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World Trade

WT/DS26/R/USA

Organization

18 August 1997
Original: English

EC Measures Concerning Meat and Meat Products (Hormones)

Complaint by the United States

Report of the Panel

The report of the Panel on EC Measures Concerning Meat and Meat Products (Hormones) - Complaint by the United States - 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 WTO Secretariat.


TABLE OF CONTENTS

    I. INTRODUCTION
    II. FACTUAL ASPECTS
      1. The measures at issue
      2. The substances at issue (hormones)
      3. The CodexAlimentarius standards
        (a) The elaboration of Codex standards
        (b) Codex standards for five hormones at issue
      4. History of events
      5. History of events under the GATT
    III. CLAIMS OF THE PARTIES
    IV. ARGUMENTS OF THE PARTIES
      1. Relationship between GATT 1994 and the SPS Agreement
      2. The SPS Agreement
        (a) Article 2.2 of the SPS Agreement
        (b) Article 2.3 of the SPS Agreement
        (c) Article 3.1 of the SPS Agreement
        (d) Article 3.3 of the SPS Agreement
        (e) Articles 5.1 and 5.2 of the SPS Agreement
          (i) Nature and mode of action of the hormones
          (ii) Metabolites
          (iii) Combinations of hormones and multiple exposure
          (iv) Detection and control
          (v) Administration and use of hormones
          (vi) Risks arising from other parameters
          (vii) The precautionary principle
          (viii) Animal health protection
        (f) Article 5.4 of the SPS Agreement
        (g) Article 5.5 of the SPS Agreement
        (h) Article 5.6 of the SPS Agreement
        (i) Article 5.7 of the SPS Agreement
      3. Agreement on Technical Barriers to Trade
      4. GATT 1994
        (a) Article III:4 of GATT
        (b) Article I:1 of GATT
    V. THIRD PARTIES SUBMISSION
      1. Australia
      2. Canada
      3. Norway
      4. New Zealand
    VI. PANEL'S CONSULTATION WITH SCIENTIFIC EXPERTS
      Panel procedures with regard to scientific expertise
      Views of the scientific experts
    VII. INTERIM REVIEW
    VIII. FINDINGS
      A. CLAIMS OF THE PARTIES
      B. ORGANIZATIONAL ISSUES
        1. Scientific evidence
        2. Parallel panel requested by Canada
      C. GENERAL INTERPRETATIVE ISSUES
        1. Scope of the measures in dispute
        2. Application of the SPS Agreement, the TBT Agreement and GATT
        3. Relationship between the SPS Agreement and GATT
      D. THE SPS AGREEMENT
        1. Overview of the provisions in dispute
        2. Burden of proof
        3. Article 3.1: sanitary measures based on international standards
          (a) Codex standards
          (b) Sanitary measures based on Codex standards
            (i) The meaning of based on
            (ii) Comparison of levels of sanitary protection
        4. Article 3.3: sanitary measures not based on international standards
          (a) Requirements for justification
          (b) Burden of proof
        5. Article 5: "Assessment of Risk and Determination of the Appropriate Level of Sanitary or Phytosanitary Protection"
          (a) Risk assessment and risk management
          (b) Articles 5.1 to 5.3: risk assessment
            (i) Techniques and factors to be taken into account
            (ii) The existence of a risk assessment
            (iii) Sanitary measures to be based on a risk assessment
          (c) Articles 5.4 to 5.6: risk management
            (i) Article 5.4: minimizing trade effects
            (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
          (d) Article 5.7: provisional sanitary measures
        6. Sanitary measures where no international standards exist: melengestrol acetate ("MGA")
          (a) Burden of proof
          (b) Articles 5.1 to 5.3: risk assessment
          (c) Article 5.5: distinctions in levels of protection
            (i) MGA for growth promotion compared to the natural hormones occurring endogenously in meat and other foods
            (ii) MGA for growth promotion compared to carbadox
        7. Article 2: "Basic Rights and Obligations"
      E. ARTICLES I AND III OF GATT
      F. CONCLUDING REMARKS
    IX. CONCLUSIONS
    ANNEX


I. INTRODUCTION

I.1 On 26 January 1996, the United States 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 (WT/DS26/1).

I.2 On 2 February 1997, pursuant to Article 4.11 of the DSU, Australia (WT/DS26/3) and New Zealand (WT/DS26/2), followed on 8 February by Canada (WT/DS26/4), requested to be joined in these consultations. The European Communities accepted these requests on 19 March 1996 (WT/DS26/5).

I.3 On 27 March 1996, the United States, Australia, Canada and New Zealand held joint consultations with the European Communities but failed to reach a mutually satisfactory solution.

I.4 On 25 April 1996, pursuant to Article 11 of the SPS Agreement, Article 14 of the TBT Agreement, Article 19 of the Agreement on Agriculture, Article XXIII:2 of the GATT, and Article 6 of the DSU, the United States requested the Dispute Settlement Body ("DSB") to establish a panel with standard terms of reference (WT/DS/26/6). The United States claimed that the EC measures:

    "... adversely affect imports of meat and meat products and appear to be inconsistent with the obligations of the European Communities under the General Agreement on Tariffs and Trade 1994, the Agreement on the Application of Sanitary and Phytosanitary Measures, the Agreement on Technical Barriers to Trade, and the Agreement on Agriculture. The provisions of these agreements with which these measures appear to be inconsistent include, but are not limited to, the following:

      (1) General Agreement on Tariffs and Trade 1994, Article III or Article XI;

      (2) Agreement on the Application of Sanitary and Phytosanitary Measures, Articles 2, 3 and 5;

      (3) Agreement on Technical Barriers to Trade, Article 2; and

      (4) Agreement on Agriculture, Article 4.

    These measures also appear to nullify or impair the benefits accruing to the United States directly or indirectly under the cited agreements".

I.5 On 20 May 1996, the DSB established a Panel in accordance with the request made by the United States. The agreed standard terms of reference of the Panel were (WT/DS26/7):

    "To examine, in the light of the relevant provisions of the covered agreements cited by the United States in document WT/DS26/6, the matter referred to the DSB by the United States in that document and to make such findings as will assist the DSB in making the recommendations or in giving the rulings provided for in those agreements".

I.6 Australia, Canada, New Zealand and Norway reserved their rights to participate in the Panel proceedings as third parties.

I.7 On 2 July 1996, the Panel was constituted with the following composition:

Chairman: Mr. Thomas Cottier
Panellists: Mr. Jun Yokota
Mr. Peter Palecka

I.8 The Panel met with the parties on 10 October 1996 and 11 November 1996. It met with third parties on 10 October 1996. The Panel consulted scientific and technical experts on 17-18 February 1997 in a meeting held jointly with the panel proceeding brought by Canada on the same EC measures. 1

I.9 On 28 November 1996, the Chairman of the Panel informed the DSB that the Panel would not be able to issue its report within six months. The reasons for that delay are stated in document WT/DS/26/8.

I.10 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 or zootechnical purposes and administered by a veterinarian or under a veterinarian's responsibility. The other exception was for oestradiol-17b, progesterone, testosterone, trenbolone acetate (or TBA) and zeranol - when they were used for growth promotion purposes and their use was governed according to the individual regulatory schemes maintained by EC 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. EC 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 be 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. 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. 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

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 EC 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 EC 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. (Phyto-hormones are produced by some plants.) Compounds chemically synthesized to mimic the effect of natural hormones are called synthetic or xenobiotic hormones. 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 the United States, the three natural hormones may be used for medical treatment (therapeutic). Oestradiol-17b is also permitted for zootechnical purposes. In the United States the six hormones are also approved for growth promotion purposes. Three of the hormones used for growth promotion purposes, trenbolone, zeranol, and MGA, have no zootechnical or therapeutic uses. For 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 (hereafter the "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 (hereafter "the 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 the United States and the EC member States, are WTO Members. The European Communities 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:

    "to establish safe levels of intake by setting Acceptable Daily Intakes (ADI) and to develop maximum residue limits when veterinary drugs are used in accordance with good veterinary practice". 5

(a) The elaboration of Codex standards

II.15 The elaboration of Codex standards involves an 8-step process:

    Step 1: The Codex Commission decides to elaborate a standard and identifies which subsidiary body or other body should undertake the work, taking into account the "Criteria for the Establishment of Work Priorities and for the Establishment of Subsidiary Bodies". Decisions to elaborate standards may also be taken by subsidiary bodies of the Codex Commission subject to subsequent approval by the Codex Commission or its Executive Committee.

    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 prepares, if appropriate, a 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 considers such comments and may amend the "draft standard".

    Step 8: The "draft standard" is submitted through the secretariat to the Codex 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.

II.16 The Codex Commission keeps under review and may revise Codex standards, generally following procedures similar to those used for the elaboration of standards. Codex standards are published and sent to governments for acceptance and to international organizations to which competence in the matter has been transferred by their EC member States. Acceptance of the standards is voluntary and Codex members are not required to indicate formal acceptance of Codex standards, guidelines or recommendations. The implementation of Codex standards at the national level is the responsibility of members.

(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:

    "the official recommended or authorized usage including withdrawal periods, approved by national authorities, of veterinary drugs under practical conditions." 7

According to the Codex expert advising the Panel, the terms "good veterinary practice" and "good veterinary and husbandry practice", when used in JECFA reports, are synonyms for GPVD.

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 MRL. 8 Specifically, the Codex states that:

    "Establishing an ADI and an [MRL] for a hormone that is produced endogenously at variable levels in human beings was considered unnecessary by the Committee. Residues resulting from the use of this substance as a growth promoter in accordance with good animal husbandry practice are unlikely to pose a hazard to human health." 9

II.22 The 32nd JECFA Report of 1988 ("1988 JECFA Report"), on which the Codex standards are based, concluded that residues arising from the use of testosterone and oestradiol-17b as a growth promoter in accordance with good animal husbandry practice are unlikely to pose a hazard to human health and that the amount of exogenous progesterone ingested in meat from treated animals would not be capable of exerting an hormonal effect, and therefore, any toxic effect, in human beings. Since, according to JECFA, the potential toxic effect of residues of these hormones is directly related to their hormonal effect, the report concluded that the additional residue levels in treated animals are not capable of exerting any toxic effect. On the basis of this safety assessment and in view of the difficulty of determining the levels of residues attributable to the use of these hormones for growth promoting purposes in cattle (residues of endogenous natural hormones in meat cannot be practically distinguished from those exogenously administered), JECFA concluded that it was "unnecessary" to establish an ADI or MRL for these hormones.

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 kidney, 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 4.123), 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 EC 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:

    "Does the use for fattening purposes in animals of the following substances: oestradiol-17b, testosterone, progesterone, trenbolone and zeranol present any harmful effect to health". 10

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.29 The EC Scientific Veterinary Committee gave its reaction to the Lamming Report on 9 November 1982, followed by the EC Scientific Committee for Animal Nutrition on 17 November 1982 and by the EC Scientific Committee for Food on 4 February 1983. These Committees supported the conclusions and recommendations of the Lamming Report, but stressed the need to lay down provisions regarding the establishment of proper programmes to control and monitor the use of anabolic agents with regard, in particular, to instructions for use, surveillance programmes and analysis methods. In January 1984, the Commission asked a group of experts within the EC Scientific Committee on Anabolic Agents to review the information on trenbolone and zeranol. On 12 June 1984, the Commission published a proposal (COM(84)295 final) for a Council Directive amending Directive 81/602/EEC, which envisaged the controlled use of the three natural hormones for growth promotion purposes and proposed re-examining the ban on the two synthetic hormones after their scientific evaluation had been completed. However, the European Parliament, the EC Economic and Social Committee and the EC Council of Ministers rejected the Commission's proposal.

II.30 The EC Commission amended its proposal accordingly and on 31 December 1985 the EC Council adopted Directive 85/649/EEC. This Directive banned 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 paragraphs 4.36-4.39). 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:

    (i) this was the only way to restore consumer confidence in the meat sector;

    (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 carries 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.

II.32 The European Parliament adopted another report on the issue of use of hormones for animal growth promotion, the "Collins Report" of 7 February 1989. 11 This report argued that:

    "Current licensing systems for the regulation of veterinary medicines (including at present, growth promoting products) require that a new product satisfy three criteria: safety, quality and efficacy. These criteria may well be satisfactory for therapeutic drugs. They are by no means sufficient for growth promoting products. For the latter it is proposed here that the Community's veterinary medicine licensing system be adapted to include a "fourth hurdle", entailing an objective socio-economic and environmental impact assessment". In the Commission's July 1988 draft proposals for the reform of veterinary medicine licensing in the Community this idea was accepted in principle. The final version of the proposals (December 1988) does not include this concept. It is clear, however, that the social, agricultural and environmental implications of the use of growth and yield promoting pharmaceuticals require a licensing system somewhat different from that which exists for these products when used for therapeutic purposes".

II.33 The EC Commission organized a scientific conference on this subject in Brussels from 29 November to 1 December 1996. With regard to the natural hormones, the 1995 EC Scientific Conference on Growth Promotion in Meat Production (the "1995 EC Scientific Conference") concluded that:

    "At present, there is no evidence for possible health risks to the consumer due to the use of natural sex hormones for growth promotion, since:

      Residue levels of these substances measured in meat of treated animals fall within the physiological range observed in meat of comparable untreated animals.

      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

With regard to the synthetic hormones, zeranol and trenbolone, the 1995 EC Scientific Conference concluded that:

    "At the doses needed for growth promotion, residue levels [of trenbolone and zeranol] are well below the levels regarded as safe (the MRLs). There are, at present, no indications of a possible human health risk from the low levels of covalently-bound residues of trenbolone." 13

5. History of events under the GATT

II.34 In March 1987, the United States raised the issue of the EC ban under the Tokyo Round Agreement on Technical Barriers to Trade ("TBT Agreement"). Bilateral consultations between the United States and the European Communities failed to resolve the dispute. Arguing that the EC Directive was not supported by scientific information, the United States requested the establishment of a technical experts group ("TEG") under Article 14.5 of the TBT Agreement to examine the question. This request was denied following the EC response that the use of growth promotants was a process and production method (PPM), and that parties to the TBT Agreement only had an obligation not to use PPMs to circumvent the Agreement. The European Communities favoured the establishment of a panel "to evaluate the rights and obligations of Parties deriving from Article 14.25 (of the TBT Agreement)". 14 The dispute went unresolved.

2.35 On 1 January 1989, the United States introduced retaliatory measures in the form of 100 per cent ad valorem duties on a list of products imported from the European Communities. The European Communities consequently asked for the establishment of a panel. This request was denied by the United States. In 1989, a joint US/EC Task Force agreed on certain measures which allowed imports into the European Communities of US meat certified to have not been produced with hormones. This resulted in the United States withdrawing some products from the retaliation list. The other EC products figuring in the list remained subject to the retaliatory action. On 19 June 1996, the European Communities requested the establishment of a panel to examine this matter. On 15 July 1996, after this Panel was composed, the United States terminated its retaliatory action in its entirety.

III. CLAIMS OF THE PARTIES

III.1 The United States claimed that the EC ban on the importation and sale of animals, and meat derived from animals, that had been administered any of the six hormones at issue for growth promotion purposes (oestradiol-17b, progesterone, testosterone, trenbolone, zeranol and melengestrol acetate (MGA)) was inconsistent with the SPS Agreement and the GATT.

III.2 Arguing that the EC measures were sanitary measures, the United States claimed, with regard to the SPS Agreement, that these measures: directly and indirectly affected international trade; were not based on an assessment of risk and were consequently inconsistent with Article 5.1 of the Agreement; were maintained without sufficient scientific evidence in contravention of Article 2.2; were not justified as a "provisional" measure under Article 5.7; breached Articles 2.2 and 5.6 in that they were not based on scientific principles; were not applied only to the extent necessary to protect human life or health and were more trade-restrictive than required to achieve the appropriate level of sanitary protection; arbitrarily or unjustifiably discriminated between Members where identical or similar conditions prevailed, in contravention of Article 2.3; constituted a disguised restriction on international trade, in breach of Article 2.3; contravened Article 3.1 because they were not based on the relevant international standards, guidelines or recommendations and that this departure from international standards was not justified by Article 3.3; and were based on arbitrary or unjustifiable distinctions in the levels of protection in different situations, resulting in discrimination or a disguised restriction on international trade in contravention of Article 5.

III.3 The United States claimed that the EC measures discriminated against imports and were inconsistent with Article III of GATT. Arguing that US meat and animals were "like" EC meat and animals, the United States claimed that the EC measures were inconsistent with Article III:4 of GATT because they prohibited the importation and sale of certain imported meat and animals, while permitting the sale of like domestic products. The EC measures therefore treated US imports less favourably than domestic production. The United States further claimed that the European Communities had no legitimate policy purpose for discriminating against US meat and animals. The United States also claimed that the EC measures were inconsistent with Article I:1 of GATT because they failed to accord to imports from the United States the advantages, favours, privileges or immunities granted to like animals and meat originating in the territories of other countries. Finally, the United States argued that the EC measures could not be justified by resort to Article XX of GATT, in particular Article XX(b), because the European Communities had put forward no evidence to support its measures on health grounds, and the measures were "applied in a manner which would constitute a means of arbitrary or unjustifiable discrimination between countries where the same conditions prevail, or a disguised restriction on international trade". The United States claimed that if the EC measures were not sanitary measures, they would be inconsistent with the TBT Agreement; in particular they were technical regulations within the meaning of the TBT Agreement, and would be inconsistent with Articles 2.1, 2.2, and 5.1.1 and 5.1.2.

III.4 The European Communities submitted that the analysis of the SPS and/or TBT Agreements should take place only if alleged violations of GATT Articles were found. Therefore, in their 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. The European Communities claimed that in case its measures were found to be contrary to Article III:4, they were 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.5 With regard to the alleged violation of Article I of GATT, the European Communities claimed that such violation was not mentioned in the Panel's terms of reference, was not mentioned in the documents by which the United States requested consultations and was not discussed during the consultations that were held subsequently. The European Communities claimed that even if animals and meat from animals to which the hormones at issue had been administered for growth promotion were found to be "like" (quod non), the measures at issue applied without distinction to all imports of meat irrespective of their country of origin and not only to imports originating in the United States. Accordingly, the European Communities argued that its measures did not violate Article I:1 of GATT.

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. The European Communities claimed that the measures at issue aimed at achieving a level of protection which was higher than could be achieved if the recommendations of Codex Alimentarius for these hormones were followed. 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 US arguments 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 and, therefore, did not warrant the application of any measures to control them. The European Communities also claimed that its measures were based on the precautionary principle. Moreover, it claimed that the United States had failed to discharge its burden of proof because it had failed to show that the measures at issue were no more trade restrictive than required to achieve the EC appropriate level of sanitary protection. The European Communities claimed that its measures were applied in exactly the same way to all animals treated with these hormones and meat from such animals intended for consumption in the EC market, whatever its origin; there was consequently no discrimination nor disguised restriction on international trade. The European Communities did not submit arguments on TBT because it considered that the measures at issue fell with the SPS Agreement. The European Communities claimed that because the measures at issue did not violate any of the provisions of the SPS Agreement, they should be found also to be in conformity with the rules of GATT, in particular Article XX:b, in case a violation of one of its provisions were to be found.

TO CONTINUE WITH EC MEASURES ON MEAT - COMPLAINT BY THE U.S.


1 WT/DS48/6.

2 Other measures relevant to the dispute are contained in Directives 72/462/EEC, 81/602/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, EC 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.

7 Ibid.

8 Codex Alimentarius, Vol. 3 - 1995, 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.

13 Ibid.

14 GATT document TBT/M/Spec/7, p.9, para. 34.