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

TABLE OF CONTENTS

1            Introduction.. 9

1.1         General 9

1.2         Request for enhanced third-party rights. 9

1.3         Background of the dispute. 10

2            Parties' requests for findings and recommendations. 11

3            Overview of the measure at issue. 11

3.1         The Dolphin Protection Consumer Information Act and its Original Implementing Regulations  12

3.2         The 2013 Final Rule. 18

4            Arguments of the parties. 21

5            Arguments of the third parties. 21

6            interim review... 22

6.1         General issues. 22

6.2         Specific issues. 22

6.2.1      Evidence concerning observable and unobservable harms caused by different fishing methods  22

6.2.2      Description of the Appellate Body's finding on observed and unobserved harms caused by setting on dolphins as compared with other tuna fishing methods. 22

6.2.3      Mexico's evolving argument on the different observer requirements under Article 2.1 of the TBT Agreement 23

6.2.4      Evidence concerning log-books. 23

6.2.5      Tracking and verification systems. 23

6.2.6      The Panel's description of Mexico's argument on less favourable treatment 24

6.2.7      Regulated vs. unregulated setting on dolphins. 25

7            Findings. 26

7.1         Claims. 26

7.2         Order of analysis. 26

7.3         Parameters of the Panel's mandate: the measure at issue and the scope of these Article 21.5 proceedings. 27

7.4         Burden and standard of proof applicable in these proceedings. 35

7.4.1      Burden of proof 35

7.4.2      Standard of proof 38

7.5         Article 2.1 of the TBT Agreement 40

7.5.1      Legal test under Article 2.1 of the TBT Agreement 40

7.5.2      Application of Article 2.1 of the TBT Agreement 47

7.5.2.1   Mexico's claim.. 47

7.5.2.2   The eligibility criteria. 49

7.5.2.3   Mexico's remaining claims of less favourable treatment: the different certification and tracking and verification requirements. 56

7.5.2.4   The different certification requirements. 58

7.5.2.5   The different tracking and verification requirements. 84

7.6         Claims under the GATT 1994. 106

7.6.1      Article I:1 of the GATT 1994. 106

7.6.1.1   Legal test 106

7.6.1.2   Application. 108

7.6.2      Article III:4 of the GATT 1994. 117

7.6.2.1   Legal test 117

7.6.2.2   Application. 119

7.7         The United States' defence under Article XX of the GATT 1994. 122

7.7.1      Article XX(g) 122

7.7.1.1   Legal test under Article XX(g) 122

7.7.1.2   Application. 124

7.7.2      Article XX(b) 128

7.7.3      The chapeau of Article XX. 129

7.7.3.1   Legal test under the chapeau of Article XX. 129

7.7.3.2   Relationship between the chapeau of Article XX of the GATT 1994 and Article 2.1 of the TBT Agreement 130

7.7.3.3   Application. 132

8            Conclusions and recommendations. 141

LIST OF ANNEXES

ANNEX A

Working Procedures of The Panel

ANNEX B

Arguments of the Parties

MEXICO

UNITED STATES

ANNEX C

Arguments of the Third Parties

CASES CITED IN THIS REPORT

ABBREVIATIONS USED IN THis REPORT

1  Introduction

1.1  General

1.1.  On 14 November 2013, Mexico requested the establishment of a panel pursuant to Article 21.5 of the Understanding on Rules and Procedures Governing the Settlement of Disputes (DSU) concerning the United States' alleged failure to implement 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.^[1] At its meeting on 22 January 2014, the DSB referred, if possible, to the original Panel in accordance with Article 21.5 of the DSU to examine the matter referred to the DSB by Mexico in document WT/DS381/20.^[2]

1.2.  The Panel's terms of reference are the following:

To examine, in the light of the relevant provisions of the covered agreements cited by the parties to the dispute, the matter referred to the DSB by Mexico in document WT/DS381/20 and to make such findings as will assist the DSB in making the recommendations or in giving the rulings provided for in those agreements.

1.3.  On 27 January 2014, the Panel was composed as follows:

Chairperson:   Mr Mario Matus

        Members:                Ms Elizabeth Chelliah

                                Mr Franz Perrez

1.4.  Australia, Canada, China, European Union, Guatemala, Japan, the Republic of Korea, New Zealand, Norway, and Thailand reserved their third-party rights.

1.5.  The Panel met with the parties from 19 to 21 August 2014. A session with the third parties took place on 20 August 2014.

1.6.  On 27 October 2014, the Panel issued the descriptive part of its Report to the parties. The parties provided comments to the descriptive part of the Panel Report on 10 November 2014. The Panel issued its Interim Report to the parties on 28 November 2014. On 12 December 2014, the parties separately requested the revision of specific aspects of the Interim Report; on 19 December 2014, the parties made comments on other party's request. The Panel issued its Final Report to the parties on 30 January 2015.

1.2  Request for enhanced third-party rights

1.7.  On 5 August 2014, in its third-party submission^[3], the European Union requested the following rights for itself and the other third parties in these proceedings:

[T]o 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. The European Union reiterated its request in its oral statement at the third-party session of the substantive meeting of the Panel with the parties.^[4]

1.8.  After considering the European Union's request and consulting the parties, who both objected to the request, the Panel informed the European Union orally at the third-party session that it had decided to decline its request. The Panel concluded that, in the absence of the parties' agreement to this request, it need not deviate from the third-party rights established in paragraphs 2 and 3 of Article 10 of the DSU, paragraph 6 of Appendix 3 to the DSU, and panel practice regarding third-party rights.

1.3  Background of the dispute

1.9.  This dispute concerns the implementation by the United States of the DSB recommendations and rulings in United States – Measures Concerning the Importation, Marketing and Sale of Tuna and Tuna Products.

1.10.  On 13 June 2012, the DSB adopted the Appellate Body Report on United States – Measures Concerning the Importation, Marketing and Sale of Tuna and Tuna Products (WT/DS381/AB/R) and the Panel Report (WT/DS381/R), as modified by the Appellate Body Report.^[5]

1.11.  The DSB ruled inter alia that the US "dolphin-safe" labelling provisions were inconsistent with Article 2.1 of the TBT Agreement and recommended that the United States bring its measure into conformity with its obligations under that Agreement.^[6] The dolphin-safe labelling provisions comprised the US Code, Title 16, Section 1385 (the "Dolphin Protection Consumer Information Act"); the implementing regulations at US Code of Federal Regulations, Title 50, Section 216.91 and Section 216.92; and a ruling by a US federal appeals court in Earth Island Institute v. Hogarth, 494 F.3d 757 (9th Cir. 2007) (the Hogarth ruling).^[7]

1.12.  On 2 August 2012, Mexico and the United States informed the DSB that additional time was required to discuss a mutually agreed reasonable period of time (RPT) for the United States to implement the recommendations and rulings of the DSB.^[8] On 17 September 2012, Mexico and the United States informed the DSB that they had agreed that the RPT was 13 months from 13 June 2012, the date of adoption of the DSB's recommendations and rulings. The RPT expired on 13 July 2013.^[9]

1.13.  On 9 July 2013, the United States published in its Federal Register a legal instrument entitled "Enhanced Document Requirements to Support Use of the Dolphin Safe Label on Tuna Products", which the United States refers to as the "2013 Final Rule". According to the United States, the 2013 Final Rule constitutes the measure taken to comply with the DSB recommendations and rulings pursuant to Article 21.5 of the DSU. Furthermore, the United States refers to all three measures – the statute, the implementing regulations (as amended by the 2013 Final Rule), and the Hogarth decision, collectively – as the "amended dolphin safe labeling measure" or the "amended measure".^[10]

1.14.  Mexico considers that the United States has not brought its dolphin-safe labelling provisions into compliance with the DSB's recommendations and rulings. Furthermore, Mexico argues that the amended tuna measure is not consistent with the United States' obligations under the covered agreements.^[11]

1.15.  On 2 August 2013, Mexico and the United States informed the DSB of Agreed Procedures under Article 21 and 22 of the DSU. Pursuant to paragraph 2 of the said Procedures, Mexico was not required to hold consultations with the United States prior to requesting the establishment of an Article 21.5 panel.^[12]

2  Parties' requests for findings and recommendations

2.1.  Mexico considers that in this dispute, the "measure taken to comply with the recommendations and rulings" of the DSB, to which Mexico refers collectively as the "Amended Tuna Measure", comprises:^[13]

a.      Section 1385 ("Dolphin Protection Consumer Information Act"), as contained in Subchapter II ("Conservation and Protection of Marine Mammals") of Chapter 31 ("Marine Mammal Protection"), in Title 16 of the US Code;

b.     US 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 guidance, 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.

2.2.  Mexico has identified a number of claims in its panel request and requests the Panel to find that:^[14]

a.      The amended tuna measure is inconsistent with Article 2.1 of the TBT Agreement because it continues to accord Mexican tuna products treatment less favourable than that accorded to like tuna products of the United States and to like tuna products originating in any other country;

b.     The amended tuna measure is inconsistent with Article I:1 of the GATT 1994 because it continues to confer on tuna products originating in other countries an advantage which is not accorded immediately and unconditionally to like tuna products originating in Mexico;

c.      The amended tuna measure is inconsistent with Article III:4 of the GATT 1994 because it continues to accord Mexican tuna products treatment less favourable than that accorded to like tuna products of United States' origin in respect of all laws, regulations and requirements affecting their internal sale, offering for sale, purchase, transportation, distribution or use;

d.     The amended tuna measure nullifies or impairs benefits that accrue to Mexico under the GATT 1994 within the meaning of GATT Article XXIII:1(b).

2.3.  Mexico requests the Panel to find that the United States had failed to comply with the recommendations and rulings adopted by the DSB on the basis that the amended tuna measure remains inconsistent with Article 2.1 of the TBT Agreement, and Articles I:1 and III:4 of the GATT 1994.^[15]

2.4.  The United States requests that the Panel reject Mexico's claims in their entirety.

3  Overview of the measure at issue

3.1.  In the original proceedings, Mexico challenged three measures: 1) the Dolphin Protection Consumer Information Act (DPCIA); 2) the statute's implementing regulations; and 3) the Ninth Circuit Court of Appeals decision in Earth Island Institute v. Hogarth ("Hogarth").^[16] The original panel and the Appellate Body found that these measures provide for the conditions under which tuna products may receive a "dolphin-safe" label, and referred to them collectively as the "measure at issue" or the "US dolphin-safe labelling provisions."^[17]

3.2.  Taken together, the DPCIA, the implementing regulations, and the Hogarth ruling set out the requirements for when tuna products sold in the United States may be labelled as "dolphin-safe". More specifically, they condition eligibility for a "dolphin-safe" label upon certain documentary evidence that varies depending on the area where the tuna contained in the tuna product is harvested and the type of vessel and fishing method by which it is harvested. In particular, tuna caught by "setting on" dolphins is currently not eligible for a "dolphin-safe" label in the United States, regardless of whether this fishing method is used inside or outside the Eastern Tropical Pacific Ocean (the "ETP"). The DPCIA and the implementing regulations also prohibit any reference to dolphins, porpoises, or marine mammals on the label of a tuna product if the tuna contained in the product does not comply with the labelling conditions spelled out in the DPCIA. However, they do not make the use of a "dolphin-safe" label obligatory for the importation or sale of tuna products in the United States.^[18]

3.3.  The relevant provisions of the original measure are described below.^[19] The 2013 Final Rule, which the United States claims to be the measure taken to comply, is also described in the following paragraphs.

3.1  The Dolphin Protection Consumer Information Act and its Original Implementing Regulations

3.4.  The DPCIA is codified in Title 16, Section 1385 of the United States Code (USC). Regulations promulgated in accordance with the DPCIA are codified in Title 50, Section 216 of the Code of Federal Regulations. The core of the US "dolphin-safe" labelling scheme is contained in subsection 1385(d)(1)-(3) of the DPCIA.  Paragraph (d) of Section 1385 of the DPCIA provisions regulates the use of the term "dolphin-safe" when it appears on tuna products.^[20]

Fishing method

3.5.  Under the DPCIA, tuna caught by large scale driftnet fishing on the high seas, and tuna products containing tuna harvested anywhere in the world by setting on dolphins are not eligible to be labelled dolphin-safe.^[21]

Certification by captain and observer

3.6.  Subparagraph (h)(1) of the DPCIA establishes the following:

(h)  Certification by captain and observer

(1)  Unless otherwise required by paragraph (2), the certification by the captain under subsection (d)(2)(B)(i) of this section and the certification provided by the observer as specified in subsection (d)(2)(B)(ii) of this section shall be that no dolphins were killed or seriously injured during the sets in which the tuna were caught.

(2)  The certification by the captain under subsection (d)(2)(B)(i) of this section and the certification provided by the observer as specified under subsection (d)(2)(B)(ii) of this section shall be 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, if the tuna were caught on a trip commencing—

(A)  before the effective date of the initial finding by the Secretary under subsection (g)(1) of this section;

(B)  after the effective date of such initial finding and before the effective date of the finding of the Secretary under subsection (g)(2) of this section, where the initial finding is that the intentional deployment on or encirclement of dolphins is having a significant adverse impact on any depleted dolphin stock; or

(C)  after the effective date of the finding under subsection (g)(2) of this section, where such finding is that the intentional deployment on or encirclement of dolphins is having a significant adverse impact on any such depleted stock.^[22]

3.7.  The DPCIA provisions refer to four criteria to establish five basic categories of circumstances in which tuna may be caught. These criteria are: location (inside or outside the ETP); fishing gear (with or without the use of purse seine nets); type of interaction between tuna and dolphin schools (there is or there is no regular or significant association between tuna and dolphin schools) and the level of dolphin mortalities or injuries (there is or there is no regular and significant mortality or serious injury). The five categories that result from the combined application of these criteria are described in subparagraphs (A) to (D) of subsection 1385(d)(1) of the DPCIA.^[23]

3.8.  These subparagraphs refer to tuna caught:

A)   On the high seas by a vessel engaged in driftnet fishing;

B)   Outside the ETP by a vessel using purse seine nets:

(i)   in a fishery in which the US Secretary of Commerce has determined that there is a regular and significant tuna-dolphin association similar to the association between dolphins and tuna in the ETP;

(ii)   in any other fishery (other than a fishery described in subparagraph (D)).

C)   In the ETP by a vessel using purse seine nets; and

D)   In a fishery other than the ones described in the previous categories that is identified by the US Secretary of Commerce as having a regular and significant mortality or serious injury of dolphins.^[24]

3.9.  Tuna products containing tuna caught under the scenario described in subparagraph (A) of subsection 1385(d)(1), i.e. tuna caught on the high seas using driftnet fishing, may under no circumstances be labelled as "dolphin-safe" or display any analogous claim. Subsections 1385(d)(1)(2) and (h) of  the DPCIA establish specific conditions for the use of the term "dolphin-safe" or any analogous claims on tuna products for each of the categories described in subparagraphs (B) through (D) of subsection 1385(d)(1). The documentary evidence required under the DPCIA for the categories (B) through (D) is described below.^[25]

3.10.  With respect to tuna products containing tuna caught outside the ETP by a vessel using purse seine nets in a fishery in which the US Secretary of Commerce has determined that a regular and significant dolphin-tuna association exists (subparagraph (B)(i)), the use of the term "dolphin-safe" or any analogous term is conditional upon a written statement executed by the captain of the vessel and an observer participating in a national or international program acceptable to the Secretary of Commerce, certifying that no purse seine net was intentionally deployed on or used to encircle dolphins during the particular voyage on which the tuna were caught and no dolphins were killed or seriously injured in the sets in which the tuna were caught.^[26]

3.11.  For tuna caught outside the ETP by a vessel using purse seine nets in any fishery, other than a fishery described in subparagraph (D) of subsection 1385(d)(1) of the DPCIA provisions,  (subparagraph (B)(ii)), a written statement executed by the captain of the vessel is required, certifying that no purse seine net was intentionally deployed on or used to encircle dolphins during the particular voyage on which the tuna was harvested.^[27]

3.12.  For tuna harvested in the ETP by a large purse seine^[28] vessel (subparagraph (C)), the conditions are:

·         a written statement executed by the captain certifying that no dolphins were killed or seriously injured during the sets in which the tuna were caught; and, unless there is a previous determination by the Secretary of Commerce that the fishing technique of setting on dolphins is not having a significant adverse impact on any depleted dolphin stock in the ETP, also certifying that no purse seine net was intentionally deployed on or used to encircle dolphins;

·         a written statement executed by either the Secretary of Commerce or the Secretary's designee, or a representative of the Inter-American Tropical Tuna Commission (IATTC), or an authorized representative of a participating nation whose national program meets the requirements of the IDCP stating that there was an observer approved by the IDCP on board the vessel during the entire trip and that such observer provided the same certifications as the vessel captain;

·         the written endorsement by each exporter, importer, and processor of the tuna; and

·         the above mentioned written statements and endorsements comply with regulations promulgated by the Secretary which provide for the verification of tuna products as dolphin-safe.

Small purse seine vessels in the ETP are not subjected to these requirements. Therefore, considering only the DPCIA and not the other aspects of the US measure, tuna caught in the ETP by this type of vessel may be labelled "dolphin-safe" without the need to submit any documentary evidence.^[29]

3.13.  For tuna caught in a fishery other than those described in subsection 1385(d)(1)(A)‑(C) (that is, tuna caught without purse seine nets or large driftnets in the high seas) that is identified by the US Secretary of Commerce as having a regular and significant mortality or serious injury of dolphins (subparagraph (D)), the use of the term "dolphin-safe" or any analogous terms is subject to a written statement executed by the captain of the vessel and an observer participating in a national or international program acceptable to the Secretary of Commerce that no dolphins were killed or seriously injured in the sets or other gear deployments in which the tuna were caught, provided that the Secretary of Commerce determines that such an observer statement is necessary.^[30]

3.14.  For tuna caught without purse seine nets in fisheries where there has not been a finding of regular and significant mortality or serious injury of dolphins, the DPCIA provisions do not require any written statement or certification.

3.15.  As described above, subparagraph (h)(1) of the DPCIA provisions establishes that, unless otherwise required by paragraph (2), tuna harvested in the ETP by a vessel using purse seine nets may be labelled "dolphin-safe" if the captain of the vessel and an approved observer certify that no dolphins were killed or seriously injured during the sets in which the tuna were caught.^[31]

3.16.  However, subparagraph (h)(2) establishes that tuna harvested in the ETP by a large vessel using purse seine nets may be labelled "dolphin-safe" if the captain of the vessel and an approved observer certify that (i) no purse-seine net were intentionally deployed on or used to encircle dolphins during the trip in which the tuna was caught, and (ii) no dolphins were killed or seriously injured during the sets in which the tuna were caught. Subparagraph (h)(2) of the DPCIA provisions conditions the applicability of subparagraph (h)(1) to the existence of a finding by the US Secretary of Commerce that the intentional deployment on or encirclement of dolphins with purse seine nets is not having a significant adverse impact on any depleted dolphin stock in the ETP. Subparagraph (g) requires the Secretary of Commerce to conduct this task in two stages resulting in an initial and a final finding on the impact of setting on dolphins in the ETP.^[32]

3.17.  In the event of a negative finding, a certification that "no dolphins were killed or seriously injured during the sets in which the tuna were caught" is sufficient in order to make the tuna products eligible for a "dolphin-safe" label. In the event of a positive finding, an additional certification 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" is required.^[33]

3.18.  The US Secretary of Commerce made a final finding that "the intentional deployment on or encirclement of dolphins with purse seine nets [was] not having a significant adverse effect on any depleted dolphin stock in the ETP."^[34] However, this finding was overturned through US court rulings, on the basis that the Secretary failed to conduct statutorily mandated studies and that the best available scientific evidence did not support the Secretary's finding.^[35]

3.19.  Hence, given that the Secretary's ruling has been overturned with the result that there is no finding that intentional deployment on or encirclement of dolphins with purse seine nets is not having a significant adverse impact on any depleted dolphin stock in the ETP, tuna harvested in the ETP by a large purse seine vessel may be labelled dolphin-safe only if the captain certifies that no dolphins were killed or seriously injured during the sets in which the tuna were caught and that no purse seine net was intentionally deployed on or used to encircle dolphins during the same fishing trip. This certification must be accompanied by a written statement executed by the Secretary of Commerce (or designee), a representative of the Inter-American Tropical Tuna Commission or an authorized representative of a participating nation whose national program meets the requirements of the IDCP that an observer approved by the IDCP was on board the vessel during the entire trip and that such observer provided the same certifications as the captain, and the endorsement by the exporters, importers and processors required in subparagraphs (d)(2)(B)-(C) of Section 1385 of the DPCIA provisions.^[36]

3.20.  As explained above, subparagraphs (d)(1)(B) and (D) of the DPCIA provisions establish different categories of tuna harvested outside the ETP large purse seine fishery.  These categories are:^[37]

·         Tuna caught using purse seine nets in a fishery in which the US Secretary of Commerce has determined that a regular and significant tuna-dolphin association exists similar to the association in the ETP (§1385 (d)(1)(B)(i));

·         Tuna caught using purse seine nets in a fishery in which the US Secretary of Commerce has not determined that a regular and significant association between tuna and dolphins exists (§1385 (d)(1)(B)(ii)); and

·         Tuna caught in a fishery other than the ones described in subparagraphs (d)(1)(A)-(C) that is identified by the US Secretary of Commerce as having a regular and significant mortality or serious injury of dolphins (§1385 (d)(1)(C)).

3.21.  As also mentioned above, the DPCIA provisions establish a specific set of conditions that must be fulfilled by each of these categories of tuna in order to use the term "dolphin-safe" or to make similar claims.  In two of these instances (i.e. tuna caught in a fishery in which the US Secretary of Commerce has determined that a regular and significant tuna-dolphin association exists, and in the case of tuna caught in a fishery other than the ones described in subparagraphs (d)(1)(A)-(C) that is identified by the US Secretary of Commerce as having a regular and significant mortality or serious injury of dolphins), the applicability of the relevant requirements is conditioned on the existence of a determination by the Secretary of Commerce that in the fishery in question there is regular and significant tuna-dolphin association similar to the association in the ETP, or regular and significant mortality or serious injury of dolphins.^[38]

3.22.  The United States indicated that no fishery outside the ETP has been determined to have a regular and significant association between tuna and dolphins similar to the association in the ETP. Moreover, the United States has also explained that it has not made a determination that any non‑purse seine tuna fishery has regular and significant dolphin mortality.^[39]

3.23.  Therefore, although it remains a possibility under the DPCIA provisions, that the Secretary of Commerce may determine that there is regular and significant dolphin-tuna association, or regular and significant mortality or serious injury of dolphins in fisheries outside the ETP, such determinations have not been made to date. Hence the "dolphin-safe" requirements for tuna caught under the circumstances described in subparagraphs (d)(1)(B)(i) and (d)(1)(D) of Section 1385 are not currently applied with respect to any fishery.^[40]

3.24.  Consequently, the scenarios described in subparagraphs (d)(1) of Section 1385 that are currently applicable are those described in:

a.      subparagraph (d)(1)(A), which refers to tuna caught on the high seas by driftnet fishing;

b.     subparagraph (d)(1)(C), which refers to tuna caught in the ETP by a large vessel using purse seine nets; and

c.      subparagraph (d)(1)(B)(ii), which refers to tuna caught by a purse seine vessel outside the ETP in a fishery that has not been the subject of a determination by the Secretary of Commerce  of regular and significant dolphin-tuna association. The "dolphin-safe" certification required for this type of tuna must be provided by the captain of the vessel and, according to subparagraph (d)(1)(B)(ii), must state only that no purse seine net was intentionally deployed on or used to encircle dolphins during the particular voyage on which the tuna was harvested.^[41]

3.25.  As subparagraph (d)(1)(D) of Section 1385 is not currently applicable, the DPCIA provisions do not require any written statement or certification for tuna caught without purse seine nets in any fishery.

Tracking and Verification Program (TTVP)

3.26.  The United States National Marine Fisheries Service (NMFS) has established the Tuna Tracking and Verification Program (TTVP) for tracking and verifying the "dolphin-safe" or "non‑dolphin-safe" condition of tuna. The provisions establishing this program are mainly contained in Title 50, Sections 216.24 and 216.91-216.93 of the US Code of Federal Regulations. Through the use of the TTVP, the United States government collects information from domestic tuna processors, US tuna vessels, and importers of tuna products, to verify whether tuna products labelled dolphin-safe meet the statutory conditions.^[42]

Form 370

3.27.  Every import of tuna and tuna products to the United States, regardless of whether the "dolphin-safe" label is intended to be used, must be accompanied by a Fisheries Certificate of Origin (National Oceanic and Atmospheric Administration (NOAA) Form 370). One copy of this form must be submitted to Customs and Border Protection at the time of importation, and a second one to the TTVP.^[43]

Tuna Tracking Form (TTF)

3.28.  For tuna caught by US vessels, section 216.93 establishes a "tracking and verification program" for large US purse seine vessels fishing in the ETP, which is designed to be consistent with the AIDCP.  The regulation requires that the observer on the vessel record every set made during a fishing voyage on a Tuna Tracking Form (TTF) bearing a unique identification number. One TTF is used to record dolphin-safe sets (i.e. where no dolphins were killed or seriously injured) and a second TTF is used to record non‑dolphin-safe sets (i.e. where there was a dolphin mortality or serious injury). The information entered on the TTFs for each set includes the date, well number, weights by species composition, estimated tons loaded, and additional notes, if any.  The observer and the vessel engineer initial the entry following each set, and the vessel captain and the observer review and sign both TTFs at the end of the fishing trip certifying that the information on the forms is accurate.  The requirement for TTFs does not apply to US vessels operating outside the ETP, nor to US vessels operating in the ETP that are not large purse seine vessels.  The TTF forms must be certified by the independent observers required on large purse seine vessels in the ETP.^[44] TTF(s) are a component of the Agreement on the International Dolphin Conservation Program (AIDCP). During any fishing trip in the ETP, large purse seine vessels are required to record on TTF(s) every purse seine set made and any dolphin mortalities or serious injuries. As required by the AIDCP, section 216.93(a) requires that separate TTFs be used to record tuna harvested in dolphin-safe and non‑dolphin-safe sets. Subsection (c)(1)(i) provides that a set is "non‑dolphin-safe" if a dolphin died or was seriously injured during the set.^[45]

3.29.  For tuna products containing tuna caught in the ETP by non‑US vessels, there are separate regulations. Section 216.92(b)(1) applies to imported tuna products made with yellowfin tuna harvested in the ETP, and requires the tuna to be caught by a vessel belonging to a nation that has obtained an affirmative finding under § 216.24(f)(8), which is a determination by the US government that a nation is in compliance with the AIDCP. For other tuna products not containing yellowfin tuna, Section 216.92(b)(2)(i) requires that the tuna have been caught by a vessel belonging to a nation that is a party to the AIDCP and is adhering to its requirements. Thus, the same requirements for compliance with the AIDCP apply to imported tuna products containing both yellowfin and non‑yellowfin tuna. The AIDCP requires member nations to implement the same TTF system for fishing by large purse seine vessels in the ETP as is implemented for US vessels under section 216.93.^[46] The Form 370 required for imported tuna products containing tuna caught in the ETP must list the numbers for the associated TTF(s).^[47]

3.30.  The TTF requirement applies only to tuna caught by large purse seine vessels in the ETP.

Physical segregation

3.31.  Under the original measure, there were no requirements for segregating dolphin-safe from non-dolphin-safe tuna for any tuna other than that caught by large purse seine vessels in the ETP. 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. Specifically, if tuna was caught in a set during which a dolphin was killed or seriously injured, that tuna must be stored in a "well" on the vessel separate from dolphin-safe tuna. If any dolphin-safe tuna is mixed in the same well with the non‑dolphin-safe tuna, all of the tuna in that well must be treated as non-dolphin-safe. Furthermore, tuna offloaded to trucks, storage facilities, or carrier vessels must be loaded or stored in such a way as to maintain the identification of the dolphin-safe or non‑dolphin-safe tuna as it left the vessel.^[48] The TTF documentation required for tuna caught by large purse seine vessels in the ETP is used for this purpose.^[49]

3.2  The 2013 Final Rule

3.32.  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 2013 Final Rule made changes to the previous regulations at Sections 216.91 and 216.93.^[50] However, neither the DPCIA, nor the Hogarth ruling, has been amended since the original panel circulated its report.^[51]

3.33.  The amended dolphin-safe labelling measure places three types of conditions on use of the dolphin-safe label for tuna products: 1) conditions relating to fishing methods, 2) conditions relating to certifications, and 3) conditions relating to record-keeping (tracking and verification).^[52]

3.34.  The relevant changes to the original implementing regulations are explained below.

Fishing method

3.35.  Under the amended measure, as under the original measure, tuna harvested using large-scale driftnets on the high seas is not eligible for the dolphin-safe label.^[53]

3.36.  Under the amended measure, as under the original measure, tuna products containing tuna harvested anywhere in the world by setting on dolphins are not eligible to be labelled dolphin-safe. This prohibition is implemented through 50 C.F.R. section 216.91(a)(1), which applies to large purse seine vessels in the ETP, and section 216.91(a)(2), which applies to purse seine vessels outside the ETP. Both provisions stipulate that tuna caught by a covered vessel is not eligible for the dolphin-safe label unless it is accompanied by a captain's certification that no purse seine nets were intentionally deployed on or used to encircle dolphins during the particular trip on which the tuna was harvested and that no dolphins were killed or seriously injured during the sets in which the tuna were caught"^[54]

3.37.  Tuna products harvested by fishing methods other than large-scale high seas driftnet fishing or setting on dolphins are eligible to be labelled dolphin-safe only if no dolphins were killed or seriously injured in the gear deployments in which the tuna were caught. To ensure this condition is met, tuna products labelled dolphin-safe are subject to the certification and record-keeping conditions discussed below.^[55]

Certifications

Captain certification

3.38.  Under the amended measure, the use of the dolphin-safe label on any tuna product is conditioned on the product being accompanied by certain certifications by the captain of the harvesting vessel and, in some circumstances, an observer from an approved national or international observer program.^[56]

3.39.  The certification requirements under the original DPCIA statute for all tuna harvested in the ETP by a large purse seine vessel remain unchanged. For US-flagged vessels, sections 216.92(a)(1) and 216.93(a) implement this condition by requiring that captain-certified TTFs, which show whether a dolphin was killed or seriously injured in the set in which the tuna were caught, accompany all tuna caught by large purse seine vessels in the ETP. For foreign-flagged vessels, section 216.24(f)(2) requires that all tuna imports be accompanied by a NOAA Form 370, which indicates dolphin-safe status and contains the certifications described in section 216.91(a) as necessary.^[57] The certification must include validation that the dolphin-safe status was certified by an independent observer meeting the requirements of the AIDCP.^[58]

3.40.  In addition to the certification that no dolphins were killed or seriously injured, tuna products containing tuna harvested by a purse seine vessel may be labelled dolphin-safe only if accompanied by a certification by the vessel captain that no purse seine net was intentionally deployed on or used to encircle dolphins during the trip on which the tuna were caught. Under the amended measure, this condition applies to tuna products containing tuna harvested by large purse seine vessels in the ETP, and by purse seine vessels outside the ETP.^[59]

3.41.  Under the amended measure, a captain's certification that no dolphins were killed or seriously injured in the sets or other gear deployments in which the tuna was caught is also needed for tuna products containing tuna harvested in any other fishery to be labelled dolphin-safe. Section 216.91(a)(2) implements this condition for tuna caught by a purse seine vessel outside the ETP on trips beginning on or after 13 July 2013. Section 216.91(a)(4) establishes the same condition for tuna harvested in all other fisheries (i.e. all fisheries other than the large purse-seine fishery in the ETP and purse seine fisheries outside the ETP). (The original tuna measure did not require any certification for tuna products containing tuna caught (i) not using purse seine nets or (ii) by small purse seine vessels in the ETP.)^[60]

Observer on-board and observer certification

3.42.  Tuna products containing tuna caught by large purse seine vessels in the ETP may be labelled dolphin-safe only if accompanied by valid documentation signed by a representative of the appropriate IDCP–member nation certifying that: (i) there was an IDCP-approved observer on board the vessel during the entire trip; and (ii) no purse seine net was intentionally deployed on or to encircle dolphins during the fishing trip and no dolphins were killed or seriously injured in the sets in which the tuna were caught. In addition, the documentation must list the numbers for the associated Tuna Tracking Forms which contain the required captain and observer certifications.^[61]

3.43.  For tuna caught by large US purse seine vessels in the ETP, sections 216.91(a)(1) and 216.93(a) implement this condition by requiring that the IDCP observer on board certify the TTF accompanying the tuna caught by that vessel.^[62] A TTF that is used to record dolphin-safe sets attests that no dolphins were killed or seriously injured in the set in which the tuna was caught.^[63]

3.44.  For tuna caught by large non‑US purse seine vessels in the ETP, sections 216.92(b) and 216.24(f)(4) implement this provision by requiring that the NOAA Form 370 accompanying the tuna products contain the necessary observer certifications. For tuna products to be labelled dolphin-safe, the accompanying Form 370 must be signed by a representative of an IDCP-member nation, and the representative must certify that (i) there was an IDCP observer on the vessel during the entire trip, (ii) no purse seine net was intentionally deployed on or to encircle dolphins, and (iii) no dolphins were killed or seriously injured in the sets in which the tuna were caught. The Form 370 must also list the numbers for the associated TTF(s), which contains the required captain and observer's certifications.^[64] 

3.45.  For tuna caught other than by large purse seine vessels in the ETP, the amended measure does not require an observer certification requirement unless the NMFS Assistant Administrator has made certain findings. More specifically, under the amended measure, observer certification is required under the following circumstances:^[65]

(i)      In a non‑ETP purse seine fishery in which the Assistant Administrator has determined that a regular and significant association occurs between dolphins and tuna (similar to the association between dolphins and tuna in the ETP) (50 C.F.R. §§ 216.91(a)(2)(i));

(ii)    In a non‑ETP purse seine fishery where the Assistant Administrator has determined that observers participating in a national or international observer program are qualified and authorized to certify that no purse seine net was intentionally deployed on or used to encircle dolphins during the fishing trip in which the tuna were caught, and that no dolphins were killed or seriously injured in the sets in which the tuna were caught" (50 C.F.R. §§ 216.91 (a)(2)(iii)(B));

(iii)   In any other fishery where the Assistant Administrator has determined that observers participating in a national or international observer program are qualified and authorized to certify that no dolphins were killed or seriously injured in the sets or other gear deployments in which the tuna were caught" (50 C.F.R. §§ 216.91(a)(4)(ii)); and

(iv)  In any other fishery that is identified by the Assistant Administrator as having a regular and significant mortality or serious injury of dolphins" (50 C.F.R. §§ 216.91(a)(4)(iii)).

3.46.  Under the current measure, for tuna caught outside the ETP, the amended tuna measure does not impose any observer certification requirements, other than with respect to seven US domestic fisheries for which the Assistant Administrator has determined that US observers are qualified and authorized to certify that no that no dolphins were killed or seriously injured in the sets or other gear deployments in which the tuna were caught. The certification is required only when the observer is on board the vessel for other reasons, and tuna caught when there is not an observer on board may still be labelled dolphin-safe with a captain's statement.^[66]

Tracking and Verification

        Documentation requirements

                Tuna Tracking Form (TTF)

3.47.  As in the original measure, under the amended measure tuna harvested in the ETP by large purse seine vessels may be labelled dolphin-safe only if the documentation requirements of sections 216.92 and 216.93 are met. For tuna caught by US-flagged vessels, the dolphin-safe label may be used if the tuna is accompanied by a TTF certified by the vessel captain and the IDCP‑approved observer and delivered to a US tuna processor that is in compliance with the tuna tracking and verification requirements of section 216.93.^[67]

3.48.  The same tracking and verification requirements, e.g. that the tuna in question should be accompanied by a TTF certified by the vessel captain and the IDCP-approved observer, apply to imported tuna products harvested in the ETP by large purse seine vessels. Such tuna products may be labelled dolphin-safe only if the tuna was harvested by a vessel flagged to an AIDCP party (or a country that is provisionally applying the AIDCP) that is adhering to all the requirements of the IDCP Tuna Tracking and Verification Plan. This requirement is implemented by the Form 370, which requires that tuna harvested in the ETP by large purse seine vessels be accompanied by documentation from the appropriate IDCP-member country certifying that there was an IDCP observer on the vessel at all times and listing the numbers for the associated TTF(s).^[68]

Form 370

3.49.  Every imported tuna product, regardless of where the tuna was caught and whether the dolphin-safe label is used, must be accompanied by a NOAA Form 370, which designates the gear type with which the tuna was caught and, if the product is to be labelled dolphin-safe, contains the necessary certifications. At the time of importation, one copy of this form is required to be submitted to Customs and Border Protection and another is required to be submitted, within 10 days of the importation, to the Tuna Tracking and Verification Program (TTVP).^[69]

Physical segregation

3.50.  The amended measure requires that, to be contained in tuna product labelled dolphin-safe, tuna must be segregated from non‑dolphin-safe tuna from the time it was caught through unloading and processing. Section 216.93(c)(1) implements this requirement for tuna caught by large purse seine vessels in the ETP, requiring that dolphin-safe tuna be loaded into designated wells and offloaded to trucks, storage facilities, or carrier vessels in such a way as to safeguard the distinction between dolphin-safe and non‑dolphin-safe tuna. Independent observers monitor the loading and unloading of wells, and individual lots of tuna are assigned TTF tracking numbers that can be traced through each step of production of the tuna products.^[70]

3.51.  Sections 216.93(c)(2) and (3) apply the same requirement to tuna caught by purse seine vessels outside the ETP and to tuna caught in other fisheries. Any mixing in the affected wells or storage areas should result in the tuna being designated non‑dolphin-safe.^[71]

Tracking cannery operations and processor operations other than cannery operations, subject to US jurisdiction

3.52.  Whenever a US cannery receives a shipment of domestic or imported tuna for processing, a NMFS representative may be present to monitor delivery and verify the dolphin-safe designations. Further, US tuna processors are required to submit monthly reports to the TTVP for all tuna received at their processing facilities. These reports indicate, for all tuna received, whether the tuna is eligible to be labelled dolphin-safe under section 216.91, species, condition of the tuna products, weight, ocean area of capture, catcher vessel, gear type, trip dates, carrier name, unloading dates, location of unloading and, if the tuna products are labelled dolphin-safe, the required certifications for each shipment of tuna. All US exporters, trans-shippers, importers, processors, and distributors of tuna or tuna products must maintain records related to the tuna for at least two years, including Form 370s and associated certifications, and all additional required reports.^[72]

4  Arguments of the parties

4.1.  The arguments of the parties are reflected in their executive summaries, provided to the Panel in accordance with paragraph 17 of the Working Procedures adopted by the Panel (see Annexes B-1, B-2, B-3, B-4, B-5 and B-6).

5  Arguments of the third parties

5.1.  The arguments of Australia, Canada, the European Union, Japan, the Republic of Korea, New Zealand, and Norway are reflected in their respective executive summaries, provided in accordance with paragraph 18 of the Working Procedures adopted by the Panel (see Annexes C-1, C-2, C-3, C-4, C‑5, C-6, C-7, C-8, C-9 and C-10). The Republic of Korea did not submit written arguments to the Panel. Japan did not make an oral statement. China, Guatemala and Thailand did not submit written or oral arguments to the Panel.

6  interim review

6.1  General issues

6.1.  All paragraph references in this section are to the paragraph numbers in the final report. This section of the Report constitutes an integral part of the Panel's findings.

6.2.  In response to the parties' requests, the Panel made typographical and stylistic corrections in the following paragraphs: 7.11, 7.16, 7.34, 7.35, 7.62, 7.71, 7.80, 7.98, 7.120, 7.124, 7.126, 7.136, 7.143, 7.147, 7.160, 7.161, 7.167, 7.172, 7.177, 7.187, 7.185, 7.192, 7.198, 7.199, 7.206, 7.208, 7.231, 7.233, 7.248, 7.249, 7.251, 7.252, 7.253, 7.256, 7.262, 7.283, 7.294, 7.297, 7.298, 7.300, 7.302, 7.303, 7.304, 7.306, 7.310, 7.312, 7.346, 7.349, 7.352, 7.355, 7.365, 7.363, 7.367, 7.368, 7.370, 7.377, 7.378, 7.401, 7.433, 7.439, 7.444, 7.450, 7.453, 7.454, 7.458, 7.466, 7.477, 7.483, 7.486, 7.508, 7.517, 7.519. 7.528, 7.533, 7.539, 7.554, 7.577, 7.579, 7.585, 7.587, 7.591, 7.593, and 7.599.

6.3.  In response to comments from both parties, the Panel has made minor revisions to the descriptive part of its Report at paragraphs 1.1, 1.10, 3.1, 3.13, 3.14, 3.28, 3.29, 3.30, 3.31, 3.32, 3.36, 3.40, and 3.47.

6.4.  In light of the requests made by the parties during the interim review stage, and in order to reflect the parties' arguments and exhibits more precisely, the Panel made adjustments to the following paragraphs: 7.104, 7.111, 7.112, 7.116, 7.154, 7.156, 7.193, 7.291, 7.309, 7.324, 7.328, 7.339, 7.349, 7.360, 7.374, 7.467, 7.589, and 7.592.

6.5.  Both parties requested that the Panel clarify and, in some cases, revise its reasoning and findings in a number of paragraphs. In response to these requests, the Panel has adjusted its Report at paragraphs: 7.66, 7.105, 7.148, 7.150, 7.366, and 7.601.

6.2  Specific issues

6.2.1  Evidence concerning observable and unobservable harms caused by different fishing methods

6.6.  Both parties requested the Panel to explain in more detail its views of certain evidence pertaining to the different eligibility criteria. The Panel did not consider it necessary to review evidence submitted by the parties in the original dispute. The Panel did, however, review the new evidence, and found that it simply confirmed the findings made in the original proceedings on this issue. For this reason, the Panel did not discuss this new evidence in great detail in its interim report. Nevertheless, in light of the parties' requests, we have decided to describe the new evidence in some more detail, and to provide more detailed explanations of the Panel's understanding and views of the various documents. The Panel notes that this new evidence confirms the factual findings made by the original panel and upheld by the Appellate Body. Accordingly, we have revised the report at paragraphs 7.111, 7.112, 7.116, 7.122, 7.123, and 7.129 to 7.135.

6.2.2  Description of the Appellate Body's finding on observed and unobserved harms caused by setting on dolphins as compared with other tuna fishing methods

6.7.  The United States requested that the Panel review its description of the Appellate Body's findings in paragraphs 7.120, 7.122, 7.579, and 7.585 of its Report. Mexico did not agree with the United States' request, and asked the Panel to reject it.

6.8.  The paragraph as originally drafted accurately reflects our understanding of the original panel and Appellate Body reports. The Appellate Body expressly confirmed that "setting on dolphins causes observed and unobserved adverse effects on dolphins".^[73] Neither party denies that setting on dolphins causes observed and unobserved harm to dolphins. However, the original panel and the Appellate Body were also clear in holding that "the risks to dolphins from other fishing techniques are [not] insignificant, and [may] under some circumstances rise to the same level as the risks from setting on dolphins".^[74] In our view, what makes setting on dolphins particularly harmful is the fact that it causes certain unobserved effects beyond mortality and injury "as a result of the chase itself".^[75] These harms would continue to exist "even if measures are taken in order to avoid the taking and killing of dolphins on the nets".^[76] It is precisely because these unobserved harms cannot be mitigated by measures to avoid killing and injuring dolphins that the original panel and the Appellate Body found that the United States is entitled to treat setting on dolphins differently from other fishing methods.

6.9.  To ensure clarity, we have revised our drafting of paragraphs 7.120, 7.122, 7.123, 7.579 and 7.585.

6.2.3  Mexico's evolving argument on the different observer requirements under Article 2.1 of the TBT Agreement

6.10.  The United States requested the Panel to revise its description of Mexico's argument in paragraphs 7.154 and 7.161 of the Report. Mexico requested the Panel to reject this request, and stated that the United States' proposed redraft would "mischaracterize Mexico's arguments".^[77]

6.11.  In our view, the original text accurately summarizes Mexico's argument. Mexico explicitly argued that the different certification requirements "impose two distinct … standards for the accuracy of information regarding the dolphin-safe status tuna: one standard for tuna caught inside the ETP, and a separate and much lower standard for tuna outside the ETP".^[78] In the Panel's view, this sentence clearly means that, in Mexico's view, the amended tuna measure imposes a lighter (or, in Mexico's words, a "much lower") burden on tuna caught outside of the ETP large purse seine fishery on tuna caught within that fishery. For the sake of clarity, the Panel has added a footnote in paragraph 7.154 explicitly linking the Panel's summary to Mexico's submission.

6.12.  In addition, the Panel notes that its description of Mexico's argument takes into account the way in which Mexico's arguments developed over the course of these proceedings, and in particular its (Mexico's) development of arguments concerning the different cost burdens imposed by the amended tuna measure. As both parties will recall, one of the main issues discussed by the Panel and the parties at the meeting concerned the various costs imposed by the amended tuna measure. A number of the Panel's written questions to the parties also concerned the different cost burdens imposed by the measure at issue, and both parties responded to these questions. As the Panel explains in paragraph 7.162 the amended tuna measure appears to impose different cost burdens on different countries, and this is an important element of the differential burdens imposed by the measure. In light of these considerations, we believe that our understanding and representation of Mexico's argument is accurate and should stand.

6.2.4  Evidence concerning log-books

6.13.  The United States requested the Panel to review certain factual findings in paragraphs 7.219 and 7.601. In particular, the United States requested that the Panel explicitly note that some logbooks do require or allow captains to record mammal bycatch. The Panel reviewed this evidence, and has revised its Report at paragraphs 7.219‑7.226.

6.2.5  Tracking and verification systems

6.14.  The United States requested the Panel to revise its findings in a number of paragraphs concerning the tracking and verification system that applies to tuna caught other than in the ETP large purse seine fishery. Specifically, the United States requested that the Panel find: (a) that can codes enable tracking back not only to the vessel by which the tuna in the can was caught, but also to the captain's statement associated with the tuna contained in the can; (b) that captains' certifications are associated with batches of tuna at their "first point of unloading"; and (c) that in some cases tuna products made from tuna caught other than in the ETP large purse seine fishery can be tracked back to the well in which it was stored during the fishing trip on which it was caught.

6.15.  With respect to the part (a) of the United States' request, the Panel declines to make the additional finding requested by the United States, i.e. that can codes enable tuna to be tracked back to the captain's statement associated with the tuna contained in the can. In the first place, the additional finding would not be consistent with the United States' own argumentation. [[BCI^[79] [80]]]. Accordingly, a general finding that can codes enable trace-back to captains' certifications would be inappropriate.

6.16.  Additionally, we do not agree that the evidence supports the United States' allegation on this point. [[BCI]].

6.17.  Although we decline to make the additional finding requested by the United States, the Panel considers it appropriate to more clearly describe the United States' argument on this point. Accordingly, we have revised paragraphs 7.310 and 7.355.

6.18.  With respect to part (b) of the United States' request, the Panel declines to make the change requested, that is, to find that captains' certifications appear to be assigned at the "first point of unloading". The Panel's finding [[BCI^[81] [82]]] Nevertheless, in order to ensure clarity, we have replaced the word "production" with the word "loining", so that the text of paragraph 7.370 more closely reflects the evidence presented by the United States.

6.19.  In respect of part (c) of the United States' request, the Panel declines to make the additional finding requested by the United States. We have revised paragraphs 7.356‑7.359 to explain more clearly why we do not agree with the United States' interpretation of the evidence.

6.20.  Moreover, Mexico requested the Panel to make an additional finding concerning the tracking and verification system for tuna caught other than in the ETP large purse seine fishery. Specifically, Mexico requests the Panel make clear that the United States "is not able to track the movement and dolphin safe status of tuna from the time of catch up to the point of delivery to a non-US cannery and subsequent shipment to the United States".^[83] The United States disagrees with the changes suggested by Mexico.

6.21.  The Panel has decided to revise paragraphs 7.365‑7.368 by adding the word "directly" to Mexico's suggested text, the Panel has addressed the United States' contention that Mexico's proposed drafting was inaccurate because US importers themselves are supposed to have the documentation necessary to trace tuna back to the point of catch. We note that in its comments on this request the United States stated that it did not contest three of Mexico's four requested revisions.

6.2.6  The Panel's description of Mexico's argument on less favourable treatment

6.22.  Mexico requested the Panel to revise its description of Mexico's argument in paragraphs 7.104 and 7.105. The United States does not support this request, and asks the Panel to reject it. According to the United States, the original paragraph properly characterizes Mexico's argument.

6.23.  The Panel has decided to revise these paragraphs. In the Panel's view, Mexico's argumentation has consistently distinguished between the way in which the different eligibility criteria on the one hand and the different certification and tracking and verification requirements on the other hand have a detrimental impact on the competitive opportunities of Mexican tuna and tuna products. In particular, beginning in its second written submission, Mexico has maintained that whereas the eligibility criteria have a direct negative impact on Mexican tuna and tuna products by disqualifying tuna caught by setting on dolphins from ever accessing the label, the other two regulatory distinctions (the different certification and tracking and verification requirements) have a detrimental impact on Mexican tuna and tuna products indirectly, as it were, because they provide "an illegitimate competitive advantage"^[84] to tuna caught other than in the ETP large purse seine fishery. This illegitimate advantage de facto modifies the conditions of competition to the detriment of Mexican tuna and tuna products.

6.24.  Mexico articulated this distinction most clearly in response to a question from the Panel. Mexico explained that the amended tuna measure has a detrimental impact on Mexican tuna and tuna products because:^[85]

a.      "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;

b.     Mexican-origin tuna and tuna products are subject to comprehensive and strict record keeping and verification requirements that prevent non-dolphin-safe tuna from being labelled as dolphin-safe. In contrast, tuna and tuna products from the United States and other countries are not subject to such comprehensive and strict requirements. As a consequence, tuna and tuna products from the United States and other countries can be mislabelled as dolphin-safe when, in fact, such tuna and tuna products are not dolphin-safe; and

c.      In the case of Mexican tuna, the initial designation of dolphin-safe status is subject to mandatory independent observer requirements at the point when the tuna is harvested from the ocean, which prevents non-dolphin-safe tuna from being mislabelled as dolphin-safe. In the case of tuna from the United States and other countries, the initial designation of dolphin-safe status is not made by independent observers at the point when the tuna is harvested from the ocean, thereby allowing the tuna to be mislabelled as dolphin-safe".

6.25.  The passage cited above clearly distinguishes between two types of alleged detrimental impact: the first, caused by the eligibility criteria, directly disadvantage Mexican tuna by disqualifying tuna caught using Mexico's primary tuna fishing method from accessing the dolphin-safe label; and the second, caused by the different certification and tracking and verification requirements, which disadvantage Mexican tuna products by granting an advantage to tuna caught outside the ETP large purse seine fishery and therefore modifies the conditions of competition to the detriment of Mexican tuna and tuna products.

6.26.  In the Panel's view, by distinguishing between the detrimental impact caused by the eligibility criteria on the one hand and the different certification and tracking and verification requirements on the other hand, Mexico clearly premised its argument on the notion that the different regulatory distinctions caused detrimental treatment in different ways and for different reasons.

6.27.  As such, the Panel believes that the text in paragraphs 7.104 and 7.105 and the interpretation of Mexico's argument contained therein is accurate and should stand. Nevertheless, the Panel has made some drafting revisions for added clarity, and has also completed the citation requested by Mexico.

6.2.7  Regulated vs. unregulated setting on dolphins

6.28.  Mexico requested the Panel to modify the drafting of paragraph 7.577. Specifically, Mexico seeks the inclusion of language suggesting that setting on dolphins is "particularly harmful" to dolphins "when unregulated".

6.29.  The Panel declines to make the changes requested by Mexico. As we have explained in various parts of this Report, our understanding is that setting on dolphins is "particularly harmful" to dolphins because, as a method of harvesting tuna, it requires, for its efficacy, that dolphins be "set on" – that is, chased and encircled, in each and every fishing set. As we have discussed in detail elsewhere, setting on dolphins gives rise to observable and unobservable harms. Although the observable harms, including mortality and serious injury, may be containable through regulation, the original panel made clear that the unobservable effects caused by the chase itself would "exist even if measures are taken to avoid the taking and killing of dolphins in the nets".^[86] While unregulated setting on dolphins may very well be more dangerous than regulated setting on dolphins – and that is a point on which we need not decide – the relative safety of regulated or unregulated setting on does not, as we understand it, change fact that setting on dolphins is particularly harmful to dolphins because it causes unobserved effects beyond observable mortality and serious injury, and which cannot be removed through regulations that reduce mortality and serious injury.

7  Findings

7.1  Claims

7.1.  Mexico claims that the amended tuna measure is inconsistent with the following provisions of the covered agreements:

a.      Article 2.1 of the TBT Agreement, because the amended tuna measure continues to accord Mexican tuna products treatment less favourable than that accorded to like tuna products of the United States and to like tuna products originating in any other country;

b.     Article I:1 of the GATT 1994, because the amended tuna measure continues to confer on tuna products originating in other countries an advantage which is not accorded immediately and unconditionally to like tuna products originating in Mexico;

c.      Article III:4 of the GATT 1994, because the amended tuna measure continues to accord Mexican tuna products treatment less favourable than that accorded to like tuna products of United States' origin in respect of all laws, regulations and requirements affecting their internal sale, offering for sale, purchase, transportation, distribution or use.

7.2.  In its request for the establishment of a panel under Article 21.5 of the DSU, Mexico also claimed that the amended tuna measure was inconsistent with Article XXIII:1(b) of the GATT 1994 because it "nullifies or impairs benefits that accrue to Mexico under the GATT 1994". However, this claim was not pursued by Mexico in any of its submissions to the Panel, and accordingly the Panel does not address it in this Report.

7.2  Order of analysis

7.3.  The parties have not requested that the Panel follow any particular order of analysis. Their written submissions address Mexico's claims under the TBT Agreement first and the GATT 1994 second.

7.4.  It is well established that where:

[A] provision of an agreement included in Annex 1A of the WTO Agreement … and a provision of the GATT 1994 that have identical coverage both apply, … the provision that deals specifically, and in detail with a question should be examined first.^[87]

7.5.  In the original proceedings in this matter, the panel found that:^[88]

[T]he TBT Agreement "deals in detail, and specifically" with the matters that it addresses. Therefore, where claims under GATT 1994 are presented in parallel with claims under the TBT Agreement, claims under the TBT Agreement should be considered first.

7.6.  Upon review, the Appellate Body similarly considered the parties' arguments concerning Article 2.1 of the TBT Agreement first.

7.7.  In our view, there is no reason to depart from the approach of the original panel in respect of the proper order of analysis. Accordingly, the Panel will first analyse Mexico's claim under Article 2.1 of the TBT Agreement, and will then proceed to consider its claims under Article I:1 and Article III:4 of the GATT 1994.

7.8.  Before considering Mexico's claims under the TBT Agreement and the GATT 1994, the Panel will address two preliminary issues: first, the measure at issue and the scope of these Article 21.5 proceedings; and second, the burden and standard of proof applicable in this case.

7.3  Parameters of the Panel's mandate: the measure at issue and the scope of these Article 21.5 proceedings

7.9.  The Panel recalls that the Appellate Body's conclusion on the WTO-inconsistency of the tuna measure was framed broadly. Indeed, the Appellate Body's ultimate recommendation to the DSB was phrased in terms of the United States' "measure" – that is, the entire tuna measure, rather than one particular aspect or element of it. At paragraph 299 of its report, the Appellate Body explicitly concluded that:^[89]

[T]he 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.

7.10.  At the end of its report the Appellate Body recommended that the DSB request the United States to "bring its measure" into conformity with WTO law.^[90]

7.11.  As the Appellate Body had previously indicated that it would use the terms "measure at issue", "US measure", and "the US 'dolphin-safe' labelling provisions" to refer to "the legal instruments challenged by Mexico collectively"^[91], it is clear that the Appellate Body's conclusions and recommendations were meant to apply to the tuna measure as a whole, including all its components. Consider, for instance, the manner in which the Appellate Body defined the measure at issue in the original proceedings:^[92]

This dispute arises out of a challenge brought by Mexico against certain legal instruments of the United States establishing the conditions for the use of a "dolphin-safe" label on tuna products.  In particular, Mexico identified the following legal instruments as the object of its challenge:  the United States Code, Title 16, Section 1385 (the "Dolphin Protection Consumer Information Act" or "DPCIA"); the United States Code of Federal Regulations, Title 50, Section 216.91 and Section 216.92 (the "implementing regulations"); and a ruling by a US federal appeals court in Earth Island Institute v. Hogarth (the "Hogarth ruling"). Taken together, the DPCIA, the implementing regulations, and the Hogarth ruling set out the requirements for when tuna products sold in the United States may be labelled as "dolphin-safe". 

7.12.  In our view, it is clear that in referring to the "'dolphin-safe' labelling provisions", the Appellate Body's conclusions and recommendations were meant to apply to the tuna measure as a whole.

7.13.  We note also that in its findings the Appellate Body made clear that there were various ways for the United States to bring its measure into conformity with the even-handedness requirement of Article 2.1 of the TBT Agreement:

The Panel further noted that the provisions of the DPCIA themselves envisage the possibility that a fishery outside the ETP would be identified as one having a "regular and significant mortality, or serious injury of dolphins", which would then lead to the application in such fishery of a requirement to certify that no dolphin has been killed or seriously injured on the trip on which the tuna was caught.^[93]

We see no error in the Panel's assessment. In addition, we note that nowhere in its reasoning did the Panel state that imposing a requirement that an independent observer certify that no dolphins were killed or seriously injured in the course of the fishing operations in which the tuna was caught would be the only way for the United States to calibrate its "dolphin-safe" labelling provisions to the risks that the Panel found were posed by fishing techniques other than setting on dolphins.^[94]  We note, in this regard, that the measure at issue itself contemplates the possibility that only the captain provide such a certification under certain circumstances.^[95]

In the light of the above, we conclude that the United States has not demonstrated that 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, is "calibrated" to the risks to dolphins arising from different fishing methods in different areas of the ocean. It follows from this that the United States has not demonstrated that the detrimental impact of the US measure on Mexican tuna products stems exclusively from a legitimate regulatory distinction.  We note, in particular, 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 methods other than setting on dolphins outside the ETP".^[96] In these circumstances, we are not persuaded that the United States has demonstrated that the measure is even-handed in the relevant respects, even accepting that the fishing technique of setting on dolphins is particularly harmful to dolphins.^[97]

7.14.  In the current proceedings, with a view to complying with the DSB recommendations, the United States has modified its implementing regulation, along the line described in paragraphs 3.32‑3.52 above. The United States takes the view that this regulatory change is sufficient to bring its measure into conformity with the rulings and recommendations of the DSB.

7.15.  Mexico has initiated this dispute under Article 21.5 of the DSU, arguing that the modification has not brought the US measure into conformity with its WTO obligations.

7.16.  The task of a panel established under Article 21.5 is to "decide[]" disputes "as to the existence or consistency with a covered agreement of measures taken to comply with … recommendations and rulings" of the DSB. In the current proceedings, the parties disagree as to the identity of the measure taken to comply which according to the United States defines the scope of review of this implementation panel.

7.17.  Mexico takes a broad view, and argues that the measure taken to comply is coextensive with what both parties call the "amended tuna measure". We have described the "amended tuna measure" in some detail above; for present purposes we simply recall that it consists of (a) Section 1385 of Title 16 of the United States Code (the legislation), (b) Title 50, Part 216, Subpart H of the United States Code of Federal Regulations as amended by the 2013 Final Rule (the regulations as amended or regulations), and c) the court ruling in Earth Island Institute v Hogarth (the Hogarth ruling).^[98] The United States urges the Panel to take a narrower view. In its opinion, while the three instruments identified by Mexico together constitute the "amended tuna measure", it is only the 2013 Final Rule, which was adopted in response to the original proceedings with the goal of "com[ing] into compliance with the DSB recommendations and rulings", that is the measure taken to comply and for the United States this Panel should limit the scope of its review to the measure it took to comply.^[99]

7.18.  The Appellate Body has explained that "[p]roceedings under Article 21.5 do not concern just any measure of a Member of the WTO; rather, Article 21.5 proceedings are limited to those 'measures taken to comply with the recommendations and rulings of the DSB'".^[100] Accordingly, a panel established under Article 21.5 is not free to consider any measure adopted and maintained by a WTO Member. Rather, its jurisdiction is limited to assessing measures taken by a Member to "implement" rulings and recommendations made by the DSB in relation to another, pre-existing measure previously found by the DSB to be WTO-inconsistent – which other measure, while necessarily relevant to the inquiry under Article 21.5, is conceptually distinct.^[101]

7.19.  We begin our analysis by recalling that what is the "measure taken to comply" in a given case is not determined exclusively by the implementing Member. A Member's designation of a measure as one taken "to comply", or not, is relevant to this inquiry, but it cannot be conclusive. Conversely, nor is it up to the complaining Member alone to determine what constitutes the measure taken to comply. It is rather for the Panel itself to determine the ambit of its jurisdiction.^[102] This determination, like all determinations made by a panel, must be conducted on the basis of an objective examination of all relevant facts.^[103]

7.20.  In our opinion, the United States is correct in asserting that the 2013 Final Rule is, strictly speaking, its "measure taken to comply". The 2013 Final Rule is, to use the Appellate Body's words, precisely that legal instrument adopted by the United States "in the direction of, or for the purpose of achieving, compliance" with the DSB's rulings and recommendations in the original proceedings.^[104] As we have already discussed, at the end of the original proceedings the Appellate Body found that the "tuna measure", defined as consisting of the legislation, regulations, and Hogarth ruling, was "inconsistent with Article 2.1 of the TBT Agreement".^[105] The 2013 Final Rule, which amends aspects of the original regulations, is the measure "taken" by the United States to remedy this WTO‑inconsistency. It is precisely through the introduction of certain changes to the regulations embodied in the 2013 Final Rule that the United States seeks to correct the illegality that the original panel and the Appellate Body identified in the original tuna measure as a whole. As a regulatory amendment, the 2013 Final Rule is integrated into the original tuna measure for the precise purpose of remedying that measure, which the DSB found to be inconsistent with WTO law.

7.21.  As a sovereign nation, the United States is of course free to come into compliance with a DSB ruling in any way it chooses. Panels have repeatedly recognized that in "the first instance the modalities of the implementation of [a] recommendation are for the [respondent] to determine".^[106] Indeed, Article 21.3 of the DSU recognizes that a Member may come into compliance on the basis of and in accordance with its own "intentions in respect of implementation of the rulings and recommendations of the DSB". A panel's role in an Article 21.5 proceeding is thus not to determine whether the way chosen by a Member to come into compliance is in any sense the "best" way, but rather to make an "objective assessment"^[107] of whether the course of action actually taken by the responding Member is sufficient to bring its measure into conformity with the WTO Agreement.

7.22.  Having said that, we do not think that a Member's choice of how to come into compliance with DSB rulings and recommendations necessarily limits or circumscribes the jurisdiction of a panel composed under Article 21.5 of the DSU for the purpose of assessing whether compliance has been achieved. In our view, the overriding question for such a panel is always whether the measure found by the DSB to be incompatible with one or more obligations under the WTO Agreement has been brought into compliance so that it is no longer WTO-inconsistent. Thus where, for example, a Member modifies one aspect or element of a measure previously found by the DSB to be WTO-inconsistent in its entirety, a panel acting under Article 21.5 is not limited to only assessing the WTO-consistency of the modified aspect or element. Rather, this Panel's task remains that of assessing whether or not a Member has brought its entire measure – that is, the measure found by the DSB to be WTO-inconsistent - into conformity with WTO law, including through or by way of the modification made to the particular aspect or element. In the present proceedings, the Panel's task is not only to determine whether the 2013 Final Rule is in itself WTO‑consistent, but rather, and more fundamentally, to assess whether, through or by way of the 2013 Final Rule, the United States has succeeded in bringing the tuna measure as a whole, as the measure found by the Appellate Body in the original proceedings to be WTO-inconsistent, into conformity with the WTO Agreement.

7.23.  It follows that our finding that the "measure taken to comply" is the 2013 Final Rule in no way precludes the Panel from considering the broader question of whether the modifications to the original measure, including the new 2013 Final Rule, is now WTO-compliant. Such a task necessarily requires the Panel to consider not only the contents of the 2013 Final Rule itself, but also to examine how the 2013 Final Rule interacts (or does not interact) with the other elements that make up the amended tuna measure.

7.24.  Accordingly, we conclude that our role in these proceedings is not limited to assessing the WTO-consistency of the 2013 Final Rule. Rather, we need to determine whether the amended tuna measure, including the 2013 Final Rule, brings the United States into compliance with the WTO Agreement.^[108]

7.25.  A further, though related, issue that we must address before proceeding to the merits of Mexico's case concerns the scope of Article 21.5 proceedings – or, to put it another way, the type of claims that may be raised against the 2013 Final Rule and the amended tuna measure more broadly. According to the United States, "Article 21.5 reports issued by the Appellate Body and panels have consistently drawn a distinction between claims made against new elements of a measure taken to comply and those elements that are unchanged from the original measure. These reports have repeatedly found that the terms of reference of a compliance panel do not include re-examining the WTO consistency of an unchanged aspect that was not found to be WTO-inconsistent in that dispute".^[109] The United States recalls that, as a general rule, Article 21.5 proceedings must not give complainants an "unfair second chance with respect to any claims on which they did not prevail in the original proceedings", as such a chance would be inconsistent with both the need for "prompt settlement of disputes"^[110] and, perhaps more importantly, the respondent's due process rights.^[111] Additionally, the United States cautions that allowing Mexico to challenge unchanged aspects of the amended tuna measure would threaten the finality of DSB rulings and recommendations and undermine the unconditional acceptance of adopted Appellate Body reports required of Members by Article 17.14 of the DSU.^[112]  

7.26.  Applying these principles to the facts of this case, the United States advances the following argument in its first written submission:^[113]

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 distinction 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.

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 labelled where a dolphin had been killed or seriously injured. And it is this distinction that the 2013 Final Rule addresses.

7.27.  In essence, the United States' argument is that the three elements or aspects of the amended tuna measure on which Mexico bases its claims – the eligibility requirements for the dolphin-safe label or the so-called qualification/disqualification distinction^[114], the different tracking and verification requirements^[115], and the different observer or certification requirements^[116] – are all unchanged from the original measure, and that, because none of these elements was found to be WTO-inconsistent by the Appellate Body in the original proceedings, Mexico cannot raise claims relating to these elements in the present proceedings.

7.28.  In support of its argument on the scope of the Appellate Body's rulings and recommendations, the United States cites to paragraphs 289-292 and 298 of the Appellate Body report. At paragraph 298, the Appellate Body said:

[I]n our view, the United States has not justified as non‑discriminatory under Article 2.1 the different requirements that it applies to tuna caught by setting on dolphins inside the ETP and tuna caught by other fishing methods outside the ETP for access to the US "dolphin-safe" label.

7.29.  Earlier, at paragraph 284, the Appellate Body found that:

The aspect of the measure that causes 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.

7.30.  According to the United States, these statements show that the Appellate Body only found fault with the different certification requirement imposed on tuna caught by setting on dolphins on the one hand and tuna caught by other fishing methods outside the ETP on the other. It "thus did not consider that any of the other numerous regulatory distinctions contained in the original measure" – specifically, concerning tracking, verification, and observers – "proved the measure discriminatory".^[117]

7.31.  Mexico rejects the United States' argument on the Panel's jurisdiction on a number of related grounds. First, it contends that the Appellate Body's findings – and thus the DSB's rulings and recommendations ­­– were "general", and applied to the "US 'dolphin-safe' labelling provisions" considered in their "totality".^[118] Second, Mexico maintains that the amended tuna measure is "in principle, a new and different measure" from the one before the original panel and Appellate Body^[119], and accordingly "the Panel should focus on [the measure] as a whole and not [on] elements comprising that measure".^[120] Finally, Mexico argues that the United States is incorrect to characterize aspects of the amended tuna measure as "unchanged". According to Mexico, important changes have in fact been made to the provisions of the measure concerning tracking and verification and observer coverage.^[121]

7.32.  In our opinion, the United States' fundamental premise – that "[t]he only regulatory distinction the Appellate Body found not to be even‑handed was the requirement that tuna products 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 labelled where a dolphin had been killed or seriously injured"^[122], and that the Appellate Body did not find any other aspect of the measure to be WTO-inconsistent – is incorrect. Neither the original panel report nor the Appellate Body report is limited in the way the United States suggests.

7.33.  Rather, the Appellate Body found that the original tuna measure as a whole was not even-handed, because while the regulatory scheme fully addressed the harms caused by setting on dolphins, it did not adequately address harms caused by other tuna fishing methods. The Appellate Body did not say that any one particular element of the regulatory scheme imposed other than on purse seine vessels in the ETP was solely responsible for this lack of even-handedness. Rather, the entire regulatory scheme was insufficient to address what the original panel and Appellate Body found to be the very real risks posed to dolphins by methods of fishing other than setting on dolphins. It was this overall lack of "even-handedness" that the Appellate Body found to be inconsistent with Article 2.1 of the TBT Agreement, and, as we read the Appellate Body's reasons, this lack of "even-handedness" was ultimately found to be characteristic of the entire system established by the original tuna measure. It was, in other words, the tuna measure as a whole, with its varying regulatory requirements, that was found to be inconsistent with Article 2.1 of the TBT Agreement.

7.34.  We have already explained that the Appellate Body's recommendation to the DSB is phrased in terms of the United States' "measure" – that is, the entire tuna measure, rather than one particular aspect or element of it. As noted above, at paragraph 299 of its report, the Appellate Body explicitly concluded 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";^[123] and at the end of its report the Appellate Body recommended that the DSB request the United States to "bring its measure" into conformity with WTO law.^[124]

7.35.  We do not agree that the passages of the Appellate Body's report cited by the United States support its contention. To the contrary, by referring in the plural to "the difference in labelling conditions" (para. 284) and "different requirements" (para. 298), we understand the Appellate Body to have been referring generally to the different requirements that the tuna measure imposed on, on the one hand, tuna caught by large purse seine vessels inside the ETP and, on the other hand, tuna caught other than in the ETP large purse seine fishery.

7.36.  We observe that the Appellate Body was careful to use the plural throughout its reasoning, including in its legal findings and overall conclusions. Thus, under the heading "Conclusion on Article 2.1 of the TBT Agreement", the Appellate Body said:

[I]n our view, the United States has not justified as non‑discriminatory under Article 2.1 the different requirements that it applies to tuna caught by setting on dolphins inside the ETP and tuna caught by other fishing methods outside the ETP for access to the US "dolphin-safe" label. The United States has thus not demonstrated that the detrimental impact of the US measure on Mexican tuna products stems exclusively from a legitimate regulatory distinction.

7.37.  Here again the Appellate Body used the term "requirements" in the plural. To us, this clearly indicates that the Appellate Body was not solely concerned with the different certification required in the ETP and outside of it. If that had been the case, the Appellate Body could, and indeed would have referred to the different "requirement" in the singular. The use of the plural indicates that the Appellate Body's findings were not limited to the difference in the certification requirement, but encompassed other differences embedded in the original tuna measure, including with respect to tracking, verification, and observers.^[125]

7.38.  It is true that the Appellate Body's reasoning focused primarily on the disqualification of tuna caught by setting on dolphins from accessing the dolphin-safe label. This may very well have been a consequence of the way the case was argued by the parties. At any rate, as Japan said in its third-party submission, the United States' attempt to limit this Panel's jurisdiction confuses "the Appellate Body's conclusion with the particular reasons that provided the basis for that conclusion".^[126] Those reasons are of course central to our analysis in these proceedings, but they do not restrict our ability to entertain claims relating to other aspects of the tuna measure, which, by virtue of the Appellate Body's broad conclusions, is properly before us. As Japan put it in its third-party submission, "to the extent the amended measure continues to accord less favourable treatment to Mexican tuna products" – whether for the reasons identified by the Appellate Body or for any other reason – "the United States would have failed to comply fully with the DSB's recommendations and rulings".^[127]

7.39.  In our opinion, Mexico is correct that although the conditions that the amended tuna measure imposes on tuna caught by large purse seine vessels in the ETP are formally unchanged, the 2013 Final Rule may have altered the legal import and significance of those conditions, meaning that we cannot simply assume that the relevant aspects of the measure are truly – that is, in a legally meaningful sense – unchanged. Indeed, previous panel and Appellate Body reports have suggested that in cases such as this, where a measure found to be inconsistent in original proceedings is revised rather than repealed or completely recreated, such revision "transforms" the original measure, so that the amended measure "in its totality"^[128] is properly considered as a "new and different measure".^[129] Accordingly, even though the tracking, verification, and certification (observer) requirements that apply to ETP-caught tuna may be formally unchanged, the introduction of the 2013 Final Rule has created a new set of legal relations between the various parts of the amended tuna measure, so that even formally unchanged elements may, in the context of the amended measure, establish a new set of legal circumstances such that it would be incorrect to regard them as "unchanged" from a legal perspective.

7.40.  We also reject the United States' contention that Mexico's arguments relating to the different tracking and verification and observer requirements "are clearly separable from the US measure taken to comply". The US measure taken to comply (i.e. the 2013 Final Rule) relates directly to the substantive declarations or certifications that must be made before a catch of tuna can be labelled as being dolphin-safe. However, tracking and verification and observer requirements go directly to the issue of the reliability of such certifications. Insofar as the goal of the tuna measure remains, inter alia, the provision of accurate information to consumers, the tracking and verification mechanisms are central aspects of the tuna measure, working together with the substantive certification requirements so as to provide accurate information to consumers about the dolphin-safe status of a particular tuna catch. Moreover, we note that the 2013 Rule itself addresses situations in which independent observer certification may be required. In other words, it deals directly with one aspect of the measure that the United States claims is "separable".^[130] In such circumstances, we cannot agree that the tracking and verification requirements are "separable" from the certification rules contained in the 2013 Final Rule.

7.41.  To sum up, we do not agree with the United States that the 2013 Final Rule is separable from the rest of the tuna measure simply because it does not change any pre-existing requirements but instead adds new requirements. In our view, the 2013 Final Rule is not a stand-alone measure but an integral component of the amended tuna measure. To the extent that it interacts with, and indeed forms an integral part of, that measure, the fact that it adds new requirements rather than changing pre-existing requirements is immaterial, and certainly does not have the effect of removing the rest of the tuna measure, which was the object of the DSB's rulings and recommendations, from our jurisdiction.^[131]

7.42.  In finding that we have jurisdiction to consider all of Mexico's claims, we are not suggesting that we have authority to re-examine all of the factual and legal circumstances of the case de novo. We are in full agreement with the European Union that where the original panel or the Appellate Body has made a finding on the basis of certain facts and evidence, and where there is no change in the facts and/or evidence on the basis of which that finding was made, we should not re-assess the issue from the beginning, but rather refer to and rely upon the finding previously made.^[132] This is not the same as saying, as the United States does, that such points are outside of our jurisdiction. Rather, our view is that such issues do fall within our jurisdiction, but that we should respect relevant findings made by the panel and the Appellate Body in the original proceedings, whether factual or legal, in the interests of maintaining the security and predictability of the multilateral trading system.

7.43.  In light of the above, we conclude that the legal question before us in these proceedings is whether the amended tuna measure, including the 2013 Final Rule, brings the United States into compliance with WTO law. We find that we have jurisdiction to consider all of Mexico's claims, including as they relate to the eligibility criteria and the certification and tracking and verification requirements.

7.4  Burden and standard of proof applicable in these proceedings

7.4.1  Burden of proof

7.44.   As a starting point, we recall the fundamental principle that:^[133]

[T]he burden of proof rests upon the party, whether complaining or defending, who asserts the affirmative of a particular claim or defence. If that party adduces evidence sufficient to raise a presumption that what is claimed is true, the burden then shifts to the other party, who will fail unless it adduces sufficient evidence to rebut the presumption.

7.45.   In disputes concerning the GATT 1994 in which Article XX is invoked, it is for the complaining party to show a breach of one or more provisions of that Agreement. If the complainant does so successfully, the burden then shifts to the respondent either to rebut the showing of violation or else to prove that the violation found is nevertheless justified under one of the general or security exceptions provided for in Articles XX and XXI.

7.46.  However, the proper allocation of the burden of proof under Article 2.1 of the TBT Agreement appears to be somewhat less clear. Ensuring that we apply the proper burden of proof is especially important in these proceedings because, as both parties recognize, the relevant factual evidence is highly contested and, with respect to some of the issues in dispute, minimal.  In particular, there appears to be limited scientific evidence concerning the scope and nature of dolphin mortalities in some non‑ETP fisheries^[134], which may have important consequences for the Panel's analysis.

7.47.  We begin by recalling that, under Article 2.1, a technical regulation will be found to afford "less favourable treatment" to imported products where (a) it modifies the conditions of competition in the relevant market to the detriment of the imported products; and (b), such detrimental modification of the conditions of competition does not stem exclusively from a legitimate regulatory distinction. We discuss the legal test under Article 2.1 in more detail below.^[135] For now, what we must consider is which party bears the burden of showing which of these two elements.

7.48.  The Appellate Body has explicitly addressed the allocation of the burden of proof under Article 2.1 of the TBT Agreement. First, in the original proceedings in this matter, the Appellate Body said that:

In the context of Article 2.1 of the TBT Agreement, the complainant must prove its claim by showing that the treatment accorded to imported products is "less favourable" than that accorded to like domestic products or like products originating in any other country. If it has succeeded in doing so, for example, by adducing evidence and arguments sufficient to show that the measure is not even‑handed, this would suggest that the measure is inconsistent with Article 2.1. If, however, the respondent shows that the detrimental impact on imported products stems exclusively from a legitimate regulatory distinction, it follows that the challenged measure is not inconsistent with Article 2.1.^[136]

7.49.  In US – COOL, the Appellate Body again set out the burden of proof under Article 2.1. It explained that:

[A]s with all affirmative claims, it is for the complaining party to show that the treatment accorded to imported products is less favourable than that accorded to like domestic products. Where the complaining party has met the burden of making its prima facie case, it is then for the responding party to rebut that showing. If, for example, the complainant adduces evidence and arguments showing that the measure is designed and/or applied in a manner that constitutes a means of arbitrary or unjustifiable discrimination of the group of imported products and thus is not even‑handed, this would suggest that the measure is inconsistent with Article 2.1. If, however, the respondent shows that the detrimental impact on imported products stems exclusively from a legitimate regulatory distinction, it follows that the challenged measure is not inconsistent with Article 2.1.^[137]

7.50.  We understand these passages as indicating that a complainant bears the burden of showing that a challenged measure modifies the conditions of competition in the relevant market (i.e. the relevant market in the responding Member) to the detriment of products from the complaining Member.^[138] As noted above, this criterion must always be satisfied before a violation of Article 2.1 can be found, regardless of whether that violation is claimed to be de facto or de jure. What is less clear to us is whether the complainant or the respondent bears the burden of showing, in the first instance, that the detrimental impact established by the complainant stems (or does not stem) exclusively from a legitimate regulatory distinction because it is (or is not) even‑handed.^[139]

7.51.  Our uncertainty arises for the following reason. In the passages quoted above, the Appellate Body indicated that a complainant is expected to show prima facie that the challenged measure "is designed and/or applied in a manner that constitutes a means of arbitrary or unjustifiable discrimination of the group of imported products and thus is not even‑handed", but that once this showing is made the burden shifts to the respondent to show that the detrimental impact in fact stems exclusively from a legitimate regulatory distinction. However, the Appellate Body has also explained that when analysing whether detrimental treatment stems exclusively from a legitimate regulatory distinction, a panel must carefully consider whether that treatment "reflects discrimination", which is "[u]ltimately [a question of] whether the measure is even‑handed".^[140] In particular, while it seems clear that the complainant must show the existence of detrimental treatment, it is not entirely clear to us whether the complainant also must show that such treatment does not stem exclusively from a legitimate regulatory distinction, or if, rather, it is the respondent that must show prima facie that the detrimental treatment does stem exclusively from a legitimate regulatory distinction. In other words, does the complainant bear the burden of showing in the first instance that steps (a) and (b) of the test under Article 2.1 of the TBT Agreement are met, or does the complainant only need to meet step (a), after which point the burden shifts to the respondent to meet step (b)?

7.52.  In its efforts to ascertain the proper allocation of the burden of proof under Article 2.1 of the TBT Agreement, the Panel asked the parties and third-parties to comment on the passages from the Appellate Body reports quoted above.^[141] Both the United States and Mexico agreed that "the complainant bears the initial burden of establishing a prima facie case in respect of all elements of its claim under Article 2.1", and that this meant that "the complainant is required to establish a prima facie case that: (i) the measure at issue modifies the conditions of competition in the relevant market to the detriment of imported products vis-à-vis like domestic products and like products originating in any other Member; and (ii) that such detrimental impact reflects discrimination against the imported products and, thus, does not stem exclusively from a legitimate regulatory distinction".^[142]

7.53.  Interestingly, a number of third-parties disagreed with the parties, and suggested that the burden of proof should be allocated under Article 2.1 of the TBT Agreement in a way that mirrors the allocation under Article III:4 and Article XX of the GATT 1994.^[143]

7.54.  Canada considered that the passages cited above "do not provide a clear indication of where the initial burden of proof lies".^[144] After reviewing the way in which the burden of proof is allocated under Article III:4 and Article XX of the GATT 1994 and recalling the close connection drawn by the Appellate Body between those Articles and Article 2.1 of the TBT Agreement, Canada submitted that "[t]here is no logical or conceptual reason why this balance should not also be reflected in the allocation of the burden of proof in Article 2.1. Further, there is nothing in the text or context of Article 2.1 that militates against this interpretive approach".^[145] It therefore concluded that in the context of:

[A] claim of less favourable treatment under Article 2.1 of the TBT Agreement, it is reasonable to expect that the complaining party should bear the burden of establishing a prima facie case that the technical regulation modifies the conditions of competition in the relevant market to the detriment of imported like products. Where the complaining party has met the burden of making its prima facie case, it would then be for the responding party to rebut that prima facie case by demonstrating that the detrimental impact is justified because it stems exclusively from a legitimate regulatory distinction.^[146]

7.55.  Similarly, in its response the European Union observed 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 Article III:4 and Article XX of the GATT" and thus concluded that "in some respects the burden of proof will fall on the defending Member, just as it does under the GATT".^[147]

7.56.  Norway, after recalling that "the legal standard in Article 2.1 embodies the same balance as that in the two GATT Articles"^[148] – that is, Article III:4 and Article XX – concluded that "the same burden of proof, and the same order of the shifting of the burden of proof, applies to Article 2.1 of the TBT Agreement" as under Article III:4 and Article XX of the GATT 1994.^[149]

7.57.  Finally, New Zealand also believed that while the "Complaining Party must adduce sufficient evidence to raise the presumption that the measure adversely impacts the conditions in which imported products compete with like domestic products in the regulating Member's market"^[150], nevertheless once this showing is made "the Responding Party bears the burden of demonstrating whether any detrimental impact stems exclusively from a legitimate regulatory distinction".^[151]

7.58.  We are mindful that there may be systemic reasons for favouring an approach to the burden of proof that would require a complainant to show prima facie that a measure modifies the conditions of competition in the relevant market to the detriment of its (i.e. the complainant's) like products, but would place the burden of showing that such detrimental impact stems exclusively from a legitimate regulatory distinction on the responding Member. For instance, there may be concern that requiring a complainant to prove, in the first instance, both that a measure has a detrimental impact on its like products and that such impact does not stem exclusively from a legitimate regulatory distinction could have the undesirable effect of discouraging claims under Article 2.1 of the TBT Agreement. This would be so because complainants may decide not to bring a claim under Article 2.1 of the TBT Agreement if they are of the view that they could obtain essentially the same outcome (i.e. a finding of less favourable treatment) under the GATT 1994 without having to prove as many facts.

7.59.  Notwithstanding these considerations, given that in the present proceedings both parties agree that it is Mexico that bears the burden of showing prima facie both that the amended tuna measure modifies the conditions of competition in the United States' market to the detriment of Mexican tuna and tuna products and that such detrimental treatment reflects discrimination because it does not stem exclusively from a legitimate regulatory distinction and is not even‑handed, we have decided to adopt this approach in the remainder of our report. The Panel is aware that it is not bound by the legal interpretations offered by the parties or the third-parties;^[152] however, in the context of the present proceedings, where Mexico itself has asserted that it bears the heavier burden of showing prima facie that both the first and second steps of the "less favourable treatment" test in Article 2.1 of the TBT Agreement are met, we think it prudent to follow this approach. Nevertheless, if at any point in our analysis we consider that allocating the burden of proof differently would or could lead to a different outcome or result, we will indicate this in our reasons, in order to ensure that the Appellate Body has sufficient findings of fact should this matter be appealed.

7.4.2  Standard of proof

7.60.  It is useful at this point to say a few words about the standard of proof, since at various points in its submissions the United States accuses Mexico of not furnishing evidence to support its arguments about the possible operation of the amended tuna measure.^[153] In particular, the United States suggests that Mexico's arguments about the possibility that non‑dolphin-safe tuna could fraudulently access the US dolphin-safe label under the amended tuna measure are based on "bare allegation".^[154] The Panel will deal with the evidence presented by both parties below in the context of assessing the merits of Mexico's claims and in light of the allocation of the burden of proof discussed above. For now, the Panel notes a few general points.

7.61.  The Appellate Body has explained that, as a general principle, "precisely how much and precisely what kind of evidence will be required to establish [a prima facie case] will necessarily vary from measure to measure, and provision to provision, and case to case".^[155] It has also made clear on numerous occasions that panels have a significant degree of discretion in weighing and analysing evidence, and this discretion includes the prerogative both to "decide which evidence it chooses to utilize in making its findings"^[156] and "how much weight to attach to the various items of evidence placed before it by the parties".^[157] Ultimately, it is the Panel that has authority to decide whether the evidence presented is sufficient to make out Mexico's claims (as well as any explanations or defences advanced by the United States).

7.62.  Additionally, the Appellate Body has clarified that under Article 2.1 of the TBT Agreement, a panel's task is to "carefully scrutinize the particular circumstances of the case, that is, the design, architecture, revealing structure, operation, and application of the technical regulation".^[158] This direction has implications for the type of evidence that a panel analysing a claim under Article 2.1 may require to make its findings. It suggests that, especially where a claim is made against a technical regulation as such, rather than as applied, it will be vital for the panel to closely examine the objective features and characteristics of the measure. It also suggests that evidence regarding the actual operation of the measure, while important^[159], may not be dispositive in cases where a measure's design, structure, and architecture are themselves claimed to be discriminatory.

7.63.  In this context, we recall the Appellate Body's guidance that in cases concerning measures challenged as such, it may not be necessary for the complainant to prove that the application of a measure in fact "result[s] in a breach … for each and every import transaction".^[160] Concomitantly, where a complainant is able to adduce clear and convincing evidence that the design, architecture, and revealing structure of a measure are themselves discriminatory, it may not be sufficient for a respondent simply to show that, in practice, the application of the measure has not in all instances resulted in actual discriminatory treatment being accorded imported products.

7.64.  We note that this approach to the standard of proof was recently followed by the Appellate Body in its report on EC – Seal Products. In that case, the Appellate Body accepted the complainants' argument that the so-called IC exception in the European Communities seal measure was inconsistent with the chapeau of Article XX of the GATT 1994 because "seal products derived from what should in fact be properly characterized as "commercial" hunts could potentially enter the EU market under the IC exception".^[161] The Appellate Body did not examine whether there had been actual instances of incorrect entry; rather, it focused its analysis on the design and structure of the measure. Ultimately, it found a violation on the basis of evidence concerning the possible WTO-inconstant operation of the measure, as well as evidence that there was no way to prevent or identify such operation.

7.65.  In writing the above, we do not mean to suggest that Mexico can establish a violation of Article 2.1 of the TBT Agreement negatively, i.e. Mexico does not succeed merely because it cannot be shown that the measure at issue has never resulted in less favourable treatment. To the contrary, in a case such as the present where the claimed discrimination is de facto rather than de jure^[162], the complainant must, in accordance with the burden of proof, show positively that the measure is designed or applied in a manner that detrimentally modifies the conditions of competition. To establish this fact, the complainant must provide evidence of the measure's design, architecture, and revealing structure, and link these aspects of the measure to the detrimental impact that it claims its imports are suffering. A complainant, especially in a case of de facto discrimination, cannot simply point to the measure at issue and then expect the panel to find a violation where the respondent fails to show that the measure at issue never could result in a violation of one or more WTO obligations.^[163] In cases of de facto discrimination, the complainant must provide evidence and argument sufficient to show why a measure that appears to be non‑discriminatory on its face nevertheless in fact provides less favourable treatment to imported products in a way that is repugnant to WTO law. This is not to say, however, that the complainant is expected to prove that a measure always has and always will, in each and every transaction, result in discrimination.

7.66.  Before concluding our discussion of the burden and standard of proof, we wish to emphasize that, as the Appellate Body has affirmed on numerous occasions, a panel "enjoy[s] a margin of discretion in [its] assessment of the facts",^[164]. A Panel is "not required to accord to factual evidence of the parties the same meaning and weight as do the parties";^[165] and, provided that it provides "reasoned and adequate explanations"^[166] of its treatment of the evidence, a panel does not violate Article 11 of the DSU merely because one of the parties disagrees with its treatment of the evidence or would have preferred the panel to come to a different conclusion. 

7.67.  Having set out our understanding of the rules on burden and standard of proof that must guide our analysis, we now turn to consider Mexico's claims under Article 2.1 of the TBT Agreement and Articles I:1 and III:4 of the GATT 1994.

7.5  Article 2.1 of the TBT Agreement

7.68.  Having discussed certain preliminary matters in the preceding paragraphs, the Panel now turns to consider the merits of Mexico's case against the amended tuna measure. As explained above, we begin by considering Mexico's claim under Article 2.1 of the TBT Agreement.

7.5.1  Legal test under Article 2.1 of the TBT Agreement

7.69.  Article 2.1 of the TBT Agreement provides that:

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.

7.70.  Article 2.1 sets out a three-step test. In order to fall foul of Article 2.1, a measure must:

(a) Be a "technical regulation" within the meaning of Annex 1.1 of the TBT Agreement;

(b) Concern or cover "like products"; and

(c) Accord to like products of the complaining Member treatment less favourable than that accorded to domestic like products or like products from any other Member.^[167]

7.71.  The present dispute does not raise questions under either (a) or (b) above. Both parties agree that, as the original panel found and the Appellate Body accepted, the tuna measure is a "technical regulation" for the purposes of the TBT Agreement.^[168] Moreover, both parties agree that, as the original panel also found^[169], Mexican and United States "tuna" and "tuna products" are like products.^[170] Accordingly, this Panel accepts that the amended tuna measure is a technical regulation within the meaning of Annex I of the TBT Agreement, and that United States and Mexican "tuna" and "tuna products" are like.

7.72.  The main issue that falls for decision under Article 2.1 of the TBT Agreement is thus whether the amended tuna measure accords to Mexican tuna and tuna products "treatment less favourable" than that which it accords to like tuna and tuna products from the United States and other WTO Members. We recall that, in accordance with our findings above about the scope of these Article 21.5 proceedings, our duty is not restricted to assessing the WTO-consistency of the 2013 Final Rule, but rather extends to considering whether the amended tuna measure as a whole, including but not limited to the 2013 Final Rule, is WTO-consistent, or whether it continues to accord less favourable treatment to Mexican tuna and tuna products.

7.73.  The Appellate Body has developed a two-tier test for determining whether a technical regulation accords less favourable treatment to imported products than to domestic products or like products from other WTO Members. First, the Panel must assess whether the measure at issue modifies the conditions of competition in the US market to the detriment of Mexican tuna and tuna products as compared to like US tuna and tuna products or tuna and tuna products originating in any other Member.^[171] Second, if the Panel finds that detrimental impact exists, it will proceed to examine whether the detrimental impact on imports stems exclusively from a legitimate regulatory distinction rather than reflects discrimination against the group of imported products. ^[172]

7.74.  In the following paragraphs, we briefly review the Appellate Body's guidance on the legal steps comprising these two tiers.

7.75.  With respect to the first tier, i.e. the question whether the amended tuna measure modifies the conditions of competition in the US market to the detriment of Mexican tuna and tuna products, we recall that "Article 2.1 of the TBT Agreement prohibits both de jure and de facto discrimination between domestic and like imported products".^[173] Accordingly, the amended tuna measure may modify the conditions of competition in the US market to the detriment of Mexican tuna and tuna products even if it does not, on its face, single out tuna for differential treatment on the basis of the flag under which it was caught and/or processed.^[174] Moreover, detrimental treatment may exist even in the absence of differential treatment, and, in fact, a "formal difference in treatment between imported and like domestic products is … neither necessary, nor sufficient, to show a violation of" Article 2.1.^[175] Where a complainant argues that a measure has a de facto detrimental impact on its exports, the reviewing panel should consider "the totality of the facts and circumstances before it, including any implications for competitive conditions discernible from the design and structure of the measure itself, as well as all features of the particular market at issue that are relevant to the measure's operation within that market". The Appellate Body has also made clear that "any adverse impact on competitive opportunities for imported products vis‑à-vis like domestic products that is caused by a particular measure may potentially be relevant to a panel's assessment of less favourable treatment under Article 2.1".^[176]

7.76.  One of the major issues that arose for consideration in the original proceedings concerned the extent to which any proven detrimental impact must be shown to "result[] from the [challenged] measure itself rather than from the actions of private parties".^[177] Reviewing the legal findings of the original panel on this issue, the Appellate Body clarified that, to succeed under Article 2.1 of the TBT Agreement, a complainant must show the existence of "a genuine relationship between the measure at issue and an adverse impact on competitive opportunities for imported products".^[178] Reaffirming its earlier findings in Korea – Various Measures on Beef^[179], the Appellate Body concluded that "[t]he relevant question is … whether the governmental intervention [i.e. the measure itself] affects the conditions under which like goods, domestic and imported, compete in the market within a Member's territory".^[180] In answering this question, the presence or existence of "some element of private choice" will not relieve a respondent of responsibility under the TBT Agreement^[181] where the challenged measure has restricted or otherwise conditioned the exercise of that choice in a way that cannot be considered "normal" in the relevant market.^[182]

7.77.  With respect to the second tier of the less favourable treatment test, i.e. the question whether any detrimental treatment reflects illegitimate discrimination, the Appellate Body has explained that panels 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 the technical regulation is even‑handed".^[183] In essence, this inquiry requires the Panel to analyse whether the detrimental treatment found to exist under the first tier "stems exclusively from a legitimate regulatory distinction rather than reflecting discrimination against the group of imported products".^[184]

7.78.  In terms of the burden of proof, and as explained above, we will assess first whether Mexico has shown prima facie both that the amended tuna measure modifies the conditions of competition in the US market to the detriment of Mexican tuna and tuna products, and second that such detrimental impact does not stem exclusively from a legitimate regulatory distinction. If Mexico succeeds in making this showing, the burden will shift to the United States to rebut Mexico by showing that, despite Mexico's prima facie case, the detrimental treatment in fact does stem exclusively from a legitimate regulatory distinction.

7.79.  With the above in mind, how should panels assess whether a detrimental impact stems exclusively from a legitimate regulatory distinction, rather than reflecting discrimination in a manner inconsistent with Article 2.1 of the TBT Agreement? The Appellate Body has provided some guidance on this issue in the recent "trilogy" of TBT cases^[185] and in EC – Seal Products. Most importantly, the Appellate Body has explained that an analysis of whether detrimental impact stems exclusively from a legitimate regulatory distinction (or whether a technical regulation that causes detrimental impact is even‑handed) must take account of whether the technical regulation at issue is "applied in manner that would constitute a means of arbitrary or unjustifiable discrimination between countries where the same conditions prevail or a disguised restriction on international trade".^[186]

7.80.  This language is, of course, similar to the language of the chapeau of Article XX of the GATT 1994.^[187] Should panels, then, draw on the jurisprudence elaborated under the chapeau in interpreting and applying Article 2.1 of the TBT Agreement? We now turn our attention to this question, which is highly contested by the parties in the present proceedings.

7.81.  According to Mexico, "[a]lmost identical language [to that used by the Appellate Body in describing the test under Article 2.1 of the TBT Agreement] is included in the chapeau of Article XX of the GATT 1994. Accordingly, the interpretation of "arbitrary discrimination" in the chapeau of Article XX sheds light on the interpretation of "arbitrary discrimination" within the meaning of Article 2.1 of the TBT Agreement".^[188] In particular, Mexico argues that the question "whether the discrimination can be reconciled with, or is rationally related to, the relevant policy objective" pursued by the technical regulation is central to a panel's analysis under Article 2.1 of the TBT Agreement. In Mexico's view, "[w]here the alleged rationale for the distinction created by the measure in question is inconsistent with, or actively undermines, its stated policy objective, it is reflective of arbitrary discrimination".^[189] Thus, says Mexico, "the degree to which the resulting regulatory distinction can be reconciled to the policy objective pursued by the measure will provide a clear indication of whether arbitrary discrimination and a lack of even‑handedness results".^[190]

7.82.  Mexico also argues that, read in light of the Appellate Body's interpretation of the chapeau of Article XX, the concept of "arbitrary or unjustifiable discrimination" under Article 2.1 of the TBT Agreement must be read as prohibiting, in the design or application of a technical regulation, "ambiguity that creates the potential for its [i.e. the technical regulation's] abuse and misapplication, regardless of whether or not the body responsible for applying the measure is acting in good faith".^[191] Moreover, according to Mexico, "a regulatory system that does not provide an effective means of verifying whether a measure is being applied in an accurate and diligent manner will also give rise to arbitrary discrimination. Where the design of the measure is such that it is impossible to audit or assess the degree to which it is being applied appropriately, the measure cannot be said to be even‑handed".^[192]

7.83.  The United States disagrees with Mexico's interpretation of "arbitrary discrimination".^[193] Specifically, it submits that Mexico's approach "artificially graft[s] the analysis used in the context of the chapeau of Article XX of the GATT 1994 onto Article 2.1 of the TBT Agreement", and concludes that this is "surely wrong" because "the two provisions are entirely different".^[194] The United States also submits that "the Appellate Body reversed the EC – Seal Products panel's GATT Article XX chapeau analysis for considering the two analyses to be the same".^[195]

7.84.  The parties elaborated on these positions in response to a question from the Panel. In its response, Mexico emphasized that "the Appellate Body did not find that the analysis under Article 2.1 was irrelevant to the analysis under the chapeau. Rather, the Appellate Body only indicated that an independent analysis must be done under the chapeau and, if the analysis under Article 2.1 is used, then an explanation must be provided as to why this analysis is relevant and applicable".^[196] According to Mexico, the Appellate Body has made clear that "there are important parallels between the analyses under Article 2.1 of the TBT Agreement and the chapeau"^[197], and, indeed, that, "'arbitrary discrimination' is a common concept" shared by the two provisions.^[198] Mexico concludes that it is "clearly appropriate to use the meaning of 'arbitrary discrimination' developed under the chapeau of Article XX as context for interpreting … Article 2.1 of the TBT Agreement".^[199]

7.85.  The United States' maintained its opposition to this interpretive approach in its response to the Panel's question. The United States explained that in EC – Seal Products the Appellate Body "refused to find that the analysis under the second step of Article 2.1 merely incorporates the analysis under the chapeau of Article XX, as Mexico would have the Panel believe". Although it acknowledged that "the 'balance' set out within the TBT Agreement is not, in principle, different from the balance set out in the GATT 1994"^[200], the United States reasserted that Mexico's approach is "surely wrong," and submitted that "Mexico is unable to cite even one paragraph of the three TBT disputes for the proposition that the most important factor in an even‑handedness analysis is whether the discrimination can be reconciled with, or is rationally related to, the relevant policy objective".^[201]

7.86.  We note that all third-parties that responded to the Panel's question on this issue agreed that the case-law on the chapeau of Article XX informs the interpretation of Article 2.1 of the TBT Agreement. New Zealand appeared to agree with Mexico's approach, and submitted that the Panel should consider whether "the rationale for the distinction [giving rise to the detrimental treatment] [is] consistent with the measure's overall objective".^[202] Similarly, Japan considered that "the assessment of even‑handedness under Article 2.1 of the TBT Agreement involves consideration of whether the regulatory distinctions in question drawn in the technical regulation have rationales which are legitimate and rationally connected with the stated policy objective pursued by the technical regulation". In Japan's opinion, "a technical regulation that is designed in such a way that its provisions contradict each other and even undermine the stated policy objective pursued by the technical regulation would be difficult to be justified under Article 2.1 of the TBT Agreement".^[203] The European Union also agreed 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".^[204] And Canada, too, indicated that "in examining the even‑handedness of the regulatory distinction, a panel should examine the rationale for the regulatory distinction advanced by the responding Member in light of the identified policy objective, to determine whether there is a rational connection between the regulatory distinction and the identified policy objective. A regulatory distinction cannot be even‑handed where it hinders or undermines the overall objective of the technical regulation".^[205]

7.87.  We begin our analysis by expressing our disagreement with the United States' claim that "the two provisions [i.e. Article 2.1 of the TBT Agreement and the chapeau of Article XX of the GATT 1994) are entirely different". The United States is, of course, correct that the text of Article 2.1 does not contain the words "arbitrary or unjustifiable discrimination". Nevertheless, as we noted above, the Appellate Body has consistently instructed panels to look for "arbitrary or unjustifiable discrimination" as one indication that a technical regulation provides less favourable treatment to imported products in contravention of Article 2.1 of the TBT Agreement.^[206] This language is drawn directly from the sixth recital of the TBT Agreement's preamble, which provides that technical regulations must "not [be] applied in a manner which would constitute a means of arbitrary or unjustifiable discrimination between countries where the same conditions prevail or a disguised restriction on international trade". By instructing panels to interpret TBT Article 2.1 in light of this recital, we believe the Appellate Body clearly intended that panels would apply the "less favourable treatment" requirement in Article 2.1 of the TBT Agreement in light of the jurisprudence developed in the context of the chapeau of Article XX. We agree with Mexico that there is no "basis to interpret the meaning of this term differently in different agreements".^[207]

7.88.  We also do not agree with the United States that the Appellate Body's recent ruling in EC – Seal Products prevents us from having recourse to Article XX chapeau jurisprudence in interpreting Article 2.1 of the TBT Agreement. In that case, the Appellate Body faulted the panel for "applying the same legal test to the chapeau of Article XX as it applied under Article 2.1 of the TBT Agreement".^[208] According to the Appellate Body, the panel "should have provided more explanation as to why and how its analysis under Article 2.1 of the TBT Agreement was relevant and applicable to the analysis under the chapeau of Article XX of the GATT 1994"^[209], instead of finding a violation of the chapeau merely because the measure at issue had previously been found to violate Article 2.1 of the TBT Agreement.^[210]

7.89.  We note that the Appellate Body found that the panel in EC – Seal Products had erred in importing its analysis under Article 2.1 of the TBT Agreement into the chapeau of Article XX; it did not say that the jurisprudence developed in the context of the chapeau could not be used to interpret Article 2.1 of the TBT Agreement. This finding is fully explicable on the basis that while the tests in the chapeau of Article XX and Article 2.1 of the TBT Agreement overlap, they are not identical. Whereas Article 2.1 asks whether detrimental treatment stems from a legitimate regulatory distinction, and while the existence of "arbitrary or unjustifiable discrimination" is one way in which inconsistency with this aspect of Article 2.1 of the TBT Agreement can be shown, the chapeau of Article XX is focused solely on whether a measure is applied in an arbitrarily or unjustifiably discriminatory manner (or is a disguised restriction on international trade).^[211] Additionally, analysis under Article 2.1 requires consideration of both the design and the application of the measure at issue^[212], whereas the chapeau focuses only on the application of the measure at issue.^[213] As we understand it, then, the error of the EC – Seal Products panel was in assuming that a violation of Article 2.1 of the TBT Agreement, which may involve analysis of factors that are not be germane to the analysis under Article XX of the GATT 1994, would automatically give rise to a violation of that latter provision. To our minds, this reasoning does not deny the possibility that jurisprudence concerning the chapeau of Article XX could be used to inform those aspects of the test under Article 2.1 of the TBT Agreement that call for an examination of whether an instance of detrimental treatment constitutes "arbitrary discrimination".

7.90.  Moreover, we cannot ignore the Appellate Body's confirmation that "important parallels" exist between the chapeau of Article XX and the "less favourable treatment" limb of Article 2.1 of the TBT Agreement. Indeed, the Appellate Body specifically recognized that "the concepts of 'arbitrary or unjustifiable discrimination between countries where the same conditions prevail' and of a 'disguised restriction on trade' are found both in the chapeau of Article XX of the GATT 1994 and in the sixth recital of the preamble of the TBT Agreement".^[214] To us, these statements clearly indicate that, while the tests under Article 2.1 of the TBT Agreement and Article XX of the GATT 1994 should not be conflated, there are nevertheless important similarities and overlaps between them, and Appellate Body jurisprudence developed in the context of one may be used to interpret similar concepts in the other.

7.91.  Accordingly, we are not convinced by the United States' argument that Mexico's approach to "arbitrary discrimination" in the context of Article 2.1 of the TBT Agreement is "surely wrong".^[215] To the contrary, we agree with Mexico that, in considering whether detrimental impact caused by a technical regulation reflects "arbitrary discrimination", we may consider, among other things, whether the detrimental treatment can be reconciled with, or is rationally related to, the policy pursued by the measure at issue. This analysis may help the Panel determine whether the detrimental impact complained of (that is, if such impact is found by the Panel to exist) stems exclusively from a legitimate regulatory distinction – although, as we have said, the "legitimate regulatory distinction" may involve examination of more than just the existence (or not) of "arbitrary discrimination".

7.92.  In addition, we note that, contrary to the United States' claim that there is no authority supporting this approach, the Appellate Body in US – Clove Cigarettes, the first of the "TBT trilogy" cases, did indeed base its finding that the United States' ban on clove cigarettes violated Article 2.1 on the fact that the exemption of menthol cigarettes from the ban was difficult to reconcile with the United States' purported goal of "prevent[ing] youth smoking" by banning flavoured cigarettes.^[216] In the course of its findings, the Appellate Body explicitly noted that "menthol cigarettes have the same product characteristic [i.e. flavouring] that, from the perspective of the stated objective of [the challenged measure, i.e. discouraging youth smoking], justified the prohibition of clove cigarettes".^[217] In other words, a central element of the Appellate Body's finding was the fact that the detrimental treatment at issue in that case could not be reconciled with or justified by reference to the policy objective of the technical regulation under review. In our view, the Appellate Body's approach in this case closely resembles the type of analysis conducted under the chapeau of Article XX of the GATT 1994, and confirms that there are important similarities between the analysis under Article XX and the analysis under Article 2.1 of the TBT Agreement.^[218]

7.93.  We turn now to the meaning of the term "even‑handed". In our understanding, even‑handedness is not a separate criterion whose existence must be proved in addition to a showing that the technical regulation at issue accords less favourable treatment to imported products. Rather, as we read the case-law, even‑handedness is properly understood as an analytical tool, a kind of rhetorical measure or test that deploys a fluid, broadly equitable concept as a proxy or gauge to help a panel determine whether identified detrimental treatment stems exclusively from a legitimate regulatory distinction. In our view, the proposition that even-handedness is not an additional test follows clearly from the Appellate Body's statement that a panel must consider the even-handedness of a measure "in order to determine"^[219] whether or not the detrimental impact caused by that measure stems exclusively from a legitimate regulatory distinction.

7.94.  In our view, the notion of even‑handedness is especially closely related to the question whether detrimental impact stems exclusively from a legitimate regulatory distinction. In particular, we think that asking whether a measure is even-handed can help a panel to determine whether the identified detrimental treatment is fully explainable as a consequence of a legitimate regulatory distinction – in which case it could be said to stem exclusively from that distinction – or whether the detrimental treatment, while perhaps connected to or broadly based on a legitimate regulatory distinction, is nevertheless not fully or precisely accounted for, in terms of both its nature and its scope, by the regulatory distinction that the responding Member seeks to pursue – in which case it could not be concluded that the detrimental treatment stems exclusively from the distinction pursued.

7.95.  In other words, in our view even-handedness directs a panel's attention to what might be called the "fit" of the measure at issue, including the detrimental treatment caused by that measure, with the legitimate regulatory distinction pursued. Thus, even if a measure were based on a legitimate regulatory distinction, the measure would nonetheless not stem exclusively from that legitimate regulatory distinction if the detrimental impact were disproportionate, or if the measure otherwise reflected, for example, protectionism, and thus was not clearly justifiable by reference only to the legitimate regulatory distinctions invoked.

7.96.  In our view, "even‑handedness" directs our attention to what can perhaps best be called the "fairness" of a technical regulation. The plain meaning of "even‑handed" is "impartial, fair". "Fair", in turn, means "just, unbiased, equitable".  Terms like "fair" and "just" are notoriously difficult to define a-contextually; accordingly, the specific criteria or indicia through which the fairness of a technical regulation should be assessed are not comprehensively enumerable in the abstract. Instead, a panel's analysis must "take into consideration the totality of the facts and circumstances of the case".^[220] In our view, "even-handedness" may overlap with the concept of "arbitrary discrimination". We think, however, that "even-handedness" is conceptually distinct from "arbitrary discrimination", and may be broader in terms of the features of a measure that it may take into account. Thus, while a showing of "arbitrary discrimination" is one way of demonstrating that a measure is not even-handed (as we explained above), the concept of "even‑handedness", and the range of facts and circumstances that could lead a panel to find that a measure is not "even‑handed" (and, therefore, to conclude that the detrimental impact in question, does not stem exclusively from a legitimate regulatory distinction) is wider than those that could give rise to a finding of "arbitrary discrimination".  

7.5.2  Application of Article 2.1 of the TBT Agreement

7.5.2.1  Mexico's claim

7.97.  Having considered certain preliminary issues, and having set out our understanding of the legal test under Article 2.1 of the TBT Agreement, we now proceed to examine the merits of Mexico's Article 2.1 claims. As we have noted, our task is to determine whether the amended tuna measure as a whole affords "less favourable treatment" to Mexican tuna and tuna products than to tuna and tuna products from the United States and other WTO Members.

7.98.  In its first written submission, Mexico explained that the analysis under TBT Article 2.1 "is on the regulatory distinction that accounts for the detrimental treatment on Mexican tuna products as compared to US tuna products and tuna products originating in other countries".^[221] According to Mexico, the following are the central regulatory distinctions whose design and application give rise to the detrimental treatment of which Mexico complains:^[222]

·                First, Mexico complains about "[t]he disqualification of setting on dolphins in accordance with 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". We refer to this aspect of the amended tuna measure as the "eligibility criteria".

·                Second, Mexico highlights "[t]he 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". We refer to this aspect of the amended tuna measure as the "different certification requirements".

·                Third and finally, Mexico draws the Panel's attention to "[t]he 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". We refer to this aspect of the amended tuna measure as the "different tracking and verification requirements".

7.99.  Mexico refers to these conditions and requirements collectively as "the difference in labelling conditions and requirements".^[223] According to Mexico, "[w]hen the facts and circumstances related to the design and application of these conditions and requirements are examined, it is clear that the detrimental impact on imports of Mexican tuna products does not stem exclusively from a legitimate regulatory distinction".^[224] Specifically, Mexico argues that "[a]s a consequence of the difference in labelling conditions and requirements, all like US tuna products and most tuna products of other countries have access to the dolphin-safe label, while, at the same time, the amended tuna measure denies access to this label for most Mexican tuna products".^[225]

7.100.  The United States has at various stages in these proceedings urged the Panel to ignore Mexico's claims concerning the different certification and tracking and verification requirements. According to the United States, the relevant detrimental impact does not stem from either of these two regulatory distinctions. Rather, "Mexico's first element [i.e. the eligibility criteria] is the detrimental impact", and since "Mexican tuna product containing tuna caught by setting on dolphins would still be ineligible for the 'dolphin safe' label" even if the different certification requirements did not exist, "Mexico simply cannot establish a causal connection between the detrimental impact" and the different certification and tracking and verification requirements".^[226]

7.101.  The United States repeats this contention in its second written submission. There, it argues that the certification and tracking and verification requirements "are not relevant to this analysis (under Article 2.1 of the TBT Agreement), in that neither aspect accounts for the detrimental impact … Simply put, the requirements regarding record-keeping/verification and observers do not cause the detrimental impact that was the basis for the DSB's recommendations and rulings".^[227]

7.102.  The Panel acknowledges that Mexico's argumentation on the detrimental treatment caused by the different certification and tracking and verification requirements appears to have developed over the course of its written submissions. In its first written submission, Mexico described the detrimental impact caused by the amended tuna measure as a whole as follows:

While all like US tuna products and most tuna products of other countries have access to the "dolphin-safe" label, the Amended Tuna Measure denies access to this label for most Mexican tuna products.^[228]

7.103.  It seems to us that this description identifies, at least primarily, the detrimental impact caused by the eligibility criteria, because, as the United States argued in its own first written submission, even if the different certification and tracking and verification requirements were eliminated, "Mexican tuna product containing tuna caught by setting on dolphins would still be ineligible for the 'dolphin safe' label, and tuna product containing tuna caught using other methods would still be potentially eligible for the label".^[229]

7.104.  In its second written submission, however, Mexico elaborated on and clarified its arguments on the detrimental impact caused by the different certification and tracking and verification requirements. Mexico explained that:

[T]he absence of sufficient fishing method qualification, record keeping, verification and observer requirements for tuna that is used to produce tuna products from the United States and other countries means that Mexican tuna products are losing competitive opportunities to tuna products that may be inaccurately labelled as dolphin-safe.^[230]

7.105.  This passage clearly identifies a distinct type of detrimental impact that, in Mexico's view, is caused by the different certification and tracking and verification requirements. Whereas the different eligibility requirements are responsible for the fact that most Mexican tuna products are ineligible to receive the label (in Mexico's words denying a competitive opportunity to Mexican tuna),^[231] the different certification and tracking and verification requirements, on Mexico's argument, provide or "confer[]"^[232] a "competitive advantage" to non‑Mexican tuna products, and so detrimentally modify the conditions of competition. In our view, Mexico's arguments on the different certification and tracking and verification requirements constitute a clear and cognizable claim of detrimental impact separate from the detrimental impact identified by Mexico as the result of the eligibility criteria.^[233] The Panel notes that although Mexico maintained in its first written submission that it is the "key elements of the design and structure of the measure" that "together" deny Mexican products competitive opportunities,^[234] in the Panel's view Mexico's argumentation throughout these proceedings made clear that different elements of the amended tuna measure negatively affect Mexican tuna in different ways.

7.106.  In its responses to the Panel's questions, the United States suggested that, by developing its argument on detrimental impact in its second written submission, "Mexico is now attempting to fundamentally alter all three of its claims, alleging that the tracking and verification and certification requirements of the amended measure modify the conditions of competition in the relevant market to the detriment of the group of Mexican tuna products via-à-vis the group of like US tuna product and like tuna product originating in other Members".^[235] The import of this statement is not entirely clear: the United States has not, for example, argued that Mexico's arguments concerning the different certification and tracking and verification requirements are barred by Article 6.2 of the DSU. At any rate, in our view, parties in WTO dispute settlement are fully entitled to develop and clarify their argumentation over the course of their written submissions. In our opinion, the very purpose of having successive rounds of written submissions, followed by an oral hearing, is to enable the parties to refine, clarify, and develop their arguments. This is an essential element of the due process "implicit in the DSU"^[236], according to which "each party [must] be afforded a meaningful opportunity to comment on the arguments and evidence adduced by the other party".^[237] We are of the view that Mexico's elaboration in its second written submission is a fully acceptable clarification of Mexico's claim and argument.

7.107.  Additionally, the Panel notes that at various stages in this litigation, Mexico has argued that it is the "differences in these labelling conditions and requirements together" that "account for the detrimental impact on imports".^[238] In other words, as Mexico explained in its response to a question from the Panel:

[I]t is only the combined operation of the labelling conditions and requirements for tuna products containing tuna caught by setting on dolphins in the ETP, together with the labelling conditions and requirements for tuna products containing tuna caught outside the ETP, that gives rise to the regulatory distinction that affects the conditions of competition to the detriment of tuna products imported from Mexico vis-à-vis like tuna products of U.S. origin and like tuna products imported from other countries.^[239]

7.108.  Despite this, both parties have structured their arguments throughout these proceedings on the basis of the three regulatory distinctions identified by Mexico. That is, while Mexico has argued that the relevant less favourable treatment emerges only or at least most clearly when all three distinctions are considered together, it has nevertheless presented its arguments on a distinction-by-distinction basis. The United States has followed suit, and presented its arguments on the three regulatory distinctions separately. We have decided to follow the approach of the parties in presenting our own analysis. Although we will indicate the connections between these distinctions where relevant, we conduct our analysis in three parts, considering first the eligibility criteria; second, the different certification requirements; and third, the different tracking and verification requirements.

7.5.2.2  The eligibility criteria

7.5.2.2.1  Arguments of the parties

7.109.  In its first written submission, Mexico describes the eligibility criteria in the following terms:

Under the Amended Tuna Measure, the labelling conditions and requirements differ depending on the fishing method used to catch tuna. Setting on dolphins is a fishing method that is "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. …

The situation is different for fishing methods used to catch tuna outside the ETP. With the exception of driftnet fishing on the high seas by the Italian fleet, 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 … these methods cause substantial dolphin mortalities and serious injuries.

…

Notwithstanding these substantial adverse effects on dolphins, the other fishing methods are not disqualified from being used to catch 'dolphin-safe' tuna. They are qualified to be used to catch dolphin-safe tuna, subject only to the requirement that there are no dolphin mortalities or serious injuries observed in the gear deployments in which the tuna is caught.^[240]

7.110.  As we understand it, Mexico's claim is that the amended tuna measure distinguishes between tuna caught by setting on dolphins and tuna caught by any other method. On the one hand, tuna caught by setting on dolphins is never eligible to receive the dolphin-safe label, even if no dolphins were actually killed or seriously injured in a particular net set. On the other hand, tuna caught by other fishing methods is, in principle, eligible to receive the dolphin-safe label, provided that no dolphins were killed or seriously injured in the particular gear deployment.

7.111.  In Mexico's opinion, this regulatory distinction modifies the conditions of competition in the United States' market to the detriment of Mexican tuna products. Mexico recalls the Appellate Body's finding in the original proceedings that "the lack of access to the 'dolphin-safe' label of tuna products containing tuna caught by setting on dolphins has a detrimental impact on the competitive Mexican opportunities of Mexican tuna products in the US market"^[241] because, although the label has "significant commercial value on the US market for tuna products"^[242], "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".^[243] In Mexico's view, the fact that tuna caught by setting on dolphins is ineligible to receive the label while tuna caught by other methods is, in principle, eligible is "clearly … not even‑handed"^[244] for a number of reasons. First, Mexico argues that the eligibility of tuna caught other than by setting on dolphins and the ineligibility of tuna caught by setting on dolphins "is not rationally connected to the objective of the measure"^[245] because those fishing methods eligible to fish dolphin-safe tuna in fact "cause substantial dolphin mortalities and serious injuries".^[246] To support this view, Mexico submitted evidence arguing that "tens to hundreds of thousands of [marine mammals] are killed each year through entanglement in fishing gear".^[247] Indeed, Mexico maintains that "these 'qualified' 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",^[248] although it also argues that to prove its case it need only show that "other fishing methods also cause mortalities and serious injuries to dolphins".^[249] The Panel notes that a number of the exhibits submitted in these proceedings were also submitted in the original proceedings.

7.112.  Second, Mexico maintains that the distinction is not even‑handed because it "assumes that setting on dolphins in an AIDCP-compliant manner has adverse effects on dolphins that justify disqualification, and this assumption is permanent and will not change, even if evidence establishes that dolphin stocks are not being adversely affected. … At the same time, the Amended Tuna Measure assumes that catching tuna using other fishing methods does not have adverse effects on dolphins. However, the evidence presented by Mexico … contradicts this assumption and proves that other fishing methods have substantial adverse effects on dolphins that are equal to or greater than those of setting on dolphins in an AIDCP-compliant manner."^[250]

7.113.  In light of these arguments, Mexico maintains that "[t]here is no justification for the different treatment", and urges the Panel to find that "[i]n the circumstances of this dispute, all tuna fishing methods should be either qualified or disqualified"^[251] from accessing the dolphin-safe label.

7.114.  The United States asks the Panel to reject Mexico's claims for a number of reasons, both procedural and substantive. On the procedural front, the United States argues that "the Appellate Body has already rejected Mexico's claim" that the eligibility criteria violate Article 2.1 of the TBT Agreement.^[252] According to the United States, "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".^[253]

7.115.   On the substantive front, while the United States accepts that, as the Appellate Body found in the original proceedings, the eligibility criteria have "a detrimental impact on Mexican tuna products"^[254], it rejects the claim that this impact does not stem exclusively from a legitimate regulatory distinction. In the opinion of the United States, "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"^[255]; accordingly, "[t]he 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 … or elsewhere".^[256] In the view of the United States, any detrimental impact felt by Mexican producers stems from the fishing practices chosen by Mexican tuna fishers, and not from the amended tuna measure itself.^[257]

7.116.  Additionally, the United States argues that "the science supports the distinctions of the amended measure, and directly contradicts Mexico's approach".^[258] In support of this position, the United States submitted evidence that, in its view, demonstrated that dolphin mortalities and serious injuries due to dolphin sets by large purse seine vessels in the ETP were many times greater than dolphin mortalities and serious injuries due to sets other than dolphin sets by large purse seine vessels.^[259] In the original proceedings and in this dispute, the United States also presented evidence that, in its view, showed that dolphin mortalities and serious injuries in purse seine and longline fisheries outside the ETP were significantly lower, on a per set basis, than dolphin mortalities and serious injuries due to sets on dolphins by large purse seine vessels in the ETP.^[260] Finally, the United States submitted evidence that, according to the United States, established that interactions with dolphins were much more frequent, and involved a much larger number of animals, in dolphin sets in the ETP large purse seine fishery than in other fisheries.^[261] In the view of the United States, Mexico failed to present evidence that dolphins were being chased to catch tuna in any fishery other than the ETP large purse seine fishery.^[262] The United States therefore concludes that "[t]here is nothing about setting on dolphins that is safe for dolphins, and the measure rightly denies access to the label for tuna products containing tuna caught by this method".^[263]

7.5.2.2.2  Analysis by the Panel

7.117.  We begin by recalling that we have addressed the United States' claims on jurisdiction above.^[264] In that discussion, we disagreed with the United States' argument that Mexico's "claim falls outside this Panel's terms of reference because [it] is premised entirely on the elements of the measure that the DSB did not find to be in breach of Article 2.1 and that are unchanged from the original measure".^[265] We noted that the Appellate Body's findings, and the DSB's rulings and recommendations, concerned the original tuna measure as a whole, so that the United States was not "entitled to assume" that any aspect of the measure was automatically and uncontestably consistent with the covered agreements.^[266]

7.118.  Nevertheless, in our opinion, the United States' argumentation on the eligibility criteria raises an additional (though certainly related) issue that we dealt with only briefly above: the place and role in this report of findings made by the panel and the Appellate Body in the original proceedings. The eligibility criteria were, after all, at the very heart of the original proceedings, and in the United States' view "the original panel has already fully addressed Mexico's argument [on this point] and found it lacking".^[267] According to the United States, the Panel should not give Mexico the opportunity to "appeal" the Appellate Body's report^[268], since doing so would upset the finality of DSB rulings and recommendations. In the opinion of the United States, adopted Appellate Body findings "must be treated by the parties to a particular dispute as a final resolution to that dispute".^[269]

7.119.  As we explained above in our discussion of the legal test under Article 2.1 of the TBT Agreement, it is appropriate for this Panel, as a compliance panel composed under Article 21.5 of the DSU to review compliance with a ruling made by the DSB in previous proceedings, to rely upon factual and legal conclusions made by the original panel and the Appellate Body, at least in the absence of compelling new evidence that would render those previous findings unsustainable. The Panel agrees with the United States that, as a matter of principle, parties in compliance proceedings should not be afforded the opportunity to re-litigate questions that have already been "definitively settled" by the Appellate Body.^[270] The question for us, however, is what precisely was "definitively settled" by the Appellate Body in the original proceedings in this matter.

7.120.  In the Panel's view, it is quite clear that the Appellate Body in the original proceedings settled the question whether the United States can disqualify tuna caught by setting on dolphins from accessing the dolphin-safe label. The Appellate Body found that setting on dolphins is "particularly harmful to dolphins"^[271], because:

[V]arious adverse impacts can arise from setting on dolphins, beyond observed mortalities, including cow-calf separation during the chasing and encirclement, threatening the subsistence of the calf and adding casualties to the number of observed moralities, as well as muscular damage, immune and reproductive system failures, and other adverse health consequences.

7.121.  Importantly, the Appellate Body also accepted that these harms arise as a result of the "chase itself". Consequentially, it affirmed the original panel's conclusion that "the US objectives … to minimize unobserved consequences of setting on dolphins" would not be attainable if tuna caught by setting-on dolphins were eligible for the dolphin-safe label^[272], because "'to the extent that it would not discourage these unobserved effects of setting on dolphins and their potential consequences on dolphin populations … [allowing tuna caught by setting on dolphins to be labelled dolphin-safe] … could potentially provide a lesser degree of protection than the existing US dolphin-safe provisions", even where setting on dolphins is conducted in an AIDCP-compliant manner.^[273] The Appellate Body thus concluded that the disqualification of tuna caught by setting on dolphins from accessing the dolphin-safe label "fully addresse[s]" the risks posed to dolphins by setting on dolphins, and made clear that requiring the United States to remove that disqualification would undermine the United States' achievement of its desired level of protection.^[274]

7.122.  As the Panel reads it, then, the Appellate Body clearly found that setting on dolphins causes observed and unobserved harm to dolphins. However, as we understand it, what makes setting on dolphins particularly harmful is the fact that it causes certain unobserved effects beyond mortality and injury "as a result of the chase itself".^[275] These harms would continue to exist "even if measures are taken in order to avoid the taking and killing of dolphins on the nets".^[276] It is precisely because these unobserved harms cannot be mitigated by measures to avoid killing and injuring dolphins that the original panel and the Appellate Body found that the United States is entitled to treat setting on dolphins differently from other fishing methods.

7.123.   Therefore, we reaffirm the Appellate Body's finding that the United States is entitled, in pursuit of its desired level of protection, to disqualify tuna caught by that method from ever being labelled as dolphin-safe.   We recall that the original US measure was considered WTO-inconsistent (and in particular inconsistent with Article 2.1 of the TBT), not because it disqualified tuna caught by setting on dolphins from accessing the dolphin-safe label, but because the original tuna measure was not even-handed with respect to other methods of fishing which may also cause harm to dolphins – a fact that was not reflected in the original dolphin labelling regime.

7.124.  In our view, a careful reading of the Appellate Body report also shows that the Appellate Body considered and answered the question whether the failure of the tuna labelling regime to disqualify other methods of tuna fishing necessarily deprives the measure of even‑handedness. Importantly, the Appellate Body found that "imposing a requirement that an independent observer certify that no dolphins were killed or seriously injured in the course of fishing operations in which the tuna was caught would [not] be the only way for the United States to calibrate its 'dolphin-safe' labelling provisions to the risks that … [are] posed by fishing techniques other than setting on dolphins".^[277] As we read it, this statement has a number of important implications. First, it recognizes that, although "the risks to dolphins from other fishing techniques are [not] insignificant"^[278], nevertheless the United States may distinguish between setting on dolphins, which, as we noted, it found was "particularly harmful", and other methods of tuna fishing.

7.125.  Secondly, and crucially for the question before us, the statement indicates that, in the view of the Appellate Body, the United States may bring its dolphin-safe labelling regime into conformity with Article 2.1 of the TBT Agreement without disqualifying methods of tuna fishing other than setting on dolphins. This is so because the question of observer certification only arises in respect of tuna fishing methods that are, in principle, qualified to catch dolphin-safe tuna. Certification requirements are simply not relevant to fishing methods that are disqualified from catching dolphin-safe tuna, because tuna caught by those methods are always and under all circumstances ineligible to receive the label. Certification, which is the documentary precondition to accessing the label, is thus only relevant in respect of tuna that is in principle eligible to be labelled dolphin-safe. In stating that the United States could "calibrate" its measure without necessarily requiring  observer coverage for tuna caught other than by setting on dolphins, the Appellate Body implicitly recognized that tuna fishing methods other than setting on dolphins do not need to be disqualified in order for the United States to bring its measure info conformity with the TBT Agreement. Put simply, we do not believe that the Appellate Body would even have touched upon the issue of certification, which is only relevant to tuna fishing methods that are, at least in principle, eligible to catch dolphin-safe tuna, if it had considered that the United States must necessarily disqualify methods of fishing other than setting on dolphins in order to make its measure even‑handed.

7.126.  Accordingly, in the Panel's opinion, the original proceedings have settled the question whether the disqualification of tuna caught by setting on dolphins, together with the qualification of tuna caught by other fishing methods, is inconsistent with Article 2.1 of the TBT Agreement. The Appellate Body found that it is not. In light of this finding, we do not think it is appropriate for us to re-open this inquiry. Rather, we respect and reaffirm the finding of the Appellate Body that, to the extent that they modify the conditions of competition in the US market to the detriment of Mexican tuna and tuna products, the eligibility criteria are even‑handed, and accordingly are not inconsistent with Article 2.1 of the TBT Agreement.

7.127.  Of course, we note that the Appellate Body ultimately found that the original tuna measure was inconsistent with Article 2.1 of the TBT Agreement. This finding was based, however, not on the fact that the United States disqualified tuna caught by setting on dolphins from accessing the dolphin-safe label, but rather on the fact that the regulatory scheme imposed by the United States on tuna fishing methods other than setting on dolphins, which are eligible to catch dolphin-safe tuna, did not sufficiently address the risks posed to dolphins by those methods.^[279] The measure was therefore not "even‑handed", in violation of Article 2.1.

7.128.  Accordingly, the question for this Panel is not whether the United States can, consistently with Article 2.1 of the TBT Agreement, disqualify all tuna caught by setting on dolphins from accessing the dolphin-safe label while qualifying all other methods. The question for us is rather whether the amended tuna measure, including through or by way of the modifications made by the 2013 Final Rule, sufficiently addresses the risks posed to dolphins from methods of tuna fishing other than setting on dolphins, that is, fishing methods that are qualified to catch dolphin-safe tuna. It is, therefore, only the regulatory regime that currently applies to those other fishing methods, which are qualified to catch dolphin-safe tuna, that this Panel should examine.

7.129.  In the course of arguing about this issue, both parties have made reference to a range of exhibits. Some were presented in the original proceedings, and some were new. In our view, the new evidence presented by both parties on this question ultimately supports our decision to reaffirm the conclusions in the original dispute that the United States is entitled to treat setting on dolphins differently from other tuna fishing methods. The evidence presented by Mexico, especially in its first written submission, certainly suggests that very significant numbers of dolphins are killed in tuna fishing operations outside of the ETP large purse seine fishery.^[280] Like the original panel and the Appellate Body^[281] (and, we note, the United States itself)^[282], we accept that tuna fisheries other than the ETP large purse seine fishery may, and in fact have, caused significant harms to dolphins.

7.130.  In our view, none of the new evidence submitted by Mexico is sufficient to undermine the Appellate Body's finding that no fishing method other than setting on dolphins has effects on dolphins as consistently harmful as those caused by setting on dolphins.^[283] With respect to gillnet fishing, Mexico has submitted substantial evidence showing that gillnets kill and seriously injure dolphins. None of this evidence, however, suggests that gillnets have the same kind of unobservable effects as setting on dolphins. The closest that the evidence comes to making such an allegation is the finding by Gomercic et al^[284] that "[e]ven when dolphins do not immediately drown in a gillnet, interactions with the net causes dolphins to die later".^[285] Specifically, the report suggests that gillnets may cause eventual strangulation even of dolphins that manage to break free from the net. Accompanying this statement is a photograph of a dolphin with a "gillnet part…protruding from [its] mouth".^[286] While it may be that dolphins injured in gillnets die at some later time, injuries such as those leading to gillnet parts "protruding from the mouth" of dolphins would seem clearly to be the kind of "serious injury" that is observable and that must, under the amended tuna measure, be certified. Accordingly, while the evidence presented by Mexico suggests that gillnets caused delayed death or serious injury, it does not suggest that such nets cause the same kind of unobservable harms as are caused by setting on dolphins.

7.131.  With respect to longline fishing, Mexico has presented convincing evidence that "longline fishing operations kill and maim dolphins".^[287] Mexico's evidence also suggests that, at least in some fisheries, longlining is having a negative effect on the sustainability of dolphin populations.^[288] Here again, however, none of Mexico's evidence suggests that longline fishing has unobservable effects similar to those caused by setting in dolphins. Mexico claims that "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 eventual drowning when they cannot free themselves from the lines".^[289] In its second written submission, Mexico submits that "dolphins suffer observed and unobserved adverse effects – including serious injury or death – as a result of commercial tuna fishing operations throughout the fisheries of the world (i.e., both within and outside the ETP) by every country with a commercial tuna fishing fleet".^[290] In support of this claim, Mexico cites to section II.A.2 of its second written submission. This section concerns "Mexico's evidence of risks to dolphins in non-ETP fisheries". While the evidence summarized in this section clearly establishes that tuna fishing methods other than setting on dolphins pose serious threats to dolphins, we have been unable to find any indication in this evidence that fishing methods other than setting on dolphins cause the kinds of unobservable harms that are caused by setting on dolphins.

7.132.  In order to help the Panel understand whether fishing methods other than setting on dolphins cause unobservable harms similar to those caused by setting on dolphins – that is, harms of which no evidence is present at the time of the catch – the Panel asked the parties to explain whether "fishing methods other than setting on dolphins cause unobserved harms".^[291] In its response, Mexico summarized a substantial number of reports and studies testifying to the deleterious effects that tuna fishing methods other than setting on dolphins may have on dolphins. This evidence presents a compelling case that various tuna fishing methods around the world are negatively impacting the health and well-being of dolphin populations.^[292] None of it, however, suggests that fishing methods other than setting on dolphins inflict the same kinds of unobservable harms that are caused by net sets. To the contrary, Mexico's evidence concerns the extent of mortality and serious injury caused by tuna fishing methods including FAD fishing,^[293] longline fishing,^[294] gillnet fishing,^[295] trawl fishing,^[296] and driftnet fishing.^[297] These, however, are precisely the kind of interactions that can and, under the amended tuna measure, must be certified, and whose occurrence renders ineligible for the dolphin-safe label any tuna caught in the set in which the harmful interaction (i.e. the death or serious injury) occurred. They are not the kind of unobservable harm that we have found occurs as a result of setting on dolphins, and which cannot be certified because it leaves no observable evidence.

7.133.  We note Mexico's argument that the United States has "expressly agreed that fishing methods other than setting on dolphins cause unobserved harms".^[298] In support of this claim, Mexico cites footnote 20 of the United States' second written submission, which reads:^[299]

[T]he United States does not suggest that fishing methods other than setting on dolphins do not cause any unobserved harms to dolphins. As we have said, many fishing techniques have the potential to harm marine mammals, including dolphins, and direct harms will have indirect (and unobserved) effects. If a mother dolphin is accidentally drowned in a FAD purse seine set, for example, that observed harm may result in unobserved harm to her calf, namely increased vulnerability to predators and starvation. But Mexico puts forward no evidence that other fishing methods produce anywhere close to the level of unobserved harm that setting on dolphins causes as a result of the chase in itself.

7.134.  In the Panel's opinion, footnote 20 is not, as Mexico argues, a concession that fishing methods other than setting on dolphins cause the kind of unobservable harms that dolphins suffer as a "result of the chase in itself". Footnote 20 recognizes that indirect and unobservable harms may follow consequentially from observable harms caused by tuna fishing methods other than setting on dolphins. Where, for example, a mother dolphin is killed or seriously injured in a gear set, her calf may also suffer as a result of her (the mother's) inability to provide care, including food and protection. The key point, however, is that these harms flow from mortalities or injuries that are themselves observable, and whose occurrence renders non-dolphin-safe all tuna caught in the set or gear deployment in which the injury or mortality was sustained. These harms may be serious. However, because they flow directly from observable harms, such as serious injury, all of which could be detected and reported, unlike the kinds of unobservable harms caused by setting on dolphins, these types of indirect harms are thus qualitatively different from the kind of unobservable harms caused by setting on dolphins. As explained above, these latter harms (i.e. caused by setting on dolphins) are unobservable in the sense that no evidence of their occurrence is produced during the set. They may be inflicted even in cases where no dolphin is caught in the net, or where any caught dolphin is released without apparent injury. Accordingly, they are harms whose occurrence cannot be recorded. Obviously, this would undermine the United States' objectives, which, as Mexico acknowledges, are "(i) ensuring that consumers are not misled or deceived about whether tuna products contain tuna caught in a manner that adversely affects dolphins; and (ii) contributing to the protection of dolphins by ensuring the US market is not used to encourage fishing fleets in a manner that adversely affects dolphins".^[300]

7.135.  In light of the above, our view is that Mexico has not provided evidence sufficient to demonstrate that setting on dolphins does not cause observed and unobserved harms to dolphins, or that other tuna fishing methods consistently cause similar harms. Rather, the Panel agrees with the United States that "even if there are tuna fisheries using…gear types that produce the same number of dolphin mortalities and serious injuries allowed or caused in the ETP…it is simply not the case that such fisheries are producing the same level of unobserved harms, such as cow-calf separation, muscular damage, immune and reproductive system failures, which arise as a result of the chase in itself".^[301] As we understand it, this position was also the basis of the original panel and Appellate Body's holding on this issue. Therefore, we find that the new evidence presented in these proceedings merely supports the conclusion reached by the panel and the Appellate Body in the original proceedings.

7.5.2.3  Mexico's remaining claims of less favourable treatment: the different certification and tracking and verification requirements

7.136.  In the original proceedings, the panel found, and the Appellate Body accepted, that disqualifying tuna caught by setting on dolphins from accessing the dolphin-safe label "fully addresses the adverse effects on dolphins resulting from setting on dolphins in the ETP".^[302] The Appellate Body also found, however, that "'the use of certain fishing methods other than setting on dolphins 'outside the ETP may produce and has produced significant levels of dolphin bycatch', and that 'the US dolphin-safe provisions do not address observed mortality', and any resulting adverse effects on dolphin populations, for tuna not caught by setting on dolphins".^[303] Because the original measure fully addressed the risks posed to dolphins by the ETP large purse seine fishery, but did not sufficiently address the risks to dolphins arising in other fisheries, the Appellate Body found that the measure was inconsistent with Article 2.1 of the TBT Agreement.

7.137.  As we understand it, then, the Appellate Body required the United States to modify its dolphin-safe labelling regime so as to ensure that it sufficiently addresses similar risks posed to dolphins by all fishing methods in all oceans. In the present proceedings, Mexico argues that the United States has not done so. In support of this position, as we set out above, it points to three regulatory distinctions that, in its view, continue not to adequately address the risks posed to dolphins by methods of fishing other than setting on dolphins in the ETP: the eligibility criteria, the different certification requirements, and the different tracking and verification requirements. We explained above that the eligibility criteria were found by the Appellate Body in the original proceedings not to violate Article 2.1 of the TBT Agreement. Our analysis now turns to the remaining two distinctions. Our task in respect of these is to determine whether the amended tuna measure sufficiently addresses the various risks arising to dolphins as a result of different fishing methods in different oceans, or whether it continues "not [to] address observed mortality … for tuna" caught other than by setting on dolphins in the ETP.

7.138.  We note that this determination arises only insofar as the United States has chosen to address risks arising to dolphins as a result of tuna fishing. In other words, there is no general obligation under WTO law for the United States to protect dolphins. The United States' obligation under the WTO Agreement is, speaking generally, not to discriminate against imported products. But insofar as the United States has chosen – and succeeded – to fully address the risks posed to dolphins by setting on dolphins in the ETP, the Appellate Body found that it must also address risks to dolphins arising from other fisheries if it is to be non‑discriminatory.^[304]

7.139.  In the original proceedings, the Appellate Body accepted that "the use of certain tuna fishing techniques other than setting on dolphins may … cause harm to dolphins".^[305] It also found that even though "certain environmental conditions in the ETP (such as the intensity of tuna-dolphin association) are unique, the evidence … suggests that the risks faced by dolphin populations in the ETP are not".^[306] The Appellate Body was "not persuaded that at least some of the dolphin populations affected by fishing techniques other than setting on dolphins are not facing risks at least equivalent to those currently faced by dolphin populations in the ETP".^[307]

7.140.  Importantly, the Appellate Body found that the certification required by the original tuna measure for methods of fishing other than setting on dolphins – that "no purse seine net was intentionally deployed on or used to encircle dolphins during the fishing trip" – did "not address risks from other fishing methods, such as FADs". The Appellate Body explained that "risks to dolphins resulting from fishing methods other than setting on dolphins could 'only be monitored by imposing a different substantive requirement, i.e. that no dolphins were killed or seriously injured in the sets in which tuna was caught'".^[308]

7.141.  Of course, imposing a new substantive requirement is precisely what the United States has done by way of the 2013 Final Rule. As the Panel noted in the descriptive part of its report, the 2013 Final Rule requires that, from the date of its entry into force, all tuna, wherever and however caught, can only be labelled as dolphin-safe if it was not caught in a set or other gear deployment in which one or more dolphins was killed or seriously injured. This means that the substantive certification required for all tuna, regardless of where or how it was caught, is now the same. In the Panel's view, this new uniformity in the required substantive certification addresses the specific concern identified by the Appellate Body at paragraph 292 of its report, and moves the amended measure towards compliance with WTO law.

7.142.  While Mexico has not challenged the new substantive certification requirements, it argues that the continued differences in who must make the substantive certifications in what circumstances, and the different tracking and verification requirements applied inside the ETP large purse seine fishery and outside it, mean that the amended tuna measure does not address similar risks posed to dolphins in different fisheries in an even‑handed manner, and therefore continues to violate Article 2.1 of the TBT Agreement.

7.143.  Before proceeding, the Panel recalls that the two distinctions at issue in this section of our Report are relevant only to tuna eligible and intended to receive the dolphin-safe label. The amended tuna measure does not prohibit non‑dolphin-safe tuna from being sold in the United States, but only controls access to the US dolphin-safe label.^[309] Accordingly, tuna that is either ineligible to access this label (i.e. tuna caught by setting on dolphins) or not intended to be sold under the dolphin-safe label is not affected by these regulatory distinctions.

7.144.  Regarding our order of analysis, the Panel notes that in its submissions Mexico deals first with the different tracking and verification requirements and second with the different certification requirements. In our report, however, we deal with the different certification requirements first and the different tracking and verification requirements second, to reflect what we understand to be the chronological order in which the requirements imposed by the relevant regulatory distinctions arise.^[310] This is simply a matter of presentation, and we do not believe that it has any significance for the content of our analysis.

7.5.2.4  The different certification requirements

7.145.  Mexico describes the different certification requirements as follows:

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.^[311]

7.146.  Before proceeding to our substantive analysis, we note that Mexico's description of the regulatory distinction in its first written submission is not entirely complete, insofar as it may seem to suggest that tuna fishing vessels outside the ETP and vessels other than large purse seine vessels inside the ETP are never subject to mandatory observer requirements. Such suggestion would be incorrect. As we explained in the descriptive part of the report, such vessels may indeed be subject to mandatory observer requirements if certain conditions are met.^[312]

7.147.  Additionally, Mexico's description of the distinction in its first written submission refers to observer requirements for "tuna caught in the ETP by setting on dolphins". As we understand it, however, the amended tuna measure requires an observer certification for all tuna caught by large purse seine vessels in the ETP. What is decisive for the observer certification requirement is thus not the method actually used to catch tuna (e.g. setting on dolphins) but the type of vessel and the location of its fishing operation. Large purse seine vessels in the ETP are, under the amended tuna measure, required to present proof of an AIDCP-compliant observer certification (and therefore to carry observers) whether or not they intend to or actually do set on dolphins.

7.148.  Accordingly, the relevant regulatory distinction could, in our view, be more accurately articulated as being: The mandatory independent observer certification requirements for all tuna caught in the ETP large purse seine fishery and the absence of such requirements (unless certain determinations have been made with respect to the fishery in which the tuna was caught) for all tuna caught in all other fisheries.

7.149.  Indeed, Mexico itself revised its description of this regulatory distinction over the course of the proceedings. In its opening statement at the Panel's meeting with the parties, Mexico described the distinction in the following terms:

In the case of Mexican tuna, the initial designation of dolphin-safe status is subject to mandatory independent observer requirements at the point when the tuna is harvested from the ocean, which prevents non‑dolphin-safe tuna from being mislabelled as dolphin-safe, 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 mislabelled as dolphin-safe when, in fact, it is not.^[313]

7.150.  In our view, this formulation more accurately captures the regulatory distinction at issue (although we note that all tuna caught in the ETP large purse seine fishery, including tuna caught by vessels belonging to countries other than Mexico, is subject to the observer requirement, so that the distinction is de facto rather than de jure). This formulation is consistent with our understanding as explained in paragraph 7.148 above. Therefore, our analysis proceeds on the basis of this description of the relevant regulatory distinction.

7.151.  In the following paragraphs, we consider, first, whether the different certification requirements modify the conditions of competition in the United States' tuna market to the detriment of Mexican tuna and tuna products. If Mexico is able to convince us that such detrimental impact exists, we will continue to examine whether the detrimental impact stems exclusively from a legitimate regulatory distinction.

7.5.2.4.1  Whether the different certification requirements modify the conditions of competition in the United States' market to the detriment of like Mexican tuna and tuna products

7.5.2.4.1.1  Arguments of the parties

7.152.  As the Panel noted in the context of its discussion above of the eligibility criteria, the core of Mexico's claim on detrimental treatment is that, under the amended tuna measure, the majority of Mexican tuna and tuna products – being caught or made from tuna caught by setting on dolphins – is ineligible to receive the United States dolphin-safe label, while the majority of tuna and tuna products caught or manufactured by the United States and other WTO Members – being caught or made from tuna caught other than by setting on dolphins – are eligible.  In light of this central claim, Mexico's argument about the detrimental impact caused by the different certification requirements is not that these requirements in themselves block or hinder Mexican access to the dolphin-safe label. Rather, Mexico's complaint is that:

[T]he absence of sufficient … observer requirements for tuna that it used to produce tuna products from the United States and other countries means that Mexican tuna products are losing competitive opportunities to tuna products that may be inaccurately labelled as dolphin-safe. This difference is what is creating the detrimental impact.^[314]

7.153.  According to Mexico, the detrimental impact caused by the different certification requirements does not stem from the "denial of a competitive opportunity" – that is, beyond or additional to the denial inherent in the disqualification of tuna caught by setting on dolphins^[315] – but rather from the granting of "a competitive advantage" to tuna and tuna products from the United States and other WTO Members.^[316]

7.154.  As we understand it, then, Mexico's claim is that by requiring observer certification for all tuna caught by large purse seine vessels in the ETP while not requiring the same for tuna caught other than by large purse seine vessels in the ETP, the amended tuna measure imposes a lighter burden, in terms of accessing the dolphin-safe label, on tuna caught in fisheries other than by setting on dolphins in the ETP.^[317] By making it easier for tuna caught other than by setting on dolphins in the ETP to access the label, the different certification requirements provide such tuna with a competitive advantage. This modifies the conditions of competition to the detriment of Mexican tuna and tuna products. Mexico also alleges that the different certification requirements create an opportunity for tuna caught in a set or other gear deployment in which a dolphin was killed or seriously injured to be incorrectly labelled as dolphin-safe. As a result, tuna that is not in fact dolphin-safe could enjoy the commercial advantage of bearing the dolphin-safe label. In contrast, "[i]n the case of Mexican tuna, the initial designation of dolphin-safe status is subject to mandatory independent observer requirements at the point when the tuna is harvested from the ocean, which prevents non‑dolphin-safe tuna from being mislabeled as dolphin-safe".^[318]

7.155.  The United States rejects Mexico's arguments. As we noted above, the United States' primary submission is that "the detrimental impact does not stem from either" the different certification requirements or the different tracking and verification requirements. Rather, "Mexico's first element [i.e. the eligibility criteria] is the detrimental impact", and since "Mexican tuna product containing tuna caught by setting on dolphins would still be ineligible for the 'dolphin safe' label" even if the different certification and tracking and verification requirements did not exist, "Mexico simply cannot establish a causal connection between the detrimental impact" and the different certification and tracking and verification requirements".

7.156.  In support of this claim, the United States argues that "Mexico has put forward zero evidence to prove" that either the different certification or the different tracking and verification requirements modify the conditions of competition in the United States tuna market to the detriment of Mexican tuna and tuna products. According to the United States:

[W]hat Mexico appears to be asserting is that its market access would increase if either one of two things happen: 1) the United States eliminates the need for the Form 370 that accompanies Mexican tuna product to list the AIDCP mandated tracking number and a Mexican government certification that an observer was on board the vessel; or 2) the United States requires all tuna product containing tuna to adhere to AIDCP-equivalent record-keeping/verification and observer coverage requirements.

But Mexico puts forward no evidence that more Mexican non‑dolphin safe tuna product would be sold in the US market under either scenario. Consumer preferences have not changed in the United States. Consumer demand for non‑dolphin safe tuna product remains low. No causal connection exists between these requirements and denial of "access" to the label that the Appellate Body determined constituted the detrimental impact.^[319]

7.157.  Additionally, in its opening statement at the Panel's meeting with the parties, the United States submitted that "Mexico [has not] 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".^[320]

7.158.  As such, the United States asks the Panel to reject Mexico's arguments.

7.5.2.4.1.2  Analysis by the Panel

7.159.  As the Panel explained in its discussion of the legal test under Article 2.1^[321], less favourable treatment within the meaning of Article 2.1 of the TBT Agreement arises where (a) the measure at issue modifies the conditions of competition in the relevant market to the detriment of imported products; and (b) at least where that detrimental treatment is de facto, the detrimental treatment identified in (a) does not stem exclusively from a legitimate regulatory distinction. A panel must necessarily make a finding on the existence of detrimental treatment before proceeding to consider whether such detrimental treatment stems exclusively from a legitimate regulatory distinction. If a complainant is unable to make a prima facie case for the existence of such treatment, a panel cannot proceed to the second step of the less favourable treatment analysis, since, as the Appellate Body has said, only those aspects of a technical regulation giving rise to detrimental treatment must be examined under the legitimate regulatory distinction test.^[322] Accordingly, if Mexico is unable to show prima facie that the different certification requirements afford detrimental treatment to its tuna products in the United States' market, we do not need to proceed to the second part of the analysis under Article 2.1 of the TBT Agreement.

7.160.  The Panel has already found above that Mexico has put forward a distinct claim of less favourable treatment in respect of the different certification and tracking and verification requirements, and that it is appropriate for us to consider that claim, even though it developed over the course of Mexico's first and second written submissions. Accordingly, we now turn to consider the merits of Mexico's case.

7.161.  The first question we must address is whether Mexico has succeeded in proving, prima facie, that the different certification requirements modify the conditions of competition to the detriment of like tuna and tuna products from Mexico. In particular, we must determine whether, as Mexico has argued, the absence of an observer coverage requirement for fishing vessels other than large purse seine vessels in the ETP does grant a competitive advantage by imposing a lighter burden, in terms of accessing the dolphin-safe label, on tuna and tuna products made from tuna caught other than by large purse seine vessels in the ETP, including by increasing the likelihood that such tuna may be labelled as dolphin-safe even if caught in a set or other gear deployment in which dolphins were killed or seriously injured.

7.162.  In the Panel's view, it is clear that by not requiring observer coverage outside of the ETP large purse seine fishery, the amended tuna measure imposes a lighter burden on tuna and tuna products made from tuna caught other than by large purse seine vessels in the ETP. The United States has recognized that observer coverage involves the expenditure of significant resources^[323], and both parties in their oral responses at the Panel meeting and in their written responses to the Panel's questions made clear that the costs of implementing observer coverage can be significant.^[324] Indeed, the United States explicitly recognized that the resource expenditure required to establish and maintain observer programs "impose[s] [an] enormous barrier to entry" into the US tuna market, and may cost hundreds of millions of dollars.^[325] In our view, these facts clearly point to the conclusion that the different certification requirements impose a lesser burden on tuna and tuna products made from tuna caught outside the ETP large purse seine fishery, and thus modify the conditions of competition to the detriment of Mexican tuna and tuna products.

7.163.  With respect to Mexico's allegation that the different certification requirements detrimentally modify the conditions of competition because they make it more likely that tuna caught outside the ETP large purse seine fishery will be inaccurately labelled, we agree with the United States that Mexico has not provided specific "evidence that non‑dolphin safe tuna product produced outside the ETP is being illegally marketed in the United States as dolphin safe".^[326] We are not convinced, however, that Mexico is, as a matter of law, required to produce such evidence to sustain its claim. As we explained in our discussion of the standard of proof^[327], it is well established that, to make out a claim of detrimental impact, a complainant is not expected to show that the measure at issue will "give rise to less favourable treatment for the like imported products in each and every case".^[328] In fact, the Appellate Body has repeatedly held, in the context of the less favourable treatment analysis under Article III:4 of the GATT 1994, that "the examination [of whether a measure modifies the conditions of competition to the detriment of imported products] need not be based on the actual effects of the contested measure in the marketplace".^[329]

7.164.  This observation applies with special force in the context of the detrimental treatment analysis under Article 2.1, concerning which the Appellate Body has instructed panels to pay close attention to the "design, architecture, revealing structure, operation, and application" of the technical regulation at issue.^[330] According to this instruction, panels are both entitled and, indeed, required to carefully consider what might be called the "objective" features or characteristics of the measure – that is, not only how the measure in fact operates, but how it is designed, how its various parts fit together, and what consequences might flow from its overall structure and architecture. Accordingly, although we would not be barred from considering evidence of actual instances of incorrect labelling had Mexico submitted it, we do not believe that Mexico's failure to submit such evidence is fatal to its claim that the different certification requirements modify the conditions of competition in the United States' market to the detriment of Mexican tuna and tuna products.

7.165.  This, of course, does not mean that Mexico need not provide any evidence to substantiate its claims: a finding of detrimental treatment "cannot rest on mere assertion".^[331] Mexico may, however, make its case on the basis of evidence and arguments going to the "design, architecture, and revealing structure" of the amended tuna measure. And this is, in fact, what Mexico has attempted to do.

7.166.  The core factual assertion underlying Mexico's allegation that the different certification requirements make it easier for tuna caught outside the ETP large purse seine fishery to be incorrectly labelled is that "captains are neither qualified nor able to make" an accurate designation that no dolphins were killed or seriously injured in a particular gear deployment.^[332] Accordingly, in Mexico's view, "it is both appropriate and necessary to have an independent observer requirement for tuna fishing outside the ETP".^[333] According to Mexico, the incapacity of captains to accurately certify the dolphin-safe status of tuna "create[s] a very real risk that tuna may be improperly certified as dolphin-safe", with the consequence that "tuna caught in the ETP, which is accurately certified as dolphin-safe by independent observers, will lose competitive opportunities to tuna caught outside the ETP, which has received an inherently unreliable dolphin-safe certification".^[334]

7.167.  The United States rejects these allegations. In its view, "[t]he simple fact is that a captains' statement is an effective vehicle to determine the eligibility of tuna for the label".^[335] According to the United States, "Mexico's argument assumes that captains operating outside the ETP are fraudulently certifying tuna as dolphin safe when it is not"^[336], but "Mexico has not provided any evidence of such fraud".^[337] The United States concludes that "Mexico cannot hope to prove its claim based simply on its insistence – without more – that certifications by captains operating outside the ETP are inherently unreliable".^[338]

7.168.  We note that the United States has itself recognized that observer certification "strengthens" the dolphin-safe certification.^[339] As we understand it, this is a concession that observer certification heightens or increases the accuracy and reliability of the label. Such concession does not entail the conclusion that, without observers, captains' certifications are always and necessarily "inherently unreliable"^[340]; but by recognizing that the observer certification "strengthens" the dolphin-safe certification^[341], the United States has acknowledged that observer certification may heighten the veracity, reliability and, importantly, the accuracy of the relevant certification. Thus, even the United States' own argument appears to recognize that it may be easier or more likely for dolphin-safe certifications made only by captains to be inaccurate than it is for dolphin certifications made by captains and observers. And of course, the consequence of this is that it may be more likely that tuna caught by vessels other than large purse seine vessels in the ETP will be inaccurately labelled as dolphin-safe than it is that tuna caught by large purse seine vessels in the ETP will be.

7.169.  In the Panel's view, however, it is not necessary to make a definitive finding on this point. The Panel's finding that the different requirements impose a lighter burden, in terms of accessing the dolphin-safe label, on tuna and tuna products made from tuna caught other than by large purse seine vessels in the ETP is sufficient to justify a finding that this aspect of the measure modifies the conditions of competition to the detriment of Mexican tuna and tuna products. In light of what we understand to be the United States' concession, the Panel does see some merit in Mexico's allegation that the different certification requirements may make it more likely that tuna caught outside the ETP could be inaccurately labelled. Ultimately, however, a definitive finding on this point would require a complex and detailed analysis of all of the various factors that may lead to tuna being inaccurately labelled. Such an analysis is not necessary in the context of the present dispute.

7.170.  Accordingly, the Panel accepts Mexico's claim that the different certification requirements detrimentally modify the conditions of competition because they impose a significantly lighter burden on tuna and tuna products made from tuna caught outside the ETP large purse seine fishery than on tuna caught within it.

7.171.  Before concluding our consideration of whether the different certification requirements modify the conditions of competition in the United States' market to the detriment of Mexican tuna and tuna products, the Panel must address the United States' contention that any detrimental impact suffered by Mexican tuna and tuna products on account of the different observer requirements stems from the AIDCP regime and not the amended tuna measure^[342], with the consequence that there is no "genuine relationship between the measure at issue and the adverse impact on competitive opportunities for imported products".^[343] Although the United States first raised this issue in the section of its first written submission entitled "Mexico Fails to Prove that Detrimental Impact does not Stem Exclusively from a Legitimate Regulatory Distinction", the United States explicitly acknowledged that the question of "genuine relationship" is relevant to the question whether "the US measure has a detrimental impact on the conditions of competition".^[344] Accordingly, we think it is appropriate to deal with this issue in the present context, although we will revisit it as well in the course of our discussion on whether any detrimental treatment caused by the different certification requirements stems exclusively from a legitimate regulatory distinction.

7.172.  According to the United States, there is no genuine connection between the amended tuna measure and any detrimental impact suffered by Mexican tuna and tuna products on account of the different certification requirements because these different requirements are not "establishe[d]"^[345] by the amended tuna measure, but rather by the AIDCP, an international treaty that Mexico joined in the free exercise of its sovereignty. The proof of this assertion, according to the United States, is the fact that even "if the United States eliminated all references to the AIDCP (and its requirements) from the amended measure, the differences in record-keeping and observers that Mexico complains about would still exist".^[346] As the United States explains:

[T]he requirement of the AIDCP observer coverage program are contained in the AIDCP and related documents. These requirements are not repeated in US law.

Rather, the amended measure requires that, for … [non‑US-flagged large purse seine vessels in the ETP], the tuna must be accompanied by a Form 370 and valid documentation, signed by the representative of the appropriate IDCP member nation, that certifies, among other things, that there was an IDCP-approved observer on board for the entire trip.^[347]

7.173.  As such, "[t]he 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 US law".^[348] In fact, says the United States, the requirement is not even "repeated in US law".^[349]

7.174.  Mexico appears to recognize that the different certification requirements stem from, in the sense of having their origin in, the AIDCP. However, in Mexico's view "[t]he US argument seeks to avoid the fact that the amended tuna measure expressly incorporates the AIDCP requirements".^[350] Mexico explains that:

Section (d)(2)(B) of the DPCIA establishes that, for a tuna product containing tuna caught in the ETP to qualify as dolphin-safe, it must be accompanied by a written statement executed by (i) a Commerce Department official, (ii) a representative of the IATTC [i.e. the Inter-American Tropical Tuna Commission], or (iii) an authorized representative of a participating nation whose national program meets the requirements of the AIDCP, which states that there was an observer approved by the AIDCP on board the vessel during the entire trip and that the observer certified that no dolphin sets were made during the entire voyage and no dolphins were killed or seriously injured during the set in which the tuna were caught. There is no such requirement for non‑ETP tuna products.^[351] 

7.175.  In Mexico's view, because the requirements of the AIDCP are embedded in the amended tuna measure, "[t]he US argument that there is no connection between the Amended Tuna Measure and the AIDCP is … unsupportable".^[352]

7.176.  It is well established that, as the Appellate Body has held in the context of both Article 2.1 of the TBT Agreement and Article III:4 of the GATT 1994, "there must be in every case a genuine relationship between the measure at issue and its adverse impact on competitive opportunities for imported versus like domestic products".^[353] In considering whether there is a "genuine connection" between the amended tuna measure and the detrimental impact alleged by Mexico, we also recall the Appellate Body's explanation, given in the course of the original proceedings in this matter, that "[i]n assessing whether there is a genuine relationship between the measure at issue and an adverse impact on competitive opportunities for imported products, the relevant question is whether governmental action 'affects the conditions under which like goods, domestic and imported, compete in the market within a Member's territory'".^[354] This statement directs our attention to the question whether the detrimental impact is attributable to government action, or whether it stems from some other source.

7.177.  In our view, although the observer coverage requirement for large purse seine vessels fishing in the ETP has its origin in the AIDCP, the different certification requirements – that is, the regulatory distinction between the requirements for tuna caught by large purse seine vessels on the one hand and the requirements for other vessels on the other hand – stem from the amended tuna measure itself. The AIDCP imposes certain certification requirements on large purse seine vessels fishing in the ETP, but it has nothing to say about other methods of fishing in the ETP or about fishing in other oceans. The amended tuna measure, by contrast, imposes certain certification requirements on the ETP large purse seine fishery and certain, different certification requirements on other fisheries. It is the amended tuna measure that provides for two sets of rules for access to the dolphin-safe label – one set for tuna caught by large purse seine vessels in the ETP, and another set for all other tuna. And it is therefore the amended tuna measure itself that sets up a distinction, within a single regulatory framework (i.e. the amended tuna measure) between large purse seine vessels in the ETP and other vessels. That the requirements imposed on large purse seine vessels in the ETP are themselves adapted from the AIDCP cannot detract from the fact that it is the design and structure of the amended tuna measure itself that establishes the regulatory distinction about which Mexico complains.

7.178.  As such, the United States' insistence that "if the United States eliminated all references to the AIDCP (and its requirements) from the amended measure, the differences in record-keeping and observers that Mexico complains about would still exist"^[355] is somewhat beside the point. In one sense, the United States is correct: the certification requirements that the AIDCP imposes on large purse seine vessels fishing in the ETP exist, of course, in the AIDCP itself, and will continue to exist as a matter of international law regardless of whether they are incorporated into the domestic legal system of the United States. But as we have explained above, Mexico's complaint is not directed at the existence of these AIDCP-mandated requirements under international law, or at its own acceptance of these conditions as an adherent to the AIDCP. Rather, Mexico's complaint is based on the fact that the amended tuna measure does not require observer coverage on vessels other than large purse seine vessels fishing in the ETP. In not doing so, the amended tuna measure imposes a lighter burden on vessels other than large purse seine vessels in the ETP, and may make it easier for tuna and tuna products made from tuna caught by such vessels to access the dolphin-safe label, thus distorting the conditions of competition on the United States' tuna market to the detriment of Mexican tuna and tuna products.

7.179.  In light of the foregoing, we conclude that Mexico has made a prima facie case that the different certification requirements in the amended tuna measure modify the conditions of competition in the United States' tuna market to the detriment of like Mexican tuna and tuna products. The United States has not rebutted this case. The Panel now proceeds to consider whether this detrimental impact stems exclusively from a legitimate regulatory distinction, or whether it rather reflects discrimination in violation of Article 2.1 of the TBT Agreement.

7.5.2.4.2  Whether the detrimental treatment caused by the different certification requirements stem exclusively from a legitimate regulatory distinction

7.5.2.4.2.1  Arguments of the parties

7.180.  According to Mexico, the different certification requirements cannot be said to stem exclusively from a legitimate regulatory distinction because "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 because captains are not trained, educated, or qualified to identify whether tuna are caught in a dolphin-safe manner, captains may not be directly involved in the setting of nets and the capturing of fish, and captains will not reliably declare non‑dolphin-safe sets or non‑compliance with dolphin-safe requirements".^[356] Mexico submits that "[a]s a consequence, the initial designation of the dolphin-safe status of tuna caught outside the ETP is unreliable and inaccurate", and therefore "consumers are receiving unreliable and inaccurate information on such products".^[357]

7.181.  As such, in Mexico's view, the effect of the different certification requirements is to create "two distinct and conflicting standards for the accuracy of information regarding the dolphin-safe status of tuna: one standard for tuna caught inside the ETP, and a separate and much lower standard for tuna caught outside the ETP".^[358] Given, however, that one of the goals of the amended tuna measure is "ensuring that consumers are not misled or deceived about whether tuna products contain tuna caught in a manner that adversely affects dolphins"^[359], Mexico concludes that the amended tuna measure's system of captain self-certification "does not bear a rational connection to", and is "entirely inconsistent"^[360] and "irreconcilable"^[361] with, the objectives of the amended tuna measure, and accordingly cannot be considered to be "even‑handed".^[362]

7.182.  Moreover, in Mexico's view, the two different standards of accuracy created by the different certification requirements cannot be explained or justified on the basis of "calibration" of the different risks to dolphins arising in different areas of the ocean and resulting from the use of different tuna fishing methods. According to Mexico:

The United States' calibration argument implies that it is acceptable and even‑handed to provide consumers with unreliable, unverified, and inaccurate information regarding the dolphin-safe status of tuna where the tuna originates from all ocean regions save the ETP, but to ensure that such information is independently certified and accurate where the tuna originates specifically in the ETP.^[363]

7.183.  However, according to Mexico:

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. It is not a question of the relative number of dolphins that are killed or seriously injured during fishing sett or gear deployments. It is simply a question of whether or not such adverse effects merely exist.^[364]

7.184.  In light of this "zero tolerance benchmark for risk" embodied in the amended tuna measure, Mexico argues that "a comparison of the magnitude of dolphin mortalities and serious injuries in different fisheries is not relevant to, and does not affect, Mexico's arguments regarding the lack of even‑handedness in the design and application of the different labelling conditions".^[365]

7.185.  In other words, in Mexico's view, the differences in the nature and degree of risk to dolphins from setting on dolphins in the ETP or from other methods in the ETP or other fisheries in no way explain or justify the different certification requirements. The amended tuna measure is designed so as to disqualify from accessing the label any and every tuna catch as soon as even a single dolphin is killed or seriously injured. Both parties accept that dolphins are at some risk from all tuna fishing methods and in all fisheries.^[366] As such, the amended tuna measure should require the same level of accuracy in reporting regardless of whether one or 1,000 dolphins are killed. And for this reason, "calibration" does not respond to Mexico's claim that the different certification requirements are inconsistent with the amended tuna measure's objectives.^[367]

7.186.  Additionally, Mexico attacks the different certification requirements on the basis that captain self-certification "permits or requires a private industry party to participate in the administration of [a law] which affect[s] the party's own commercial interests".^[368] In Mexico's view, there is a "financial incentive for captains to declare the tuna caught by their vessels to be 'dolphin-safe', and a corresponding financial disincentive to declare any tuna caught by their vessels to be non‑dolphin-safe", because "if a captain were to decline to certify tuna caught by his or her own vessel as dolphin-safe … the value of the tuna would be significantly diminished".^[369] According to Mexico, the different certification requirements place captains "in an inherent conflict of interest", because they "have a vested commercial and financial interest in securing dolphin-safe certification for the tuna that they catch". In Mexico's opinion, this creates "a very real risk that the tuna may be improperly certified as dolphin-safe", which would be inconsistent with the amended tuna measure's stated objectives.^[370]

7.187.  According to Mexico, the risk that captains will make improper or inaccurate statements is heightened by the fact that "there are no safeguards in the form of effective legal sanctions or enforcement mechanisms for fishing vessel captains who inaccurately or improperly certify the dolphin-safe status of tuna that is caught by their own vessels".^[371] As such, Mexico submits that "there are no incentives to accurately and properly administer the dolphin-safe certification requirements for tuna caught outside the ETP".^[372]

7.188.  The United States rejects Mexico's allegations.

7.189.  First, and simply, the United States argues that "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 US law".^[373] According to the United States', Mexico's argument is based "entirely on speculation and innuendo rather than any actual evidence".^[374]

7.190.  Secondly, the United States denies that captains' statements are "inherently unreliable" or "meaningless".^[375] On the contrary, the United States observes that "captains statements, logbooks, and the like have always been a core implementation tool for Members to verify compliance with [a range of] applicable fishing rules".^[376] Additionally, "the United States also relies on the self-reporting by vessels for implementation of its domestic laws, such as the MMPA".^[377] In the view of the United States, "Mexico's suggestion – that such an approach [e.g. reliance on captain self-certification to prove compliance with fishing laws and regulations] is inherently unreliable – would be hugely trade disruptive. Members simply do not have the resources to require the independent verification of all the activities of domestic and foreign producers".^[378]

7.191.  The United States also submits that Mexico's arguments concerning the reliability of captains "ignores the fact that this is a closely watched industry", as well as one that is "very risk averse".^[379] Moreover, the United States notes that, contrary to Mexico's allegation, United States domestic law imposes various civil and criminal penalties on captains and other persons who make false dolphin-safe declarations.^[380]

7.192.  Thirdly, the United States suggests that the even‑handedness of the different certification requirements is inherent in the very fact the "amended measure requires an observer certification where one particular international agreement requires observers, and does not require an observer certification where the relevant authority for the fishery does not require observers to certify as to the tuna's eligibility for a 'dolphin safe' label".^[381] According to the United States, Mexico's claim against the different certification requirements "ignores why the AIDCP was agreed to in the first place … [T]he IATTC Members agreed to different requirements regarding record-keeping/verification and observer coverage because the ETP is different".^[382]

7.193.  Fourthly, and relatedly, the United States asserts that the difference about which Mexico complains does not stem from US law, but merely reflects that the AIDCP imposes requirements that differ from those of other RFMOs. According to the United States, even if the United States eliminated from its measure all reference to observers, "the difference that Mexico criticizes would still exist".^[383] In the United States' view, Mexico's argument is essentially that it (i.e. the United States) can only make this element of the amended tuna measure "even-handed" by "unilaterally require[ing] 100 per cent observer coverage throughout the world".^[384] According to the United States, this argument seeks to make Mexico's own international commitments the "floor" for the requirements that the United States must impose on itself and all other trading partners. This, the United States argues, is inconsistent with the principle that a Member may take measures "at the levels that it considers appropriate".^[385]

7.194.  Finally, the United States observes that the Appellate Body in the original proceedings expressly noted that "nowhere in its reasoning did the [original] Panel state that imposing a requirement that an independent observer certify that no dolphins were killed or seriously injured in the course of the fishing operations in which the tuna was caught would be the only way for the United States to calibrate its 'dolphin-safe' labelling provisions".^[386] In the view of the United States, this statement represents an "explicit acknowledge[ment] that the United States could 'calibrate' its measure without requiring all its trading partners to put independent observers on their respective tuna fleets".^[387]

7.5.2.4.2.2  Analysis by the Panel

7.195.  We begin our analysis by recalling that the question before us is whether the detrimental impact identified in the preceding section of this Report stems exclusively from a legitimate regulatory distinction, because, for instance, it is even‑handed. In considering this question, we must constantly bear in mind that, pursuant to the allocation of the burden of proof advanced by both parties and accepted by the Panel, it is for Mexico to show, at least prima facie, that the different certification requirements do not stem exclusively from a legitimate regulatory distinction. Only if Mexico makes this showing will the burden shift to the United States to show that, contrary to Mexico's case, the detrimental impact does in fact stem exclusively from a legitimate regulatory distinction.

7.196.  Before proceeding, the Panel notes that in its discussion above of the legal test under Article 2.1 of the TBT Agreement, it set out the factors that may be taken into account when considering whether identified detrimental impact stems exclusively from a legitimate regulatory distinction.^[388] It is not necessary to repeat in full what was said there. Nevertheless, we would note again that, in our opinion, the jurisprudence developed by the Appellate Body in respect of the chapeau of Article XX of the GATT 1994 may be relevant in elucidating the meaning of the discipline contained in the second tier of Article 2.1 of the TBT Agreement.^[389] In particular, it is our opinion that in examining whether detrimental treatment stems exclusively from a legitimate regulatory distinction, a panel may take into account the extent to which the identified detrimental treatment is explained by, or at least reconcilable with, the objectives pursed by the measure at issue. We therefore reject the United States' suggestion that Mexico's arguments on the relationship between the different certification requirements and the objectives of the amended tuna measure are "not relevant to the analysis".^[390]

7.197.  We turn now to the substance of the parties' arguments. Mexico appears to accept that, as the Appellate Body found, the system currently in place in the ETP fully addresses the risks posed to dolphins by setting on dolphins in the ETP.^[391] Its complaint is that the amended tuna measure, like the original measure before it, does not fully address the risks posed by other fishing methods in the ETP and other oceans, and therefore is not even-handed. Accordingly, the essence of Mexico's argument is not that the United States should remove the certification requirements that exist in the ETP, but, conversely, that "it is both appropriate and necessary to have an independent observer requirement for tuna fishing outside the ETP"^[392] – and, indeed, that without imposing an observer requirement for vessels other than large purse seiners in the ETP, the amended tuna measure cannot be even‑handed as required under Article 2.1 of the TBT Agreement.

7.198.  As we understand it, Mexico's claim that the different certification requirements are not even‑handed rests on the fundamental factual premise that captains' certifications are "inherently unreliable"^[393] and "meaningless".^[394] This is so, in Mexico's view, for two distinct reasons: first, captains have a financial incentive to certify that their catch is dolphin-safe even when it is not, and the amended tuna measure contains no mechanism to check this incentive; and second, captains lack the technical expertise necessary to properly certify that no dolphins were killed or seriously injured in a given set or other gear deployment, and therefore their certifications do not ensure that tuna labelled dolphin-safe in fact meets the statutory and regulatory requirements. We will address each of these allegations separately.

7.199.  We examine first Mexico's claim that captains' statements are unreliable because captains have a financial incentive to certify that tuna is dolphin-safe even when it is not. To help the Panel understand the possible incentives that might play into a captain's decision on certification, the Panel asked the parties to explain "[w]hat, if anything, is the relationship between, on the one hand, the number and/or dolphin-safe status of tuna caught, and, on the other hand, a captain's remuneration and/or other incentives".^[395]

7.200.  In its response, Mexico argues that "the value of tuna caught by a purse seine vessel 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".^[396] According to Mexico, "canneries will not buy tuna that is not designated as dolphin-safe", and accordingly "[t]here is an extremely strong disincentive for a captain to self-report a dolphin set".^[397] Mexico submits this economic disincentive would exist even where captains are not paid on the basis of the value or the volume of the tuna they catch. According to Mexico, "[i]f tuna cannot be sold to canneries, or if the catch volume of the vessel is low because it tried to avoid dolphins, those outcomes would be contrary to the economic interests of the companies that own and operate the vessels. A captain would not long be employed under such circumstances".^[398]

7.201.  In support of this claim, Mexico cites to the decision in the Freitas case^[399], a United States administrative law judgment concerning illegal sets on marine mammals. In particular, Mexico highlights the following statement by the Commerce Department judge:

Given the incentives for making unlawful sets on marine mammals when the amount of potential economic gain associated with a catch of large tuna is so great, compliance with the mandates not to set on marine mammals is difficult to enforce. Here, Respondents knew not to intentionally set on whales and yet elected to do so anyway presumably because the economic benefits outweighed the potential cost under the MMPA.^[400]

7.202.  The United States in its response argues that "[t]here is no evidence on the record to establish that a relationship exists between the number of fish caught on a particular trip or the dolphin-safe status of such fish and the vessel captain's remuneration (and/or other incentives)".^[401] Indeed, contrary to Mexico's position, the United States suggests that vessel captains have economic incentives not to lie on their dolphin-safe declarations, because "[i]f a captain is untruthful about his catch, and a cannery discovers this, it would likely have a negative impact on the captain's income, because the cannery would no longer want to do business with that captain".^[402] Additionally, the United States reiterates that "untruthfulness … could … provide an evidentiary basis for a captain to suffer civil and criminal penalties".^[403]

7.203.  To help the Panel explore this issue further, the Panel also asked the parties the following question:

In both of its written submissions and in its oral statement to the Panel, the United States emphasizes that captain certifications are regularly relied upon by national and international regulators, and that such statements are generally accepted as being reliable. Is it international practice to accept captains' certifications to prove compliance with regulatory requirements? In other RFMOs, are captains' certifications sufficient to establish compliance with relevant regulatory requirements?^[404]

7.204.  In its response, Mexico acknowledges that "captain's self-certifications might be reliable for certain purposes", but denies that they are "reliable for the purpose of certifying the dolphin-safe status of the tuna caught by the captain's own fishing vessel".^[405] In support of this position, Mexico notes that a variety of academic, governmental, and supra-governmental authorities have, in the past, expressed doubt about the extent to which captains accurately self-report.

7.205.  Mexico notes, for instance, a 2006 study conducted jointly by the Duke University Marine Laboratory and the University of St. Andrews that found "that accurate estimation of bycatch rates in any fishery requires an independent observer scheme".^[406] Mexico also notes a technical memorandum prepared by the United States Commerce Department, which recognizes that "[d]espite fairly good outreach and the distribution of reporting forms to all state and Federally-permitted fishermen each year, compliance with the reporting requirement is thought to be very low".^[407] To give one more example, Mexico observes that an "Observer Program Operations Manual" prepared by Canada and published by the United Nations Food and Agriculture Organization states that "under-reporting is common practice and … even now, after years of persistent enforcement, discrepancies between real and reported catch can be as high as … two to ten times higher for regulated bycatch species".^[408]

7.206.  The United States takes the opposite position in its response to the Panel's question. According to the United States, "[c]aptain statements and logbooks are an integral part of regional fishery management organisation (RFMO) regimes and other international regimes and agreements".^[409] For example, both the IATTC and the WCPFC require that vessels keep detailed logbooks of information on various aspects of fishing operations. According to the United States, "the fact that most RFMOs rely on logbook data to manage fish stocks demonstrates that captains' statements, in the form of logbooks, are viewed as reliable".^[410] Additionally, the United States points to various international treaties whose implementation relies on captains' self-certifications and logbooks. To give one example, the Convention for the Conservation of the Antarctic Marine Living Resources (CCAMLR), a treaty that "makes it unlawful to engage in harvesting Antarctic marine living resources in violation of any conservation measure in force under the Convention or to violate any regulation promulgated under the implementing statute", is implemented by the United States through "a catch documentation scheme, whereby captains have to supply fishing details to NOAA [i.e. the National Oceanic and Atmospheric Administration]".^[411]

7.207.  In sum, the United States urges the Panel to find that:

Captain statements and logbooks are an integral part of RFMO and other international regimes, as well as regimes of individual nations. These regimes depend on such documentation to regulate in a whole host of areas that are critical for the appropriate management of fisheries and the environment more broadly. These areas include closed area rules, fish stock management, and implementation of environment requirements … nations and international organizations depend on this information, despite that [sic] it may be contrary to the narrow financial interests of the particular vessel to provide accurate information.^[412]

7.208.  In the Panel's opinion, Mexico's argument concerning the reliability – and, indeed, the integrity – of vessel captains has significant implications. The Panel accepts the evidence submitted by the United States that many regional and international organizations and arrangements rely on captains' certifications and logbooks both to monitor compliance with regulatory requirements and as a means of data collection. In the Panel's view, the fact that many domestic, regional, and international regimes rely on captains' self-certification raises a strong presumption that, from a systemic perspective, such certifications are reliable. RFMOs and other fisheries and environmental organizations are experts in their respective fields, and the fact that they have relied, and continue to rely, on captains' statements in a variety of fishing and environmental areas strongly suggests that, as a general matter, they consider such certifications to be reliable. Of course, the Panel must make its own "objective assessment of the matter", and in this regard the fact that a particular practice is accepted by one or more domestic, regional, or even international organizations is not, by itself, determinative. But the Panel considers that such acceptance is a highly relevant and probative fact.

7.209.  The Panel is not convinced that the evidence submitted by Mexico is sufficient to rebut this demonstration by the United States. The documents submitted by Mexico certainly suggest that there have been instances in which captains' certifications have been unreliable. Nevertheless, in the Panel's view, the fact that domestic, regional, and international regimes have continued to rely on captains' certifications and logbooks even though instances of non‑compliance have been reported suggests to us that such instances of non‑compliance should not be considered as seriously undermining the general reliability of captains' certifications, as Mexico would have the Panel find.

7.210.  Additionally, the Panel is not convinced by Mexico's argumentation concerning the economic incentives facing captains. As we noted above, Mexico asserted that, even where a captain's personal remuneration is not tied to the value of the fish caught, she or he is nevertheless unlikely to accurately report dolphin mortality and serious injury because doing so may result in dismissal from employment. But Mexico has provided no evidence that this would be the case, and the United States' alternative understanding of the economic incentives facing captains seems just as plausible to us.

7.211.  In light of the above, the Panel finds that Mexico has not met its burden of making a prima facie case that captains' certifications are unreliable because captains have a financial incentive not to report accurately on the dolphin-safe status of tuna caught in a given set or other gear deployment. Therefore, this argument does not convince us that relying on captains' certifications outside the ETP deprives the amended tuna measure of even-handedness.

7.212.  We now turn to consider Mexico's second argument, that captains' certificates are unreliable because captains may not have the technical expertise necessary to accurately certify that no dolphins were killed or seriously injured in a particular set or gear deployment.

7.213.  In considering whether captains can be assumed to have the technical expertise necessary to make an accurate dolphin-safe certification, we find it helpful to compare the kind of tasks expected to be carried out by observers in the ETP and other oceans with those that are customarily carried out by captains. Such a comparison should shine some light on whether captains are generally expected to have the kind of skills necessary to certify that no dolphins were killed or seriously injured in a given set or other gear deployment.

7.214.  We begin by noting that both parties have recognized that the task of observers in the ETP is complex.^[413] Both parties have also provided evidence indicating that observers under the IATTC Observer Program:

[A]re biologists trained to collect a variety of data on the mortalities of dolphins associated with the fishery, sightings of dolphin herds, catches of tunas and by catches of fish and other animals, oceanographic and meteorological data, and other information used by the IATTC staff to assess the conditions of the various stocks of dolphins, study the causes of dolphin mortality, and assess the effect of the fishery on tunas and other components of the ecosystem.^[414]

7.215.  We also take note of the evidence provided by both parties regarding the "Guidelines for Technical Training of Observers," which elaborate on the training requirements expected from observers qualifying for the IATTC Observer Program; such requirements include: (i) candidates should be university graduates with a degree in biology or a related subject (zoology, ecology, etc.); (ii) training should include the identification of certain fish and animals, including tuna and those dolphins associated with tuna fishing; (iii) information on how to accurately fill out data forms; and (iv) information on identification, dealing with, and documenting "instances of  interference (including bribery attempts), intimidation or obstruction by vessel crew during a trip".^[415]

7.216.  Significantly, we note that in the 2013 Final Rule, the National Marine Fisheries Service (NMFS) also recognized the complexity of accurately certifying that no dolphins were killed or seriously injured, and stated that it:

[A]nticipates that qualified observers will undergo training programs that include such topics as recognizing an intentional set, dolphin species identification, and criteria for determining a serious injury. NMFS acknowledges that these skills are complex, and that many existing observer programs give little attention to marine mammal interactions. NMFS will determine an observer program is qualified and authorized only after rigorous scrutiny of the program's training programs, and a finding that the observers are able to make the requisite determinations.^[416]

7.217.  We also recall that the NMFS Assistant Administrator has published a Qualified and Authorized Notice listing the criteria that must be met in order for observers to be considered as "qualified and authorized" for purposes of the dolphin-safe labelling program under the DPCIA.^[417] The NMFS Assistant Administrator has established, inter alia, the following criteria: (i) observers are trained and able to identify dolphins endemic to the area of the fishery; (ii) observers are trained and able to determine dolphin mortality and serious injury ('serious injury' meaning any injury likely to cause mortality); and (iii) observers are trained and able to collect written or photographic documentation sufficient for an authorized representative participating in the observer programme to verify or make a determination about the disposition of any dolphin. The Assistant Administrator also indicates that under NMFS observer programmes, observers participate in training programs that "include such topics as dolphin species identification, dolphin mortality recognition, data collection requirements for use in making a serious injury determination, and recognition of an intentional purse seine set".^[418]

7.218.  The evidence above strongly suggests that certifying whether a dolphin has been killed or seriously injured in a set or other gear deployment is a highly complex task. It is especially telling, in the Panel's view, that the amended tuna measure itself recognizes the necessity of training and education in equipping persons with the necessary technical know-how to ensure that they can properly certify the dolphin-safety of a tuna catch.

7.219.  The Panel has looked closely at the evidence submitted by the parties concerning the competencies and tasks generally expected of captains. This evidence includes the various regional and international treaties discussed above in the context of Mexico's argument concerning the financial incentives facing captains. As we explained above, this evidence indicates that captains are generally expected to conduct a wide variety of tasks on board the vessels they command. As we read the evidence, captains are generally expected to have the knowledge and ability to fulfil a range of activities that tends to extend to certifying the existence of facts over which they have control and/or direct knowledge, e.g. port of entry and exit, co-ordinates, date and time of gear deployment, and type of gear deployed.^[419] In some cases captains are also expected to certify the species of fish caught, or the presence of whale or bird bycatch. In our opinion, however, these tasks are significantly different from those involved in certifying that no dolphins were killed or seriously injured in sets or other gear deployments.

7.220.  The United States has also submitted evidence showing that, at least in some fisheries, captains are sometimes expected or enabled to record mammal, and specifically dolphin, bycatch. According to the United States, "minimum RFMO logbook standards may require tracking of marine mammal bycatch, including species identification, [but] such minimum standards may not require recording whether the marine mammal was killed or seriously injured. However, certain logbooks required by national programs covering fisheries in the WCPFC and IOTC areas do require determinations concerning the fate of any marine mammal bycatch".^[420]

7.221.  In support of this claim, the United States has submitted seven documents. The first two of these documents are logbook templates produced by the United States National Marine Fisheries Service for use in the Western Pacific Longline (Exhibit US‑175) and Atlantic (Exhibit US‑176) fisheries. Exhibit US‑175 does indeed include a column in which captains are required to identify both the species and fate of dolphin bycatch. Specifically, captains are required to note whether a dolphin was released "uninjured", "injured", or "dead".^[421] Similarly, Exhibit US‑196 requires that captains indicate whether certain dolphin species were "involved", "injured", or "dead".^[422]