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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)


125. The Panel adds to these considerations, the following statement:

... [W]e consider that a risk assessment, on which to base an import prohibition in accordance with Article 5.1, cannot be premised on the concept of "zero risk". Otherwise, all import prohibitions would be based on a risk assessment since there is a risk (i.e., a possibility of an adverse event occurring), however remote, associated with most (if not all) imports.77

In its third participant's submission, the European Communities states that it finds this statement perplexing. The European Communities is concerned that what the Panel affirmed might be misconstrued to mean that "zero risk" as an appropriate level of protection is not a choice open to Members under the SPS Agreement. The statement by the Panel quoted above is not appealed, and we merely note that it is important to distinguish -- perhaps more carefully than the Panel did -- between the evaluation of "risk" in a risk assessment and the determination of the appropriate level of protection. As stated in our Report in European Communities - Hormones, the "risk" evaluated in a risk assessment must be an ascertainable risk; theoretical uncertainty is "not the kind of risk which, under Article 5.1, is to be assessed."78 This does not mean, however, that a Member cannot determine its own appropriate level of protection to be "zero risk".

126. Applying our three-pronged test set out in paragraph 128 above, to the 1996 Final Report in order to determine whether that Report meets the requirements of a risk assessment within the meaning of Article 5.1 and the first definition in paragraph 4 of Annex A, we note that the Panel found that the 1996 Final Report identifies the diseases whose entry, establishment or spread Australia wants to prevent as well as the potential biological and economic consequences associated with the entry, establishment or spread of such diseases. The Panel, therefore, concluded that "the 1996 Final Report meets the first requirement of a risk assessment".79 We agree with the Panel.

127. With regard to the second requirement for a risk assessment of the type applicable in this case, namely, the evaluation of the likelihood of entry, establishment or spread of the diseases of concern and of the associated potential biological and economic consequences, we note that the Panel stated in paragraph 8.82 of its Report:

... the 1996 Final Report uses the words probability, possibility and likelihood on different occasions and evaluates elements of probability for some of the diseases of concern.277 (emphasis added)

277 At the meeting with experts advising the Panel Australia stated that "we contend we have conducted a probability risk assessment" and implied that assessing risk as low or small is a statement of probability (Transcript, para. 155)

After citing some passages from the 1996 Final Report which evaluate elements of probability80, the Panel concluded:

Considering the evidence before us, we note that the 1996 Final Report addresses some elements of both probability and possibility. We shall, therefore, assume - without making a finding on this issue - that it meets the requirement set out above.81 (emphasis added)

128. We believe, however, that on the basis of the facts found by the Panel, it could, and should, have come to the conclusion that the 1996 Final Report does not contain the "evaluation of the likelihood of entry, establishment or spread" of the diseases of concern "and of the associated potential biological and economic consequences" as required by paragraph 4 of Annex A of the SPS Agreement. As we have already emphasized, some evaluation of the likelihood is not enough.82

129. In arriving at our conclusion that the 1996 Final Report does not meet the second requirement of a risk assessment of the type applicable in this case, we rely, in particular, on the Panel's factual findings in paragraph 8.83 of its Report:

... that the 1996 Final Report (as stated by several of the experts advising the Panel284) lends more weight to the unknown and uncertain elements of the assessment than the 1995 Draft Report (on which the 1996 Final Report is based). This, on occasions, results in general and vague statements of mere possibility of adverse effects occurring; statements which constitute neither a quantitative nor a qualitative assessment of probability.285

284 Wooldridge answers, p.6, quoted in para. 8. and Rodgers answers, p.1 ("As such, the 1995 report is a more useful document, in the sense of an internal risk assessment exercise, since it 'evaluates' the data to conclude that a negligible risk exists, while at the same time recognising that the overall risk of disease introduction cannot be quantified. The final report seems to lend more weight to the unknown elements of the assessment and as such is more cautious, which results in an outcome closer to the 'unacceptable' rather than the 'negligible but acceptable' end of the scale").

285 This led the experts advising the Panel on this issue to the conclusion that the 1996 Final Report does not appropriately assess probability as is required in their view. See Burmaster's answer to Panel Question 1, Burmaster answers, p.1; Rodgers, Transcript, para. 26 ("[The 1996 Final Report] assesses risks on a disease-by-disease basis but in a textural form and does not assign any probabilities that would be needed to reach a conclusion. In this respect, therefore, I think, it possibly does fall short of determining any probability based on the information available") and Wooldridge, Transcript, para. 55 ("... since [the 1996 Final Report] looks only at the possibility of the unwanted outcomes of infection and disease importation, rather than the probability, in my opinion, it does not in any event fulfil the essential requirements of a risk assessment").

130. We might add that the existence of unknown and uncertain elements does not justify a departure from the requirements of Articles 5.1, 5.2 and 5.3, read together with paragraph 4 of Annex A, for a risk assessment. We recall that Article 5.2 requires that "in the assessment of risk, Members shall take into account available scientific evidence". We further recall that Article 2, entitled "Basic Rights and Obligations", requires in paragraph 2 that "Members shall ensure that any sanitary ... measure ... is based on scientific principles and is not maintained without sufficient scientific evidence, except as provided for in paragraph 7 of Article 5." As we stated in European Communities - Hormones, "Articles 2.2 and 5.1 should constantly be read together. Article 2.2 informs Article 5.1: the elements that define the basic obligation set out in Article 2.2 impart meaning to Article 5.1."83

131. We, therefore, come to the conclusion that the 1996 Final Report does not meet the second requirement of the type of risk assessment applicable in this case, i.e., the evaluation of the likelihood of entry, establishment or spread of the diseases of concern and of the potential associated biological and economic consequences.

132. We turn now to the third requirement of a risk assessment within the meaning of Article 5.1 and the first definition in paragraph 4 of Annex A of the SPS Agreement, namely, the evaluation of the likelihood of entry, establishment or spread of a disease according to the SPS measures which might be applied. We agree with the Panel that the measures which might be applied are those which reduce the risks of concern, and are referred to in the 1996 Final Report as risk reduction factors. We note that the Panel observed that the 1996 Final Report examines a large number of different risk reduction factors for each of the 24 diseases of concern84, and we note that the Panel came to the following factual finding:

For most of these risk reduction factors, the 1996 Final Report provides some evaluation of the extent to which these factors could reduce risk.85 (emphasis added)

133. With regard to the quarantine policy options considered to reduce the total risk associated with all diseases of concern, the Panel, arrived at these factual findings:

... that the 1996 Final Report does not substantively evaluate the relative risks associated with these different options. Even though the definition of risk assessment requires an "evaluation ... according to the sanitary ... measures which might be applied", the 1996 Final Report identifies such measures but does not, in any substantial way, evaluate or assess their relative effectiveness in reducing the overall disease risk.86 (emphasis added)

Thereafter, the Panel stated:

Considering the evidence before us, we recall that the 1996 Final Report addresses and to some extent evaluates a series of risk reduction factors, in particular, on a disease-by-disease basis. We shall, therefore, assume - without making a finding on this issue - that the 1996 Final Report ... does make such evaluation according to and taking into account the sanitary measures or options - considered to reduce the alleged risk - which might be applied.87 (emphasis added)

134. We believe that the above assumption is not justified by the Panel's factual findings in paragraphs 8.89 and 8.90 of its Report. On the basis of its factual findings, the Panel should have come to the conclusion that the 1996 Final Report does not fulfil the third requirement for the type of risk assessment applicable in this case, i.e., it does not contain the required evaluation of the likelihood of entry, establishment or spread of the diseases of concern according to the SPS measures which might be applied. We recall that, contrary to the Panel, we consider that some evaluation of the likelihood is not enough.88

135. We conclude, on the basis of the factual findings made by the Panel and the requirements for a risk assessment as set forth above, that the 1996 Final Report meets neither the second nor the third requirement for the type of risk assessment applicable in this case, and, therefore, that the 1996 Final Report is not a proper risk assessment within the meaning of Article 5.1 and the first definition in paragraph 4 of Annex A.

136. Inasmuch as we have found that the 1996 Final Report is not a proper risk assessment, and since it was the only risk assessment put forward by Australia, we conclude that the measure at issue, i.e., the import prohibition on fresh, chilled or frozen salmon, is not based on a risk assessment as required by Article 5.1 of the SPS Agreement, and, therefore, that Australia has acted inconsistently with Article 5.1 of the SPS Agreement.

137. We note that the Panel, after reiterating our statement on the relationship between Articles 2.3 and 5.5 in European Communities - Hormones, went on to say:

... Articles 5.1 and 5.2 ... "may be seen to be marking out and elaborating a particular route leading to the same destination set out in" Article 2.2. Indeed, in the event a sanitary measure is not based on a risk assessment as required in Articles 5.1 and 5.2, this measure can be presumed, more generally, not to be based on scientific principles or to be maintained without sufficient scientific evidence. We conclude, therefore, that if we find a violation of the more specific Article 5.1 or 5.2 such finding can be presumed to imply a violation of the more general provisions of Article 2.2. We do recognize, at the same time, that given the more general character of Article 2.2 not all violations of Article 2.2 are covered by Articles 5.1 and 5.2.89

138. We agree with the Panel, and, therefore, conclude that, by maintaining an import prohibition on fresh, chilled or frozen ocean-caught Pacific salmon, in violation of Article 5.1, Australia has, by implication, also acted inconsistently with Article 2.2 of the SPS Agreement.

C. Article 5.5 of the SPS Agreement

139. The next issue we address is whether the Panel erred in law in finding that Australia has acted inconsistently with Article 5.5 of the SPS Agreement.

140. Following our Report in European Communities - Hormones90, the Panel considered:

... that three elements are required in order for a Member to act inconsistently with Article 5.5:

    • the Member concerned adopts different appropriate levels of sanitary protection in several "different situations";
    • those levels of protection exhibit differences which are "arbitrary or unjustifiable"; and
    • the measure embodying those differences results in "discrimination or a disguised restriction on international trade".91

141. The Panel found that all three conditions are fulfilled and therefore concluded that:

Since all three elements of Article 5.5 are present in this case, we find that Australia, by maintaining the measure at issue, acts inconsistently with its obligations under Article 5.5. Given our earlier finding - that a violation of the more specific Article 5.5 can be presumed to imply a violation of the more general Article 2.3 - we find that Australia, to that extent, also acts inconsistently with Article 2.3.92

142. Australia appeals from this finding of inconsistency with Article 5.5 and, by implication, Article 2.3 of the SPS Agreement. Without challenging the Panel's three-step legal test for inconsistency with Article 5.5 as such, Australia contends that the Panel has made a series of errors of law in the interpretation and application of the test.93 Australia argues that the Panel, in its application of Article 5.5, exceeded its terms of reference, erred in the allocation and application of the burden of proof, failed to make an objective assessment of the matter as required by Article 11 of the DSU and made a number of substantive errors in its interpretation and application of Article 5.5. The first of these claims has already been dealt with in Part IV of our Report; the second and third claims are dealt with in Sections A and B of Part VI. In this section we focus exclusively on the substantive errors of law Australia claims the Panel made in its interpretation and application of each of the three elements of Article 5.5 of the SPS Agreement.

To continue with First Element of Article 5.5


77Panel Report, para. 8.81.

78Adopted 13 February 1998, WT/DS26/AB/R, WT/DS48/AB/R, para. 186.

79Panel Report, para. 8.73.

80The Panel cited only a passage in the Executive Summary, two passages with respect to two diseases (Aeromonas salmonicida and Parvicapsula sp.), and a passage from the disease agent conclusions. See Panel Report, para. 8.82.

81Panel Report, para. 8.83.

82Supra., para. 124.

83Adopted 13 February 1998, WT/DS26/AB/R, WT/DS48/AB/R, para. 180.

84Panel Report, para. 8.89. These risk reduction factors are: "restricting zone of origin, species of origin, life cycle stage; pre and post shipping quarantine; product testing with tests having high sensitivity; processing, maturation and storage for specified time and temperature; treatments, (e.g., heating, disinfection); restricting the destination; vaccination; and certification."

85Panel Report, para. 8.89.

86Panel Report, para. 8.90.

87Panel Report, para. 8.91.

88Supra., para 124.

89Panel Report, para. 8.52.

90Adopted 13 February 1998, WT/DS26/AB/R, WT/DS48/AB/R, para. 214.

91Panel Report, para. 8.108.

92Panel Report, para. 8.160.

93Australia's appellant's submission, paras. 146 ff.