B. The measure at issue

16. The United States alleged that Japan imposed an absolute ban on all products that Japan asserted were potential hosts to a quarantine pest such as codling moth. The Japanese legislation which was applicable imposed an import ban on enumerated "prohibited articles"; this was the Plant Protection Law (described under paragraph 2.18), enacted on 4 May 1950, as amended. The only applicable regulation was the Enforcement Regulation, enacted 30 June 1950, as amended. No legislative or regulatory provision specifically described or imposed a requirement of varietal testing to obtain an exemption from such a ban. ³⁵ The practice of varietal testing was not formally written in any law or regulation, but stemmed from the implementation of the aforementioned legislation and regulation.
17. The United States noted that Article 7 of the Plant Protection Law specified which products were prohibited for importation; these included "quarantine pests". The annex to Article 9 of the Plant Protection Law Enforcement Regulation specified the pest species that were subject to quarantine, the country(ies) or region(s) from which the pest originated, and the plant species that Japan asserted to be potential hosts to the quarantine pest. The annex listed the plants prohibited from entry, and an appendix to the list also indicated which varieties of products from specified regions were permitted entry into Japan. The United States maintained that the regulation was otherwise unclear on the question of how a particular variety might be permitted entry.
18. As it had evolved through practice, the ban was lifted only for specific varieties of an identified host product upon satisfaction of "quarantine treatment standards established through a regime of basic testing ... to prove complete mortality of the most resistant stage of the relevant pest in the scale of more than 30,000 test insects being used". ³⁶ "The disinfestation test with a scale of 30,000 test insects is to seek for a disinfestation rate equivalent to probit 9 (99.9968 per cent mortality) which was adopted by the United States in its treatment standard." ³⁷ To satisfy this requirement for permission to export a new variety, Japan required elaborate and repetitive testing procedures, and a public hearing process. ³⁸
19. The United States acknowledged that the SPS Agreement recognized that countries had a sovereign right to implement legitimate restrictions on trade to protect their plant life and health from the introduction of pests that might cause harm. However, the United States stressed that the SPS Agreement did not permit unjustified import prohibitions that did not address legitimate phytosanitary concerns. The Japanese requirement of varietal testing was exactly the kind of unnecessary and unjustified measure that the SPS Agreement was intended to prohibit.
20. The history of US efforts to export apples, cherries, walnuts, and nectarines illustrated the way in which the Japanese insistence on varietal testing had served as a significant barrier to trade. Since the early 1970s³⁹, the United States had been engaged in a rigorous research effort to export various fruit products to Japan. An effective quarantine treatment ⁴⁰ for cherries had first been developed in the United States in 1976; for US walnuts in 1984; for US nectarines in 1986; and an effective treatment for US apples had first been developed in 1986.

Table 2 History of Japanese Approval Process for Varietal Testing on US products
Product	Date Treatment Developed*	Testing Process Began	Confirmatory Test Dates	Public Hearing Date**	Approval Date
APPLES
Red Delicious	1986	Oct. 1969	17-29 April 1994	7 and 8 July 1994	22 August 1994
Golden Delicious	1986	Oct. 1969	17-29 April 1994	7 and 8 July 1994	22 August 1994
Gala	1986	Oct. 1994	4 Sept. - 26 Nov. 1997	Pending	Pending
Granny Smith	1986	Oct. 1994	4 Sept. - 26 Nov 1997	Pending	Pending
Jonagold	1986	Oct. 1994	4 Sept. - 26 Nov 1997	Pending	Pending
Fuji	1986	Oct. 1994	4 Sept. - 26 Nov 1997	Pending	Pending
Braeburn	1986	Oct. 1994	4 Sept. - 26 Nov 1997	Pending	Pending
CHERRIES
Bing	1976	1973	1977		10 January 1978
Van	1976	1973	1977		10 January 1978
Lambert	1976	1973	1977		10 January 1978
Rainier	1976	June 1988	July 1991		12 May 1992
Garnett	1976	June 1993	9 May � 10 June 1994		18 January 1995
Brooks	1976	May 1994	13 May 14 June 1994		25 October 1996
Tulare	1976	May 1994	13 May - 14 June 1994		25 October 1996
Sweetheart	1976	August 1995	24 July - 18 Aug 1997	Pending	Pending
Lapin	1976	August 1995	24 July - 18 Aug 1997	Pending	Pending
NECTARINES
Summer Grand	1986	July 1986	July 1986		17 June 1988
Fantasia	1986	July 1986	July 1986		17 June 1988
May Grand	1986	June 1986	June 1986		17 June 1988
Spring Red	1986	June 1986	June 1986		17 June 1988
Fire Brite	1986	June 1986	June 1986		17 June 1988
Red Diamond	1986	June 1986	June 1986		1 March 1995
May Diamond	1986	June 1988	June 1988		December 1990
May Fire	1986	May 1988	May 1988		December 1990
May Glo	1986	May 1988	May 1988		December 1990
Royal Giant	1986	August 1992	August 1992		1 March 1995
WALNUTS
Hartley	1984	1982	August 1984		1986
Payne	1984	1982	August 1984		1986
Franquette	1984	1982	August 1984		1986
Eureka	1984	1982	August 1984
* Development of an effective treatment means that probit 9 security was achieved during large-scale tests of 30,000 codling moths. ** Absence of public hearing date denotes only that the information is not available. Source: USDA Agricultural Research Service, USDA Animal and Plant Health Inspection Service (US Exhibit 1)

21. The United States noted that Japan was a major producer and consumer of apples - the twelfth largest producer in the world. In 1995-1996, Japan had produced for commercial use 879,100 metric tons of apples, and consumed 796,883 metric tons of apples. Imports accounted for less than one percent of that consumption (1,089 metric tons). ⁴¹
22. The United States claimed that as a consequence of Japan's unjustified trade restrictions, exports to Japan of cherries, nectarines, apples and walnuts currently represented only a small part of US exports world-wide. In 1996, US apple exports totalled US$409.49 million. Only 0.14 per cent of those exports (US$570,000) went to Japan. Of the total US$78.85 million nectarine (and peach) exports in 1996, only 0.26 per cent (US$185,000) were exported to Japan. In respect of walnuts, 18.91 per cent of US exports went to Japan. While a significant amount of US cherry exports were sent to Japan (61.91 per cent of US exports), this number was not as significant when compared to the number of cherry varieties that were not even considered for export to Japan because the testing of quarantine treatment for each variety would be overly burdensome.
23. It was common practice, according to the United States, to produce new varieties of agricultural products and enhance existing ones to capture a particular preference in the market place, or to modify harvesting time to coincide with demand trends for that fruit. These changes and enhancements could be as benign and subtle as a variation in the color of the product. The modifications of the product represented the sort of variability that did not affect how effective the quarantine treatment would be at killing the plant pests of concern. Yet Japan required complete testing and review of each variety, no matter how similar the variety might be to already accepted varieties. The entire testing and approval process for a given variety took anywhere from 2 to 4 years to complete, and was expensive to perform. ⁴² As a result, the United States claimed that Japan's measures served to restrict or altogether block access to Japan's market for new varieties.
24. The United States claimed that efficacy of MB treatment for apples, cherries, walnuts and nectarines had been conclusively established. Japan was obliged to allow importation of all US varieties of these products without delay, subject only to application of the respective protocol of treatment for the product. ⁴³
25. Japan noted that the importance of phytosanitary measures to protect plants against foreign pests had long been recognized under the IPPC (paragraphs 2.25 to 2.33), to which Japan had been a party since 1952. While codling moth was prevalent throughout the temperate zone, the pest had not been discovered in Japan (paragraph 2.6). It was Japan's opinion that, to a considerable extent, this was attributable to Japan's plant quarantine policy. For Japan, (i) the diverse and mild climatic conditions surrounding Japanese agriculture, which allowed for a high risk of the establishment of exotic pests once they were introduced into the country; (ii) the highly concentrated, intensive cultivation, which would be seriously damaged once pests were established; and, (iii) the recent increase in the volume and diversity of plant/agricultural imports, made international plant quarantine essential to Japan. Hence, in order to prevent the entry of quarantine pests, the Plant Protection Law and the Enforcement Regulation identified quarantine pests, and prescribed inspection, disinfestation and other quarantine measures.
26. Japan contended that the exercise of the authority of import prohibition was kept to the minimum necessary on the basis of available scientific evidence. Specifically, the import prohibition applied only to host plants of the quarantine pests which were found to pose a particularly significant risk, as a result of the risk assessment conducted in compliance with the PRA Guidelines of the FAO (paragraph 2.30), and against which no inspection would be effective. Currently these high-risk quarantine pests were 12 species of insects⁴⁴, three diseases ⁴⁵ and pests of rice not found in Japan.
27. Japan stated that prohibited plants, countries or areas of origin and the quarantine pests concerned were subject to continuous review whenever additional information became available in respect of the introduction of a pest into a new area, its eradication, new discoveries on pests and hosts, or development of a risk analysis method. Most recently, Japan had reviewed the regulations in April 1997⁴⁶, on the basis of the PRA Guidelines, and, as a result, the sweet potato vine borer had been deleted from - and fire blight had been added to - the quarantine pests whose host plants were subject to import prohibition. ⁴⁷
28. Japan recalled that the MAFF had the authority to lift the import prohibition. This was done by the de-listing of the product from the Annexed Table to the Enforcement Regulation (an amendment of the Enforcement Regulation). This was, according to Japan, the subject matter at issue in the current dispute (characterized by the United States as "varietal testing"). Japan claimed that contrary to the arguments of the United States, the import prohibition was not absolute (paragraph 4.16). The Japanese Government had accommodated foreign governments� requests for lifting of the prohibition. The number of products de-listed from the ban was evidence of this. The criteria established through past practice for de-listing were the following:

1. lifting was subject to a proposal of an alternative measure by the foreign government;
2. the level of protection required of the measure was that equivalent to import prohibition; and,
3. the exporting government bore the burden of proving that the proposed measure achieved the required level of protection.
29. In respect of the first criteria, Japan claimed that an active measure was necessary to counter the quarantine pest, because inspection did not work effectively against the pest. Such a measure could be: complete eradication of the pest from the territory, establishment of a pest-free area, or disinfection/disinfestation treatment prior to shipment. The purpose of involvement of the foreign government was to ensure implementation of the measure in the foreign jurisdiction. In respect of the second criteria, the requirement of equivalency was self-explanatory; Japan noted that the parties to the dispute at issue were not in conflict over the level of protection. Third, for practical reasons, the importing country was at a disadvantage in respect of the gathering of sufficient information on exotic pests (which did not exist domestically), for varieties that often were not produced in Japan, hence, the exporting government had the burden of proving that the proposed measure achieved the required level of protection.
30. Japan claimed that these criteria had been designed as part of the policy for the implementation of domestic law through past practice. They represented fundamental policy orientation and were not published as a document. However, for the key process of demonstration of efficacy of quarantine treatment, MAFF had developed test guidelines in order to enhance transparency and these were made available for exporting countries.
31. The description of the Japanese practice by the United States was misleading (paragraphs 2.18 to 2.24). Japan did not demand "complete testing and review of each variety" (paragraph 4.23), the requirement depended on the US export strategy. If the United States proposed to export more than one variety, complete testing including a large-scale test (30,000 test insects in three replicates) would be required on only one representative variety. That is, if the United States were to apply for approval of 100 varieties of the same product, complete testing would be required only of the one variety which demonstrated the lowest degree of sensitivity to the proposed treatment in dose-mortality tests and a probit analysis. The concept of a representative variety applied equally to approval of additional varieties. As long as efficacy of the treatment in use was confirmed with respect to additional varieties by dose-mortality tests, what was required was an on-site confirmatory test (10,000 test insects) for one representative variety alone. Even if the results of dose-mortality tests were unsatisfactory, a large-scale test was necessary for only one representative variety of the additional varieties.
32. Japan maintained that the essence of the requirement was a demonstration that a proposed treatment would be effective on all varieties which the exporting government proposed to ship to Japan. The exporting government was free to propose any method for the purpose of this demonstration.
33. Japan pointed out that what the United States had referred to as the testing procedure (in paragraph 4.18) were the contents of the "Experimental Guidelines for the Lifting Import Ban" and the "Experimental Guide for Cultivar Comparison Test on Insect Mortality" ⁴⁸ which the MAFF had provided as a model confirmation process for a proposed disinfestation treatment of insects. Japan stressed that these were model guidelines, they did not have the force of law, and were not imposed by the MAFF. Exporting governments were free to propose their own confirmation method.
34. Japan stated that the US data cited in paragraph 4.22 showed that Japan was the largest importer of American cherries, and was a major (the largest, if members of the European Communities were treated separately) importer of US walnuts.
35. According to the United States, to have the ban lifted on a new variety, the testing procedure included: (i) an initial test to estimate the basic dose-response of the pest in question, in or on the variety in question; (ii) data review by a MAFF official; and, (iii) a large-scale test consisting of a total of 30,000 insects at 10,000 insects in each of three successive individual trials. If successful, only then was an on-site confirmatory test conducted in the presence of MAFF staff. Resulting data was again reviewed by a MAFF official, and following confirmation of efficacy, a public hearing in Japan was required on lifting the ban for the particular variety. The United States noted that where there was an accepted quarantine treatment for another variety of the same product, Japan allowed for a comparison dose-mortality test. The same treatment was tested simultaneously on the new and old variety and the results were compared to ascertain whether there were differences in response of the insects. The results of this test were reviewed by Japanese officials. If there were no differences, then an on-site confirmatory test was required with 10,000 insects generally divided into three replications, in the presence of a MAFF official. This process was rarely employed, however, because it was possible that the old variety was no longer cultivated or the harvest time for one variety did not coincide with another.
36. In respect of the concept of representative variety, the United States noted that as a matter of practical application of these tests, there were occasions where the United States would seek to introduce more than one variety at the same time. Japan was correct in asserting that in some circumstances, because of the varietal testing requirement, a representative variety could be chosen to perform the confirmatory tests. But that did not mean that significant time and resources had not already been devoted to dose-mortality testing on all of the proposed varieties. Dose-mortality testing could take as long as a month or more to perform on a given set of varieties. It was also important to bear in mind that the benefit of allowing for a representative variety was not always realized. This was because it was difficult to test certain varieties simultaneously due to the fact that they were harvested at different times. Moreover, with some fruit products, new varieties were developed so rapidly and there were so many varieties that it was not practical to conduct this type of intensive varietal testing. Thus, while not all of the varieties that had been tested by the United States had undergone confirmatory testing, a large proportion of the varieties had; and more importantly, all varieties had been subjected to some form of detailed testing.
37. In this respect, the United States noted that it had tested seven varieties of apples, nine varieties of cherries, four varieties of walnuts and ten varieties of nectarines. There had never been a difference in results from one variety to another. Every confirmatory test had uniformly achieved Japan's level of quarantine protection against the codling moth at the same exact treatment level for a product. ⁴⁹ Moreover, Japan was not able to point to a single example in which any agricultural exporting country in the world had had to modify a treatment for killing codling moth among varieties of the same product. Japan had approved the treatments for ten varieties of nectarines, two varieties of apples, seven varieties of cherries and three varieties of walnuts. This was despite differences in dose-mortality tests and despite differing CxT values. Japan had approved these varieties because of the ability of the United States to demonstrate that the quarantine treatment provided the desired level of mortality. Every article published on the efficacy of MB and/or MB and cold storage for disinfestation of codling moth had demonstrated that there were no differences among varieties that affected efficacy of a quarantine treatment.
38. Japan countered that large-scale demonstration (i.e., the large-scale confirmatory test or the on-site confirmatory test) applied to one representative variety which was found, in dose-mortality testing and the probit analysis, to be the most resistant to a treatment. Thus, contrary to what had been suggested by the United States, the number of varieties which had been subject to either form of large-scale demonstration had been: two varieties of apples (as opposed to seven as the United States had claimed), seven varieties of cherries (as opposed to nine), one variety of walnuts (as opposed to four) and three varieties of nectarines (as opposed to ten) (Table 3). Japan's policy was not such that would require unnecessary testing on all varieties.

Table 3 History of Lifting and Large-Scale Demonstration of US Fruits (i.e. either large-scale confirmatory test or on-site confirmatory test)
	Approved Year	Varieties	Large-Scale Test	On-site Confirmatory Test
Apples	1994	Red Delicious Golden Delicious	Red Delicious	Red Delicious
	(under way)	Gala Braeburn Jonagold Fuji Granny Smith		Fuji
Cherries	1978*	Bing Van Lambert	Bing Van Lambert	Bing Van Lambert
	1992	Rainier		Rainier
	1995	Garnet		Garnet
	1996	Brooks Tulare		Tulare
	(under way)	Sweetheart Lapin		Sweetheart
Nectarines	1988	Summer Grand May Grand Fantasia Spring Red Firebrite Red Diamond	May Grand	May Grand
	1993	May Diamond Mayfire May Glo		May Diamond
	1995**	Royal Giant	Royal Giant	Royal Giant
Walnuts	1986***	Franquette Payne Hartley	Hartley	Hartley
* At that time, each of the varieties was subjected to large-scale demonstration. ** The large-scale test was necessary because the element of the treatment was modified (fruit containers were changed from wooden bins to export carton boxes). *** The representative variety was selected by the CxT value.

39. Conversely, five varieties of apples (out of seven), seven varieties of nectarines (out of ten), two varieties of cherries (out of nine) and two varieties of walnuts (out of three) had been, or were being, approved by the small-scale laboratory experiment alone. It was therefore not correct to state that "all varieties have been subjected to some form of detailed testing". On the contrary, the present confirmation mechanism used the dose-mortality test to screen so that not all varieties needed to be subjected to large-scale demonstration, either by the large-scale confirmatory test or the on-site confirmatory test.

To continue with Application of the SPS Agreement

³⁵ According to the United States, Japan had confirmed this under Question 2 of Japan's Response to US Consultation Questions (US Exhibit 3), in which Japan stated: "Lifiting of import bans by variety is based on the legislation tabulated below. There is no situation where lifting of import bans by variety is based on legislation other than that given below". The table referred to listed the Plant Protection Law and the Enforcement Regulation.

³⁶ Japan's response to Question 5 of US Consultation Questions. (US Exhibit 3)

³⁷ Japan's response to Question 8 of US Consultation Questions. (US Exhibit 3)

³⁸ Japan's responses to Questions 5 and 8 of US Consultation Questions. (US Exhibit 3)

³⁹ Moffitt, "Methyl Bromide Fumigation Combined with Storage for Control of Codling Moth in Apples," 64(5) J. Econ. Entomol. pp. 1258-1260, 1971. (US Exhibit 21)

⁴⁰ The United States noted that the development of an effective treatment meant that probit 9 security was achieved during large-scale tests of 30,000 codling moths.

⁴¹ USDA, Economic Research Service.

⁴² US Exhibit 1.

⁴³ The United States referred to the work plans for cherries, nectarines, and apples. These indicated a thoroughness in testing procedures that would be applied consistently to any product that was subject to quarantine. (US Exhibit 22)

⁴⁴ (i) Codling moth; (ii) Mediterranean fruit fly; (iii) Bactrocera dorsalis species complex: (iv) Queensland fruit fly; (v) melon fly; (vi) sweet potato weevil; (vii) West Indian sweet potato weevil; (viii) Colorado potato beetle; (ix) potato cyst nematode; (x) white potato cyst nematode; (xi) citrus burrowing nematode and (xii) Hessian fly.

⁴⁵ Potato wart, tobacco blue mold and fire blight.

⁴⁶ Japan noted at the first substantive meeting that amended regulations were effective as of 1 April 1998.

⁴⁷ Japan noted, in addition, that in light of the latest information on the insect classification, the Oriental fruit fly was reclassified as the Bactrocera dorsalis species complex, and the white potato cyst nematode was separated from the potato cyst nematode.

⁴⁸ Contained in Japan, Exhibit 10.

⁴⁹ US Exhibit 2.