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lead.jpg (22302 bytes)    Volume 4 
   Number 1
   1 February 1999 


by Stephen L. Kass and Jean M. McCarroll
Carter, Ledyard & Milburn

In a previous column, ("Sea Turtles and World Trade," New York Law Journal, April 24, 1998, 3:1), we discussed an April 6 decision by a Dispute Settlement Panel of the World Trade Organization (WTO) in the Shrimp/Turtle case that held that a U. S. Law, §609 of P.L. 101-162 (prohibiting the import of shrimp from countries that do not require "Turtle Excluder Devices" (TEDs) on fishing vessels to protect endangered sea turtles), violated the General Agreement on Tariffs and Trade (GATT) by improperly discriminating against trade with such countries.

We sharply criticized the panel decision for adopting an excessively narrow view of GATT's Article XX, which authorizes restrictions on international trade to protect the environment, and expressed the hope that the WTO's appellate body would either reverse or at least correct the major excesses of the Panel's decision. Failure to do so, we suggested, would seem to confirm the fears of those U.S. environmentalists who believe that global free trade threatens the validity of U.S. environmental standards in both domestic and international arenas.

On Oct. 12, the WTO's appellate body issued its decision affirming, but significantly modifying, the panel's report in the Shrimp/Turtle case. Because it represents the latest statement of WTO law on the subject, the appellate body's opinion sheds important light on the continuing tension between the international business community's desire to eliminate non-tariff barriers to trade and environmentalists' efforts to defend both domestic and international efforts to protect the environment.

Neither of these goals may appear to have much to do with Fidel Castro or, worse, Saddam Hussein. Yet, as explained below, international resentment toward a growing U.S. propensity for unilateral action to deal with complex international issues has a direct bearing on the world's willingness to accept U.S. decisions as to the proper balance between environmental protection and economic growth, particularly in developing nations. As a result, otherwise reasonable U.S. environmental standards may continue to be suspect if they fail to reflect multilateral views on the most appropriate ways to protect the global environment.


Migrating sea turtles are "threatened with extinction" and, as such, entitled to the highest level of protection under the Convention on International Trade in Endangered Species (CITES). CITES protection, however, does little to protect sea turtles against the hazards of incidental "by-catch" by commercial shrimp vessels, whose nets routinely capture sea turtles in both coastal and international waters around the world. To reduce (and effectively avoid) this by-catch, in 1987 the U.S. required all U.S. commercial shrimpers to employ TEDs.

In 1989, Congress enacted §609, which banned imported shrimp from vessels that failed to employ TEDs. In 1996, the U.S. Court of International Trade held that this required the Secretary of Commerce to prohibit the entry of shrimp from all commercial vessels from any nation failing to require TEDs on its commercial shrimp fleet, even if the shrimp in question were caught with TEDs. (Although this decision was later reversed by the Federal Circuit Court of Appeals, the WTO case was argued before that reversal.)

The import ban was challenged by India, Pakistan, Thailand and Malaysia, who were joined by Australia, Ecuador, China, Nigeria and the European Communities in alleging that §609 amounted to an illegal restriction on trade under GATT Article XI and was not entitled to the limited protection that GATT Article XX affords to non-discriminatory environmental measures.

GATT's basic premise is that international trade can flourish best in the absence of non-tariff barriers to the free movement of goods across borders. Nevertheless, Article XX permits an exception to this principle if a member state can show that its import restrictions meet both the threshold conditions of the article (known as its "chapeau") and the specific requirements of one or more paragraphs of that article:

Article XX, General Exceptions

Subject to the requirement that such measures are not applied in a 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, nothing in this Agreement shall be construed to prevent the adoption or enforcement by any contracting party of measures:

(b) necessary to protect human, animal or plant life or health;

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

In its April decision, the WTO panel did not reach the issue of whether §609 satisfied the requirements of either Paragraph (b) (measures "necessary to protect ... animal ... life") or Paragraph (g) (measures "relating to the conservation of exhaustible natural resources"), as claimed by the U.S. It found, instead, that §609 did not satisfy the chapeau of Article XX since, in the panel's view, any unilateral environmental measure that restricted trade amounted to "unjustifiable discrimination" that threatened to undermined the WTO.

It was this wholesale refusal of the panel to consider the validity of any unilateral environmental measure restricting trade that was most vehemently attacked by the environmental community and, on appeal, by the U.S. in its brief to the appellate body.

Appellate Body Decision

The WTO appellate body affirmed the panel's ultimate finding that §609 failed to meet the threshold test of Article XX's chapeau and thus constituted "unjustifiable discrimination" in violation of GATT's Article XI. In arriving at this conclusion, however, the appellate body took pains to repair the damage done by the panel to the uneasy modus vivendi between trade law and environmental law and to demonstrate that, at least in some circumstances, Article XX could be applied in a way that permits international action to protect the environment even at the expense of free trade.

The appellate body's decision began with a polite reprimand to the panel for refusing, as a matter of law, to accept submissions from the numerous U.S. non-governmental organizations (NGOs) that had sought to submit amicus curiae briefs in defense of §609.

The panel had permitted the U.S., as a party to the dispute, to attach to its brief whatever NGO positions it wished to bring to the panel's attention (as part of the U.S.'s own statement), but the panel had found no basis for direct NGO submissions, which it clearly viewed as disruptive of orderly litigation among states. The appellate body, however, pointed out that WTO panels had ample authority to request, and thus to accept, NGO submissions where the panel believes such submissions can be helpful to its analysis.

Although this leaves future WTO panels free to reject NGO submissions in their discretion, even this first step toward acceptance of an amicus role for environmental (and other) NGOs is significant. While every government is eager to promote its nation's trade, relatively few are prepared to devote significant resources and political capital to defending the global (or even their domestic) environment in the face of possible trade disadvantages.

It has become increasingly apparent that the strongest supporters of many of the environmental measures challenged in trade disputes are not the governments involved but those NGOs that lobbied for their enactment in the first place. While many NGOs seek an absolute right to amicus status in WTO proceedings, the appellate body opinion represents an important advance over prior WTO practice and, as a practical matter, may prove more workable than permitting many conflicting as-of-right submissions from the hundreds of NGOs potentially interested in disputes affecting global trade.

The appellate body next turned to the underlying basis for the panel's decision -- and squarely rejected it. The panel erred, the appellate body said, in addressing the question of whether §609 was "unjustifiable" under Article XX's chapeau without first considering the environmental purpose and context of that statute under the specific authorizing language of Paragraphs (b) and (g). This was necessary in order to make an informed determination as to whether §609 was warranted by its environmental purposes, rather than, as the panel had done, simply declaring that any unilateral restriction on trade threatened to undermine GATT and was therefore "unjustifiable."

The panel's standard, wrote the appellate body, finds no basis either in the text of the chapeau or in that of either of the two specific exceptions claimed by the United States. The Panel, in effect, constructed an a priori test that purports to define a category of measures which ... fall outside the justifying protection of Article XX's chapeau .... It is not necessary to assume that requiring from exporting countries compliance with, or adoption of, certain policies (although covered in principle by one or another of the exceptions) prescribed by the importing country, renders a measure a priori incapable of justification under Article XX. Such an interpretation renders most, if not all, of the specific exceptions of Article XX in utile, a result abhorrent to the principles of interpretation we are bound to apply.

The opinion turned next to the substantive contentions of the U.S. that §609 satisfied the requirements of both Article XX's Paragraph (g) and, in the alternative, Paragraph (b). Paragraph (g) permits trade restrictions "relating to the conservation of exhaustible natural resources" only if such measures are also "made effective in conjunction with restrictions on domestic production or consumption."

Since §609 was enacted two years after the U.S. had already imposed similar TED requirements on domestic shrimp vessels (and since the U.S. enforced those requirements with both civil penalties and, if necessary, vessel seizures), the principal issue facing the appellate body here was whether "exhaustible natural resources" included endangered animal life, rather than referring only to scarce mineral resources (as contended by the complaining states).

Here too, the appellate body adopted the more liberal view, holding that endangered aquatic species, not merely oil, gas and other minerals, were included within "exhaustible material resources," despite the obvious duplication this created with Paragraph (b). This was an important holding because Paragraph (g) requires that a challenged measure merely relate to exhaustible resources, not that (like Paragraph (b)), it is necessary to protect animal life.

Having found that §609 qualified under Paragraph (g), the appellate body next returned to Article XX's chapeau in order to determine whether, as applied, §609 was nevertheless "unjustifiable" or "arbitrary." While the overall purpose of §609 was, in the appellate body's view, clearly eligible for Article XX protection, it was still necessary for the U.S. to show that §609 did not, in practice, create unjustifiable or arbitrary burdens on trade.

Manner of Application

It was here that the appellate body parted company with the U.S. position. The principle of good faith expressed in the chapeau to Article XX, said the opinion, requires that an otherwise legitimate exception authorized by that article not only be fair on its face but also be applied in a manner that is neither arbitrary nor unjustifiable in view of the purpose of that exception and the corresponding treaty rights of other states.

Section 609's application failed this test, said the appellate body, because it requires all affected foreign governments to adopt essentially the identical TED regulations as the U.S., regardless of whether they have already undertaken (or are prepared to undertake) other measures to protect sea turtles in their coastal waters and regardless of differing conditions in such countries' fishing practices or regulatory capabilities. Indeed, under U.S. practice at the time the dispute was argued, even shrimp harvested with TED-equipped vessels were excluded from the U.S. if the country in question did not have an overall regulatory program comparable to the U.S. scheme.

Related to this failure to recognize even the possibility of other equally appropriate ways of protecting sea turtles was the U.S. failure to engage in negotiations with other GATT members in an effort to reach either bilateral or multilateral agreements to protect shrimp without a unilateral U.S. import ban. Section 609 itself, prior WTO decisions, the 1992 Rio Declaration and Agenda 21, all discourage unilateral actions to protect the environment and encourage states instead to seek an international consensus to address such issues.

Although the U.S. had successfully concluded multilateral negotiations with a handful of Western Hemisphere states (resulting in an Inter-American Convention signed by the U.S., Brazil, Costa Rica, Nicaragua and Venezuela), none of the parties had yet ratified that Convention, and the U.S. had made no comparable efforts to conclude a similar agreement with the complaining states.

Moreover, while the U.S. had afforded states in the Caribbean and Western Atlantic fishing region a three-year "phase-in" period to install TEDs, the complaining Asian states were given only four months to comply with the §609 requirements, a practical impossibility for many of them given the large number of small vessels active in the shrimp trade and the reduced level of TED training made available to such countries by the U.S.

Not only did §609 therefore amount, as applied, to "unjustifiable discrimination," but it also constituted, in the judgment of the appellate body, a form of "arbitrary discrimination" by the U.S. The §609 certification procedures (for determining which states comply and which fail to comply with the TED program) were neither transparent nor predictable. Thus foreign states seeking §609 certification in order to export shrimp to the U.S. market were at the whim of mid-level bureaucrats, whose decisions were subject to neither discernible standards nor appellate review.

Countries denied certification were not advised of this fact but learned of it when their names were omitted from the published list of certified TED programs.

Fear of Arrogance

Although it reversed those parts of the panel decision that had threatened to eviscerate Article XX, the appellate body ultimately agreed that §609, despite its laudable aim, had been applied in a way that amounted to both arbitrary and unjustifiable discrimination by the U.S.

The U.S. failure to consult with more than a few of its neighboring states in order to develop a multilateral consensus on how best to save migrating turtles, its insistence that only U.S.-approved TED programs were adequate, its disparate phase-in periods for different regions and its arbitrary and closed "certification" process all contributed to a sense that, whatever the merits and bona fides of the U.S. desire to save an endangered species, the precedential effects of permitting a single nation, already dominant in economic, military and political spheres, to dictate environmental standards for the world were too threatening to be accepted without a complaint by the WTO.

Although the cost of outfitting commercial vessels with TEDs is very modest (from $75 to $500 per vessel, according to the U.S.), §609 drew opposition not only from directly affected Asian states but also from China, the European Communities, Australia and two Western Hemisphere countries. Most of these parties have also registered sharp protests at U.S. trade policies in other areas -- notably Cuba -- where they believe the U.S. has, for domestic political reasons, imposed unreasonable, even arrogant, trade restrictions on its commercial partners.

Although the Shrimp/Turtle case was decided before the most recent U.S. air strikes against Saddam Hussein's government in Iraq, the appellate body's opinion (like the earlier Panel decision) reflects the same international skepticism toward unilateral economic actions by the U.S. that has been evident during the past several weeks with respect to unilateral military action.

To emphasize this concern, the appellate body noted that, despite its professed concern over endangered sea turtles, the U.S. had failed to raise this issue during recent CITES conferences (when multilateral action might have been possible), had not signed the Convention on the Conservation of Migratory Species or even the United Nations Convention on the Law of the Sea, and had not ratified the Convention on Biological Diversity approved at Rio in 1992, all of which were aimed at protecting turtles and similarly endangered marine species.

In short, an apparent U.S. disdain for the developing norms of international environmental law and an equally conspicuous failure to work collaboratively with other states to implement effective environmental standards likely contributed to the WTO's rejection of what, on its face, was both a reasonable and non-discriminatory U.S. statute designed to protect the global environment, rather than U.S. fishing interests.

To overcome these obstacles in the future, the U.S. would be well advised not only to correct the specific negotiating and administrative lapses pointed out by the appellate body, but to address the growing problem of U.S. disrespect for international environmental commitments, and international law, generally.

U.S. environmental NGOs might also consider the importance of encouraging both meaningful U.S. consultation with other governments (and NGOs) prior to promulgation of future environmental standards affecting trade and the development of open administrative procedures that treat other nations as responsible trading partners rather than as supplicants.


Stephen L. Kass and Jean M. McCarroll direct, together with Clifford P. Case, the Environmental Practice Group at Carter, Ledyard & Milburn. Carter, Ledyard & Milburn is a full service law firm with offices in New York City and Washington, D.C.

Reprinted with permission of the New York Law Journal, The New York Law Publishing Company. The New York Law Journal can be found on the Internet at: