AUSTRALIA - MEASURES AFFECTING IMPORTATION OF SALMON
Arbitration under Article 21.3 9c) of the
Understanding on Rules and Procedures
Governing the Settlement of Disputes
Award of the Arbitrator
Said El-Naggar
I. Introduction
1. On 6 November 1998, the Dispute Settlement Body (the "DSB")
adopted the Appellate Body Report 1 and the
Panel Report 2, as modified by the
Appellate Body Report, in Australia - Measures Affecting Importation of
Salmon. On 25 November 1998, Australia informed the DSB, pursuant to Article
21.3 of the Understanding on Rules and Procedures Governing the Settlement of
Disputes (the "DSU"), that it would implement the recommendations
and rulings of the DSB in this dispute and that, in doing so, it would be
"mindful" of the provisions of Article 3.5 of the DSU. Australia
indicated that it would require a reasonable period of time to complete the
implementation process.
2. By letter of 27 November 1998, Australia sought Canada's
agreement to a 15-month period as the "reasonable period of time" for
implementation. In a letter of 14 December 1998, Canada advised Australia that
it could not agree to this proposal. Pursuant to Article 21.3 of the DSU,
consultations between the parties were held on 30 November, and on 18 and 21
December 1998, but these did not produce agreement on a reasonable period of
time for the implementation process.
3. By communication of 24 December 1998, Canada requested that
the reasonable period of time be determined by binding arbitration, pursuant to
Article 21.3(c) of the DSU. By joint letter of 11 January 1999, the parties
informed the Director-General of the World Trade Organization (the "WTO")
that they had agreed that I should act as Arbitrator. The parties were informed,
by letter of 13 January 1999, that the Director-General had conveyed their
wishes to me and that I had accepted the appointment. Thereafter, by letter of
14 January 1999, the parties intimated to me that they had agreed to extend the
time-period for the arbitration process, fixed at 90 days by Article 21.3(c) of
the DSU, by a further 19 days, that is until 23 February 1999. Notwithstanding
this extension of the time-period for the arbitration process, the parties
stated that my award would be deemed to be an award made under Article 21.3(c)
of the DSU.
4. Written submissions were received from Australia and Canada
on 22 January 1999 and an oral hearing was held on 2 February 1999.
II. Arguments of the Parties
A. Australia
5. Australia argues that it is impracticable to comply
immediately with the relevant recommendations and rulings of the DSB, as
decisions on implementation require the fullfilment of certain processes in
accordance with Australia's legal system. In accordance with those processes,
Australia estimates that 15 months from the date of adoption of the Appellate
Body and Panel reports represent the shortest period possible for implementation
under Australia's legal system 3.
6. Australia rejects Canada's suggestion that the DSB's
recommendations and rulings can be implemented either by repealing or amending
the measure concerned or by granting an import permit under the Quarantine
Proclamation 1998 ("QP 1998"), which is the successor to Quarantine
Proclamation 86A ("QP86A"). Australia considers that the measure can
be brought into conformity with the Agreement on the Application of Sanitary
and Phytosanitary Measures (the "SPS Agreement") without
repeal or amendment since it does not contain an absolute ban. Rather, it allows
the Director of Quarantine to permit entry of otherwise prohibited products on
the basis of a risk assessment.
7. As regards Canada's suggestion that a permit be granted to
allow imports of Canadian salmon, Australia emphasizes that such a permit must
be based on a risk assessment conducted in accordance with procedures determined
by Government. Failure to respect those procedures may provide grounds for
review under the Administrative Decisions (Judicial Review) Act 1977 (the
"Judicial Review Act 1977").
8. According to Australia, implementation of the obligation
contained in Article 5.5 of the SPS Agreement could also not be achieved
by the introduction of measures on certain other aquatic products, comparable to
those currently applied on salmon, without risk assessments on those other
products.
9. Australia states that decisions on implementation will be
taken on the basis of generic risk assessments that have already commenced.
These assessments cover: non-viable salmonids, live ornamental finfish and
non-viable marine finfish. The measures adopted will be reflective of
Australia's obligations under Article 3.5 of the DSU and they may incorporate
measures differentiated by country of origin where that is justified by the risk
assessments, provided that such measures achieve Australia's appropriate level
of protection. It has been estimated that it will be possible to take decisions
on the basis of these risk assessment procedures by February 2000.
10. Australia emphasizes that, although it is required to bring
its measure into conformity, it is not necessarily required to introduce less
trade-restrictive measures. Members are afforded a measure of discretion in the
means chosen to implement, provided that the means are consistent with the
recommendations and rulings of the DSB, with the covered Agreements, and with
the provisions of Article 3.5 of the DSU. Australia's obligation is to ensure
that its measures are based on proper risk assessments and that measures
applicable to salmon and other relevant aquatic products do not result in
discrimination or a disguised restriction on trade.
11. The mandate of the arbitrator is solely to determine the
"reasonable period of time" for implementation. It does not entitle
him to suggest or determine ways or means of implementation. The guideline for
the arbitrator in determining that period is 15 months from the date of adoption
by the DSB of the Appellate Body and Panel Reports. However, this period may be
shorter or longer than 15 months, according to the "particular
circumstances" of the case. Australia considers that Canada has the burden
of proof insofar as it seeks to prove that there are "particular
circumstances" justifying a period of time shorter than 15 months. As
Australia has not proposed a period longer than 15 months, it is not required to
prove "particular circumstances" justifying a 15-month
period.
12. It has been the practice of arbitrators to interpret the
reasonable period of time as the shortest period possible, within the legal
system of the Member concerned, to effect implementation
4. But arbitrators are
not required to consider the shortest period of time within which the measure
can be withdrawn or modified, rather they should consider the shortest period of
time for implementation according to the means chosen. In this case,
implementation can be effected in a WTO-consistent manner without legislative
amendment. Within the framework of Australia's legal system, this means of
implementation will require a period of 15 months.
13. In that respect, Australia states that quarantine decisions
are adopted on the basis of delegated legal authority, in accordance with
Government decisions on the procedures applicable to the conduct of a risk
assessment process. The Quarantine Act 1908 constitutes the basic
framework for the exercise of quarantine authority. The Act provides for the
Governor-General to prohibit, by Proclamation, the importation into Australia
of, inter alia, animals or other articles likely to introduce disease.
The Governor-General may also empower the Director of Quarantine to permit the
import of otherwise prohibited "things". Proclamations by the
Governor-General are subordinate legislation. QP 1998, promulgated by the
Governor-General, provides the legal basis for the exercise of the Director of
Quarantine's powers to authorize the import of, inter alia, the fresh,
chilled or frozen salmon from Canada (the "salmon product at issue").
As noted, his decisions are subject to judicial review under the Judicial
Review Act 1977 and must, therefore, be based on the procedures determined
by the Government for the conduct of risk assessments.
14. These procedures are set down in The AQIS Import Risk
Analysis Process Handbook (the "AQIS Handbook")
5. This Handbook
details a series of steps to be taken in the course of an "Import Risk
Analysis" procedure. Some of the steps are allocated a specific time-period
for completion, but others are not. Those with a specified time-period are
generally concerned with public consultation periods and with appeals. A total
of 315 days is required for the completion of those steps. Clearly, the
remaining steps also require an appropriate time-period for completion. This is
estimated on a case-by-case basis by AQIS and the Risk Analysis Panel concerned.
15. Since the three risk assessment procedures that are relevant
to this dispute will be completed by February 2000, Australia requests that the
reasonable period of time for implementation be 15 months. Australia is not
seeking a 15-month period because that period of time is required to undertake
risk assessments, but because risk assessments are a necessary part of the
overall decision-making process and that process cannot be completed in less
than 15 months. This period does not exceed the "guideline" set down
in Article 21.3(c) of the DSU and Canada has the burden of proof in
demonstrating that there are "particular circumstances" justifying a
shorter period.
B. Canada
16. At the core of this arbitration is Australia’s contention
that the "reasonable period of time" should include the time to
conduct new risk assessments. Australia’s contention must be rejected, both
because it runs directly contrary to the ruling of the arbitrator in European
Communities - Hormones and because it is manifestly unreasonable for the
effective functioning of both the SPS Agreement and the dispute
settlement system.
17. Like the present case, the measure at issue in European
Communities - Hormones was found to be inconsistent with Article 5.1 of the SPS
Agreement because it was not based on a risk assessment. The European
Communities sought to have the time needed to conduct a risk assessment included
in the reasonable period of time for implementation. The arbitrator stated that
the time needed to conduct scientific studies or to consult with experts had no
relevance in determining the appropriate duration of the reasonable period of
time 6. Thus, according to Canada, Australia is seeking allowances for
considerations that have been found to be irrelevant to the task confronting the
Arbitrator.
18. Canada considers that Australia wishes to carry out the new
risk assessments in order to provide the scientific evidence necessary to
demonstrate the consistency of a measure already judged to be inconsistent with
the SPS Agreement. This approach was rejected by the arbitrator in European
Communities - Hormones 7. Canada emphasizes that although the measure at issue
was adopted 24 years ago and should have been consistent with the SPS
Agreement as from 1 January 1995, Australia has never been able to provide
credible evidence to support it. Indeed, there are several risk assessment
studies that conclude that fresh, chilled or frozen salmon from Canada can be
imported with negligible risk. 8
19. In Canada's view, by seeking to include in the reasonable
period the time required to conduct a further risk assessment on salmonids,
Australia is, in effect, claiming the benefit of Article 5.7 of the SPS
Agreement through the guise of implementing the DSB’s recommendations and
rulings. In addition, by seeking to include the time to do risk assessments on
non-salmonid species, Australia is attempting to win through the implementation
process that which it was denied by the Panel: a delay in removing or modifying
the measure's inconsistency with Article 5.5.
20. To take account of the time needed to do new risk assessments
would invite abuse of Articles 5.1 and 5.5 of the SPS Agreement. Findings
of inconsistency with either provision would have little or no consequence. A
Member could adopt a measure inconsistent with those provisions secure in the
knowledge that, even if the measure were found to be inconsistent with the SPS
Agreement, the Member would then be granted time to conduct risk
assessments. Furthermore, the Member might then claim that such risk assessments
demonstrated the consistency of the original measure. Such an approach would
deprive Articles 5.1 and 5.5 of the SPS Agreement of virtually all their
effect.
21. Canada, therefore, submits that it would be manifestly
unreasonable to allow Australia to include in the reasonable period of time the
time needed to do new risk assessments.
22. In seeking a 15-month period for implementation, Australia
appears to concede that, however else implementation might be accomplished, it
can be achieved in 15 months by a decision of the Director of Quarantine. As
this 15-month period includes the time to conduct new risk assessments, which in
Canada’s view are not related to implementation, Australia is implicitly
conceding that the Director of Quarantine could make the necessary
determinations well within 15 months.
23. Canada recalls that, in European Communities - Hormones,
the arbitrator found that:
Read in context, it is clear that the reasonable
period of time, as determined under Article 21.3(c), should be the
shortest period possible within the legal system of the Member to
implement the recommendations and rulings of the DSB
9.
24. Furthermore, the arbitrator in European Communities -
Hormones also stated that where implementation could be accomplished by
"administrative means, the reasonable period of time should be considerably
shorter than 15 months." 10
In Canada's opinion, the process involved in
bringing the impugned measure into conformity with Australia's obligations under
the SPS Agreement is an administrative, not legislative, process. It can,
therefore, be effected in much less than 15 months.
25. To the best of Canada's knowledge, Australian law
provides no time limits for administrative determinations by the Director of
Quarantine since the procedures set out in the AQIS Handbook are merely policy
guidelines and are not legally binding. Canada maintains that AQIS's choice of
policy should not adversely affect Canada in terms of what constitutes a
reasonable period of time for implementation.
26. Canada believes that, on the basis of the ample evidence
already before Australia and in view of the absence of scientific justification
for the measure, there is no reason why Australia should not bring its measure
into compliance expeditiously, through the most direct means available: an
administrative decision by the Director of Quarantine allowing the importation
of fresh, chilled or frozen Canadian salmon.
III. The Reasonable Period of Time
27. My mandate in this arbitration is governed by Article 21.3(c)
of the DSU. It provides that when the "reasonable period of time" is
determined through arbitration:
… a guideline for the arbitrator should be that the
reasonable period of time to implement panel or Appellate Body
recommendations should not exceed 15 months from the date of adoption of
a panel or Appellate Body report. However, that time may be shorter or
longer, depending upon the particular circumstances.
28. The precise meaning of this provision becomes clear when it
is read in its context. Paragraph 1 of Article 21 provides:
Prompt compliance with recommendations or rulings of
the DSB is essential in order to ensure effective resolution of disputes
to the benefit of all Members.
29. It should also be noted that the second sentence of paragraph
3 of Article 21 stipulates that the Member concerned shall have a reasonable
period of time "[i]f it is impracticable to comply immediately with the
recommendations and rulings" of the DSB. Article 3.7 of the DSU explains
what is meant by immediate compliance:
A solution mutually acceptable to the parties to a
dispute and consistent with the covered agreements is clearly to be
preferred. In the absence of a mutually agreed solution, the first
objective of the dispute settlement mechanism is usually to secure the
withdrawal of the measures concerned if these are found to be
inconsistent with the provisions of any of the covered agreements.
The provision of compensation should be resorted to only if the immediate
withdrawal of the measure is impracticable and as a temporary
measure pending the withdrawal of the measure which is inconsistent with
a covered agreement. (emphasis added)
30. Taken together, these provisions clearly define the rights
and obligations of the Member concerned with respect to the implementation of
the recommendations and rulings of the DSB. In the absence of a mutually agreed
solution, the first objective is usually the immediate withdrawal of the
measure judged to be inconsistent with any of the covered agreements. Only if it
is impracticable to do so, is the Member concerned entitled to a reasonable
period of time for implementation. When the reasonable period of time is
determined through arbitration, the guideline for the arbitrator is that it
should not exceed 15 months from the date of adoption of the panel and/or
Appellate Body reports. This does not mean, however, that the arbitrator is
obliged to grant 15 months in all cases. The reasonable period of time may be
shorter or longer, depending upon the particular circumstances.
31. A certain difficulty arises in this case because of the
divergent views of the parties as to what constitutes implementation. According
to Australia, implementation of the recommendations and rulings of the DSB in
casu involves conducting risk assessments, not only with respect to the
salmon product at issue, but also with respect to non-salmonid products. In
Australia's opinion, the "reasonable period of time" should be such as
to enable it to conduct those risk assessments since they will form the basis of
the decisions on implementation. Australia argued, both in its written
submission and in its oral statement, that the outcome of the risk assessments
currently being conducted cannot be prejudged. Implementation could well result
in the continuation of the import prohibition on the salmon product at issue or
in the admission, with or without conditions, of that product into the
Australian market. It all depends, in the view of Australia, upon the outcome of
the risk assessments.
32. Canada does not share Australia's view on the meaning of
implementation of the recommendations and rulings of the DSB. According to
Canada, whether or not Australia wishes to carry out studies or risk
assessments, the conduct of such studies does not constitute implementation of
the recommendations and rulings of the DSB and cannot be included in the
calculation of the reasonable period of time. There is no reason, Canada argues,
why Australia should not bring its measure into compliance expeditiously through
the most direct means available, i.e., an administrative decision by the
Director of Quarantine allowing the importation of fresh, chilled or frozen
Canadian salmon.
33. Clearly, what constitutes a "reasonable period of
time" depends upon the action which Australia takes under its legal system
to implement the recommendations and rulings of the DSB. If implementation is
effected by means of an administrative decision to repeal or modify the measure
at issue or by means of a permit granted by the Director of Quarantine, the
length of time needed to carry out such a process would be different from what
it would be if Australia were to conduct a series of risk assessments.
34. I believe it is necessary to recall the findings and
conclusions of the Appellate Body 11
and of the Panel 12
, as modified by the Appellate
Body, which are the subject of the recommendations and rulings of the DSB. The
relevant aspects may be summarized as follows:
a) the SPS measure at issue in this dispute is the
import prohibition on fresh, chilled or frozen salmon set forth in QP
86A (now QP 1998), as confirmed by the 1996 Decision;
b) by maintaining without a proper risk assessment, or
without risk assessment, an import prohibition on fresh, chilled or
frozen salmon from Canada, Australia has acted inconsistently with
Article 5.1 and, by implication, Article 2.2 of the SPS Agreement;
c) by maintaining the measure at issue, Australia has
acted inconsistently with its obligations under Article 5.5 and, by
implication, Article 2.3 of the SPS Agreement.
35. I am mindful of the limits of my mandate in this arbitration.
I am particularly aware that suggesting ways and means of implementation is not
part of my mandate and that my task is confined to the determination of the
"reasonable period of time". Choosing the means of implementation is,
and should be, the prerogative of the implementing Member. In the words of the
arbitrator in European Communities - Hormones:
… An implementing Member … has a measure of
discretion in choosing the means of implementation, as long as
the means chosen are consistent with the recommendations and rulings of
the DSB and with the covered agreements13
. (emphasis in original)
However, he also said:
… It would not be in keeping with the requirement
of prompt compliance to include in the reasonable period of time,
time to conduct studies or to consult experts to demonstrate the consistency
of a measure already judged to be inconsistent. That cannot be
considered as "particular circumstances" justifying a longer
period than the guideline suggested in Article 21.3(c). This is not to
say that the commissioning of scientific studies or consultations with
experts cannot form part of a domestic implementation process in
a particular case. However, such considerations are not pertinent to the
determination of the reasonable period of time14
. (emphasis in original)
36. The Appellate Body was unequivocal in its conclusion that the
measure in dispute is the import prohibition on Canadian fresh, chilled or
frozen salmon, contained in QP 86A and confirmed by the 1996 Decision. It was
equally unequivocal in its findings that such an import prohibition is
inconsistent with Articles 5.1, 2.2, 5.5 and 2.3 of the SPS Agreement.
Given these findings and conclusions, it is difficult, indeed, to accept the
view that, in the determination of the reasonable period of time, account should
be taken of the time needed to conduct risk assessments to demonstrate the
consistency of the import prohibition already found to be inconsistent with the
provisions of the SPS Agreement.
37. I turn now to the issue of the "reasonable period of
time" in the case at hand. As mentioned before, Australia considers 15
months to be the minimum period for implementation in accordance with Australian
law. Canada, on the other hand, holds the view that Australia can implement the
recommendations and rulings of the DSB in much less than 15 months. Australia
maintains that the burden of proof falls on Canada to demonstrate that there are
"particular circumstances" justifying a shorter period than the
guideline of 15 months. Australia also maintains that, as it has not proposed a
period longer than 15 months, it is not required to prove "particular
circumstances" justifying a 15-month
period.
38. It has been pointed out that the arbitrator is not obliged to
grant 15 months as the reasonable period for implementation in all cases.
"Particular circumstances" justifying a longer or shorter period must
be taken into account on a case-by-case basis. In the present case, there are
certain considerations which persuade me that the reasonable period of time
should be significantly less than 15 months. In the first place, Australia's
request for 15 months was based on the assumption that a good part, if not most,
of that period would be used to conduct a number of risk assessments. In its
written submission, Australia points out that the AQIS Handbook details a series
of steps to be taken in the course of an Import Risk Analysis procedure under
Australian law. Some of the steps are allocated a specific time-period, but
others are not. A total of 315 days, i.e., 10½ months, is required for the
completion of the time-bound steps for scientific studies under the procedures
of the AQIS Handbook 15
. Since I have concluded that conducting risk assessments is
not pertinent to the determination of the reasonable period of time, it follows
that the reasonable period in this case should be considerably less than 15
months. In the second place, both parties agree with the arbitrator in European
Communities - Hormones that the reasonable period of time, as determined
under Article 21.3(c), should be the shortest period possible within the legal
system of the Member to implement the recommendations and rulings of the DSB
16
.
Both parties also agree that the process involved in bringing the measure in
dispute into conformity with Australia's obligations under the SPS Agreement is
an administrative, not a legislative, process. As pointed out by the arbitrator
in European Communities - Hormones, when implementation can be effected
by administrative means, the reasonable period of time should be
"considerably shorter than 15 months 17
."
IV. The Award
39. In light of the above considerations, I determine that the
reasonable period of time for Australia to implement the recommendations and
rulings of the DSB in this case is eight months from the date of adoption
of the Appellate Body and Panel Reports by the DSB, i.e. eight months from 6
November 1998.
Signed in the original at Geneva this 11th day of February
1999 by:
______________________
Said El-Naggar
1 Australia - Measures
Affecting Importation of Salmon, WT/DS18/AB/R, adopted 6 November 1998.
2 Australia - Measures
Affecting Importation of Salmon, WT/DS18/R, adopted 6 November 1998.
3 Australia's written
submission, para 3.
4 Award of the
Arbitrator under Article 21.3 (c) of the DSU, EC Measures Concerning Meat and Meat Products
(Hormones) (European Communities - Hormones"), WT/DS26/15, WT/DS48/13, 29 May 1998, para. 26 and Award
of the Arbitrator under Article 21.3 (c) of the DSU, Indonesia - Certain Measures Affecting
the Automobile Industry ("Indonesia - Autos"), WT/DS54/15, WT/DS55/14, WT/DS59/13, WT/DS64/12
7 December 1998, para. 22.
5 Australia's written submission,
Exhibit A. AQIS is an acronym for Australian Quarantine and Inspection Service.
6 European Communities -
Hormones, supra, footnote 4, para. 39.
7 Ibid.
8 New Zealand, The Risk
of Introducing Exotic Diseases of Fish into New Zealand Through the Importation of ocean-Caught
pacific Salmon from Canada, prepared by Stuart C. MacDiarmid (September 1994); and M. Stone, S.
MacDiarmid and H. Pharo, Import Health Risk Analysis: salmonids for Human Consumption (New Zealand:
Ministry of Agriculture Regulatory Authority, 1997); D. Vose, Quantitative
analysis of the
risk of establishment of Aeromonas salmonicida and Renibacterium salmoninarum in Australia
as a result of importing Canadian ocean-caught salmon.
9 Supra, footnote 4,
para. 26, cited with approval by the Arbitrator in Indonesia - Autos, supra, footnote 4 para. 22.
10 Supra, footnote 4,
para. 25.
11Supra, footnote 1.
12 Supra, footnote 2.
13 Supra, footnote 4,
para. 38.
14 Ibid., para. 39.
15 Australia's written submission,
para. 51.
16 European Communities
- Hormones, supra, footnote 4, para. 26.
17 European Communities
- Hormones, supra, footnote 4, para. 25.
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