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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)


192. There is no finding nor examination in the Panel Report on the question of whether the import prohibition on fresh, chilled or frozen salmon is "not more trade-restrictive than required" to achieve Australia's appropriate level of protection.

193. However, in the same context and manner that we did our examination under Article 5.1 of the SPS Agreement, we believe that - to the extent this is possible on the basis of the factual findings of the Panel and/or facts that are undisputed between the parties - we should complete the legal analysis and determine whether the proper SPS measure at issue, i.e., Australia's import prohibition on fresh, chilled or frozen salmon, is "not more trade-restrictive than required" to achieve Australia's appropriate level of protection.

194. We agree with the Panel that Article 5.6 and, in particular, the footnote to this provision, clearly provides a three-pronged test to establish a violation of Article 5.6. As already noted, the three elements of this test under Article 5.6 are that there is an SPS measure which:

(1) is reasonably available taking into account technical and economic feasibility;

(2) achieves the Member's appropriate level of sanitary or phytosanitary protection; and

(3) is significantly less restrictive to trade than the SPS measure contested.

These three elements are cumulative in the sense that, to establish inconsistency with Article 5.6, all of them have to be met. If any of these elements is not fulfilled, the measure in dispute would be consistent with Article 5.6. Thus, if there is no alternative measure available, taking into account technical and economic feasibility, or if the alternative measure does not achieve the Member's appropriate level of sanitary or phytosanitary protection, or if it is not significantly less trade-restrictive, the measure in dispute would be consistent with Article 5.6.

195. With regard to the first element of this test, we note the Panel's factual finding that there are alternative SPS measures that are reasonably available, taking into account technical and economic feasibility. We, therefore, consider that the first element of the test under Article 5.6 is met.

196. With regard to the second element of the test under Article 5.6, i.e., whether the available alternative SPS measures meet the appropriate level of protection, we note that the Panel stated in paragraph 8.173 of its Report, that "[t]o determine whether any of the alternative measures meet Australia's appropriate level of protection, we should [...] examine whether these alternatives meet the level of protection currently achieved by the measure at issue." As already noted, this statement is based on the Panel's premise that "the level of protection implied or reflected in a sanitary measure or regime imposed by a WTO Member can be presumed to be at least as high as the level of protection considered to be appropriate by that Member." We disagree with the Panel.

197. We note that, in this case, the level of protection reflected in the SPS measure at issue, i.e., the import prohibition, is undisputedly a "zero-risk level" of protection. However, Australia determined explicitly that its appropriate level of protection is:

... a high or "very conservative" level of sanitary protection aimed at reducing risk to "very low levels", "while not based on a zero-risk approach".158

It is clear, in this case, that the appropriate level of protection as determined by Australia is definitely not at least as high as the level of protection reflected in the SPS measure at issue.

198. In discussing Australia's position with respect to its appropriate level of protection, the Panel noted:

It is for Australia to decide on ... [its appropriate level of protection], but, again, in so doing it has to act consistently with the SPS Agreement, in particular Articles 2, 5.1 to 5.3 and 5.6. Our examination under Article 5.6 is not aimed at a de novo review of what sanitary measure Australia should have chosen to achieve its appropriate level of protection. On the other hand, we cannot completely defer this decision to Australia and thus not give effect to Article 5.6. Our mandate under Article 11 of the DSU requires us to "make an objective assessment of the matter before [us], including an objective assessment of the facts of the case".159

199. We do not believe that Article 11 of the DSU, or any other provision of the DSU or of the SPS Agreement, entitles the Panel or the Appellate Body, for the purpose of applying Article 5.6 in the present case, to substitute its own reasoning about the implied level of protection for that expressed consistently by Australia. The determination of the appropriate level of protection, a notion defined in paragraph 5 of Annex A, as "the level of protection deemed appropriate by the Member establishing a sanitary ... measure", is a prerogative of the Member concerned and not of a panel or of the Appellate Body.

200. The "appropriate level of protection" established by a Member and the "SPS measure" have to be clearly distinguished.160 They are not one and the same thing. The first is an objective, the second is an instrument chosen to attain or implement that objective.

201. It can be deduced from the provisions of the SPS Agreement that the determination by a Member of the "appropriate level of protection" logically precedes the establishment or decision on maintenance of an "SPS measure". The provisions of the SPS Agreement also clarify the correlation between the "appropriate level of protection" and the "SPS measure".

202. According to Article 3.3 of the SPS Agreement:

Members may introduce or maintain sanitary or phytosanitary measures which result in a higher level of sanitary or phytosanitary protection than would be achieved by measures based on the relevant international standards, ... as a consequence of the level of sanitary or phytosanitary protection a Member determines to be appropriate ... (emphasis added)

Article 5 of the SPS Agreement, entitled "Assessment of Risk and Determination of the Appropriate Level of Sanitary or Phytosanitary Protection", provides in paragraph 3:

In assessing the risk to animal or plant life or health and determining the measure to be applied for achieving the appropriate level of sanitary or phytosanitary protection from such risk ... (emphasis added)

Paragraph 4 of Article 5 of the SPS Agreement addresses, specifically, the determination of the appropriate level of protection in requiring that:

Members should, when determining the appropriate level of sanitary or phytosanitary protection, take into account the objective of minimizing negative trade effects. (emphasis added)

203. The correlation between the "appropriate level of protection" and the "SPS measure" is perhaps shown most clearly in Article 5.6 of the SPS Agreement which reads:

... when establishing or maintaining sanitary or phytosanitary measures to achieve the appropriate level of sanitary or phytosanitary protection, Members shall ensure that such measures are not more trade-restrictive than required to achieve their appropriate level of sanitary or phytosanitary protection ... (emphasis added)

The words of Article 5.6, in particular the terms "when establishing or maintaining sanitary ... protection", demonstrate that the determination of the level of protection is an element in the decision-making process which logically precedes and is separate from the establishment or maintenance of the SPS measure. It is the appropriate level of protection which determines the SPS measure to be introduced or maintained, not the SPS measure introduced or maintained which determines the appropriate level of protection. To imply the appropriate level of protection from the existing SPS measure would be to assume that the measure always achieves the appropriate level of protection determined by the Member. That clearly cannot be the case.

204. We, therefore, conclude that the Panel's statement that "to determine whether any of the alternative measures meet Australia's appropriate level of protection, we should [...] examine whether these alternatives meet the level of protection currently achieved by the measure at issue" is wrong. What is required under Article 5.6 is an examination of whether possible alternative SPS measures meet the appropriate level of protection as determined by the Member concerned.

205. We recognize that the SPS Agreement does not contain an explicit provision which obliges WTO Members to determine the appropriate level of protection. Such an obligation is, however, implicit in several provisions of the SPS Agreement, in particular, in paragraph 3 of Annex B, Article 4.1161, Article 5.4 and Article 5.6 of the SPS Agreement. 162 With regard to Article 5.6, for example, we note that it would clearly be impossible to examine whether alternative SPS measures achieve the appropriate level of protection if the importing Member were not required to determine its appropriate level of protection.

206. We thus believe that the SPS Agreement contains an implicit obligation to determine the appropriate level of protection. We do not believe that there is an obligation to determine the appropriate level of protection in quantitative terms. This does not mean, however, that an importing Member is free to determine its level of protection with such vagueness or equivocation that the application of the relevant provisions of the SPS Agreement, such as Article 5.6, becomes impossible. It would obviously be wrong to interpret the SPS Agreement in a way that would render nugatory entire articles or paragraphs of articles of this Agreement and allow Members to escape from their obligations under this Agreement.

207. While in this case Australia determined its appropriate level of protection, and did so with sufficient precision to apply Article 5.6, we believe that in cases where a Member does not determine its appropriate level of protection, or does so with insufficient precision, the appropriate level of protection may be established by panels on the basis of the level of protection reflected in the SPS measure actually applied. Otherwise, a Member's failure to comply with the implicit obligation to determine its appropriate level of protection - with sufficient precision - would allow it to escape from its obligations under this Agreement and, in particular, its obligations under Articles 5.5 and 5.6.

208. We recall that the second element of the test under Article 5.6 requires us to examine whether any of the possible alternative SPS measures identified above would achieve Australia's appropriate level of protection. To be able to do this, first of all, we have to know what level of protection could be achieved by each of these alternative SPS measures.

209. We note, however, as we already stated in the context of our examination of Article 5.1, that the Panel made the following factual finding:

... the 1996 Final Report does not substantively evaluate the relative risks associated with these different options [i.e., the five quarantine policy options mentioned in the 1996 Final Report].[...] 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.163

210. This makes it impossible to verify in an objective manner on the basis of the 1996 Final Report, whether any of the alternative policy options discussed in this Report would achieve Australia's appropriate level of protection for ocean-caught Pacific salmon.

211. In addition, we note that the Panel Report does not contain any other factual element which would allow us to examine the alternative quarantine policy options, as the Panel examined them only in comparison to the erroneous yardstick of the level of protection implied from the heat-treatment requirement. It was on this basis that the Panel made its finding that Canada had raised "a presumption - which has not been rebutted - that there are alternative measures available which would meet Australia's appropriate level of protection". The Panel was however cautious to add:

...Our finding does, therefore, not endorse any of the alternative options we examined. It does not imply that Option 2 would actually achieve Australia's appropriate level of protection nor does it imply that Option 2 would be the only option which could achieve that level.164

212. We, therefore, are not in a position to complete the examination of the second element of the test under Article 5.6, i.e., whether there is another measure that achieves the appropriate level of sanitary protection.

213. We recall that because of the Panel's error of examining whether the heat-treatment requirement, rather than the proper SPS measure at issue, i.e., the import prohibition, is "not more trade-restrictive than required", we are compelled to reverse the Panel's finding that Australia has acted inconsistently with Article 5.6.165 In reversing the Panel's finding on Article 5.6, we do not, however, conclude that Australia did or did not violate Article 5.6. There may well be a violation of Article 5.6, and possibly Article 2.2166 , but we are unable to come to a conclusion on these issues due to the insufficiency of the factual findings of the Panel and of facts that are undisputed between the parties.

E. Articles 5.5 and 5.6 of the SPS Agreement with Respect to other Canadian Salmon

214. The next issue which we have to address is whether the Panel erred in law by misapplying the principle of judicial economy, in particular, in failing to extend its assessment of Canada's claims regarding Articles 5.5 and 5.6 to other Canadian salmon.167

215. We recall that the Panel distinguished, in its findings, between ocean-caught Pacific salmon and other Canadian salmon. The Panel found for both ocean-caught Pacific salmon, in paragraph 8.99, and other Canadian salmon, in paragraph 8.59, that Australia, by maintaining the measure at issue, has acted inconsistently with Article 5.1 and, by implication, Article 2.2 of the SPS Agreement. However, the Panel limited its findings on Article 5.5 and, by implication, on Article 2.3, as well as its findings on Article 5.6, to ocean-caught Pacific salmon.

216. The Panel justified this limitation of the product scope of its findings on Articles 5.5, 2.3 and 5.6 in the following manner:

Given the fact that (1) most of the studies and reports before us, and in particular the 1996 Final Report (Australia's only formal risk assessment) specifically address and discuss adult, wild, ocean-caught Pacific salmon (even though the data they contain may relate to or be relevant for other salmon) and (2) Canada itself also focused on adult, wild, ocean-caught Pacific salmon during our proceedings, we, in turn, concentrated our attention and questions (to both the parties and the experts advising the Panel) on adult, wild, ocean-caught Pacific salmon. For these reasons, the evidence and arguments before us which are relevant to Articles 5.5 and 5.6 are centred on adult, wild, ocean-caught Pacific salmon. We do not therefore consider it appropriate or necessary "in order to resolve the matter in issue in the dispute"251 to further address the salmon products in dispute other than those from adult, wild, ocean-caught Pacific salmon.168

251 Appellate Body Report on US - Measure Affecting Imports of Woven Wool Shirts and Blouses from India, adopted 23 May 1997, WT/DS33/AB/R, pp.17-20, addressing the issue of judicial economy, at p.19 ("A panel need only address those claims which must be addressed in order to resolve the matter at issue in the dispute").

217. Canada appeals from this finding. Canada submits that the Panel's failure to assess the consistency of the measure at issue with Articles 5.5 and 5.6 for other Canadian salmon was based on a misapplication of the "principle of judicial economy" that we set out in United States - Shirts and Blouses. According to Canada, this misapplication led to a result contrary to Article 3.7 of the DSU. Canada argues, "in the alternative", that the Panel's limited consideration of Articles 5.5 and 5.6 disregarded the ample evidence before it, thereby constituting a violation of Article 11 of the DSU.169

218. Australia does not address Canada's claims of legal error with regard to judicial economy. According to Australia, it is readily apparent that judicial economy was not, in fact, the principal reason for the Panel's limitation of its findings. Australia argues that the Panel limited its findings on Articles 5.5 and 5.6 to ocean-caught Pacific salmon because Canada did not present sufficient evidence to allow the Panel to make findings with regard to other Canadian salmon.170

To continue with The Principle of Judicial Economy


158Panel Report, para. 8.107.

159Panel Report, para. 8.172.

160That the level of protection and the SPS measure applied have to be clearly disAtinguished results already from our Report in European Communities - Hormones, WT/DS26/AB/R, WT/DS48/AB/R, adopted 13 February 1998, para. 214.

161Reasonable questions from interested Members within the meaning of paragraph 3 of Annex B can arise, in particular, with respect to the application of Article 4 of the SPS Agreement. Articles 4.1 and 4.2 imply, in our view, a clear obligation of the importing Member to determine its appropriate level of protection.

162Furthermore, it could be argued that an implicit obligation for a Member to determine the appropriate level of protection results also from Article 5.8 and Article 12.4 of the SPS Agreement.

163Panel Report, para. 8.90.

164Panel Report, para. 8.181.

165Supra., para. 191.

166Article 2, entitled "Basic Rights and Obligations", requires in paragraph 2 that:

Members shall ensure that any sanitary or phytosanitary measure is applicable only to the extent necessary to protect ... animal life or health. (emphasis added)

The establishment or maintenance of an SPS measure which implies or reflects a higher level of protection than the appropriate level of protection determined by an importing Member, could constitute a violation of the necessity requirement of Article 2.2.

167Canada's appellant's submission, para. 24.

168Panel Report, para. 8.60.

169Canada's appellant's submission, para. 27.

170Australia's appellee's submission, para. 30.