F. Article 2.3 of the SPS Agreement

243. The last substantive issue we address is whether the Panel erred in law in not making a finding that Australia has acted inconsistently with Article 2.3, first sentence, independently from its finding that Australia has acted inconsistently with Article 5.5 of the SPS Agreement.

244. The Panel's findings with respect to Article 2.3 are limited to the following statements:

245. In its appeal, Canada argues that the Panel erred in applying Article 2.3, first sentence, solely through Article 5.5, rather than focusing on this provision as an independent obligation. Canada criticizes the Panel for not having found a violation of Article 2.3, first sentence, independently from the finding of a violation of Article 5.5.¹⁹⁰ Furthermore, Canada argues that in applying Article 2.3, first sentence, as an afterthought to its analysis of Article 5.5, the Panel compounded the error it had made in confining the analysis of, and the finding under, Article 5.5, to ocean-caught Pacific salmon.¹⁹¹

246. With regard to Canada's second ground of appeal, we refer to Section E of Part V of our Report, in which we deal inter alia with the Panel's failure to extend its findings on Article 5.5, and, by implication, Article 2.3 to other Canadian salmon. In this section, we will focus on Canada's first ground of appeal.

247. We note that the Panel indeed failed to examine Canada's claim that Australia's import prohibition on fresh, chilled or frozen salmon violated the first sentence of Article 2.3. Canada argued before the Panel that Australia does not control the internal movement of salmonid products from infected states to disease-free states to protect its salmonid populations from salmonid disease agents such as EHN. In contrast to this absence of control on the internal movement of salmonid products, Australia completely prohibits the importation of fresh, chilled and frozen salmon. Canada argued before the Panel that in this sense the import prohibition on fresh, chilled or frozen salmon constitutes an arbitrary or unjustifiable discrimination between imported Canadian and domestic Australian salmonid products, and that Australia has thereby acted inconsistently with Article 2.3, first sentence.

248. We do not believe that the Panel, by not examining Canada's claim on Article 2.3, first sentence, intended to deny that Article 2.3, first sentence, contains an obligation independent from Article 5.5. We note that although the Panel stated that Article 5.5 provides for more specific and detailed rights and obligations than the "Basic Rights and Obligations" set out in rather broad wording in Article 2.3¹⁹², the Panel explicitly recognized

249. Furthermore, the Panel made it clear that it abstained from a separate examination of Article 2.3, first sentence, because it saw no need for such an examination, having already found that the measure in dispute is inconsistent with the requirements of Articles 5.1, 5.5 and 5.6 and is, on that ground, also inconsistent with the requirements of Articles 2.2 and 2.3.¹⁹⁴ In other words, the Panel abstained from a separate examination of Article 2.3 on grounds of judicial economy, not because it considered that Article 2.3, first sentence, does not contain any obligation independent of Article 5.5.

250. According to Article 2.3, first sentence:

251. This provision takes up obligations similar to those arising under Article I:1 and Article III:4 of the GATT 1994 and incorporates part of the "chapeau" to Article XX of the GATT 1994. Its fundamental importance in the context of the SPS Agreement is reflected in the first paragraph of the preamble of the SPS Agreement.

252. We recall that the third - and decisive - element of Article 5.5, discussed above, requires a finding that the SPS measure which embodies arbitrary or unjustifiable restrictions in levels of protection results in "discrimination or a disguised restriction on international trade". Therefore, a finding of violation of Article 5.5 will necessarily imply a violation of Article 2.3, first sentence, or Article 2.3, second sentence. Discrimination "between Members, including their own territory and that of others Members" within the meaning of Article 2.3, first sentence, can be established by following the complex and indirect route worked out and elaborated by Article 5.5.¹⁹⁵ However, it is clear that this route is not the only route leading to a finding that an SPS measure constitutes arbitrary or unjustifiable discrimination according to Article 2.3, first sentence. Arbitrary or unjustifiable discrimination in the sense of Article 2.3, first sentence, can be found to exist without any examination under Article 5.5.

253. We now turn to the question of whether the measure at issue, i.e., the import prohibition on fresh, chilled or frozen salmon, violates Article 2.3, first sentence.

254. We recall that in the context of its examination of the third element of Article 5.5, the Panel noted that it had doubts whether Australia applies similarly strict sanitary standards on the internal movement of salmon products within Australia as it does on the importation of salmon products. The Panel did not come to a conclusion on this alleged difference in sanitary standards. It merely acknowledged the arguments advanced by both Canada and Australia and stated that it saw "no benefit in trying to compare" the risk arising from EHN as opposed to that arising from the diseases of concern to Australia with respect to ocean-caught Pacific salmon.¹⁹⁶ It also stated that it saw no benefit in trying to compare the different measures imposed by Australia to deal with these risks.¹⁹⁷ The Panel's discussion is characterized by caution and an absence of factual findings.

255. In the context of an examination under Article 2.3, first sentence, it would first of all be necessary to determine the risk to Australia's salmonid population resulting from diseases, such as EHN, which are endemic to some parts of Australia but exotic to others. There are, however, no factual findings by the Panel or undisputed facts between the parties on this matter. It is, therefore, impossible for us to determine whether the import prohibition on fresh, chilled or frozen salmon, for both ocean-caught Pacific and other Canadian salmon, constitutes an arbitrary or unjustifiable discrimination within the meaning of Article 2.3, first sentence of the SPS Agreement.

VI. Procedural Issues

256. Australia raises a number of procedural issues concerning the Panel's conduct of the proceedings and its examination of the case. These issues relate to the Panel's allocation and application of the burden of proof; its duty to conduct an objective assessment of the matter pursuant to Article 11 of the DSU; the admission of, and consideration by, the Panel of certain evidence; and the Panel's response to Australia's request to submit a third written submission in reply to Canada's oral statement at the second meeting of the Panel with the parties.

A. Burden of Proof

257. First, Australia claims that the Panel erred in its allocation and application of the burden of proof under Articles 2 and 5 of the SPS Agreement. In paragraph 8.40 of its Report, the Panel referred to our report in European Communities - Hormones which stated:

Applying this rule, the Panel found:

258. In addressing the various claims of Canada challenging the consistency of the measure at issue with Articles 5.1, 5.5. and 5.6 (and, indirectly, 2.2 and 2.3), the Panel examined the evidence submitted by Canada in support of its claims and the evidence submitted by Australia in rebuttal. For each of these claims, the Panel came to the conclusion that Canada had established a prima facie case of inconsistency with the relevant provisions of the SPS Agreement and that Australia had not rebutted the presumption of inconsistency.²⁰⁰

259. Australia concedes that the Panel correctly articulated the burden of proof as established by us in United States - Shirts and Blouses and, in its specific application to the SPS Agreement, European Communities - Hormones.²⁰¹ However, Australia contends that the Panel "applied the burden incorrectly"²⁰² and failed to properly assess, in its consideration of the evidence before it, whether Canada had met the burden of proof in relation to its claims under Articles 5.1, 5.5 and 5.6.²⁰³

260. It appears to us that the core of Australia's appeal on this question is not a related to the allocation of the burden of proof, but rather how the Panel considered and weighed the evidence in concluding that Canada had established a prima facie case of inconsistency with Articles 5.1, 5.5 and 5.6. We stated in European Communities - Hormones:

261. The Panel's consideration and weighing of the evidence in support of Canada's claims relates to its assessment of the facts and, therefore, falls outside the scope of appellate review under Article 17.6 of the DSU.

B. Objective Assessment of the Matter

262. Australia claims that the Panel failed to make an objective assessment of the matter before it and to apply the appropriate standard of review pursuant to Article 11 of the DSU. Australia contends that the Panel "partially or wholly ignored relevant evidence placed before it, or misrepresented evidence in a way that went beyond a mere question of the weight attributed to it, but constituted an egregious error amounting to an error of law".²⁰⁵ Australia also contends that the Panel failed to accord due deference to matters of fact put forward by parties.²⁰⁶

263. Among the various allegations made by Australia, there are two which stand out. The first concerns the consideration by the Panel of scientific studies which, according to Australia, were either not relevant or were too general to answer the question of relative risks to the Australian salmonid population from the entry, establishment or spread of salmonid vis-à-vis non-salmonid products.²⁰⁷ The second is the allegation that the Panel seriously mischaracterized the process relating to, and the character and purpose of, Australian government draft reports, recommendations and legislation.²⁰⁸

264. In our report in European Communities - Hormones, we stated:

265. We also recall our statement in European Communities - Poultry:

266. In our view, the Panel did not "deliberately disregard", "refuse to consider", "wilfully distort" or "misrepresent" the evidence in this case; nor has Australia demonstrated in any way that the Panel committed an "egregious error that calls into question the good faith" of the Panel. We, therefore, conclude that the Panel did not abuse its discretion in a manner which even comes close to attaining the level of gravity required for a claim under Article 11 of the DSU to prevail.

267. Finally, in response to Australia's contention that the Panel failed to accord "due deference" to matters of fact it put forward, we note that Article 11 of the DSU calls upon panels to "make an objective assessment of the matter before it, including an objective assessment of the facts of the case and the applicability of and conformity with the relevant covered agreements". Therefore, the function of this Panel was to assess the facts in a manner consistent with its obligation to make such an "objective assessment of the matter before it". We believe the Panel has done so in this case. Panels, however, are not required to accord to factual evidence of the parties the same meaning and weight as do the parties.

To continue with Admission and Consideration of Certain Evidence

¹⁹⁰Canada's appellant's submission, para. 10.

¹⁹¹Ibid.

¹⁹²Panel Report, para. 8.48.

¹⁹³Panel Report, para. 8.109.

¹⁹⁴Panel Report, para. 8.184.

¹⁹⁵In European Communities - Hormones we characterized Article 5.5 as "marking out and elaborating a particular route leading to the same destination set out in Article 2.3" (emphasis added). Adopted 13 February 1998, WT/DS26/AB/R, WT/DS48/AB/R, para. 212.

¹⁹⁶Panel Report, para. 8.157.

¹⁹⁷Ibid.

¹⁹⁸Adopted 13 February 1998, WT/DS26/AB/R, WT/DS48/AB/R, para. 98.

¹⁹⁹Panel Report, para. 8.40.

²⁰⁰Panel Report, paras. 8.59, and 8.99 (on Article 5.1), paras. 8.137, 8.139 8.141 and 8.159 (on Article 5.5) and paras. 8.171, 8.181 and 8.182 (on Article 5.6).

²⁰¹Australia's appellant's submission, para. 85.

²⁰²Ibid.

²⁰³These allegations can be found in Australia's appellant's submission in paras. 90-96. We note that in the parts of Australia's appellant's submission dealing with Articles 5.1, 5.5 and 5.6, these allegations are reiterated in the following paragraphs:

²⁰⁴Adopted 13 February 1998, WT/DS26/AB/R, WT/DS48/AB/R, para. 132.

²⁰⁵Australia's appellant's submission, para. 105. Australia's specific allegations of failure by the Panel to undertake an objective assessment of the matter in the examination of Canada's claims under Articles 5.1, 5.5 and 5.6 are set out in the following paragraphs of Australia's appellant's submission:

²⁰⁶Australia's appellant's submission, para. 100. The facts put forward by Australia which, according to Australia, the Panel failed to give due deference, relate to Australia's determination of its appropriate level of protection, Australia's 1996 Final Report, Australia's characterization of the measure at issue and the fact that the 1988 Conditions do not have application to fresh, chilled or frozen salmon, Australia's domestic practices and processes in risk assessment including the role of draft reports and recommendations, and the legal status and application of SPS measures.

²⁰⁷Australia's appellant's submission, paras. 168 - 183, 231 - 239 and 243 - 246.

²⁰⁸Australia's appellant's submission, paras. 281 - 289.

²⁰⁹Adopted 13 February 1998, WT/DS26/AB/R, WT/DS48/AB/R, para. 133.

²¹⁰Adopted 23 July 1998, WT/DS69/AB/R, para. 133.