Trump Loses to Mexico in First Major Trade Dispute

‘Master negotiator’ Donald Trump, who once told supporters that he is here to “win, win, win,” just lost a major trade fight against Mexico. On Tuesday, the World Trade Organization ruled against the United States in a years-long trade dispute over Mexican tuna cans.

The Dispute

The WTO told the U.S. it should fix its labeling policies for tuna cans even though the Obama administration had revamped the rules two years ago. In 2015, the WTO found that the U.S.A. discriminated against its southern neighbor when it applied a less favorable treatment to Mexican tuna can imports.

The dispute dates back to 2008, when Mexico filed a complaint with the international group, saying that the U.S.’s “dolphin safe” rules were purposely designed to restrict Mexican imports from entering the U.S.

The Mexican tuna canning industry insists its products are dolphin safe and accuses the U.S. of running a covert protectionism.

Because of the WTO ruling, Mexico is now free to impose annual trade sanctions on the U.S.

Meanwhile, the U.S. can choose to either appeal the decision or settle with Mexico to close the case. The dispute is very similar to the beef labeling feud the U.S. had with Canada in 2015.

Mexico has disputed the rules for more than two decades over strict U.S. regulations that have kept its canned tuna out of the American market for years by barring the products from wearing a dolphin-safe label. Mexico holds 3.5 percent share of the market.

The U.S. claims the yellow tuna in the Eastern Tropical Pacific where Mexican fisheries operate swim with dolphins, which then get caught in the nets. Before the international agreement was reached, millions of dolphins died needlessly.

Mexico Claims It Has Been Discriminated Against

Thanks to international efforts in the ETP, Dolphin deaths are down significantly in the region. Mexico claims that its dolphin death thresholds are even stricter than those in the U.S., but they claim the US has blocked them from labeling their cans as “Dolphin-friendly” over paperwork issues.  What’s more, Mexico argues that the U.S. is not as strict with tuna coming from other regions, where ship’s captains are allowed to certify no dolphins were harmed. In addition, they claim there has never been an instance of a Mexican ship’s captain caught lying when giving the certification.

The U.S. defense said that the country makes distinctions for tuna coming from different countries because the fishing methods are different. The international trade panel, however, ruled the differing certification rules, although sometimes justified from a conservationist point of view, were unfair to Mexico.

The Central American country can now claim $163 million-per-year damages from the Trump administration. The sum represents the approximate annual loss for Mexico tuna exports caused by the U.S. restrictions. Mexico’s economic ministry recently told CNN that his country would take immediate action to reclaim the $163 million from the U.S.

This outcome of the dispute could serve as a (yet another) reality check for Trump supporters who still think the president sticks with his promises like the one to hire the best negotiators to help the U.S. win trade disputes such as this.

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