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Complaint by Canada
Report of the Panel
The report of the Panel on EC
Measures Concerning Meat and Meat Products (Hormones) - Complaint
by Canada - is being circulated to all Members, pursuant to the
DSU. The report is being circulated as an unrestricted document
from 18 August 1997 pursuant to the Procedures for the
Circulation and Derestriction of WTO Documents (WT/L/160/Rev.1).
Members are reminded that in accordance with the DSU only parties
to the dispute may appeal a panel report, an appeal shall be limited
to issues of law covered in the panel report and legal interpretations
developed by the panel, and that there shall be no ex parte
communications with the panel or Appellate Body concerning matters
under consideration by the panel or Appellate Body.
Note by the Secretariat:
This Panel Report shall be adopted by the Dispute Settlement
Body (DSB) within 60 days after the date of its circulation unless
a party to the dispute decides to appeal or the DSB decides by
consensus not to adopt the report. If the Panel Report is appealed
to the Appellate Body, it shall not be considered for adoption
by the DSB until after the completion of the appeal. Information
on the current status of the Panel Report is available from the
II. FACTUAL ASPECTS
2. The substances at issue (hormones)
3. The CodexAlimentarius standards
(b) Codex standards for five hormones at issue
IV. ARGUMENTS OF THE PARTIES
2. The SPS Agreement
(b) Article 2.1 of the SPS Agreement
(c) Article 2.2 of the SPS Agreement
(d) Article 2.3 of the SPS Agreement
(e) Article 2.4 of the SPS Agreement
(f) Article 3.1 of the SPS Agreement
(g) Article 3.3 of the SPS Agreement
(h) Article 5 of the SPS Agreement
(i) Articles 5.1 and 5.2 of the SPS Agreement
(iii) Combinations of hormones and multiple exposure
(iv) Detection and Control
(v) Administration and use of hormones
(vi) Other parameters
(vii) The precautionary principle
(viii) Animal health protection
(k) Article 5.5
(l) Article 5.6 of the SPS Agreement
(b) Article XI
(c) Article XX 124 5. Nullification and impairment
3. New Zealand
Views of the scientific experts
B. ORGANIZATIONAL ISSUES
2. Third party rights
2. Application of the SPS Agreement, the TBT Agreement and GATT 3. Relationship between the SPS Agreement and GATT
2. Burden of proof
3. Article 3.1: sanitary measures based on international standards
(b) Sanitary measures based on Codex standards
(ii) Comparison of levels of sanitary protection
(b) Burden of proof
(b) Articles 5.1 to 5.3: risk assessment
(ii) The existence of a risk assessment
(iii) Sanitary measures to be based on a risk assessment
(ii) Article 5.5: distinctions in levels of protection
(iii) Article 5.6: measures not more trade restrictive than required to achieve the appropriate level of protection
(b) Articles 5.1 to 5.3: risk assessment
(c) Article 5.5: distinctions in levels of protection
(ii) MGA for growth promotion compared to carbadox and olaquindox
F. CLAIM OF NULLIFICATION AND IMPAIRMENT UNDER ARTICLE XXIII:1(b) OF GATT
G. CONCLUDING REMARKS 256IX. CONCLUSIONS 257ANNEX
I.1 On 28 June 1996, Canada requested consultations with the European Communities pursuant to Article 4 of the Understanding on Rules and Procedures Governing the Settlement of Disputes ("DSU"), Article 11 of the Agreement on the Application of Sanitary and Phytosanitary Measures ("SPS Agreement"), Article 14 of the Agreement on Technical Barriers to Trade ("TBT Agreement"), Article 19 of the Agreement on Agriculture, and Article XXII of the General Agreement on Tariffs and Trade 1994 ("GATT"), regarding the Council Directive Prohibiting the Use in Livestock Farming of Certain Substances Having a Hormonal Action and related measures which "... adversely affect the importation of livestock and meat from livestock" (WT/DS48/1) .
I.2 Pursuant to Article 4.11 of the DSU, Australia requested to be joined in these consultations on 16 July 1997 (WT/DS48/2), the United States on 17 July (WT/DS48/3) and New Zealand on 18 July (WT/DS48/4). The European Communities denied the request of the United States to join consultations. On 25 July 1996, Canada, Australia, and New Zealand held joint consultations with the European Communities but failed to reach a mutually satisfactory solution.
I.3 On 27 September 1996, pursuant to Article XXIII of the General Agreement on Tariffs and Trade 1994, Article 11 of the Agreement on the Application of Sanitary and Phytosanitary Measures, Article 14 of the Agreement on Technical Barriers to Trade, Article 19 of the Agreement on Agriculture and Articles 4 and 6 of the DSU, Canada requested the Dispute Settlement Body ("DSB") to establish a panel with standard terms of reference (WT/DS48/5). Canada claimed that:
(ii) the General Agreement on Tariffs and Trade 1994, and in particular Articles III or XI thereof;
(iii) the Agreement on Technical Barriers to Trade, and in particular Articles 2 and 5 thereof;
(iv) the Agreement on Agriculture, and in particular Article 4 thereof; and
"(b) the application of the EC measures otherwise nullifies or impairs the benefits accruing to Canada pursuant to the Agreement Establishing the World Trade Organization."
I.6 The parties to the dispute agreed on 4 November 1996 to the following composition of the Panel:
I.7 The Panel met with the parties on 7 January 1997 and 19 February 1997. It met with third parties on 7 January 1997. The Panel consulted with scientific and technical experts on 17-18 February 1997, jointly with the parties to this dispute and the parties to the dispute US-EC Measures Concerning Meat and Meat Products (Hormones).1
I.8 The Panel issued its interim report to the parties on 7 May 1997. Following a request made by the European Communities pursuant to Article 15.2 of the DSU, the Panel held a further meeting with the Parties on 4 June 1997. The Panel issued its final report to the Parties to the dispute on 30 June 1997.
II. FACTUAL ASPECTS
1. The measures at issue
II.1 This dispute concerns EC measures, in particular Council Directive 81/602/EEC ("Directive 81/602/EEC"), Council Directive 88/146/EEC ("Directive 88/146/EEC") and Council Directive 88/299/EEC ("Directive 88/299/EEC").2
II.2 Directive 81/602/EEC prohibits the administering to farm animals of substances having a thyrostatic action or substances having an oestrogenic, androgenic or gestagenic action; the placing on the market or slaughtering of farm animals to which these substances have been administered; the placing on the market of meat from such animals; the processing of meat from such animals and the placing on the market of meat products prepared from or with such meat. The Directive provides two exceptions to the prohibition: one exception is provided for substances with an oestrogenic, androgenic or gestagenic action when they are used for therapeutic purposes and administered by a veterinarian. The other exception was provided for five growth promoting hormones - oestradiol-17b, progesterone, testosterone, trenbolone acetate and zeranol - when they were used for growth promotion purposes and their use was governed according to the individual regulatory schemes maintained by member States. This exception was made pending an examination of the effects of these hormones on the health of consumers and the adoption of an EC rule. Member States are obliged to apply their regulatory schemes to imports from third countries in a manner not more favourable than that applied to intra-EC trade.
II.3 Directive 88/146/EEC extends the prohibition imposed by Directive 81/602/EEC to the administration to farm animals of trenbolone acetate and zeranol for any purpose, and oestradiol-17b, testosterone and progesterone for fattening purposes. However, the Directive maintains the permission to administer these three natural hormones to animals for therapeutic and zootechnical purposes under prescribed conditions; in particular, therapeutic treatment is defined to mean the administering to an individual animal of any of the substances which are authorized to treat a fertility problem diagnosed on examination by a veterinarian. The products which are used for therapeutic treatment may by administered only by a veterinarian, in the form of an injection (to the exclusion of implantation) to farm animals which have been clearly identified. Such treatment must be registered by the veterinarian and these animals may not be slaughtered before expiry of the period fixed. In the case of animals at the end of their reproductive career, the treatments are prohibited from being administered during the fattening period following the end of their breeding life. The importation from third countries of animals and meat from animals to which have been administered substances with thyrostatic, oestrogenic, androgenic or gestagenic action is prohibited.3 However, under certain conditions, Article 7 of Directive 88/146/EEC allows trade in those animals and meat from those animals treated for therapeutic or zootechnical purposes, including imports from third countries.4 Article 4 of Directive 88/146/EEC explicitly requires that undertakings in the EC member States producing the prohibited hormones, those companies authorized to market these hormones for whatever purposes and undertakings producing pharmaceutical and veterinary products based on those substances, must keep a detailed register recording (in chronological order) the quantities produced or acquired and those sold or used for the production of pharmaceutical and veterinary products.
II.4 Directive 88/299/EEC lays down the conditions for applying the derogations, provided for in Article 7 of Directive 88/146/EEC, from the prohibition on trade in certain categories of animals and their meat. The first derogation of the Directive requires member States to authorize trade in animals intended for reproduction and reproductive animals at the end of their career (and of meat of such animals) which, during their reproductive career, have undergone one of two categories of treatments. The first category is therapeutic treatment with one of the following substances: oestradiol-17b, testosterone and progesterone; and those derivatives which readily yield the parent compound on hydrolysis after absorption at the site of application which appear in a list of approved products. The second category is the administration of substances having an oestrogenic, androgenic or gestagenic action for synchronization of oestrus, termination of unwanted gestation, the improvement of fertility and the preparation of donors and recipients for the implantation of embryos, provided that the products in which they are contained appear on a list of approved products and with the respect of strict conditions of use concerning, in particular, the respect of the withdrawal period, the monitoring of those conditions of use and of the means of identification of the animals. In addition, Articles 3 and 4 of this Directive provide that trade between the member States of the European Communities in animals intended for reproduction and reproductive animals and meat from such animals is allowed only if all the conditions laid down in the Directive are respected, in particular as regards the waiting period and the requirement that animals have not received any of the above treatments with any of the above substances during the fattening period following the end of their breeding life. The EC stamp may be affixed to the meat only if the waiting time ended before the animals are slaughtered. The second derogation in Directive 88/299/EEC allows imports from third countries of treated animals and meat of such animals under guarantees equivalent to those for domestic animals and meat.
II.5 Directive 96/22/EC will replace Directives 81/602/EEC, 88/146/EEC and 88/299/EEC as from 1 July 1997. It will maintain the prohibition on the use of these hormones for growth promotion purposes; extend the prohibition on the use of beta-agonists; restrict the use of the hormones at issue for therapeutic or zootechnical purposes, reinforcing in particular the role of the veterinarian; and reinforce the provisions on control and testing. Penalties and sanctions in case of violations are to be increased where checks detect the presence of prohibited substances or products or residues of substances administered illegally. Such substances or products will be confiscated and any treated animals or meat placed under official supervision until penalties have been applied.
2. The substances at issue (hormones)
II.6 Hormones (chemicals) produced by the bodies of humans and animals are called endogenous or natural hormones. Compounds chemically synthesized to mimic the effect of natural hormones are called synthetic or xenobiotic hormones (phyto-hormones are produced by some plants.) Natural hormones are secreted into the blood stream by specialized cells and travel throughout the body. Hormones act by binding protein receptors present in hormone-responsive tissues. The receptor undergoes a conformational change, binds to specific DNA sequences and regulates specific genes within a cell. Synthetic hormones may differ from endogenous (natural) hormones in their rate of metabolism and excretion.
II.7 Hormones function in four broad areas: reproduction; growth and development; maintenance of the internal environment; and production, utilization and storage of energy. One hormone can have multiple actions. For example, the male hormone testosterone controls many processes from the development of the fetus to libido in the adult. One function may be controlled by multiple hormones: the menstrual cycle involves oestradiol, progesterone, follicle-stimulating hormone and luteinizing hormone.
II.8 Of the six hormones involved in this dispute, three are naturally occurring hormones produced by humans and animals: oestradiol-17b, progesterone and testosterone (hereafter also referred to as natural hormones). Oestradiol-17b is a sex steroidal hormone with oestrogenic action (i.e., responsible for female characteristics); testosterone is a sex steroidal hormone with androgenic action (i.e., responsible for male characteristics); progesterone is a sex steroidal hormone with gestagenic action (i.e., responsible for maintaining pregnancy). These three hormones are produced throughout the lifetime of each individual and are required for normal physiological functioning and maturation. Hormone levels vary with the tissue, with the species of animal and with the sex and individual. Hormone levels vary most dramatically with puberty, pregnancy and castration.
II.9 The other three hormones involved in this dispute are artificially produced hormones: trenbolone, zeranol and melengestrol acetate (MGA) (hereafter also referred to as synthetic hormones). These hormones mimic the biological activity of the natural hormones. Trenbolone mimics the action of testosterone; zeranol mimics the action of oestradiol-17b; and MGA mimics progesterone.
II.10 In Canada, the three natural hormones may be administered to animals to correct certain endocrine disfunctions (hereafter "therapeutic" purposes); oestradiol-17b and progesterone may be administered for breeding purposes such as synchronizing oestrus and preparing female animals for artificial insemination (hereafter "zootechnical" purposes); all six substances at issue are used to increase the feed efficiency and the rate of animal growth (hereafter "growth promotion" purposes). Five of these hormones (except MGA) are formulated as pellets (with approved and fixed amounts of compound) designed to be implanted in the ear of the animal. The ear is discarded at slaughter. MGA is administered as a feed additive.
3. The Codex Alimentarius standards
II.11 The SPS Agreement makes reference, in a number of provisions, to "the relevant international standards, guidelines and recommendations". Annex A:3(a) of the SPS Agreement states that the international standards, guidelines and recommendations relevant for food safety are those established by the Codex Alimentarius Commission relating to food additives, veterinary drug and pesticide residues, contaminants, methods of analysis and sampling, and codes and guidelines of hygienic practice.
II.12 The Codex Alimentarius Commission ("Codex Commission") is a joint FAO/WHO advisory body established to implement the Joint FAO/WHO Food Standards Programme. The purpose of this programme is to protect the health of consumers and to ensure fair practices in food trade through the elaboration of food standards. These standards, together with notifications received from governments with respect to their acceptance or otherwise of the standards, constitute the Codex Alimentarius. The Codex Alimentarius ("Codex") is thus a collection of internationally adopted food standards presented in a uniform manner.
II.13 Membership of the Codex Commission is open to all member Nations and Associate members of FAO and/or WHO and is composed of government representatives of these members. Most of its members, including Canada and the EC member States, are WTO Members. The European Community has an observer status in the Codex Commission. The Codex Commission has established a number of subsidiary bodies, including the Codex Committee on Residues of Veterinary Drugs in Food ("CCRVDF").
II.14 The technical and scientific analysis of veterinary drugs, food additives and some other substances in foods and beverages is not undertaken by the Codex Commission itself but independently by the Joint FAO/WHO Expert Committee on Food Additives ("JECFA"). The JECFA is composed of independent scientists who serve in their individual capacities as experts, not as representatives of their governments or organizations. The goal of the JECFA evaluation of veterinary drugs is:
(a) The elaboration of Codex standards
II.15 The elaboration of Codex standards involves an 8-step process:
Step 2: The Codex Commission secretariat arranges for the preparation of a "proposed draft standard". In the case of veterinary drugs, JECFA is in charge of preparing recommendations for maximum residue levels.
Step 3: The secretariat distributes the "proposed draft standard" to the members of the Commission for comments.
Step 4: The comments received are sent by the secretariat to the CCRVDF which considers the comments and, if appropriate, amends the proposed draft standard.
Step 5: The proposed draft standard is submitted through the secretariat to the Codex Commission or to the Executive Committee with a view to its adoption as a "draft standard".
Step 6: The "draft standard" is sent by the secretariat to all members and interested international organizations for comments on all aspects, including possible implications of the "draft standard" for their economic interests.
Step 7: The comments received are sent by the secretariat to the CCVDRF, which has the power to consider such comments and amend the "draft standard".
Step 8: The "draft standard" is submitted through the secretariat to the Commission together with any written proposals received from members and interested international organizations for amendments at Step 8 with a view to its adoption as a "Codex standard". Adoption of standards is normally done on the basis of a consensus decision, however, if requested, a vote may be taken. In this case, a decision by the majority of Codex members is required. An accelerated elaboration procedure may be used when there is an urgent need for a standard.
(b) Codex standards for five hormones at issue
II.17 Codex standards for veterinary drugs are normally stated in terms of an Acceptable Daily Intake ("ADI") and a Maximum Residue Limit ("MRL"). An ADI is "an estimate by JECFA of the amount of a veterinary drug, expressed on a body weight basis, that can be ingested daily over a lifetime without appreciable health risk (standard man = 60 kg)6". An ADI is derived from the experimental No Observable Effect Level ("NOEL") in the most appropriate animal species, by applying an appropriate safety factor. To account for sensitivity variabilities between humans and animals, and dietary variabilities among humans, a safety factor is typically applied. When data from long-term animal toxicity studies are available, a safety factor of 100 is generally applied. Larger safety factors, up to 1000, may be used in certain cases.
II.18 A Codex MRL is one of the tools for ensuring that intake does not exceed the ADI and that "Good Practice in the use of Veterinary Drugs" ("GPVD") is observed. It is the maximum concentration of residue resulting from the use of a veterinary drug (expressed in mg/kg or mg/kg on a fresh weight basis) that is recommended by the Codex Commission to be legally permitted or recognized as acceptable in or on a food. Test animals are first treated with the drug in accordance with proposed GPVD and, on the basis of this usage, tentative MRLs are set for various tissues. These MRLs are then compared with the ADI, considering dietary food intake. If the MRL established on the basis of proposed GPVD would cause the ADI to be exceeded, the MRL will be lowered to a level which ensures that the ADI is not exceeded, and the proposed GPVD will also be made stricter. If, on the other hand, the proposed MRL would not cause the ADI to be exceeded (as is most frequently the case), the MRL will be proposed for adoption. Thus, MRLs are frequently set at levels below (even far below) the theoretical safe levels determined from an ADI. An MRL may also be reduced to be consistent with the GPVD as approved by national authorities or increased (to a level still below the safe level) to be detectable using practical methods.
II.19 "Good Practice in the Use of Veterinary Drugs" (GPVD), is defined as:
II.20 For the hormones at issue, JECFA considered five of the six substances (all except MGA) and made recommendations on four of them (excluding trenbolone) during its 32nd Session in 1987. For trenbolone, further data was sought and a JECFA recommendation made in 1989. The CCRVDF considered the JECFA recommendations at its meetings in 1987 and recommended draft standards for the three endogenous hormones and zeranol. These draft standards were approved by the Codex Commission at Step 5 in 1989. Standards for these four hormones were considered at Step 8 by the Codex Commission in June 1991, but, following a vote on the matter, were not adopted. A draft standard for trenbolone at Step 5 was adopted on 1991. In June 1995, the Codex Commission adopted standards, at Step 8, for the five hormones, on the basis of a vote. These standards apply exclusively with respect to cattle, and meat and meat products of bovine origin, when these hormones are used for growth promotion purposes.
II.21 With respect to the three natural hormones in dispute, oestradiol-17b, progesterone and testosterone, similar Codex standards apply. For these three hormones it was considered "unnecessary" to establish an ADI or MRL8. Specifically, the Codex states that:
II.23 With respect to two of the synthetic hormones at issue, zeranol and trenbolone, the Codex standards are the following: an ADI of 0-0.5 and 0-0.02 mg/kg body weight, respectively, and for both hormones an MRL of 2 mg/kg in bovine muscle and 10 mg/kg in bovine liver.
II.24 The 1988 JECFA Report, on which the Codex standard for zeranol is based, noted that zeranol was a weak oestrogen which mimicked the action of oestradiol-17b. The report concluded that the toxic (in casu tumorigenic) effect of zeranol is associated with its hormonal (i.e. oestrogenic) properties and that an ADI could thus be established on the basis of a no-hormonal-effect level. Adopting what it considered to be a conservative approach by using as a basis studies on ovariectomized female cynomolgus monkeys (highly sensitive to oestrogenic substances) and using a safety factor of 100, JECFA set an ADI for human beings of 0-0.5 mg/kg of body weight. For a 70 kg person consuming 500 g of meat daily over an entire lifetime, the maximum permissible or safe level of zeranol residues in meat would then, according to JECFA, be 70 mg/kg of edible tissue. However, the report noted that when zeranol is administered to cattle according to good animal husbandry practice, the maximum mean residue levels did not exceed 0.2 mg/kg in muscle, 10 mg/kg in liver, 2 mg/kg in kindney, and 0.3 mg/kg in fat at any time after implantation. These residue levels obtained on the basis of good animal husbandry practice are thus below the maximum permissible level of 70 mg/kg. However, in order to set a level which is detectable by routine residue analysis methods, the Codex MRL was increased to 2 mg/kg in muscle and set at 10 mg/kg in liver.
II.25 Trenbolone acetate is the chemical form or ester used for the administration of trenbolone. Trenbolone, or trenbolone acetate ("TBA"), an androgen which mimics the action of testosterone, is rapidly hydrolysed after administration to cattle. The major metabolite (i.e. compound into which TBA breaks down by chemical activity after entering the body) is a-trenbolone, occurring inter alia in liver, and b-trenbolone present in muscle. With respect to TBA, the 1988 JECFA Report concluded that its potential toxic effects only arise as a consequence of its hormonal activity. The report further concluded that, therefore, an ADI could be established on the basis of a no-hormonal-effect level. Adopting what it considered to be a conservative approach by using as a basis studies on castrated male rhesus macaque monkeys (which are highly sensitive to compounds with antigonadotropic activity) and pigs (which are a sensitive model for assessing hormonal effects of TBA) and using a safety factor of 100, JECFA later set an ADI for human beings of 0-0.02 mg/kg of body weight (34th JECFA Report of 1989). The maximum ADI for a 60 kg person would thus be 1.2 mg of TBA residues. JECFA then set MRL's for b-trenbolone in muscle and a-trenbolone in liver of 2 mg/kg and 10 mg/kg, respectively, based on average residue levels in heifers at 15-30 days after implantation of 300 mg TBA, noting that concentrations would be even lower at proposed GPVD. According to JECFA, the MRL's thus obtained on the basis of conservative estimates should not exceed the Codex ADI or safe level at any time after implantation of the drug, that is, irrespective of the withdrawal period used.
4. History of events
II.26 European consumers' concern over the use of hormones for growth promotion purposes in livestock grew steadily throughout the 1970s as the result of the illegal use of dethylstilboestrol, commonly known as DES (see paragraph 4.183, footnote 130), in veal production in France and incidents, particularly in Italy, where adolescents had been reported to be suffering from hormonal irregularities and veal had come under suspicion as a possible cause. European consumer organizations called for a boycott of veal, and the market for veal was severely affected. On 20 September 1980, the EC Council of (Agriculture) Ministers adopted a declaration in favour of a ban on the use of oestrogen and endorsed the principle of greater harmonisation of legislation on veterinary medicines and of greater control on animal rearing, both at the production and slaughtering stages.
II.27 On 31 October 1980, the EC Commission proposed legislation aimed at banning the use of all hormone products (COM (80) 614), except for therapeutic purposes. This proposal was expanded later by documents COM(80)920 and COM(80)922, presented on 6 January 1981. These allowed for the controlled use for therapeutic and zootechnical purposes of three natural hormone products, and introduced a number of control measures on the production and handling of such products, together with proposals on the testing of animals. On 13 February 1981, the European Parliament adopted the "Nielsen Report" approving the Commission proposals. The EC Economic and Social Committee endorsed the proposals in February 1981. However, three member States (Belgium, Ireland and the United Kingdom) sought to have the three natural hormones remain available both as therapeutic drugs and as growth promotion agents, and Ireland and the United Kingdom also argued for the retention of the synthetic hormones, trenbolone and zeranol. Moreover, third countries, including Argentina, Australia, Canada, New Zealand, South Africa and the United States, also raised questions concerning the impact of any ban on their exports to the European Communities.
II.28 The EC Council of Ministers adopted its first Directive on the issue (81/602/EEC) on 31 July 1981. In that Directive, and in regard to five of the hormones at issue (all but MGA), the Council directed the Commission to provide, not later than 1 July 1984, a report on the experience acquired and scientific developments, accompanied, if necessary, by proposals taking into account these developments. Accordingly, the Commission set up a Scientific Group on Anabolic Agents in Animal Production, chaired by Professor G.E. Lamming (the "Lamming Group"). The question addressed to the Lamming Group was:
"The Lamming Group issued an interim report on 22 September 1982 (the "Lamming Report"). The Lamming Report concluded as follows:
"The Scientific Working Group is of the opinion that the use of oestradiol-17b, testosterone and progesterone and those derivatives which readily yield the parent compound on hydrolysis after absorption from the site of application would not present any harmful effects to the health of the consumer when used under the appropriate conditions as growth promoters in farm animals.
"Evaluation of data on "trenbolone" and "zeranol" revealed that some data on the hormonal non-effect-level and the toxicology of these compounds and their metabolites are still missing.
"The Scientific Working Group considers it necessary that additional information be provided before a final conclusion can be given on trenbolone and zeranol.
"Proper programmes to control and monitor the use of anabolic agents are essential.
"It is necessary to continue scientific investigations on the relevance of the present use of the "no-hormone-effect" level related to the harmful effects of anabolic agents."
II.30 The EC Commission amended its proposal accordingly and on 31 December 1985 the EC Council adopted Directive 85/649/EEC. This Directive confirmed the ban on the use of all the substances concerned for growth promotion purposes and established more detailed provisions concerning authorized therapeutic uses. The Directive was challenged in the European Court of Justice, which annulled it on procedural grounds. The proposals were re-introduced by the EC Commission and re-adopted by the EC Council as Council Directive 88/146/EEC on 16 March 1988.
II.31 Following reports of significant use of illegal growth-promoting hormonal substances in a number of EC member States, on 26 September 1988 the European Parliament established a "Committee of Enquiry into the Problem of Quality in the Meat Sector". The Report of this Committee (the "Pimenta Report") endorsed the ban on the use of hormones and was adopted by the European Parliament on 29 March 1989 (see paragraph 4.19). The essential findings of the Pimenta Report were that the prohibition of hormonal substances for non-therapeutic (i.e. growth-promoting) purposes must be maintained and expanded because:
(ii) 10 out of 12 national veterinary experts indicated that a total ban would facilitate implementation and control;
(iii) the scientific conclusions regarding the use of natural hormones rested upon strict conditions of use which it believed could not in reality be attained. The Committee was of the opinion that use of the natural/nature-identical hormones carried the risk of inexperienced application, incorrect dosage and unsupervised injection which could pose a risk to the animal and the consumer, and also noted doubts with regard to long-term cumulative and interactive potential carcinogenicity. In addition, the Committee believed that proven necessity and socio-economic desirability should be criteria of acceptability for the use of (bio)chemical growth promoters in animal-rearing;
(iv) The Committee did not accept the argument that prohibiting the use for growth promotion of some natural or nature-identical hormones would result in an increase in the use of other, more dangerous growth-promoting substances to the detriment of the consumer;
(v) the Committee believed that the Commission should promote the concept of animal welfare in agricultural production.
The daily production of sex hormones by humans is much higher than the amounts possibly consumed from meat, even in the most sensitive humans (prepubertal children and menopausal women).
Due to an extensive first-pass metabolism, the bioavailability of ingested hormones is low, thus providing a further safety margin."12
III.1 Canada claimed that the EC measures were governed by the SPS Agreement and that the European Communities, by banning the importation of meat and meat products from animals to which any of the six hormones had been administered for purposes of promoting the growth of animals, had acted inconsistently with the SPS Agreement, in particular Articles 2, 3 and 5. The EC measures were not based on an appropriate risk assessment; failed to take into account international standards, guidelines and recommendations in the absence of scientific justification; were used, in part, as a means to control domestic production; and were more restrictive than required to meet their appropriate level of protection. These measures were far more restrictive than measures adopted by the European Communities to control the use of other substances used in animal husbandry that presented a demonstrably greater risk to health than the six hormones at issue. The EC level of protection for growth promoting hormones was significantly higher than the EC level of protection for antimicrobial growth promoters and other veterinary drugs, resulting in a discrimination against Canadian beef imports and a disguised restriction on international trade.
III.2 Canada also claimed that the EC measures were contrary to GATT, in particular Article III or XI. Canada argued that the EC measures were either an import prohibition, in contravention of GATT, or internal measures that discriminated in favour of EC cattle and beef products, and against like Canadian cattle and beef products, also contrary to GATT.
III.3 Canada submitted alternative arguments that the measures at issue also failed to meet obligations under the TBT Agreement, in particular Article 2, in the event it was found to be applicable.
III.4 Canada claimed that the application of the EC measures otherwise nullified or impaired the benefits accruing to Canada pursuant to the Agreement Establishing the World Trade Organization ("WTO Agreement") respecting market access for beef.14
III.5 The European Communities considered that the analysis of the SPS and/or TBT Agreements should take place only if alleged violations of GATT Articles were found and therefore, in its defense, the European Communities first invoked GATT. With regard to the alleged violation of Article III:4 of GATT, the European Communities argued that the animals to which the hormones at issue had been administered for growth promotion, and meat from those animals, were not "like" other animals and meat from those animals, respectively. Furthermore, the European Communities argued that even if they were found to be "like", imported products were not given "less favourable treatment" than domestic products. Therefore, the European Communities claimed that its measures did not infringe Article III:4 of GATT. With regard to the alleged violation of Article XI of GATT, the European Communities claimed that the EC measures at issue were internal regulations within the scope of Article III of GATT. Therefore, Article XI of GATT did not apply. The European Communities claimed that in case its measures were found to be contrary to Article III:4, it was justified by Article XX(b), which did not affect the power of a Member to adopt a policy in order to protect human and animal health.
III.6 The European Communities claimed that the measures at issue, in any event, did not violate any provision of the SPS Agreement because they satisfied all the conditions imposed by it. The measures were based on scientific principles as required by Article 2.2 of the SPS Agreement, and a risk assessment had been performed which established the scientific basis for regulatory action. The European Communities observed that the SPS Agreement recognized a Member's right to establish the level of protection which the Member determined to be appropriate within its territory. The European Communities claimed that the SPS Agreement did not require Members to change the level of sanitary protection they were applying before its entry into force. The European Communities also claimed that the measures at issue were based on scientific principles and aimed at achieving a level of protection which was higher than could be achieved if the recommendations of Codex for these hormones were followed, because more recent scientific evidence showed that these hormones were genotoxic and carcinogenic. It also claimed that WTO dispute settlement panels were not competent to judge its level of sanitary protection nor the scientific evidence upon which it was based, but only whether its measures were in conformity with the provisions of the SPS Agreement. It further claimed that the arguments of Canada in fact attacked the EC chosen level of protection, not its measures, because they suggested that residues of these hormones above naturally present levels did not pose any risk to health. The European Communities claimed that the SPS Agreement laid down the objective of avoiding arbitrary or unjustifiable distinctions in applying the chosen levels of protection (not between measures used nor between risks presented by other substances), and only if such distinctions resulted in discrimination or a disguised restriction on trade. The European Communities further claimed that its measures were based on the precautionary principle. It maintained that its measures were no more trade restrictive than required to achieve its appropriate level of sanitary protection and applied in exactly the same way to all animals treated with these hormones and meat from such animals, whatever its origin; there was consequently no discrimination nor disguised restriction on international trade. The European Communities also claimed that Canada failed to discharge its burden of proof because it had failed to show on the basis of current scientific evidence that meat containing residues of these hormones was safe for human consumption and that there existed another measure, reasonably available taking into account technical and economic feasibility, which could achieve the EC appropriate level of sanitary protection and was significantly less restrictive on trade.
III.7 The European Communities claimed that the measures at issue fell outside the scope of application of the TBT Agreement because they were sanitary measures within the meaning of the SPS Agreement. In the alternative, the EC claimed that the measures at issue did not violate Articles 2.1 and 2.2 of the TBT Agreement because their legitimate objective was to protect human and animal health and they were not more trade restrictive than necessary to achieve this objective. Finally, the European Communities claimed that its measures did not nullify or impair the benefits accruing to Canada pursuant to the WTO Agreement, because the benefits claimed by Canada were granted after the adoption of the EC measures, could have been reasonably anticipated by Canada and did not upset the competitive relationship between domestic and imported products.
TO CONTINUE WITH EC MEASURES CONCERNING MEAT AND MEAT PRODUCTS (HORMONES) COMPLAINT BY CANADA
2 Other measures relevant to the dispute are contained in Directives 72/462/EEC, 81/851/EEC, 81/852/EEC, 85/358/EEC, referenced in Directive 88/146/EEC; the decisions, control programme and derogations referred to in Article 6(2), Article 6(7) and Article 7, respectively, of Directive 88/146/EEC; and any amendments or modifications, including Directives 96/22/EC and 96/23/EC.
3 Article 6(7) of Directive 88/146/EEC requires the establishment of a control programme as regards imports from third countries to ensure that imports do not receive more favourable treatment than EC products. This control programme also provides for rules on the frequency of controls on imports from each third country and on guarantees offered by the inspection regulation of third countries. Such checks on imports are now carried out in accordance with Directives 91/496/EEC and 90/675/EEC.
4 Article 7 of Directive 88/146/EEC allows derogations in respect to trade in animals intended for reproduction and reproductive animals at the end of their career (and in respect of meat from these various animals, taking into account the guarantees given), which in the course of their existence have been treated under the provisions of Article 4 of Directive 81/602/EEC. This article authorizes the administration to farm animals of substances with oestrogenic, androgenic or gestagenic action approved in accordance with the Directives on veterinary medical products (other than substances referred to in Article 3 of Directive 81/602/EEC) for therapeutic use, synchronization of oestrus, termination of unwanted gestation, the improvement of fertility and the preparation of donors and recipients for the implantation of embryos. The administering of these substances shall be effected by a veterinarian, however, member States may allow the synchronization of oestrus and the preparation of donors and recipients for the implantation of embryos to be done not by a veterinarian but under his direct responsibility.
5 Codex Alimentarius, Vol.3, Residues of Veterinary Drugs in Foods, p.vi.
6 Ibid., p.65.
8 Ibid., Section 1, pp.7, 12 and 14.
9 Ibid, Section 1, footnote, pp.7, 12 and 14.
10 Report of the (EC) Scientific Veterinary Committee, Scientific Committee for Animal Nutrition and the Scientific Committee for Food on the Basis of the Report of the Scientific Group on Anabolic Agents in Animal Production, pp.1 and 12.
11 European Parliament, Committee on the Environment, Public Health and Consumer Protection, Report on "The USA's Refusal to comply with Community legislation on slaughterhouses and hormones and the consequences of this refusal", EP 128 381/B, 7 February 1989, named after its reporter Mr. Collins, MEP.
12 "Assessment of Health Risk - Working Group II", in 1995 EC Scientific Conference Proceedings, pp.20-21.
14 Uruguay Round Schedule LXXX - European Communities, Part I Most Favoured-Nation Tariff, Section I -Agricultural Products, Section I A Tariffs and Section I B Tariff Quotas, as subsequently modified. Tariff items covered by the EC beef and veal regime are: