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16 January 1998
EC Measures Concerning Meat and Meat Products (Hormones)
European Communities, Appellant/Appellee
United States, Appellant/Appellee
Australia, New Zealand and Norway, Third Participants
Feliciano, Presiding Member
I. Introduction: Statement of the Appeal
1. The European Communities, the United States and Canada appeal from certain issues of law and legal interpretations in the Panel Reports, EC Measures Concerning Meat and Meat Products (Hormones). 1 These two Panel Reports, circulated to Members of the World Trade Organization ("WTO") on 18 August 1997, were rendered by two Panels composed of the same three persons. 2 These Panel Reports are similar, but they are not identical in every respect. The Panel in the complaint brought by the United States was established by the Dispute Settlement Body (the "DSB") on 20 May 1996. On 16 October 1996, the DSB established the Panel in the complaint brought by Canada. The European Communities and Canada agreed, on 4 November 1996, that the composition of the latter Panel would be identical to the composition of the Panel established at the request of the United States.
2. The Panel dealt with a complaint against the European Communities relating to an EC prohibition of imports of meat and meat products derived from cattle to which either the natural hormones: oestradiol-17b , progesterone or testosterone, or the synthetic hormones: trenbolone acetate, zeranol or melengestrol acetate ("MGA"), had been administered for growth promotion purposes. This import prohibition was set forth in a series of Directives of the Council of Ministers that were enacted before 1 January 1995. Those Directives were:
1. Council Directive 81/602/EEC of 31 July 1981 ("Directive 81/602")3;
2. Council Directive 88/146/EEC of 7 March 1988 ("Directive 88/146")4; and
3. Council Directive 88/299/EEC of 17 May 1988 ("Directive 88/299").5
3. Directive 81/602 prohibited the administration to farm animals of substances having a hormonal action and of substances having a thyrostatic action. It also prohibited the placing on the European market of both domestically produced and imported meat and meat products derived from farm animals to which such substances had been administered. Two exceptions to this prohibition were provided for. One exception covered substances with an oestrogenic, androgenic or gestagenic action when used for therapeutic or zootechnical purposes and administered by a veterinarian or under a veterinarian's responsibility. The other exception related to three natural hormones (oestradiol - 17b , progesterone and testosterone) and two synthetic hormones (trenbolone acetate and zeranol) used for growth promotion purposes if allowed under the regulations of the Member States of the European Economic Community ("EEC"), until a detailed examination of the effects of these substances could be carried out and until the EEC could take a decision on the use of these substances for growth promotion. The sixth hormone involved in this appeal, MGA, was not included in the second exception; it was covered by the general prohibition concerning substances having a hormonal or thyrostatic action.
4. Seven years later6, Directive 88/146 was promulgated prohibiting the administration to farm animals of the synthetic hormones: trenbolone acetate and zeranol, for any purposes, as well as the administration of the natural hormones: oestradiol - 17b , progesterone and testosterone, for growth promotion or fattening purposes. This Directive permitted Member States of the EEC to authorize, under specified conditions, the use of the three natural hormones for therapeutic and zootechnical purposes. Directive 88/146 explicitly prohibited both the intra-EEC trade and the importation from third countries of meat and meat products obtained from animals to which substances having oestrogenic, androgenic, gestagenic or thyrostatic action had been administered. Trade in meat and meat products derived from animals treated with such substances for therapeutic or zootechnical purposes was allowed only under certain conditions. Those conditions were set out in Directive 88/299.
5. Effective as of 1 July 1997, Directives 81/602, 88/146 and 88/299 were repealed and replaced with Council Directive 96/22/EC of 29 April 1996 ("Directive 96/22"). 7 This Directive maintains the prohibition of the administration to farm animals of substances having a hormonal or thyrostatic action. As under the previously applicable Directives, it is prohibited to place on the market, or to import from third countries, meat and meat products from animals to which such substances, including the six hormones at issue in this dispute, were administered. This Directive also continues to allow Member States to authorize the administration, for therapeutic and zootechnical purposes, of certain substances having a hormonal or thyrostatic action. Under certain conditions, Directive 96/22 allows the placing on the market, and the importation from third countries, of meat and meat products from animals to which these substances have been administered for therapeutic and zootechnical purposes.
6. The Panel circulated its Reports to the Members of the WTO on 18 August 1997. The US Panel Report and the Canada Panel Report reached the same conclusions in paragraph 9.1:
(i) The European Communities, by maintaining sanitary measures which are not based on a risk assessment, has acted inconsistently with the requirements contained in Article 5.1 of the Agreement on the Application of Sanitary and Phytosanitary Measures.
(ii) The European Communities, by adopting arbitrary or unjustifiable distinctions in the levels of sanitary protection it considers to be appropriate in different situations which result in discrimination or a disguised restriction on international trade, has acted inconsistently with the requirement contained in Article 5.5 of the Agreement on the Application of Sanitary and Phytosanitary Measures.
(iii) The European Communities, by maintaining sanitary measures which are not based on existing international standards without justification under Article 3.3 of the Agreement on the Application of Sanitary and Phytosanitary Measures, has acted inconsistently with the requirements of Article 3.1 of that Agreement.
In both Reports, the Panel recommended in paragraph 9.2:
... that the Dispute Settlement Body requests the European Communities to bring its measures in dispute into conformity with its obligations under the Agreement on the Application of Sanitary and Phytosanitary Measures.
7. On 24 September 1997, the European Communities notified the DSB of its decision to appeal certain issues of law covered in the Panel Reports and certain legal interpretations developed by the Panel, pursuant to paragraph 4 of Article 16 of the Understanding on Rules and Procedures Governing the Settlement of Disputes (the "DSU"), and filed two notices of appeal 8 with the Appellate Body pursuant to Rule 20 of the Working Procedures for Appellate Review (the "Working Procedures"). Pursuant to Rule 21 of the Working Procedures, the European Communities filed an appellant's submission on 6 October 1997. On 9 October 1997, the United States and Canada filed appellants' submissions pursuant to Rule 23(1) of the Working Procedures. On 20 October 1997, the United States and Canada each filed an appellee's submission pursuant to Rule 22 of the Working Procedures and the European Communities filed its own appellee's submission pursuant to Rule 23(3) of the Working Procedures. On the same day, Australia, New Zealand and Norway filed separate third participants' submissions in accordance with Rule 24 of the Working Procedures.
8. The oral hearing was held on 4 and 5 November 1997. The participants and third participants presented oral arguments and responded to questions put to them by the Members of the Division hearing this appeal. The participants and third participants also gave oral concluding statements.
II. Arguments of the Participants and Third Participants
A. Claims of Error by the European Communities - Appellant
1. Burden of Proof
9. The European Communities argues that the Panel erred in its allocation of the burden of proof in this dispute in three respects. In the view of the European Communities, the Panel erred on the issue of burden of proof under the Agreement on the Application of Sanitary and Phytosanitary Measures (the "SPS Agreement") in general; in allocating the burden of proof under Article 3.3 of the SPS Agreement; and in allocating the burden of proof under Article 5.1 of the SPS Agreement.
10. In respect of the issue of burden of proof under the SPS Agreement in general, the European Communities argues that the Panel erred in finding that the burden of proof under the SPS Agreement rests on the Member imposing a measure. 9 According to the European Communities, none of the general considerations invoked by the Panel supports the view that special rules on the burden of proof should be applied in proceedings concerning the SPS Agreement.
11. As to the allocation of the burden of proof under Article 3.3 of the SPS Agreement, the European Communities disagrees with the Panel's finding that Article 3.3 constitutes an exception to the general obligation, contained in Article 3.1, to base measures on international standards, and that the burden of proof under Article 3.3 is therefore on the responding party. 10 The European Communities argues that the SPS Agreement expressly recognizes that a Member has the right to choose an appropriate level of sanitary and phytosanitary protection, and that Article 3.3 lays down specific conditions governing the exercise of that right in those cases where an international standard exists. According to the European Communities, Article 3.1 does not provide a "general obligation" to be read in isolation, but presents one of three options available to a Member when an international standard exists.
12. With regard to the burden of proof under Article 5.1 of the SPS Agreement, the European Communities opposes the Panel's finding that Canada and the United States had met their burden of presenting a prima facie case of inconsistency with Article 5.1, in respect of importation of meat treated with the MGA hormone. 11 The European Communities notes that Canada and the United States stated that they had conducted risk assessments and had authorized MGA for growth promotion, but refused to provide scientific evidence and information, claiming their studies were proprietary and confidential in nature. The European Communities believes that the Panel has fundamentally erred in law by condoning the refusals by Canada and the United States to submit all studies available.
2. Standard of Review
13. The European Communities claims that the Panel erred in law 12 by not according deference to the following aspects of the EC measures: first, the decision of the European Communities to set and apply a level of sanitary protection higher than that recommended by the Codex Alimentarius (the "Codex") for the risks arising from the use for growth promotion of the hormones in dispute; second, the EC's scientific assessment and management of the risk from the hormones at issue, and third, the EC's adherence to the precautionary principle and its aversion to accepting any increased carcinogenic risk.
14. It is submitted by the European Communities that WTO panels should adopt a deferential "reasonableness" standard when reviewing a Member's decision to adopt a particular science policy or a Member's determination that a particular inference from the available data is scientifically plausible. To the European Communities, the Panel in this case imposed its own assessment of the scientific evidence.
15. The European Communities asserts that GATT 1947 panel reports rejected a de novo standard of review in relation to fact-finding13, and that this approach has been maintained by panels established under the DSU. 14 It is contended that the "reasonable deference standard of review" has been given expression in the Marrakesh Agreement Establishing the World Trade Organization 15 (the "WTO Agreement") in Article 17.6 of the Agreement on Implementation of Article VI of the General Agreement on Tariffs and Trade 1994 (the "Anti-Dumping Agreement"). The European Communities considers that the principle of reasonable deference is applicable in all highly complex factual situations, including the assessment of the risks to human health arising from toxins and contaminants, and that therefore, the Panel applied an inappropriate standard of review in the present case.
3. The Precautionary Principle
16. The European Communities submits that the Panel erred in law in considering that the precautionary principle was only relevant for "provisional measures" under Article 5.7 of the SPS Agreement. 16 The precautionary principle is already, in the view of the European Communities, a general customary rule of international law or at least a general principle of law, the essence of which is that it applies not only in the management of a risk, but also in the assessment thereof. It is claimed that the Panel therefore erred in stating that the application of the precautionary principle "would not override the explicit wording in Articles 5.1 and 5.2 [of the SPS Agreement]", and in suggesting that that principle might be in conflict with those Articles. The European Communities asserts that Articles 5.1 and 5.2 and Annex A.4 of the SPS Agreement do not prescribe a particular type of risk assessment, but rather simply identify factors that need to be taken into account. Thus, these provisions do not prevent Members from being cautious when setting health standards in the face of conflicting scientific information and uncertainty.
4. Objective Assessment of the Facts
17. The European Communities argues that the Panel failed to make an objective assessment of the facts and therefore did not comply with its obligations under Article 11 of the DSU. The Panel, it is alleged, disregarded or distorted the evidence with regard to both the MGA and the other five hormones at issue supplied by the Panel's experts, as well as the scientific evidence presented by the European Communities. In support of this contention, the European Communities submits that the Panel has manifestly distorted the views of both Dr. Lucier 17 and Dr. André. 18 According to the European Communities, contrary to what the Panel found, the evidence provided to the Panel by the majority of its own scientific experts indicated that there was a real risk of adverse effects arising from the use of the hormones at issue. It is also claimed that the Panel manifestly distorted the scientific evidence by considering that the 1995 European Communities Scientific Conference on Growth Promotion in Meat Production (the "1995 EC Conference") amounted to a risk assessment in the sense of Articles 5.1 and 5.2. The distinction made by the Panel between general studies on the health risks associated with hormones and specific studies addressing the health risks of residues in food of hormones used for growth promotion purposes was, in the view of the European Communities, devised by the Panel for the sole purpose of enabling it to conclude that the Monographs of the International Agency for Research on Cancer ("IARC") 19 are not relevant as a risk assessment in this case. This, the European Communities asserts, amounts to a distortion of relevant scientific evidence. The European Communities also alleges that the Panel violated Article 11 of the DSU by discarding several articles and opinions of individual scientists invoked by the European Communities.
18. With regard to the problems relating to the control of the correct use of the hormones, the European Communities contends that it submitted convincing specific evidence to the Panel, but that the Panel either failed to take this evidence into account or failed to summarize it properly in the Panel Report. Finally, the Panel allegedly ignored the arguments made by the European Communities as to why the situations compared by the Panel under Article 5.5 were not comparable. In rejecting the six reasons advanced by the European Communities as to why the distinction in the levels of sanitary protection between carbadox and olaquindox, on the one hand, and the hormones at issue in this dispute, on the other, is not arbitrary or unjustifiable, the European Communities argues that the Panel failed to take into account the evidence before it.
Continue with EC Measures concerning meat and meat products (hormones)
1 Complaint by the United States, WT/DS26/R/USA, (the "US Panel Report") and Complaint by Canada, WT/DS48/R/CAN, (the "Canada Panel Report").
2 As the composition of both Panels was identical, we will refer to the Panels as "the Panel".
3 Official Journal, No. L 222, 7 August 1981, p. 32.
4 Official Journal, No. L 70, 16 March 1988, p. 16.
5 Official Journal, No. L 128, 21 May 1988, p. 36.
6 It should be noted that on 31 December 1985 the Council of Ministers adopted Directive 85/649/EEC prohibiting the use in livestock farming of certain substances having a hormonal action, Official Journal, No. L 382, 31 December 1985, p. 228. This Directive prohibited the use of all the hormones (except MGA, the use of which had been previously prohibited) for growth promotion purposes and established more detailed provisions concerning authorized therapeutic uses. This Directive was challenged in the Court of Justice of the European Communities, which annulled it on procedural grounds in its Judgment of 23 February 1988,  E.C.R. 855. Shortly afterwards, the European Commission submitted to the Council a proposal for a substantively identical Directive, which the Council adopted on 7 March 1988 as Directive 88/146/EEC.
7 Official Journal, No. L 125, 23 May 1996, p. 3.
8 WT/DS26/9, 25 September 1997, and WT/DS48/7, 25 September 1997.
9 US Panel Report, paras. 8.52-8.54; Canada Panel Report, paras. 8.55-8.57.
10 US Panel Report, para. 8.86; Canada Panel Report, para. 8.89.
11 US Panel Report, para. 8.253; Canada Panel Report, para. 8.256.
12 US Panel Report, paras. 8.124, 8.127, 8.133, 8.134, 8.145, 8.146, 8.194, 8.199, 8.213 and 8.255; Canada Panel Report, paras. 8.127, 8.130, 8.136, 8.137, 8.148, 8.149, 8.197, 8.202, 8.216 and 8.258.
13 The European Communities refers to: Panel Report, United States - Imposition of Anti-Dumping Duties on Imports of Fresh and Chilled Atlantic Salmon from Norway, adopted 27 April 1994, ADP/87; Panel Report, United States - Imposition of Countervailing Duties on Imports of Fresh and Chilled Atlantic Salmon from Norway, adopted 28 April 1994, SCM/153; Panel Report, Korea - Anti-Dumping Duties on Imports of Polyacetal Resins from the United States, adopted 27 April 1993, BISD 40S/205; Panel Report, United States - Measures Affecting Imports of Softwood Lumber from Canada, adopted 27-28 October 1993, BISD 40S/358, Panel Report, United States - Anti-Dumping Duties on Imports of Stainless Steel Plate from Sweden, ADP/117, 24 February 1994, unadopted; Panel Report, EC - Anti-Dumping Duties on Audio Tapes in Cassettes originating in Japan, ADP/136, 28 April 1995, unadopted; and Panel Report, United States - Imposition of Countervailing Duties on Certain Hot-rolled Lead and Bismuth Carbon Steel Products originating in France, Germany and the United Kingdom, SCM/185, 15 November 1994, unadopted.
14 The European Communities refers to: Panel Report, United States - Restrictions on Imports of Cotton and Man-made Fibre Underwear ("United States - Underwear"), adopted 25 February 1997, WT/DS24/R; Panel Report, United States - Measure Affecting Imports of Woven Wool Shirts and Blouses ("United States - Shirts and Blouses"), adopted 23 May 1997, WT/DS33/R.
15 Done at Marrakesh, Morocco, 15 April 1994.
16 US Panel Report, paras. 8.157 and 8.158; Canada Panel Report, paras. 8.160 and 8.161.
17 See, in particular, US Panel Report, footnote 331; Canada Panel Report, footnote 437.
18 See, in particular, US Panel Report, footnote 348; Canada Panel Report, footnote 455.
19 The 1987 Monographs of the IARC on the Evaluation of Carcinogenic Risks to Humans, Supplement 7 (the "1987 IARC Monographs").