United States—Import Prohibition of Certain Shrimp and Shrimp Products

United States—Import Prohibition of Certain Shrimp and Shrimp Products in Europe

World Trade Organization, Appellate Body, 1998.

Appellate Body Report WT/DS58/AB/R.[1]
I. Introduction: Statement of the Appeal

This is an appeal by the United States from certain issues of law and legal interpretations in the Panel Report, United States—Import Prohibition of Certain Shrimp and Shrimp Products. . . .

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The United States issued regulations in 1987 pursuant to the Endangered Species Act of 1973[2] requiring all United States shrimp trawl vessels to use approved Turtle Excluder Devices (“TEDs”) or tow-time restrictions in specified areas where there was a significant mortality of sea turtles in shrimp harvesting.[3] These regulations, which became fully effective in 1990, were modified so as to require the use of approved TEDs at all times and in all areas where there is a likelihood that shrimp trawling will interact with sea turtles, with certain limited exceptions.

Map – United States (1998)
Map – United States (1998)

. . . Section 609(b)(1) imposed . . . an import ban on shrimp harvested with commercial fishing technology which may adversely affect sea turtles. Section 609(b)(2) provides that the import ban on shrimp will not apply to harvesting nations that are certified. . . . According to the 1996 [Administrative] Guidelines [for Implementing the Endangered Species Act], the Department of State “shall certify any harvesting nation meeting the following criteria without the need for action on the part of the government of the harvesting nation: (a) any harvesting nation without any of the relevant species of sea turtles occurring in waters subject to its jurisdiction; (b) any harvesting nation that harvests shrimp exclusively by means that do not pose a threat to sea turtles, e.g., any nation that harvests shrimp exclusively by artisanal means; or (c) any nation whose commercial shrimp trawling operations take place exclusively in waters subject to its jurisdiction in which sea turtles do not occur.”

Second, certification shall be granted to harvesting nations that provide documentary evidence of the adoption of a regulatory program governing the incidental taking of sea turtles in the course of shrimp trawling that is comparable to the United States program and where the average rate of incidental taking of sea turtles by their vessels is comparable to that of United States vessels.[4] According to the 1996 Guidelines, the Department of State assesses the regulatory program of the harvesting nation and certification shall be made if the program includes: (i) the required use of TEDs that are “comparable in effectiveness to those used in the United States. Any exceptions to this requirement must be comparable to those of the United States program . . . “; and (ii) “a credible enforcement effort that includes monitoring for compliance and appropriate sanctions.” . . .

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In the Panel Report, the Panel reached the following conclusions:

. . . [W]e conclude that the import ban on shrimp and shrimp products as applied by the United States on the basis of Section 609 of Public Law 101-162 is not consistent with article XI: 1 of GATT 1994, and cannot be justified under article XX of GATT 1994.

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IV. Issues Raised in This appeal

The issues raised in this appeal by the appellant, the United States, are the following:

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(b) whether the Panel erred in finding that the measure at issue constitutes unjustifiable discrimination between countries where the same conditions prevail and thus is not within the scope of measures permitted under article XX of the GATT 1994.

VI. Appraising Section 609 under Article XX of the GATT 1994

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A. [Introduction]

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Article XX of the GATT 1994 reads, in its relevant parts:

Article XX

General exceptions

Subject to the requirement that such measures are not 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, nothing in this agreement shall be construed to prevent the adoption or enforcement by any Member of measures:

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(g) relating to the conservation of exhaustible natural resources if such measures are made effective in conjunction with restrictions on domestic production or consumption;

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In United States—[Standards for Reformulated and Conventional] Gasoline,[[5]] we enunciated the appropriate method for applying article XX of the GATT 1994:

In order that the justifying protection of article XX may be extended to it, the measure at issue must not only come under one or another of the particular exceptions—paragraphs (a) to (j)—listed under article XX; it must also satisfy the requirements imposed by the opening clauses of article XX. The analysis is, in other words, two-tiered: first, provisional justification by reason of characterization of the measure under XX(g); second, further appraisal of the same measure under the introductory clauses of article XX. (emphasis added)

The sequence of steps indicated above in the analysis of a claim of justification under article XX reflects, not inadvertence or random choice, but rather the fundamental structure and logic of article XX. The Panel [in its Report] appears to suggest, albeit indirectly, that following the indicated sequence of steps, or the inverse thereof, does not make any difference. To the Panel, reversing the sequence set out in United States—Gasoline “seems equally appropriate.” We do not agree.

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We hold that the findings of the Panel . . . and the interpretative analysis embodied therein, constitute error in legal interpretation and accordingly reverse them.

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B. Article XX(g): Provisional Justification of Section 609

In claiming justification for its measure, the United States primarily invokes article XX(g). . . .

1. “Exhaustible Natural Resources”

We begin with the threshold question of whether Section 609 is a measure concerned with the conservation of “exhaustible natural resources” within the meaning of article XX(g). . . . India, Pakistan and Thailand contended that a “reasonable interpretation” of the term “exhaustible” is that the term refers to “finite resources such as minerals, rather than biological or renewable resources.” In their view, such finite resources were exhaustible “because there was a limited supply which could and would be depleted unit for unit as the resources were consumed.” Moreover, they argued, if “all” natural resources were considered to be exhaustible, the term “exhaustible” would become superfluous. . . .

We are not convinced by these arguments. Textually, article XX(g) is not limited to the conservation of “mineral” or “non-living” natural resources. The complainants’ principal argument is rooted in the notion that “living” natural resources are “renewable” and therefore cannot be “exhaustible” natural resources. We do not believe that “exhaustible” natural resources and “renewable” natural resources are mutually exclusive. One lesson that modern biological sciences teach us is that living species, though in principle, capable of reproduction and, in that sense, “renewable”, are in certain circumstances indeed susceptible of depletion, exhaustion and extinction, frequently because of human activities. Living resources are just as “finite” as petroleum, iron ore and other non-living resources.

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Given the recent acknowledgement by the international community of the importance of concerted bilateral or multilateral action to protect living natural resources, and recalling the explicit recognition by WTO Members of the objective of sustainable development in the preamble of the WTO agreement, we believe it is too late in the day to suppose that article XX(g) of the GATT 1994 may be read as referring only to the conservation of exhaustible mineral or other non-living natural resources. Moreover, two adopted GATT 1947 panel reports previously found fish to be an “exhaustible natural resource” within the meaning of article XX(g).[6] We hold that, in line with the principle of effectiveness in treaty interpretation, measures to conserve exhaustible natural resources, whether living or non-living, may fall within article XX(g).

We turn next to the issue of whether the living natural resources sought to be conserved by the measure are “exhaustible” under article XX(g). That this element is present in respect of the five species of sea turtles here involved appears to be conceded by all the participants . . . in this case. The exhaustibility of sea turtles would in fact have been very difficult to controvert since all of the seven recognized species of sea turtles are today listed in appendix 1 of the Convention on International Trade in endangered Species of Wild Fauna and Flora (“CITES”). The list in appendix 1 includes “all species threatened with extinction which are or may be affected by trade.” (emphasis added)

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For all the foregoing reasons, we find that the sea turtles here involved constitute “exhaustible natural resources” for purposes of article XX(g) of the GATT 1994.

[The Appellate Body also held that Section 609 was “related to the conservation of exhaustible natural resources” and that it was “made effective in conjunction was restrictions on domestic production or consumption” as required by paragraph (g) of Article XX of the GATT 1994.]

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C.The Introductory Clauses of Article XX: Characterizing Section 609 under the Chapeau’s Standards

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Although provisionally justified under article XX(g), Section 609, if it is ultimately to be justified as an exception under article XX, must also satisfy the requirements of the introductory clauses—the “chapeau”[[7]]—of article XX, that is,

Article XX

General exceptions

Subject to the requirement that such measures are not 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, nothing in this agreement shall be construed to prevent the adoption or enforcement by any Member of measures: (emphasis added)

We turn, hence, to the task of appraising Section 609, and specifically the manner in which it is applied under the chapeau of article XX; that is, to the second part of the two-tier analysis required under article XX.

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In United States—Gasoline, we stated that “the purpose and object of the introductory clauses of article XX is generally the prevention of ‘abuse of the exceptions of [article XX]’.” We went on to say that:

. . . The chapeau is animated by the principle that while the exceptions of article XX may be invoked as a matter of legal right, they should not be so applied as to frustrate or defeat the legal obligations of the holder of the right under the substantive rules of the General agreement. If those exceptions are not to be abused or misused, in other words, the measures falling within the particular exceptions must be applied reasonably, with due regard both to the legal duties of the party claiming the exception and the legal rights of the other parties concerned.

At the end of the Uruguay Round, negotiators fashioned an appropriate preamble for the new WTO agreement, which strengthened the multilateral trading system by establishing an international organization, inter alia,[[8]] to facilitate the implementation, administration and operation, and to further the objectives, of that agreement and the other agreements resulting from that Round. In recognition of the importance of continuity with the previous GATT system, negotiators used the preamble of the GATT 1947 as the template for the preamble of the new WTO agreement. Those negotiators evidently believed, however, that the objective of “full use of the resources of the world” set forth in the preamble of the GATT 1947 was no longer appropriate to the world trading system of the 1990’s. As a result, they decided to qualify the original objectives of the GATT 1947 with the following words:

. . . while allowing for the optimal use of the world’s resources in accordance with the objective of sustainable development, seeking both to protect and preserve the environment and to enhance the means for doing so in a manner consistent with their respective needs and concerns at different levels of economic development, . . .

[T]his language demonstrates a recognition by WTO negotiators that optimal use of the world’s resources should be made in accordance with the objective of sustainable development. As this preambular language reflects the intentions of negotiators of the WTO agreement, we believe it must add color, texture and shading to our interpretation of the agreements annexed to the WTO agreement, in this case, the GATT 1994. . . .

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Turning then to the chapeau of article XX, we consider that it embodies the recognition on the part of WTO Members of the need to maintain a balance of rights and obligations between the right of a Member to invoke one or another of the exceptions of article XX, specified in paragraphs (a) to (j), on the one hand, and the substantive rights of the other Members under the GATT 1994, on the other hand. Exercise by one Member of its right to invoke an exception, such as article XX(g), if abused or misused, will, to that extent, erode or render naught the substantive treaty rights . . . of other Members. . . . The chapeau was installed at the head of the list of “General exceptions” in article XX to prevent such far-reaching consequences.

In our view, the language of the chapeau makes clear that each of the exceptions in paragraphs (a) to (j) of article XX is a limited and conditional exception from the substantive obligations contained in the other provisions of the GATT 1994, that is to say, the ultimate availability of the exception is subject to the compliance by the invoking Member with the requirements of the chapeau. . . .

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2. “Unjustifiable Discrimination”

We scrutinize first whether Section 609 has been applied in a manner constituting “unjustifiable discrimination between countries where the same conditions prevail”. Perhaps the most conspicuous flaw in this measure’s application relates to its intended and actual coercive effect on the specific policy decisions made by foreign governments, Members of the WTO. Section 609, in its application, is, in effect, an economic embargo which requires all other exporting Members, if they wish to exercise their GATT rights, to adopt essentially the same policy (together with an approved enforcement program) as that applied to, and enforced on, United States domestic shrimp trawlers. As enacted by the Congress of the United States, the statutory provisions of Section 609(b)(2)(A) and (B) do not, in themselves, require that other WTO Members adopt essentially the same policies and enforcement practices as the United States. Viewed alone, the statute appears to permit a degree of discretion or flexibility in how the standards for determining comparability might be applied, in practice, to other countries. However, any flexibility that may have been intended by Congress when it enacted the statutory provision has been effectively eliminated in the implementation of that policy through the 1996 Guidelines promulgated by the Department of State and through the practice of the administrators in making certification determinations.

According to the 1996 Guidelines . . . any exceptions to the requirement of the use of TEDs must be comparable to those of the United States program. . . . [And] in practice, the competent government officials only look to see whether there is a regulatory program requiring the use of TEDs or one that comes within one of the extremely limited exceptions available to United States shrimp trawl vessels.

The actual application of the measure, through the implementation of the 1996 Guidelines and the regulatory practice of administrators, requires other WTO Members to adopt a regulatory program that is not merely comparable, but rather essentially the same, as that applied to the United States shrimp trawl vessels. Thus, the effect of the application of Section 609 is to establish a rigid and unbending standard by which United States officials determine whether or not countries will be certified, thus granting or refusing other countries the right to export shrimp to the United States. Other specific policies and measures that an exporting country may have adopted for the protection and conservation of sea turtles are not taken into account, in practice, by the administrators making the comparability determination.

. . . It may be quite acceptable for a government, in adopting and implementing a domestic policy, to adopt a single standard applicable to all its citizens throughout that country. However, it is not acceptable, in international trade relations, for one WTO Member to use an economic embargo to require other Members to adopt essentially the same comprehensive regulatory program, to achieve a certain policy goal, as that in force within that Member’s territory, without taking into consideration different conditions which may occur in the territories of those other Members.

Furthermore, when this dispute was before the Panel and before us, the United States did not permit imports of shrimp harvested by commercial shrimp trawl vessels using TEDs comparable in effectiveness to those required in the United States if those shrimp originated in waters of countries not certified under Section 609. In other words, shrimp caught using methods identical to those employed in the United States have been excluded from the United States market solely because they have been caught in waters of countries that have not been certified by the United States. The resulting situation is difficult to reconcile with the declared policy objective of protecting and conserving sea turtles. This suggests to us that this measure, in its application, is more concerned with effectively influencing WTO Members to adopt essentially the same comprehensive regulatory regime as that applied by the United States to its domestic shrimp trawlers, even though many of those Members may be differently situated. We believe that discrimination results not only when countries in which the same conditions prevail are differently treated, but also when the application of the measure at issue does not allow for any inquiry into the appropriateness of the regulatory program for the conditions prevailing in those exporting countries.

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3. “Arbitrary Discrimination”

We next consider whether Section 609 has been applied in a manner constituting “arbitrary discrimination between countries where the same conditions prevail”. We have already observed that Section 609, in its application, imposes a single, rigid and unbending requirement that countries applying for certification under Section 609(b)(2)(A) and (B) adopt a comprehensive regulatory program that is essentially the same as the United States’ program, without inquiring into the appropriateness of that program for the conditions prevailing in the exporting countries. Furthermore, there is little or no flexibility in how officials make the determination for certification pursuant to these provisions.[9] In our view, this rigidity and inflexibility also constitute “arbitrary discrimination” within the meaning of the chapeau.

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. . . The certification processes under Section 609 consist principally of administrative ex parte[10] inquiry or verification by staff of the Office of Marine Conservation in the Department of State with staff of the United States National Marine Fisheries Service. With respect to both types of certification, there is no formal opportunity for an applicant country to be heard, or to respond to any arguments that may be made against it, in the course of the certification process before a decision to grant or to deny certification is made. Moreover, no formal written, reasoned decision, whether of acceptance or rejection, is rendered on applications for either type of certification, whether under Section 609(b)(2)(A) and (B) or under Section 609(b)(2)(C). Countries which are granted certification are included in a list of approved applications published in the Federal Register; however, they are not notified specifically. Countries whose applications are denied also do not receive notice of such denial (other than by omission from the list of approved applications) or of the reasons for the denial. No procedure for review of, or appeal from, a denial of an application is provided.

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We find, accordingly, that the United States measure is applied in a manner which amounts to a means not just of “unjustifiable discrimination”, but also of “arbitrary discrimination” between countries where the same conditions prevail, contrary to the requirements of the chapeau of article XX. The measure, therefore, is not entitled to the justifying protection of article XX of the GATT 1994. . . .

In reaching these conclusions, we wish to underscore what we have not decided in this appeal. We have not decided that the protection and preservation of the environment is of no significance to the Members of the WTO. Clearly, it is. We have not decided that the sovereign nations that are Members of the WTO cannot adopt effective measures to protect endangered species, such as sea turtles. Clearly, they can and should. And we have not decided that sovereign states should not act together bilaterally, plurilaterally or multilaterally, either within the WTO or in other international fora,[11] to protect endangered species or to otherwise protect the environment. Clearly, they should and do.

What we have decided in this appeal is simply this: although the measure of the United States in dispute in this appeal serves an environmental objective that is recognized as legitimate under paragraph (g) of article XX of the GATT 1994, this measure has been applied by the United States in a manner which constitutes arbitrary and unjustifiable discrimination between Members of the WTO, contrary to the requirements of the chapeau of article XX. . . .

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The Appellate Body recommends that the DSB request the United States to bring its measure found in the Panel Report to be inconsistent with article XI of the GATT 1994, and found in this Report to be not justified under article XX of the GATT 1994, into conformity with the obligations of the United States under that agreement.

Notes

[1] This report is posted at the WTO’s Internet Web site at https://www.wto.org/wto/dispute/58abr.doc.

[2] Public Law 93-205, 16 U.S.C. 1531 et. seq.

[3] United States Federal Regulation, title n52, para. 24244, 29 June 1987 (the “1987 Regulations”). Five species of sea turtles fell under the regulations: loggerhead (Caretta caretta), Kemp’s ridley (Lepidochelys kempi), green (Chelonia mydas), leatherback (Dermochelys coriacea) and hawksbill (Eretmochelys imbricata).

[4] Section 609(b)(2)(A) and (B).

[[5] Appellate Body Report WT/DS2/AB/R, posted on the WTO’s Internet Web site at https://www.wto.org/wto/dispute/ gas1.htm.]

[6] United States—Prohibition of Imports of Tuna and Tuna Products from Canada, adopted 22 February 1982, BISD 29S/91, para. 4.9; Canada—Measures Affecting Exports of Unprocessed Herring and Salmon, adopted 22 March 1988, BISD 35S/98, para. 4.4.

[[7] French: “hat.”]

[[8] Latin: “among other things.”]

[9] In the oral hearing, the United States stated that “as a policy matter, the United States government believes that all governments should require the use of turtle excluder devices on all shrimp trawler boats that operate in areas where there is a likelihood of intercepting sea turtles” and that “when it comes to shrimp trawling, we know of only one way of effectively protecting sea turtles, and that is through TEDs.”

[[10] Latin: “from one party or side.” An ex parte inquiry is one conducted without notice to the other party or parties adversely interested and without the latter being present or having the opportunity to contest the decision made there.]

[11] Plural of “forum.” A meeting place, such as a court or tribunal.]


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