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(Continued) J. ARTICLE 8 AND ANNEX C
Canada
4.349 Australia's measures impose information requirements that are not limited
to what is necessary for appropriate control, inspection and approval
procedures, contrary to Article 8 and Annex C.1(c) of the SPS Agreement .
Australia's certification requirement is part of a procedure to check and ensure
the fulfilment of sanitary measures within the meaning of Annex C. More
precisely, it falls under paragraph 1(c) of Annex C as an information
requirement for control, inspection and approval procedures. The requirement
that consignments of salmonid product must be accompanied by official
certification confirming that the exported fish fully meet Australia's import
conditions is a procedure to ensure the fulfillment of Australia's sanitary
measures, within the meaning of paragraph 1 of Annex C.
4.350 To the extent that the information required in the certificate relates to
the fulfillment of certain conditions, those conditions may themselves be
measures, or parts of measures. However, the information that must be provided
regarding the fulfilment of those conditions or measures may also fall within
Article 8 and paragraph 1(c) of Annex C. The official certification requirement
for salmonids in turn imposes certain information requirements. Australia's
information requirements are not limited to what is necessary for appropriate
control, inspection and approval procedures, contrary to paragraph 1"(c)of Annex
C and, by extension, Article 8, of the SPS Agreement .
4.351 There are three reasons for this. First, consignments of non-salmonids
that are not in "consumer-ready" form do not have to fulfil any of these three
information requirements. Moreover, consignments of non-salmonids that are in
"consumer-ready" form do not have to fulfil any information or certification
requirements at all. There is no rational reason for this distinction. For
example, as Canada has shown, Australia's determination that imports of non-salmonids
pose an acceptable risk with respect to the disease agent VERV is predicated on
those imports not being juvenile fish. Yet Australia does not require
information that non-salmonid imports are not juveniles.
4.352 Second, these information requirements find no support in international
standards as reflected in the OIE Code. Section 1.3.2 of the 1999 Draft Report
leaves the impression that exporting countries should be prepared to supply
importing countries with information of the sort required by AQPM 1999/51 in
accordance with the OIE Code. The Report fails to explain that the OIE Code
recommends the provision of this information for exports of live fish or their
gametes only. The OIE Code also contains a model international fish health
certificate for dead, uneviscerated fish.126 However, the OIE Code prescribes no
documentation or certification for dead, eviscerated fish products because such
products are considered to pose a minimal risk of disease establishment.127
4.353 Third, the certification and information requirements for salmonids in
AQPM 1999/51 are part of measures that are themselves inconsistent with Articles
2.2, 2.3, 5.1, 5.5 and 5.6 of the SPS Agreement . The certification and
information requirements, therefore, cannot be considered necessary for
appropriate control, inspection and approval procedures.
4.354 Australia seems to imply in its rebuttal submission that the obligations
in subparagraph (c) of Annex C, paragraph 1 are limited to information
requirements for additives or contaminants in food, beverages or feedstuffs.128
Clearly, the wording of subparagraph (c) is illustrative rather than exclusive.
Subparagraph (c) requires that information requirements be limited to what is
necessary, "including" for the approval of additives or the establishment of
tolerances for contaminants. There is no basis for Australia's contention that
subparagraph (c) does not apply to approval procedures in the present case.
Australia
4.355 In the present dispute, the information requirements of certification not
only implement but also directly reflect the risk management measures identified
in the 1999 IRA. In these circumstances, Annex C.1(c) does not attach any
additional requirements to the substantive provisions of the Agreement. Canada
must establish that the underlying risk management measures are not appropriate
control, inspection and approval procedures.
4.356 Canada identifies three "information requirements" allegedly of concern to
it in regard to certification: (a) that the fish are derived from a population
for which there is a documented system of health monitoring and surveillance;
(b) that the fish are not juveniles or sexually-mature adults; and (c) that the
fish are not derived from a population slaughtered as an official disease
control measure. Canada advises that it does not export juvenile or
sexually-mature salmonids for human consumption; and that it does not process
for human consumption fish slaughtered for disease control purposes. Canada
therefore cannot claim that conditions (b) or (c) impose any constraint on its
commercial opportunities in the Australian market.
4.357 In relation to condition (a), Canada found no difficulty in certification
for its salmon. The 1999 IRA also states that for countries with an established
history of exporting animals, fish and animal products to Australia, AQIS
recognises the appropriate government agencies in relation to fish health
(monitoring and surveillance) and the approval and control of fish processing
plants (provision of export certification).
4.358 As one of the very few OIE member countries with exceptional fish health
status, Australia is justified to extend the general principles of the OIE while
at the same time meeting WTO obligations.
V. SUMMARY OF THIRD PARTY SUBMISSIONS
A. EUROPEAN COMMUNITIES
5.1 The European Communities indicated that it was limiting its comments to
legal issues which in its view were of systemic importance for the
interpretation and proper functioning of the DSU and the SPS Agreement .
Appropriateness of Article 21.5 proceeding
5.2 The European Communities welcomed that the parties had agreed that this
dispute about compliance with DSB rulings and recommendations should be resolved
by recourse to Article 21.5 instead of Article 22.6 of the DSU. The European
Communities considered that this approach was the correct application of the
legal requirements of the DSU.
Terms of reference and scope of the Panel
5.3 The European Communities considered that there was merit in Australia's
arguments that the Panel's mandate was restricted to examining the existence or
consistency with a covered agreement of measures "taken to comply with the
recommendation and rulings" of the DSB in this case. The European Communities
deemed that there were important systemic reasons129 to confine the mandate of an
Article 21.5 panel to examining the measures taken to comply on matters for
which the DSB had made recommendations and rulings, excluding any claims about
other measures.
5.4 The European Communities made a distinction between, on the one hand, old
and new facts and evidence, i.e. those that existed at the time the original
Panel decided the case, as opposed to those resulting from the implementation
measures; and, on the other hand, old and new claims and arguments, i.e. those
that existed (but failed to be invoked by Canada) at the time the original Panel
decided the case, as opposed to those resulting directly from the implementation
measures. The European Communities argued that claims Canada made based on old
facts and evidence should be outside the scope of this Panel. Similarly, old
claims on which neither the Panel nor the Appellate Body had made legal findings
in the original proceeding were also outside the scope of this Panel. It
followed that Canada could only advance claims directly related to the measures
taken by Australia to comply with the legal findings and recommendations of the DSB in this case.
Rights of third parties
5.5 The European Communities noted that the Panel request had not been preceded
by Article 4 DSU consultations. The EC warned against the development of such a
practice, which was not in conformity with the DSU and which might, in certain
cases, affect rights of defence and the rights of interested third parties.
Nature of implementing measures
5.6 The European Communities agreed with Australia that implementation might
require legal and/or administrative action, depending on the circumstances of
each specific case. The European Communities argued that the findings of panels
addressed specific measures and, consequently, implementation should correct the
aspects of those measures found to be inconsistent. The term "measure" had a
wide meaning in the SPS context. Accordingly, the implementing measures should
be decided on a case by case basis taking into account the constitutional and
legislative requirements of the Member concerned. What was legally important in
terms of implementation and compliance, however, was to satisfy in legal terms
the rationale of the findings and recommendations of the DSB. How this was to be
achieved technically was a matter for the complying Member.
Nature and results of risk assessment
5.7 The European Communities agreed with Australia that Canada could not fault
Australia's risk assessment methodology by simply arguing that another approach,
for example a quantitative approach, would have been more correct and legally
acceptable. In addition, the European Communities argued that Canada could not
fault Australia's new risk assessment by simply comparing its findings with
those of the previous risk assessments (e.g. of 1995) which had been found to be
inconsistent with Article 5. The essential point to keep in mind was whether
Canada's claims put into question the accuracy of the scientific basis of
Australia's new risk assessment or whether they simply pointed out alternative
plausible scientific conclusions which might have been drawn from the same
scientific evidence. In the view of the European Communities, Canada had not
fulfilled its burden of proof to show that there was no rational relationship
between Australia's implementation measures and the scientific basis of its risk
assessment.
5.8 The European Communities agreed with Australia that, in principle, the
chosen level of protection indicated the nature of the necessary measures, not
the other way round. The European Communities also agreed with both parties that
setting this level of protection was an autonomous right or a prerogative. Yet,
in view of Australia's still somewhat unclear level of protection, the European
Communities was not sure that Australia had demonstrated that there was a
rational relationship between provisions on "consumer-ready form" (particularly
the skin-off and weight requirements) and the risk assessment. In the absence of
the relevant documentation, the European Communities was not in a position to
express a clear and definitive view, although the latest explanations provided
by Australia appeared to indicate that this requirement might be scientifically
justified.
Nature of the measure necessary to achieve the appropriate level of protection
5.9 In the view of the European Communities, this case raised an important
question on the relationship between risk, appropriate level of protection, and
the nature of a measure that was not more trade restrictive than required. Both
parties, but mainly Australia, discussed individual types of fish and illnesses,
but then generalized their conclusions by applying them to more or all types of
fish and diseases. The European Communities argued that this was not very
helpful in the exercise of identifying alternative, less trade restrictive
measures, in the sense of Article 5.6.
B. NORWAY
5.10 According to Norway, the question before the Panel was whether Australia
had brought its measure into conformity with its obligations under the
Agreement. In Norway's view, AQPM 1999/51 went a long way towards remedying the
inconsistencies with the SPS Agreement , but in practice constituted a continued
discrimination of imported salmon.
The requirements of a risk assessment
5.11 Norway agreed with Canada that Australia employed vague notions of the
likelihood of entry of the different diseases, using qualitative terms such as
"high" and "low". Furthermore, Australia scarcely quantified the consequences of
disease introduction and used vague terms regarding what measures might achieve
its desired level of protection, their effect on disease introduction and their
relative effectiveness. This vagueness made it exceedingly difficult to judge
whether there really was a risk of disease introduction through importation of
eviscerated salmon and if any of the additional measures would noticeably reduce
risk.
5.12 Norway recalled the Appellate Body's statement regarding the precision with
which a level of protection must be established. Although a Member may use
qualitative terms, the Appellate Body stated that:
"[�] This does not mean, however, that an importing Member is free to determine
its level of protection with such vagueness or equivocation that the application
of the relevant provisions of the SPS Agreement , such as Article 5.6, becomes
impossible. It would obviously be wrong to interpret the SPS Agreement in a way
that would render nugatory entire articles or paragraphs of articles of this
Agreement and allow Members to escape from their obligation under this
Agreement."130.
5.13 Norway argued that this requirement of precision also applied to the other
elements of the risk assessment process that a Panel must be able to judge or
evaluate in order to establish whether a Member had fulfilled its obligation
under the Agreement. Norway concluded that Australia had failed to meet the
requirements for a risk assessment in Article 5.1.
5.14 In Norway's view, the scientific studies undertaken in many countries and
relevant OIE recommendations showed that the Australian measures went beyond
what was necessary. Furthermore, Norway found it difficult to understand that
none of these studies allowed Australia to make its risk assessment more
quantitative.
The requirement that a measure be based on a risk assessment, be based on
scientific principles and not be maintained without sufficient scientific
evidence
5.15 Norway considered that Article 5.1, which required that measures be based
on a risk assessment, should be read in conjunction with the basic obligation in
Article 2.2, which required that all measures be based on scientific principles
and not be maintained without sufficient scientific evidence. Norway noted that
the documents referred to in AQPM 1999/51 were all marked "drafts". Thus the
first element of this requirement, that there actually exist a risk assessment,
was somewhat doubtful.
5.16 Assuming that a risk assessment existed, Norway did not dispute that
Australia's measures were mentioned in the 1999 IRA. However, Article 5.1 read
in conjunction with Article 2.2 required that there be a scientific foundation
for establishing that a given measure would reduce the risk. The effectiveness
of the measures evaluated by Australia in the 1999 IRA was only described in
very general terms. This was also the case for the evaluation of the relative
effectiveness of the different measures. Thus in Norway's view, the scientific
underpinning for choosing a cocktail of measures with respect to salmon did not
seem to meet this requirement.
The requirement that a measure be necessary and not more trade restrictive than
required
5.17 Norway submitted that the level of protection must satisfy not only the
requirement that it be precise enough to allow a meaningful comparison of
measures, but also the basic requirement that it relate to a specific risk. It
should be clear that the level of protection must relate to the risk of
introduction of a disease, as it was the consequences (biological and economic)
of such disease introduction against which a country wanted to protect itself.
Norway welcomed the fact that Australia used disease-based risk assessment and
disease-based risk management. However, Australia's level of protection did not
apply to a particular disease, but to all salmon. While Australia's theoretical
approach was correct - relating the risk to disease introduction - it did not
seem to apply this approach in practice.
5.18 Norway argued that it was not clear that there was a need for different
measures against other finfish imported inter alia for human consumption and
containing the same diseases as salmonids. Taking A. salmonicida as an example,
the pattern for disease introduction from non-viable salmonids and other
non-viable finfish would in both cases be through waste introduced into the
aquatic environment. The consequences for Australian salmon growers would be
identical regardless where the bacteria came from. The likelihood of these
bacteria being in imported fish did not seem to differ radically between salmon
and other finfish, which were also imported in much larger quantities without
evisceration, and so generally represented a much greater risk. According to
Norway, Australia did not substantiate that the likelihood of disease spreading
was different for one type of fish-waste as opposed to waste from other fish
once it contained the bacteria. On the contrary, the 1999 IRA noted explicitly
that infection could be transmitted horizontally. Yet, the conclusions in the
1999 IRA were radically different for the two kinds of fish, and the measures
chosen were much more burdensome for salmon. Whether or not the intent was to
protect Australian salmon farmers from competition, this was clearly the effect.
5.19 Norway emphasized one element of the Australian measure which seemed
unrelated to the risk reduction purportedly desired by Australia. Norway found
it difficult to see how a requirement that fish and fillets be "not more than
450 grams" and "pan size" had a relevant bearing on the risk, and found that
Australia gave no rational explanation in the 1999 IRA. Since restaurants and
hotels normally required fish and fillets of greater size, Norway argued that
this requirement served only to protect this market for Australian product, and
thus violated Articles 2.2 and 5.6.
5.20 In response to a question from Australia regarding alternatives to the 450
gram requirement, Norway argued that further processing in Australia would
presumably include smoking or canning. With respect to smoking, the problem of
waste did not necessarily arise, as smoked salmon in whole sides was often
traded with skin on. Furthermore, if Australia instead required that all
domestically smoked salmon fulfil the same requirements as imports of smoked
salmon, the problem could not arise. (Norway did not advocate such restrictions
on smoking, however). Australia had not substantiated that waste (e.g. skin,
bones, gills) from normally traded eviscerated fish represented a quarantine
risk that required such a restriction. Furthermore, if processing facilities
were a problem, strict controls of these installations would achieve the same
result with less restrictions on trade.
5.21 Norway noted that food preparation in restaurants - which always demanded
large fillets of more than 450 grams, could not be deemed as further processing.
A normal portion of skin-on fish fillet for one person would be between 250 and
300 grams. Under the Australian requirement, it was impossible for a family of
two or more persons to prepare a salmon dinner without buying several portions
instead of one larger piece. The 450 gram requirement therefore seemed
irrational and could only be considered completely arbitrary.
C. UNITED STATES
5.22 The United States first addressed the procedural issue of the relationship
between Articles 21.5 and 22 of the DSU. The United States argued that the Panel
need not and should not rule on this issue, since it had been left to the
ongoing negotiating process to resolve, consistent with Article 3.2 of the DSU.
5.23 A second procedural issue concerned the broad and inclusive approach taken
by the Panel in defining the scope of the proceeding, with which the United
States agreed. The United States considered the Panel's approach to be the only
one consistent with the purpose of the WTO dispute settlement system as
reflected in Articles 3 and 21 of the DSU: the prompt settlement of disputes.
5.24 The United States welcomed the progress in the implementation of the DSB
rulings and recommendations Australia had made since July 1999, which allowed
importation of salmon fillets or cutlets in "consumer-ready" form. The United
States reported that Australia and the United States had agreed in November 1999
upon the terms for certification of US salmonid products to be exported to
Australia. However, this certification would still not permit the importation of
fresh or frozen salmon with skin or bones in a portion greater than 450 grams
unless they were to be further processed in quarantine to a consumer-ready form
at a certified Australian processing facility. The United States remained
concerned about this size limitation, particularly as no processing facilities
had as yet been certified to be able to conduct the further processing required.
5.25 Australia's 450 gram limitation denied US exporters the opportunity they
had elsewhere around the world to sell salmon whole to importers, who then cut
or process the fish to the specifications of the market. Headed, eviscerated and
gilled Pacific and Atlantic salmon, either cultured or wild, weighed from 2 to
20 kg, with the average typically in the 2 to 10 kg range. Boneless fillets from
the average fish would range from 800 to 4000 grams According to the ABARE
report, Salmon Imports into Australia (Australia's exhibit U), whole fresh fish
which was gilled and gutted constituted half of the Australian market for
salmon, while salmon for smoking, which used whole fish as well, constituted
between 20 and 25 per cent of domestic production. The balance - approximately a
quarter of the market - was sold primarily as fillets and steaks (including bulk
packs of these), which was the lower end of the market. Thus, US salmon exports
were relegated to serving less than a quarter of the market - and even there,
they could not compete with domestic fillets or steaks exceeding 450 grams.
5.26 The United States agreed with Canada that there was no scientific basis for
this significant restriction on trade. The United States argued that a July 1999
regulation could not be based on a risk analysis that had only been completed in
November 1999. (Earlier versions of the 1999 IRA were labelled "draft").
Government limitation on the size of imported product could not be expected to
change the overall risk of pathogen introduction, if such a risk existed.
5.27 The United States cited the quantitative risk assessment prepared by New
Zealand (Stone et al., 1997), which estimated that the risk of introducing Aeromonas salmonicida into New Zealand in a whole, eviscerated fish, with a 99
per cent confidence interval, conservatively would be less than one in a million
per tonne of imported fish. This assessment was based on the import of cultured
or wild salmonids from anywhere in the world. If considering only wild Pacific
salmon, the estimated odds of introduction of Aeromonas salmonicida , with a 95
per cent confidence interval, was a hundred times less likely, or one in a
billion per tonne imported. The quantitative risk assessment performed by New
Zealand, and clinical data gathered by United States and Canadian researchers,
indicated that the bacteria and viruses of concern to Australia were very
unlikely to be introduced in headed, gilled and eviscerated salmon products of
any size.
5.28 The pathogen screening by United States and Canadian researchers was based
on whole fish, and the quantitative assessment conducted by New Zealand was
based on head-on eviscerated fish, both of which presented a higher likelihood
of harbouring pathogens than the fillets in question. Accordingly, the
likelihood of importing pathogens in a skin-on fillet of any weight was even
smaller than the New Zealand statistic provided for the fish in the studies
mentioned above, of one in a billion per tonne imported. Given the relatively
lower projected volumes of import (the entire Australian market being less than
10,000 tonnes) the risk of introducing a salmonid pathogen into Australia for
all practical purposes approached zero.
5.29 According to the United States, this conclusion was bolstered even further
by the fact that all of the studies mentioned were conducted on fish that had
not been frozen. The risk of introduction of exotic pathogens into Australia
would be further minimized by the freezing of salmon or salmon products prior to
export. Most pathogens were significantly reduced by freezing, while cooking
would kill all pathogens.
5.30 In response to a question from Australia regarding whether New Zealand's
risk assessment constituted a basis for risk management by Australia, the United
States explained that it had referenced the New Zealand risk assessment in the
context of supporting United States and Canadian researchers who noted the
similarity of pathogen-free findings in whole fish. The United States agreed
with Canada that although the New Zealand packaging requirements were
unnecessary and trade restrictive, they were less trade restrictive than the
regulations Australia had implemented.
5.31 In response to a second question from Australia regarding alternatives to
the 450 gram limitation, the United States noted that the burden of proof was on
the complaining party to identify a measure that satisfied the requirements of
Article 5.6, and any alternative identified by the United States would not be
relevant to the Panel's findings. Since some salmon greater than 450 grams would
not be further processed in Australia, but consumed directly by the end user,
Australia's measure was more trade-restrictive than required, since it
restricted trade in product that did not pose the alleged risk.
5.32 The United States explained that it sought the opportunity to sell salmon
that was not only in fillet form, but salmon that was headed, gilled and gutted.
Even in the case of fillets, it was commercially preferable to sell fillets
skin-on, as the skin helped to maintain the physical integrity of the salmon,
reduce moisture loss and increase storage life of the product. Fillets of salmon
produced in the United States typically weighed between 800 and 1500 grams,
although King salmon fillets could weigh as much as 4000 grams. Typical European
requests were for 800 to 1200 gram and 1200 to 1600 gram fillets. Furthermore,
fillets purchased by the consumer would be cooked skin-on, which would kill
pathogens found on or in the skin. Headed and gutted product would also
frequently be cooked as it was, thereby killing any pathogens if they were
present.
5.33 With regard to Australia's concern over commercial wastes, the United
States concurred with Canada that processing facilities in an environment with a
conservative level of protection would require treatment of waste products for
any fisheries products.
5.34 The United States proposed that a less trade restrictive measure would
allow the direct importation of any salmon product, regardless of weight, for
direct consumer consumption and purchase by the retail sector, distributors and
institutional users. With respect to salmon destined for further processing, the
United States did not believe there was any risk from the importation of headed
and gutted product or the resultant waste from processing commercial volumes of
fish. However, any response to alleged risks from processing should not be dealt
with through size or volume restrictions on imports, but rather through
requirements that the processing facility dispose of its wastes through a
municipal sewage system or by heat-treating the wastes at a rendering facility.
126 Ibid., p. 179.
127 The OIE Code provides model international health certificates
for live fish and gametes, dead uneviscerated fish, live molluscs and live
crustaceans, but does not provide one for dead eviscerated fish (OIE Code, pp.
175-183, 187).
128 Australia�s Rebuttal Submission, para. 267.
129 The systemic reasons include the accelerated nature of the
procedure which restricts several procedural rights, due process and proper
examination of scientific evidence, the lack of a reasonable period to comply
with new legal findings, etc.
130 Australia - Salmon Appellate Body Report, para. 206.
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