6. Article 5.5 of the SPS Agreement

42. According to Canada, the issue facing the Panel under Article 5.5 was not whether the risks posed by different products were the same, but whether the appropriate levels of protection maintained by Australia to address those risks were different, and, if they were, whether those differences were arbitrary or unjustifiable and resulted in discrimination or a disguised restriction on international trade.

43. The key point before the Panel, in Canada's view, was that despite the absence of evidence that dead, eviscerated, fresh, chilled or frozen salmon for human consumption has ever introduced disease anywhere, and that the risk of such introduction was extremely low, Australia closes its market. By contrast, when faced with the knowledge that many of the same disease agents are entering Australia, through fish products other than salmon, Australia allows the fish products in, because it claims not to know the likelihood that those disease agents would infect the Australian salmonid population or the consequences if they did. In other words, Australia adopts two diametrically opposed levels of protection.

44. Canada claims that contrary to Australia's assertions, the Panel did consider "potential biological and economic consequences." Australia had argued that for different situations to be comparable, both disease and consequences needed to be the same. However, the Panel found as a fact, based on the experts' testimony, that for a given disease, the biological and economic consequences of a disease introduction would be the same or similar, regardless of the product introducing the disease.

45. In response to Australia's claim that the Panel denied it the right to adopt a cautious approach, and to determine its own level of protection, Canada points out that what the Panel did was to compare the measures imposed by Australia in respect of salmon and non-salmonids. Australia contended throughout the case that its appropriate level of protection for disease agents that could affect its salmonids is very conservative. According to Canada, it was so conservative in fact, that at times Australia appeared to be insisting that no matter how remote the probability or likelihood of the risk, the mere possibility that such disease agents might be introduced was sufficient for it to ban salmonids that might host the agents in question. When confronted with the fact that many of the same disease agents not only might occur, but are known to occur in non-salmonid products, Australia takes a very different approach: it lets the products in. It is, therefore, difficult to understand what Australia hopes to gain by faulting the Panel for comparing only disease agents known to occur in salmon with those known to occur in non-salmonids. According to Canada, had the Panel expanded its analysis to contrast Australia's "cautious" position on potential disease agents in salmonids with its "open market" for non-salmonids in which such disease agents have been confirmed, Australia's discrepancies in levels of protection would have appeared that much greater.

46. According to Canada, the Panel might well have found that the distinctions in levels of protection in all of the different situations identified by Canada were arbitrary or unjustifiable. However, it did not. Instead, it focused on the two comparative products - whole frozen herring used as bait and live ornamental finfish - for which Australia's differing measures seemed the most egregious. This was because, as the Panel's experts noted, the importation of live ornamental fish and bait fish are generally considered to pose higher risks of introducing exotic disease agents than does the importation of dead fish for human consumption. Moreover, as the experts noted, there has never been a recorded case of dead, eviscerated fish, such as the salmon that Australia prohibits, resulting in an exotic disease introduction. By contrast, there are many such documented introductions in the case of live fish, even in Australia.

47. Canada states that when it comes to the risks of disease introduction that non-salmonid imports (particularly live fish, bait fish, and other fish for human consumption) pose to Australia's salmonids, Australia demands that Canada provide not just evidence, but proof of risk. However, in the case of salmonid imports, despite the strong evidence that the risk is negligible, Australia imposes an import ban "just in case".

48. Canada submits that the evidence regarding all three elements of Australia's Article 5.5 violation is as compelling as one is ever likely to find, not only insofar as the measure applies to ocean-caught Pacific salmon, but to all fresh, chilled or frozen salmon products covered by the measure. If the evidence in this case is insufficient to support a finding that Australia violated Article 5.5, it is difficult to conceive of circumstances in which a Member could prove an Article 5.5 violation.

7. Article 5.6 of the SPS Agreement

49. Canada asserts that although Australia contends that the 1996 Final Report concluded that the other quarantine policy options it identified (Options 2-5) would not meet Australia's appropriate level of protection, there is nothing in the 1996 Final Report to sustain this assertion. A review of the Panel Report, and the 1996 Final Report, reveals that this conclusion applies, if at all, only to the two options rejected ab initio - removal of all quarantine restrictions or a ban on all salmon imports - which the 1996 Final Report found could not "reasonably be considered as appropriate, having regard to associated quarantine risks".

50. According to Canada, Australia implies illogically that the only measure in place that actually achieves the prohibition on fresh, chilled or frozen salmon - heat treatment - does not achieve Australia's appropriate level of protection, while the prohibition itself does. Also, by stating that its appropriate level of protection is "explicit" in the prohibition itself, Australia appears to be suggesting that the appropriate level of protection is the prohibition. The language of Article 5.6 makes perfectly clear that a measure is not the appropriate level of protection.

C. Canada - Appellant

1. Product Coverage

51. Canada asserts that the Panel's failure to make findings under Articles 5.5 and 5.6 for salmon products other than ocean-caught Pacific salmon was based on a misapplication of the "principle of judicial economy" as set out by the Appellate Body in United States - Shirts and Blouses¹⁹ and led to a result contrary to Article 3.7 of the DSU. Moreover, the Panel's approach had the perverse result of subjecting a Member's measure to less scrutiny the more overt its violation of its SPS obligations. In the alternative, Canada submits that the Panel's limited consideration of Articles 5.5 and 5.6 was based on justifications at odds with the ample evidence before the Panel, thereby constituting a violation of Article 11 of the DSU.

52. According to Canada, if making a ruling on one claim will sufficiently determine the course of implementation so as to secure a positive solution to the dispute, it would be redundant for a panel to proceed further. However, a panel that addresses certain claims but declines to address others that would better frame the course of implementation will not necessarily have resolved the matter in dispute. An implementing Member may be able to implement in such a way as to bring its measure into conformity in respect of the claims addressed by the panel, but not in respect of the other claims that the panel did not address. The matter would not be resolved in respect of those other claims and the complaining Member would be forced to bring another case to address them. Hence, the "judicial economy" sought by the panel would be a false economy.

53. Canada claims that the Panel's decision in the present case to limit its findings to ocean-caught Pacific salmon was not a decision to address certain claims. Rather, it was a decision to address only one of the product categories, namely ocean-caught Pacific salmon, in respect of which Canada had claimed a violation of the two articles in question. Given that neither Australia's measure nor the scope of the dispute was limited to ocean-caught Pacific salmon but, rather, extended to all fresh, chilled or frozen salmon, and having found that in order to resolve this dispute it was appropriate and necessary to consider Canada's Articles 5.5 and 5.6 claims for ocean-caught Pacific salmon, it logically follows that it was appropriate and necessary to do so in respect of all the salmon products covered by the measure. By omitting to do so, the Panel failed to resolve the matter at issue in the dispute. Canada argued that the findings of the Panel under Articles 5.5 and 5.6 with regard to ocean-caught Pacific salmon could be extended to other Canadian salmon.

2. Article 2.3 of the SPS Agreement

54. Canada asserts that it presented evidence to support its independent Article 2.3 claim - that although Australia bans the importation of uncooked salmon from Canada ostensibly to prevent the entry and establishment of exotic diseases, it does not control the movement of salmon within Australia from states with, to states without, certain diseases. However, the Panel decided that it was "more appropriate in the circumstances of this dispute to first deal with Canada's claims under Article 5" and when it considered Article 5.5, it did so only in respect of ocean-caught Pacific salmon. It was on the ground of having found a violation of Article 5.5 that the Panel found Australia also inconsistent with the requirements of Article 2.3. The Panel's finding on Article 2.3, therefore, was limited to ocean-caught Pacific salmon as the Panel declined to "further examine Canada's other claims under Article 2".

55. According to Canada, the Panel erred in applying the first sentence of Article 2.3 as an afterthought to its analysis of Article 5.5. It erred in interpreting the first sentence of Article 2.3 only as preambular language and examining it solely through Article 5.5, and not as an independent obligation. It compounded this error by inappropriately confining its analysis and finding to ocean-caught Pacific salmon rather than considering all categories of salmon at issue. In doing so the Panel disregarded its terms of reference and the evidence placed before it.

56. Canada claims that the Panel's interpretation has the effect of emasculating Article 2.3, first sentence. It violates customary rules of interpretation of public international law and offends the principle articulated by the Appellate Body Report in United States - Standards for Reformulated and Conventional Gasoline ("United States - Gasoline")²⁰ that the interpreter must give effect to all the terms of a treaty. It also runs afoul of the admonition in Article 3.2 of the DSU that "recommendations and rulings of the DSB cannot add to or diminish the rights and obligations provided in the covered agreements". It fails to secure a positive solution to the dispute.

D. Australia - Appellee

1. Product Coverage

57. Australia asserts that the lighter scrutiny by the Panel of farmed salmon vis-à-vis ocean-caught Pacific salmon was not a matter of legal error, but was caused by the failure of Canada to present legal claims and arguments relevant to all of the salmon categories, which effectively invited the Panel to engage in "product splitting" in its examination of claims. According to Australia, Canada is wrong in asserting that the Panel can find inconsistency on the basis of a limited category of products in respect of some of the elements forming part of the obligations of Articles 5.5 and 5.6 and can thereby extend those findings to another category of products, thus avoiding the need to establish a prima facie case in respect of all elements of the obligations with respect to the latter products.

58. In Australia's view, there was, contrary to what Canada contends, no "ample evidence" before the Panel in respect of other categories of salmon, since most of the studies referred to by Canada are of a general nature or are based on late or unsubmitted evidence.

2. Article 2.3 of the SPS Agreement

59. According to Australia, Canada's appeal in respect of Article 2.3, first sentence, is based on a mischaracterization of the Panel's findings of violation under Article 5.5. The Panel did not find a violation of Articles 5.5 and 2.3 because Australia applies different measures on domestic salmonid product and imported salmon. Hence, all of Canada's arguments relating to internal and external controls are irrelevant to the matters under appeal.

60. Australia argues that the notion of Article 2.3 as an independent obligation would conflict with the ordinary meaning of the terms in their context. Canada has not explained why its claims of error should not have equal application to the obligations expressed in the second sentence of Article 2.3, or for that matter in regard to the provisions of Articles 2.2 and 5.1.

To continue with European Communities

¹⁹Adopted 23 May 1997, WT/DS33/AB/R.

²⁰Adopted 20 May 1996, WT/DS2/AB/R.