Sweden Claws Back Privileges on Lobsters

By Laura Bassett

Background

Something may be rotten in the state of Denmark,[1] but there’s also something (shell)fishy in the state of Sweden! Following a complaint that has been simmering for a year now, Sweden recently announced its decision to continue pushing for a trade ban on American Lobsters.[2]  The complaint was first voiced in March 2016, when Sweden claimed that there were around 30 American Lobsters found with their claws banded along Sweden’s west coast over the past few years. [3] This discovery prompted the Swedish Ministry of Environment and Energy to seek an importation ban on these lobsters due to concerns about “their potential to harm European lobsters with diseases, bacteria, and parasites.”[4] The Swedish government wants American Lobsters to be declared an invasive species.[5] However, claiming something as an invasive species doesn’t automatically excuse the restriction on trade.

Sweden wants the EU to ban American Lobsters, meaning that if this ban is instituted, it wouldn’t just ban imports into Sweden; the ban would stretch to the other 28 (or now, 27[6]) countries of the European Union.[7] In September 2016, it looked as though Sweden would be able to win its bid to label American Lobsters (Homerus americanus) an invasive species.[8] Sweden submitted an 85-page risk assessment alleging that the discovery of American Lobsters—in particular, of a female lobster carrying hybrid eggs—proved that there has been cross-breeding between the species and its European counterpart.[9] The Scientific Forum on Invasive Alien Species—which is comprised of appointed experts from each EU member state—determined that the risk assessment was valid and announced its intention to open an investigation.[10] However, in October 2016, the EU’s Committee on Invasive Alien Species—the political counterpart to the Forum’s Scientific purpose—decided not to list the American Lobster as an invasive species“for technical reasons”.[11] In January 2017, though, Sweden reaffirmed its desire to restrict the importation of American Lobsters, even if it could only do so by national or regional measures.[12] Regardless of whether Sweden successfully inhibits trade of the lobsters to the EU or just to Sweden, these measures will tend to restrict international trade and will therefore, be subject to the rules governing the World Trade Organization.

Governing Law

Canada[13], Sweden and the US were parties to the original General Agreement on Tariffs and Trade (GATT), and they, along with the European Union (formerly the European Communities) are parties to its successor entity, the World Trade Organization.[14] As such, the GATT (1994) will govern any disputes between members, and the WTO Panel Decisions and Appellate Body Decisions will be persuasive on this matter.

As a general rule, any trade restrictive measures are impermissible under the GATT 1994 unless they can be justified under Article XX of the GATT 1994.[15] Article XX does allow for “necessary” restrictions, which are determined through a balancing test that looks at the contribution of the measure to the ends pursued, the importance of the common interests or values protected, and the impact of the measure won imports and exports.[16] Under this analysis, even though there is no measure more restrictive than an import ban, such as ban may nevertheless be determined to be “necessary” for the means pursued.[17]However, if the ban on lobsters was found to be “necessary” under the general exceptions in Article XX, Sweden would still have to prove that the measure makes a material contribution to the solution—as opposed to a marginal contribution—and that there was no alternative that was less trade restrictive that would still preserve the member’s (aka Sweden’s) right to achieve the desired level of protection for the right pursued.[18] Finally, such measures must also satisfy the chapeau, which states that the issue must not a) be applied so as to constitute a means of arbitrary discrimination, b) be applied so as to constitute unjustifiable discrimination or c) be a disguised restriction on trade.[19]  The leading case on chapeaus, US—Shrimp, states that the chapeau must allow for the same treatment for the same circumstances and different treatment for different circumstances, as well as some flexibility so as not to be arbitrarily rigid.[20]

Application

If Sweden can prove that the European Lobster and the American Lobster are not “like products,” there will be no problem; that situation will be more analogous to EC-Asbestos, in which the Appellate Body determined that the products containing asbestos were unlike the products not containing asbestos, though they were used for similar purposes.[21] This allowed the European Communities (now, the European Union), to implement trade restrictive practices against products containing asbestos.[22] However, if the species of lobsters are determined to be “like products,” Sweden (or the EU, if they reconsider) will be in violation of GATT Article 3.[23] In Sweden’s case, Sweden could attempt to argue the ban under Article XX(b) (“Protect Human, Animal[,] Or Plant Life Or Health”)[24] or under the SPS. If Sweden makes an internal regulation of sorts, they may also try to argue under Article XX(E) (“Secure Compliance With Laws Or Regulations”).[25] Under XX(E), Sweden will have to consider both the Korea—Measures Affecting Imports of Fresh, Chilled, or Frozen Beef case and the Colombia—Indicative Prices and Restrictions on Ports of Entry case from the Dispute Settlement Body’s Panel. In Korea—Beef, arbitrage was contributing to practices that were considered deceptive under the Korean Unfair Competition Act; this lead to a separation of the imported beef from the domestic beef at the retail level.[26] The Panel determined that the dual retail system employed by Korea to distinguish between the more-expensive domestic beef and the cheaper foreign beef was an adequate way of implementing the consumer protection purpose of the Unfair Competition Act. Similarly, the Panel upheld Colombia’s argument that its laws—limiting foreign textiles and apparel to 11 of its 26 ports of entry—to be presumptively GATT-consistent in Columbia—Ports of Entry.[27] The Panel reiterated an Appellate Body finding that national laws should be presumptively GATT consistent until proved otherwise, but the Panel then struck down the specific laws at issue because Colombia had failed to prove that the measure materially contributed to the goal and because the full extent of the restrictiveness was unknown.[28]

In summary, Sweden will have an uphill battle to justify such measures under Article XX(b) or XX(e) of the GATT.

[1] Act 1, Scene IV, Line 90 of Hamlet

[2] Patrick Whittle, Sweden still wants to ban American lobster imports, Portland Press Herald (Jan. 19, 2017), http://www.pressherald.com/2017/01/19/sweden-not-giving-up-fight-over-lobster-imports/.

[3] J. Craig Anderson, Sweden seeks to stop imports of live Maine lobster into Europe, Portland Press Herald (Mar. 18, 2016), http://www.pressherald.com/2016/03/18/sweden-asks-eu-to-help-stop-american-lobster-invasion/.

[4] Id.

[5] Id.

[6] 'No turning back' on Brexit as Article 50 triggered, BBC News (Mar. 30, 2017), http://www.bbc.com/news/uk-politics-39431428?intlink_from_url=http://www.bbc.com/news/live/uk-politics-39424391&link_location=live-reporting-story;  For an explanation of why the official Brexit is now imminent, see Laura Bassett, How Exactly Will Britain Leave the EU, Michigan State International Law Review Legal Forum (September 27, 2016), https://www.msuilr.org/msuilr-legalforum-blogs/2016/9/27/brexit-how-exactly-will-britain-leave-the-eu.

[7] Dispute Settlement Body, World Trade Organization, last accessed Mar. 31, 2017, https://www.wto.org/english/tratop_e/dispu_e/dispu_body_e.htm.

[8] Penelope Overton, Sweden’s Proposed Ban on American Lobsters Clears First Hurdle, Portland Press Herald (Sep. 6, 2016), http://www.pressherald.com/2016/09/06/swedens-proposed-ban-on-american-lobsters-allowed-to-move-forward/.

[9] Id.

[10] Penelope Overton, Sweden’s Proposed Ban on American Lobsters Clears First Hurdle, Portland Press Herald (Sep. 6, 2016), http://www.pressherald.com/2016/09/06/swedens-proposed-ban-on-american-lobsters-allowed-to-move-forward/.

[11] Penelope Overton, European Union Decides it Won’t Ban Imports of American Lobster, Portland Press Herald (Oct. 14, 2016), http://www.pressherald.com/2016/10/14/european-union-wont-ban-american-lobster/.

[12] Patrick Whittle, Sweden still wants to ban American lobster imports, Portland Press Herald (Jan. 19, 2017), http://www.pressherald.com/2017/01/19/sweden-not-giving-up-fight-over-lobster-imports/.

[13] Although not previously mentioned, Canada also exports the specific type of lobster named the “American Lobster,” and as such, Canada has joined the US in its challenge. See, Id.

[14] Members & Observers, World Trade Organization, last accessed Mar. 31, 2017, https://www.wto.org/english/thewto_e/whatis_e/tif_e/org6_e.htm.

[15] [cite]

[16] Joost Pauwelyn, Andrew T. Guzman, & Jennifer A. Hillman, International Trade Law, 391 (3d ed. 2016).

[17] Id. at 581; See, also, Appellate Body Report, EC—Asbestos (2001).                                 

[18] Id. at 391 (citing Appellate Body Report, Brazil—Tyres (2007)).

[19] Id. at 420 (citing Appellate Body Report, US—Standards for Reformulated and Conventional Gasoline, WT/DS2/AB/R (adopted May 20,1996)  (1996)).

[20] Id. at 423-30.

[21] Id. at 381 (citing Appellate Body Report, European Communities—Measures Affecting Asbestos and Asbestos-Containing Products, WT/DS135/AB/R (adopted Mar 12, 2001) (2001)).

[22] Id.

[23] General Agreement on Tariffs and Trade art. 3.

[24] Pauwelyn, Guzman, & Hillman, supra note 16, at 401.

[25] Id. at 405.

[26] Id.

[27] Id. at 406.

[28] Id. at 407-08.