IV. ARGUMENTS OF THE PARTIES

1. Relationship between GATT 1994 and the SPS Agreement

IV.1 The European Communities considered that the SPS Agreement would apply only if a violation of the Articles of GATT were to be established. The European Communities argued that the General Interpretative Note to Annex 1A of the WTO Agreement provided that:

"In the event of conflict between a provision of the General Agreement on Tariffs and Trade 1994 and a provision of another agreement in Annex 1A to the Agreement Establishing the World Trade Organisation ...., the provision of the other agreement shall prevail to the extent of the conflict" (emphasis added).

IV.2 The European Communities argued that the SPS Agreement codified, as the last recital of its preamble stated, the desire of the Members "to elaborate rules for the application of the provisions of GATT which relate to the use of sanitary or phytosanitary measures, in particular the provisions of Article XX(b)". Furthermore, it was well established GATT law and practice that GATT 1947 did not affect the power of its Members to set up a regulatory policy which they deemed necessary in order to protect human, animal or plant health. But the conformity of the measures it applied for that purpose could be reviewed under GATT.¹⁵ It was, therefore, admitted that a violation of GATT by a measure should be established first, before recourse to possible justifications (e.g. under Article XX(b)) could be considered. In such an event, the Panel could review the measure but not the underlying policy objective on which it was alleged to be based. The European Communities noted that there were several new provisions in the SPS Agreement that established a series of rights and obligations for Members. However, the SPS Agreement reaffirmed the right of Members to adopt or enforce measures the Member deemed to be necessary to protect human, animal or plant health (recitals 1 and 6 of preamble). It could therefore be argued that most of the obligations created by the SPS Agreement were already applied under GATT 1947 through interpretations of Article XX(b) by panel reports and the CONTRACTING PARTIES.

IV.3 The European Communities claimed that Article 2.4 of the SPS Agreement established that SPS measures which conformed to the Agreement were "presumed" to be in accordance with the obligations of the Members "under the provisions of GATT which relate to the use of sanitary or phytosanitary measures, in particular the provisions of Article XX(b)" (emphasis added). Despite the fact that the words "in particular" appeared in Article 2:4, it was hard to imagine other provisions of GATT "which relate to the use of sanitary or phytosanitary measures".

IV.4 The European Communities noted that, in their "Statement of Administrative Action", the USTR had explained that:

"The S&P negotiations initially began as an attempt to elaborate on the provisions of Article XX(b). The Agreement extends beyond an interpretation of existing GATT provisions, however, and includes new obligations - in particular, transparency requirements such as providing notice of, and an opportunity to comment on, proposed S&P measures."¹⁶

Therefore, if the SPS Agreement were to be defined as a self-standing agreement this was not because it interpreted provisions of GATT other that Article XX(b), but only because it laid down additional procedural requirements. The substantive role of the SPS Agreement, was to interpret Article XX(b) of GATT. In other words, recourse to the substantive provisions of the SPS Agreement could be made only under the same conditions under which recourse could be made to Article XX of GATT, that was only after a violation of another provision of GATT was first established. As far as the additional, procedural obligations laid down by the SPS Agreement were concerned, these could be examined by the Panel directly and independently of any need to establish first a violation of the provisions of GATT.

IV.5 The United States claimed that the EC ban was subject to the SPS Agreement because the Agreement applied to "all sanitary and phytosanitary measures which may, directly or indirectly, affect international trade"¹⁷ and the EC measures were sanitary measures, as defined by the SPS Agreement, which directly and indirectly affected international trade. The SPS Agreement was specifically tailored to SPS measures and was the lex specialis in this instance. It made sense to look first to the agreement most specifically designed to address the types of measures and issues involved. The SPS Agreement applied to all SPS measures, and applied whether or not a Member was invoking a GATT exception for such measures. It imposed requirements additional to those in Article III and to the conditions for justifying the application of the exception in Article XX(b). For instance, Article 3.2 of the SPS Agreement provided that an SPS measure conforming to international standards, guidelines or recommendations was presumed to be consistent with the "relevant provisions" of not only GATT, but also the SPS Agreement itself. The Agreement stood independently from GATT. Thus, a complaining party did not need to first show that an SPS measure was inconsistent with GATT before it might invoke the provisions of the SPS Agreement.

IV.6 The United States submitted that the negotiating record confirmed that the SPS Agreement was intended to go beyond GATT and to impose requirements additional to those in GATT. In the earliest phases of negotiations on SPS issues, the discussions had focused on further definition of Article XX(b). Up to the Dunkel Draft text (MTN.TNC/W/FA of 20 December 1991), the SPS text was phrased as a Decision of the CONTRACTING PARTIES interpreting the GATT, simply because participants had wished the proposed disciplines to apply to all GATT contracting parties and only a Decision (as opposed to an optional-membership Code) would accomplish that result.¹⁸ However, in April 1992, when the possibility emerged of using the MTO Agreement (later renamed the WTO Agreement) to tie the Uruguay Round results together into a "single undertaking", negotiators had agreed to change the form of the text to a free-standing Agreement in Annex 1A of the MTO Agreement.¹⁹ In contrast, the various Understandings on GATT Articles began as decisions interpreting the GATT and were finally incorporated into GATT. Had the negotiators intended that the SPS Agreement be nothing but a clarification of the GATT, in whole or in part, the United States argued, they would have given its provisions the same form as, for instance, the Understanding on the Interpretation of Article XVII of the GATT. The European Communities' suggestion that the SPS Agreement could be divided between provisions that applied to all SPS measures (and applied under all circumstances), and other provisions which only applied if an SPS measure violated the GATT, had no basis in the text of the SPS Agreement.

2. The SPS Agreement

IV.7 The United States claimed that according to the definition of sanitary and phytosanitary measures in the SPS Agreement, whether a measure was a sanitary measure depended on its purpose.²⁰ The United States noted that the purported sanitary purpose of the EC measures was stated in the texts of the EC Council Directives themselves, and was apparent from the history of the EC measures and subsequent statements of the European Communities, including statements to Contracting Parties of the GATT 1947. In reviewing the proposal for Directive 81/602/EEC, the European Economic and Social Committee had recognized that "there is an urgent need to draw up EC provisions in order to protect human health".²¹ Similarly, the debate of the European Parliament on the proposal for Directive 88/146/EEC underscored the claim that the EC measures were designed to protect human health from risks associated with the use of the hormones at issue.²² The preamble to Directive 81/602/EEC stated in part: "Whereas, due to the residues that they leave in meat, certain substances with a thyrostatic, oestrogenic, androgenic or gestagenic action may be dangerous for consumers" and "Whereas, moreover, the harmless or harmful effects of the use of Oestradiol-17b, Progesterone, Testosterone, Trenbolone and Zeranol still have to be examined in detail." This concern for human health was carried forward with Directive 88/146/EEC.²³ In addition, during the discussion in the Tokyo Round Committee on Technical Barriers to Trade concerning the EC measures, the EC representative had stated that the European Communities "adopted the Directive as the best way of avoiding any health risks connected with the use of hormonal substances".²⁴ The United States argued that although the European Communities had stated that the purpose of its measures was a sanitary purpose, ostensibly to protect human life or health within the European Communities from risks arising from additives, contaminants, or toxins in food, the measures were not legitimate sanitary measures.

IV.8 The European Communities agreed with the United States that the measures challenged were better defined as measures falling within the scope of the SPS Agreement rather than the TBT Agreement. The European Communities noted that an essential link of the SPS disciplines with the regulatory freedom of the parties was that the measures applied were of concern to the SPS Agreement (and the WTO system) only if they affected international trade. Moreover, the SPS Agreement defined the measures to which it applied on the basis of the objective of the measure and the type of product to which it was applied.

IV.9 The United States claimed that the EC measures on their face applied to imports of animals and meat, prohibiting imports of animals to which any of the hormones at issue had been administered for growth promotion purposes, and imports of meat from such animals. They clearly affected international trade and, when they were applied, they closed market access for significant quantities of imports from the United States²⁵ and other Members and continued to block imports of animals and meat.

IV.10 The United States observed that US exports of beef and veal to the European Communities in the three years prior to the ban (1986-88) averaged in the hundreds of millions of dollars, and trade to the European Communities during the 1985-87 period was growing at about 30 per cent per year.²⁶ In 1989, when the ban went into effect, US exports plummeted to nearly zero. Moreover, as a result of various rounds of multilateral trade negotiations, the European Communities had bound its tariffs on all products affected by the measures at issue. In the Tokyo Round of Multilateral Trade Negotiations, concluded in 1979 prior to the adoption of the EC measures at issue here, the United States negotiated a quota for 10,000 tonnes of high-quality beef subject to a tariff of 20 per cent ad valorem and free of any variable levy. In the Uruguay Round, this 10,000-tonne quota was converted to a tariff-rate quota and the variable levy on beef imported in excess of 10,000 tonnes was "tariffied". The European Communities also had bound duties on offal products (e.g., hearts, livers, and kidneys). As a result of the EC beef import ban, US exports of these products to the European Communities had been substantially impaired.

IV.11 The United States argued that the SPS Agreement was designed to ensure that no Member maintained protectionist barriers to trade in the guise of SPS measures and that Article 1.1 required that sanitary measures "be developed and applied in accordance with the provisions of this Agreement". The requirement that measures be "developed" in accordance with the SPS Agreement did not apply here since the EC measures were developed prior to the entry into force of the WTO. However, the European Communities were still required to "apply" these measures in accordance with the provisions of the SPS Agreement.

IV.12 Moreover, in order to differentiate between legitimate SPS measures and other types of measures, the United States noted that the SPS Agreement provided a number of disciplines for sanitary measures. These included an obligation that each sanitary measure:

(i) be based on an assessment, as appropriate to the circumstances, of the risks to human, animal or plant life or health;²⁷


(ii) not be maintained without sufficient scientific evidence;²⁸


(iii) be based on scientific principles;²⁹


(iv) not be more trade-restrictive than required to achieve the appropriate level of sanitary protection, taking into account technical and economic feasibility;³⁰


(v) not arbitrarily or unjustifiably discriminate between Members where identical or similar conditions prevailed;³¹


(vi) not be applied in a manner that would constitute a disguised restriction on international trade;³² and


(vii) be based on international standards, guidelines or recommendations, where they existed.³³

The United States claimed that the EC measures failed each of these requirements. The EC ban was not a legitimate sanitary measure because it severely restricted international trade, was not applied only to the extent necessary to protect human life or health, was not based on scientific principles, was maintained without sufficient scientific evidence, was not based on an assessment of the risks, and was more trade-restrictive than required to achieve the appropriate level of protection. It also constituted a disguised restriction on international trade.

IV.13 The European Communities responded that, as envisaged in the EC legislation, imports might take place from third countries provided that guarantees were offered that no animal and no meat coming from an animal to which hormonal substances had been administered would be exported to the European Communities. The EC legislation in question did not impose a ban on US meat or on meat from any other origin. The US exported fresh meat not destined for human consumption and exported to the European Communities hormone-free meat products for human consumption on the basis of measures agreed by the joint US/EC Task Force. The US exports of meat to the EC market for the years 1989 to 1994 were as follows: 1988: 72,557 tonnes, 1989: 8,380 tonnes, 1990: 3,617 tonnes, 1991: 1,156 tonnes, 1992: 6,320 tonnes, 1993: 6,833 tonnes, 1994: 6,594 tonnes, 1995: 8,499 tonnes.³⁴

IV.14 The European Communities agreed that the SPS Agreement imposed the disciplines enumerated by the United States and considered that its measures satisfied all those disciplines. When the EC Commission had first proposed to the EC Council in 1980 to take measures in this area as well as in 1988, it had found itself facing certain factual, legal and scientific situations. From the factual point of view, consumer concerns over the use of hormones for growth promotion in livestock were very high. Despite the traditionally cautious approach to the regulation of dangerous substances followed by the EC member States, consumer confidence in science and regulators (especially among well-informed consumer organisations and groups) was very low. This factual situation had not changed during the entire period that had preceded the adoption of Directive 96/22/EC. Consumer concerns were even higher today.

IV.15 The European Communities noted that from the legal point of view, the use of hormones in animal growth promotion had long been prohibited in most EC member States; only some EC member States allowed the use of some of these substances under certain conditions.³⁵ With the progressive establishment of the common market, the divergence in the legislation of EC member States was inhibiting free trade within the European Communities in animals and meat from animals treated with some of these hormones, and distorting the conditions of competition among EC meat producers.

IV.16 Furthermore, the European Communities observed that from the scientific point of view, the situation was very unclear in the early 1980s. The relevant international organizations - FAO, WHO, the Office internationale des épizootics (OIE) and the Codex Commission - had started to seriously examine the safety of these hormones in meat production only during the 1980s. The first substantive and comprehensive scientific report had been published by OIE in 1983. JECFA had discussed and issued a substantive and comprehensive scientific report on these hormones only in 1988. Furthermore, none of these scientific reports established beyond doubt that the use of these hormones in animal growth was safe for human health. For example, in the 1983 OIE Scientific Report it was stated:

"Even though many unknown influences still exist with regard to the details of the mechanism of action, particularly with reference to how the message brought by the receptor is translated into action in the cell nucleus, we are nevertheless beginning to have some understanding of how anabolics work" (page 62).

With regard to the three so-called "natural" hormones, the European Communities noted that all of the above scientific reports suggested that they were "unlikely to pose a hazard to human health" if used "in accordance with good veterinary or animal husbandry practice".³⁶ As regards the other so-called "synthetic" hormones, reliable toxicological data were still missing in the 1988 JECFA Report (page 26). Their use for animal growth promotion had been provisionally recommended in accordance with good animal husbandry practice and residue checking in order to ensure that the so-called Acceptable Residue Levels (ARLs) provisionally recommended were not exceeded. The European Communities argued that even today the state of scientific knowledge was not much different from what it was in 1981 and 1988 when the challenged measures had been adopted (as shown by the 1995 EC Scientific Conference).

IV.17 The United States argued that although the purported major objective of the EC ban was to protect human health, the real purpose was to protect EC meat production from third-country competition. Noting that the European Communities cited as the purposes of these measures (i) protection of human health and (ii) a desire to alter the terms of competition for animals and meat in order to render these conditions "largely identical" within the EC market, the United States claimed that neither reason offered a valid justification under the WTO agreements. Furthermore, in developing the hormone ban, the European Communities were also motivated by the fact that the ban would help reduce surplus supplies of meat in the European Communities and lower the cost of the EC Common Agricultural Policy. The United States argued that this attempt to protect domestic production from more competitive imports was protectionism and was inconsistent with EC WTO obligations.

IV.18 The United States noted in this regard that in April 1984, the European Communities had introduced milk quotas to reduce the oversupply of milk, which resulted in an increase in cattle slaughter. EC intervention stocks of beef, which were slightly less than 400,000 tonnes in November 1983, soared to over 800,000 tonnes by the end of 1985.

IV.19 The European Communities rejected the US argument that the EC measures had been adopted in order to protect domestic production from foreign competition. The reference to the divergence in the legislation of the EC member States which distorted the conditions of competition and affected free circulation of products in intra-EC trade (1st and 2nd paragraphs of Directive 88/146/EEC), was made for the sole purpose of justifying the need to take action at the EC level. Because of its internal constitutional structure, the European Communities was obliged to take action in order to eliminate distortions in the conditions of competition and to increase free intra-EC trade.³⁷ The preamble of the Directive thus clearly explained that the underlying objective was to respond in an harmonized way to the effect of these hormones on human health. This objective, however, was not in itself independent or more important than the objective of safeguarding against risks to human and animal health resulting from the substances at issue.

IV.20 The European Communities further argued that action at the EC level was explicitly permitted by Article XXIV:8(a) of GATT. It submitted that when the European Court of Justice examined the object and purpose of Directive 85/649/EEC (invalidated on procedural grounds and subsequently re-enacted in Directive 88/146/EEC) it had noted that "the aim of the Directive, according to the recitals in its preamble, is to protect human health and consumer interests with a view to eliminating the distortion of conditions of competition and bringing about an increase in consumption of the product in question".

IV.21 Furthermore, the European Communities asserted that the historical record clearly demonstrated that the purpose of the EC measures was to protect human and animal health from risks arising from the use of the hormones at issue. The European Communities noted that the European Parliament had proposed a ban on imports of meat from animals treated with growth promoting hormones primarily because "scientific information about these substances is far from complete and that considerable doubt therefore exists about the desirability of their use and of their effect on human health".³⁸ Serious health concerns had been clearly stated in different MEP reports, including the "Nielsen Report", the "Pimenta Report" and the "Collins Report", and the European Parliament had remained constantly opposed to the authorization of all these hormones for animal growth promoting purposes for reasons of possible hazards to human and animal health. The Economic and Social Committee had also rejected the use of these hormones for growth promotion purposes on health grounds. The European Communities claimed that, from the above sequence of events which had eventually led to the adoption of Directive 88/146/EC, it was clear that the European Communities had examined carefully the potential risks to human and animal health from the use of these hormones for animal growth promotion purposes; considered that scientific evidence, whilst suggesting that these substances, if used in accordance with good veterinary practice, did not seem to pose risks to human and animal health, did not exclude beyond doubt that they posed no potential risks to human health; examined carefully all of the available options for harmonizing the conditions of use of these substances before concluding that, at present, the ban on their use was the only scientifically, technically and economically feasible option.

IV.22 The European Communities rejected the US references to milk quotas and observed that the increase in the EC intervention stocks of beef was unrelated to the objective and purpose of the challenged measure. Such high intervention stocks of beef did not exist in the EC member States that introduced the prohibition on the use of these hormones as early as 1961; such high intervention stocks of beef did not exist in 1981 when this prohibition was for the first time imposed at EC level; and such high intervention stocks of beef did not exist in April 1996 when the European Communities adopted Directive 96/22/EC which re-enforced the prohibition on the use of these hormones. The European Communities further submitted that the fact that the Directive offered equal access to the EC market for third-country meat was additional proof that there was no protectionist purpose in the EC measures. Statistics showed that the European Communities had continued to import about the same quantities of meat as before the application of the ban, it was, however, meat from animals to which hormones for growth promotion purposes had not been administered.

(a) Article 2.2 of the SPS Agreement

IV.23 The United States recalled that Article 2.2 required Members to ensure that any sanitary measure was applied only to the extent necessary to protect human or animal health, based on scientific principles and not maintained without sufficient scientific evidence. The United States argued that the European Communities had failed to follow scientific principles, and lacked any scientific evidence to give credence to its asserted health concerns. The European Communities presented no evidence to contradict the long established scientific determination that the six hormones were safe for use as growth-promotion substances and that consumption of meat containing the minute quantities of residues from treated animals was not harmful to consumers.

IV.24 The United States claimed that while the negotiators had not defined precisely "scientific principles", at a minimum this term incorporated the scientific method, which represented those principles and processes universally regarded as necessary for scientific investigation, in particular procedures for:

(i) the observation of phenomena in nature or under controlled conditions;


(ii) the systematic classification of empirical data;


(iii) the measurement of empirical quantities and for calculating probable errors and significant deviations;


(iv) forming a hypothesis;


(v) analysing experimental results using logic and mathematics; and


(vi) many other related techniques and processes.

IV.25 The European Communities responded that the US explanation of the concept of "scientific principles" was a caricature of "the scientific method" which could have been taken straight from a school textbook circa 1960. There was absolutely no reason to suppose that the Members of the SPS Agreement had the list presented by the United States in mind when signing it. There were many theories of science and the "scientific method"; the European Communities relied on biological principles when assessing the risks of using hormones for growth promotion. Measures must be based on scientific principles, as opposed to non-scientific ones, such as superstition. If a measure was aimed at reducing or eliminating a risk to health, then it must actually address that risk in a manner which could be scientifically justified. If, for example, the measure was aimed at eliminating a pathogenic organism from a food, there were several methods, e.g. heating, salting, pickling, etc. which could be scientifically proven to be effective. If, however, a Member required prayers to be said over the food, or a ritual dance to be performed around it, that would not be compatible with the SPS Agreement because such methods could not be scientifically proven to be effective.

IV.26 The European Communities further argued that during the meetings of the Panel with scientists on 17 and 18 February 1997, a number of experts advising the European Communities explained their views on the potential dangers to human and animal health from the use of these hormones for growth promotion. None of the experts advising the Panel argued that the experts referred to by the European Communities did not employ scientific principles in their research. The US Statement of Administrative Action stated that Article 2.2 of the SPS Agreement did not require the best science nor the weight of scientific evidence to be taken into account; it only stipulated that there should be "scientific principles" and "sufficient" (not absolute) scientific evidence. The European Communities further argued that for example, Dr. Lucier had agreed with the conclusions of the EC scientists that both the natural and synthetic hormones were carcinogenic at low levels (the natural hormones are carcinogenic even at existing physiological levels). Some of the scientists who attended the meetings of the Panel (and those of JECFA 1988) might not agree with the conclusions of the scientists advising the European Communities or with Dr. Lucier, but this was not relevant for the purposes of Articles 5.2, 2.2 and 3.3 of the SPS Agreement. What was important was whether, in the scientific research employed by the EC scientists (or the scientific reports to which they made reference in their reports), the minimal attributes of scientific inquiry were respected. The European Communities had not heard the opposite from any of the scientists advising the Panel nor from the United States and Canada. Therefore, the European Communities was allowed to take into account their scientific views (or the views of the scientists to which they referred in their reports) in its assessment of the risks of these hormones for growth promotion.

IV.27 The European Communities indicated that a logical consequence of the requirement for measures to be based on scientific principles was that they must not be maintained without scientific evidence. All Members had measures in place before the SPS Agreement was drawn up, and in the absence of this requirement it could have been argued that the requirement for basing measures on scientific principles could not be applied retrospectively. The SPS Agreement understandably did not define the term "scientific evidence". It was easier to argue that there were scientific principles, scientific methods, scientific experiments and scientific data. But it was difficult to define what was "scientific evidence", since its content was relative in terms of time and was dependent on the principles, methods, experiments and data mentioned. For example, what might be an acceptable scientific method for one scientist might not satisfy another, who might be more interested in certain other scientific principles or aspects totally neglected or only partially examined by the first scientist. For that reason the SPS Agreement only required "sufficient", not clear or certain, scientific evidence (Article 2.2).³⁹ The SPS also required Members, in their risk assessment, to taken into account "available scientific evidence". But from the "available" scientific evidence, a Member was entitled to rely on that which its own scientists said was appropriate and sufficient, and disregard other available evidence. It followed that neither the Panel nor any other member might judge the adequacy of the scientific evidence upon which a Member based its measure in order to achieve its level of sanitary and phytosanitary protection. For the same reasons, a Codex group of scientific experts could not judge the adequacy of the scientific evidence used by a Member of the SPS Agreement.⁴⁰ In other words, if the "weight" of available scientific evidence indicated that a substance was not dangerous to human health, but another small or minority part of available scientific evidence (of the same Member) argued that there may be potential risks to human health, that Member was entitled under the SPS Agreement to take a precautionary approach and base its measure on the latter part of the available scientific evidence. As the United States has said in the Statement of Administrative Action, it is sufficient if the "government maintaining the measures has a scientific basis for it" (emphasis added).

IV.28 The scientific basis of the EC Directives 81/602 and 88/146 were the following:

(i) the 1982 Report of the Scientific Veterinary Committee, Scientific Committee for Animal Nutrition and the Scientific Committee for Food on the basis of the Report of the Scientific Group on Anabolic Agents in Animal Production (the Lamming Report);


(ii) the 1983 OIE Scientific Conference Report;


(iii) the 1988 JECFA Report;


(iv) the various works of relevant international institutions, such as the International Agency for Research on Cancer (IARC);


(v) the scientific works by individual scientists relevant to the issue of use of hormones in general and for animal growth in particular; and


(vi) information on the use of these hormones for growth promotion available from other countries, when relevant.

IV.29 For the adoption of Directives 81/602/EEC, 88/146/EEC and 92/22/EC, apart from the above scientific evidence, additional technical information had been taken into account. This information consisted mainly of the internal studies of the EC Commission, the reports of the European Parliament, the reports of the Economic and Social Committee and the deliberations of the Council of Ministers. For their deliberations, the Ministers were assisted by scientific groups and individual scientific experts, including experts from the relevant administrations of the EC member States. For the adoption of Directive 96/22 of 29 April 1996, the 1995 EC Scientific Conference Proceedings had also been taken into account.

IV.30 The European Communities noted that in its first proposal to the Council on these substances, the EC Commission had explained that controls were needed "... in view of the effects of these substances in relation to carcinogenicity, physiological effects and meat quality. The latter aspect is also important as regards use of natural substances since physiological effects may also occur when exposure to exceptional levels incidentally takes place".⁴¹ In its second submission to the Council of Ministers the EC Commission had explained the (zero) tolerance levels which were being proposed and the need to take into account the natural levels of the endogenous hormones which might occur in animals.⁴² In its third expanded submission to the Council of Ministers, the EC Commission had explained the proposed therapeutic and zootechnical uses of the natural hormones, including the system of control of use and marketing.⁴³

IV.31 The European Communities indicated that, with respect to Directive 88/146/EEC in 1982, the Commission had created an ad-hoc Scientific Committee of Experts on Anabolic Agents in Animal Production (chaired by Professor Lamming). This Committee had issued an interim report on 22 September 1982 (the "Lamming Report"). The EC Scientific Veterinary Committee gave its reaction on 9 November 1982. This was followed by the EC Scientific Committee on Animal Nutrition on 17 November 1982, and by the EC Scientific Committee for Food on 4 February 1983. In essence, these Committees supported controlled use of natural hormones, but were opposed to the use of trenbolone and zeranol. On 12 June 1984, the EC Commission published its proposal (COM(84)295) which envisaged the controlled use of the three natural hormones for growth promotion and proposed re-visiting the prohibitions on the two synthetic hormones after completion of their scientific evaluation.

IV.32 The European Commission's proposal was rejected by the European Parliament based on the report of the Committee on the Environment, Public Health and Consumer Protection and on the opinion of the Committee on Agriculture, Fisheries and Food.⁴⁴ The European Parliament, which did not approve the proposed authorization of the three natural hormones except for therapeutic purposes, had explained that:

"... Considering that scientific information about these substances is far from complete and that considerable doubt therefore exists about the desirability of their use and of their effect on human health ...


"... whereas, in particular, there seems to be doubt as to the effects on the immunity against various diseases of animals treated with hormone cocktails and that this in turn may lead to an increased use of antibiotics ...


"... Recognizes that there is considerable difficulty involved in checking whether such substances have been used because, where they have been properly administered, the measurable residue concentrations are well within normal physiological limits relatively soon after application;


"Believes, therefore, that the permitted use of hormones for therapeutic purposes must be strictly controlled and documented. ...


"Rejects the authorization of artificial and natural hormones as growth promoters".

IV.33 The European Communities concluded that, therefore, the European Parliament and the scientific experts advising their members had carefully reviewed the scientific evidence presented to it by the European Commission and by its own expert committees, and had decided to reject the Commission's proposal. The Economic and Social Committee had also reviewed the European Commission's proposal, taking into account a very wide range of technical and scientific expertise, and in its opinion (29 November 1984) stressed that:

"... even the lifting of the bans on the three endogenous anabolics (oestradiol-17b, testosterone and progesterone) in respect of foodstuffs of animal origin cannot be regarded as unobjectionable from the point of view of the safety, health and well-being of the population, until they have been proved harmless on the basis of sound experience covering, inter alia, conditions of use ..."

IV.34 The European Commission's proposal was also rejected by the Council of Ministers. As a result, the Commission amended its proposal and on 31 December 1985 the Council adopted Directive 85/649/EEC. This Directive confirmed a ban on the use of all the substances concerned for growth promotion purposes and established more detailed provisions concerning authorized therapeutic use. This Directive was challenged in the European Court of Justice, which annulled it on purely procedural grounds. Re-introduced, the proposal was re-adopted by the Council on 16 March 1988 (Council Directive 88/146/EEC), prohibiting the use in livestock farming of substances having a hormonal action.

IV.35 The European Communities noted that in 1987, Professor Lamming had published an account of further work undertaken by members of his group on zeranol and trenbolone which concluded that these substances would probably be safe when used in accordance with "accepted husbandry practice".⁴⁵ The European Communities argued that the report had not defined this concept, and that its conclusion was based on the unsupported assumption that their carcinogenicity was related to their hormonal effects.

IV.36 The European Communities indicated that subsequently, in 1988, following discoveries of significant use of illegal growth-promoting hormonal substances in certain EC member States, the European Parliament had established a "Committee of Enquiry into the Problem of Quality in the Meat Sector". This Committee had received submissions from a wide range of scientific experts, organisations and institutions, including meat trade and farmers' organisations, third country producers, the pharmaceutical industry and consumers' organizations. The outcome of the work of the Committee of Enquiry into the Problem of Quality in the Meat Sector (the "Pimenta Report"), was adopted by the European Parliament on 29 March 1989. The report observed that there was no discernable health risk in the use of the three endogenous hormones at issue where these were, in particular, administered to castrated steers and where they were administered in the form of slow-release implants in a part of the animal which was not consumed (e.g. the ear) and where a specific withdrawal period was observed before slaughter. Of the two other hormonal substances, zeranol was regarded as being as safe as the three endogenous hormones referred to, while with regard to trenbolone acetate, a small residual doubt regarding potential long-term carcinogenicity persisted. The Pimenta Report also indicated that the Committee had been impressed with the thoroughness and objectivity with which the scientists concerned had produced and presented their findings. Nonetheless, the Committee endorsed the ban on the use of hormones, noting examples where scientific knowledge on the safety of substances had subsequently been reversed and that "[t]he scientific evidence does not address the question of potential interaction of these substances with other substances or the multiplier effect of these substances in a worst-case scenario (e.g. the administering of hormones to an animal with an already high level of endogenous hormones and the ingestion of the meat (or milk) of that animal by a female taking the oestrogen-based contraceptive pill" (page 6).

IV.37 The European Communities noted that the Pimenta Report had concluded that successful regulations could not be based solely on scientific information, partly because of the "current state of knowledge" argument, and partly because the regulatory process had to resolve social and political conflicts that extended beyond scientific considerations. Although the decision-making process in controversial socio-economic and environmental issues had to take into account the scientific evidence, it was essential that the final decision rest with society itself through its elected representatives. The report noted that what might appear to be a public rejection of science was more plausibly related to a question of confidence in the adequacy of regulatory control. The Committee was unconvinced that the legalization of the five natural/nature-identical hormones for growth-promotion would prevent the use of harmful black-market alternatives. It observed that producers were still using easily-detectable synthetic substances because of the continued attractiveness of these products and the economic gain to be obtained from their use. These were also incentives not to follow the conditions for administration specified by the Lamming Committee.

IV.38 In this respect, the Pimenta Report noted that "upstream" controls were essential, beginning with testing blood and urine samples of live animals on the farm. The processes of metabolism, dilution and excretion in the living animal meant that the longer the interval between administration of the substance and testing of the live animal or carcass, the more difficult it was to detect the metabolites characteristic of the use of illicit substances. In addition, once the carcass was slaughtered and butchered, detection of metabolites and tracing back to the animal became very difficult. However, testing for synthetic substances posed no significant problems, although the degree of capability and sophistication of detection varied enormously between EC member States. In addition, methods of chemical masking and other sophisticated techniques were being increasingly used. While testing for the three natural hormones posed a problem in that the range of levels of these hormones produced naturally in the body of the animal was so large and variable, ranges of levels could be drawn up, taking into account the sex, age, oestral cycle and condition of the animal. If tests showed that an animal, for no apparent reason, was at or above the upper limit, then testing on other animals in the herd could provide valid evidence since the statistical possibility of an entire herd possessing above-average hormone levels was minute.

IV.39 The Committee reported that ten out of twelve veterinary authorities from the EC member States agreed that a total ban on administered hormones would be easier to police than a partial ban, because veterinarians could generally tell by visual signs when an animal had been treated with hormones (the shape of the animal and the sexual organs were altered) but not whether this had been a treatment with legal versus illegal substances. Furthermore, psychologically, a total ban was more effective than a partial one in that regulators, producers and consumers were left in no doubt that the administration of any hormonal substance for growth promotion purposes was not allowed. The control of the whole meat production chain in Europe would have to be equally rigorous whether all hormonal substances or only some hormonal substances were banned for growth promotion purposes. Inspection would need to be just as comprehensive and rigorous. The Pimenta Report concluded that severe sanctions would have to be imposed on those flouting the ban to overcome the strong economic incentives to use growth promotion substances, and that this problem had to be tackled in order for a ban to be effective and for confidence to be restored in the meat sector (page 13).

IV.40 The European Communities added that the European Parliament had adopted another important report on the issue of use of hormones for animal growth promotion, the "Collins Report" of 7 February 1989.⁴⁶ This report proposed that the EC veterinary medicine licensing system be adapted to include a "fourth hurdle", entailing an objective socio-economic and environmental impact assessment in addition to safety, quality and efficacy criteria. It argued that the social, agricultural and environmental implications of the use of growth and yield promoting pharmaceuticals required a licensing system different from that which existed for these products when used for therapeutic purposes.

IV.41 The European Communities indicated that the European Commission, in close cooperation with EC member States, had continued to review the application of Directive 88/162 in the appropriate scientific and management committees. After the entry into force of the SPS Agreement, the European Communities had decided to review once again the situation from the scientific point of view. For that reason, it had organized the 1995 EC Scientific Conference in Brussels. In light of the findings of that conference and other evidence, the European Commission had proposed to the Council of Ministers to maintain the prohibition on the use of these hormones for growth promotion, to further restrict their use for therapeutic or zootechnical purposes, to reinforce the provisions on control and testing, and to increase substantially the penalties and sanctions in case of violations.⁴⁷ Both the European Parliament⁴⁸ and the Economic and Social Committee⁴⁹ approved the Commission's proposal. The Council of Ministers adopted the new Directive 96/22 of 29 April 1996, which will replace Directive 88/146/EEC and the other relevant Directives as from 1 July 1997.

IV.42 The United States argued that the European Communities had failed to comply with Article 2.2 which prohibited a Member from maintaining sanitary and phytosanitary measures "without sufficient scientific evidence". The proposal for a Council Directive submitted by the EC Commission on 13 June 1984 explicitly admitted that "on scientific grounds, it appears that the use of oestradiol-17ß, testosterone and progesterone, and those derivatives which readily yield the parent compound on hydrolysis after absorption from the site of application, would not present any harmful effects to the health of the consumer nor harm the consumer by altering the characteristics of meat when used under the appropriate conditions as growth promoters in farm animals".⁵⁰ The United States added that there was absolutely no new scientific evidence considered by the Commission prior to the change in the proposed Directive to ban the use of these hormones. Indeed, in response to the 1995 EC Scientific Conference Proceedings, EC Agriculture and Rural Affairs Commissioner Fischler had confirmed that these hormones did not pose a danger to health when used in beef production. However, rather than deciding to modify the ban to reflect the scientific evidence, Mr. Fischler had indicated that this was a political matter and had noted that a 10 million ECU advertising campaign extolling the virtues of eating hormone-free meat had been launched and that the EC Council would be pressed to introduce tougher monitoring measures. The United States concluded that, in the absence of any identifiable risk from these hormones and without any supporting scientific evidence for the ban, the EC measures were not "applied only to the extent necessary to protect human, animal or plant life or health" and were not "based on scientific principles", contrary to Article 2.2. Indeed, the EC approach was contrary to scientific principles.

TO CONTINUE WITH EC MEASURES ON MEAT - COMPLAINT BY THE U.S.

¹⁵ See, e.g. the panel report on "Thailand - Restrictions on Importation of and Internal Taxes on Cigarettes", adopted on 5 October 1990, DS10/R.

¹⁶ US Statement of Administrative Action, p.87.

¹⁷ Article 1.1 of the SPS Agreement.

¹⁸ "Given the desire of participants for the application of the proposed disciplines to all contracting parties, this draft has been presented in the form of a Decision of the CONTRACTING PARTIES on the Application of Sanitary and Phytosanitary Measures. However, this is without prejudice to the final form the agreement might take." MTN.GNG/NG5/WGSP/7, 20 November 1990, p.1.

¹⁹ P.21 of document 707 dated 15 April 1992, "Review of Individual Texts in the Draft Final Act (Texts on Agriculture), Informal Note by the Secretariat" (Secretariat proposal to rectify the form to change it from a decision to an agreement), and p.19 of document 963 dated 10 June 1992, "Review of Individual Texts in the Draft Final Act, Informal Note by the Secretariat" (record of rectifications agreed in the Legal Drafting Group in April 1992, including this change in form). The paragraphing of the text was rearranged into article format during the legal drafting process for the Marrakesh Final Act in February 1994. Secretariat proposals for rectifications at p.71 of MTN/FA/Corr.2 dated 18 February 1994, and agreed rectifications in MTN/FA/Corr.5 dated 11 March 1994.

²⁰ Article 2.1 of the SPS Agreement. The United States argued that the European Communities was mistaken in its perception of the coverage of the SPS Agreement. The EC claim that sanitary and phytosanitary measures were defined based in part on the type of product to which the measure applied was incorrect. Nothing in the SPS Agreement limited its coverage by the type of product. The SPS Agreement applied to any sanitary or phytosanitary measure. For example, measures restricting the importation of construction equipment to ensure that it was not carrying soil with plant pests or diseases, or that it did not harbour plant pests, were phytosanitary measures, even though they applied to construction equipment. The same would be true for measures applicable to lawn furniture to ensure that it did not harbour cocoons of a plant pest, or measures applicable to tires to make sure they did not host mosquitoes carrying infectious diseases for humans.

²¹ Paragraph 1.2 of the opinion, EC Official Journal No C 138/29, 9 June 1981. This opinion is cited in the preamble to Directive 81/602/EEC.

²² Debate published in the Annex to the EC Official Journal No 2-330 of 10 October 1985, beginning, p.232.

²³ Directive 88/146/EEC states that: "Whereas the administration to farm animals of certain substances having a hormonal action is at present regulated in different ways in the member States; whereas while their immediate effect on animals from the farmer's point of view is clear, assessments of their effect on human health vary and this is reflected in the regulations governing their use; whereas this divergence distorts the conditions of competition in products that are the subject of common market organizations and is a serious barrier to intra-EC trade."

²⁴ Paragraph 12, TBT/M/Spec/7 (Committee on Technical Barriers to Trade, Minutes of Meeting held on 23 July and 28 July 1987). See also paragraph 6 of TBT/M/Spec/7 ("The complaint of the United States should not deter his authorities from applying the measures that they had adopted to protect the health and safety of their population."), as well as paragraphs 9 and 24. See also paragraphs 11 through 13 of TBT/M/Spec/5.

²⁵ According to a table provided by the United States, an average 70 per cent of all US cattle were treated with one or more of these hormones.

²⁶ The United States estimated in 1988 that the EC measures cut off approximately $100 million in US exports.

²⁷ Article 5.1 of the SPS Agreement.

²⁸ Ibid., Article 2.2.

²⁹ Ibid., Article 2.2.

³⁰ Ibid., Article 5.6.

³¹ Ibid., Article 2.3.

³² Ibid., Article 2.3.

³³ Ibid., Article 3.1.

³⁴ The European Communities explained that the figures were based on Eurostat statistics.

³⁵ The European Communities indicated that 4 or 5 EC member States allowed the use of some of these hormones for growth promotion until their prohibition at EC level. The information on level of use, if available at all, would only be known to those individual EC member States. One EC member State, the United Kingdom, had indicated that anecdotal evidence suggested that growth promoting hormones might have been used up to 40 per cent of the United Kingdom cattle prior to the ban.

³⁶ 1988 JECFA Report, pp.19 et seq.

³⁷ The European Communities noted that this obligation resulted from Articles 100 and 100A, in conjunction, in this case, with Articles 30 and 36 of the EC Treaty.

³⁸ Point E of Parliament's Resolution, EC Official Journal No 288, 11 November 1985, p.158.

³⁹ On the other hand, the European Communities noted that the term "scientific evidence" had a different meaning from the requirement to provide "evidence" in a legal trial.

⁴⁰ See, for example, the article by D.A. Wirth (1994), "The role of Science in the Uruguay Round and the NAFTA Trade Disciplines", 27 Cornell International Law Journal, 817-859, at 856-57.

⁴¹ COM(80)614 of 31 October 1980.

⁴² COM(80)920 of 6 January 1981.

⁴³ COM(80)922 of 6 January 1981.

⁴⁴ European Parliament Doc. A2-100/85 of 11 October 1985.

⁴⁵ The Veterinary Record, 24 October 1987, p.389.

⁴⁶ European Parliament, Committee on the Environment, Public Health and Consumer Protection, Report on "The USA's Refusal to comply with EC Legislation on Slaughterhouses and Hormones and the Consequences of this Refusal", EP 128 381/B, 7 February 1989, named after its reporter Mr. Collins, MEP. See para. 2.32.

⁴⁷ EC Official Journal C 302, 9 November 1993, p.8 and C 222, 10.8.1994, p.16.

⁴⁸ EC Official Journal C 128, 9 May 1994, p.105.

⁴⁹ EC Official Journal C 52, 19 February 1994, p.30.

⁵⁰ COM(84)295 final, clause 13 of the preamble, 29 June 1984, Official Journal C 170, p.4 seq.