IV.259 The natural hormones were not ranked by the CES system as they did not leave detectable residues in food and did not present any risk to human health. Canada presented the CES ranking of various veterinary drugs,²¹² and claimed that it illustrated that the natural and synthetic hormones were safer than several veterinary drugs commonly used for animal production in the European Communities.

IV.260 The European Communities noted that the basic provisions in EC law which regulated the additives in feedingstuffs was Council Directive 70/524/EEC,²¹³ as subsequently amended several times. There were in general three types of additives which might be used by the EC member States in feedingstuffs: antibiotics, growth promoters, coccidiostats and other medicinal substances. Before any of the three types of additives might be used, an authorization had to be granted by the Commission after consulting the Standing Committee for Feedingstuffs. There were two types of authorization:

(i) definitive authorization, in which case the additive was placed in Annex I of the directive and might be used in all the EC member States in accordance with the conditions fixed in the authorization; and


(ii) provisional authorization, in which case the additive was placed in Annex II of the Directive. A provisional authorization was valid for a maximum period of five years.

IV.261 he main conditions for including a substance in Annex I required that:

(i) the substance must have a favourable effect on the characteristics of those feedingstuffs or on livestock production;


(ii) at the level permitted in feedingstuffs, it did not adversely affect human or animal health or the environment, nor harm the consumer by altering the characteristics of livestock products;


(iii) its presence in feedingstuffs could be controlled;


(iv) at the level permitted in feedingstuffs, treatment or prevention of animal disease was excluded.²¹⁴

IV.262 For the issuance of an authorization to place an additive in Annex I or II, a monograph must be drawn up, indicating the identification process or the criteria for the identification and characterization of the additive, particularly its composition and degree of purity and its physico-chemical and biological properties, taking account of scientific and technical knowledge (Article 8:1). The fact that a substance was placed in Annex I or Annex II did not necessarily mean that it was used automatically in all EC member States; EC member States were free to decide which of those substances to use in feedingstuffs in their territory.

IV.263 The principle in EC law for all substances permitted as additives in feedingstuffs was that there should be no residues of these substances in meat for human consumption.²¹⁵ The principle of no residues was achieved with the imposition, if necessary, of appropriate withdrawal periods, as was the case notably for growth-promoting additives, coccidiostats and other medicinal substances. However, when a particular substance was used also as veterinary medicinal product (i.e. substances administered to food producing animals for medical treatment), the MRLs established in the latter case were also applicable when the substances were used also as additives in feedingstuffs. Council Regulation (EEC) 2377/90 of 26 June 1990,²¹⁶ laid down the MRLs for veterinary medicinal products which were used in foodstuffs of animal origin. The absence of MRLs for additives in feedingstuffs was explained by the fact that the substances were used in such small quantities and were little absorbed so that they left practically no residues in meat destined for human consumption. However, in order to harmonize entirely the legislation within the European Communities, the European Commission would shortly propose an amendment to Directive 70/524/EEC, which would require MRLs also for additives before granting an authorization.

IV.264 The European Communities stressed that only two growth promoting substances could be used: carbadox and olaquindox (Annex I (J) of Directive 70/524/EEC).²¹⁷ However, certain EC member States had asked the European Commission to review the authorizations of carbadox and olaquindox, and the Commission had agreed, before the Council of Ministers on 26 February 1996, and on 17 December 1996 to review both of these substances shortly after avoparcin, ronidazole and dimetridazole (possibly in the course of 1997). Carbadox, olaquindox and avoparcin had already been examined and reviewed recently in the SCAN committee and the authorization for avoparcin had already been withdrawn.

IV.265 The European Communities added that at EC level there were 10 antibiotics which were allowed to be used as additives in feedingstuffs in the EC member States and which might also function as growth-promoters because they stabilized the flora and reduced the pathogenic micro-organisms in the animals and induced a higher feed efficiency and growth rate. Most, if not all, of these substances were also allowed to be used in Canada for nutritional uses (growth promotion). Canada allowed more substances than the European Communities to be used as antibiotics and as coccidiostats in feedingstuffs (only 21 coccidiostats were permitted in the European Communities).

IV.266 The European Communities explained that monesin was permitted to be used as an antibiotic in bovines and as coccidiostat in poultry, in which case a withdrawal period of 3 days was required. As an ionophore, it was assumed to have a certain degree of toxicity (headaches, nausea, nosebleeds, skin rashes). But monesin was not genotoxic nor mutagenic. When used as an additive in feedingstuffs, no MRLs were established, as explained above (Directive 70/524). The dosage of monesin authorized as an additive had been evaluated five times. It was concluded that its availability as a prepared feedingstuff, the dosage permitted and the withdrawal periods fixed eliminated the risks of residues in meat destined for human consumption. Monesin was allowed to be used in Canada for nutritional purposes and the prevention of coccidiosis. Avoparcin was currently allowed to be used as an antibiotic in feedingstuffs. It was not carcinogenic, but it was thought to pose risks because of the development of antibiotic-resistant bacteria which could possibly transfer to humans. Since it was used as a feedingstuff only, there no MRL was fixed. The Commission was in the process of withdrawing its authorization, in accordance with the opinion of the SCAN. Benzylpenicillin was an antibiotic substance used mainly against gram-negative bacteria. It was one of the longest-used antibiotics. Penicillins had a very low toxicity in terms of direct effects. In connection with therapeutic use, hypersensitivity reactions were by far the most commonly encountered side effects. The small amounts of penicillin which may be present in food products of animal origin were not able to sensitize humans. For these reasons, benzylpenicillin was included in Annex I of Regulation 2377/90 for all food producing species. An MRL of 50 mg/kg had been established. Ivermectin was an anthelmintic used against various parasites. Its scientific evaluation had shown that it was neither carcinogenic nor mutagenic. It was included in Annex I of Regulation 2377/90 for all food producing animals. MRLs of 100 mg/kg of bovine liver, 40 mg/kg of bovine fat, 15 mg/kg of ovine liver, 20 mg/kg of porcine fat had been established. Although for monesin, carbadox, olaquindox and avoparcin, there were no MRLs, the European Commission would soon propose MRLs for feed additives. As feed additives, no veterinary control for their use was required.

IV.267 With regard to benzylpenicillin and ivermectin, the European Communities argued that a prescription by a veterinarian was required in order to avoid risks to consumers of foodstuffs obtained from the treated animals. If in some EC member States no prescription was effectively required, this was not in conformity with the provisions of this Directive. The European Commission had already requested the relevant information from all the EC member States. For the moment not all had replied, but the situation of those which had replied showed that in Germany and Denmark neither of these two substances could be obtained without prescription. A prescription was also required in France. In the Netherlands, benzylpenicillin was subject to veterinarian prescription. The Commission had information which showed that in Ireland only benzylpenicillin was available without prescription, and only to farmers organisations carrying out a special programme for the prevention of mastitis in cows. This programme was carried out under veterinary supervision and applied to a limited number of animals.²¹⁸

IV.268 The European Communities explained that the measures which EC member States must put in place to ensure that the MRLs for benzylpenicillin and ivermectin were not exceeded. Council Directive 86/469/EEC harmonised controls on residues in live animals (bovines, pigs, sheep, goats and horses) and fresh meat, both of the European Communities and third countries which exported meat to the European Communities. It supplemented Directive 85/358/EEC which set out the rules on the detection and monitoring of substances having a hormonal or thyrostatic action. The aim was to examine animals, their tissues and biological material and fresh meat for the presence of residues of substances having a pharmacological action or of conversion products and other substances transmitted to meat which were likely to be dangerous to human health. The EC member States were allowed to control for residues of any substance which might pose a danger to human or animal health.

IV.269 The substances and residues to be checked were defined in Annex I of Directive 86/469/EEC. The substances were divided into different groups or sub-groups according to their chemical or pharmacological action. The minimum sampling levels and frequency were also defined in Annex II of the Directive. The samples had to be taken from live animals at farm level or at the slaughterhouse before slaughtering, and from carcasses at slaughterhouse level. A monitoring plan taking into account the specific situation of each EC member State and setting out the national measures to be taken had to be submitted every year to the European Commission (Articles 3 and 4). The Commission examined the plans presented by the EC member States in order to determine wether they conformed to the provisions laid down in Directive 86/469/EEC. These plans were updated each year in the light of experience. For example, on the basis of positive results recorded during a previous year, search for new substances, improvements gained in laboratory techniques, etc. Official samples were examined in approved laboratories for residues (Article 8). National Reference Laboratories coordinated standards and methods of analysis for each group of residues, as defined in the Annex I of the Directive. Four EC Reference Laboratories were designated to help the Commission and the National Reference Laboratories (NRL) to improve the harmonization of the methods of analysis and the quality of the work of each NRL. In case an official sample revealed the presence of residues of prohibited substances, or quantities of authorized substances exceeding EC or stricter national MRLs, the competent authorities of the EC member States must undertake investigations at the farm of origin without delay, and launch an inquiry into the origin of the substances concerned, as necessary, at the levels of manufacture, handling, storage, transport, administration, distribution or sale. Positive animals (for prohibited substances) were banned from human and animal consumption and additional monitoring took place on the farms of such animals. In the case of authorized substances, meat in which the presence of residues in excess of the MRLs was confirmed was excluded from human consumption. All the necessary administrative and penal sanctions had to be taken by competent authorities to ensure that these requirements were strictly observed.

IV.270 As regarded imports from third countries, the admission or retention on the list of third countries which were authorized to export animals or meat of animals for human consumption to the European Communities was subject to the submission by the third country concerned of an annual plan detailing of the guarantees for the checking of residues. The effect of these guarantees must be at least equivalent to that resulting from the guarantees provided for in Directive 86/469/EEC. The third country plans were approved by the European Commission in accordance with the opinion of the Standing Veterinary Committee. The annual plans of 25 third countries had currently been approved, and these countries exported meat which respected the MRL requirements of the European Communities, where they existed. In addition, those countries which allowed the use of hormones for growth promotion for their domestic production had all concluded arrangements with the European Communities to ensure that the meat exported to the European Communities was produced without hormones for growth promotion.

IV.271 In general, the system of surveillance now in force has been maintained under the new Directive 96/23/EC, which would enter into force on 1 July 1997. However, the new Directive clarified and improved the procedures for the detection of residues. It required that controls should be based primarily on targeted and unannounced inspections, with less emphasis on the present system of random sampling. Under the new Directive, the monitoring plans had to be extended to poultry meat, fish, milk, and some other products (rabbit and game meat, honey eggs). More flexibility was given to sampling plans, according to the specific problems of each EC member State. The new Directive would improve harmonisation of methods of analysis, for both routine and reference methods. It would extend the competence of the four EC Reference Laboratories to products other than meat, and to other types of residues not yet covered by the current residues Directives. Directive 96/23/EC would establish clearly the responsibilities of each operator and would strengthen the sanctions against the farmers and the operators (veterinarians, pharmacists, slaughterhouses, etc.) in case of detection of residues of prohibited substances or residues of authorized but illegally used substances. Serious financial and administrative sanctions would be imposed in case of fraud, without prejudice to possible penal sanctions taken by the competent authorities of the EC member States. The new Directive would also improve transparency on control results since it required their annual publication and as well as the publication of a European Commission report to the Council and to the European Parliament concerning the situation of residues control in the European Communities.

IV.272 Canada recalled that paragraph 5 of Annex A defined appropriate level of sanitary and phytosanitary protection as "[t]he level of protection deemed appropriate by the Member establishing a sanitary or phytosanitary measure to protect human, animal or plant life or health within its territory" and observed that Article 5.5 of the SPS Agreement limited this choice of an appropriate level of protection by requiring that arbitrary and unjustifiable distinctions in the level of protection considered appropriate in different situations must not result in discrimination, or a disguised restriction on international trade.²¹⁹ The European Communities maintained that it was highly risk averse, and that its prohibition on the use of hormones for growth promotion, including the six hormones at issue, was necessary to achieve its high level of sanitary protection. However, as Canada had just demonstrated, EC measures governing the use of other growth promoters and veterinary drugs revealed that a significantly lower level of protection was considered appropriate for the risks to human health posed by those substances. The six hormones in question were as safe as, or safer than, growth promoters commonly used in the European Communities. Moreover, they were demonstrably safer than veterinary drugs that were commonly used in the European Communities.

IV.273 Canada submitted that antimicrobial growth promoters distributed as feed additives posed no less risk to human health than the six hormones at issue. Three antimicrobial growth promoters authorized for use in the European Communities were particularly noteworthy: carbadox was known to be both mutagenic and carcinogenic; olaquindox was mutagenic; and there was scientific evidence indicating that the use of avoparcin as a feed additive presented a serious risk to human health because it might lead to the development of vancomycin-resistant strains of bacteria. Yet the EC measures governing the use of feed additives were substantially less restrictive than the complete ban on the use of the six growth promoting hormones for growth promotion purposes. Growth promoters and coccidiostats regulated under the EC Feed Additives Directives could be administered by producers without the supervision of veterinarians, and were not subject to the authorization procedures and MRL requirements set out in the MRLs Regulation or the residues monitoring requirements established under Residues Directives. Canada argued that given that these substances posed no less a risk than that posed by the six growth promoting hormones, it followed that these less restrictive measures could not possibly attain the same level of protection that purportedly lay behind the prohibition on the use of the six hormones for growth promotion purposes. This would be the case even if these substances were subject to MRL requirements and residue monitoring requirements. It was apparent that the EC level of sanitary protection for growth promoting hormones was significantly higher than the level for antimicrobial growth promoters.

IV.274 Furthermore, Canada claimed that many veterinary drugs used for therapeutic purposes and governed by the Veterinary Medicines Directives posed demonstrably greater risks to human health when compared to the six hormones.²²⁰ While veterinary drugs were subject to the authorization procedures and MRL requirements of the MRLs Regulation and the residues monitoring requirements of Residues Directives, under the laws of EC member States some of these substances, such as benzylpenicillin and ivermectin, might be administered by farmers without prescription or the supervision of a veterinarian. Farmers might even administer prescribed veterinary drugs without the veterinarian even seeing the animals being treated. Canada claimed that these less restrictive measures could not possibly attain the same level of protection that purportedly lay behind the prohibition on the use of the six hormones for growth promotion purposes. It was again apparent that the EC level of sanitary protection for growth promotion hormones was significantly higher than the level for other veterinary drugs commonly used in the European Communities.

IV.275 Canada argued that these marked distinctions in levels of protection were arbitrary and unjustifiable, and resulted in discrimination and a disguised restriction on international trade.²²¹ Canadian beef from cattle treated with the six hormones for growth promotion purposes posed no greater risk to EC consumers than EC beef treated with anti-microbial growth promoters or other veterinary drugs. The prohibition on imports of beef from cattle treated with the six hormones for growth promotion discriminated against Canadian beef imports, and constituted an unwarranted restriction of this trade in the guise of a sanitary measure. Canada claimed, therefore, that the EC measures were contrary to Article 5.5.

IV.276 The European Communities responded that there was nothing in the text of the contested measures, the legislative history or in any other document to suggest that the purpose for which the measures were adopted was to protect EC production of meat from foreign competition. It was incorrect to conclude that because the European Communities did not, in this case, follow the voluntary MRLs suggested by Codex on the five hormones and because it applied different levels of protection for totally different substances which posed entirely different types of risks to human and animal health, the European Communities must be considered to have violated its obligations under the SPS Agreement. Canada had failed to establish that, in the face of the overwhelming scientific evidence that the use of hormones for animal growth promotion was potentially very dangerous to public and animal health, there were other type of measures which, while significantly less restrictive of trade, were capable of ensuring that the level of protection which the European Communities had chosen in this case (no residue of hormones in animals and meat) could be effectively achieved. Conversely, the European Communities had gone through that exercise in 1984 and recently in April 1996 and had decided that the prohibition on use of these hormones in animal growth promotion was the only measure reasonably available and less restrictive of trade. The European Communities argued that Canada compared things which were not comparable, because the premises on which they were based were different, and that Canada confused the notions of "risk", "appropriate level of protection", and "measures applied to achieve that level of protection".

IV.277 The European Communities insisted that under the SPS Agreement, each Member had the right to set its level of sanitary protection where and how it chose. The only (minimal) disciplines imposed by the SPS Agreement in respect of the level of protection were in Articles 5.4 and 5.5, as follows:

(i) Members should take into account the objective of minimizing negative trade effects (Article 5.4) (emphasis added).


(ii) With the objective of achieving consistency in the application of the concept of appropriate level of protection, Members shall avoid arbitrary or unjustified distinctions in the levels they consider to be appropriate in different situations, if such distinctions result in discrimination or a disguised restriction on international trade (Article 5.5) (emphasis added).

IV.278 The European Communities argued that because there might often be a range of sanitary or phytosanitary measures available to achieve the same level of protection, the measures employed by various Members might differ even where they were designed to achieve the same level of protection. Differences in the type of measures applied might, however, restrict trade without providing any additional protection to human, animal or plant life or health. The European Communities contended that it was for this purpose that Article 5.5 contained the notion of consistency. Article 5.5 did not require Members to achieve consistency between the level of protection which they choose against different hazards to human, animal and plant life and health, but only required consistency in terms of avoiding arbitrary or unjustifiable distinctions in applying the chosen level of protection, and then only if such distinctions resulted in discrimination or a disguised restriction on trade. It could not be interpreted as requiring consistency in setting or deciding the level of protection. This interpretation was consistent with the preamble of the SPS Agreement, which stated that the harmonization of SPS measures did not require Members to change their appropriate level of protection.

IV.279 The European Communities noted that the text of Article 5.5 did not go further in defining consistency. Consistency was not harmony with past performance, particularly in the context of the SPS Agreement, where new diseases might be emerging and new technologies emerging to deal with old diseases. The definition of consistency which best fit the intention of the SPS Agreement was "constant adherence to the same principles of thought or action".²²² This constant adherence had to be applied to the same substances, which posed the same type of risk under same conditions of use. The European Communities argued that in the context of the SPS Agreement, the factual and legal situation currently existing in Members regarding regulation of dangerous substances should also be taken into account. Consistency was a dynamic process evolving with technology, new risk assessment and the confines of regulatory policies which required years to review existing authorizations of dangerous substances. To infer lack of consistency on 1 January 1995 from the complex situation that existed before the entry into force of the Agreement was to disregard the letter of Article 5.5, to ignore the practical situation in almost all Members and to threaten the credibility of the SPS Agreement.

IV.280 The European Communities argued that it was because of this reality that the negotiators had adopted the reasonable approach of developing guidelines "to further practical implementation of this provision" envisaged in Article 5.5. In the European Communities' view, this in itself was indicative of the absence of a consensus on the implications of the provision at the time the Agreement was negotiated and signed. Therefore, the text of paragraph 5 clarified that the concept of consistency was only an objective to be achieved in the application of the appropriate level of sanitary or phytosanitary protection against risks to human, animal or plant life or health. This could also be seen from the drafting history of this provision. On 13 June 1995, the WTO Secretariat had circulated a note²²³ on the drafting history of the provision on consistency. The last paragraph of the note stated that:

"... the purpose of the provision is to ensure that government decisions as to what levels of risk are acceptable in various situations are not taken in such a manner as to result in discrimination or disguised restrictions on trade. It has been agreed that the mechanism for ensuring that governments avoid arbitrary or unjustifiable distinctions in the levels of risk they accept is to require governments to be consistent in their risk management decisions."

The same note also clarified that during the negotiations, concern had been expressed that what were considered as acceptable levels of risk with regard to animal or plant health could not necessarily be considered as politically acceptable levels of risk in matters regarding human health, or vice - versa. It was also stated that consistency might be desirable and achievable among decisions regarding animal health, or even between plant and animal health issues, however, an across-the-board consistency between decisions regarding human, animal and plant health risks was not acceptable.

IV.281 The European Communities observed that the drafting history demonstrated, therefore, that the negotiators of the SPS Agreement had never had in mind a situation similar to the one presented by Canada, where measures applied equally to imported and domestic products were compared with other measures applied to totally different substances which posed different types of risks. Discussions in the SPS Committee had focused on how to ensure consistency, on comparisons between human health on one side and animal and plant health on the other, and on voluntary risks, but had, so far, yielded no concrete guidelines. The only notion that had a legal meaning was the prohibition of arbitrary and unjustifiable distinctions, if they resulted in discrimination or disguised restriction. It should therefore be noted that absolute consistency was not what was implied in Article 5.5, but rather that it was a step­by­step process, an objective which was to be achieved by respecting the legal obligation set out in Article 5.5 of avoiding arbitrary and unjustifiable distinctions.

IV.282 The European Communities noted that Canada compared measures adopted with regard to hormones with measures adopted with regard to other substances, and the risks posed by hormones and these other substances, respectively. The European Communities claimed that Article 5.5 dealt with neither of these two notions ­ neither with measures, nor with risks. Article 5.5 established an obligation to avoid "arbitrary and unjustifiable distinctions in the levels [of sanitary or phytosanitary protection against risks to human life or health, or to animal and plant life or health] it considers to be appropriate in different situations, if such distinctions result ...". In other words, Article 5.5 imposed an obligation not to arbitrarily distinguish between levels of protection. No direct comparison of measures, nor of risks was envisaged. Furthermore, the provision did not prohibit overtly all types of distinctions in the levels of protection, only those distinctions which were arbitrary and unjustifiable, and which resulted in discrimination or disguised restriction. The second could not be assumed to be a consequence of the first; it was a separate qualification. Canada, therefore, was required to prove that the levels of protection were different, that the distinction was arbitrary and unjustifiable, and that it resulted in discrimination or a disguised restriction on international trade.

IV.283 The European Communities further argued that the requirement in Article 5.5 to avoid "arbitrary or unjustifiable distinctions in the levels" considered to be appropriate, using "levels" in the plural, indicated that the SPS Agreement accepted that a Member might have more than one level of protection, applicable to different situations. Article 5.5 did not require Members to apply the same level of protection against possible adverse health effects from all pests, diseases and contaminants, as Canada suggested. This would be absurd because the degree of severity of adverse health effects varied according to the pest or disease and because Members could not be expected to provide the same degree of protection to plants which they applied to humans. Moreover, it would be equally unreasonable to interpret Article 5.5, as Canada did, to require Members to choose the same level of protection against residues of all veterinary drugs. Not all veterinary drugs had the same adverse effects on consumers through residues in food, and Members were at liberty to choose different levels of protection for different residues, as long as the level was consistent in different situations for the same residue. This was the essence of the ruling by the European Court of Justice in the German Beer case, cited by Canada (footnote to paragraph 4.275, footnote 221) and it was the case with the EC rules on hormones and other veterinary drugs.

IV.284 The European Communities admitted that Canada might be justified to claim that the European Communities' level of protection against a particular adverse health effect, e.g. cancer, should be consistent even where that effect was caused by different substances. The European Communities had chosen its measures in the light of the specific circumstances in which each substance was used in order to achieve its appropriate level of protection. A comparison of the hormones with feed additives acting as growth promoters, such as carbadox and olaquindox, had to take into account the following elements:

(i) carbadox and olaquindox were not hormones, although they both acted as growth promoters;


(ii) the hormones at issue, when administered for growth promotion, speeded up directly the feed-weight conversion rate of the animals, whereas carbadox and olaquindox acted as growth promoters only indirectly by combating the development of bacteria and by aiding the intestinal flora of piglets;


(iii) carbadox and olaquindox were commercially available only as prepared feedstuffs, not as injections or implants nor as combinations;


(iv) they were allowed to be administered only to piglets, to the exclusion of any other animal;


(v) there were no commercially alternative products for carbadox and olaquindox which possessed not only the growth promotion aspect but also the medicinal effects of these two substances;


(vi) there were no incentives nor potential for misuse since these two substances could exert growth promotion only in piglets, not in other animals; and


(vii) all substances were said to be genotoxic and carcinogenic.

IV.285 On the basis of these elements, the European Communities argued that carbadox and olaquindox were different substances from the hormones at issue, although they posed the same type of risk to human or animal health. The conditions imposed by the European Communities guaranteed, however, that there were no residues of carbadox and olaquindox in meat destined for human consumption. Therefore, the level of protection, "no residues in human food", was the same with regard to these two substances and the hormones.²²⁴ The European Communities recalled that when EC member States made checks for these substances, they were checking to ensure that there were no residues. There was no tolerance level that was permitted for the residues of these two substances in meat for human consumption. But the fact that it had chosen to apply this level of protection by measures different from those it applied to growth hormones was irrelevant. The European Communities choose its measures in the light of the specific circumstances in which each substance was used.

IV.286 In summary, the European Communities noted that the SPS Agreement allowed Members to choose their appropriate level of protection by their chosen political process and only required this choice to be "consistent" in respect of the same hazard in different situations. The SPS Agreement did not require Members to use the same measures to control the same hazard in different situations. On the contrary, it required measures to be "tailored", by means of risk assessment, to ensure that they were appropriate to the circumstances. To compare measures taken with regard to hormones with measures taken with regard to other substances was not relevant nor significant for the purposes of determining the existence of a breach of Article 5.5. More restrictive measures were not necessarily equivalent to a higher level of protection, and more important still, "less restrictive" measures were not at all indicative of a lower level of protection. Measures were taken to achieve the appropriate level of protection. It was, therefore, useless to compare measures which were applied to different products, different risks and in different circumstances. Moreover, the comparison of "risks" was also not correct. Levels of protection were to be compared, and measures taken to achieve such levels were to be based on risk assessment, as appropriate to the circumstances. The EC level of protection was the same in the examples invoked: no residues of the hormones at issue in meat destined for human consumption. The risk against which its measures aimed to protect the EC consumers was also the same: carcinogenicity. The European Communities used different measures as a result of risk assessments appropriate to the circumstances, which took into account the factors outlined in Article 5.2.

IV.287 The European Communities argued that although Canada had claimed that "it is apparent that the EC level of protection for growth­promoting hormones is significantly higher than" for other substances, Canada had not demonstrated, first of all, the existence of different levels of protection and second, that the other two conditions were also met. Finally, the European Communities concluded that Canada had stated that there were about 10,000 to 15,000 authorized veterinary medicinal products in the European Communities. Yet, Canada's claim of lack of consistency in the European Communities was limited to five substances. This showed that there was indeed already a very high degree of consistency in the EC legislation.

IV.288 Canada did not disagree with the EC statement that "Article 5.5 imposes an obligation not to arbitrarily distinguish between levels of protection. No direct comparisons of measures, nor of risks is provided here." Canada argued, however, that it was not correct to state that "... It is, therefore, useless to compare measures alone which are applied to different products, different risks and in different circumstances". Canada submitted that the Panel was not prevented from looking at the evidence it had presented to infer that the European Communities applied distinctly different levels of protection, and that in the absence of any precise articulation by the European Communities as to what its level of protection was, despite repeated requests by Canada and other WTO Members in consultations, a complaining party and the Panel were left with no other recourse.

IV.289 Canada claimed that, contrary to the EC arguments, Article 5.5 addressed precisely the issue of consistency in the setting or deciding of the appropriate level of protection. The EC interpretation was not consistent with the text of Article 5.5. Nowhere did Article 5.5 speak of "... avoiding arbitrary or unjustifiable distinctions in applying the chosen level of protection ....". Rather, it spoke to "... the objective of achieving consistency in the application of the concept of appropriate level of sanitary or phytosanitary protection ....". Moreover, in Canada's view, the EC interpretation was also inconsistent with the negotiating history of the SPS Agreement. As the note by the Secretariat on consistency in risk management decisions made clear, Article 5.5 was drafted with the intention of ensuring some consistency in the decisions of governments when setting or deciding appropriate levels of protection:

"As the following review of the drafting history of the SPS Agreement makes clear, it was agreed at a very early stage in the negotiations that sanitary and phytosanitary measures should not be applied in an arbitrary or unjustifiably discriminatory manner. It was also agreed that sanitary and phytosanitary measures should primarily be based on risk assessment and analysis, and subsequently that each government was responsible for the determination of what it considered to be its acceptable level of risk (appropriate level of sanitary or phytosanitary protection). From this it followed that to ensure that such governmental decisions did not result in arbitrary or unjustifiable discrimination in the application of sanitary or phytosanitary measures, there must be some consistency in the decisions taken²²⁵ (emphasis added).


Once the concept of governments deciding what was an acceptable level of risk on the basis of an analysis of the actual risks involved was adopted as a basic element of the emerging SPS Agreement, it was recognized that disciplines were needed to ensure that this right to take a sovereign decision not be used to circumvent the obligations of non-arbitrariness or unjustifiable discrimination in the identification and measurement of risks, it was noted that there was still ample scope for governments to succumb to political pressures to protect certain domestic industries from foreign competition through their decisions regarding acceptable levels of risk/sanitary and phytosanitary protection"²²⁶ (emphasis added).

IV.290 Canada contended that the scope of the phrase "different situations" should be interpreted in the context of the objective of Article 5.5, set out in the opening clause: "With the objective of achieving consistency in the application of the concept of appropriate level of sanitary or phytosanitary protection against risks to human life or health, or to animal and plant life or health ...". As the note of the Secretariat explained:

"The next concern was that what were considered as acceptable levels of risk with regard to animal or plant health could not necessarily be considered as (politically) acceptable levels of risk in matters regarding human health, or vice-versa. That is, consistency might be desirable and achievable among decisions regarding animal health, or even between plant and animal health issues, however an across-the-board consistency between decisions regarding human, animal and plant health risks was not acceptable."²²⁷

IV.291 Thus, in the present case, it was clear that the appropriate level of protection underlying the EC measures must be compared for consistency only among decisions regarding the appropriate level of protection for other sanitary measures protecting human health. In that regard, Canada noted that all the examples it had raised identified the potential for adverse health effects in humans arising from veterinary drug residues in meat and other animal products. Moreover, the EC interpretation would limit "different situations" to "the same residue" or, at most, "different substances" causing "a particular adverse health effect". The European Communities offered no support for this narrow interpretation, aside from the Note cited above, which only spoke of limiting consistency in this case to human health.

IV.292 Canada submitted that the phrase "different situations" captured all the different sanitary risks posed to human health contemplated by the SPS Agreement, i.e., those arising from different sources, or causing different adverse health effects. Thus, within the terms of the SPS Agreement, and drawing upon the applicable paragraphs in the definition of a sanitary measure set in Annex A, (i.e., paragraphs 1(b) and (c)), "different situations" would capture risks posed to human health "... arising from additives, contaminants, toxins or disease-causing organisms in food, beverages or feedstuffs," as well as risks "... arising from diseases carried by animals, plants or products thereof, or from the entry, establishment or spread of pests".²²⁸ In the present case, "different situations" would capture the risks to human health posed by, inter alia, contaminants such as veterinary drugs residues, pesticides and heavy metals, by toxins such as botulinum toxin, fumonesin and aflatoxin-B1, and by disease-causing organisms such as salmonella, E. coli and campylobacter.

IV.293 In the alternative, if the Panel did not accept this interpretation, Canada submitted that, at the very least, the scope of "different situations" encompassed similar risks and similar products.²²⁹ In this regard, the examples cited by Canada described a variety of veterinary drugs which were routinely used by EC farmers in animal production and which left residues in meat and milk. Thus, the products were similar. The adverse health effect that was the determining factor in the safety evaluation of each residue might be different: for example, JECFA had concluded that allergic reactions in humans was the determining factor in the safety evaluation of benzylpenicillin. However, these different adverse effects might be no less severe than cancer: for example, allergic reactions to penicillin had caused anaphylactic deaths.²³⁰ Thus, the risks were similar. It was apparent that whatever the EC level of sanitary protection was for the six hormones at issue, it must be significantly higher than its level for antimicrobial growth promoters, in particular carbadox and olaquindox, and for a number of other veterinary drugs. These distinctions were arbitrary and unjustifiable.

IV.294 Canada argued that the phrase "each Member shall avoid arbitrary or unjustifiable distinctions in the levels it considers to be appropriate" indicated that only some distinctions were to be avoided, i.e., those that were arbitrary or unjustifiable. It followed that other distinctions were permissible, i.e., those that were justifiable. Canada submitted that distinctions might be justified when the severity of the adverse health effects posed by dissimilar risks were significantly different. Thus, if one risk involved acute, anaphylactic shock that may lead to death as the adverse health effect, and another risk involved a mild, transient stomach upset, a higher level of protection for the former when compared to the latter could be justified. However, such a distinction would be arbitrary and unjustifiable if the risks compared involved adverse health effects of comparable severity.

IV.295 Canada further submitted that there was no reason to subject consumers to higher risk from the residues of veterinary drugs used for therapeutic purposes, versus those used for other purposes, such as growth promotion: a distinction in the appropriate levels of protection would not be justified. Canada suggested that the distinction between using veterinary drugs for therapeutic purposes, versus using them for other purposes, such as zootechnical or growth promotion purposes, was in many ways a false dichotomy. Using veterinary drugs for therapeutic purposes not only benefited an animal by improving the animal's welfare, it also benefited the farmer because the animal became more productive. Ultimately, whether a farmer would use a veterinary drug to cure a disease in a food producing animal was still an economic question: if the costs outweighed the benefits, the animal probably would not be treated.

IV.296 Canada noted that ingesting sufficient quantities of the residues of veterinary drugs commonly used by farmers in the European Communities could cause severe adverse health effects, i.e., could result in death. Carbadox was a genotoxic carcinogen in animals, as was one of its metabolites. Allergic reactions to benzylpenicillin residues in hypersensitive members of the population could cause anaphylaxis, leading to death. Persons suffering from pulmonary obstructive diseases, such as chronic asthma, were extremely sensitive to non-selective B-adrenoceptor antagonists, such as carazolol; a sufficient dose of carazolol could cause severe bronchial constriction and asphixiation, again leading to death. Organo-phosphate pesticides were powerful neuro-toxins, and some were also carcinogenic.²³¹ Thus, Canada argued, the severity of the potential adverse health effects of these substances was comparable to, or greater than, that of the six hormones at issue.

TO CONTINUE WITH EC MEASURES CONCERNING MEAT AND MEAT PRODUCTS (HORMONES) COMPLAINT BY CANADA

²¹² "Compound Evaluation and Residue Information 1994" (Washington: U.S. Department of Agriculture, Food Safety and Inspection Service), pp.2.3-2.5.

²¹³ EC Official Journal L 270, 14 December 1970, p.1.

²¹⁴ The European Communities indicated that this condition did not apply to coccidiostats and other medicinal substances.

²¹⁵ The European Communities indicated that this principle applied also to imports of meat from third countries.

²¹⁶ EC Official Journal L 224, 18 August 1990, p.1.

²¹⁷ The European Communities indicated that a provisional comparison with the situation in Canada, as regards substances used as additives in feedingstuffs for growth - promotion, would appear to indicate that more additives for growth promotion were used in Canada. Thus, although Canada did not allow the use of olaquindox, it did allow (in addition to the hormones at issue) the use of carbadox, chlorotetracycline hydrochloride, oxytetracycline hydrochloride, 3-nitro-4-hydroxyphenylarsonic acid, arsanilic acid, bambermycins, bacitracin, methylene disalicylate, lincomycin, procaine penicillin, etc. Apart from carbadox, olaquindox (and bacitracin zinc for swine only), the other substances were not allowed to be used as growth-promoting feed additives in the European Communities. It should also be noted that the 1991 JECFA report on carbadox and olaquindox concluded that residues resulting from the use of carbadox in pigs were acceptable provided that the recommended MRLs were not exceeded (as was the case in the European Communities), and residues from the use of olaquindox in food-producing animals under conditions of good practice in the use of veterinary drugs were temporarily acceptable.

²¹⁸ This type of clinical trials were provided for in Article 14 of regulation 2377/90 of 26 June 1990 (EC Official Journal. L 224, 18 August 1990, p.1), on condition that foodstuffs obtained from livestock participating in such trials not contain residues which posed a hazard to human health.

²¹⁹ J.J. Barcelo, "Product Standards to Protect the Local Environment - the GATT and the Uruguay Round Sanitary and Phytosanitary Agreement", (1994) 27 Cornell International Law Journal,. Vol. 755, pp.765-66.

²²⁰ Canada noted that, for example, in contrast to veterinary drugs with fixed MRLs under Annex I of Directive 2377/90/EEC, or provisional MRLs under Annex III, oestradiol-17b was placed in Annex II as a substance for which no MRL was necessary (Regulation 3059/94/EC). Carazolol, on the other hand, poses a significant risk to humans with chronic bronchitis or asthma and has been assigned a MRL.

²²¹ J.J. Barcelo, supra, note 179, at pp.765-66 provided a useful example:

A party must "avoid arbitrary or unjustifiable distinctions in the levels it considers to be appropriate in different situations, if such distinctions result in discrimination or a disguised restriction on international trade." The meaning of this language is not immediately apparent, but on its face it could provide a ground for a more searching scrutiny of a party's S&P provisions than any of the other three requirements thus far discussed. We should note, however, that the "arbitrary distinctions" language is tied to the proviso "if such distinctions result in discrimination or a disguised restriction on international trade." That proviso helps to clarify the kind of case envisioned. A good example is the well known German Beer case in EU law decided by the European Court of Justice in 1987.

In the German Beer case, Germany allowed beer to be sold in Germany and labelled "bier" only if it was made from malted barley, hops, yeast, and water. No additives at all were allowed. Most German beer has been made in this manner since the sixteenth century. Beer in other EU countries, however, is frequently made from rice and other cereals. In the case of these beers, additives are needed for technical reasons to produce the beer. The German rule therefore prevented much of the beer made in other EU countries from being imported and sold in Germany as "bier". Germany tried to justify the rule in part on the ground that Germans consume large quantities of beer and that the additives in general would pose a human health risk. The European Court of Justice rejected this argument, however, for one very striking reason: for all beverages, other than beer, German law specifically allowed some of the very additives that were banned completely in beer. Thus, the arbitrariness of these distinctions appeared to convince the European Communities that the German regulation was essentially a form of disguised protectionism designed to protect German beer producers from non-German competitors.

Suppose, for example, that the toxicity of pesticides Y and Z are indistinguishable. Suppose further that the United States adopts a rule calling for zero pesticide Z residue on apples. The U.S. provision might run into trouble if, for example, pesticide Z were traditionally used in Canada, pesticide Y in the United States, and the zero pesticide rule applied only to pesticide Z.

Admittedly, judgments could differ about the application of this "arbitrary distinctions" standard. But in its defense, how else could one deal with a situation such as that presented by the German Beer case, apparently a case of disguised protectionism? There is a risk of an inappropriate panel decision under the standard. Without it, however, there would be a loophole through which very large amounts of disguised protection could be driven.

²²² Oxford English Dictionary.

²²³ G/SPS/W/16.

²²⁴ The European Communities noted that, as it had indicated, it was going to review these two substances shortly and already in the process of withdrawing the authorization for avoparcin, the other substance mentioned by Canada. This showed that the European Communities had already achieved a very high degree of consistency in their legislation.

²²⁵ "Consistency in Risk Management Decisions", G/SPS/W/16, p.2, para. 4.

²²⁶ Ibid., p.3, para. 7.

²²⁷ "Consistency in Risk Management Decisions", G/SPS/W/16, p.4, para. 11.

²²⁸ Definition of SPS measure: SPS Agreement Annex A, para. 1.

²²⁹ Canada noted that it was interesting to note that the draft guidelines prepared by the Chairman of the SPS Committee suggested that at a minimum this was the scope of "different situations" contemplated by Article 5.5. Guideline 7 stated:

"A proposed decision on an appropriate level of protection should be compared with previous decisions taken with regard to human health, animal health, or plant health, at least for similar risks or similar products. Any substantive differences in the proposed/accepted level of protection should be duly justified in accordance with the provisions of the Agreement." Draft - "Draft Guidelines to Further the Practical Implementation of Article 5.5", Note.by the Chairman, 16 September 1996.

²³⁰ W.G. Huber (1986), "Allergenicity of Antibacterial Drug Residues," in A.G. Rico, ed., Drug Residues in Animals (Orlando: Academic Press), pp.46-49.

²³¹ Dr. McLean, answer to Panel question 11, para. 6.131.