U.S. Implementation of Adverse WTO Rulings: A Closer Look at the Tuna-Dolphin, COOL, and Clove Cigarettes Cases

Jamie Strawbridge
October 30, 2013

Critics of the World Trade Organization (WTO) fear that WTO rules can be used to challenge regulatory actions intended to protect the environment, bolster food safety, or promote public health.[1] These fears were brought to the fore by three recent cases concerning the WTO's Agreement on Technical Barriers to Trade (TBT Agreement).[2] In those cases, the United States was found to have violated the non-discrimination obligation in Article 2.1 of the TBT Agreement, and in particular the "national treatment" obligation, which prohibits "technical regulations" that discriminate against products imported from another WTO member.[3] The challenged measures involved the United States' "dolphin safe" labeling regime for tuna,[4] its country-of-origin labeling (COOL) regime for meat products,[5] and its ban on flavored cigarettes.[6] But rather than weakening these regulations in order to comply with the WTO rulings, the United States has, in recent months, strengthened its regulatory regimes. This article examines these compliance actions.

U.S.—Tuna II (Mexico)

The U.S. approach to compliance in U.S.—Tuna II (Mexico) is perhaps the most likely to survive further scrutiny. Launched by Mexico, the WTO challenge arose from the fact that most tuna caught by the U.S. fleet was eligible to be sold with a "dolphin safe" label in the United States, whereas most tuna caught by the Mexican fleet was not. This put the latter products at a disadvantage in the U.S. market. The U.S. labeling regime did not explicitly discriminate against Mexican products. However, it did preclude the application of the label to tuna caught in the eastern tropical Pacific Ocean (ETP) by setting nets on dolphins in order to scoop up both dolphins and the tuna that like to swim underneath  a description that covers the way most of the Mexican fleet operates. The U.S. fleet and other ships operating outside the ETP and using alternative methods automatically qualified for the label, even if they observed dolphins dying as a result of their fishing.[7]

The Appellate Body (AB) agreed that the regime had a detrimental impact on Mexico, but stressed that this would not lead to a finding of discrimination under Article 2.1 of the TBT Agreement if that impact "stems exclusively from a legitimate regulatory distinction."[8] Essentially, the United States had to prove that the different labeling requirements depending on the location and fishing method were "even-handed" in the sense of being "calibrated" to different threat levels to dolphins arising from different fishing methods, with tougher requirements applied to more harmful methods. The United States failed in this regard, according to the AB, partly because all fishing methods have the potential to harm dolphins, not just the method favored by the Mexican fleet.[9]

To comply with the AB ruling, the United States made it harder for tuna-fishing vessels around the world to receive the "dolphin safe" label. It did not change the requirements facing vessels (including most Mexican vessels) that set nets on dolphins in the ETP. They still cannot qualify. Under the new regime, however, the captains of vessels using alternative methods outside the ETP  a category into which most U.S. vessels fall  must now certify that no dolphins were killed or seriously injured due to their activities in order to receive the "dolphin safe" label. Previously, these vessels automatically received the label.[10] Although Mexico claims these steps are insufficient,[11] the United States now has a stronger case that the remaining difference in labeling conditions arises from a "legitimate regulatory distinction" and is "calibrated" to different risks to dolphins posed by different fishing methods.

There are several reasons to believe the United States may prevail in expected compliance proceedings. First, the original WTO panel appeared to agree that setting nets on dolphins is a particularly harmful fishing method.[12] Second, that panel conceded that little information exists on the threat to dolphins from alternative fishing methods.[13] Third, the AB hinted that compliance would not necessarily require uniform labeling requirements for all fishing methods in all bodies of water, and at one point even appeared to suggest that a new captain's statement for non-ETP vessels using alternative methods might help with compliance.[14]


The U.S.—COOL dispute, initiated by Canada and Mexico,[15] centered on U.S. regulations requiring meat products to be packaged with labels indicating origin. The AB found that, in order to know which label to use, producers had to track the origin of animals as they passed through the supply chain. This often involved segregating cattle of different origins, which drove up costs. Producers could avoid segregation, and increased costs, by purchasing only domestic livestock. As a result, the AB found that the regime had a detrimental impact on Canadian and Mexican livestock.[16]

As in US—Tuna II (Mexico), the finding that COOL had a detrimental impact on imports was not sufficient to fault the United States. The AB also had to examine whether that impact "stems exclusively from a legitimate regulatory distinction."[17] The AB found it did not, partly because the amount of information that producers were required to track was disproportionate to the level of information conveyed to consumers. Less information was conveyed because the labels were vague and confusing.[18] Therefore, the recordkeeping requirements for producers, which had a detrimental impact on imports, could not be "explained" by the need to convey information to consumers because that information was "not necessarily conveyed." The AB found that the regulatory distinctions imposed by COOL amounted to "arbitrary and unjustifiable discrimination against imported livestock, such that they cannot be said to be applied in an even-handed manner."[19]

To comply, the United States published new regulations[20] revamping the labeling criteria. For instance, instead of vague, "mixed origin" labels stating "Product of the U.S., Mexico"  which were widely used under the old regime  the new labels clearly conveyed where the animal was born, raised and slaughtered. In compliance proceedings,[21] the United States can make the case that its revised regime contributes more robustly to its objective of informing consumers about the food they eat and that any detrimental impact on foreign livestock does not amount to discrimination contrary to Article 2.1.[22]

But it is still not clear that the United States has fully complied with its WTO obligations. In addition to emphasizing the opacity of the old labels, the AB noted that much of the meat sold in the U.S. market (including meat sold in restaurants and many processed products) is exempt from labeling requirements.[23] The new regulations do not alter these exemptions. Thus, Canada and Mexico could argue that the recordkeeping burden is still disproportionate to the information conveyed to consumers in light of the fact that many meat products need not be labeled at all.

U.S.Clove Cigarettes

In the U.S.Clove Cigarettes dispute, the United States is attempting its most controversial compliance approach. Indonesia successfully argued that a 2009 U.S. law[24] that banned flavored cigarettes (including clove cigarettes, which are predominantly imported from Indonesia) but exempted menthol cigarettes (which are predominantly produced in the United States) amounted to discrimination contrary to Article 2.1 of the TBT Agreement.

The AB was once again unconvinced by U.S. arguments that the differential treatment accorded to cloves and menthol cigarettes (which the AB found were "like" products) stemmed from a legitimate regulatory distinction. For the United States, the main distinction was that menthol cigarettes (unlike cloves) are smoked by millions of Americans, and banning them could raise further complications, such as a black market and widespread suffering from withdrawal. Unconvinced, the AB suggested that a menthol smoker suffering from withdrawal could simply smoke regular cigarettes.[25]   

In response to the WTO ruling, the United States did not ban menthol cigarettes or allow clove cigarettes, either of which could have constituted compliance. Instead, the United States laid the groundwork for a potential menthol ban by having the Food and Drug Administration solicit comments from stakeholders on questions such as: whether it might make sense to ban menthol cigarettes; if so, how this could be done; and what complications might arise.[26] However, the United States did not commit to taking any action on menthol cigarettes. The United States also unveiled a series of education campaigns designed to discourage teenagers from smoking menthol cigarettes and released a study concluding that the presence of menthol in cigarettes makes it harder for smokers to quit.[27]

If these actions lead to a ban on menthol cigarettes, the United States will come into compliance, albeit after the deadline for doing so. Absent such a ban, many believe that the United States will be skating on thin ice in expected compliance proceedings.[28] If the detrimental impact on clove cigarettes remains, how do these new steps change the calculus on whether that detrimental impact "stem[s] from a legitimate regulatory distinction"?[29]

The United States could argue that, by inching toward new regulations on menthol cigarettes and, in the meantime, trying to curb their use, it is seeking to align the treatment of cloves and menthol cigarettes as much as it can and as quickly as it can. At the same time, it could renew arguments that banning menthol cigarettes is not feasible at this time, perhaps using the new stakeholder comments as additional evidence to support this conclusion.[30] But it is unclear if this will be sufficient to comply with the adverse WTO ruling as a matter of WTO law.


If the WTO upholds U.S. compliance steps in some or all of these cases, the United States will have navigated around fears that adverse rulings necessarily lead to weakened regulatory standards. In fact, if the U.S. approaches are affirmed, it could be said that these challenges encouraged "pro-consumer" and "pro-health" outcomes and did not lead to increased access for imports an ironic twist that may make other WTO members think twice before mounting similar challenges under the TBT Agreement.

About the Author:

Jamie Strawbridge is the former managing editor of Inside U.S. Trade, a publication that covers the details of U.S. trade policy for an expert audience. He has written extensively about a variety of international trade topics since 2006.

[1] See, e.g.WTO and Environment, Health & Safety, Public Citizen (2013), https://www.citizen.org/trade/wto/ENVIRONMENT/.

[2] Agreement on Technical Barriers to Trade, Jan. 1, 1995, 1868 U.N.T.S. 120, available at http://www.wto.org/english/docs_e/legal_e/17-tbt_e.htm [hereinafter TBT Agreement]. 

[3] Id. at art. 2.1 (Article 2.1 states that WTO members "shall ensure that in respect of technical regulations, products imported from the territory of any Member shall be accorded treatment no less favourable than that accorded to like products of national origin and to like products originating in any other country."). 

[4] Appellate Body Report, United States—Measures Concerning the Importation, Marketing and Sale of Tuna and Tuna Products, WT/DS381/R (May 16, 2012) [hereinafter U.S.—Tuna II (Mexico) AB Report], available at http://www.wto.org/english/tratop_e/dispu_e/381abr_e.pdf.

[5] Appellate Body Report, United States—Certain Country of Origin Labelling (COOL) Requirements, WT/DS384/AB/R, WT/DS386/AB/R (June 29, 2012) [hereinafter U.S.—COOL AB Report], available at www.wto.org/english/tratop_e/dispu_e/384_386abr_e.doc.

[6] Appellate Body Report, United States – Clove Cigarettes Measures Affecting the Production and Sale of Clove Cigarettes, WT/DS406/AB/R (Apr. 4, 2012) [hereinafter U.S.Clove Cigarettes AB Report], available at http://www.wto.org/english/tratop_e/dispu_e/406abr_e.pdf.

[7] Panel Report, United States—Measures Concerning the Importation, Marketing and Sale of Tuna and Tuna Products, WT/DS381/R, ¶¶ 2.3-2.16 (Sept. 15, 2011) [hereinafter US—Tuna II (Mexico) Panel Report], available at http://www.wto.org/english/tratop_e/dispu_e/381r_e.pdf.

[8] U.S.—Tuna II (Mexico) AB Report, supra note 4, ¶ 284.

[9] Id. ¶¶ 297-299.

[10] Enhanced Document Requirements to Support Use of the Dolphin Safe Label on Tuna Products, 78 Fed. Reg. 40997 (July 9, 2013) (to be codified at 50 C.F.R. pt. 216).

[11] Press release, Secretaría de Economía (Mexico), Mexico will challenge before the World Trade Organization the new regulation of the United States on labelling "dolphin-safe" (July 11, 2013), http://www.economia.gob.mx/news-and-events/press-room/headlines/9650-boletin-conjunto-110713-en.

[12] US—Tuna II (Mexico) Panel Report, supra note 7, ¶ 7.438.

[13] Id. ¶ 7.519.

[14] U.S.—Tuna II (Mexico) AB Report, supra note 4, ¶ 296.

[15] A single WTO panel was established to hear the complaints of Canada and Mexico with regards to COOL.

[16] U.S.—COOL AB Report, supra note 5, ¶¶ 286-292.

[17] Id. ¶¶ 271, 293, 340.

[18] Id. ¶¶ 341-350.

[19] Id. ¶¶ 349.

[20] Mandatory Country of Origin Labeling of Beef, Pork, Lamb, Chicken, Goat Meat, Wild and Farm-Raised Fish and Shellfish, Perishable Agricultural Commodities, Peanuts, Pecans, Ginseng, and Macadamia Nuts, 78 Fed. Reg. 31367 (May 24, 2013) (to be codified at 7 C.F.R. pt. 65).

[21] See Recourse to Article 21.5 of the DSU by Canada, United States—Certain Country of Origin Labelling (COOL) Requirements, WT/DS384/26 (Aug. 20, 2013); Recourse to Article 21.5 of the DSU by Mexico, United States—Certain Country of Origin Labelling (COOL) Requirements, WTO/DS386/25 (Aug. 20, 2013).

[22] Memorandum from the law firm Stewart & Stewart to Roger Johnson, President, National Farmers Union; Jon Wooster, President, United States Cattlemen's Association; Wenonah Hauter, Executive Director, Food & Water Watch; and Lori Wallach, Director, Global Trade Watch (Feb. 4, 2013), http://www.citizen.org/documents/Strengthen-COOL-Memo.pdf (raising the possibility of using clearer labels to help achieve compliance).

[23] U.S.—COOL AB Report, supra note 5, ¶ 344.

[24] Family Smoking Prevention and Tobacco Control Act, 21 U.S.C. § 387 (2006 & Supp. III 2009).

[25] U.S.—Clove Cigarettes AB Report, supra note 6, ¶ 225.

[26] Menthol in Cigarettes, Tobacco Products; Request for Comments, 78 Fed. Reg. 44484 (July 24, 2013) (to be codified at 21 C.F.R pt. 65).

[27] See Press release, Food and Drug Administration, FDA Invites Public Input on Menthol in Cigarettes, (July 23, 2013), http://www.fda.gov/NewsEvents/Newsroom/PressAnnouncements/ucm361966.htm.

[28] It is not clear how compliance proceedings will unfold because Indonesia and the United States are at odds on the next procedural step in the dispute. The United States has suggested that Indonesia should request the establishment of a compliance panel (Statement of the United States at the August 23, 2013 DSB Meeting (Aug. 23, 2013) (on file with author). Indonesia has argued that there is no need for a compliance panel under Article 21.5 of the DSU because the United States "has announced no measures to comply" with the case findings. Statement of Indonesia at the August 23, 2013 DSB Meeting (Aug. 23, 2013) (on file with author). 

[29] U.S.—Clove Cigarettes AB Report, supra note 6, ¶ 225.

[30] For a discussion on the possibility of this type of approach, see Rob Howse, Comment on Simon Lester, Implementing the Clove Cigarettes Ruling, Int'l Econ. L. and Pol'y Blog (Apr. 17, 2012, 11:13 AM),  http://worldtradelaw.typepad.com/ielpblog/2012/04/implementing-clove-cigarettes.html.