THAILAND: CONCILIATING

A DISPUTE ON TUNA
EXPORTS TO THE EC
MANAGING THE CHALLENGES OF WTO
PARTICIPATION
CASE STUDY40

COURSE : EEM 709 TRADE &

ENVIRONMENT

PRESENTED BY : SYED MIR AHMER ALI

(16943)

OVERVIEW OF
PRESENTATION

CASE SUMMARY
TUNA FISH
THAILANDS EXPORT PROFILE
CASE BACKGROUND
CLIMATE OF NEGOTIATION
SETTLEMENT PROCESS
CRITICISIM ON SETTELMENT
LEARNING OUTCOME
TRADE AND ENVIORNEMENT NEXUS

TUNA FISH - CHICKEN OF THE

SEA

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,

Easy
accessibility
and
popularity translates into big
business, thriving markets
and fierce competition.

CANNED
TUNA
an
important source of income

TYPE OF TUNA FISH

Source : http://www.atuna.com/index.php/en/tuna-info/tuna-species-guide

THAILANDS EXPORT
PROFILE

3RD largest producer/exporter of canned tuna in

World
31% of Global share of volume of exports
Thailands biggest export destinations are ;
United States of America
European Community (EC)
Canada
Thailand industry is capable of considerably better
performance given more equitable access to the
EC market.

TUNA DEPENDNET
ECONOMY
Thailands tuna industry is exportoriented,
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.

CASE SUMMARY
THAILAND WAS FACING AN INHIBIT
TARIFF OF 24% WHILE ACP
COUNTRIES WERE ENJOYING ZERO
TARIFFS ON TUNA IMPORTS WHICH
WAS PROVING DETRIMENTAL TO THE
LEGITIMATE ECONOMIC INTERESTS
OF THAILAND AS A MAJOR
PRODUCER OF CANNED TUNA

ACP = African, Caribbean and Pacific state

BACKGROUND OF EC-ACP
AGREEMENT

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.

For CANNED TUNA 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,
increasingly feeling
preferential trading
revenue, investment

Thailands tuna industry was

the negative impact of this
arrangement, as reflected in
and opportunity losses.

FAVOURABLE CLIMATE
With the formal establishment of the WTO in 1995 and
the entry into force of the GATT 1994 rules came a
more favorable 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 Favored Nation)
principle, which states that
All WTO Members are bound to grant to each

other treatment as favorable as they give to any

other Member in the application and
administration of import and export duties and

FAVOURABLE CLIMATE
A tariff concession made to one Member must be
extended immediately and unconditionally to all
other Members of WTO .
Thailand challenge the discriminatory tariff were in
place with respect to Legal framework in place.

CLIMATE IN FAVOUR OF
THAILAND

DOHA MINISTERIAL CONFERENCE (9-13

NOVEMBER 2001)
A give-and-take situation presented itself. The ECACP Agreement could not be extended without the
consensus of all WTO members in approving the
adoption of the requested waiver. Realizing that
Thailand would not concede, the EC agreed to hold
consultations with Thailand and the Philippines to
examine their differences.
In the end, Thailand agreed to concede on the waiver,
on condition that their case be taken up in an
appropriate forum, with the aim of resolving the
conflict of interest.

WTO: DISPUTE
SETTLEMENT
UNDERSTANDING
(DSU)
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 in
the WTO Agreement.
There are three major stages to the DSU:
i.
ii.

Consultation between the concerned parties

Adjudication/ arbitration by Panels and the Appellate
Body
iii. 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,

PRO & CONS OF DSU

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 COMPLAINANTS
PLAYERS
European
Communi
ty

Thailand
&
Philippin
es

The Philippines, as a fellow ASEAN and WTO member

facing similar difficulties, joined with Thailand
Complainants collectively refer as Thailand and the
Philippines.

ASEAN = Association of Southeast

WTO PROCEEDINGS : THAI

NEGOTIATOR

DR.CHANINTR
CHALISARAPONG

THAI AMBASSADOR TO THE WTO, WHO

THEREBY SERVED AS THE OFFICIAL VOICE
OF THAILAND

THE PLAYERS

Private
Sector

The major task was to provide

industry data, information and
support in every form possible to
the Ministry of Commerce

Ministry
of
Commer
ce

Examined the legal and related

aspects
associated
with
the
negotiation process, as well as
providing an official link to Geneva
and the WTO proceedings.

Brussels
Law Firm

The Firm provided in-depth legal

counsel and professional backing in
writing
official
submissions,
although it did not participate in the
actual mediation.

FOCAL
POINT

From the start role of each players was well delineated

Chanintr
Chalisarap
ong

CASE OVERVIEW
(Chronological Oder)
mediator came out with an advisory opinion
20 December 2002

New EC Council Regulatio

(Officially Adoption of Quota)

WTO Ambassadors Oral
Statements
5 November 2002

WTO Mediator
21 October 2002
Rounds of Consultations
6-7 December 2001 (Brussels)
29-30 January 2002 (Manila)
4-5 April 2002 (Bangkok)
Requesting Dir. General -WTO for
4arbitration
September 2002

5 June 2003

New Quota of 25K tonnes @ tariff o

- Thailand (for 52% or 13, 000 tonnes),
- Philippines (36% or 9, 000 tonnes)
- Indonesia (11% or 2, 750 tonnes) and
- Other third countries (1% or 250 tonn

Doha Ministerial
Conference
9-13 November 2001
EC requested waiver of MFN
obligations
2
March 2000
EC - ACP
03
February 2000
Agreement

The Events of Case Span Approximately Three and a

 Another challenge related to WTO members rights

and obligations and the difficulty in striking a
balance between what one might characterize as a
legal versus a political spin on the situation.
Legally speaking, Thailand had a solid right to pursue
dispute resolution. Politically speaking, however, one
must recall that in the WTO there are certain forms of
positive discrimination which are acceptable; that is,
discrimination in favour of the poorest countries. In
the light of this, Thailand argued that, while the
preferential tariff was perhaps justifiable in the
1970s as a means of support for least developed
countries (LDCs), greatly improved investment
and economic situations in the ACP countries by
the 1990s no longer warranted it. Thailand did not

THAILAND SUPPORTER
Doha, Brussels or Geneva
Of the fifteen EC members at the time, northern
Europe supported our cause, as they had no tuna
industry of their own to protect. Spain and Portugal, on
the other hand, were extremely opposed to the
mediators opinion.
In between were France and Italy. We realized that
Frances opinion carried so much weight among EC
constituents that it could have turned the majority vote
within the EC either way.
Thailand - Prime Minister paid an official visit to France
at the time and he raised the issue with President
Jacques Chirac. He also held discussions with the French

RESULT
Regulation No.975/2003 of 5 June 2003
Tariff-rate quota suggested by the mediator was officially
adopted.
The Regulation specifies that the tariff quota shall be
opened annually for an initial period of five years.
first two years shall be fixed as follows:
25,000 tonnes from 1 July 2003 to 30 June 2004,
25, 750 tonnes from 1 July 2004, to 30 June 2005.

The regulation also allowed for a revision in the second year

after the tariff quota is opened, so that the volume of the
quota could be adapted to the market needs of the EC, if
necessary.
The regulation entered into force following its publication in
theOfficial Journal of the European Union, and is binding in
its entirety and directly applicable in all EU Member States.

Lessons

This case is a good example of how developing country members were able to use
their WTO rights to secure more equitable treatment from a developed country
trading partner.

Once the positive resolution had been reached, EU Trade Commissioner Pascal
Lamy travelled to Bangkok to inform Thailands Minister of Commerce, Adisai
Bhodharamik, an indication of continued good relations between the two trading
partners.

Indeed, Chanintr emphasized that, although the tariff situation was of great
importance to its canned tuna industry and national interests, Thailand made a
conscious effort to maintain good relations with the EC throughout the proceedings.
He said that

in resorting to the dispute settlement process, we did not seek to confront, but
opted for friendly persuasion and understanding. After all, the EC is one of our
major trading partners, and a very important consumer not only of Thai tuna but
in other sectors as well. We intended to avoid at all costs doing anything that would
jeopardize our long-standing and good relationship with the EU.

Lessons
On a broader level, it is well accepted
that taking action can itself be a sticking
point for developing countries wary of
investing the time, energy and financial
resources in a consultation and mediation
process which may not even produce any
binding outcomes, let alone taking the
matter to Panel proceedings. This is often
the case for other sectors within Thailand
as well.

 Economic players collect data and maintain consistent industry

information. Solid factual evidence makes a legal impression and
argument on the opposing side.
Initially EC
complainants

rejected just about every argument made by the

Thailands ambassador to the WTO was assure that the private sector
would not back down, and that they would continue to support the
government.
Another major obstacle is the issue of unity within a given industry or
sector, which is often lacking, resulting in poor co-ordination and
teamwork. Therefore, efforts must be made to achieve the level of
commitment and the momentum necessary to support the industry
throughout the dispute settlement process.

THAILAND : MESSAGE TO
WORLD
Thailands main
objective was to show
the international
community that an
unfair practice was
being directed at the
complainants and that
they were serious about
challenging it

CRITICISM
12% TARIFF IS STILL TOO
HIGH

ANSWER TO CRITICISM
In the word of Chanintr
Ambassador of Thailand

Compromise was the best outcome,

and we are satisfied with the result.
We wanted a win-win situation
where trade would be managed as
fairly as possible. We didnt want to
take advantage of our opponent, or
to simply turn the tables on them.

LEARNING OUTCOME
1. Co-operation between a well-represented tuna industry and the Thai government .
2. Government and the private sector working hand in hand can be the best weapon to
defend our national interests.
3. The government cannot negotiate effectively without good information and support
from the private sector.
4. The two sectors must work together and determine very clearly how much time and
resources they have to spend and, if they win, how much the industry will benefit as
a whole.
5. This case sets a precedent for other member countries, demonstrating that even
without full court proceedings, a binding result could ultimately be achieved.
6. Thailand present close collaboration between government officials and industry
leaders challenged proposed changes in EU tariff preferences.
7. The Thai tuna case illustrates the operation of the conciliation procedures in WTO
disputes, using the good offices of the Director General of the WTO.
8. These provisions of the disputes mechanism do not capture headlines in the same
way as a panel adjudication, but they offer many advantages as this case shows,
including less contentious procedures, and significantly lower costs.

HISTORICAL RECORD OF
CASE
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.

GAIN ON SOLUTION
The tuna industry of Thailand fights
to retain access to the European
Union (EU) market on comparable
terms
to
its
competitors,
but
manages to avoid a costly formal
dispute adjudication.

Trade & Environment Nexus

rights and obligations

legal versus a political
Status of Quo
fully-fledged legal battle