Business Environment & Analysis

MINI PROJECT

TOPIC Shrimp Import Agreement and its Impact on India

Group II Members Regina Murtaza Abbas Abhinandan Golchha Ajit Golchha Sharmiza DM-07-004 DM-07-007 DM-07-013 DM-07-014 DM-07-048

The Issue
The legitimate role of the international trade system, particularly, the World Trade Organization (WTO) in promoting national and international standards of environmental protection is contentious. Many cases which have come before the WTO involving issues of environmental protection have been ruled in favor of freer trade. The recent dispute before the WTO regarding the sanction placed on shrimp imported from four Asian countries into the United States was significantly related to the role of multilateral environmental agreements (MEAs) and GATT obligations. In an effort to protect species of sea turtles threatened with extinction, the US has placed an import ban against India, Malaysia, Thailand, and Pakistan pursuant to US domestic law Section 609. In October, 1998, the WTO appellate panel found that although the US law was justified on its face, falling within the ambit of the GATT exception relating to the conservation of natural resources, its implementation amounted to "arbitrary and unjustified discrimination". The WTO ruling, although resulting in a partial victory for environmental concerns, makes it difficult for countries to use unilateral trade measures to protect the environment. The WTO in its report, stressed it preference for the use of multilateral agreements and negotiations in securing agreements to conserve sea turtles before the enforcement of an import prohibition. The criteria for the use of trade measures in MEAs however is still unclear. Proposals are undertaken on including a clear definition on how and under what terms specified trade measures could be used to enforce environmental goals.
Introduction : It prohibited the importation of any shrimp harvested using commercial fishing technologies that might harm seaturtles, unless the exporting country is certified by the U.S. administration as having a regulatory program to prevent incidental turtle deaths comparable to that of the United States or is certified as having a fishing environment that does not pose risks to sea turtles from shrimping, where it adopted a program to require shrimpers to use TEDs on their boats; a country could take up to three years to phase in the comprehensive program; further guidelines, issued in 1993, extended somewhat the final deadline by which a foreign country must implement its program in order to be certified. In 1995, environmental NGOs challenged before the U.S. Court of International Trade (CIT) the decision of the State Department to limit the application of Section 609 to the greater Caribbean area, as well as certain other interpretations that the State Department had made of the law.

History : o 1973 Endangered Species Act is approved. It aims to protect all endangered species from further threats of extinction. While working primarily through and conservation and protection, the ESA also affects harvesting techniques.

o o o o

1987 Voluntary guidelines are issued for including turtle exclusionary devices. 1989 and 1991 Legislation is negotiated to protect all sea turtles in American waters, including Central America and the Caribbean. 1992 Various NGO's pressure the prohibition to cover international shrimp harvests. 1996 A full prohibition of all shrimp from any country that does not have sufficient precautions and regulatory agencies to ensure that the catch of sea turtles is lesser than or equal to that of United States.

Solution to the problem TED In 1989, the United States attempted to impose the TED requirement on shrimpers elsewhere in the world. It allows turtles like the loggerhead to escape from trawl nets through a grid of bars at the top or bottom.

Setback : Did not get along very well with the developing countries : Requirements Expensive Time difference Preferential treatment for some No alternatives accepted

In 1991 Some countries like Mexico, Belize, Guatemala, Honduras, Nicaragua, Costa Rica, Panama, Colombia, Venezuela, Trinidad and Tobago, Guyana, Suriname, French Guyana, and Brazil were required to make a commitment to require all shrimp trawl vessels to use TEDs at all times . nations were given three years for the complete phase-in of a comparable programme. In 1996 Department of State prohibited the importation of shrimp or products of shrimp wherever harvested in the wild with commercial fishing technology which may affect adversely those species of sea turtles the conservation of which is the subject of regulations. While some foreign nations were given ample amount of time to implement the TED technology while the others werent provided much time for switching thus a preferential treatment. Was TED the only option ? o They argued that the use of TED was not the only and most effective device to protect the sea turtles and that TED is not a multilateral environmental standard and that extending the same programme outside the United States was disguised restriction on international trade, because scientific evidence did not demonstrate that shrimp trawling was the principal threat or even an immediate threat to sea turtles elsewhere in the world. In 1996, the Indian government proposed legislation for the requirement of modified "indigenous" TEDs, which they called TSDs (Turtle Saving Devices) to be used by local fishermen. This was a response to the declining olive ridley population that was nesting in beaches such as in Orissa. The modified TSDs were similar to standard TEDs except for having fewer bars. This resulted in the increase of the distance between each pair of bars to ensure that bigger specimens of shrimp and fish were able to pass through the TSD and into the net. It has been acknowledged that the larger sea turtles, primarily large loggerheads and leatherbacks are too large to fit through the escape hatches installed in most TEDs. These turtles remain trapped within the net and perish. TED use becomes impractical due to debris in the water. Result in 10% loss in catch

Response to the United States In October 1996, India, Malaysia, Thailand and Pakistan challenged the U.S. law under WTO dispute settlement procedures, claiming that it was inappropriate for the United States to prescribe their national conservation policies. In April 1998, a panel found that the U.S. measure was inconsistent with Article XI of the General Agreement on Tariffs and Trade (GATT), which provides that WTO Members shall not maintain import restrictions. The United States had maintained that Section 609 fell within the exception under Article XX(g) of the GATT that permits import restrictions relating to the conservation of an exhaustible natural resource. Accordingly, the United States appealed the panel findings to the WTO Appellate Body. What the challengers had to say : Malaysia o Malaysia submitted that none of the Malaysian fishermen used TEDs. A significant amount of wild harvested shrimps were caught using traditional mechanisms (such as hand retrieval nets) which would not in any way cause incidental catches of turtles. Organizations actively involved in the conservation of turtles included the Fisheries Department, local universities, NGOs (e.g. WWF and the Malaysian Society of Marine Sciences) and corporate bodies (as sponsors of conservation projects). Sabah and Sarawak had turtle protection laws, and fishing trawlers were not allowed to operate within designated areas where turtles mated and nested. Therefore, in the case of the Sarawak population of green turtles, even in the absence of TEDs, the population had remained constant over a long period and had been sustained. The Turtle Island of Sabah was constituted as a State Park in 1984, after the Sabah State Government had compulsorily acquired the islands from private ownership. In 1988, after 22 years of 100 per cent egg protection, the nesting population of green turtles showed a reversal in its declining trend; nesting density reached a record in 1991. The active enforcement of fishery laws by the Department of Fisheries had successfully kept the trawlers away from the coastal and Turtle Island waters and the existing trawling operations had been successfully kept away from the migration routes of the turtles. Malaysia had a comprehensive legal framework on the conservation and management of marine turtles which were under the jurisdiction of 13 individual states. The states' legislation on turtle protection had been enacted in 1932 and prohibited, inter alia, the capture, killing, injuring, possession or sale of turtles, collection of eggs, disturbing turtles during laying eggs, and provided for the establishment of turtle sanctuaries. Subsidiary legislation had also been enacted, such as the Customs (Prohibition of Export/Import) Orders of 1988, enforced specifically to ban the exports and imports of turtle eggs to and from all countries.

Malaysia had cooperated with the Philippines in the launching of the Turtle Island Heritage Protected Area in 1996, to develop uniform conservation measures for the turtles on the islands The use of TED alone could not absolutely ensure the survival of turtles.

Thailand : o Thailand submitted that it had a long history of taking action to protect the four species of sea turtles (leatherback, green, hawksbill and olive ridley) within its jurisdiction. The Thai culture embraced a traditional belief that it was sinful to kill sea turtles. As early as 1947, the Fisheries Act had been passed prohibiting the catching, harvesting or harming of any sea turtle. This Act also specified that any accidentally caught turtles had to be released into the sea immediately.

Three branches of the Government of Thailand were responsible for sea turtle restoration programmes: the Department of Fisheries, the Department of Forestry, and the Royal Thai Navy. Sea turtle egg collection programmes were run by 5 Marine Fisheries Development Centers and 13 Coastal Aquaculture Development Centers within the Department of Fisheries. The goal of the restoration programmes administered by these institutions was to cultivate and release 5,000 baby sea turtles a year. From 1967 to 1996, there had been no observed incidental sea turtle kills in connection with shrimping. The reason for this was that sea turtles inhabited coral reefs and sea grass beds within three kilometres of the shoreline where shrimp trawling was prohibited.

During the fifth meeting of the ASEAN Sectoral Working Group on Fisheries, held on 13-14 March 1997, Thailand had suggested that an agreement be negotiated within ASEAN with respect to sea turtles. The meeting had agreed to authorize Thailand to draft a Memorandum of Understanding ("MOU") setting forth the steps that could be taken jointly for the protection and conservation of sea turtles. The MOU committed its signatories to the protection, conservation, replenishment and recovery of sea turtles and of their habitats based upon the best available scientific evidence. The MOU also established a Technical Expert Working Group to prepare an ASEAN programme for Sea Turtle Conservation and Protection, coordinated by Malaysia. It also established mutual recognition of each nation's laws and regulations on this subject and called for harmonization of such laws and for the sympathetic consideration of such new laws that might be proposed by the working group.

Pakistan : o Pakistan stated that its culture embraced a traditional belief that it was sinful to kill sea turtles.

In 1950, Pakistan had passed legislation to protect sea turtles by enacting the Imports and Exports (Control) Act (amended on 13 August 1996), which made it illegal to export protected species, including sea turtles and sea turtle by-products from Pakistan. In addition to laws protecting sea turtles, various public and private organizations in Pakistan were engaged in sea turtle protection programmes. Since 1979, Pakistan's Sindh Wildlife Department was engaged in sea turtle conservation programmes in conjunction with WWF and IUCN (International Union for Conservation of Nature). The Sindh Wildlife Department had also engaged in turtle conservation training programs designed to teach the public about the importance of protecting sea turtles. This programme had proven to be extremely effective in preserving and protecting sea turtles. It was estimated that between October 1979 and December 1995 more than 1.5 million sea turtle eggs had been protected and thousands of hatchlings had been released safely to the sea. Pakistan did not accept the US assertion that the use of TEDs was the only way to prevent the extinction of sea turtles and considered the US action to be an unacceptable interference in policies within Pakistan's sovereign jurisdiction.

India : o Five of the seven species of sea turtles found worldwide are reported to occur in Indian coastal waters and the Bay Islands. The turtle was an incarnation of Lord Vishnu. All the five species of sea turtles that occur in Indian coastal waters are legally protected under Schedule I of the Indian Wildlife Protection Act (1972), as well as listed in Appendix I of Convention of International Trade in Endangered Species of Wild Fauna and Flora (CITES) which ensure that international trade in specimens of wild animals and plants does not threaten the survival of the species in the wild by signatory countries. The nesting population of olive ridley had increased over the past ten years in the Gahirmatha region, off India's Orissa coast, and every year approximately 600,000 olive ridley sea turtles nested in this area. The local government had banned fishing and shrimping within a radius of 20 kilometres around Gahirmatha to protect these turtles. In addition, 65,000 hectares in the Bhitarkanika and Gahirmatha regions had been declared a sea turtle sanctuary. Central Marine Fisheries Research Institute in India monitored olive ridley turtles nesting in some regions during 1978 and 1986, and conducted an exhaustive study on the nesting population. The Institute also operated a hatchery for sea turtles in Madras, from which hatchlings were released at sea.

o o

Impact on India : o o o o o o The US embargo had had a ripple effect on the entire Indian shrimping industry. A great deal of uncertainty within the Indian shrimp industry. Socio -economic condition was closely linked - adversely affected their livelihood Great difficulties to many processing units in India Maintain separate tubs and storage facilities for material from different sources Considerable waste of time and under -utilization of facilities already created.

Environment and the United States : o A survey conducted by Gallup which depicts that there has been a decrese in concern for environment in the US. Each year U.S. factories spew 3 million tons of toxic chemicals into the air, land, and water. That compounds the over one-half billion tons of solid hazardous wastes Environment Performance Index ..Among 132 countries, USA has a ranking of 100 of its ecosystem vitality US the 2nd highest producer of Carbon emission Over time, Americans' concerns about environmental problems have generally declined. A survey was conducted by Gallup which depicted these results Apart from fishing/ shrimping there are the various other reasons for Turtle mortality but rather than creating an international stirs are we doing something to curb these turtle mortality due to these causes

o o o o

1. 2. 3. 4. 5. 6. 7.

Artificial lighting Magnetic Interference Oil spills and marine pollution Fishing Poaching Global warming Disease

One of the greatest threats to the survival of hatchlings is artificial lighting. When a sea turtle hatches, its evolutionary instincts push it to move towards the brightest light in view, which naturally would be the sun or the moon, leading them toward the ocean horizon and into their new ecosystem. However, due to the continual expansion of cities, construction of condos and hotels on coasts everywhere has grown exponentially. With the invention of the light bulb and therefore artificial light, the sea turtles natural source of guiding light has been replaced and is no longer the only or the brightest source of light. With virtually every coast now constantly lit with buildings, the hatchlings become easily confused and turned around, few of them making successful treks to the ocean. Studies support artificial light as the leading cause for hatchling disorientation, showing that in 1999, 51% of the nests studied showed signs of confusion with one-fourth of all the hatchlings headed in the wrong direction Ferrous metal wire mesh screens are commonly used to protect sea turtle nests from predators' excavating and devouring the eggs and hatchlings. A new concern is that nestlings' delicate magnetic sense may not develop normally in the presence of the magnetic field interference from these steel mesh cages. Marine pollution is both directly harmful to sea turtles as well as indirectly, through the deterioration of their natural habitats. Some of the most dangerous ocean pollutants include toxic metals, PCBs,fertilizers, untreated waste, chemicals, and a variety of petroleum products. Oil spills are particularly dangerous to sea turtles. Argument by Plaintiff Nations : India, Pakistan and Thailand argued that the embargo on shrimp and shrimp products was inconsistent with the Most-Favored-Nation ("MFN") principle embodied in Article I:I of GATT. This argument was raised because: Further, the embargo violated Article I:I because, pursuant to the embargo, wild shrimp harvested by use of TEDs were forbidden entry into the United States if harvested by a national of a non-certified country, while shrimp harvested by the same method by a national of a certified country would be permitted entry into the United States. The embargo, as applied, was also inconsistent with Article I:I of the GATT 1994 because initially affected nations had been granted a phase-in period of three years, while newly affected nations had not been given a similar phase-in period. Thus, initially affected nations had been given the opportunity to implement the required use of TEDs without substantially interrupting shrimp trade to the United States. Products from these countries had therefore been given an "advantage, favor, privilege or immunity" over like products originating in the territories of other Members.

Article XI of GATT 1994 provided for the general elimination of quantitative restrictions on imports and exports. The scope of Article XI was comprehensive, applying to all measures instituted or maintained by a Member prohibiting or restricting the import, export or sale for export of products other than measures that took the form of duties, taxes or other charges. Physically identical shrimp and shrimp products from different nations were treated differently by the United States upon imports based solely on the method of harvest and the

policies of the foreign government under whose jurisdiction the shrimps were harvested. Import of shrimp and shrimp products from some shrimp harvesting nations were denied entry into the United States while imports of similar shrimp and shrimp products from other nations were permitted entry into the United States.

Argument by United States The US argued that it had taken measures to protect and conserve sea turtles, an endangered natural resource that all parties to this dispute had agreed needed to be protected and conserved. United States required its shrimp fishermen to harvest shrimp in manner that was safe for sea turtles. In this case, the United States only asked that shrimp imported into the United States to be harvested in a comparable manner. Art XX lays down specific instances in which a WTO member may be exempted from GATT rules. A member can exercise Art XX to protect human, animal, plant life or health. Art XX could also be exercised for conservation of exhaustible natural resources if such measures are made effective in conjunction with restrictions on domestic production or consumption. In reply to this the plaintiff nations argued: The import ban was not about conservation but a unilateral trade measure by the US. United States had the option to work with other nations on additional measures that could be taken to conserve sea turtles without unilaterally imposing its own solutions to the problem. If TEDs usage was the only means of protecting sea turtles from extinction, the United States did not approach the complainants about an agreement on this issue until November1996, long after the embargo had been put in place, after they had notified the United States and the Members of their intention to bring this dispute to the WTO for resolution.

WTO Agreement - first multilateral trade agreement concluded after the UN Conference on Environment and Development, provided that the rules of trade must not only promote expansion of trade and production, but must do so in a manner that respects the principle of sustainable development and protects and preserves the environment.

The Decision : Panel Ruling: April 6th, 1998 Article XI of GATT provides for general elimination of quantitative restrictions and is comprehensive and applies to all measures instituted or maintained by any member with regard to imports or exports. Measures prohibited by Art XI includes outright quotas, and quantitative restrictions through import or export licenses.

And Art 609 of US constitutes prohibition or restriction of import of shrimp products and is not in nature of duty, tax, or other charges within the meaning of Art XI. In other words, Section 609, amounts to prohibition or restriction on the import of shrimp within the meaning of Article XI. As far as Art XX is concerned, it dealt with specific exceptions to GATT rules. And United States argued that its measures were justified under Art XX (b) and (g). US also argued that Art XX did not contain any jurisdictional limitations as to the location of animals or natural resources to be protected or conserved.

The panel found that plaintiff nations were given substantially less notice by the US than other countries before being forced to comply with the TEDs requirements and that it is a form of discrimination between countries where the same conditions prevailed. Therefore, the panel concluded that the US measure constituted unjustifiable discrimination between countries.