Tuna is arguably one of the most well-known and abundant of fish, found in large quantities at supermarkets and convenience stores around the world. It is such a popular sight in its canned form that one may have even dissociated it from its origins as a fish, until reminded of the amusing slogan-cum-brand, ‘chicken of the sea’. As such, it is safe to say that tuna enjoys as much popularity among consumers as the humble and ubiquitous chicken.
On the production side, easy accessibility and popularity translates into big business, thriving markets and fierce competition. For producers of canned tuna, the fish is their livelihood, an important source of income and an industry of serious economic significance, contributing as it does to the national balance of payments, the employment rate and, subsequently, a productive and healthy social climate.
This is especially true in the case of Thailand, the world’s third-largest producer of canned tuna and the largest exporter, accounting for 31% of the global volume of exports. As of 2000, the United States has remained Thailand’s biggest export destination, followed by the European Community (EC) and then Canada.(1) Since Thailand’s tuna industry is export-oriented, with almost all its production intended for overseas markets, foreign import restrictions and regulations wield considerable impact on its growth and overall dynamism. This is where Thailand encountered difficulties with one of its major trading partners — the EC.
Despite its impressive world ranking, producers of canned tuna in Thailand were convinced that their industry was capable of considerably better performance given more equitable access to the EC market. This inequity existed primarily in the form of a preferential tariff granted by the EC to canned tuna producers from the African, Caribbean and Pacific states (ACP countries), a status consolidated in the Cotonou Agreement (ACP Agreement) of 3 February 2000 between the EC and the ACP countries. While ACP countries were enjoying zero tariffs on tuna imports, other countries such as Thailand were continuing to face an inhibiting tariff of 24%, which was proving detrimental to the legitimate economic interests of Thailand as a major producer of canned tuna. Furthermore, zero import tariffs for ACP countries encouraged investors increasingly to view the ACP countries as a favourable investment destination, in contrast to Thailand, undermining the cost and other comparative advantages that Thailand has to offer.
This case study illustrates the manner in which Thailand raised the issue and challenged the EC tariff within the framework of the Dispute Settlement Understanding (DSU) provided for in the WTO Agreement. There are three major stages to the DSU: consultation between the concerned parties, adjudication by Panels and, if necessary, the Appellate Body, and implementation of the ruling. However, it is not always necessary for every case to follow this trajectory and to be taken to Panels. In fact, the preferred path is for members to settle the dispute between themselves, through consultations.(2)
To this end, the DSU provides good offices, conciliation and mediation which may be requested by members if consultations fail to produce an acceptable solution. These options serve as an intervening step in which an independent third party is engaged to help members resolve the dispute at hand, thereby avoiding Panel proceedings which can be the most costly and time-consuming stage of the DSU procedures.
The events concerning this case study span approximately three and a half years, dating back to the conclusion of the ACP Agreement in 2000, followed by the WTO consultation and mediation process and concluding with the EC’s new Council Regulation of 5 June 2003. As the first case in WTO history to be settled through mediation, it sets a valuable example for fellow member countries, demonstrating that disputes may be resolved within the WTO without resorting to formal litigation.
Although this is a recent case, it is worth noting that the EC-ACP relationship dates back almost forty years to 1963. During this time a number of agreements were produced through which the EC granted ACP countries trade benefits on a number of products, including canned tuna. Thus, for this particular product, ACP countries had been enjoying free access to the EC market for almost thirty years prior to the ACP Agreement of 2000. By the mid-1990s, Thailand’s tuna industry was increasingly feeling the negative impact of this preferential trading arrangement, as reflected in revenue, investment and opportunity losses.
With the formal establishment of the WTO in 1995 and the entry into force of the GATT 1994 rules came a more favourable climate in which to address such preferential or discriminatory trading relationships in the international arena. One of the basic principles of the WTO legal framework is the MFN (most-favoured nation) principle, which states that ‘all WTO Members are bound to grant to each other treatment as favourable as they give to any other Member in the application and administration of import and export duties and charges. A tariff concession made to one Member must therefore be extended immediately and unconditionally to all other Members.’(3) Thus, with regard to the EC’s preferential tariff rates, the legal impetus and the framework within which Thailand could challenge the discriminatory tariff were in place. It would be up to the concerned parties of Thailand to take up the cause, and to gather the information, personnel and determination necessary to see it through to a satisfactory conclusion.
I. The players back to top
The countries concerned here are Thailand and the Philippines on the one hand and the European Community on the other. The Philippines, as a fellow ASEAN and WTO member facing similar difficulties, joined with Thailand in this landmark attempt to prove that preferential tariffs had long been impairing their economic interests, and to seek appropriate redress or compensation from the EC. For the purposes of this case study, however, the focus will remain on Thailand and its actions, although the term ‘complainants’ will be used to refer collectively to Thailand and the Philippines when necessary.
Throughout this process, close collaboration and co-ordination was a vital element between private-sector players — that is representatives of the complainants’ tuna industries — and their respective governments. In Thailand’s case, it was the Ministry of Commerce specifically that provided a strong link between the tuna industry and the Thai permanent mission to the WTO in Geneva, where the mediation took place. At the WTO proceedings, the role of negotiator was assumed by the Thai ambassador to the WTO, who thereby served as the official voice of Thailand.
The Thai tuna industry was represented by Chanintr Chalisarapong, in his capacity as chairman of the Thai Tuna Packers’ Group/Thai Food Processors’ Association. Chanintr acted as a focal point in consolidating industry data and information, as well co-ordinating efforts and co-operation from the private sector side. Since the matter involved issues of international law and practice, lawyers were also hired. Although this was a WTO case, the complainants were challenging the EC, whose headquarters is located in Brussels. Therefore the Thai side chose to engage a law firm based in Brussels, which is where the first round of consultations was also held. Finally, although this case was treated as strictly confidential, no such dispute can exist entirely in a vacuum; therefore, external forces in the form of political pressures from some EC governments had their impact as well.
From the start, the role of each of the major players was well delineated, with each playing to their natural strengths. The major task for the private sector was to provide industry data, information and support in every form possible to the Ministry of Commerce. The Ministry of Commerce, on the other hand, examined the legal and related aspects associated with the negotiation process, as well as providing an official link to Geneva and the WTO proceedings. The Brussels law firm provided in-depth legal counsel and professional backing in writing official submissions, although it did not participate in the actual mediation.
Constructive co-operation between the public and private sectors was a key element for a number of reasons. First, a strong, mutually supportive partnership created a sense of solidarity in a shared pursuit. Second, the government alone would not have been able to allocate the funding necessary for an endeavour of this nature. Therefore, where financial resources were needed, the private sector pooled its funds. Third, the sharing of industry data and information — from sources such as the Customs Bureau, and FAO and EC statistics — enabled the team to build a much stronger case than would otherwise have been possible, which allowed them to maintain consistency and confidence in their positions and arguments throughout the lengthy process. In sum, a vital component of success was the readiness of the affected industry to contribute to its own defence, in terms of funding and manpower.
Of their working relationship with the Thai government Chanintr remarked, ‘We launched into the process of seeking redress, confident in our just cause, equipped with the factual tools and reassured by the full support of the government and its willingness to take the lead in negotiations and in lobbying efforts at all levels.’ This willingness on the part of the government was matched by the private sector’s own efforts: ‘When we saw that there was not enough legal expertise in the ministry, we, the private sector, gathered the funding needed to hire a law firm in Brussels. While representatives of the government engaged actively in the negotiations, we continuously prov
Tuna is arguably one of the most well-known and abundant of fish, found in large quantities at supermarkets and convenience stores around the world. It is such a popular sight in its canned form that one may have even dissociated it from its origins as a fish, until reminded of the amusing slogan-cum-brand, ‘chicken of the sea’. As such, it is safe to say that tuna enjoys as much popularity among consumers as the humble and ubiquitous chicken.
On the production side, easy accessibility and popularity translates into big business, thriving markets and fierce competition. For producers of canned tuna, the fish is their livelihood, an important source of income and an industry of serious economic significance, contributing as it does to the national balance of payments, the employment rate and, subsequently, a productive and healthy social climate.
This is especially true in the case of Thailand, the world’s third-largest producer of canned tuna and the largest exporter, accounting for 31% of the global volume of exports. As of 2000, the United States has remained Thailand’s biggest export destination, followed by the European Community (EC) and then Canada.(1) Since Thailand’s tuna industry is export-oriented, with almost all its production intended for overseas markets, foreign import restrictions and regulations wield considerable impact on its growth and overall dynamism. This is where Thailand encountered difficulties with one of its major trading partners — the EC.
Despite its impressive world ranking, producers of canned tuna in Thailand were convinced that their industry was capable of considerably better performance given more equitable access to the EC market. This inequity existed primarily in the form of a preferential tariff granted by the EC to canned tuna producers from the African, Caribbean and Pacific states (ACP countries), a status consolidated in the Cotonou Agreement (ACP Agreement) of 3 February 2000 between the EC and the ACP countries. While ACP countries were enjoying zero tariffs on tuna imports, other countries such as Thailand were continuing to face an inhibiting tariff of 24%, which was proving detrimental to the legitimate economic interests of Thailand as a major producer of canned tuna. Furthermore, zero import tariffs for ACP countries encouraged investors increasingly to view the ACP countries as a favourable investment destination, in contrast to Thailand, undermining the cost and other comparative advantages that Thailand has to offer.
This case study illustrates the manner in which Thailand raised the issue and challenged the EC tariff within the framework of the Dispute Settlement Understanding (DSU) provided for in the WTO Agreement. There are three major stages to the DSU: consultation between the concerned parties, adjudication by Panels and, if necessary, the Appellate Body, and implementation of the ruling. However, it is not always necessary for every case to follow this trajectory and to be taken to Panels. In fact, the preferred path is for members to settle the dispute between themselves, through consultations.(2)
To this end, the DSU provides good offices, conciliation and mediation which may be requested by members if consultations fail to produce an acceptable solution. These options serve as an intervening step in which an independent third party is engaged to help members resolve the dispute at hand, thereby avoiding Panel proceedings which can be the most costly and time-consuming stage of the DSU procedures.
The events concerning this case study span approximately three and a half years, dating back to the conclusion of the ACP Agreement in 2000, followed by the WTO consultation and mediation process and concluding with the EC’s new Council Regulation of 5 June 2003. As the first case in WTO history to be settled through mediation, it sets a valuable example for fellow member countries, demonstrating that disputes may be resolved within the WTO without resorting to formal litigation.
Although this is a recent case, it is worth noting that the EC-ACP relationship dates back almost forty years to 1963. During this time a number of agreements were produced through which the EC granted ACP countries trade benefits on a number of products, including canned tuna. Thus, for this particular product, ACP countries had been enjoying free access to the EC market for almost thirty years prior to the ACP Agreement of 2000. By the mid-1990s, Thailand’s tuna industry was increasingly feeling the negative impact of this preferential trading arrangement, as reflected in revenue, investment and opportunity losses.
With the formal establishment of the WTO in 1995 and the entry into force of the GATT 1994 rules came a more favourable climate in which to address such preferential or discriminatory trading relationships in the international arena. One of the basic principles of the WTO legal framework is the MFN (most-favoured nation) principle, which states that ‘all WTO Members are bound to grant to each other treatment as favourable as they give to any other Member in the application and administration of import and export duties and charges. A tariff concession made to one Member must therefore be extended immediately and unconditionally to all other Members.’(3) Thus, with regard to the EC’s preferential tariff rates, the legal impetus and the framework within which Thailand could challenge the discriminatory tariff were in place. It would be up to the concerned parties of Thailand to take up the cause, and to gather the information, personnel and determination necessary to see it through to a satisfactory conclusion.
I. The players back to top
The countries concerned here are Thailand and the Philippines on the one hand and the European Community on the other. The Philippines, as a fellow ASEAN and WTO member facing similar difficulties, joined with Thailand in this landmark attempt to prove that preferential tariffs had long been impairing their economic interests, and to seek appropriate redress or compensation from the EC. For the purposes of this case study, however, the focus will remain on Thailand and its actions, although the term ‘complainants’ will be used to refer collectively to Thailand and the Philippines when necessary.
Throughout this process, close collaboration and co-ordination was a vital element between private-sector players — that is representatives of the complainants’ tuna industries — and their respective governments. In Thailand’s case, it was the Ministry of Commerce specifically that provided a strong link between the tuna industry and the Thai permanent mission to the WTO in Geneva, where the mediation took place. At the WTO proceedings, the role of negotiator was assumed by the Thai ambassador to the WTO, who thereby served as the official voice of Thailand.
The Thai tuna industry was represented by Chanintr Chalisarapong, in his capacity as chairman of the Thai Tuna Packers’ Group/Thai Food Processors’ Association. Chanintr acted as a focal point in consolidating industry data and information, as well co-ordinating efforts and co-operation from the private sector side. Since the matter involved issues of international law and practice, lawyers were also hired. Although this was a WTO case, the complainants were challenging the EC, whose headquarters is located in Brussels. Therefore the Thai side chose to engage a law firm based in Brussels, which is where the first round of consultations was also held. Finally, although this case was treated as strictly confidential, no such dispute can exist entirely in a vacuum; therefore, external forces in the form of political pressures from some EC governments had their impact as well.
From the start, the role of each of the major players was well delineated, with each playing to their natural strengths. The major task for the private sector was to provide industry data, information and support in every form possible to the Ministry of Commerce. The Ministry of Commerce, on the other hand, examined the legal and related aspects associated with the negotiation process, as well as providing an official link to Geneva and the WTO proceedings. The Brussels law firm provided in-depth legal counsel and professional backing in writing official submissions, although it did not participate in the actual mediation.
Constructive co-operation between the public and private sectors was a key element for a number of reasons. First, a strong, mutually supportive partnership created a sense of solidarity in a shared pursuit. Second, the government alone would not have been able to allocate the funding necessary for an endeavour of this nature. Therefore, where financial resources were needed, the private sector pooled its funds. Third, the sharing of industry data and information — from sources such as the Customs Bureau, and FAO and EC statistics — enabled the team to build a much stronger case than would otherwise have been possible, which allowed them to maintain consistency and confidence in their positions and arguments throughout the lengthy process. In sum, a vital component of success was the readiness of the affected industry to contribute to its own defence, in terms of funding and manpower.
Of their working relationship with the Thai government Chanintr remarked, ‘We launched into the process of seeking redress, confident in our just cause, equipped with the factual tools and reassured by the full support of the government and its willingness to take the lead in negotiations and in lobbying efforts at all levels.’ This willingness on the part of the government was matched by the private sector’s own efforts: ‘When we saw that there was not enough legal expertise in the ministry, we, the private sector, gathered the funding needed to hire a law firm in Brussels. While representatives of the government engaged actively in the negotiations, we continuously prov
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