Issues of Fairness in the Tuna-Dolphin Cases

FORUM

With the strengthening of trade, financial and productive ties between states, there has been a growing discussion on the effects of international economic interdependence on national economies. Whereas a general consensus seems to exist among economists that free and open markets create positive net gains at the national and cosmopolitan levels, politicians find themselves faced with having to respond to the demands of their constituencies for policy actions that mitigate the negative redistributive effects of open markets. Similarly, at the international level, policy-makers in global fora have to deal with the demands of weaker states to restructure economic relations in a manner that recognizes the power differentials inherent in these relations. These demands are most often in the form of "level playing fields," "harmonization," and "fair trade" (Bhagwati 1994, p. 548). In this paper I plan to analyze what has been referred to as the Tuna-Dolphin Cases involving the trade disputes initially between the US and Mexico and later the US and the EC regarding the US ban on the importation of tuna from countries that catch tuna using fishing techniques⁽¹⁾ which kill dolphins. After a necessarily brief discussion of the philosophical notion of fairness, I will delineate the stances taken by various actors affected by the Tuna-Dolphin Cases, specifically in regards to their usage of different understandings of fairness as summarized in Suranovic's (1997) seven principles of fairness⁽²⁾. This paper is not a detailed study of the GATT rulings on the Tuna-Dolphin Cases⁽³⁾, but rather should be read as situated in a broader normative discussion of the issue of fairness as it arises concerning the effects of increased trade on the environment.

Generally there seems to be little agreement amongst philosophers about what constitutes fairness and how notions of fairness relate to broader concepts such as morality, good, justice and equity. For example, Zajac (1995) differentiates between economic perspectives which focus more on efficiency and distributional justice, and normative theories such as those of Rawls, Nozick and utilitarians, as well as positive theories as embodied in the "Formal Principle of Distributive Justice" and "Institutional Framing." Kuenne (1993), on the other hand, distinguishes broadly between theories which are egotistically oriented and those that are socially oriented. The former implies that the individual is the fundamental unit of moral concern, while the latter views the individual as situated in the context of, and restrained by, societal relations.

However, fairness as applied to trade issues is fundamentally concerned with finding techniques, such as harmonization and reciprocity⁽⁴⁾, for managing interdependence. Since this is done by creating more level playing fields, it would seem that Rawls' concept of justice as fairness would be an especially relevant starting point (Kuenne 1993; Zajac 1995). The original position contains many of the assumptions and concerns that lie behind the idea of free trade. First of all, Rawls starts at the level of social institutions by asking how these institutions distribute fundamental rights and duties, and divide the advantages stemming from social cooperation. This would seem to correspond to the concern states have with the distribution of advantages and disadvantages which stem from the functioning of international markets. Secondly, Rawls's original position embodies a strong notion of non-discriminatory equity since the individuals in the original position are rationally autonomous⁽⁵⁾, equal, and arrive at unanimous decisions regarding the principles of justice. Similarly, it can be argued that international trade fora generally view all states as autonomous and equal and have decision-making procedures that often rely on unanimity. The idea of creating level playing fields between states seems to correspond to Rawls' attempt to find principles of justice which minimize the advantages of arbitrary natural and social contingencies such as genetic factors and positions in societies into which people are born. Finally, Rawls argues for "reflective equilibrium" to the extent that principles of justice must conform to "the deeper, latent convictions and common sense principles of moral behavior that override the pluralistic moral convictions of groups with different religious, philosophical, and social convictions of the ultimate goods in human existence" (Kuenne 1993, p. 77). In other words, an interactive adjustment process is necessary to achieve some form of overlapping consensus between different groups. Such a process seems essential for the resolution of trade disputes to combat what Jackson (1994, p. 601) has termed the problem of "interface concept." He argues that even similar economies have significant cultural, structural, and governmental differences that can generate a sense of unfairness.

The interface concept is only one of the difficulties that arise when attempting to find agreement over what constitutes fairness in trade. In addition to the conflation with broader philosophical concerns of morality which can be interpreted and justified in an extremely diverse fashion, there is disagreement if subjective concepts of fairness should even be a concern in economic matters. Nevertheless, arguments of fairness are constantly being utilized by those affected by trade decisions and thus a discussion of fairness seems relevant. In fact, many pieces of trade legislation, Section 301 is just one example, make a number of references to fairness, although the term is never defined. Generally, it would seem that while there is no consensus on how to define fairness, people seem to recognize unfairness when they see it (Suranovic 1997, p. 3). These difficulties imply that application and measurement issues lie at the heart of the controversy regarding fairness. Therefore, I will analyze the fairness issues involved in the Tuna-Dolphin Cases using Suranovic's (1997) seven principles of fairness. These provide a positive analysis of fairness by inducing a comprehensive framework or overview of the different usages of fairness, irrespective of application and measurement. Fairness has multiple dimensions and a number of these principles overlap and conflict with each other. Nevertheless, they provide a useful framework for comparing the positions of actors involved in the Tuna-Dolphin Cases.

Although dolphin kills have been a problem in the Eastern Tropical Pacific fishing zone since the late '50s, few noticed. This essentially changed and the issue gained enough public attention in 1972 to lead to the passage of the Marine Mammal Protection Act (MMPA) in Congress⁽⁶⁾. The act aimed to reduce the number of dolphins killed to levels approaching zero, by changing fishing techniques⁽⁷⁾, set fixed rates for the number of dolphins that could be killed, and required fishing vessels to carry federal observers. While the number of dolphins killed was initially greatly reduced, a recomposition of fishing fleets resulted in high foreign kill rates. This is because an increasing number of vessels were registered to Latin and South American countries and a majority of these continued to use purse seine methods. To combat this Congress added a Direct Embargo Provision in 1984 to the MMPA which prohibited the importation of tuna from nations that did not have regulatory programs and mortality rates comparable to those of the US.⁽⁸⁾ This resulted in the US imposing embargos on Mexico, Venezuela, Ecuador, Panama and Vanuatu in 1991. However, Mexico resisted the dolphin-safe measures and requested that a GATT resolution panel determine the legality of the US embargo.

Mexico took the position that the embargo violated Article XI of the GATT, prohibiting quantitative restrictions on imports, and Article III:1 and 4, preventing discrimination against foreign goods. The US argued that the restrictions were internal regulations as allowed under Article II:1. The panel decided that in order for Article III:1 and 4 and Article 11:1 to be applicable, the embargo would have to apply to the products as such and could not be based on the process by which the product was produced. The MMPA did not apply to tuna because it did not change its composition. Furthermore, it was argued that the embargo violated Article III: 4 because it did not accord Mexican and American products like treatment. This was because the kill rates set for foreign countries under the MMPA were not based on current US kill rates, but rather were allowed to be 1.5 times higher. In addition, the panel found that the embargo constituted a quantitative restriction under Article XI:1 since it did not satisfy the requirements for exemption under Article XX(b) and (g). These Articles allow quantitative restrictions as long as these are "necessary to protect human, animal or plant life or health" and relate to the "conservation of exhaustible resources if such measures are made effective in conjunction with restrictions on domestic production or consumption." The panel indicated that XX(b) was not intended to be applied extrajurisdictionally and that the embargo was not necessary. This decision was based on the fact that the US did not show that GATT-consistent measures were not available and that all other reasonable GATT-consistent avenues, such as multilateral negotiations, had been exhausted.⁽⁹⁾ Finally, the panel pointed out that Article XX(g) could also not be applied extrajurisdictionally. The US could only control the production or consumption of a resource under its own jurisdiction.⁽¹⁰⁾

In 1992 the EC requested the second GATT dispute resolution panel to review the US restrictions on the import of tuna. In 1994 the panel decided to uphold its decision that the embargo constituted a quantitative trade restriction under Article XI. However, this time the panel's reasoning was quite different. The panel rejected the EC's position that dolphins do not constitute an exhaustible resource⁽¹¹⁾ under Article XX (g). Furthermore, the panel found that nothing in this Article or Article XX(b) prohibited the protection of resources outside of US territory. Nevertheless, they upheld the first panel's decision that all GATT-consistent measures must first be exhausted. However, the panel added to the first panel's interpretation of XX(g) by stating that the embargo was not primarily aimed at rendering domestic restrictions on production and consumption effective since it would force other countries to change their national policies. This would in turn impair the balance of rights and obligations among the contracting parties of GATT.

The question remains as to what principles of fairness, as outlined by Suranovic, the various states involved in this trade dispute invoked to defend their positions. The panel's ruling that the US embargo affecting other countries national policies would involve a violation of the rights and obligations of the contracting parties, points toward a notion of equality fairness in the GATT treaty. GATT members are to be treated as autonomous and equal states and no state is allowed to force its policies upon another. This ties in closely with the notion of Golden Rule Fairness as a mutual respect for rules of the game as invoked by both Mexico and the US. Mexico felt the US was breaking the rules of GATT and the US felt Mexico was violating the rules of the MMPA, although the US position is somewhat shaky since it unilaterally decided upon these rules. In the view of the US, Mexico and the EC violated the principle of positive reciprocity fairness, since the US believed itself to be contributing to the preservation of the global commons, while Mexico and the EC did not contribute their fair share in return. Mexico on the other hand felt that the US was violating the principle of non-discrimination fairness to the extent that Mexican products were discriminated against through quantitative trade restrictions favoring the US' domestic tuna products. Furthermore, Mexico and the EC both invoked the principle of privacy fairness since they viewed the passage of the embargo as an attempt to affect their national policy decisions and, therefore, as an infringement of their national sovereignty. Finally, the panel's ruling suggests that the US violated the maximum benefit fairness principle since its unilateral trade restrictions were viewed as hampering overall efficiency gains stemming from unfettered trade.

Judging from the different interpretations of these principles, it appears that they can sometimes conflict with each other and that it is possible for one principle to be used simultaneously by both parties in a dispute. It is precisely for this reason that delineating such principles can only be a first step in understanding how fairness is used in concrete situations. The next step must then be to give content to these principles by applying application and measurement issues in order to resolve disputes in a consistent manner. In doing so, it is essential to keep in mind the context of the Tuna-Dolphin Cases as embedded in larger questions of the relationship between trade and the environment.

Many environmentalists argue that GATT (and now the WTO) gives precedence to trade over environmental issues.⁽¹²⁾ Generally, the fear exists that the emphasis upon liberalization will encourage countries to set low levels of environmental protection in order to reduce production costs and encourage foreign investment. Despite what the GATT resolution panel argued, it would seem that in most cases environmental objectives can only be met by influencing changes of other nations policies since environmental problems often cross national boundaries. If this is not accepted, then all types of unilateral measures, including widely established ones such as anti-dumping measures and countervailing duties, would be brought into question (Charnovitz 1992, p. 204). Furthermore, it is feared that GATT decisions requiring the use of least-trade restrictive means and relevant international standards instead of national ones could create a convergence of environmental policy at the lowest-common denominator level and thus exert downward pressure on developed countries environmental standards (Cough 1993, p. 29). The problem is that although the GATT panel ruled that the tuna embargo represented a non-tariff trade barrier in the form of a production and process standard, almost all animal protection laws affecting other countries can be interpreted in this manner. This could potentially be expanded and thus invalidate many international wildlife protection measures.

Finally, there is a concern not only among environmentalists but consumers⁽¹³⁾ as well that there has been an erosion of US sovereignty to enforce laws that reflect national concerns for the environment in order to achieve a more efficient trading system. Yet, there are also environmentalists who emphasize the need for multilateral environmental legislation above unilateral legislation, primarily because environmental problems do not stop at state borders. Charnowitz (1992, p. 207) disagrees with this argument and states that unilateral action is better than no action or delayed action to protect the environment, and that unilateral action in the past has often served as the catalyst for multilateral environmental initiatives.

Wherever one may stand on the issue, it is clear that discussing the manner in which fairness is considered in regard to international environmental disputes will be of little use unless some type of consensus is reached between states as to what type of normative preference the environment will have over concerns for economic efficiency. While individuals in Rawls' original position would have recognized the need to protect natural resources for future generations, our current ability to function as rational utility maximizers does not seem pervasive enough to generate the concern needed to come to agreement on environmental disputes.

Bibliography

Bhagwati, Jagdish. 1994. "Fair Trade, Reciprocity and Harmonization." in: Alan Deardorff and Robert Stern (eds.). Analytical and negotiating issues in the global trading system. Michigan: University of Michigan Press.

Charnovitz, Steve. 1992. "GATT and the environment: Examining the issues." International Environmental Affairs. 4,3: 203-233.

Cough, Paul. 1992. "Trade and Environment Tensions." EPA Journal. 19, 2: 28-32.

Jackson, John. 1994. "Comments on Initial Draft of Chapter." in: Alan Deardorff and Robert Stern (eds.). Analytical and negotiating issues in the global trading system. Michigan: University of Michigan Press.

http://gurukul.ucc.american.edu/ted/TUNA.htm

http://gurukul.ucc.american.edu/ted/TUNA2.htm

http://www.econet.apc.org/ciel/issue2.html

http://www.highnorth.no/a-tu-ta.htm

Kuenne, Robert. 1993. Economic Justice in American Society. Princeton: Princeton University Press.

Stevens, Candice. 1993. "Harmonization, trade and the environment." International Environmental Affairs. 5,1: 42-49.

Suranovic, Steven. 1997. "A Positive Analysis of Fairness with Applications to International Trade." Preliminary Draft.

Zajac, Edward. 1995. The Political Economy of Fairness. Cambridge: MIT Press.

1. At issue here is the purse seine (encirclement) technique using a net with cables at the bottom which close like a drawstring purse entrapping the catch.

2. These principles are: 1) Non-discrimination Fairness, 2) Distributional Fairness, 3) Golden Rule Fairness, 4) Positive Reciprocity Fairness, 5) Negative Reciprocity Fairness, 6) Privacy Fairness, 7) Maximum Benefit Fairness.

3. For a detailed study of the two cases see the web sites at http://gurukul.ucc.american.edu/ted.

4. According to Stevens (1993), harmonization is concerned with efforts to converge health, safety and environmental product standards as a way of facilitating international trade. Such efforts have previously included pre-market harmonization, mutual recognition, equivalency and reference standards. With increasing global environmental problems, the concern is now shifting to the international compatibility of environmental policy instruments such as ambient standards, process standards (especially relevant for the Tuna-Dolphin Cases), economic instruments and eco-labeling schemes. Reciprocity deals with developing "a system of swaps, or reciprocal deals, by which different countries agree to different obligations, but try to match up their effect so that each country feels it is receiving as much benefit as it is giving" (Jackson 1994, p. 600).

5. Rationally autonomous implies that individuals have no previous notions of principles of right and seek their maximum advantage in fulfilling their rational life plan while feeling disinterested in the welfare of others (Kuenne 1993, p. 77).

6. Unless otherwise noted the following information on the Tuna-Dolphin-Cases is derived from the Trade and Environment website at: http://gurukul.ucc.american.edu/ted/TUNA.htm, http://gurukul.ucc.american.edu/ted/TUNA2.htm as well as from the CIEL website at: http://www.econet.apc.org/ciel/issue2.html.

7. Among the techniques used are the back down method in which the fishing boat reverses when about half the fish are retrieved in order to let dolphins swim out of the nets. In addition, finer nets are used which do not ensnare the dolphins and manned rafts assist the dolphins out of the net.

8. In addition, the Intermediary Nation Provision was passed which stated that intermediary countries exporting tuna to the US must prove that they have prohibited tuna products from countries that have been directly banned by the US. The Dolphin Protection Consumer Information Act provided measures for labeling tuna which is "dolphin-safe."

9. The panel ignored the fact that the US was part of an ongoing twenty year effort to negotiate an agreement through the Inter-American Tropical Tuna Commission to protect dolphins.

10. It should be noted that the panel decision was never implemented since the US and Mexico solved their dispute bilaterally to avoid any disturbance of the NAFTA negotiations going on at the time.

11. The Fisherman's Coalition also questions to what extent dolphins can be considered an exhaustible resource since the number of dolphins killed is far beneath the sustainable level. Furthermore, they argue that if the fisherman were to fish the smaller, younger tuna that do not swim with the dolphins the tuna stand will be reduced (http://www.highnorth.no/a-tu-ta.htm).

12. Charnovitz (1992) argues that this was not always the case and represents a shift away from the original intent of the GATT framers.

13. For Ralph Nader's position on GATT and the environment see: http://www.infoasis.com/people/stevetwt/New_Global_Economy/WTO_CAGE.html