(c) The Panel's conclusion under Article 5.6

102. Irrespective of whether Article 2.2 is violated in this case, we offer the following conclusion with respect to Article 5.6. Indeed, even if we were to have found that Japan's measure is maintained with sufficient scientific evidence in accordance with Article 2.2, we would then be called upon to examine whether the measure is consistent with Article 5.6.
103. We have considered above that � on the basis of the evidence before the Panel and the opinions of the experts advising the Panel � it can be presumed that an alternative measure exists (i.e., determining the sorption level of additional varieties as described in paragraphs 8.76 and 8.91 and following) which would meet all of the elements under Article 5.6. ³³⁹ In so doing, we are not endorsing this or any other specific alternative measure as the measure to be put in place by Japan.
104. We thus conclude that the varietal testing requirement maintained by Japan is more trade-restrictive than required within the meaning of Article 5.6. For the same reasons as those outlined in paragraphs 8.44 and 8.45, on the basis of the evidence before us, we only make this finding with respect to apples, cherries, nectarines and walnuts.

H. Transparency of phytosanitary measures (Article 7 and Annex B of the SPS Agreement)

1. Arguments by the parties

105. The United States also claims that the varietal testing requirement has not been published, making it inconsistent with Article 7 of the SPS Agreement.
106. Japan does not contest that the varietal testing requirement is in effect and applied. Japan acknowledges, moreover, that it has not been published. Japan argues, however, that the guidelines developed by the MAFF concerning confirmation of efficacy of a disinfestation treatment have been distributed to foreign plant quarantine authorities for the purpose of transparency. Japan stresses, moreover, that these guidelines are available to any interested foreign government through Japan's Enquiry Point in accordance with paragraph 3 (b) of Annex B to the SPS Agreement and that anyone who wants to know more about approved products can refer to the MAFF notifications published in the Official Gazette or contact MAFF itself. Japan further contends that the guidelines do not constitute enforceable phytosanitary "regulations" under paragraph 1 of Annex B. According to Japan, they are only a model and are not mandatory since exporting countries may choose to demonstrate efficacy of treatment by other means. Finally, according to Japan, these guidelines are not generally published because they are a highly technical document addressed to foreign plant quarantine authorities.
107. In response, the United States submits that irrespective of the informal process by which US scientists, in consultation with Japan, have devised procedures to test by variety, the fact remains that the varietal testing requirement itself should be published. According to the United States, the net result is that absent such publication, an exporter has no way to discern what is necessary to move a product from the prohibited list to a list approved by Japan for entry.

2. Evaluation by the Panel

108. We note that Article 7 provides in relevant part:

"Members ... shall provide information on their ... phytosanitary measures in accordance with the provisions of Annex B".

Paragraph 1 of Annex B, in turn, states that:

"Members shall ensure that all ... phytosanitary regulations which have been adopted are published promptly in such a manner as to enable interested Members to become acquainted with them".

A footnote to this paragraph specifies that the "phytosanitary regulations" referred to are:

"phytosanitary measures such as laws, decrees or ordinances which are applicable generally".

109. Therefore, in our view, for a measure to be subject to the publication requirement in Annex B, three conditions apply: (1) the measure "[has] been adopted"³⁴⁰; (2) the measure is a "phytosanitary regulation"³⁴¹, namely a phytosanitary measure such as a law, decree or ordinance³⁴², which is (3) "applicable generally".³⁴³
110. The fact that the varietal testing requirement challenged by the United States "[has] been adopted" and is "applicable generally" is not in dispute. We only need to examine whether this requirement is a "phytosanitary regulation" in the sense of paragraph 1 of Annex B.
111. Even though the varietal testing requirement is not mandatory � in that exporting countries can demonstrate quarantine efficiency by other means � in our view, it does constitute a "phytosanitary regulation" subject to the publication requirement in Annex B. The footnote to paragraph 1 of Annex B refers in general terms to "phytosanitary measures such as laws, decrees or ordinances". ³⁴⁴ Nowhere does the wording of this paragraph require such measures to be mandatory or legally enforceable. Moreover, Paragraph 1 of Annex A to the SPS Agreement makes clear that "phytosanitary measures include all relevant laws, decrees, regulations, requirements and procedures". It does not, in turn, require that such measures be mandatory or legally enforceable. The interpretation that measures need not be mandatory to be subject to WTO disciplines is confirmed by the context of the relevant SPS provisions, a context which includes provisions of other WTO agreements and the way these provisions define "measure", "requirement" or "restriction"³⁴⁵, as interpreted in GATT and WTO jurisprudence. ³⁴⁶ This context indicates that a non-mandatory government measure is also subject to WTO provisions in the event compliance with this measure is necessary to obtain an advantage from the government or, in other words, if sufficient incentives or disincentives exist for that measure to be abided by.
112. We consider that in this case the varietal testing requirement, as set out in the "Experimental Guide for Cultivar Comparison Test on Insect Mortality � Fumigation" (hereafter referred to as "the guidelines"), does provide sufficient incentives for it to take effect. Indeed, if an exporting country abides by the guidelines, its request for entry of a certain variety of a product will be granted. If an exporting country accepts the varietal testing requirement and follows the guidelines, it will do so in order to obtain an advantage from the government. We thus consider that the varietal testing requirement is a phytosanitary regulation in the sense of paragraph 1 of Annex B.
113. We note, moreover, that even though Japan submits that the guidelines are only a test model and that exporting governments may choose to demonstrate efficacy of treatment by other means, Japan asserts that so far no exporting government ever proposed such other means ³⁴⁷ and that Japan, accordingly, never accepted any alternative means.
114. We thus find that the varietal testing requirement meets all three conditions for a measure to be subject to the publication requirement in paragraph 1 of Annex B. The requirement thus needs to be "published promptly in such a manner as to enable interested Members to become acquainted with them".
115. Japan acknowledges that it has not published the varietal testing requirement. The fact that Japan distributed the guidelines to foreign plant quarantine authorities does not mitigate the lack of publication. In our view, distribution to a limited number of addressees and MAFF's general availability to answer any queries, does not equal prompt publication which enables interested Members to become acquainted with the varietal testing requirement. The publication by MAFF of the protocols relating to approved products does not ensure publication of the varietal testing requirement itself. It only informs Members of products which have met this requirement. Moreover, we do not consider that the highly technical nature of the varietal testing requirement can excuse Japan from publishing it.

3. The Panel's conclusion under Article 7

116. On these grounds ³⁴⁸ we conclude that Japan, by not having published the varietal testing requirement, acts inconsistently with its obligations under paragraph 1 of Annex B of the SPS Agreement and, for that reason, with its obligations contained in Article 7 of that Agreement. Since Japan has not published the measure at issue with respect to any of the products falling within our mandate, our finding applies to all of these products.

I. Obligations with respect to control, inspection and approval procedures (Article 8 and Annex C of the SPS Agreement)

117. Given that we have found earlier that the varietal testing requirement is inconsistent with the requirements of Articles 2.2³⁴⁹, 5.6 ³⁵⁰ and 7 ³⁵¹ of the SPS Agreement, we see no need to further examine whether it is also inconsistent with Article 8, referring to Annex C, of that Agreement.

J. Concluding Remark

118. In footnote , we noted that the parties to this dispute referred to the fact that the substance methyl bromide � used in the quarantine treatments at issue here � needs to be phased-out in accordance with the Montreal Protocol on Substances that Deplete the Ozone Layer ("Montreal Protocol"). However, the parties to this dispute also noted that Article 2H:6 of the Montreal Protocol exempts the use of Methyl Bromide for quarantine and preshipment application from this phasing-out schedule.
119. Without embarking on an examination of the Montreal Protocol, we do want to stress that nothing in this report should be read in a way which would affect the rights and obligations of WTO Members party to the Montreal Protocol.

IX. Conclusions

1. In light of the findings above, we reach the conclusion that Japan

(i) by maintaining the varietal testing requirement in dispute with respect to apples, cherries, nectarines and walnuts, acts inconsistently with its obligation under Article 2.2 of the SPS Agreement not to maintain phytosanitary measures "without sufficient scientific evidence, except as provided for in paragraph 7 of Article 5"; and

(ii) by maintaining the varietal testing requirement in dispute with respect to apples, cherries, nectarines and walnuts, acts inconsistently with its obligation in Article 5.6 of the SPS Agreement to "ensure that [its phytosanitary] measures are not more trade-restrictive than required to achieve [Japan's] appropriate level of � phytosanitary protection, taking into account technical and economic feasibility"; and

(iii) by not having published the varietal testing requirement in dispute with respect to any of the products at issue, acts inconsistently with its obligations under paragraph 1 of Annex B of the SPS Agreement and, for that reason, with its obligations contained in Article 7 of that Agreement.

2. Since Article 3.8 of the DSU provides that "[i]n cases where there is an infringement of the obligations assumed under a covered agreement [including the SPS Agreement], the action is considered prima facie to constitute a case of nullification or impairment", we conclude that to the extent Japan has acted inconsistently with the SPS Agreement it has nullified or impaired the benefits accruing to the United States under the SPS Agreement.
3. We recommend that the Dispute Settlement Body request Japan to bring its measure in dispute into conformity with its obligations under the SPS Agreement.

To continue with Annex A - Transcript of the Joint Meeting with Experts

³³⁹ See paragraphs 8.94, 8.97 and 8.101.

³⁴⁰ See paragraph 1 of Annex B of the SPS Agreement.

³⁴¹ Ibid.

³⁴² See footnote to paragraph 1 of Annex B.

³⁴³ Ibid.

³⁴⁴ In accordance with Article 3.2 of the DSU and established WTO jurisprudence, we shall interpret these terms in paragraph 1 of Annex A in accordance with the interpretative rules of the 1969 Vienna Convention on the Law of Treaties ("Vienna Convention"), in particular Article 31 thereof which provides in relevant part as follows: "1. A treaty shall be interpreted in good faith in accordance with the ordinary meaning to be given to the terms of the treaty in their context and in light of its object and purpose".

³⁴⁵ For example, the Illustrative List of Trade-Related Investment Measures ("TRIMs") contained in the Annex to the Agreement on TRIMs indicates that TRIMs inconsistent with Articles III:4 and XI:1 of the GATT include those which are "mandatory or enforceable under domestic law or under administrative rulings, or compliance with which is necessary to obtain an advantage" (emphasis added).

³⁴⁶ Recently, for example, the panel on Japan � Measures Affecting Consumer Photographic Film and Paper (adopted on 22 April 1998, WT/DS44/R), addressing a claim of non-violation nullification and impairment under Article XXIII:1(b) of the GATT, stated the following (at paragraph 10.49):

See also the panel report on Japan � Trade in Semi-Conductors (adopted on 4 May 1988, BISD 35 S/116), where the panel found (at paragraph 109) that although measures are not mandatory, they could be considered as "restrictions" subject to Article XI:1 of the GATT in the event "sufficient incentives or disincentives existed for non-mandatory measures to take effect". Similarly, the panel on EEC � Regulation on Imports of Parts and Components (adopted on 16 May 1990, BISD 37S/132) considered (at paragraph 5.21) that the term "laws, regulations or requirements" contained in Article III:4 of the GATT included requirements "which an enterprise voluntarily accepts in order to obtain an advantage from the government".

³⁴⁷ The United States, however, asserts that it did propose alternatives, including 100 per cent inspection of certain apples and inspection for certification of cherries (in both instances without fumigation) and the use of a systems approach for nectarines, but that Japan rejected these alternatives.

³⁴⁸ See paragraphs 8.108 - 8.115.

³⁴⁹ See paragraph 8.61.

³⁵⁰ See paragraph 8.104.

³⁵¹ See paragraph 8.116.