WTO issues Appellate Body report on US/Mexico tuna case
Today, the World Trade Organization (WTO) published the Appellate Body report on “United States – Measures concerning the importation, marketing and sale of tuna products” (WT/DS381/AB/R)
The original complaint from Mexico was made in October of 2008. Mexico alleged that the conditions for the use of “dolphin-safe” labeling on tuna imported into the US are inconsistent and discriminatory.
Summary of key findings
DPCIA
The “Dolphin Protection Consumer Information Act” or the (DPCIA) stipulated that tuna products made from tuna caught by “setting on” dolphins (that is, chasing and encircling dolphins with a net in order to catch the tuna associating with them) are not eligible for a “dolphin-safe” label in the United States. Before the Panel, Mexico alleged that the measure at issue is inconsistent with Articles I:1 and III:4 of the GATT 1994, and Articles 2.1, 2.2, and 2.4 of the TBT Agreement.
Technical Regulation
Regarding the question of whether the measure at issue constitutes a “technical regulation”, the Appellate Body found that the Panel did not err in characterizing the measure at issue as a “technical regulation” within the meaning of Annex 1.1 to the TBT Agreement.
Labeling provisions are inconsistent with Article 2.1 of the TBT Agreement
With respect to Mexico's claim under Article 2.1 of the TBT Agreement, the Appellate Body reversed the Panel's finding that the US “dolphin-safe” labelling provisions are not inconsistent with Article 2.1 of the TBT Agreement, and found, instead, that the US measure is inconsistent with Article 2.1. The Appellate Body reasoned, first, that, by excluding most Mexican tuna products from access to the “dolphin-safe” label while granting access to most US tuna products and tuna products from other countries, the measure modifies the conditions of competition in the US market to the detriment of Mexican tuna products. Next, the Appellate Body scrutinized whether, in the light of the factual findings made by the Panel and undisputed facts on the record, the detrimental impact from the measure stems exclusively from a legitimate regulatory distinction. The Appellate Body found that the measure at issue is not even-handed in the manner in which it addresses the risks to dolphins arising from different fishing techniques in different areas of the ocean.
Mexico did not demonstrate that “dolphin-safe” labeling was more trade restrictive than necessary
Regarding Mexico's claim under Article 2.2 of the TBT Agreement, the Appellate Body reversed the Panel's finding that Mexico had demonstrated that the US “dolphin-safe” labelling provisions are more trade restrictive than necessary to fulfil the United States' legitimate objectives.
DPCIA consistent with Article 2.4 of the TBT Agreement
The Appellate Body did not disagree with the Panel's conclusion that the US measure at issue is not inconsistent with Article 2.4 of the TBT Agreement. The Appellate Body reversed however the Panel's intermediate finding that the “dolphin‑safe” definition and certification developed within the framework of the Agreement on the International Dolphin Conservation Program (“AIDCP”) is a “relevant international standard” within the meaning of Article 2.4 of the TBT Agreement.
More information is available in the full text of the Appellate Body report on the WTO website.
Rack Room Shoes, et al., v. United States Dismissed
Rack Room Shoes asserted that certain glove, footwear and apparel tariffs violate the Equal Protection Clause of the Constitution. Some items in the Harmonized Tariff Schedule of the United States (HTSUS) such are given higher/lower rates based on gender. From Rack Room’s perspective they are importing products that may be materially identical, but are taxed differently based upon usage. As with other similar court cases, Rack Room stood to save a lot of money on the difference of duty rates if it were deemed illegal.
Rack Room Shoes argued that because the HTSUS uses the gender and age of intended users of certain imported products to distinguish between tariff rates, and because those tariff rates are not equal, the HTSUS therefore unconstitutionally discriminates on the basis of gender and/or age. The government moved to dismiss for failure to state a claim.
Repeat of Totes-Isotoner Corp
This decision is the latest in a series of court cases that contest the differing duty rates based on gender. From 2008-2010, Totes-Isotoner Corp (Totes) brought up the same complaint. Over the course of three court cases, Totes claims were deemed insufficient according to the standard set forth by Bell Atlantic Corp. v. Twombly (Twombly). The Twombly case resulted in a ruling that stated that court pleadings require “more than labels and conclusions, and a formulaic recitation of the elements of a cause of action will not do.”
Decision
The courts stated that HTSUS gender references are to the principal or chief use of products by one sex or another. This is different from the use of a suspect classification that requires people to be treated differently depending on their sex. Thus, the HTSUS gender references do not support an inference that the classifications have a discriminatory purpose.
Since Rack Room Shoes was unable to show that the legislature was motivated by discriminatory intent, rather than by lawful action, the case was dismissed.
New Note 5 being added to Chapter 64, HTSUS
U.S. Customs and Border Protection (“CBP”) is in the process of determining its approach to the administration of new Additional U.S. Note 5 (“Note 5”) to Chapter 64, Harmonized Tariff Schedule of the United States (“HTSUS”), as it relates to the tariff classification of footwear with textile outer soles. New Note 5 states:
"For the purposes of determining the constituent material of the outer sole pursuant to Note 4(b) to this Chapter, no account shall be taken of textile materials which do not possess the characteristics usually required for normal use of an outer sole, including durability and strength."
Specifically, CBP is asking the public to provide comments on the interpretation of the phrase “characteristics usually required for normal use of an outer sole, including durability and strength”, and how to determine whether such characteristics are possessed by imported footwear.
If you are in the footwear business, now is the time to give your input on this new note.
Email CBP
All comments relating to this pre-publication request should be sent to: EarlyInputMailbox@dhs.gov
You must email no later than thirty days from the date of publication. Please put “Note 5” in the subject line. After analyzing the comments, CBP will consider how best to proceed with this matter.
For the full announcement, go to:
http://www.cbp.gov/xp/cgov/trade/trade_outreach/htsus_564.xml
The Committee for the Implementation of Textile Agreements (CITA) determined on Dec 16, 2011 that certain cotton/nylon/spandex raschel knit, open work crepe, piece dyed fabric, as specified below, is not available in commercial quantities in a timely manner in the CAFTA-DR countries. The product will be added to the list in Annex 3.25 of the CAFTA-DR Agreement in unrestricted quantities.
Specifications
Certain Cotton/Nylon/Spandex Raschel Knit Open Work
Crepe Fabric, Piece Dyed
HTS: 6005.22.00
Fabric Type: Raschel knit, open work crepe fabric with a blistered surface with interstices covering 15% of the surface area,
piece dyed.
Fiber Content: Cotton: 61-65%; Nylon: 32-34%; Spandex: 3-5%
Yarn Size:
Cotton:
Metric: 28/2 to 32/2
English: 16.5/2 to 19/2
Nylon:
Metric: 150-160 denier/10 filament
English: 56-60 denier/10 filament
Nylon (wrapping yarn for spandex core):
Metric: 113-150 denier/36 filament
English: 60-80 denier/36 filament
Spandex (wrapped in nylon):
Metric: 40-45 denier
English: 200-225 denier
Weight:
Metric: 160-180 grams per sq. meter
English: 4.7-5.3 ounces per sq. yard
Width:
Metric: 137.2-147.4 centimeters, cuttable
English: 54-58 inches, cuttable
Machine gauge: 18
Bar: 18
Coloration: Piece dye
Performance Criteria:
1. Dimensional Stability: -7%/+2%, AATCC 135/150
2. Fabric Skewing: 4%, AATCC 179
3. Fabric Weight: -8%/+8%
For Further Information online, go to http://web.ita.doc.gov/tacgi/CaftaReqTrack.nsf/2e62506a81f79cb8852570fc006bdf70/30f4b00cb801dc0f852579440074483b?OpenDocument
Source: CUSTOMS RECORD, VOL. 24, NO. 1247, DECEMBER 22, 2011, PAGE 4
Ron Kirk Challenges EU Claims
US Trade Representative Ron Kirk announced that the US is challenging the European Union's (EU) claim that it's subsidies to Airbus are in full compliance with the World Trade Organization (WTO). It appears that the EU has not withdrawn subsidies that were ruled contrary to WTO rules and has actually granted addition subsidies to Airbus. As a result the US is requesting that the EU enter into consultations regarding their claims.
Countermeasures for Current Period $7-10 Billion
The US is also requesting that it be authorized to impose countermeasures in response to the EU's claim that it fully complied with the WTO ruling. These countermeasures for the recent period would have been in the range of $7-10 billion. This step will preserve US rights, but any imposition of counter measures would not incur until after further WTO proceedings
Ambassador Kirk Stated:
“The WTO clearly found that every single grant of launch aid to Airbus, for every single aircraft that company produced, was a WTO-inconsistent subsidy that caused unfair adverse effects to U.S. industry and jobs. Our action today underscores what we have said all along – that the United States cannot accept anything less than an end to this subsidized financing. The United States remains prepared to engage in any meaningful efforts, through formal consultations and otherwise, that will lead to the goal of ending subsidized financing at the earliest possible date.”