TWN Info Service on WTO and Trade Issues (Dec10/09)
15 December 2010
Third World Network

WTO confirms Australian apple ban is WTO-illegal
Published in SUNS #7054 dated 6 December 2010

Geneva, 3 Dec (Kanaga Raja) -- The Appellate Body of the World Trade Organization (WTO) this week upheld an earlier panel ruling that found the nearly 90-year-old Australian measures affecting the importation of apples from New Zealand to be inconsistent with Australia's WTO obligations.

In its ruling issued on 29 November, the Appellate Body recommended that the Dispute Settlement Body (DSB) request Australia to bring its measures, found in the Appellate Body report and in the panel report, as modified by the Appellate Body report, to be inconsistent with the Agreement on the Application of Sanitary and Phytosanitary Measures (SPS Agreement), into conformity with its obligations under that Agreement.

A dispute panel was established on 21 January 2008 to consider a complaint by New Zealand concerning several Australian measures on the importation of apples from New Zealand.

The panel had handed down a ruling on 9 August this year, and found the Australian measures against the import of apples from New Zealand to be inconsistent with Australia's WTO obligations. New Zealand had prevailed in most of its complaints in the dispute with Australia.

The panel had requested Australia to bring the inconsistent measures into conformity with its obligations under the SPS Agreement.

In its ruling, the panel had noted that Australia banned the importation of New Zealand apples in 1921, following the entry and establishment of fire blight in Auckland in 1919. In 1986, 1989 and 1995, New Zealand applied for access to the Australian apple market. In each case, its application was rejected.

Following a new request for access to the Australian market filed by New Zealand in January 1999, the Australian Quarantine and Inspection Service (AQIS) initiated the import risk analysis for New Zealand apples, which was the subject of the dispute. The Final Import Risk Analysis Report for Apples (IRA) from New Zealand was issued by Biosecurity Australia, a prescribed agency, in November 2006.

The scope of the risk analysis was the importation of mature apple fruit free of trash, either packed or sorted and graded bulk fruit from New Zealand. In addition to fire blight, European canker and apple leafcurling midge (ALCM), the IRA included assessments of eight other pests. (For full details of the panel ruling, see SUNS #6986 dated 12 August 2010.)

The IRA provides that New Zealand and Australia must agree standard operating procedures for each quarantine pest of concern before exports of apples may begin, but no such agreement has yet been reached.

The 17 measures listed by New Zealand in its request for the establishment of a panel were among those specified in the IRA. Of the 17 challenged measures, eight related to fire blight, five to European canker, and one to ALCM. Three additional "general" measures applied to all three of these pests. The parties subsequently reached agreement on one of the 17 measures.

The 16 measures at issue were conditions for the importation of apples from New Zealand that have been imposed by Australia following completion of the import risk analysis.

Australia and New Zealand each appealed certain issues of law and legal interpretations developed in the panel report.

Before the panel, said the Appellate Body in its ruling, New Zealand had claimed that the measures at issue, both individually and as a whole, were inconsistent with Articles 2.2, 2.3, 5.1, 5.2, 5.5, 5.6, and 8, and Annex C(1)(a) to the SPS Agreement.

Among other things, New Zealand had alleged that the Australian measures are maintained without scientific evidence, are not based on a proper risk assessment, and are more trade restrictive than necessary to achieve Australia's appropriate level of protection.

New Zealand had also claimed that the IRA ignores available scientific evidence, Australian border inspection processes, relevant apple production processes in New Zealand, relevant diseases or pests in New Zealand, and relevant climatic conditions in both New Zealand and Australia. Furthermore, New Zealand had alleged that the delay of almost eight years between New Zealand's request for the admission into Australia of New Zealand apples and the completion of Australia's approval procedures was "undue".

According to the Appellate Body report, Australia appealed the panel's finding that the 16 measures at issue, both as a whole and individually, constitute SPS measures within the meaning of Annex A(1) to the SPS Agreement. Secondly, Australia appealed the panel's finding that the measures at issue regarding fire blight and ALCM, as well as the requirements identified by New Zealand as "general" measures that are linked to all three pests at issue in the present dispute, are inconsistent with Articles 5.1 and 5.2 of the SPS Agreement and, by implication, with Article 2.2 of the SPS Agreement.

Thirdly, Australia claimed that the panel failed to engage with all of the important evidence before it, failed to understand the methodology employed in the IRA, and, thus, failed to make an objective assessment of the facts before it, as required by Article 11 of the Dispute Settlement Understanding (DSU). Finally, Australia appealed the panel's finding that Australia's measures at issue are more trade restrictive than required and are therefore inconsistent with Article 5.6 of the SPS Agreement.

On appeal, said the Appellate Body, Australia challenged the panel's findings on the measures relating to fire blight (Measures 1-8) and ALCM (Measure 14), as well as the general measures (Measures 15-17) to the extent that they apply to these two pests. Australia did not appeal the panel's findings on the measures relating to European canker, or the general measures (Measures 15-17) to the extent that they apply to European canker.

Measure 1 relates to the requirement that apples be sourced from areas free from fire blight disease symptoms. Measure 2 is on the requirement that orchards/blocks be inspected for fire blight disease symptoms, including that they be inspected at an intensity that would, at a 95 per cent confidence level, detect visual symptoms if shown by 1 per cent of the trees, and that such inspections take place between 4 to 7 weeks after flowering.

Measure 3 concerns the requirement that an orchard/block inspection methodology be developed and approved that addresses issues such as the visibility of symptoms in the tops of trees, the inspection time needed and the number of trees to be inspected to meet the efficacy level, and the training and certification of inspectors.

Measure 4 is on the requirement that an orchard/block be suspended for the season on the basis that any evidence of pruning or other activities carried out before the inspection could constitute an attempt to remove or hide symptoms of fire blight, while Measure 5 relates to the requirement that an orchard/block be suspended for the season on the basis of detection of any visual symptoms of fire blight.

Measure 6 is with regards to the requirement that apples be subject to disinfection treatment in the packing house. Measure 7 is on the requirement that all grading and packing equipment that comes in direct contact with apples be cleaned and disinfected (using an approved disinfectant) immediately before each Australian packing run, while Measure 8 is on the requirement that packing houses registered for export of apples process only fruit sourced from registered orchards.

Measure 14 meanwhile concerns the requirements of inspection and treatment for ALCM, including the options of: inspection of each lot on the basis of a 3000-unit sample selected at random across the whole lot for ALCM, symptoms of quarantineable diseases, quarantineable pests, arthropods, trash and weed seeds, with detection of any live quarantineable arthropod resulting in appropriate treatment or rejection for export; or inspection of each lot on the basis of a 600-unit sample selected at random across the whole lot for symptoms of quarantineable diseases, trash and weed seeds, as well as mandatory appropriate treatment of all lots.

Measure 15 is on the requirement that Australian Quarantine and Inspection Service officers be involved in orchard inspections for European canker and fire blight, in direct verification of packing house procedures, and in fruit inspection and treatment. Measure 16 is on the requirement that New Zealand ensure that all orchards registered for export to Australia operate under standard commercial practices, and Measure 17 relates to the requirement that packing houses provide details of the layout of premises.

In its findings and conclusions, the Appellate Body upheld the panel's finding that the 16 measures at issue, both as a whole and individually, constitute SPS measures within the meaning of Annex A(1) to the SPS Agreement.

It further upheld the panel's finding that Australia's measures regarding fire blight and ALCM, as well as the general measures relating to these pests, are inconsistent with Articles 5.1 and 5.2 of the SPS Agreement, and that, by implication, these measures are also inconsistent with Article 2.2 of the SPS Agreement.

The Appellate Body found that Australia has not established that the panel acted inconsistently with its duty to conduct an objective assessment of the matter before it, within the meaning of Article 11 of the DSU.

It reversed the panel's finding that Australia's measures at issue regarding fire blight and ALCM are inconsistent with Article 5.6 of the SPS Agreement, but said it is unable to complete the legal analysis of New Zealand's claim under that provision.

It also reversed the panel's finding that New Zealand's claim under Annex C(1)(a) and its consequential claim under Article 8 of the SPS Agreement fall outside the panel's terms of reference. However, it found that New Zealand has not established that the 16 measures at issue are inconsistent with Annex C(1)(a) and Article 8 of the SPS Agreement.

The Appellate Body recommended that the DSB request Australia to bring its measures, found to be inconsistent with the SPS Agreement, into conformity with its obligations under that Agreement. +