Mexico loses 10-year WTO battle over U.S. tuna labelling

By Tom Miles

GENEVA (Reuters) - The United States won a legal battle over "dolphin safe" tuna-labelling on Friday, when the World Trade Organization's appeals judges dismissed Mexico's argument that the U.S. labelling rules violated WTO rules.

More than 10 years after the dispute first came to the WTO in October 2008, the WTO ruling ended Mexico's claim that U.S. labelling rules unfairly penalised its fishing industry.

Mexico said it had cut dolphin deaths to minimal levels but that it was being discriminated against by U.S. demands for paperwork and sometimes government observers. Tuna catches from other regions did not face the same stringent tests, it said.

Mexico will now aim to grow its tuna industry in other markets while attempting to re-establish a dialogue with the United States, said Luz Maria de la Mora, its foreign trade sub-secretary, on a local radio program.

"The industry will have to decide if it's convenient to modify its fishing method, but I don't think that will happen because it's a sustainable, responsible method," she said.

The dispute centred on U.S. refusal to grant a "dolphin safe" label to tuna products caught by chasing and encircling dolphins with a purse seine net in order to catch the tuna swimming beneath them. Mexico's tuna fleet in the eastern tropical Pacific Ocean used such methods almost exclusively.

"Dolphin-safe tuna" could only be used to describe tuna captured in nets where there was no death or serious injury of dolphins. But the WTO found that "setting on" dolphins with a purse seine net was likely to kill or injure them, even if there was no observable evidence of such deaths and injuries.

The United States lost a first round of the legal battle and changed its rules in 2013. The WTO said the rule change was not enough and a second U.S. rule change followed in 2016.

In April last year Mexico won the right to impose $163 million in annual trade sanctions if the WTO ruled that U.S. labelling laws were still not in line with WTO rules. Mexico had said it planned to impose the sanctions on imports of U.S. high-fructose corn syrup.

Six months later the WTO said the U.S. tuna labelling rules were now WTO-compliant, derailing Mexico's case and its claim for sanctions. Mexico appealed, leading to Friday's ruling.

(Reporting by Tom Miles in Geneva; Additional reporting by Noe Torres and Daina Beth Solomon in Mexico City; Editing by Stephanie Nebehay, Richard Balmforth and Sam Holmes)