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World Trade

20 October 1998
Original: English

Australia - Measures Affecting Importation of Salmon

Report of the Appellate Body


6. Article 5.5 of the SPS Agreement

19. According to Australia, the Panel imputed an incorrect meaning to the term "risk" in identifying the existence of "different situations" and in finding the existence of "arbitrary or unjustifiable distinctions" in the levels of protection applied in those different situations. The Panel thereby erred in confining its examination of "different situations" to the risk of introduction of disease agents. On the basis of the definition in paragraph 4 of Annex A of the SPS Agreement, the "risk" to be examined is not either the risk of entry, establishment or spread or the risk of the associated biological and economic consequences but the risk of entry, establishment or spread of disease and the associated biological and economic consequences.

20. According to Australia, the Appellate Body's statement in European Communities - Hormones on the need for the "different situations" in Article 5.5 to "present some common element or elements sufficient to render them comparable" was misapplied by the Panel, since the statement should not be read, as the Panel did in this case, to provide a basis for ignoring the explicit wording of the SPS Agreement. Australia argues that: "If Article 5.5 is applied correctly in the context of the plain reading of paragraphs 1 and 4 of Annex A, then if the risks of entry, establishment or spread of one disease and the associated biological and economic consequences is the same or similar to the risk of 24 diseases, a comparison would be legitimate." According to Australia, it is not necessary to have 24 diseases in common; the fundamental issue is that the risks - as defined by the SPS Agreement - should be comparable.

21. Australia also argues that the Panel incorrectly interpreted "entry, establishment or spread" as "introduction" in the sense of "entry", contrary to the explicit wording of Articles 5.1 to 5.3 and Annex A, paragraphs 1 and 4 of the SPS Agreement, and has thereby failed to give effect to all the terms of the treaty. This has led the Panel into serious legal error in failing to examine the consequences of disease entry, establishment or spread.

22. According to Australia, the Panel failed to establish that there were sufficient elements in common with regard to the biological and economic consequences for Australia's salmonid population which will arise from the importation of salmonid species vis-à-vis those from widely different species of other aquatic animals. Evidence and scientific opinion were disregarded by the Panel because they were extraneous to the Panel's oversimplified examination which did not take it beyond a "concern" for the aquatic environment in general, and a view that there might be more risks associated with the importation of non-salmonid species than previously understood.

23. Australia asserts that the Panel, in determining that its examination of "arbitrary or unjustifiable distinctions in levels of protection in different situations" must be limited solely to disease agents positively detected, failed to interpret those terms in their proper context. The Panel thereby diminished Australia's WTO right to adopt a cautious approach in determining its own appropriate level of protection. The Panel has, therefore, failed to observe the provisions of Articles 3.2 and 19.2 of the DSU.

24. Australia argues that the Panel misused the statement in paragraph 215 of the Appellate Body Report in European Communities - Hormones to justify its use of arbitrary distinctions in levels of protection as a "warning signal" in the third test of Article 5.5. Not only has it erred in effectively using this single element in three different guises in three of its "warning signals" and "other factors", but it has gone beyond using it as a "warning signal" that something "might" be the case, and given it greater and inappropriate evidential weight by including it among signals and factors which "considered cumulatively", create a presumption of a legal violation.

25. Australia asserts that an adverse finding under Article 5.1 does not provide any evidence of a "disguised restriction on trade" resulting from arbitrary or unjustifiable distinctions in the levels of protection under Article 5.5, nor should it presume or pre-empt a finding under Article 5.5. Any such interpretation would negate any burden of proof on the complainant to establish a presumption in regard to the three elements of Article 5.5 and would not provide any scope for rebuttal by the respondent. Furthermore, such an interpretation would fail to give effect to all the terms of the treaty, and would vitiate the role of Article 5.5 as an additional obligation to that imposed by Article 5.1.

26. Australia claims that the first of the "other factors" cited by the Panel, referring to "two substantially different implementing measures" which involve "discrimination" between products, is based on an inappropriate analogy to Article III of the GATT 1994 and is a manifest factual inaccuracy. Furthermore, according to Australia, the Panel erred if it is applying an interpretation of discrimination based on Article III of the GATT 1994, rather than applying an interpretation in the sense of Article 2.3 of the SPS Agreement, i.e., discrimination between different WTO Members or between Australia and Canada "where identical or similar conditions prevail".

27. According to Australia, the Panel mischaracterized the difference between the recommendation of the 1995 Draft Report and the recommendation of the 1996 Final Report as a "change" and a "rather substantial change in conclusions". It incorrectly accorded a draft recommendation the status of an SPS measure and erroneously adhered to a view that the only way to justify a difference between draft recommendations and final recommendations under the SPS Agreement is by new scientific evidence. In this context, the Panel refused to consider relevant evidence submitted by Australia on re-evaluation of data and the role of draft reports and recommendations as part of the transparency of the practices and processes of government. Australia asserts that there is no SPS provision that requires a WTO Member to implement draft recommendations absent new scientific evidence.

28. Australia contends that the Panel is in legal error in implying that, with regard to one disease, epizootic haematopoietic necrosis ("EHN"), which is endemic in certain regions of Australia, but exotic to others, consistency with Article 5.5 requires either restrictions on the internal movement of salmon products within Australia, or alternatively, that Australia apply import zoning to grant access to Canada. The Panel did not identify any legal requirements in Article 5.5 in this regard, or in any other part of the SPS Agreement, although it noted the provisions of Article 6 in a footnote. The Panel did not claim that Australia's internal controls are in violation of Article 5.5 or any other provision of the SPS Agreement, but used this claim as somehow constituting factual evidence of the existence of a disguised restriction on trade without providing any relevant argument to support this claim.

7. Article 5.6 of the SPS Agreement

29. Australia claims that the Panel has erred in law in the way it has applied the three-pronged test to establish inconsistency with Article 5.6. According to Australia, no evidence was presented to indicate that the 1996 Final Report considered four alternative quarantine policy options as "reasonably available taking into account technical and economic feasibility". The 1996 Final Report did not address this issue, as it concluded that the options would not achieve Australia's appropriate level of protection.

30. Furthermore, Australia argues that the Panel "has incorrectly characterized the measure which currently achieves Australia's appropriate level of protection in determining that this level can be met by certain heat treatment conditions." Heat treatment does not constitute the level of protection for fresh, chilled or frozen salmon. Australia also contends that it never claimed that the difference between the alternative quarantine policy options was "only a minimal, if any, difference".

B. Canada - Appellee

1. Terms of Reference

31. Canada posits that the Panel's inquiry could not be confined to the 1996 Decision of the Director of Quarantine because it is too narrow in scope as it applies only to ocean-caught Pacific salmon, as it takes effect only from 13 December 1996 and as it is only one element of the measure at issue. The 1988 Conditions fell, by Australia's own admission, within the terms of reference since these Conditions were implemented pursuant to QP86A, the instrument Australia describes as "the legal framework for the authority to determine the 1988 Conditions". If the 1996 Decision is the only measure at issue, then the Panel would have had to find Australia in violation of Article XI of the GATT 1994.

32. Canada claims that Australia was at all times well aware of the case against it, including the measure that was being challenged and the claims of violation that Canada was making in respect of that measure. Canada and Australia had been engaged since 1975 in discussions about Australia's denial of access to Canadian fresh, chilled or frozen salmon. The request for a panel leaves no room for doubt. It referred to Australia's measures prohibiting the importation of fresh, chilled or frozen salmon and specified that those measures included QP86A and any modifications or amendments thereto. The request for consultations is also clear on its face. It states that Australia prohibits the importation of untreated fresh, chilled or frozen salmon from Canada under QP86A, dated 19 February 1975. Finally, contrary to Australia's assertion that Canada provided no further clarification as to the measure at issue in its first submission, Canada identified the measure at issue on the very first page of its submission.

33. Canada asserts that Australia's contention is simply a game of semantics. It is abundantly clear from the Panel Report that the Panel examined whether Canadian fresh, chilled or frozen salmon had access to the Australian market. It was not requested nor did it concern itself with Canadian access to the Australian market for heat-treated salmon. The reason for this is obvious: heat-treated salmon is permitted entry into Australia and there is no dispute between the parties as to that product. What is also abundantly clear is that fresh, chilled or frozen salmon is not permitted entry into Australia because it is not heat-treated in accordance with the prescribed temperatures and heat duration periods.

34. Australia alleges that the Panel exceeded its terms of reference by examining the consistency of Australia's measure with Article 6 of the SPS Agreement. According to Canada, the Panel did no such thing. It merely cited Article 6 in a footnote and did not "examine the consistency of the measure" with Article 6.

2. Burden of Proof

35. Canada asserts that Australia's claims that Canada did not establish a prima facie case of violation by Australia of Articles 5.1, 5.5 and 5.6 of the SPS Agreement are unsubstantiated and without merit. Its allegations of Panel error are in fact allegations that the Panel has not made an objective assessment of the matter before it, including an objective assessment of the facts. This is an extremely serious allegation. It demands that Australia provide full and convincing evidence. Australia comes nowhere near to meeting this standard.

36. Canada claims that Australia misconceives the meaning of the evidentiary standard of prima facie by considering that a prima facie case exists when "subject to rebuttal, a panel could find that it is more probable than not that each element of the claim can be satisfied according to each of the Articles under which the claim has been brought". According to Canada, the Panel correctly articulated and applied the evidentiary standard, by relying on the Appellate Body Report in United States - Measure Affecting Imports of Woven Wool Shirts and Blouses ("United States - Shirts and Blouses").18

3. Objective Assessment of the Matter

37. According to Canada, nowhere does Australia's submission identify an egregious error that calls into question the good faith of the Panel. Australia's allegations of "error" are merely attempts to reargue its case and to have the Appellate Body substitute its judgment for that of the Panel as the trier of facts.

4. Other Procedural Matters

38. Canada asserts that, as Australia itself acknowledges, the Panel did allow it to make a third written submission regarding its allegations that Canada had made new "claims" at the second substantive meeting. Australia appears to be arguing that it has nevertheless been denied due process. All of the so-called new claims are new arguments, as the Panel correctly pointed out. Throughout this dispute, the Panel extended deadlines and made accommodations to meet Australia's objections that it did not have adequate time to prepare.

39. Due to Australia's objections, the Panel held that the Vose Report was "not crucial to our report" and that "we shall not further consider it in our examination". According to Canada, however, the Vose Report went specifically to the issue of whether Australia omitted significant information from the 1996 Final Report that was in the 1995 Draft Report, which information was critical to the transparent estimation of risk. Thus, if there has been any denial of "due process", it is Canada that has suffered it. The Panel's failure to consider the Vose Report deprived Canada of a relevant piece of evidence.

40. Canada argues that Australia's claims of prejudice due to the reference by Canada of certain studies showing the ineffectiveness of heat treatment against particular disease agents, which studies were not submitted in evidence, but were relied upon by the Panel, "is the most outrageous" of Australia's due process assertions. According to Canada, Australia claims that it could not locate these studies to verify or substantiate them due to Canada's typographic error in a footnote listing the publication dates as 1933 rather than 1993. Canada asserts that "what Australia has neglected to tell the Appellate Body is that the studies referred to by Canada were all referenced in the 1996 Final Report, which is where Canada found them. Both parties submitted the December 1996 Final Report into evidence. Canada submits that Australia was, therefore, well aware of these studies, or that it should have been aware of them."

5. Article 5.1 of the SPS Agreement

41. In Canada's view, the Panel correctly applied the legal standard and correctly considered the evidence to determine whether the results of the risk assessment provided a rational scientific basis to support the heat-treatment requirement. The Panel was compelled to conclude that the results of Australia's risk assessment did not "reasonably support" the heat-treatment requirement.

To continue with Article 5.5 of the SPS Agreement

18 Adopted 23 May 1997, WT/DS33/AB/R.