WTO Correctly Calls the U.S. to Task for Lying about Dolphins

May 23, 2012 • Commentary
This article appeared in Forbes on May 23, 2012.

In a dispute between the U.S. and Mexico over federal regulations defining “dolphin safe” tuna, the World Trade Organization recently held that the U.S. rules are an unjustifiable discrimination against Mexican tuna fishers. They are also in violation of WTO obligations.

This outcome is a welcome indictment of American policies that prevent eco‐​conscious consumers from having effective access to information, and using their power in the free market to support environmental causes. Moreover, it casts light on a growing trend that opaquely mixes health, safety, and environmental regulations with trade protectionism.

Current U.S. law prohibits tuna producers from making any statements on their product labels about how their fishing practices affect dolphins unless they meet the minimum requirements for the official “dolphin safe” label. Advocates of the law say it is about truth in advertising and accuse the WTO of putting the world’s dolphins at risk for the sake of trade flows. This argument fails to appreciate the sophisticated competence of American consumers and, more importantly, ignores the fact that these federal rules are misleading.

Tuna caught in a part of the Pacific Ocean near Mexico must meet strict requirements before it can be labeled “dolphin safe.” Mexican tuna fishers work primarily in the Eastern Tropical Pacific where dolphins and tuna often school together. They catch tuna by “setting on dolphins,” that is, by locating a school of dolphins and encircling it with nets to catch the tuna swimming underneath. This practice can result in dolphin mortality as the tuna are captured, although dolphin death has declined significantly since the institution of the International Dolphin Conservation Program, which places independent observers on all Mexican tuna fishing vessels in the region. The U.S labeling law prohibits any tuna caught using this method in this part of the ocean from being labeled dolphin safe even if an observer certifies that no dolphins were killed.

What makes the law discriminatory and misleading is that tuna caught elsewhere, like the Western Central Pacific where U.S. fishing fleets operate, may be labeled dolphin safe without any certification that dolphins were not harmed. In the WTO case, the U.S. was given an opportunity to justify this different treatment by showing that the policy even‐​handedly addresses different levels of risk for dolphins in different regions. But the WTO found that fishing techniques used in other parts of the ocean can also harm dolphins, and that excluding Mexican tuna from access to the label under especially strict terms was discriminatory.

The discriminatory nature of the law does a great disservice to American consumers of tuna. The fact that over 98% of canned tuna sold in the United States is labeled “dolphin safe” suggests that American consumers really care about dolphins. In a market where a dolphin safe label is a competitive necessity, access to that label effectively determines access to the American consumer market for tuna. It’s that consumer‐​driven market reality that prompted Mexico to make a trade case out of the issue.

This particular case is an excellent example of how consumers are better informed about the things that matter to them when government does not interfere with the free flow of information. Polls have indicated that most consumers believe the “dolphin safe” label certifies that no dolphins were harmed when the tuna were caught. This is untrue. The federal requirements for dolphin‐​safe labeling do not exclude tuna that were caught while killing dolphins as long as it was not done using one particular method in one particular part of the ocean. Consumers are indeed being misled, but it is the control of information by government, not the availability of competing standards, that is to blame.

Without this law, consumers would be free to demand tuna caught without setting on dolphins, or they might prefer to buy only tuna whose capture was certified as dolphin safe by an independent observer. Under the current regime, tuna producers are completely prohibited from providing that information on product labels. A policy designed to protect dolphins by harnessing the power of consumers depends on having informed consumers with access to all relevant information. Consumers who want to protect dolphins from tuna fishers are not served by a law that actually protects U.S. tuna fishers from Mexican competition.

The adverse WTO ruling offers the U.S an excellent opportunity to demonstrate simultaneously its commitment to the free trade principles of the international trading system, and its belief in the values of a free and open society. Market competition can shape fishing practices to make them more ethical and fair only if information is permitted to flow freely to those with the power to use it. The best solution—the one that is clearly within the bounds of trade rules and best protects dolphins—is to drop the labeling requirement altogether and trust dolphin‐​loving consumers to make rational choices.

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