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Japan - Measures Affecting Agricultural Products

Report of the Panel

(Continued)


    I. Article 8 (Annex C)

  1. The United States claimed that as a matter of control and inspection procedures, the Japanese measure was inconsistent with Article 8. The United States noted that sub-paragraphs (a) through (i) of paragraph 1 of Annex C did not replace any of the requirements of Articles 2, 5, and 7, but complemented them by imposing additional, more specific disciplines on Annex C measures. An Annex C measure therefore could be in breach of Articles 2, 5, 7, and 8. However, if an Annex C measure was inconsistent with Articles 2 and 5, as was the case with the Japanese measure at issue, then it was not a legitimate sanitary or phytosanitary measure. To a certain extent, then, the requirements of Annex C.1(a)-(i) would be secondary with respect to such an illegitimate measure since, under the SPS Agreement, the measure could not be maintained in the first place.
  2. Article 8 and Annex C set out several standards that Members had to observe in the operation of control and inspection. The varietal testing requirement was such a procedure because Japan required control and inspection of the quarantine treatment of a variety of a product before it could be approved for export into its country. The exporting country had to provide certification that the quarantine treatment applied to the variety in question achieved the appropriate phytosanitary level of protection of Japan.
  3. Annex C, paragraph 1(c) required that Members limit information requirements to "what is necessary for appropriate control, inspection and approval procedures". Yet, because the varietal testing requirement was not based on scientific principles, was maintained without sufficient scientific evidence, was not based on an assessment of the risks, and was more trade-restrictive than required to achieve the appropriate level of protection, Japan's measure was inappropriate.
  4. Japan noted, in respect of paragraph 1(c), that the information required was what was necessary to demonstrate the efficacy of a treatment. Japan recalled that it did not necessarily demand complete testing of each variety (paragraph 4.31). The requirement under paragraph 1(c) was consequently fully met. Nevertheless, Japan remained willing to consider more appropriate ways to fulfil the informational requirements of exporting governments.
  5. The United States further argued that Japan had, contrary to Article 8 and Annex C, paragraph 1(h), not limited the required procedures for a "modified product" to what was "necessary to determine whether adequate confidence exists that the product still meets the regulations concerned". The United States claimed that a requirement that allowed for uniform treatment for a product without testing by variety would be an appropriate limitation. To require the United States to provide information on the efficacy of treatment for every variety when there was already an existing and efficacious treatment for the product was not limiting Japan's information requirements to what was necessary.
  6. While there were no differences among varieties of a product that affected efficacy of quarantine treatment, there were any number of varieties that were developed for the purpose of improving marketability. The difference could be as benign as improving the color or inducing ripeness more quickly. A variety of nectarine could be modified so it ripened one week faster than another variety. A variety of cherry could be modified so that it had a more vibrant color. A variety of apple could be modified so that it tasted sweeter than another variety. While these were modifications, they did not represent a difference in variety such that it affected efficacy of treatment. These modification were therefore not a change in the specifications of the product for purposes of efficacy treatment for codling moth. The United States had demonstrated that variety did not affect efficacy of MB quarantine treatment. Accordingly, no "further procedure" was "necessary" within the meaning of paragraph 1(h) of Annex C for new varieties. Thus, Japan's measure at issue, which did require further procedures for new varieties, was inconsistent with paragraph 1(h) because it went far beyond what was "necessary".
  7. In respect of consistency with paragraph 1(h), Japan pointed out that the issue of whether different varieties fell within the concept of 'modified products' had to be addressed. Japan claimed that such changes typically referred to alterations of additives or ingredients in processed foods and did not cover varietal differences. Even if the provision were to apply to varietal differences, under the Japanese system, required information was limited to what was "necessary to determine if it is able to obtain sufficient confidence of conformity" of additional new varieties to those approved subject to the quarantine treatment. Japan did not require varietal testing on "modifications of the product" as long as it was demonstrated, based on scientific evidence, that they "represent the sort of variability that in no way affects how effective the quarantine treatment will be at killing the plant pests of concern", as set out by the United States in paragraph 4.23. Even if varieties were "modified products", Japan considered that different varieties had to be tested to "determine whether adequate confidence exists" and that the "modified products" still met the regulations concerned. Moreover, Japan noted that the requirements of confirmation at the time of approval of additional varieties were far less rigorous than the requirements which applied to the initial lifting of the import prohibition. In this sense, the Japanese policy was fully consistent with paragraph 1(h). Japan noted that if there were "no differences among varieties of a product that affect efficacy of quarantine treatment" no demonstration would be required, by tests or otherwise. Japan was therefore in full conformity with paragraph 1(h) of the Annex C.
  8. Regarding the definition of "modified products", the United States noted that, contrary to Japan's assertion, Annex C nowhere circumscribed or narrowed the scope of the phrase "modified products" to mean "alterations of additives or ingredients in processed foods". The text of paragraph 1(h) provided no basis for exclusion of the products at issue.

    V. Summary of Third Party Submissions

    A. Brazil

  1. Brazil noted that its interest in the dispute derived from its own experience in dealing with Japanese import prohibition and quarantine requirements for fruits under the Plant Protection Law and the Enforcement Regulation. Japan constituted an important potential market for Brazilian products. Since 1986, Brazilian authorities had been in consultations with Japan with a view to initiating exports of Brazilian mangoes to Japan, which were currently prohibited under the cited legislation.
  2. In order to eradicate an insect that was of concern to Japanese authorities (the Mediterranean fruit fly, or ceratitis capitata), Brazil had undertaken the necessary research and had developed a treatment of immersion in hot water for the Tommy Atkins variety of mangoes. The test results had, in Brazil's view, met Japan's requirement eliminating 30,000 individuals of the pest. Yet Brazil had still not received authorization to initiate exports. Japanese authorities had requested that Brazil use a treatment of hot vapour, which was ten times more expensive than the treatment based on immersion in hot water. Brazil had not understood the reasoning behind this request, since the treatment that had been tested and adopted had been proven to be successful and was currently being utilized by another exporter of mangoes to Japan (Mexico) for treatment against the same insect. Brazil believed that the case of the mango could prove to be useful to the Panel, since the import prohibition was based on the same legislation that was used by Japan to establish quarantine treatments and import prohibitions for the fruit varieties that were of direct interest to the United States. Brazil was still pursuing a bilateral solution to the problem, in accordance with the principles set out in Article 3.7 of the DSU.
  3. On the core issue of varietal testing requirements, Brazil shared the views expressed by the United States that testing by product (commodity-by-commodity) was an alternative measure that was reasonably available and was significantly less trade restrictive. In more general terms, Brazil noted the long history of bilateral negotiations that were necessary to permit the importation of different varieties of fruits into Japan. In the case of a developing country like Brazil, which was still negotiating the lifting of an import prohibition on a single variety of a fruit, this was a precedent that certainly did not reflect the balance of rights and obligations under the SPS Agreement, and specifically the operation of the Articles cited by the United States in its complaint.
  4. In the case before the Panel, there were clearly differences of view concerning such key issues as "risk assessment", "sufficient scientific evidence", "scientific justification" and "appropriate level of protection". There was also an important discussion, from Brazil's point of view, concerning the recourse to alternative measures and the need to avoid discriminating or trade restrictive SPS measures.
  5. In respect of Articles 2 and 5 of the SPS Agreement, Brazil attached special importance to the issue of necessity and to guaranteeing that measures were based on scientific principles and not maintained without sufficient scientific evidence. These guidelines, alongside the obligation not to discriminate, were important guarantees to avoid SPS measures that resulted in a "disguised restriction on international trade". Article 5 of the SPS Agreement spelled out, in detail, the elements that had to be taken into consideration in analyzing the necessity for a measure and in deciding on the nature of the measure.
  6. The treatment advocated by Brazil to combat the Mediterranean fruit fly was used by another WTO Member for the same product for export to the Japanese market. Nevertheless, Brazil had been called upon to use another treatment, which was more expensive. While Brazil remained ready to cooperate with Japanese authorities, it noted that it had not yet received adequate explanations - of scientific or other nature - as to the reason for not being accorded the right to use a quarantine treatment that had been proven to be effective in tests conducted by Brazil and which were accepted by Japan for exports of another Member affected by the same pest. It was Brazil's belief that Japanese authorities had to take into consideration the concepts of a reasonable (and cost-effective) available alternative and of non-discrimination. 156 Brazil also questioned whether the minimization of negative trade effects was being taken into consideration by Japan.
  7. Since the provisions of Articles 2 and 5 of the SPS Agreement spelled out a series of guidelines that had to be followed both individually by Members and in cooperation between Members concerned, one of Brazil's major concerns was the issue of threshold in the application and interpretation of these provisions. This was more so due to the fact that in the operation of the Plant Protection Law and of the Enforcement Regulation, Japan insisted that the burden of proof, relating to the acceptability of a substitute disinfestation measure (equivalent to an import prohibition), rested on the exporting Member.
  8. The issue of burden of proof - scientific evidence or scientific justification - and of different interpretations of results recorded in scientific tests constituted an important part both of the US and of the Japanese submissions concerning the need for varietal testing. While Brazil did not wish to comment on the specific discussion of the significance of the statistical differences recorded in the laboratory tests referred to by both parties, it was concerned with the extent to which an exporting country had to go in order to confirm the validity of a specific measure, especially in light of its current experience in the consultations related to tests to prove the efficacy of treatment for the Mediterranean fruit fly in Brazilian mangoes. Since Japan itself recognized that most information was received from the exporting Member, Brazil believed that the concept of equivalence, which was contained in Article 4, should also be taken into consideration in the examination of information provided concerning the pest and the proposed method of treatment. 157
  9. The correct implementation of the provisions of Articles 7 and 8 of the SPS Agreement concerning transparency and standards for control and inspection were a further guarantee against unnecessary burdens imposed on exporting Members. Brazil noted the reservations of the United States in relation to the implementation by Japan of these two provisions, especially the problem of lack of sufficient transparency of the SPS measure which Brazil had also experienced. Since Brazil did not yet export mangoes to Japan, it was not in a position to provide its experience with Article 8 requirements, but, since its future exports would be affected by the same procedures, it was concerned with what seemed to amount to unnecessary information requirements.
  10. Brazil did not question Japan's right to implement sanitary and phytosanitary measures. Brazil was also aware of its rights under Article 5.8 of the SPS Agreement. The objective of Brazil's participation as a third party in the Panel proceedings was to express its concern with the possibility that measures designed to protect plant health were being implemented without the necessary justification and in such a way as to create negative trade effects or even as to constitute disguised barriers to trade.

To continue with European Communities


156 Brazil noted that the United States had referred to discrimination in relation to Japanese domestic production of fruits. However, Brazil's present concern was related to discrimination in relation to other WTO Members that exported to Japan.

157 Brazil noted that although Article 4 was included in the terms of reference of the Panel, it had not been cited by either of the parties to the dispute in their first submissions.