AUSTRALIA - MEASURES AFFECTING IMPORTATION OF SALMON
- RECOURSE TO ARTICLE 21.5 BY CANADA -

2. Evaluation of likelihood � according to the SPS measures which might be applied

Canada

4.121 The 1999 Draft Report concludes in respect of certain disease agents that the "unrestricted" estimate of the risk of even eviscerated product is too high to permit importation. It therefore was incumbent upon the Report to evaluate the likelihood of the entry, establishment and spread of those disease agents according to further risk management measures that might be applied. It has not done so. Instead, the Report simply reviews a number of additional pre- and post-importation risk mitigation measures and reaches the identical conclusion for each of these disease agents: "� the implementation of these measures singly would reduce risk but not to the extent required to meet Australia's ALOP. The implementation of all measures listed above would meet Australia's ALOP�".³⁷

4.122 Australia has no basis for reaching this conclusion, because the 1999 Draft Report does not substantively evaluate the relative risks associated with these different measures. There is nothing in the 1999 Report to indicate that single measures were evaluated as to their efficacy in reducing the likelihood of the entry, establishment or spread of the disease agents in question to Australia's appropriate level of protection.

4.123 For example, in respect of IHNV, the 1999 Draft Report concludes that "the probability of IHNV becoming established in Australia as a consequence of the unrestricted importation of eviscerated salmonids, including juveniles and sexually mature fish would be very low".³⁸ [emphasis added] It also finds that the consequences of such disease establishment would be of "moderate to high significance". The Report concludes, presumably on the basis of the "risk evaluation matrix" in section 1.2.4, that additional risk management measures are warranted.³⁹

4.124 Having recognized that IHN is primarily a disease of farmed juvenile salmonids, it would obviously have been appropriate for the 1999 Draft Report to consider whether limiting imports to adult fish would reduce the probability of disease establishment. According to Australia's "risk evaluation matrix", a one-step reduction from "very low" to "extremely low" would satisfy Australia's appropriate level of protection. However, the Report does not consider whether a restriction on the importation of juvenile salmonids would achieve this. Instead, it sets out nine possible risk mitigation measures for IHNV.⁴⁰ It then asserts, without any evaluation of probability, that the implementation of any one of these measures would not reduce risk to the extent required to meet Australia's appropriate level of protection. It concludes, again without any evaluation of probability, that the implementation of all nine measures would meet Australia's appropriate level of protection.

4.125 Australia states with respect to IHNV that it has evaluated risk according to the measures that might be applied. It states:

"For example, a restriction on juvenile and sexually mature fish would address risk factor 2 for IHNV. Such a restriction would not address risk factors 1, 3, 4, 5 or 6 and would not achieve Australia's ALOP for salmon."⁴¹

What Australia has failed to do, however, is to consider the likelihood of entry, establishment or spread if juvenile and sexually mature fish were restricted. According to the 1999 Report, "risk factor 2" is that the risk associated with juvenile fish and sexually mature fish "would be higher than that associated with commercially harvested, market-size salmonids".⁴² It may therefore be that restricting imports of juvenile and sexually mature fish would be sufficient to achieve Australia's appropriate level of protection regardless of whether additional measures were imposed to address other risk factors.

4.126 Similarly, the 1999 Report finds that inspection and grading would both detect fish clinically diseased with IHN and would identify juvenile and sexually mature fish. It concludes: "This would substantially address risk factors 2 and 3".⁴³ Inspection and grading is undertaken in the ordinary course for fish for human consumption. It is a minimally trade restrictive requirement. Again, however, the 1999 Report does not evaluate the likelihood of the entry, establishment or spread of IHNV if inspection and grading were required, alone or in conjunction with restrictions on juveniles and sexually mature fish. Nor has the 1999 Report done so for any of the other disease agents purportedly of concern to Australia.

4.127 At paragraph 115 of its First Submission, Australia contends that:

"For each disease agent, AQIS evaluated each risk management measure to determine the degree to which it would address the key risk factors associated with that agent. From this analysis, one measure or a combination of measures was determined as necessary to reduce the risk posed by that disease agent to meet Australia's ALOP."

Canada was unable to find any indication in the 1999 Report that any measure or combination of measures has actually been assessed specifically with regard to the likelihood of bringing the assessed risk within Australia's appropriate level of protection. Canada's position is confirmed by the response of Dr. Wooldridge to the Panel's question 1 to the experts.⁴⁴

4.128 Dr. McVicar suggests that "[t]here is some but limited [sic] relevant quantified data available of the decrease in the level of pathogen present in the commodity after preparation to a consumer ready state, supporting the logic that removal of inedible or low value parts will reduce (but not eliminate) the risk of this material coming into contact with waters containing susceptible fish." He adds that "On this basis Australia makes a judgement on their likely effectiveness in reducing this risk which is both transparent and logical". Dr. McVicar does not explain how this judgment is transparent nor, more to the point, where Australia has evaluated the relative effectiveness of risk reduction measures. Certainly, Dr. Wooldridge was unable to find this evaluation.

4.129 Drs. McVicar and Br�ckner also recognize that Australia has offered no justification for the 450 grams threshold. It therefore is difficult to understand how they could conclude that Australia somehow evaluated the likelihood of the entry, establishment or spread of disease according to the measures which might be applied.

4.130 In the case of salmonids, Australia assumes that imports will be eviscerated but that for certain diseases, evisceration will not achieve its appropriate level of protection. Even if this were the case, no salmon exported from Canada for human consumption will ever merely be eviscerated. In addition to evisceration, in all cases it will be thoroughly washed, inspected and graded and in the case of farmed salmon (which includes all Atlantic salmon) it will always be bled. These measures collectively, and many of them individually, will reduce any residual risk beyond evisceration.

4.131 However, Australia does not evaluate the likelihood that the full range of primary processing in the exporting country or any of the individual steps included in primary processing such as washing or inspection, will achieve its appropriate level of protection. Instead, Australia simply concludes that additional, more trade restrictive measures are required to achieve its appropriate level of protection.

Australia

4.132 The 1999 IRA evaluates the likelihood of entry, establishment or spread according to the SPS measures which might be applied. The risk management measures necessary to achieve Australia's ALOP were determined on a disease-by-disease basis (Chapters 5 and 8 of the 1999 IRA). AQIS identified a range of risk management measures based on industry procedures, the operations of competent authorities and their interactions with industry, and common procedures in the international trade for animals and animal products.

4.133 In identifying these measures, AQIS considered matters such as practicability and ease of implementation, cost of compliance, cost-effectiveness and impact on trade, subject to the overriding requirement that measures reliably contribute towards achieving Australia's ALOP.

4.134 For each disease agent, AQIS evaluated each risk management measure to determine the degree to which it would address the key risk factors associated with that agent. From this analysis, one measure or a combination of measures were determined as necessary to reduce the risk posed by that disease agent to meet Australia's ALOP.

4.135 It was found that for no disease agent was a single measure sufficient to reduce the risk to achieve the ALOP. Chapters 4 and 5 of the 1999 IRA concluded that for specific diseases of salmonids, implementation of the measures singly would reduce risk, but not to the extent required to meet Australia's ALOP. Accordingly, a combination of measures (not identical in all cases but based on the risk factors for the particular disease agent) was applied that would achieve the ALOP.

4.136 Canada's claim rests on an assertion that the 1999 IRA "does not substantively evaluate the relative risks associated with these different measures", for example, IHN, R. salmoninarum and A. salmonicida . Both Dr. Br�ckner and Dr. McVicar advise that the 1999 IRA evaluates the likelihood of risk according to the measures which might be applied.

4.137 The 1999 IRA examined the influence of individual measures singly or in combination, and applied them as warranted. The risk management measures were not applied as a suite of measures "across the board" i.e. for all imports of eviscerated salmonids. This is demonstrated by the measures applied for ISAV and A. salmonicida .

3. Measures based on a risk assessment

Canada

4.138 Even if the 1999 Report did satisfy the three requirements of a risk assessment under the SPS Agreement, which it does not, Australia's trade-restrictive salmonid measures are not based on the 1999 Report as required by Article 5.1.

4.139 Australia's measures are based on a draft. AQPM 1999/51 is titled Final Reports of Import Risk Analyses on Non-Viable Salmonid Products, Non-Viable Marine Finfish Products and Live Ornamental Finfish and Adoption of New Policies. However, the documents that Australia has prepared thus far are not "Final" at all. As already described, they are drafts for "public comment" or "public consultation".

4.140 In the original Panel process, Australia explained that previous such drafts, the May 1995 and May 1996 Draft Reports, were merely "working documents prepared as a means of focusing public attention and debate on proposed import access requests".⁴⁵ Accordingly, Australia insisted (with respect to the May 1995 Draft Report), that it "has the status of a public discussion paper and has no official status as such".⁴⁶

4.141 According to the Appellate Body, "[t]he requirement that an SPS measure be 'based on' a risk assessment is a substantive requirement that there be a rational relationship between the measure and the risk assessment".⁴⁷ The "Final Reports" to which AQPM 1999/51 refers did not exist at the time that Australia's policies were purportedly based on them. The "rational relationship" requirement of Article 5.1 cannot possibly be satisfied by the irrational relationship between the measures and the then non-existent "Final Reports" on which they are purportedly based.

4.142 Despite its position before the original Panel, Australia now insists unabashedly that "There is no legal significance attached to a 'draft' and 'final' version of an IRA, as compared to the legal difference between draft recommendations and decisions by the Director of Quarantine."⁴⁸ In any event, the relationship between the measures and reports, draft or final, is not apparent.

4.143 Even if one were to now accept Australia's insistence to this Panel that the 1999 Draft Report "embodies a risk assessment", Australia's salmonid measures would still not be "based on" the 1999 Report in either its draft or final incarnations.

4.144 The test of whether a measure is "based on" a risk assessment as required by Article 5.1 is a substantive requirement that there be a "rational relationship between the measure and the risk assessment".⁴⁹ In the present case, there is no rational relationship between Australian requirements that salmonids may not be released from quarantine unless they are "consumer-ready" and the 1999 Report, even if the 1999 Report were a risk assessment.

4.145 As the experts have recognized in their responses to the Panel's questions, there is no scientific justification in the 1999 Report for the 450 gram threshold for eviscerated, headless product and for skin-on product.⁵⁰ Nor is there any scientific justification in the 1999 Report for the requirement that fins and the belly flap be excluded from product to be sold as "consumer-ready". There is therefore no rational relationship between the 1999 Report and the "consumer-ready" product requirements that Australia has imposed on Canadian salmon. Accordingly, the "consumer-ready" product requirements are not based on a risk assessment even if the 1999 Report were a risk assessment, and are maintained by Australia inconsistently with Article 5.1 and by implication, Article 2.2 of the SPS Agreement.

4.146 The purpose of a risk reduction measure is to reduce assessed risk to an acceptable level. In the present case, the risk at issue is the establishment and spread of the disease agents of concern to Australia. According to the 1999 Report, the concern regarding this risk is limited to one pathway: the regular discharge by fish processing plants of untreated wastewater into the aquatic environment. The 1999 Report essentially dismissed other pathways and sources of fish waste as insignificant.

4.147 The 1999 Report considers the likelihood of aquatic pathogens even entering the aquatic environment to be extremely low when salmonid fish waste such as the head, fins, bones and skin are disposed of by households or in the HRI trade. This extremely low probability is even before one considers whether those pathogens that may enter the aquatic environment will come into contact with a susceptible host at a sufficient dose and by a suitable route to cause infection, which, recall, is an analysis that the 1999 Report does not undertake. The 1999 Report therefore offers no rational basis for Australia's insistence that salmonid imports, including Canadian salmon, can only be sold to the HRI trade and consumers in what Australia calls "consumer-ready" form.

4.148 A rational solution to address the alleged risks of untreated waste discharges from processing facilities would be to keep salmonid imports away from commercial processing plants that do not adequately treat their waste rather than away from wholesale, retail and HRI markets that may want to consume such product. Nor is there any rational basis for excluding head-on product from processing plants that do have adequate waste treatment. Moreover, if Australia considers the concentration of salmonid wastes at processing plants to be a potential concern, there is no rational explanation why head-off, eviscerated salmon may be processed into so-called "consumer-ready" form by having the skin removed at processing plants, where wastes may be concentrated, but not sold to consumers or the HRI trade, whose waste has been deemed to constitute a minimal risk.

4.149 In attempting to defend its product-form requirements, Australia devotes considerable effort to the case that there is a market for products in "consumer-ready" form. Australia's contentions are both irrelevant and misleading. In the first place, the issue is not whether as Australia contends, there are significant commercial opportunities for so-called "consumer-ready" product but whether Australia has, without justification, excluded Canadian products from other Australian markets, real or potential. The level of impairment that Canada has suffered by Australia's unjustified exclusion of non-"consumer-ready" product may be a legitimate issue in the context of an arbitration under Article 22.6 of the DSU, but it is irrelevant in the present context. Even if there were no existing demand at all for head-on or skin-on salmon, Australia could not, without justification, prevent Canadian exporters from attempting to create a new market.

4.150 Second, Australia's own evidence contradicts its assertions. Thus, the ADVS study, to which Australia has referred, states that the bulk of Australia's own Atlantic salmon exports take the form of gilled and gutted, but head-on, fish.⁵¹ The ABARE Report, which Australia has submitted as Exhibit U, states that in Australia's domestic market, "Around half of farmed salmon production is sold as whole fresh fish which are gutted and gilled".⁵² These facts are not unique to Australia. Canada's principal salmon exports are not small fillets and steaks or skin-off product but whole eviscerated salmon, often head-on and often gills-in. Dr. McVicar confirmed in his oral testimony that whole, eviscerated salmonids are often traded internationally. Evidence submitted confirms that salmon skin is often highly sought as a delicacy⁵³, that salmon is sold at retail in skin-on pieces larger than 450 grams and that eyes, gills and skin are important indicators of freshness in salmon product.

4.151 Canada also gives evidence that for many cooking methods skin-off salmon is less desirable, limits options and is wasteful, that many consumers consider salmon skin to be a delicacy, and that, according to Graham Kerr, the well-known international culinary consultant, the preferred product in the HRI sector is whole head-on or head-off product. Mr. Kerr stated that he agreed with Canada's position that requiring imported salmonids to be processed to 450 gram pieces will adversely affect the competitiveness of any imported product.

4.152 Australia's position before this Panel is at odds with the statement of its own Trade Minister, Mr. Vaile, that the AQIS requirements may make Canadian exports unviable and uncompetitive against Australian product.⁵⁴

4.153 Australia's measures close its market to the very product form in which most of Canada's salmon export trade takes place, and the product form that would compete directly with much of Australian production.

Australia

4.154 For a measure to be based on a risk assessment requires that the measure must be sufficiently supported or reasonably warranted by the risk assessment. There must be a rational relationship between the measures and the risk assessment.⁵⁵

4.155 The structure of the 1999 IRA - hazard identification, risk assessment and risk management - makes clear the essential link between risk assessment and the risk management measures adopted. There is a rational relationship between the measures and the 1999 IRA. The measures are based on the 1999 IRA. This is confirmed by the experts advising the Panel.

4.156 The requirements relating to consumer-ready product address the conclusions of the exposure assessment on commercial processing of imported product. The 1999 IRA concludes that the probability and nature of exposure associated with household or hotel/restaurant consumption meets Australia's ALOP. However, risk associated with commercial processing of head-off eviscerated salmonid product do not.

4.157 Paragraph 5.2.2 of the 1999 IRA describes disease risks associated with commercial processing. The commercial processing of imported salmonids could generate a significant volume of solid or liquid waste at the premises' point of discharge. Continuous long-term release of untreated waste at the premises' point of discharge could result in infective material building up to a biologically significant level in the aquatic environment.

4.158 To control risk associated with commercial processing, AQIS applies controls over commercial plants processing imported salmonid products with regard to location, waste disposal and related matters. To ensure that imported salmonids were not commercially processed in non-approved premises, only consumer-ready product will be permitted to be released from quarantine. Consumer-ready product is product which is ready for consumption/use by the end-user, or product which if further processed would not generate significant quantities of waste products of quarantine concern.

4.159 The 1999 IRA identified that some disease agents are associated with skin. For skinless fillets, commercial processing for consumer sale would generate minimal waste. Skinless fillets of any weight would be "consumer-ready". For skin-on fillets of greater than 450 grams, commercial processing would generate significant quantities of waste, for example from processing into skinless fillets.

4.160 "Consumer ready" addresses two distinct issues: the scientific basis for risk management measures; and the practical effectiveness of a measure. "Consumer-ready" cannot be examined independently of the risk management measures applied to processing.

4.161 In summary, the 1999 IRA identified as the primary concern the release of waste (skin, fins, flaps, bones, etc.) into the aquatic environment from commercial processing of imported product. Product with skin-on in pieces greater than a consumer-ready portion is likely to be subject to further commercial processing in Australia. This would produce significant concentrations and volumes of waste material that would present an unacceptable risk of biologically significant numbers of organisms capable of causing disease in salmon being released into the aquatic environment. Commercial processing must take place in approved premises that are required to dispose of wastes in a biosecure manner.

4.162 Therefore it can be concluded that the 19 July measures are based on the 1999 IRA which embodies a risk assessment. There is a rational relationship between the measures and the risk assessment.

4.163 With respect to certification for ISA, Australia's 1999 IRA on salmonids does not specify the exact meaning of the phrase "officially suspected" since it would not be practical to do so: administrative arrangements vary between countries, having regard to each competent authority's regulatory arrangements (e.g. for health surveillance and the provision of health certification). What constitutes "official suspicion" is normally agreed between the competent authorities of the exporting and importing countries in the course of finalising certification arrangements.

4.164 After finalising the risk analysis and in the course of consultations with Canada on health certification, Australia became aware of additional scientific information relevant to "officially suspected" and the provision and scope of this certification in practice. In light of new information of risk factors of ISA, AQIS proposed an amended form of certification. Canada raised no technical or scientific concerns on the amended form. The United States has also agreed to a similar certification statement.

G. ARTICLE 5.5

Canada

4.165 Even if Australia's new policies were implemented, all three elements for a violation of Article 5.5 of the SPS Agreement would still be present.

Australia

4.166 In the original dispute, the measures on fresh chilled or frozen salmon from Canada were found to be inconsistent with Article 5.5 specifically in relation to measures applying to whole frozen herring for use as bait and to live ornamental finfish. In order to implement the DSB recommendations, Australia undertook risk assessments that addressed all three product groups. The 1999 IRAs were conducted in parallel and on the basis of common methodology and risk assessment techniques. The mandate of an Article 21.5 panel is limited to an examination of the measures applying to these three product groups. It does not extend to comparisons with other products and different diseases.

1. Different appropriate levels of protection in different situations

Canada

4.167 According to this Panel and as confirmed by the Appellate Body, different situations can be compared under Article 5.5 if they involve either a risk of entry, establishment or spread of the same or a similar disease or a risk of the same or similar associated potential consequences.⁵⁶ There are at least two such comparable situations in the present case. One is the levels of protection reflected in Australia's treatment of imported, dead salmonids as compared to its treatment of imported, dead non-salmonids and live ornamental fish. The other is the levels of protection reflected in Australia's treatment of imported dead salmonids as compared to its treatment of dead domestic fish, both salmonids and non-salmonids.

4.168 The same or similar disease agents are VHSV, pilchard herpesvirus and other bacterial fish pathogens.⁵⁷ The same or similar associated biological or economic consequences are the consequences of a VHS outbreak for Australian fish, including salmonids, the consequences of other disease outbreaks caused by the introduction of other bacterial fish pathogens, and the consequences of the introduction of a disease outbreak affecting Australian pilchards, such as the huge pilchard die-off associated with what may have been an introduced herpesvirus and which has devastated Australia's domestic pilchard industry.⁵⁸ Thus, the first element for a violation of Article 5.5 is present.

Australia

4.169 The legal tests as stated by the Appellate Body are:

• Article 5.5 does not establish a legal obligation of consistency of appropriate levels of protection; nor is the goal absolute or perfect consistency. It is only arbitrary or unjustifiable inconsistencies that are to be avoided.⁵⁹
• "Different situations" can only be compared if they involve either a risk of entry, establishment or spread of the same or similar disease or a risk of the same or similar associated potential biological or economic consequences.⁶⁰
• "Different situations" can only be compared if they are comparable, i.e. they present some common elements sufficient to render them comparable.⁶¹

As demonstrated in the 1999 IRA's, Australia's response to Question 26 and the experts' comments on Question 10, it cannot be assumed that:

• one disease in common would translate to the same risk;
• the existence of one disease in common would warrant the same measure, either at disease or product level; and
• comparisons could be made on the basis of simplistic charts which list the totality of measures applied at product level.

4.170 Australia has provided evidence that will enable the Panel to go beyond the simplified comparisons of its original examination. The Panel is therefore in a position to conduct its examination on the basis of:

• those diseases in common referred to by Canada in relation to salmon, whole frozen herring for bait and live ornamental finfish;
• the relative risks to salmonids and other fish in Australia associated with those diseases, taking into account the risks associated with prevalence and end usage, balanced against the general principle that risk of transmission is greater within a species or group of fish;
• the individual risk management measures determined against those diseases in common between the three product groups, including the assessments addressing the risk on an end usage basis ; and
• as counterfactual elements, the risk management measures determined for diseases of salmon which are not in common with the other two product groups.

2. Distinctions in levels of protection in different situations

Canada

4.171 According to the Panel Report, Australia has determined its appropriate level of protection to be a "high or 'very conservative' level of sanitary protection aimed at reducing risk to 'very low levels'".⁶² It appears from Australia's statements and policies that what Australia considers "acceptably low" or "very conservative" for other products it does not consider low enough or conservative enough for imported salmonids.

4.172 There is a widespread scientific consensus that bait and feed fish and live fish are a higher quarantine risk than dead, eviscerated fish. This is because they have not undergone the many risk-reduction steps such as inspection and evisceration to which dead eviscerated fish for human consumption are subjected. In addition, the pathways for disease transmission are direct. Potentially infectious bait and feed fish are deposited directly into the environment for the purpose of being consumed by other fish. Live ornamental fish may also be deposited whole into the aquatic environment.⁶³ Thus, the experts consulted by the original Panel were able to say that products such as bait fish represented a higher quarantine risk than salmon products.

4.173 However, Australia will continue to permit the unrestricted entry of live ornamental fish and continued until December 1999 to permit the unrestricted entry of non-salmonids, including bait fish.⁶⁴ During this time, Australia strictly controlled the entry of dead, eviscerated salmonids for human consumption. As the Panel and the Appellate Body found, this indicates that there remains a "rather substantial" difference in Australia's appropriate level of protection for non-salmonid products such as bait fish and live ornamental finfish on the one hand, and dead, eviscerated salmonids on the other.⁶⁵

4.174 Moreover, the volume of imported product is an extremely important component of risk.⁶⁶ Whereas Australia estimates in the 1999 Draft Report that it might import 5,000 tonnes of dead, eviscerated salmonids⁶⁷, in one year it imports approximately ten times as much bait.⁶⁸ Because the risks from bait fish are significantly higher than from eviscerated salmonid products, Australia's risk exposure under a "transition" period of even four months will be equivalent to significantly more than four years of salmonid imports.

4.175 During the "transition" period for live ornamental fish, Australia will have imported millions of live fish. Imports of live fish are a well-documented source of disease introductions. By contrast, there has never been a documented case of the introduction of disease from the importation of dead, eviscerated salmonids or any other dead, eviscerated fish. From this it can reasonably be inferred that the risk Australia has chosen to accept during this "transition" period is equivalent to that posed by many years of eviscerated salmonid imports.

4.176 The "transition periods" therefore indicate, first, that Australia has not taken measures to comply with the recommendations and rulings of the DSB and second, that even if the policies Australia has announced somehow constitute "new measures", under those new measures Australia continues to apply different appropriate levels of protection to non-salmonid and live ornamental fish imports than to dead, eviscerated salmonids.

4.177 Australia asserts that: "The first element of Article 5.5 does not require that the measures must enter into effect on the same date".⁶⁹ Australia offers no basis for this. However, elsewhere in its First Submission, Australia argues that commercial and administrative factors such as shipping times, contractual arrangements and the need to amend QP 1998 entitle it to postpone implementation of its new policies for non-salmonid and live ornamental finfish.⁷⁰ These factors do no such thing. The arbitrator gave Australia until 6 July 1999 to comply with the DSB's recommendations and rulings. Australia's obligation to comply by 6 July included compliance with Article 5.5.

4.178 Immediate compliance, under Article 21.3 of the DSU, may be impracticable for reasons such as those Australia raises with this Panel. However, in Australia's case, the alternative, reasonable period of time, expired almost five months ago. Australia has blatantly disregarded the ruling of the arbitrator under Article 21.3 and has unilaterally accorded itself months or years of additional time to take the measures that it claims will bring it into compliance.

4.179 Moreover, in the course of the arbitration on the reasonable period of time for Australia's compliance, Australia did not raise the commercial factors it now cites for its delay. Its current position that its new policies for non-salmonids and live ornamental finfish require amendments to QP 1998 contradict its statements to the arbitrator that its measure could be brought into conformity without amending QP 1998.⁷¹

4.180 If Australia considered itself unable to comply by 6 July 1999, it could have entered into negotiations to compensate Canada until it could fully implement. Instead, Australia baldly asserted its compliance, forcing Canada to request the establishment of this Panel. If this Panel were to accept Australia's claims with respect to Article 5.5 and were to countenance Australia's delays, it would render Article 21.3 of the DSU a nullity and make a mockery of the requirement of prompt compliance in Article 21.1.

4.181 If and when the "transition periods" end, Australia's new measures will perpetuate a distinction in its appropriate levels of protection. Under AQPM 1999/51, only five of the eight pre-import requirements that will apply to salmonids will also apply to non-salmonids.⁷² In addition, salmonids will have to satisfy all of these requirements and be processed to a consumer-ready state, but non-salmonids that satisfy the more limited pre-import requirements may be imported in non-"consumer-ready" forms.

4.182 Moreover, AQIS has left a major loophole in its restrictions on non-salmonids. Non-salmonids that neither meet the more limited processing, documentation and certification requirements nor are "consumer-ready" may nevertheless be imported under an import permit. That is, dead, non-salmonid marine finfish may be imported into Australia without evisceration, without heading and gilling, without inspection and grading, without health certification and without processing to a "consumer-ready" state.

4.183 The new policies grant the discretion to issue such permits to delegates of the Director of Quarantine if they conclude that "the proposed importation is consistent with Australia's appropriate level of protection (i.e. it presents an equivalent level of risk to certified, inspected, headless, eviscerated, washed fish)".⁷³ It is entirely unclear on what basis delegates would be able to make such assessments. For example, they will be assessing individual shipments, whereas risk, as already discussed, is a function of total import volumes. Thus, a one-tonne shipment of whole, uneviscerated fish for bait may indeed pose a low risk whereas 40,000 such shipments, if assessed cumulatively, may not. Moreover, these discretionary permits will be issued quickly. According to AQPM 1999/64, they will normally be issued within ten working days of receipt of the application and payment of a fee.⁷⁴

4.184 Australia asserts that the "Comparative Table" of risk management measures annexed to its First Submission demonstrates that Australia has not adopted different appropriate levels of protection in different situations. It is important to note that Australia uses the term "risk management" to mean very different things for salmon and non-salmonids. For salmon, "risk management" means measures in addition to evisceration. For non-salmonids, "risk management" does not necessarily even mean evisceration.

4.185 In the case of live ornamental finfish, following the "transition period" Australia will marginally tighten its requirements for some fish but will weaken them for others. For example, whereas the minimum post-entry quarantine holding period has been fourteen days⁷⁵, according to AQPM 1999/51, the minimum quarantine period will be three weeks for goldfish but only one week for all other fish.⁷⁶

4.186 In sum, Australia cannot be considered to have corrected the distinction in its appropriate levels of protection found by the Panel and the Appellate Body.

4.187 Dr. McVicar is not convinced that Australia's different treatment of salmon and pilchard imports reflects even a distinction in appropriate levels of protection. He argues that the disease agent VHSV, which pilchards share in common with salmon, is more readily transmitted to other pilchards and may be presumed to be more pathogenic to other pilchards than to salmon. He also argues that VHSV is the only disease agent of pilchards of current concern to Australia, whereas adult salmon may host more disease agents. He emphasizes that Australia has long experience in importing pilchards without a disease introduction, although by this we must assume him to mean a disease introduction to salmonids since pilchard imports are suspected of causing the recent mass pilchard mortalities in Australia.

4.188 Against these factors is the fact that pilchards are imported in vastly larger quantities than salmonids, and that pilchards are deposited directly into the aquatic environment. Dr. McVicar has noted that this practice often occurs in a marine environment, possibly away from salmonid farms. However, the 1999 Report also declares pilchards to be the most popular recreational bait fish. The 1999 Report makes this statement without distinction as to the type of aquatic environment, whether it is open ocean or trout streams, where pilchards are used. In addition, uneviscerated pilchards are used as bait for tuna long-lining all around the southern coast of Australia. Canada understands that every time a long-line is set, up to 3000 uneviscerated pilchards are deposited directly into the aquatic environment.

4.189 Salmon on the other hand would be imported only for human consumption, which would greatly restrict the amount of product that would enter the aquatic environment regardless of whether it hosted a pathogen. Any imported salmon will also be eviscerated, which Dr. McVicar states will significantly reduce risk. Any imported salmon would also be subject to the numerous other primary processing measures that Canada has described such as washing, inspection and in the case of all farmed salmonids, including all Atlantic salmon, bleeding, which would reduce risk beyond evisceration alone.

4.190 Whereas pilchard imports are suspected in two disease outbreaks in Australia, trade in dead, eviscerated salmon products has never been demonstrated to cause, and is not currently suspected of causing, any disease establishments. This holds true even though there has been vastly more trade in salmon than in pilchards and salmon has been traded in all types of environments, including, prior to 1975, Australia. Dr. Winton advised the original Panel that there were even examples where fish that potentially contained high levels of an infectious agent had not resulted in transmission of disease if they were eviscerated.⁷⁷ As Dr. McVicar says, "considerable emphasis has to be placed on historical experience and the absence of a disease event is of considerable relevance".

4.191 Australia claims its appropriate level of protection is in all cases a "high or very conservative level of protection aimed at reducing risk to very low levels while not based on a zero-risk approach". If so, it is impossible to understand how Australia can tolerate the uncontrolled release of uneviscerated pilchards directly into its various aquatic environments, including those populated by salmon and trout. Yet it cannot tolerate the importation of far smaller volumes of salmon for human consumption that has been eviscerated, washed, inspected and in the case of farmed fish, bled. Either Australia maintains arbitrary and unjustifiable distinctions in its appropriate levels of protection in different situations, or its measures in respect of salmon are more trade restrictive than required to achieve its appropriate level of protection.

4.192 Dr. Winton told the original Panel that Pacific herring may "contain a significantly and quantifiably higher incidence and prevalence of infection than do Pacific salmon".⁷⁸ Despite Dr. McVicar's caveat that diseases of high pathogenicity are less likely to be transmitted between species, he commented in the 1999 Report that Atlantic herring is a possible source of ISAV in salmon.⁷⁹ According to AQPM 1999/79, AQIS is currently considering an application for the importation of whole round herring for use as fish feed or bait.

4.193 Even if that application, or others like it, are rejected, as a specified non-salmonid fish, whole round herring may still be imported into Australia for further processing. Once in Australia, herring imports may be headed and eviscerated at commercial processing facilities. Australia allows this, despite Dr. Winton's warning, despite the suspicion of herring as a source of ISAV and despite Australia's professed concern that wastes from processing facilities are the most likely pathway for the release of exotic pathogens into the environment.

4.194 By the standards of what Australia insists is its appropriate level of protection, when it comes to non-salmonid imports, Australia is still gambling. Dr. McVicar has commented that control measures must be based on proven cases, not possible risks. There are no proven cases, or even documented cases of disease transmission via dead eviscerated salmonids or any other fish. By contrast, as Canada's Exhibit GG shows clearly, fisheries scientists caution against feeding any fish species with raw marine fish. The experiments on which this advice was based demonstrated that marine VHS viruses are potentially pathogenic for rainbow trout even when the viruses come from unrelated species.

4.195 Dr. McVicar cautions that one should prefer real-life experience over experimental testing. But there are no real-life demonstrations of disease transmission via dead, eviscerated salmonids. On the basis of Australia's alleged appropriate level of protection, its professed concerns regarding disease transmission pathways and the known and suspected risks posed by herring and pilchards, there is no possible justification for Australia to allow whole herring, but not salmon, to be processed in Australia and to allow whole pilchards and herring to be used as bait or feed.

4.196 Nor does Dr. McVicar address all the other diseases of concern to Australia that may be present in bait fish, namely aquabirnavirus, IPN, IHN, red sea bream iridovirus, A. salmonicida (typical and atypical), and Photobacterium damsela piscicida.

Australia

4.197 Canada seeks to widen the Panel's examination beyond its mandate. The Panel's mandate does not extend to an examination of the consistency of all measures applying to all non-viable salmonids; or to measures outside the scope of "measures taken to comply".

4.198 The bulk of Canada's evidence relates to herring bait and live ornamental finfish in respect of two diseases in common: A. salmonicida (atypical) and IHN. There is now new scientific data and new measures before the Panel. Canada's evidence does not constitute a hazard identification. Nor does Canada contest the science of the risk evidence.

4.199 Of the diseases in common with salmon, the 1999 IRA's examined risks on the basis of common methodology according to end use and the form in which imported. The 1999 IRA's then assigned risk management measures on a disease-by-disease basis and, where appropriate, with regard to specific host/disease combinations.

4.200 Dr. Br�ckner advises:

"The scientific argument is that disease manifests differently in different species and in respect of products of such species. It is asserted that this difference should be taken into account when determining risk management measures. In none of the Articles mentioned in the Agreement, is it required that there should be "across the board" conformity of measures to meet an ALOP. The process that was followed in the 1999-IRA also supports the view of Australia although it could be reasoned that there are both advantages and disadvantages to this approach - especially if a measure is evaluated in terms of possible restrictions on trade that such a measure might impose. The approach of Australia appears not to be inconsistent with the Agreement and can thus not be opposed." (response to Question 10)

4.201 The use of host-disease lists (such as that provided by the Panel in its letter of 1 November 1999) must be treated with caution. Canada did not submit the lists into evidence to the Panel. Furthermore, Dr. McVicar cautions against the unreserved use of published host-disease lists, as numerous reports of disease occurrence are the result of experimental challenge or from samples taken from or in close association with infectious populations of the normal host in unnatural conditions (response to Question 10). Dr. McVicar also advises that different strains of the same disease agent may show marked differences in pathogenicity, infectiveness and therefore risk. Some atypical strains of A, salmonicida do not cause significant disease in salmonids when they come from non-salmonids.

4.202 There is better scientific evidence before the Panel in regard to the source and risk associated with the diseases in question (Australia's Exhibit A) than contained in the lists. The lists do not represent lists of species of fish that are commercially marketed or traded for human consumption, nor do they represent lists of species of fish imported by Australia for human consumption.

4.203 With regard to A. salmonicida , Canada's claims are based on assertions that thirty-three species are hosts of A. salmonicida (atypical), thirty-five species for A. salmonicida (typical), and that Australia imports all such species for human consumption. These claims are rejected by the facts. A. salmonicida has been reported in Canadian salmon, but mostly in the typical form. The typical form has not been reported in herring. Among live ornamental fish allowed entry to Australia, it has been reported only in goldfish (Carassius auratus) and Labrus bimaculatus (a marine wrasse).

4.204 A. salmonicida (atypical) is the only disease in common to the three product groups. Non-viable fish for human consumption is traded in eviscerated or further processed form. Australia sources most of its imports of fresh chilled or frozen fish for human consumption in the form of frozen fillets, and principally from New Zealand, where both the disease and many of the species cited by Canada do not exist.

4.205 Risk management measures were warranted for salmon other than wild, ocean-caught Pacific salmon and for farmed non-salmonid marine fish. For salmon other than wild ocean-caught Pacific salmon, the measures applied are:

• the fish must be derived from a population subject to health surveillance and monitoring administered by a competent authority;
• the fish must not be derived from a population slaughtered as an official disease control measure;
• the fish must not be juvenile salmonids or spawners;
• the head and gills removed and internal and external surfaces thoroughly washed;
• the fish must be inspected and graded under supervision of a competent authority;
• the product for export must be free from visible lesions associated with infectious disease and be fit for human consumption;
• the fish must be processed in a premises approved by and under the control of a competent authority;
• consignments must be accompanied by official certification;
• only approved premises may commercially process imported salmonids in Australia; and
• only consumer-ready product will be released from quarantine.

For farmed non-salmonid marine finfish, the measures are listed in AQPM 1999/79. For live ornamental finfish and goldfish, the measures are listed in AQPM 1999/77. For Labrus bimaculatus, the measures are listed in AQPM 1999/77.

4.206 IHNV is one of the most significant diseases of salmon and the full suite of risk management measures apply for salmon with this disease. However, the risk of IHN being found in herring is negligible and it is not a disease of goldfish.

4.207 North American herring is a principal host of VHSV. Canada does not claim that pilchards are associated with transmission of VHS to salmonids. VHS is associated with colder water temperatures. This disease is also reported in pilchards as an exceptional occurrence in unusual environmental conditions in Canadian waters. Australia normally sources Pacific pilchards from warmer waters where VHSV is not reported. Most Australian water temperatures are higher than those where VHSV normally occurs. The 1999 IRA concluded that the risk associated with eviscerated salmonids met Australia's ALOP. Risk management measures were not warranted. For other fish products certain risk-management measures apply.