United States—Import Prohibition of Certain Shrimp and Shrimp Products, Recourse to Article 21.5 by Malaysia

WT/D558/AB/RW (2001)

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United States—Import Prohibition of Certain Shrimp and Shrimp Products, Recourse to Article 21.5 by Malaysia

World Trade Organization Appellate Body
WT/D558/AB/RW (2001)

Facts

In 1998, the World Trade Organization (WTO) Appellate Body ruled that the United States (U.S.) engaged in unjustifiable and arbitrary discrimination in violation of the chapeau of WTO Article XX. Specifically, the appellate body ruled that the U.S.’s program regarding the importation of shrimp products was improperly discriminatory because it required exporters to adopt essentially the same sea-turtle protection polices as used in the U.S. Per the appellate body, Article XX required more flexibility. The appellate body further concluded that the U.S. had to negotiate in good faith potential shrimp-import agreements with all relevant countries. The U.S. proceeded to negotiate agreements with, among others, Southeast Asian countries. Those negotiations resulted in a memorandum that was likely to be formalized in 2001. In the meantime, the U.S. promulgated new rules allowing countries to import shrimp products to the U.S. if they followed turtle-protection policies comparable to those used in the U.S. Malaysia challenged the new regulations, claiming that the U.S. failed to negotiate in good faith and engaged in improper discriminatory negotiations, as evidenced by the lack of a binding agreement. Malaysia further claimed that the U.S. failed to cure its improper discrimination because the new regulations still were too inflexible to account for local conditions. A WTO panel rejected Malaysia’s challenge. In doing so, the panel compared the U.S.’s negotiations with Southeast Asian nations with its negotiations that resulted in the Inter-American Convention (IAC) to evaluate whether the U.S. devoted comparable efforts, resources, and energy to the two sets of negotiations. Based on that comparison, the panel concluded that the U.S. negotiated in good faith with the Southeast Asian nations. The panel further ruled that the new regulations were sufficiently flexible so as not to constitute improper discrimination. Malaysia appealed to the appellate body, arguing that (1) the U.S. duty to engage in good-faith negotiations and avoid improper discrimination required the U.S. to conclude an agreement, (2) the WTO incorrectly treated the IAC negotiations as a legal standard, and (3) the WTO erroneously found that the new U.S. regulations were proper.

Rule of Law

Issue

Holding and Reasoning ()

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