that it considers an assessment of the
contribution of the Amended Tuna Measure to its objective is relevant to whether the Amended
Tuna Measure "falls within the range of policies designed to achieve the objective".
4

6. However, Australia agrees with the United States that an assessment of the contribution of
the Amended Tuna Measure to its objective is re levant only to the question of whether the
measure is "necessary" to fulfil its objective. It is not relevant to the first question of whether a
challenged measure has been adopted to achieve a particular objective.

B. WHETHER THE AMENDED TUNA MEASURE IS "NECESSARY" TO FULFIL ITS
OBJECTIVE

7. Australia recalls the Appellate Body's guidance that "… a necessity analysis involves
'weighing and balancing' a series of factors, including the importance of the objective, the
contribution of the measure to its objective, and the trade-restrictiveness of the measure".
5

8. Australia submits that, consistent with the Appellate Body's guidance, the contribution made
by the Amended Tuna Measure and the trade-restrictiveness of the Amended Tuna Measure should
be examined by the Panel as two distinct factors. The Panel should then examine the interaction of
these factors, together with the importance of the interests and values at stake, and any other
relevant factors, as part of the "holistic weighing and balancing exercise", to determine whether

1 Appellate Body Report, EC – Seal Products, para. 5.169, citing Appellate Body Reports US – Gasoline,
p. 22 DSR 1996:I, p. 20; US – Shrimp, paras. 119 and 120; and US – Gambling, para. 292 (footnotes
omitted).
2 Appellate Body Report, EC – Seal Products, para. 5.169, citing Appellate Body Reports US – Gasoline,
p. 22 DSR 1996:I, p. 20; US – Shrimp, paras. 119 and 120; and US – Gambling, para. 292 (footnotes
omitted).
3 Panel Report, EC – Tariff Preferences, paras. 7.201-7.202.
4 Mexico's Second Written Submission, para. 252.
5 Appellate Body Report, EC – Seal Products, para. 5.169; see also Appellate Body Report, China –
Publications and Audiovisual Products, paras. 239-242.

- C-7 -

the measure is "necessary" to fulfil its objectives under Article XX(b). 6 Australia further submits
that the Panel's analysis of the trade-restrictiveness of the Amended Tuna Measure should focus
on whether the Amended Tuna Measure has a "limiting effect on trade". In other words, the
Panel's analysis should focus on the "restrictive impact of the measure on international
commerce".
7

9. Australia considers that a finding of discrimination is not per se determinative of the
question of the trade-restrictiveness of a measur e. Moreover, it would not be appropriate to
simply transpose a finding of inconsistency with the obligations under another provision of GATT to
the consideration of the trade-restrictiveness of a measure under Article XX.

10. However, Australia does not suggest that the facts and circumstances that support a finding
of discrimination are irrelevant to the question of trade-restrictiveness. Rather, Australia notes
that the precise contours of trade-restrictiveness may vary in any given case, and will largely
depend on the nature of the specific measure at i ssue and the specific claims of inconsistency with
WTO obligations.

11. In this instance, the effect of the Amende d Tuna Measure on the competitive opportunities
available to Mexican tuna products may be relevant to the Panel's analysis of the
trade-restrictiveness of the measure.

C. BURDEN OF PROOF UNDER ARTICLE 2.1 OF THE TBT AGREEMENT

12. In Australia's view, the Appellate Body's statements in paragraph 216 of US – Tuna and
paragraph 272 of US – COOL indicate the complainant must do more than show the technical
regulation at issue has a detrimental impact on imports to meet the burden of establishing its
prima facie case of less favourable treatment under Article 2.1 of the TBT Agreement. This is
consistent with the Appellate Body's prior clarification that not every instance of a detrimental
impact on imported products amounts to the less favourable treatment of imports that is
prohibited under Article 2.1;
8 and thus the existence of a detrimental impact on imports is not
dispositive of less favourable treatment under Article 2.1.9

13. Rather, as explained in the Appellate Body 's statements, the complainant also bears the
burden of adducing evidence and arguments showin g that the measure is designed and/or applied
in a manner that is not even-handed (for exam ple, in a manner that constitutes a means of
arbitrary or unjustifiable discrimination) such that the detrimental impact on imports reflects
discrimination prohibited under Article 2.1.
10 While such evidence and arguments could suggest
that the detrimental impact on imports does not stem exclusively from a legitimate regulatory
distinction, the complainant is not required specifically to prove this negative.

14. In Australia's view, a complainant meets the burden of establishing its prima facie case of
less favourable treatment under Article 2.1 once it has adduced evidence and arguments showing
that a measure has a detrimental impact on imports and that the measure is designed and/or
applied in a manner that is not even-handed. Afte r this, the burden shifts to the respondent to
show that the detrimental impact on imported products stems exclusively from a legitimate
regulatory distinction.

6 Appellate Body Report, EC – Seal Products, para. 5.165.
7 See Appellate Body Report, Brazil – Retreaded Tyres, para. 143, citing Appellate Body Report, US –
Gambling, para. 306 and Korea – Various Measures on Beef, para. 163; and Appellate Body Report China –
Raw Materials, para. 319, cited in Appellate Body Report, US – Tuna II (Mexico), para. 319.
8 Appellate Body Reports, US – Clove Cigarettes, para. 182; US – Tuna II (Mexico), para. 215; US –
COOL, para. 271.
9 Appellate Body Report, US – Clove Cigarettes, paras. 180-182.
10 Appellate Body Report, US – COOL, para. 271.

- C-8 -

ANNEX C-3
EXECUTIVE SUMMARY OF THE THIRD-PARTY SUBMISSION OF CANADA
I. INTRODUCTION

1. In its third-party submission, Canada addresses three key systemic legal issues: the scope
of analysis under Article 2.1 of the TBT Agr eement; the legal standard for determining the
legitimacy of the regulatory distinction under Arti cle 2.1; and, the relationship between the legal
standards for less favourable treatment in Article 2.1 of the TBT Agreement and Article III:4 of the
GATT 1994.

II. A PANEL MUST CONSIDER THE OVERALL ARCHITECTURE OF THE MEASURE IN
DETERMINING WHETHER THE DETRIMENTAL IMPACT STEMS EXCLUSIVELY FROM A
LRD

2. In assessing whether a regulatory distinction is even-handed under Article 2.1, the Appellate
Body has been clear that a panel must "carefully scrutinize the particular circumstances of the
case, that is, the design, architecture, revealing structure, operation, and application of the
technical regulation at issue."

3. The United States' claim that the LRD analysis must be limited only to the distinction that
accounts for the detrimental impact limits the scope of the analysis in a manner that is
inconsistent with the jurisprudence. Such a narrow approach would undermine a panel's ability to
make an objective assessment of the matter before it, contrary to Article 11 of the DSU.

4. The Appellate Body has confirmed that in examining whether a detrimental impact stems
exclusively from a LRD, a panel is not limited to considering only the regulatory distinction that
accounts for the detrimental impact on imported products. Rather, a panel must consider the
overall architecture of the technical regulation, as designed and applied. In addition, the Appellate
Body has emphasized that the even-handedness of the challenged technical regulation as a whole
is an element of the LRD analysis.

5. There may be other elements of the measure that are relevant to the analysis of whether
the regulatory distinction is even-handed. Althou gh these elements may not be directly connected
to the regulatory distinction that causes the detrimental impact, they, nevertheless, may help
explain whether the detrimental impact reflects discrimination in violation of Article 2.1.

6. Not every element of a technical regulation will be probative of whether a detrimental
impact reflects discrimination. A panel's consideration of the relevance of an element of a technical
regulation must be done on a case-by-case basis.

III. THE EXAMINATION OF THE RATIONALE FO R THE REGULATORY DISTINCTION IS AN
INTEGRAL PART OF THE EVEN-HANDEDNESS ANALYSIS

7. In its first written submission, Mexico applied the three-part test articulated by the panel in
EC – Seal Products . That test is incorrect because it requires, in its first and second elements, an
examination of the explanation or justification for the regulatory distinctions independently of the
determination of whether the regulatory distinction is even-handed.

8. In examining the even-handedness of the regu latory distinction, a panel should examine the
rationale for the regulatory distinction advanced b y t h e r e s p o n d i n g M e m b e r i n l i g h t o f t h e
identified policy objective, to determine whether there is a rational connection between the
regulatory distinction and the identified policy objective. In doing so, a panel must examine
whether the regulatory distinction is designed or applied in a manner that constitutes arbitrary or
unjustifiable discrimination, such that it lacks even-handedness. The jurisprudence supports the
view that the extent to which there is a rational connection should not be considered separately
from the determination of the even-handedness of the regulatory distinction. The presence or

- C-9 -

absence of a rationale that explains or justifies the regulatory distinction in light of the identified
policy objective is a critical aspect in determining whether a regulatory distinction is even-handed.

9. The jurisprudence interpreting "arbitrary or unjustifiable discrimination" under the chapeau
of Article XX can inform the interpretation of a measure's even-handedness under Article 2.1. This
is consistent with the Appellate Body finding that "there are important parallels between the
analyses" under Article 2.1 and the chapeau, and that the balance under the TBT Agreement as set
out in the preamble is, in principle, not different from the balance set out in the GATT 1994
between the non-discrimination obligations in Articl es I:1 and III:4 and the general exceptions in
Article XX.

10. Although the Appellate Body recently faulted the panel in EC – Seal Products for substituting
the Article 2.1 LRD test for the chapeau test under Article XX, this does not undermine the
importance of examining, as part of the even-h andedness analysis under Article 2.1, whether the
regulatory distinction is rationally connected to the objective of the technical regulation.

IV. ALTHOUGH THE LEGAL STANDA RDS FOR THE NON-DISCRIMINATION
OBLIGATIONS UNDER ARTICLE 2.1 AND AR TICLE III:4 ARE NOT THE SAME, THIS
DOES NOT "UNDERMINE A MEMBER'S AB ILITY TO REGULATE IN THE PUBLIC
INTEREST"

11. In EC – Seal Products , the Appellate Body confirmed that the legal standard for the non-
discrimination obligation under Article 2.1 of the TBT Agreement does not apply equally to claims
under Articles I:1 and III:4 of the GATT 1994. For the purposes of a "less favourable treatment"
analysis under Article III:4, a panel is not required to examine whether the detrimental impact of a
measure on competitive opportunities for like imported products stems exclusively from a LRD.

A. The GATT 1994 Protects a Member's Right to Regulate

12. The Appellate Body has confirmed that under the GATT 1994, a Member's right to regulate is
accommodated under Article XX; therefore, in examining detrimental impact under Articles I:1 and
III:4, a panel must not conduct an additional inquiry into whether the detrimental impact stems
exclusively from a LRD.

13. According to the United States, the legal standard for the obligation under Article III:4 of the
GATT 1994 should include an examination of th e "underlying rationale and operation of the
standard", otherwise a Member would not be ab le to adopt measures that draw regulatory
distinctions in the pursuit of legitimate public policy objectives. This is plainly incorrect. The United
States' argument ignores other provisions in the GATT 1994 that enable a Member to "regulate in
the public interest", including Article XX, which sets out general exceptions to Members' trade
obligations under the Agreement.

B. The GATT 1994 does not preclude a Member from drawing regulatory
distinctions

14. The United States' suggestion that Articl e III:4 should include an examination of "the
underlying rationale and operation of the standard" at issue, appears to import into Article III:4 an
additional element that considers a measure's policy objectives, such as the LRD test under
Article 2.1 of the TBT Agreement. It also denies any legal effect to the provisions in Article XX of
the GATT 1994, which protect a WTO Member's right to regulate.

15. The provisions in the GATT 1994 reflect a careful balance between the trade liberalizing
objectives reflected in, inter alia, its non-discrimination obligations, and the protection of Members'
right to regulate in the public interest, as set out in Article XX. Due to the structure of the
GATT 1994, the analysis of a challenged measure's policy objectives, which can provide a rationale
for the discrimination between like products, is to be conducted under Article XX.

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1. The Panel does not have the authority to address any perceived
imbalance between a Member's right to regulate under the GATT 1994
and the TBT Agreement

16. The United States asserts that the scope of legitimate objectives that can be invoked under
Article XX to justify a violation of the GATT 1994 is narrower than the scope of legitimate
objectives that a Member can invoke under Articles 2.1 and 2.2 of the TBT Agreement, and that
this would create problems where a Member pursues objectives not listed under Article XX of the
GATT 1994.

17. The United States' submissions fail to demonstrate the accuracy of its assertion. However,
even if it were the case that the scope of legitimate objectives is narrower under Article XX as
compared to Articles 2.1 or 2.2 of the TBT Agreem ent, as the Appellate Body has pointed out, any
perceived imbalance in the existing rights an d obligations under the TBT Agreement and the
GATT 1994, is for the WTO Members to address in negotiations.

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ANNEX C-4
EXECUTIVE SUMMARY OF THE ORAL STATEMENT OF CANADA
AT THE MEETING OF THE PANEL
I. INTRODUCTION

1. In its third-party oral statement, Canada a ddressed the correct test to be applied under TBT
Article 2.1 with respect to the "less favourable treatment" element, the question of the relationship
between that provision and GATT Article III:4, an d the sequence of analysis that should be
followed under GATT Article XX.

II. TEST FOR "LESS FAVOURABLE TR EATMENT" UNDER TBT ARTICLE 2.1

2. The correct test to determine whether a detrimental impact stems exclusively from a
legitimate regulatory distinction (LRD) is whether the regulatory distinction is even-handed. There
can be a number of factors that can demonstrate even-handedness, or the lack thereof.

3. Canada considers that the European Union mis-states the law when it suggests that all
regulatory distinctions are permissible provided that they stem exclusively "from the pursuit of
legitimate objectives". It is a necessary but not sufficient condition for the measure as a whole,
including the regulatory distinction, to pursue a legitimate objective. It is also necessary for the
regulatory distinction itself to be "legitimate". This determination does not rest on whether the
objective pursued is legitimate, but on whether the regulatory distinction is "even-handed."

III. ARTICLE III:4 OF THE GATT 1994 DO ES NOT INCLUDE A LRD ELEMENT

4. The Appellate Body's findings in EC – Seal Products confirms that the legal standard for the
non-discrimination obligations under TBT Article 2.1 does not apply equally to claims under GATT
Articles I:1 and III:4. Therefore, a panel is not required, under Article III:4, to conduct an
additional inquiry into whether the detrimental impact stems exclusively from a LRD or consider
any policy rationale that the responding Member puts forth to seek to justify the discriminatory
treatment.

5. Canada does not consider that a Member's ability to regulate in the public interest would be
undermined if a panel is not required to consider the underlying rationale or policy objective of a
measure as part of the analysis under Article III:4. The balance reflected in the TBT Agreement
between the desire of WTO Members to avoid unne cessary obstacles to trade and the recognition
of Members' right to regulate is given effect, inter alia, through the inclusion of the LRD element in
TBT Article 2.1. This balance is not, in principl e, different from the balance set out between GATT
Articles I:1 and III:4, and GATT Article XX. Canada considers that the balance struck in the
GATT 1994 does protect a Member's right to regu late. Any attempt to introduce an additional
inquiry of a measure's underlying rationale into the Article III:4 analysis would disrupt this careful
balance, and the established jurisprudence that has guided the interpretation of the non-
discrimination obligations in the light of Article XX.

6. Further, the United States does not offer any concrete example to substantiate its concern
that the narrower scope of objectives under Article XX compared to TBT Article 2.1 may undermine
a Member's right to regulate.

IV. THE SEQUENCE OF ANALYS IS UNDER GATT ARTICLE XX

7. The Appellate Body has recently affirmed, in China – Rare Earths, that an assessment under
GATT Article XX involves a two-tiered analysis.

8. The first step, provisional justification, requires that the responding party demonstrate that
the impugned measure "address[es] the particular in terest specified in that paragraph", and that
"there [is] a sufficient nexus between the measure and the interest protected". In the context of
Article XX(b), it also requires a responding party to demonstrate that it has adopted or enforced a

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measure "necessary to protect human, animal or plant life or health". The necessity analysis
involves a process of "weighing and balancing" a series of factors.

9. Although Mexico describes the correct test under Article XX, it fails to apply the correct
"sequence of steps" for assessing consistenc y with Article XX. Canada agrees with the
United States that the assessment of whether th e measure contributes to the fulfillment of the
objective forms part of the necessity test, and should not form part of the analysis of whether the
measure falls within the scope of Article XX(b).

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ANNEX C-5
INTEGRATED EXECUTIVE SUMMARY OF THE ARGUMENTS OF THE EUROPEAN UNION
1. The European Union has a substantial intere st in the matter before the Panel, and we
request that our interests as a Third Party be fully taken into account throughout the panel
process. Specifically, we request that Third Parties be permitted: to be present throughout the
hearing; to comment, at the invitation of the Panel, on matters arising during the hearing; to
receive copies of any questions to the Parties, their responses and comments; and to be present at
any subsequent meeting of the compliance Panel with the Parties. In order to facilitate the work of
the Panel and of the Parties, the European Union pr oposes that the Third Parties should receive all
documents in a single copy in electronic format only. For the same reasons, the European Union
also proposes that each Third Party should be permitted to prepare one integrated executive
summary of all its submissions, of up to 6 pages (as currently provided), within 7 days (as also
currently provided), to be used as the relevant section of the descriptive part of the Panel Report.

2. Although there is no formal system of pr ecedent in WTO law, original proceedings and
compliance proceedings are part of a continuous process, and compliance panels are expected to
be guided by their own prior findings.

3. If the same matter that was placed before the original panel and decided is again placed
before the compliance Panel (that is, the following are unchanged: the law and clarification of the
law; the measure; the facts; and the evidence) then the compliance Panel can and should simply
refer to its prior finding, and re-iterate it. There is no general rule of res judicata in WTO law; but
compliance panels are expected to follow the results of original proceedings.

4. If one or more of the above elements has changed, then the compliance Panel should take
that into account when making its determinations, whilst at the same time being guided by its
prior findings.

5. The terminology in the US submissions remains unclear: is it a question of scope,
jurisdiction, terms of reference, res judicata, non liquet, the relationship between different types of
DSU proceedings, or the particular language of Article 21.5? Furthermore, the significance of
certain statements from past cases remains unclear, particularly when they are taken out of the
context of the particular case in which they were made.

6. In the opinion of the European Union, none of the issues raised by the United States touch
on the concept of jurisdiction.

7. The concept of terms of reference (Article 7 of the DSU) may be thought of as referring to
the "jurisdiction" of a particular panel , although use of the term "terms of reference" is more
precise and preferable, because that is the term us ed by the treaty, and thus helps to distinguish
this concept from the concept of jurisdiction. In this case, Mexico's claim under Article 2.1 of the
TBT Agreement is clearly in Mexico's Panel Request and thus within the terms of reference.

8. Nothing in Article 3.7 establishes a condition under which a party would be prevented from
initiating proceedings, including compliance proceedings. The only express limitation referred to in
Article 3.7 is that a Member shall exercise its ju dgement as to whether action would be fruitful. A
Member is expected to be largely self-regulating in deciding whether any such action would be
fruitful. There is no general doctrine of res judicata in WTO dispute settlement.

9. Contrary to what the United States appears to believe, US – Shrimp does not support its
submissions in the present proceedings. On the contrary, it simply confirms that, once particular
measures are properly within the scope of compliance proceedings, because they are declared or
undeclared measures taken to comply, any clai m may be made against them, whether or not
made in the original proceedings, and the compliance panel must assess and rule on such claim ,
such ruling being subject to scrutiny on appeal.

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10. In Mexico – Corn Syrup (Article 21.5 – US), the compliance panel had been correct to
examine the consistency of the re-determination. It was this assessment that the Appellate Body
reviewed. This case does not support the US submissions in the present proceedings. It simply
confirms that, once particular measures are properly within the scope of compliance proceedings,
because they are declared or undeclared measur es taken to comply, any claim may be made
against them, whether or not made in the original proceedings, and the compliance panel must
assess and rule on such claim , if only to determine that the matter was decided in the original
proceedings, such ruling being subject to scrutiny on appeal.

11. Article 11 of the DSU requires a panel to make an objective assessment of the matter before
it, including an objective assessment of the facts of the case and the applicability of and
conformity with the relevant covered agreements, and to make such other findings as will assist
the DSB in making the recommendations or in giving the rulings provided for in the covered
agreements. This is consistent with Article 23 of the DSU, which requires Members to have
recourse to the DSU when they seek redress of a violation of obligations under the covered
agreements; Article 3.3 of the DSU, which refers to situations in which a Member considers there
is a violation; and Articles 3.2 and 19.2 of the DSU, pursuant to which the rights and obligations of
Members may not be added to or diminished in dispute settlement proceedings. Similarly,
Article 17.12 of the DSU requires the Appellate Bo dy to address each of the issues raised in
accordance with Article 17.6 during an appellate proceeding. Thus, subject to the proper exercise
of judicial economy (which is not at issue in these compliance proceedings), when a matter is
properly within the jurisdiction and terms of refe rence of a WTO adjudicator, that adjudicator is
required to assess and rule upon it. There is no general doctrine of non liquet in WTO dispute
settlement.

12. The concept of the scope of various different proceedings under the DSU in relation to each
other is different from the concepts of jurisdiction, terms of reference, res judicata and non liquet
outlined above. There are certainly some exclusions and overlaps. For example, the same measure
and matter can be subject to more than one panel proceeding. A reasonable period of time may be
fixed by an arbitrator pursuant to Article 21.3(c) of the DSU; but in some cases the
implementation period is fixed by the original panel. And so forth. Thus, just because a particular
matter or measure is within the scope of one procee ding or one type of proceeding, that does not
necessarily mean that it is not within the scope of another proceeding or type of proceeding.

13. The scope of compliance proceedings is governed by the terms of Article 21.5 of the DSU: it
is the "dispute" that consists of the "disagreement as to the existence or consistency with a
covered agreement of measures taken to comply with the recommendations and rulings" of the
DSB. Such an examination also includes both declared measures taken to comply; as well as any
undeclared measures taken to comply, including those that satisfy the close nexus test. Measures
taken to comply, like all measures subject to review in WTO dispute settlement, may be either
actions or omissions attributable to the responding Member.

14. Once, for whatever reason, measures are within the scope of compliance proceedings, the
complaining Member is not restricted to challenging the consistency of those measures with the
same provisions of the covered agreements at issu e in the original proceedings, and, furthermore,
the defending Member is not free to assume that such measures are WTO consistent.

15. The scope of compliance proceedings also includes a disagreement "as to the existence" of a
measure taken to comply. For example, the complaining Member might assert that no measure
taken to comply exists, whilst the defending Member might assert that a measure taken to comply
does exist. Such disagreement would be within the scope of compliance proceedings, and if found
to exist, the measure would necessarily be characterised as a measure taken to comply.

16. Another possibility is that the parties agree that no measure taken to comply exists, but the
complaining Member asserts that such a measure was necessary (that is, should exist), whilst the
defending Member asserts that such a measure was unnecessary (need not exist), because, for
example, through events arising during the passage of time, the inconsistency has ceased.
Another way of expressing this same disagreement is that the complaining Member is complaining
about the defending Member's omission, that is, its failure to ensure that the measures it adopts
or maintains are in conformity with the covered agreem ents. This omission, and by definition the
measure to which it refers (that is, the original measure, as maintained), are thus also within the
scope of the compliance proceedings.

- C-15 -

17. The United States bases its submissions on the scope of these compliance proceedings in
large measure on the findings in EC – Bed Linen (Article 21.5 – India). However, there are in this
respect a number of issues that must be taken into consideration.

18. First, if the clarification of WTO law to be applied by a compliance panel will not be the same
as the clarification of WTO law that was applied by the original panel (for example, because of
clarifications provided in the original proceedings) then the reasoning in EC – Bed Linen
(Article 21.5 – India) does not apply.

19. Second, if the measures or aspects of the measures that are the subject of the compliance
complaint are not the same as the measures or aspects of the measures that were the subject of
the original complaint, then the reasoning in EC – Bed Linen (Article 21.5 – India) does not apply.

20. Third, given the circumstances of th at case, the facts and evidence were already frozen on
the file of the original investigation . In contrast, if the investigating authority does re-open the
record and collect more information and evidence, such that the facts or evidence have changed
relative to those at issue in the original proceedings, then the reasoning in EC – Bed Linen
(Article 21.5 – India) does not apply.

21. Fourth, the aspect of the measure in question that was challenged by India was separable
from other aspects of the measure. If that is not the case, the reasoning in EC – Bed Linen
(Article 21.5 – India) does not apply.

22. Furthermore, it is significant that, in each of the subsequent cases that touch on this matter
(US – Oil Country Tubular Goods Sunset Reviews (Article 21.5 – Argentina) ; US – Softwood
Lumber VI (Article 21.5 – Canada) ; US – Cotton (Article 21.5 – Brazil) ; US – Zeroing (EC)
(Article 21.5 – EC)) , the situation arising was distinguished from EC – Bed Linen (Article 21.5 –
India). Significantly, in the most recent of these cases, US – Zeroing (EC) (Article 21.5 – EC) , in
reversing the panel, the Appellate Body referred to a statement by the panel in US –
Countervailing Measures on Certain EC Products (Article 21.5 – EC) (upon which the United States
seeks to rely in these compliance proceedings) to the effect that "a new claim on an aspect of the
original measure that was never challenged and remained unchanged" would be precluded in
compliance proceedings, and stated expressly that it disagreed with that proposition.

23. The European Union considers that a compliance panel must balance the principles of
prompt settlement and due process, and that both principles must take into account not only the
interests of the parties in a particular dispute, but also the interests of the system.

24. We are not merely speaking of an additional delay corresponding to an additional reasonable
period of time. If the relevant matters would be referred to a new panel it would likely take much
longer to return to the current procedural point.

25. In this respect, the European Union refers to the International Law Commission (ILC)
Articles on the Responsibility of States for Internationally Wrongful Acts ("Articles on State
Responsibility" or "ASR"), which have been frequently referred to in WTO litigation. The ASR
(and/or the associated Commentaries) confirm three points. First, the legal consequences of an
internationally wrongful act (such as the US acts found WTO inconsistent by the original panel)
include cessation and non-repetition (and do not affect the continued duty of performance).
Second, a concern with non-repetition is particularly justified when the pre-existing situation is not
going to be restored. Third, the focus of the WTO dispute settlement mechanism is on cessation
rather than reparation.

26. In short, to the extent that WTO rules are understood to focus on cessation rather than
reparation, there is already a significant shift in the architecture of WTO dispute settlement away
from the principle of prompt settlement, the burd en of the passage of time being placed on the
complainant rather than the respondent. This being so, it is entirely appropriate, and even
essential for the proper functioning of the WT O dispute settlement system, that there is a
reasonable re-balancing in the form of an effect ive apprehension by the system of repetition. The
precise moment at which this is achieved is the moment at which the scope of compliance
proceedings is under consideration. In the submissi on of the European Union, this issue should be
approached so as to permit a compliance panel to reasonably capture the full extent of what is, in

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essence, a continuing situation. The European Union submits that the compliance Panel should
bear these factors in mind when considering the various scope arguments advanced by the
United States in this particular case.

27. In conclusion: The amended tuna measure is a declared measure taken to comply. Declared
measures taken to comply fall within the scope of compliance proceedings. The European Union
considers that the various elements of the am ended tuna measure can only meaningfully and
reasonably be considered as a whole, and are inse parable from each other. Therefore, the entirety
of the amended tuna measure falls within the scope of these compliance proceedings. The
complaints are within the jurisdiction and terms of reference of the compliance Panel. There is no
rule of res judicata or non liquet. The compliance Panel must make an objective assessment of the
matter before it. The situation is not the same as the situation that arose in EC – Bed Linen
(Article 21.5 – India), and the reasoning in that case does not therefore apply.

28. As regards the order of analysis: The European Union suggests that the compliance Panel
starts with Article 2.1 of the TBT Agreement and then deals with Articles III:4 and XX of the
GATT 1994. A good rule of thumb when considering order of analysis is to begin with the more
specific provision. This allows the adjudicator to remain as faithful as possible to the intent of the
parties to the treaty. Reading the more general rule and the more specific rule together, or one as
context for the other, gives a WTO adjudicator the best insight into the drafters' intentions. The
recitals of the TBT Agreement confirm that it develops and builds on the GATT 1994.

29. As regards Article 2.1 of the TBT Agreement, and turning to this particular case, first, the
European Union considers that, in assessing whether or not there is a detrimental impact on
imports, the relevant comparison is between the situation before adoption of the original measure
and the present situation.

30. Second, the European Union considers that all regulatory change may involve costs that, in
the short term, will inevitably be unequally distributed amongst existing firms and Members as a
function of their past investment decisions. This fact alone does not mean that the measure
breaches. What is important is that, in the long term, all firms and Members can adjust to the new
regulatory regime and enjoy equal competitive opportunities.

31. Third, the European Union considers that the mere fact that unit regulatory compliance costs
may be higher for firms or Members with lower production volumes or market share does not,
alone, establish breach. Firms and Members make their own choices about economies of scale.
Propensity to breach WTO law is not a function of the relative size of Members or their firms or
their production volumes or market shares. WTO law treats all WTO Members as equals, taking
their relative size as a given fact.

32. Fourth, the European Union considers that th e fundamental question is whether or not the
legitimate regulatory distinctions are even-handed. No facts are per se excluded from that
assessment. This is an aspect of the case that will require the compliance Panel to carefully weigh
all of the facts and evidence. In essence, the question is whether or not the amended tuna
measure involves unjustified discrimination. Existing case law confirms that a mere difference does
not necessarily amount to discrimination, let alone unjustified discrimination. The compliance Panel
will therefore have to consider whether or not any different treatment within and outside the ETP
is even-handed and justified. In particular, the co mpliance Panel will need to consider whether or
not any different treatment is appropriately calibrated to different fishing methods, having regard
to the legitimate regulatory objectives pursued by the United States, framed in a manner that
actually corresponds to those legitimate objectives. The compliance Panel may also wish to
consider whether or not there is an alternative approach, which would consist in significantly
narrowing or even eliminating such differences, whilst still making an equivalent contribution to
the legitimate objectives, and that is reasonably available taking into account technical and
economic feasibility. If this is not the case, the compliance Panel should defer to the legitimate
exercise of regulatory autonomy by the United States. If it is the case, the compliance Panel
should find that the amended tuna measure is inconsistent with Article 2.1 of the TBT Agreement.

33. In response to a question from the Panel on the even-handedness requirement the European
Union has replied as follows. As explained in our submissions to the original panel and the
compliance panel, the Appellate Body has clarified that an assessment of an alleged de facto
breach of the national treatment obligation under Article 2.1 of the TBT Agreement, contextually

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informed by the recitals of the TBT Agreement and by Article 2.2 of the TBT Agreement, is not in
principle different from the analysis that would take place under Articles III:4 and XX of the
GATT 1994. This informs what is meant by the term "even-handed". This means that the
"rationale" or "objective" or "purpose" or "objective intent" of the regulatory distinction criticised
by Mexico is indeed relevant to the assessment, just as it would be relevant in an assessment
under Articles III:4 and XX of the GATT 1994.

34. It is possible that the regulatory distinction neither "assists" nor "hinders" the overall
objective, but merely reflects a calibration of th e different measures to di fferent risks. The mere
existence of such differences does not necessarily mean that there is discrimination, or unjustified
discrimination. Under the SPS Agreement, for example, measures must be calibrated according to
both the origin and the destination of the relevant products. In its consideration of this matter, the
Panel may wish to consider whether or not there is an alternative approach, which would consist in
significantly narrowing or even eliminating such differences (and any different costs associated
with them), whilst still making an equivalent contribution to the legitimate objectives, and which is
reasonably available taking into account technical and economic feasibility (that is, cost).

35. In response to an additional question from the Panel on burden of proof, the European Union
has replied as follows. The European Union agrees that, in interpreting and applying Article 2.1 of
the TBT Agreement in the case of a claim of a de facto breach of the national treatment obligation,
it should be born in mind that the balance struck in that provision is not different from the balance
struck in Articles III:4 and XX of the GATT. It is lik ely that this will be reflected when it comes to
considering the evidence. In particular, it is likely that in some respects the burden of proof will fall
on the defending Member, just as it does under the GATT.

36. However, at the same time, the European Union would caution against an excessively
mechanistic approach to this question. Whilst it is true that, under the GATT, it will normally be the
complainant's burden to demonstrate the breach and the defendant's burden to demonstrate the
defence, nevertheless, both of these statements are expressions of the more general principle that
it is generally for the party asserting the affirmative of a particular fact to adduce evidence in
support of its assertion.

37. Furthermore, we would note that the concept of the burden of proof refers to the proving of
a fact through adducing evidence. It is distinct from the burden of persuasion, which rather refers
to the making of arguments in order to persuade an adjudicator that a particular fact) should be
characterised in a particular manner. When it comes to burden of persuasion, what tends to
happen is that, at the end of the exchange of ar guments, and having respected due process, the
adjudicator will weigh the arguments and make a finding. We would also make the point that
future hypotheticals or alternative counterfactuals cannot be proved directly. Finally, we would
recall that a panel has the authority to put questions to either party, in search of any information
that it deems necessary, and that might reasonably be in that party's possession, without however
making the case for either party.

38. In sum, whilst the fact that Article 2.1 (complainant's burden) corresponds in principle to
Articles III:4 (complainant's burden) and XX (defendant's burden) of the GATT may seem to pose
a burden of proof conundrum, the extent of the difficulties should not be exaggerated. There are in
fact many other provisions of the covered agreements that raise similar questions, because it is
often not entirely clear when there is a rule-excep tion relationship, or what the relationships are
between different provisions or covered agreements. The way forward in this respect does not lie
in an excessively rigid approach to burden of proof issues, but rather in an intelligent use of the
panel's authority to question the parties in order to obtain relevant information.

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ANNEX C-6
EXECUTIVE SUMMARY OF THE THIRD-PARTY SUBMISSION OF JAPAN
I. Article 2.1 of the TBT Agreement

1. As noted by both parties, the Appellate Body developed a two-step test for panels to follow
in assessing claims of de facto less favourable treatment under Article 2.1. The first step consists
of an examination of whether the technical regulation at issue modifies the conditions of
competition in the relevant market to the detrim ent of the group of imported products vis-à-vis
the group of like domestic products or like products originating in any other country. An
affirmative finding that there is such a detrimental effect is not sufficient to demonstrate less
favourable treatment under Article 2.1. Instead, there is a second step in which the panel
scrutinizes whether the detrimental impact on imports stems exclusively from a legitimate
regulatory distinction rather than reflecting discrimination against the group of imported products.
1

2. The United States argues that the regulatory distinctions examined under the second step of
the Article 2.1 analysis are limited to the regulatory distinctions that account for the detrimental
impact determined in the first step of the analysis. The United States finds support for this position
in a statement made by the Appellate Body in the original proceedings.
2

3. Japan agrees that the regulatory distinction that accounts for the detrimental impact usually
will be the main focus of the assessment under the second step of the analysis. However, the
scope of the assessment is not as narrow as the United States suggests. Rather, the Article 21.5
Panel must "carefully scrutinize the particular circumstances of the case, that is, the design,
architecture, revealing structure, operation, and a pplication of the technical regulation at issue".
3
In Japan's view, this assessment goes beyond the regulatory distinction that allegedly accounts for
the detrimental impact. Thus, Japan does not support an overly rigid definition of the scope of the
assessment under the second step.

4. Ultimately, in this case, the parties seem to disagree less about the relationship between
steps one and two, and more about the regulato ry distinction that was at the heart of the
Article 2.1 analysis in the original proceedings. Japan agrees with the United States that the
clearest description of what the Appellate Body co nsidered to be the detrimental impact caused by
the tuna measure is found in paragraph 284 of the Appellate Body Report, which states:

In the light of the findings of fact made by the Panel, we concluded earlier that the
detrimental impact of the measure on Mexican tuna products is caused by the fact
that most Mexican tuna products contain tuna caught by setting on dolphins in the
ETP and are therefore not eligible for a "dolphin-safe" label, whereas most tuna
products from the United States and other countries that are sold in the US market
contain tuna caught by other fishing methods outside the ETP and are therefore
eligible for a "dolphin-safe" label. The aspect of the measure that causes the
detrimental impact on Mexican tuna products is thus the difference in labelling
conditions for tuna products containing tuna caught by setting on dolphins in the ETP,
on the one hand, and for tuna products containing tuna caught by other fishing
methods outside the ETP, on the other hand. The question before us is thus whether
the United States has demonstrated that this difference in labelling conditions is a
legitimate regulatory distinction, and he nce whether the detrimental impact of the
measure stems exclusively from such a distinction rather than reflecting
discrimination. (original emphasis)

1 Appellate Body Report, United States – Measures Concerning the Importation, Marketing and Sale of
Tuna and Tuna Products [hereinafter US – Tuna II (Mexico)], WT/DS381/AB/R (16 May 2012), para. 215
(referring to Appellate Body Report, United States – Measures Affecting the Production and Sale of Clove
Cigarettes [hereinafter US – Clove Cigarettes], WT/DS406/AB/R (4 April 2012), paras. 180, 182 and 215).
2 Second Written Submission of the United States of America (22 July 2014), para. 66 (referring to
Appellate Body Report, US – Tuna II (Mexico), para. 286).
3 Appellate Body Report, US – Clove Cigarettes, para. 182.

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5. Nonetheless, Japan disagrees with the United States that the recordkeeping/ verification and
observer requirements that Mexico has raised in these proceedings are not relevant to the analysis
under Article 2.1. In the second step of the Arti cle 2.1 analysis, the Article 21.5 Panel will have to
determine whether the detrimental impact stems from a legitimate regulatory distinction. In order
to make this determination, the Article 21.5 Panel must "carefully scrutinize the particular
circumstances of the case, that is, the design, ar chitecture, revealing structure, operation, and
application" of the amended tuna measure.
4 To the extent that Mexico claims that the
recordkeeping/verification and observer requirement aspects of the difference in labelling
conditions cause detrimental impact to Mexico tuna products and shows that such labelling
conditions are not even-handed, they would be relevant to the Article 21.5 Panel's analysis.
Indeed, it would appear that the recordkeeping/ verification and observer requirements concern
whether tuna products meet the conditions of eligibility of the "dolphin-safe" label. Accordingly,
Japan fails to see why such requirements should be excluded ex ante from the Article 21.5 Panel's
assessment.

II. Article III:4 of the GATT 1994

6. In the recent EC – Seal Products dispute, Japan and several other WTO Members expressed
the view that the assessment of claims of de facto less favourable treatment under Article III:4 of
the GATT 1994 may proceed along the lines of the tw o-step test developed by the Appellate Body
in the context of Article 2.1 of the TBT Agreemen t. Japan, for example, noted that a consistent
interpretation of both provisions is supported by the fact that both GATT Article III:4 and
TBT Article 2.1 address the same "less favourable treatment" issue. Furthermore, technical
regulations are in principle not only regulated und er TBT Article 2.1 but also fall among the types
of measures regulated by GATT Article III:4. Th e non-discrimination rule under TBT Article 2.1
only applies with respect to "technical regulations".
5 Thus, TBT Article 2.1 would provide relevant
context for the interpretation of Article III:4 when the matter relates to technical regulations.
Japan continues to believe that whether the detrimental impact on the competitive opportunities of
like imported products stems from legitimate regulatory distinctions is a relevant consideration for
purposes of the assessment of a measure under Article III:4 of the GATT 1994.

7. The incongruity of having separate tests under Article III:4 of the GATT 1994 and
TBT Article 2.1 is illustrated by the circumstances in this dispute. As noted earlier, the United
States' position in this dispute is that the amended tuna measure does not violate TBT Article 2.1
because, in its view, Mexico has failed to show that the detrimental impact on Mexican tuna
products does not stem from legitimate regulatory distinctions. Let us assume that the United
States were to succeed in its argument. In such circumstances, the amended measure would be
found not to provide less favourable treatment and therefore not inconsistent with Article 2.1 of
the TBT Agreement. Yet, under an overly narrow interpretation of GATT Article III:4 in which the
assessment of less favourable treatment focuses ex clusively on the detrimental impact, the same
measure could be found to accord less favourable treatment and therefore be inconsistent with
GATT Article III:4. The notion that the same technical regulation does not accord less favourable
treatment under Article 2.1 of the TBT Agreement, but does accord less favourable treatment for
purposes of Article III:4 of the GATT 1994 defies logic.

8. Article 2.1 of the TBT Agreement is the more specific provision in the more specific
agreement. TBT Article 2.1 is concerned only with one class of measures: technical regulations. By
contrast, GATT Article III:4 addresses a much wider class of measures that can potentially fall
under the generic categories of "laws, regulations and requirements affecting [the] internal sale,
offering for sale, purchase, transportation, distribu tion or use". That a technical regulation can be
found to be consistent with the more specific non-discrimination obligation and yet inconsistent
with the more general obligation makes the outcome all the more incongruous.

9. Japan recognizes that a measure found to be inconsistent with GATT Article III:4 could
eventually be justified under Article XX of the GATT 1994. However, the availability of Article XX
does not provide a neat solution to the problem de scribed above. It is an acknowledged fact that
the list of policy reasons that could justify a measure under Article XX is narrower than under
Article 2.1 of the TBT Agreement. Moreover, the assessment under Article XX is not necessarily the
same as under the second step of Article 2.1. Thus, the risk of conflicting findings is real.

4 Appellate Body Report, US – Clove Cigarettes, para. 182.
5 Appellate Body Report, US – Clove Cigarettes, para. 97.

- C-20 -

10. The outcome is less than optimal in other respects. It would appear that a WTO Member
facing a technical regulation that it considers to be discriminatory now has an incentive to bring
the claim under Article III:4 of the GATT 1994, rather than under Article 2.1 of the
TBT Agreement. This is because its burden under Article III:4 is lower than under TBT Article 2.1.
Under an overly narrow Article III:4, the complainant only has to demonstrate that the measure
has a detrimental impact on the competitive opport unities of the like imported products, at which
point the burden shifts to the respondent to show that the technical regulation is justified because
any regulatory distinctions are legitimate. It follows from this analysis that TBT Article 2.1 could
become redundant and cease to have much meanin g. This surely cannot be the outcome intended
by WTO Members when they negotiated the TBT Agreement.

11. Like the United States
6, Japan is concerned that excluding any examination of the purpose
and nature of the measure at issue from the assessment under GATT Article III:4 could improperly
undermine many legitimate and genuinely non-discriminatory measures. Japan therefore urges the
Article 21.5 Panel to adopt an interpretation of Article III:4 of the GATT 1994 that is coherent with
Article 2.1 of the TBT Agreement and that takes du e account of legitimate regulatory distinctions
that may underlie a technical regulation.

III. Article 21.5 of the DSU

12. Proceedings under Article 21.5 of the DSU co ncern disagreements "as to the existence or
consistency with a covered agreement of measur es taken to comply with the recommendations
and rulings". The United States recognizes that , in these Article 21.5 proceedings, Mexico would
be entitled to:

(a) reassert a claim where the original panel had exercised judicial economy
7;

(b) reassert a claim that alleges that the new aspects of the amended measure not only
fail to bring the measure into compliance with the provisions that were the subject of
the DSB recommendations and rulings, but are inconsistent with the covered
agreements
8; and

(c) make a new claim regarding an unchanged aspect of the measure that it could have
brought previously, where that unchanged aspect is an "inseparable" aspect of the
measure taken to comply.9

Nevertheless, the United States argues that Mexico's claim under Article 2.1 of the TBT Agreement
falls outside the Article 21.5 Panel's terms of refere nce because it is premised on elements of the
measure that were not found to be WTO-inconsistent and that are unchanged from the original
measure.
10

13. Japan considers it helpful to begin the analysis of this issue by recalling the relevant DSB
recommendation and ruling stemming from the or iginal dispute. These DSB recommendations and
rulings derive, of course, from the rulings of the Appellate Body and panel reports in the original
proceedings. In the case of Article 2.1 of the TBT Agreement, Japan believes that the relevant
ruling is the Appellate Body's finding that "the US 'dolphin-safe' labelling provisions provide 'less
favourable treatment' to Mexican tuna products than that accorded to tuna products of the United
States and tuna products originating in other countries and are therefore inconsistent with
Article 2.1 of the TBT Agreement".
11 In the light of the DSB's recommendations and rulings, the

6 Second Written Submission of the United States of America, para. 142.
7 See Appellate Body Report, United States – Sunset Review of Anti-Dumping Measures on Oil Country
Tubular Goods from Argentina (Article 21.5 – Argentina) [hereinafter US – Oil Country Tubular Goods Sunset
Reviews (Article 21.5 – Argentina)], WT/DS268/AB/RW (12 April 2007), paras. 141, 150-52.
8 See Appellate Body Report, European Communities – Anti-Dumping Duties on Imports of Cotton-type
Bed Linen from India (Article 21.5 – India) [hereinafter EC – Bed Linen (Article 21.5 – India)],
9 Second Written Submission of the United States of America, para. 48. See Appellate Body Report,
United States – Laws, Regulations and Methodology for Calculating Dumping Margins ("Zeroing") (Article 21.5
– EC) [hereinafter US – Zeroing (EC) (Article 21.5 – EC)], WT/DS294/AB/RW (14 May 2009), para. 433.
10 First Written Submission of the United States of America (27 May 2014), para. 202(1).
11 Appellate Body Report, US – Tuna II (Mexico), para. 299.

- C-21 -

United States was under an obligation to eliminate the less favourable treatment resulting from
the measure. To the extent the amended measure continues to accord less favourable treatment
to Mexican tuna products, the United States would have failed to comply fully with the DSB's
recommendations and rulings.
12

14. The United States asserts that the DSB's recommendations and rulings are narrowly limited
to the Appellate Body's finding that the original measure prohibited tuna products from being
labelled "dolphin safe" if it contained tuna caught in the ETP and a dolphin was killed or seriously
injured, but allowed tuna products containing tuna caught outside the ETP to be labelled "dolphin
safe" even if dolphins had been killed or seriously injured.
13 J a p a n n o t e s t h a t , a s p a r t o f i t s
reasoning, the Appellate Body explained that "the US measure fully addresses the adverse effects
on dolphins resulting from setting on dolphins in the ETP, whereas it does 'not address mortality
(observed or unobserved) arising from fishing meth ods other than setting on dolphins outside the
ETP'".14 This is, however, the reason given by the Appellate Body to support its ultimate
conclusion that "the US 'dolphin-safe' labelling provisions provide 'less favourable treatment' to
Mexican tuna products than that accorded to tuna products of the United States and tuna products
originating in other countries and are therefore inconsistent with Article 2.1 of the
TBT Agreement".
15 The United States therefore appears to confuse the Appellate Body's
conclusion with the particular reasons that provided the basis for that conclusion.

15. The situation in this case has similarities with the situation before the Appellate Body in US –
Oil Country Tubular Goods Sunset Reviews (Article 21.5 – Argentina) . That dispute concerned the
likelihood of dumping determination, which was premised on the following two factual bases: (i) a
finding of likely past dumping during the period of review; and (ii) a finding that import volumes
declined after the imposition of the anti-dumping duty order, which was made in the original
sunset determination and was incorporated into the measure challenged in the Article 21.5
proceedings. The original panel only addressed th e first factual basis and as a result concluded
that the likelihood of dumping determination was inconsistent with Article 11.3 of the
Anti-Dumping Agreement. It did not examine the second factual basis. In the compliance
proceedings, the United States argued that the second factual basis, i.e. the import volume
analysis, which remained unchanged in the U.S. Department of Commerce's ("USDOC") likelihood
of dumping redetermination, was not part of the "measure taken to comply" and therefore could
not be examined by the Article 21.5 Panel. The A ppellate Body disagreed with the United States'
argument. The Appellate Body held that the original panel's finding of WTO-inconsistency was
addressed to the USDOC's likelihood-of-dumping determination and that USDOC's finding on
import volumes is "an integral part of the 'measure taken to comply'"
16; as a consequence, to
comply with the original panel's finding, as adopted by the DSB, the United States had to bring its
determination of likelihood of dumping into co nformity with Article 11.3 of the Anti-Dumping
Agreement.17 The Appellate Body added that the narrow approach advocated by the United States
in that case improperly confused the original panel's conclusion concerning the USDOC's likelihood-
of-dumping determination with the particular reason that provided the basis for that conclusion.

16. Japan therefore urges the Article 21.5 Panel to find that Mexico's claims are properly within
its terms of reference.

12 See Appellate Body Report, United States – Measures Relating to Zeroing and Sunset Reviews
(Article 21.5 – Japan) [hereinafter US – Zeroing (Japan) (Article 21.5 – Japan)], WT/DS322/AB/RW (18 August
2009), para. 158.
13 First Written Submission of the United States of America, para. 192 (referring to Appellate Body
Report, US - Tuna II (Mexico), paras. 289-292).
14 Appellate Body Report, US – Tuna II (Mexico), para. 297 (referring to Panel Report, United States –
Measures Concerning the Importation, Marketing and Sale of Tuna and Tuna Products, WT/DS381/R (15
September 2011), para. 7.544).
15 Appellate Body Report, US – Tuna II (Mexico), para. 299.
16 Appellate Body Report, US – Oil Country Tubular Goods Sunset Reviews (Article 21.5 – Argentina) ,
para. 146.
17 Ibid. para. 143.

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ANNEX C-7
EXECUTIVE SUMMARY OF THE ORAL STATEMENT OF THE REPUBLIC OF KOREA
AT THE MEETING OF THE PANEL*
1. The Republic of Korea ("Korea") appreciates this opportunity to present its views to the
Panel as a third party. While the parties to the dispute and the third parties raise several important
issues, Korea would like to briefly focus on the following two systemic issues. First, Korea would
like to share its observation on the issue of th is compliance Panel's terms of reference. Second,
Korea would like to comment on relationship between Article 2.1 of the TBT Agreement and
Article III:4 of the GATT.

A
 COMPLIANCE PANEL'S TERMS OF REFERENCE

2. As the WTO itself proclaims, the main function of the WTO is to ensure that trade flows as
smoothly, predictably, and freely as possible. In order for the WTO agreements to be better
enforced, the WTO provides its Members with di spute settlement function. The goal of the WTO
dispute settlement is to achieve the prompt se ttlement of the dispute, while keeping the due
process rights of the parties to the dispute.

3. That being said, when a Member's measure is found to be inconsistent with the relevant
provisions of the WTO agreements through the dispute settlement procedures, the measure can be
said to block the flow of trade. At the DSB meeting, therefore, the WTO requires the Member
concerned to bring the measure into the conformity with the relevant provisions of the WTO
agreements. At the time when the inconsistent measure has been corrected through the RPT, it
can be said that the flow of trade is now recovered.

4. That being so, Korea would like to reiterate its understanding that true finality of a dispute
should envisage a situation where the exporters of the aggrieved party restore their
competitiveness which they had enjoyed before the WTO inconsistent measure imposed by the
Member concerned was adopted.

5. In this regard, a compliance panel's terms of reference is not confined to changed
measures; rather it may cover unchanged measures if the compliance panel's review on the
unchanged measures is necessary to finalize the dispute. Indeed, the Appellate Body in
United States – Zeroing (DS294) clarified that claims that had not previously been raised could
nevertheless be asserted against an implementi ng measure in a compliance proceeding "even
where such a measure taken to comply incorporates components of the original measure that are
unchanged, but are not separable from other aspects of the measure taken to comply."
1

6. The Appellate Body in several Article 21.5 disputes has already ruled that measures taken to
comply are not confined to the declared measures by the implementing Member.
2 The Appellate
Body in Mexico – Corn Syrup (Article 21.5) has particularly ruled that compliance panels have a
duty to examine issues of a "fundamental nature," issues that go to the root of their jurisdiction on
their own motion even if the parties to the dispute remain silent on those issues.3

7. It should be emphasized, however, that a compliance panel's broad terms of reference must
not be interpreted to allow the second chance for the complaining party to re-litigate. Therefore,
this compliance Panel must strike a balance between the prompt settlement of the dispute and due
process concerns in determining its scope of review.

* The Republic of Korea requested that its oral statement serve as its executive summary.
1 See United States – Laws, Regulations and Methodology for Calculating Dumping Margins (“Zeroing”)
– Recourse to Article 21.5 of the DSU by the European Communities, Appellate Body Report,
2 E.g., Appellate Body Reports, US-Softwood Lumber IV (Article 21.5 – Canada); US-Zeroing
(Article 21.5 – EC).
3 Appellate Body Report, Mexico-Corn Syrup (Article 21.5), para. 36, quoted in US-Countervailing
Measures on Certain EC Products (Article 21.5 – EC), para. 7.35.

- C-23 -

RELATIONSHIP BETWEEN ARTICLE 2.1 OF THE TBT AGREEMENT AND ARTICLE III:4 OF
THE GATT 1994

8. The WTO does not prohibit a Member from pursuing its legitimate policy goals, e.g.,
consumers' right to know, safety, and protection of human and animal or plant life or health, etc.
Even more, the WTO allows additional policy space to its Members through GATT Article XX
exceptions. However, the WTO permits a Member count ry's policy space only if it meets the rights
and obligations under the WTO agreements. Therefore, the WTO carefully strikes the balance
between a Member country's policy space and the object and purpose of the WTO agreements.

9. As the current dispute describes, the TBT Agreement allows a Member to pursue its policy
goals, through a discriminatory measure, only if the discriminatory measure stems from the
legitimate regulatory distinction. However, because the concept, discrimination, lies in both
Article 2.1 of the TBT Agreement and Article III: 4 of the GATT 1994, the qu estion about the clear
relationship between the two provisions in interpreting and applying the concept of discrimination
has often been raised.

10. Considering the second recital of the TBT Agreement which states that "[ d]esiring to further
the objectives of GATT 1994," the TBT Agreement s eems to be more specified instrument dealing
with the WTO Members' technical regulations, while the GATT 1994 covers broader measures. In
addition, the test for finding a violation of Article 2.1 of the TBT Agreement is different from the
test for finding a violation of Article III:4 of the GATT 1994. As a result, there is a possibility that a
discriminatory measure under Article III:4 of the GATT 1994 may be justified under Article 2.1 of
the TBT Agreement. Although Article XX of the GATT 1994 does provide certain exceptions, it is
well discussed so far that the scope may be narrower than that of Article 2.1 of the
TBT Agreement, because the two Agreements cover different ambit of trade areas.

11. Considering the rapid technical changes and ensuing increasing non-tariff barriers through
the TBT measures, Korea respectfully requests this compliance Panel to provide a guidance on the
relationship between Article 2.1 of the TBT Agreement and Article III:4 of the GATT 1994.

12. This concludes Korea's oral statement. Thank you.

- C-24 -

ANNEX C-8
INTEGRATED EXECUTIVE SUMMARY OF THE ARGUMENTS OF NEW ZEALAND
I. INTRODUCTION

1. New Zealand's submission comments on what constitutes "compliance" under Article 21 of
the Understanding on Rules and Procedures Governing the Settlement of Disputes (DSU), the
nature of de facto discrimination under the General Agreement on Tariffs and Trade 1994 (GATT)
and the Agreement on Technical Barriers to Trade (TBT Agreement) and the interpretation of
"treatment no less favourable" under Article 2. 1 of the TBT Agreement and Article III:4 of the
GATT 1994.

II. DSU: A MEASURE TAKEN TO COMPLY MUST BE IMPLEMENTED

2. New Zealand notes the claim by Mexico that the United States has in effect "unilaterally
granted itself a further extension to the RPT [Rea sonable Period of Time for Implementation] by
not enforcing the measure it has introduced for the purpose of bringing itself into compliance"
during a six month "education and outreach" grace period where the measure is legally in force,
but does not appear to be fully enforced.
1 New Zealand has concerns about the significant
systemic implications for the dispute settlement process if compliance is found to be achieved
when a Member merely announces it will enforce th e rules in the future. This should be strongly
discouraged. Consistency with WTO obligations must involve compliance both in law and in fact.

3. As stated in Article 21.1 of the DSU, "prompt compliance" with recommendations and rulings
of the DSB is essential for the effective resolution of disputes. The DSU recognises that immediate
compliance may not be possible in all circumstances, but requires that Members comply within a
reasonable period of time as determined under Article 21.3. New Zealand submits that any grace
periods should be taken into consideration in the determination of the RPT itself. The Member
seeking the grace period could raise this concern in the course of seeking to agree on a RPT with
the complaining Member(s) or during Article 21.3(c) arbitration proceedings.
2

III. THE NATURE OF DE FACTO DISCRIMINATION UNDER THE GATT AND THE
TBT AGREEMENT

4. At their core, the national treatment and Most Favoured Nation obligations in Articles I:1
and III:4 of the GATT and Article 2.1 of the TBT Agreement are concerned with non-discrimination.
The Appellate Body has clarified that discrimination under these articles is not limited to de jure
discrimination, but extends also to de facto discrimination.
3 The Parties appear to disagree about
the extent to which a measure that is origin-neutral on its face, such that any Member could
choose to meet its conditions, can nevertheless be de facto discriminatory.

5. Mexico's First Written Submission alleges that the amended measure accords less favourable
treatment to imported products vis-à-vis like domestic products inconsistent with the obligation in
Article III:4 as:

… the Panel and Appellate Body found that most tuna caught by Mexican vessels,
being caught in the ETP by setting on dolphins, would not be eligible for inclusion in a

1 Mexico First Written Submission, 8 April 2014, para. 99.
2 See Award of the Arbitrator, Korea – Taxes on Alcoholic Beverages – Arbitration under Article 21.3(c)
of the DSU, WT/DS75/16, WT/DS84/14, 4 June 1999, DSR 1999:II, p. 937, para. 47 where the arbitrator
noted that a thirty day grace period was required for the enforcement of certain measures under Korean law
and included this additional period after the promulgation of the amendments to the legislation as part of the
RPT.
3 Appellate Body Report, Canada – Certain Measures Affecting the Automotive Industry,
WT/DS139/AB/R, WT/DS142/AB/R, adopted 19 June 2000, DSR 2000:VI, p. 2985, para. 78; Appellate Body
Report, United States – Measures Affecting the Production and Sale of Clove Cigarettes, WT/DS406/AB/R,
adopted 24 April 2012 (US – Clove Cigarettes), para. 181; Appellate Body Reports, European Communities –
Measures Prohibiting the Importation and Marketing of Seal Products, WT/DS400/AB/R, WT/DS401/AB/R,
adopted 18 June 2014 (EC – Seal Products), para. 5.101.

- C-25 -

dolphin-safe product under the US dolphin-safe labelling provisions, while most tuna
caught by US vessels is potentially eligible for the label.4
6. By contrast, the United States submit that:

The amended measure has no exceptions – th e eligibility requirements apply to all
tuna products. And those eligibility requirements relate to fishing methods, which is
not an immutable condition. Any Member may produce non-eligible tuna products one
year and eligible products the next year, depending on the different choices that its
fleet makes year to year.
5
7. New Zealand does not comment on whether there is de facto discrimination in the instant
case but would like to make some general obse rvations. New Zealand notes that the Appellate
Body made the following comments on de facto discrimination under Article 2.1 of the
TBT Agreement in the original proceedings:

In its analysis, the Panel appears to juxtapose factors that "are related to the
nationality of the product" with other factors such as "fishing and purchasing
practices, geographical location, relative integration of different segments of
production, and economic and marketing choices." In so doing, the Panel seems to
have assumed, incorrectly in our view, that regulatory distinctions that are based on
different "fishing methods" or "geographical location" rather than national origin per
se cannot be relevant in assessing the consistency of a particular measure with
Article 2.1 of the TBT Agreement. The Panel's approach is difficult to reconcile with the
fact that a measure may be de facto inconsistent with Article 2.1 even when it is
origin-neutral on its face.
6
8. Like the Appellate Body, New Zealand considers that there can be de facto discrimination
where a regulatory distinction is based on matters other than national origin, or characteristics
with an inherent relationship with origin. New Zealand cautions against any approach that would
restrict de facto discrimination to instances where the relevant distinction is inherently related to
origin. Narrowing the ambit of de facto discrim ination under the GATT and the TBT Agreement in
this way would significantly limit the effectiveness of one of the core obligations in the WTO rules.
The fact that a Member could theoretically comply with conditions, or could theoretically access an
advantage, is not an automatic or complete answer to a discrimination claim. A non-discrimination
assessment should continue to focus on whether the impugned measure modifies the competitive
conditions of the relevant market under Arti cle III:4 of the GATT and Article 2.1 of the
TBT Agreement,
7 and whether an advantage has been accorded immediately and unconditionally
to like products originating in or destined for the territory of other Members under Article I:1.8

IV. "TREATMENT NO LESS FAVOURABLE"

A. Article 2.1 of the TBT Agreement

9. The Appellate Body has clarified that an assessment of "treatment no less favourable" under
Article 2.1 of the TBT Agreement requires panels to assess whether the technical regulation
modifies the conditions of competition in the relevant market to the detriment of the imported
products vis-à-vis like domestic products or like imported products from another country.
However, a finding of detrimental impact on competitive opportunities is not dispositive of "less
favourable treatment" under Article 2.1.
9 The Appellate Body has clarified that a regulatory

4 Mexico First Written Submission at para. 329 (footnote omitted).
5 United States First Written Submission at para. 312.
6 Appellate Body Report, United States – Measures Concerning the Importation, Marketing and Sale of
Tuna and Tuna Products, WT/DS381/AB/R, adopted 13 June 2012 (US – Tuna II (Mexico)), para. 225.
7 See, for example, Appellate Body Reports, EC – Seal Products, para. 5.116 and US – Tuna II (Mexico),
para. 237.
8 Appellate Body Reports, EC – Seal Products, para. 5.86.
9 Appellate Body Report, US – Clove Cigarettes, para. 182, as followed in Appellate Body Reports, US –
Tuna II (Mexico), para. 215 and Appellate Body Reports, United States – Certain Country of Origin Labelling
(COOL) Requirements, WT/DS384/AB/R / WT/DS386/AB/R, adopted 23 July 2012 (US – COOL), para. 271.

- C-26 -

distinction that is not designed in an even-handed manner will not be legitimate. 10 In determining
whether a regulatory distinction is even-handed, panels have been directed to consider the
"design, architecture, revealing structure, operation, and application of the technical regulation at
issue".
11 New Zealand submits that examination of these aspects should focus on the rationale or
objective that the regulatory distinction pursues, and assess this against the objective of the
measure as a whole.

10. In this dispute, the even-handedness a ssessment would involve consideration of the
United States' rationale for distinguishing between tuna products containing tuna caught by setting
on dolphins in the Eastern Tropical Pacific and tuna harvested by other methods in other areas of
the ocean. New Zealand submits that the Panel should consider whether this rationale is consistent
with the overall objective of the amended dolp hin-safety measure. For instance, does the
distinction assist or hinder the dolphin-safety objective? Is eligibility for the label tailored to the
different levels of dolphin-safety risks arising from the different fishing methods? In other words, is
the rationale for the distinction consistent with the measure's overall objective?

B. Article III:4 of the GATT 1994

11. There appears to be some disagreement between the parties about whether the purpose of
the measure is relevant to assessing whether it accords "treatment no less favourable" to imported
products vis-à-vis domestic products. The United States suggests that the purpose and nature of a
measure should be assessed as part of the Article III:4 analysis. The United States submits that to
do otherwise "would doom many legitimate and genuinely non-discriminatory measures"
12 to
inconsistency with Article III:4 of the GATT.

12. The exclusion of the nature and purpose of th e measure from an Article III:4 analysis should
not be viewed in isolation, but in the context of the requirements of that provision as a whole. The
analysis of "treatment no less favourable" contains a number of elements: in order for there to be
a breach, the measure at issue must "modify the co nditions of competition" to the detriment of
imported products;13 and there must be a "genuine relationship" between any detrimental impact
and the measure at issue. 14 Article III:4 does not prevent Members from regulating in the public
interest, including by treating imported and domestic products differently. However, it imposes
disciplines on how Members regulate in order to protect the equality of competitive conditions for
like domestic and imported products. Members may regulate to treat domestic and imported
products differently, so long as this difference does not detrimentally affect the conditions of
competition for imported products. In addition, there will only be a breach of Article III:4 if this
detrimental impact is attributable to the measure itself because there is a "genuine relationship"
between the measure and the detrimental impact. Th e exceptions articulated in Article XX of the
GATT provide Members with further freedom to regulate for the public policy objectives outlined in
the paragraphs set out in that article.

13. New Zealand therefore does not believe th at excluding the nature and purpose of the
measure from an examination of "treatment no less favourable" under Article III:4 would restrict a
Member's right to regulate for legitimate objectives as the United States suggests.

14. New Zealand also notes that a number of third parties have commented on the different
tests under Article 2.1 of the TBT Ag reement and Article III:4 of the GATT
15 and the risk of
conflicting findings under those two articles if the nature and purpose of a measure is excluded

10 Appellate Body Report, US – Clove Cigarettes, para. 182 as followed in Appellate Body Reports, US –
COOL, para. 271.
11 Appellate Body Report, US – Clove Cigarettes, para. 182 as followed in Appellate Body Reports, US –
COOL, para. 271.
12 United States Second Written Submission, para. 142.
13 Appellate Body Reports, EC – Seal Products, para. 5.101 (referring to Appellate Body Reports, US –
Clove Cigarettes, para. 179; Appellate Body Report, Thailand – Customs and Fiscal Measures on Cigarettes from
the Philippines, WT/DS371/AB/R, adopted 15 July 2011, DSR 2011:IV, p. 2203 (Thailand – Cigarettes
(Philippines)), para. 128; and Appellate Body Report, Korea – Measures Affecting Imports of Fresh, Chilled and
Frozen Beef, WT/DS161/AB/R, WT/DS169/AB/R, adopted 10 January 2001, DSR 2001:I, p. 5, para. 137).
14 Appellate Body Reports, EC – Seal Products, para. 5.101 (referring to Appellate Body Report, US –
COOL, para. 270 that in turn quotes Appellate Body Report, US – Tuna II (Mexico), footnote 457 to para. 214,
in turn referring to Appellate Body Report, Thailand – Cigarettes (Philippines), para. 134).
15 Canada third party submission, paras. 43-46, Japan third party submission, paras. 10-15 and Norway
third party submission, paras. 9-10.

- C-27 -

from the Article III:4 analysis.16 This could arise because Article XX of the GATT contains a closed
list of objectives, while potentially any objective pursued by a regulatory distinction is relevant
under Article 2.1 of the TBT Agreement. A regulatory distinction that pursues an objection that is
not listed in Article XX could therefore theore tically be consistent with Article 2.1 of the
TBT Agreement but inconsistent with Article III:4.

15. The potential for an incoherent result is most likely to arise where the objective of a
regulatory distinction does not fall within the exceptions enumerated in Article XX. This is not the
situation in the present dispute, where the United States has invoked the exceptions in
Article XX(b) and (g). In any event, New Zealand's view is that the potential incoherence between
Article 2.1 and Article III:4 is unlikely to be resolved as a matter of strict legal interpretation. We
refer to the Appellate Body's statement in EC – Seal Products that "if there is a perceived
imbalance in the existing rights and obligation s under the TBT Agreement and the GATT 1994, the
authority rests with the Members of the WTO to address that imbalance."
17

16 Japan third party submission, paras. 11-13.
17 Appellate Body Reports, EC – Seal Products, para. 5.129.

- C-28 -

ANNEX C-9
EXECUTIVE SUMMARY OF THE THIRD-PARTY SUBMISSION OF NORWAY*
I. INTRODUCTION

1. Norway welcomes the opportunity to be heard and to present its views as a third party in
this proceeding under Article 21.5 of the Dispute Settlement Understanding (DSU).

2. Norway will not address all of the issues upon which there is disagreement between the
parties to the dispute. Rather, Norway will in this written submission confine itself to discuss
certain aspects of the interpretation of Article III:4 of the GATT 1994.

II. GATT 1994 ARTICLE III:4

A. Introduction

3. GATT 1994 Article III:4 provides in relevant parts that

The products of the territory of any contracting party imported into the territory of
any other contracting party shall be accorded treatment no less favourable than that
accorded to like products of national origin in respect of all laws regulations and
requirements affecting their internal sale, offering for sale, purchase, transportation,
distribution or use.
4. Mexico and the United States disagree on whether the Amended Tuna Measure
1 accords
Mexican tuna products "treatment no less favourable than that accorded" like tuna products from
the United States. With regard to the legal standard, the focus of the disagreement seems to be
whether the underlying rationale – the basis – on which the member is regulating, must be part of
the examination when assessing "less favourable treatment" under the GATT 1994 Article III:4
2, or
if it is sufficient to demonstrate that the measure "has a detrimental impact on the competitive
opportunities for imported […] products […] vis-à-vis domestic […] products". 3 Accordingly, the
Parties seems to disagree on whether or not there is a need to assess if the detrimental impact
"reflects discrimination against like imported pr oducts, including an "additional inquiry" as to
whether the detriment is related to the foreign origin of the product"
4

5. Norway takes no position on the facts of th e dispute, but will in the following submit its
views on the legal interpretation of what constitutes "less favourable treatment" under GATT 1994
Article III:4.

B. Less Favourable Treatment

6. There are several prior panel and Appellate Body reports in which the term "treatment no
less favourable" in Article III:4 of the GATT 1994 has been interpreted. In EU – Seals , the
Appellate Body held that "the following propositions are well established" as a result of these prior
reports:

First, the term "treatment no less favourable" requires effective equality of
opportunities for imported products to compete with like domestic products. Second, a
formal difference in treatment between im ported and domestic like products are
necessary, nor sufficient, to establish that imported products are accorded less
favourable treatment than that accorded to like domestic products. Third, because
Article III:4 is concerned with ensuring effective equality of competitive conditions for

* Norway requested that its third party submission serve as its executive summary.
1 The measure is described in the Parties' submissions, see i.a. Mexico's First Written Statement part II
and United States' First Written Submission part II.A.
2 United States' First Written Submission para. 304.
3 Mexico's Second Written Submission para. 219.
4 Mexico's Second Written Submission para. 219.

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imported products, a determination of whether imported products are treated less
favourably than like domestic products involves an assessment of the implications of
the contested measure for the equality of competitive conditions between imported
and domestic like products. If the outcome of this assessment is that the measure has
a detrimental impact on the conditions of competition for like imported products, then
such detrimental impact will amount to treatment that is "less favourable" within the
meaning of Article III:4. Finally, for a measure to be found to modify the conditions of
competition in the relevant market to the detriment of imported products, there must
be a "genuine relationship" between the measure at issue and the adverse impact on
the competitive opportunities for imported products.
5
7. Article III:4 applies to both de jure and de facto discrimination.6 In considering claims of de
facto discrimination, a panel "must take into consideration 'the totality of facts and circumstances
before it', and assess any 'implications' for competitive conditions 'discernible from the design,
structure, and expected operation of the measure'".
7 The assessment must be founded on a
careful analysis of the contested measure and its implications in the marketplace.8

8. The Appellate Body has held that distinctions between imported and like domestic products
may be drawn without necessarily according less favourable treatment to the imported products.
However, there is a point at which the differential treatment of imported and like domestic
products amounts to "treatment no less favourable" within the meaning of Article III:4.
 9 According
to the Appellate Body, that is when the regulatory differences distort the conditions of competition
to the detriment of imported products. If that happens, "then the differential treatment will amount
to treatment that is less favourable within the meaning of Article III:4."10 A further inquiry into the
rationale of, or the justification for, the regulatory differences is not required for a finding of a
violation under GATT 1994 Article III:4.

9. It is worth noting, that the legal standard for assessing "treatment no less favourable" under
Article III:4 of the GATT 1994 differs from the lega l interpretation of the identical term in
Article 2.1 of the Agreement on Technical Barriers to Trade (TBT Agreement). Under Article 2.1 of
the TBT Agreement, there is a second step in the legal analysis, in addition to the examination of
whether the contested measure modifies the conditions of competition in the relevant market to
the detriment of imported products. The extra step involves an inquiry into whether the
detrimental impact (where found) can be explaine d from stemming exclusively from a legitimate
regulatory distinction. As explained above and, and as stated by the Appellate Body in EU – Seals,
this second step, is not required under Article III:4 of the GATT 1994:

We do not consider […] that for the purposes of an analysis under Article III:4, a
panel is required to examine whether the detrimental impact of a measure on
competitive opportunities for like imported products stems exclusively from a
legitimate distinction.
11
10. The difference between the legal standards under GATT Article III:4 and Article 2.1 of the
TBT Agreement is due to the "immediate contextual differences" between the TBT Agreement and
the GATT 1994. 12 Under GATT 1994 Article III:4, any justifications for the regulatory distinction
giving rise to the detrimental impact may be considered pursuant to the exceptions set forth in
this Agreement, notably under Article XX. The TBT Agreement does not contain a general
exceptions clause similar to that of the GATT 1994 . Instead, the sixth recital of the preamble of
the TBT Agreement indicates that a Member has a right to adopt measures necessary to fulfil
certain legitimate policy objectives, provided they are not applied in a manner that would
constitute a means of arbitrary and unjustifiable discrimination or a disguised restriction on
international trade, and are otherwise in acco rdance with the provisions of the Agreement.
13 In

5 Appellate Body Report, EU – Seals, para. 5.101 (footnotes omitted).
6 See, e.g. Panel Report, US – FSC (Article 21.5 – EC), para. 8.159.
7 Appellate Body Report, US – COOL, para 269 (footnotes omitted).
8 Appellate Body Report, US – FSC (Article 21.5 – EC), para. 215.
9 Appellate Body Report, EU – Seals, para 5.109.
10 Appellate Body Report, Thailand – Cigarettes (Phillippines), para. 128.
11 Appellate Body Report, EU – Seals, para. 5.117.
12 Appellate Body Report, EU – Seals, para. 5.125.
13 Appellate Body Report, US – Clove Cigarettes, para. 109.

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this context, the Appellate Body has set out that, under Article 2.1, if a regulatory distinction has a
detrimental impact on imports, a panel may assess its legitimacy under Article 2.1 itself.14

III. CONCLUSION

11. Norway respectfully requests the Panel to ta ke account of the considerations set out above.

14 Appellate Body Report, US – Clove Cigarettes, para. 109.

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ANNEX C-10
EXECUTIVE SUMMARY OF THE ORAL STATEMENT OF NORWAY
AT THE MEETING OF THE PANEL*
I. INTRODUCTION

1. Norway welcomes this opportunity to present its views on the issues raised in these panel
proceedings.

2. In its written statement, Norway addressed certain aspects of the interpretation of
Article III:4 of the GATT 1994. We will not repeat these arguments here. Rather, we would like to
draw the Panel's attention to two issues of rele vance to the interpretation of Article 2.1 of
the Agreement on Technical Barriers to Trade (TBT Agreement).

3. The legal standard for establishing a violatio n of Article 2.1 of the TBT Agreement involves a
finding of less favourable treatment, which again involves a two-step analysis. First, the
complainant must establish that the technical regulation at issue modifies the conditions of
competition in the market of the regulating Memb er to the detriment of the group of imported
products vis-à-vis the group of domestic or other foreign products.
1 Second, it must be shown that
the detrimental impact on imported products does not stem exclusively from a legitimate
regulatory distinction (LRD).
2 Both of the questions that we will comment upon today are related
to the second step.

II. THE SCOPE OF THE ANALYSIS

4. The first question that we will address is: what is the scope of the Panel's analysis when
determining whether the detrimental impact stems exclusively from a LRD. In the view of the
United States, the scope should be confined to those aspects of the measure forming the
regulatory distinction.
3 Norway agrees with Canada that the approach proposed by the
United States is not in line with the standard articulated in the jurisprudence.4

5. In previous TBT cases, the Appellate Body has concluded that "a panel must carefully
scrutinize the particular circumstances of the case, that is, the design, architecture, revealing
structure, operation, and application of the technical regulation at issue, and, in particular,
whether that technical regulation is even-handed".
5

6. In other words, while the regulatory distinction that accounts for the detrimental impact
naturally will be in focus of the examination, th e panel must look further when undertaking its
analysis. Indeed, in accordance with what the Appellate Body has articulated, rather than
conducting a limited inquiry only into those parts of the measure constituting the regulatory
distinction, the Panel must undertake a thorough assessment on a case-by-case basis of the
different elements of the technical regulation. In its determination of whether the detrimental
impact reflects discrimination in violation of Article 2.1, the panel must carefully consider the
overall architecture of the technical regulation as designed and applied and the even-handedness
of the measure as a whole.

III. THE TEST FOR DETERMINING WHETHER OR NOT THE DETRIMENTAL IMPACT STEMS
EXCLUSIVELY FROM A LRD

7. The second issue, on which we would like to make a few comments, is related to which test
should be applied when determining whether the detrimental impact stems exclusively from a LRD.
In the so-called TBT Trilogy Cases, the Appellate Body has articulated that the relevant inquiry

* Norway requested that its oral statement serve as its executive summary.
1 Appellate Body Report, US – Clove Cigarettes, para. 180.
2 Appellate Body Report, US – Clove Cigarettes, paras. 181-182.
3 United States' First Written Submission, paras. 191 and 222.
4 Canada's Third Party Submission para. 10.
5 Appellate Body Report, US – Clove Cigarettes, para 182.

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when making this determination, is whether the regulatory distinction is designed and applied in
an even-handed manner, or whether it lacks even-handedness, for example because it is designed
or applied in a manner that constitutes arbitrary or unjustifiable discrimination.6

8. In its first written submission, Mexico acknowledges this, but in addition, submits that the
panel in EU – Seals has set out the most recent elaboration of the test to be applied when
analysing the legitimacy of the regulatory distinction. 7 That test included three steps; "step 1"
addressing the rational connection between the distinction and the objective of the measure;
"step 2" considering whether an otherwise rationally disconnected distinction can be justified by
some other "rationale"; and "step 3" addressing whether the distinction is applied in an even-
handed manner.
 8

9. In Norway's view, the three steps articulated by the panel in EU – Seals does not properly
reflect the analytical framework developed in the pr evious TBT cases. In particular, the test by the
panel in EU – Seals seems to be at odds with previous jurisprudence when setting up separate
inquiries (steps 1 and 2) into the measure's policy objective or other justifications for the
regulatory distinction. In the previous cases, the consideration of whether there is a rational
connection between the policy objective and the regu latory distinction, or, in the absence of such
rational connection, whether there are other cogent reasons explaining the regulatory distinction,
has been an integral part of the even-handednes s analysis. Indeed, this consideration played an
important role in the even-handedness analysis both in US – Clove Cigarettes and US – COOL.

10. The analytical framework relied on by the Appellate Body in this regard, is not the same as
the analysis used in the context of Article XX of the GATT 1994. The need to conduct independent
analyses under these two provisions was recently confirmed by the Appellate Body in EU – Seals
9.
At the same time, however, the Appellate Body has underscored that there are "important
parallels between the analyses" to be applied under Article 2.1 of the TBT Agreement and the
chapeau of Article XX of the GATT 1994.
10 In light of this, the even -handedness analysis under
Article 2.1 may be informed by the jurisprudence in terpreting the term "arbitrary and unjustifiable
discrimination" under the chapeau of Article XX. This supports our view that the assessment of the
identified policy objectives, or other justifications for the distinction, must take place as part of the
even-handedness analysis under Article 2.1 of the TBT Agreement.

11. Mr. Chairman, distinguished Members of the Panel, this concludes Norway's statement
today.