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Retaliatory Sanctions in Tuna Labeling Case Cut by Two-Thirds, Could be Brief

Thursday, April 27, 2017
Sandler, Travis & Rosenberg Trade Report

The World Trade Organization has set $163.23 million as the amount of annual trade sanctions Mexico may seek to impose against the U.S. in their long-running dispute over dolphin-safe tuna labeling. This amount is a third of the $472.3 million Mexico had requested but significantly more than the $21.9 million for which the U.S. had argued. However, the retaliation threat could be short-lived if a separate pending decision finds that the U.S. has come into compliance with WTO rules.

The U.S. amended its regulations for labeling imported tuna as dolphin-safe in July 2013 in response to a WTO decision that the previous regulations were not “even-handed” because they focused more on the risks to dolphins posed by purse seine tuna fishing in the eastern tropical Pacific Ocean, where Mexican vessels conduct the majority of their tuna fishing operations, and less on the risks from other fishing methods in other areas. Mexico objected to the stricter standards and took the issue back to the WTO, where the Appellate Body concluded in December 2015 that the revised regulations continued to unfairly discriminate against tuna imported from Mexico.

Mexico subsequently sought to impose $472.3 million in retaliatory sanctions but in an April 25 decision a WTO arbitrator set the amount at $163.23 million, the estimated trade loss Mexico sustained due to the U.S. regulations in 2014. Mexico’s economy ministry said it would immediately request WTO authorization to impose sanctions in this amount as well as initiate the necessary internal procedures. It is expected that the sanctions will take the form of higher import tariffs on U.S. goods. Press reports state that Mexico plans to target high-fructose corn syrup but other products could be affected as well.

In the meantime, the WTO is set to decide in July whether another revision the U.S. made to its dolphin-safe tuna labeling regulations in March 2016 was sufficient to bring them into compliance with WTO rules. If that determination is affirmative, Mexico would have to cease any associated retaliatory sanctions it may implement between now and then.

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