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World Trade
Organization

WT/DS18/AB/R
20 October 1998
(98-0000)
Original: English

Australia - Measures Affecting Importation of Salmon

Report of the Appellate Body

(Continued)


IV. Terms of Reference

A. The Measure and Product at Issue

90. The first question we address is whether the Panel failed to interpret correctly its terms of reference with respect to the measure and the product at issue in this dispute. In its request for the establishment of a panel, Canada identified the measure and the product at issue as follows:

The Australian Government's measures prohibiting the importation of fresh, chilled or frozen salmon (the "Australian measures" or the "measures") include Quarantine Proclamation 86A, dated 19 February 1975, and any amendments or modifications to it. The measures adversely affect the importation of Canadian salmon.22

91. With regard to the measure at issue, the Panel concluded in paragraph 8.19 of its Report that:

... according to our terms of reference, the measure we need to examine in this dispute is QP86A as implemented or confirmed by the 1988 Conditions, the 1996 Requirements and the 1996 Decision and this in so far as it prohibits the importation into Australia of fresh, chilled or frozen salmon.

92. In coming to that conclusion, the Panel considered in paragraph 8.18 of its Report that the 1988 Conditions:23

... in effect deny the importation of commercial quantities of salmon product not heat-treated as prescribed. The 1988 Conditions can, in that sense, also be said to constitute a measure "prohibiting the importation of fresh, chilled or frozen salmon" as referred to in the Panel request. For the above reasons, we consider that also the 1988 Conditions fall within our terms of reference.

With regard to the 1996 Requirements24, the Panel subsequently considered:

... the same reasoning as that developed above for the 1988 Conditions applies. We thus consider that the 1996 Requirements fall within our terms of reference.25

93. Later in the Panel Report, in examining whether the SPS measure at issue was based on a risk assessment as required by Article 5.1 of the SPS Agreement, the Panel found that:

... From a trade perspective (focusing on what product cannot enter the Australian market) the measure at issue in effect constitutes an import prohibition on, inter alia, fresh, chilled and frozen salmon. However, if we approach the measure at issue to determine its sanitary aspects (focusing on what is required for the product to be allowed for importation) - an approach we need to conduct in the context of the SPS Agreement - we find that it, in effect, imposes heat treatment as a sanitary solution to the risk posed by the importation of salmon. These two perspectives are two sides of a single coin: a consequence of Australia's sanitary requirement that salmon be heat-treated before it can be imported, is that imports of fresh, chilled and frozen salmon are prohibited ...26

In a footnote to this paragraph, the Panel further clarified that:

What Canada is challenging before this Panel is Australia's justification for the measures that prohibit access for fresh, chilled or frozen salmon - or, in other words, which permit access for salmon only if it has been heat-treated in accordance with the 1988 Conditions or commercially canned.27

94. With regard to the product at issue, the Panel stated that the product coverage of this dispute is limited, in accordance with the request for the establishment of a panel, to "fresh, chilled or frozen salmon". The Panel explicitly held that the product coverage "does exclude heat-treated product"28 and that "heat-treated product falls outside the product coverage of this dispute".29

95. According to Australia, the Panel exceeded its terms of reference in respect of "both the product covered and the applicable quarantine measures for consideration".30 With regard to product coverage, Australia contends that the Panel erred in law by extending the product coverage to heat-treated salmonid products.31 Australia concedes that the Panel expressly stated that heat-treated products fall outside the product coverage of this dispute, but it argues that "[b]y the time of its examination of consistency of 'the measure' with the provisions of Article 5.1, the Panel seemingly decided that its terms of reference cover all forms of salmon product processed from the 'initial' product, i.e., fresh salmon."32 Australia contends that the Panel extended its terms of reference beyond the SPS measure at issue, i.e., the import prohibition on fresh, chilled or frozen salmon33, by including the heat-treatment requirement which applies only to smoked salmon and salmon roe.34 Australia argues that the Panel, by characterizing a quarantine measure for smoked salmon as a sanitary aspect of a trade measure for fresh, chilled or frozen salmon (the "other side" of a single coin)35, demonstrated "sharply flawed logic".36 According to Australia, it is not a consequence of the requirement that smoked salmon be heat-treated that imports of fresh, chilled or frozen salmon are prohibited. Australia stresses that smoked salmon and fresh, chilled or frozen salmon are different products and that the quarantine measures for each are not "two sides of the same coin".37

96. With regard to the product at issue in this dispute, we note that the Panel explicitly stated that heat-treated products fall outside the product coverage of this dispute.38 Furthermore, it is clear from the Panel Report that the Panel only considered "fresh, chilled or frozen salmon". We, therefore, conclude that Australia's claim that the Panel exceeded its terms of reference by considering products outside its terms of reference and, in particular, heat-treated products, is without merit.

97. With regard to the measure at issue, we note that QP86A provides, in relevant part:

Now Therefore I, ..., the Governor-General of Australia, ..., hereby, ...

(d) Prohibit the Importation into Australia of Dead Fish of The Sub-Order Salmonidae, or Any Parts (other than Semen or Ova) of Fish of That Sub-Order, in Any form Unless

(i) prior to importation into Australia the fish or parts of fish have been subject to such treatment as in the opinion of the Director of Quarantine is likely to prevent the introduction of any infectious or contagious disease, or disease or pest affecting persons, animals or plants; and

(ii) the Director of Quarantine or a person authorized by him has, by instrument in writing, consented to the importation and the instrument is produced to a Collector ... or to a quarantine officer. (emphasis added)

It is clear from the wording of QP86A that it establishes an import prohibition on salmon. This is not disputed; both parties agree that fresh, chilled or frozen salmon has not been allowed to enter Australia since QP86A came into force.39

98. Although QP86A imposes an import prohibition, it delegates authority to the Director of Quarantine to allow imports which have been subject to such treatment as is likely, in his opinion, to prevent the introduction of any disease. On the basis of this delegated authority, the Director of Quarantine issued the currently applicable 1988 Conditions.40 The 1988 Conditions were construed by the Panel to apply not only to smoked salmon, but also to other categories of salmon, including fresh, chilled or frozen salmon. In the view of the Panel, this interpretation is justified by the title and the first paragraph of the 1988 Conditions. The title reads:

Conditions for the Importation of Salmonid Meat and Roe into Australia.

Paragraph 1 reads:

All uncanned salmon and trout meat and salmon roe will require a quarantine permit to enter Australia.

99. As the Panel saw it, neither the title nor paragraph 1 specifies that the 1988 Conditions deal only with smoked salmon. However, upon closer scrutiny, it appears that this interpretation misreads the actual scope of the 1988 Conditions. They provide that:

(a) the importation of all salmonids other than canned salmon requires a quarantine permit41;

(b) the application for such permit must state the temperature and duration at which the salmon-trout is smoked, or the roe is heated42;

(c) for salmon which is not treated as above-provided, the AQIS will consider variations to these requirements which could take into account the effect of any auxiliary processing such as "flash-baking", "par-boiling", "gamma irradiation", "brining" or "freezing" where the effectiveness of this process in inactivating organisms can be demonstrated43;

(d) for the importation of consignments of smoked salmon meat under 5 kilograms in weight, there is no need for a quarantine permit, but the prescribed processing is still required.44

100. The 1996 Requirements confirm subparagraph (d) above, but modify the labelling requirement for consignments of smoked salmon under 5 kilograms in weight, as prescribed in the 1988 Conditions.45

101. We agree with Australia that the heat-treatment requirement mentioned in the 1988 Conditions applies only to smoked salmon, and that these Conditions exempt heat-treated smoked salmon and salmon roe from the import prohibition laid down in QP86A. Fresh, chilled or frozen salmon falls under the import prohibition of QP86A, as confirmed by the 1996 Decision of the Director of Quarantine. Fresh, chilled or frozen salmon is not, and cannot be, subjected to heat treatment. As a matter of fact, heat treatment would destroy fresh, chilled or frozen salmon. As the Panel itself explicitly stated: "heat treatment actually changes the nature of the product and limits its use. Heat-treated salmon can obviously no longer be consumed as fresh salmon."46 Moreover, both participants agree that fresh, chilled or frozen salmon is an entirely different product from heat-treated (commercially marketed as "smoked") salmon.47

102. We recall that the Panel stated that the measure at issue in this dispute "is QP86A as implemented or confirmed by the 1988 Conditions, the 1996 Requirements and the 1996 Decision, and this in so far as it prohibits the importation into Australia of fresh, chilled or frozen salmon".48 As indicated above, the Panel interpreted its terms of reference to include the 1988 Conditions, by considering them to constitute a measure "prohibiting the importation of fresh, chilled or frozen salmon" unless heat-treated as prescribed.49 We recall that in the context of its examination of whether Australia's measure was consistent with Article 5.1, the Panel treated the import prohibition and the heat-treatment requirement as "two sides of a single coin". It said that a consequence of Australia's sanitary requirement that salmon be heat-treated before it can be imported is that imports of fresh, chilled or frozen salmon are prohibited.50

103. We do not share the Panel's position. In our view, the SPS measure at issue in this dispute can only be the measure which is actually applied to the product at issue. The product at issue is fresh, chilled or frozen salmon and the SPS measure applicable to fresh, chilled or frozen salmon is the import prohibition set forth in QP86A. The heat-treatment requirement provided for in the 1988 Conditions applies only to smoked salmon and salmon roe, not to fresh, chilled or frozen salmon.

104. We also do not share the Panel's view that the import prohibition and the heat-treatment requirement are "two sides of the same coin". Smoked salmon and fresh, chilled or frozen salmon are different products and the SPS measures applied to each are not "two sides of the same coin". We agree with Australia that it is not a consequence of the requirement that smoked salmon be heat-treated that imports of fresh, chilled or frozen salmon are prohibited. Imports of fresh, chilled or frozen salmon are prohibited as a direct consequence of the application of QP86A, and this prohibition has not been revoked, but has, in fact, been continuously maintained since 1975. We likewise do not share the Panel's view that the 1996 Requirements apply to fresh, chilled or frozen salmon. These requirements clearly apply only to imports of small amounts of smoked salmon.

105. For the reasons set out above, we reverse the Panel's findings in paragraph 8.18 and 8.19 of the Panel Report that the 1988 Conditions and the 1996 Requirements fall within the Panel's terms of reference. We conclude that the SPS measure at issue in this dispute is the import prohibition on fresh, chilled or frozen salmon set forth in QP86A, as confirmed by the 1996 Decision, rather than the heat-treatment requirement set forth in the 1988 Conditions.

To continue with Article 6 of the SPS Agreement


22WT/DS18/2, 10 March 1997.

23Supra., footnote 3.

24Ibid.

25Panel Report, para. 8.18.

26Panel Report, para. 8.95.

27Panel Report, footnote 302.

28Panel Report, para. 8.24.

29Ibid.

30Australia's appellant's submission, para. 50. See also Notice of Appeal, point 2.

31Australia's appellant's submission, para. 54.

32Australia's appellant's submission, para. 62.

33Australia's appellant's submission, para. 65.

34Australia's appellant's submission, para. 23. Further, in para. 24 of its appellant's submission, Australia argues that the Panel erred by construing the measure at issue as a measure "in effect", rather than a measure "as applied", implying that the measure at issue was some sort of disguised import prohibition - in the form of a measure that applied to products outside its terms of reference (i.e., the heat-treatment requirement applied to smoked salmon and salmon roe).

35Panel Report, para. 8.95.

36Australia's appellant's submission, para. 78.

37Ibid.

38Panel Report, para. 8.24.

39With the exception of the importation of small quantities of fresh, chilled or frozen salmon allowed for scientific or taxidermy purposes. Panel Report, para. 8.95.

40Supra., footnote 3. These 1988 Conditions replaced the 1983 Guidelines for the Importation of Smoked Salmon and Trout into Australia.

411988 Conditions, para. 1.

421988 Conditions, paras. 2 and 8. In para. 3 of the 1988 Conditions, a table of an approved temperature-time relationship is set out.

431988 Conditions, para. 5.

441988 Conditions, para. 9.

45Supra., footnote 3.

46Panel Report, para. 8.182.

47Responses by Australia and Canada to questions at the oral hearing.

48Panel Report, para. 8.19.

49Panel Report, para. 8.18.

50Panel Report, para. 8.95.