E. Arguments by the Third Participants

1. European Communities

61. The European Communities states that the Panel's limitation of the products examined to ocean-caught Pacific salmon is not justified by the principle of judicial economy. However, it is not clear that the Panel was in a position to examine claims in respect of the other categories of salmon. Therefore, it did not make a finding not because such was not necessary but because it did not have the necessary evidence to make a finding.

62. The European Communities observes that the Panel appears to have made a very peculiar application of the principles governing the allocation of the burden of proof. The claim that "disguised restriction of trade" is evidenced by the absence of similar restrictions on the internal movement of salmon was raised by, and therefore had to be substantiated by, Canada. If, despite the evidence submitted by Canada, the Panel still had "doubts" on the factual accuracy or relevance of this claim to the third element of Article 5.5, it should have dismissed the claim.

63. The European Communities also states that the frequent resort by the Panel, in its examination of Article 5, to the use of assumptions rather than making definitive findings is an extreme and undesirable use of judicial economy. This approach is not conducive to the resolution of disputes.

64. The European Communities argues that the normal meaning of "potential" and "likelihood" is different - "likelihood" implies a higher degree of probability than "potential". However, the object, purpose and context of the SPS Agreement indicate that no greater level of probability could have been intended for the first type of risk assessment than for the second type as defined by paragraph 4 of Annex A of the Agreement. There is no reason why SPS measures against pests and diseases will be more stringently examined than those against health risks from additives, contaminants, etc.

65. The European Communities also states its concern that the panel might be misconstrued to have stated that a "zero risk" level of protection is not a choice open to Members under the SPS Agreement. This is not at all what the Appellate Body meant in European Communities - Hormones²¹ when it referred to the "theoretical uncertainty" which always remains.

66. The European Communities argues that there is no relevant difference between the "trade perspective" and the "sanitary perspective" of the measure at issue. In the case of fresh, chilled or frozen salmon the measure at issue from both perspectives is an import ban. The conclusion of the Panel that heat treatment does not sufficiently reduce risk and hence there is no rational relationship between the risk assessment and the measure of heat treatment does not follow from its previous reasoning for two reasons: first, the treatment has no application to fresh, chilled or frozen salmon, and, second, if heat treatment is not effective, it strengthens the conclusion that imports of fresh, chilled or frozen salmon should be prohibited.

67. The European Communities also asserts that the Panel was correct in proceeding with an examination of Articles 5.5 and 5.6 because the consequences on implementation arising from a finding of a violation of Article 5.1 are not the same as those from a finding of a violation of Articles 5.5 or 5.6. However, it was wrong to justify its decision to conduct further examination by the use of the "alternative" approach, i.e., had the Panel been judged incorrect on its findings on Article 5.1 then, it would have been required to examine Articles 5.5. and 5.6. That approach is a negation of the principle of judicial economy since its logic would always require all claims to be examined.

68.The European Communities contends that the Panel's consideration of the "difference in the degree of risk" in the context of the second element of Article 5.5 is wrong because such is not a means to evaluate the arbitrariness or unjustifiability of distinctions in levels of protection. It is an element of the definition of the level of protection.

69. Because of this error, according to the European Communities, the analysis was confined to determine whether the differences between the measures applied to different types of fish could be justified by corresponding differences in the degree of risk. The only logical conclusion that the Panel could have drawn from that type of analysis was whether or not there were differences in levels of protection. That type of analysis was not sufficient to establish whether the differences in levels of protection were "arbitrary" or "unjustified". For that, the Panel should have evaluated the "character" of these differences.

70. According to the European Communities, the Panel also made four serious legal errors in applying the third element of Article 5.5: i) it gave excessive weight to the existence of differences in levels of protection as indirect evidence of the third element of Article 5.5, thereby blurring the distinction between the second and the third elements of Article 5.5; ii) it erroneously interpreted "disguised restriction on international trade" to include "discrimination between products"; iii) it inferred the motive of Australia in reversing the recommendation of the 1995 Draft Report through pure speculation; and iv) it made an irrelevant argument derived from the absence of internal controls on the movement of salmon.

71. The European Communities asserts that the Panel's analysis of the measure at issue under Article 5.6 suffers from the same defects as the analysis under Article 5.1, since it is based on the erroneous notion that the measure at issue is heat treatment. The Panel also erred in its approach to the burden of proof in connection with Article 5.6. While it stated that it was not making a finding on whether any alternative option would actually achieve Australia's appropriate level of protection, it nevertheless concluded that Canada raised a presumption on the availability of other measures which would achieve Australia's appropriate level of protection. This demonstrates that the Panel is making a "presumption" in the sense of an indication or a suspicion that a fact is true.

2. India

72. India asserts that in matters such as these, the burden of proof was on Australia. Article 3.3 of the SPS Agreement specifically states that Members may introduce measures which result in a higher level of protection than measures based on relevant international standards, provided that there is scientific justification and that it is not more trade restrictive than required to achieve the appropriate level of protection. Article 5.8 states that in case any other Member feels that such a measure is constraining or has the potential to constrain its exports and that the measure is not based on relevant international standards, it can ask for an explanation. This clearly shows, according to India, that in all such cases the burden of proof is on the Member who has introduced the measure.

73. India argues that Article 5.5, both in letter and in spirit, stresses consistency in the application of SPS measures. Its intention and objective is very clear - Members shall avoid distinctions in the levels of protection they consider appropriate in different situations, if these result in discrimination or disguised restriction on international trade.

74. India claims that since Australia's own risk assessment concedes that the levels of risk presented by the five quarantine policy options cannot be distinguished, each of these options could therefore achieve Australia's appropriate level of protection. Australia should have adopted the least trade-restrictive of these options.

3. Norway

75. Norway contends that the Panel's approach to the substantive requirements of a risk assessment is correct, especially with respect to the requirement that an evaluation be made of the effectiveness of various risk reduction options. According to Norway, the Panel should, however, have concluded separately on the substantive requirements of a risk assessment before moving on to the requirement that the measure is based on a risk assessment. All the necessary elements of fact for such conclusions seem to be present. The consequences of the Panel's approach become evident if the Appellate Body were to accept Australia's claims regarding the measure. In such a case there would be no finding, based on the facts of the case, that relates to the risk assessment as such - or the requirements regarding scientific evidence and scientific principles in Article 2.2.

76. Norway argues that proper interpretation of based on is that the effectiveness of a measure in reducing the risk must be established by the risk assessment, and that the chosen measure must be among those that were evaluated and found to have a certain effectiveness. The concrete choice of the appropriate measure to achieve a Member's level of protection, should thereafter be addressed under the "necessity requirement" in Article 2.2 as elaborated in Article 5.6. If the necessity of the chosen measure is implicit in Article 5.1, Article 5.6 would be deprived of its meaning.

77. Norway forwards that this requires a three step approach: i) a finding regarding the substantive requirements of the risk assessment itself; ii) a finding regarding whether the measure is among those that were evaluated and found effective in the risk assessment; and iii) a finding regarding whether the applied measure is necessary to achieve the importing Member's level of protection.

78. Norway contests Australia's claims that the Panel is creating a new legal obligation, by determining that diseases not detected cannot be validly taken into account for the purpose of a Member's appropriate level of protection. In Norway's view, if Australia's contention is correct, a Member would be permitted to adopt an SPS measure without having to identify a risk. Norway thinks that it is clear from the definition of Annex A, paragraph 1, of the SPS Agreement that SPS measures relate to protection from risks; therefore, if no risk has been identified with respect to a specific import, no SPS measure can be applied.

79. Norway argues that if one were to accept Australia's claim that the measure is an import ban, then the question becomes one of determining whether any of the identified alternative measures, reasonably available, is sufficient to reduce risk to the "very low levels" demanded by Australia. The 1996 Final Report does not make a clear evaluation and determination in this regard, and this lack of evaluation may in itself be a violation of the substantive requirements of a risk assessment under Article 5.1.

80. Norway asserts that the Panel should take the obligations in Article 2 as its point of departure, since they encompass the "Basic Rights and Obligations." This is because the crux of the matter is whether the Australian measure is "necessary" to achieve its level of protection, whether it is based on scientific principles and sufficient scientific evidence, and/or whether the measure amounts to an unjustifiable restriction on international trade.

4. United States

81. The United States asserts that Australia's argument ignores the fact that heat treatment was evaluated in Australia's 1996 Final Report, as well as in the 1995 Draft Report, alongside other measures with relation to fresh, chilled or frozen salmon.

82. Ironically, according to the United States, Australia cites comments by the experts noting that Australia's heat-treatment requirement effectively changes - i.e., destroys - the product, as support for its claim that heat treatment is not applicable to fresh, chilled or frozen salmon. This is like asserting that a requirement that concrete blocks be pulverized to dust before importation is a measure that pertains only to the importation of dust. Again, the Panel was not required to disregard Australia's requirement for heat treatment simply because Australia's measure requires that the character of fresh, chilled or frozen salmon be destroyed so that the resulting product is no longer "fresh, chilled or frozen".

83. The United States argues that if the Panel limited its analysis to ocean-caught Pacific salmon based on the interest of judicial economy, that principle was misapplied as it resulted in a failure of the Panel to resolve completely the matter at issue in the dispute. This is not a situation where a Panel properly elected not to consider all of the arguments or claims presented by a party. Instead, the Panel in this proceeding failed to extend the analysis to all fresh, chilled or frozen salmon which is the subject of Canada's panel request.

84. The United States asserts that Australia implemented a ban to address the possibility that eviscerated salmon, imported for human consumption, might serve as a host to introduce diseases, only some of which are exotic to Australia, into its salmon fisheries and that it was just such hypothetical risks that the Appellate Body in European Communities - Hormones concluded were not the "kind of risk which, under Article 5.1, is to be assessed".

85. The United States argues that Australia, by insisting that the Panel's comparison of the levels of protection only be made between different types of fish that are host to a like number of diseases would require that the comparison be made only where identical risks prevail. Such a limitation simply is not warranted by the text of Article 2.3, which the Appellate Body has said is an important element of the context of Article 5.5. In addition, Australia's argument regarding the appropriateness of the Panel's comparison ignores the scientific evidence before the Panel that it is very unlikely that imported salmon bears many, if any, of the approximately 20 diseases to which Australia refers.

86. The United States further argues that the Appellate Body in European Communities - Hormones implicitly approved comparisons of levels of protection in circumstances where the risks and conditions were not identical.

87. The United States asserts that Australia's arguments on Article 5.6 ignore two basic considerations. First, the Panel had before it scientific evidence which called into question the effectiveness of heat treatment. Thus, if heat treatment was achieving Australia's level of protection, there were alternatives available, including evisceration, that would also achieve the same level of protection. Second, the Panel noted the scientific conclusions that the risk associated with the importation of salmon for human consumption was small. Also, the 1996 Final Report found that "[t]he difference in level of risk between each option is incremental and cannot be quantified". Canada had therefore established an unrebutted prima facie case that less trade-restrictive alternative measures, capable of achieving Australia's level of protection, were available.

III. Issues Raised in this Appeal

88. The appellant, Australia, raises the following issues in this appeal:

89. The appellant, Canada, raises the following issues in this appeal:

To continue with Terms of Reference

²¹ Adopted 13 February 1998, WT/DS26/AB/R, WT/DS48/AB/R.