TWN Info Service on WTO and Trade Issues (Apr22/14)
20 April 2022
Third World Network

Costa Rican measures on Mexican avocados held WTO-illegal
Published in SUNS #9557 dated 19 April 2022

Geneva, 14 Apr (Kanaga Raja) – A dispute panel at the World Trade Organization has largely ruled that measures imposed by Costa Rica concerning the importation of fresh avocados from Mexico are inconsistent with its WTO obligations.

In a ruling (WT/DS524/R) issued on 13 April, the Panel said that, insofar as Costa Rica has acted inconsistently with the provisions of the Sanitary and Phytosanitary Measures (SPS) Agreement, it has nullified or impaired benefits accruing to Mexico under that Agreement.

The Panel recommended to the Dispute Settlement Body (DSB) that Costa Rica be asked to bring its measures into conformity with its obligations under the SPS Agreement.

The Panel upheld several of the claims put forward by Mexico in its dispute against Costa Rica, while dismissing some other claims. It also declined to rule on some additional claims on grounds of judicial economy.

BACKGROUND TO THE DISPUTE

According to the Panel report, the dispute concerns certain measures imposed by Costa Rica on the importation of fresh avocados for consumption from Mexico, related to the Avocado sunblotch viroid (ASBVd), a pathogen that causes sunblotch disease affecting avocado trees and fruit.

On 8 March 2017, Mexico requested consultations with Costa Rica with respect to the measures and claims at issue in the dispute. Consultations were held on 26 and 27 April 2017, but failed to resolve the dispute.

On 22 November 2018, Mexico requested the establishment of a panel and at its meeting on 18 December 2018, the DSB established a panel pursuant to the request of Mexico in document WT/DS524/2.

In its panel request, Mexico identified the following five instruments as measures:

1. Resolutions DSFE-003-2018 and DSFE-002-2018 issued by the State Phytosanitary Service of the Ministry of Agriculture and Livestock of Costa Rica, dated 29 January 2018.

2. Reports ARP-002-2017 and ARP-006-2016 prepared by the Pest Risk Analysis Unit of the State Phytosanitary Service, dated 10 July 2017, as well as Manual NR-ARP-PO-01_M-01, containing the qualitative methodology applied in the said risk analyses.

According to the Panel report, Mexico is currently the world’s leading producer of avocado fruit. According to FAO data, Mexico produced 2,184,663 tonnes of avocado in 2018 and 2,300,889 tonnes in 2019, equivalent to more than 30% of global production for both years.

According to the same data, Costa Rica produced 15,000 tonnes of avocado in 2018 and 16,746 tonnes in 2019.

Describing the basic characteristics of ASBVd, the Panel said that viroids are the smallest known sub-cellular pathogens and are composed of a circular single-stranded RNA molecule, of between 246 and 434 nucleotides and a compact secondary structure.

Viroids might have appeared very early in evolution and could represent the world that presumably preceded our current world based on deoxyribonucleic acid (DNA) and proteins. Viroids do not encode proteins and replicate autonomously when inoculated into their host plants, said the Panel report.

Viroids are pathogenic biological agents exclusive to the plant kingdom and are grouped into two families, one of which, Avsunviroidae, is the one to which Avocado sunblotch viroid (ASBVd) belongs. ASBVd is a species of viroid composed of a circular single-stranded RNA molecule of 247 nucleotides that replicates in the chloroplast. ASBVd is the causal agent of sunblotch disease.

With regard to its current geographical distribution, ASBVd is present in America, Europe, Asia, Africa and Oceania.

ASBVd affects all avocado cultivars, in other words, all varieties of avocados are susceptible to ASBVd and there are no resistant varieties, said the Panel report.

Mexico requested that the Panel find that the measures described by Costa Rica are inconsistent with Costa Rica’s obligations under Articles 1.1, 2.1, 2.2, 2.3, 3.1, 3.3, 5.1, 5.2, 5.3, 5.5, 5.6 and 6.1 of the SPS Agreement and Articles III:4 and XI:1 of the GATT 1994.

Mexico further requested, pursuant to Article 19.1 of the Dispute Settlement Understanding (DSU), that the Panel recommend that Costa Rica bring its measures into conformity with its WTO obligations.

Costa Rica requested that the Panel reject Mexico’s claims in this dispute in their entirety.

According to the Panel report, Mexico asserts that the specific measures at issue in the dispute are those by which, both individually and jointly, Costa Rica restricts the importation of fresh avocados for consumption from Mexico.

Mexico contends that the requirements set out in Resolutions DSFE-002-2018 and DSFE-003-2018, Reports ARP-002-2017 and ARP-006-2016, and the methodology in Manual NR-ARP-PO-01_M-01 together constitute import restrictions on fresh avocados for consumption from Mexico.

Mexico also submits that Costa Rica’s measures are phytosanitary measures in accordance with paragraph 1 of Annex A to the SPS Agreement, and that these measures have affected international trade, so they are, individually and jointly, phytosanitary measures pursuant to the first sentence of Article 1.1 of the SPS Agreement, and that consequently, the provisions of the SPS Agreement apply to them.

For its part, Costa Rica contends that Mexico has failed to demonstrate that Costa Rica’s measures function together as an inseparable whole, and that it is inappropriate to assess Mexico’s claims on the basis of a general measure or of a set of measures.

Costa Rica asserts that Mexico has put forward claims with respect to three instruments that it has identified as individual measures, but that these do not, in and of themselves, meet the criteria for the applicability of the SPS Agreement.

Costa Rica submits that the Reports ARP-002-2017 and ARP-006-2016 and the Manual NR-ARP-PO-01_M-01 do not constitute phytosanitary measures in accordance with the definition given in Annex A(1); and that Mexico has failed to demonstrate that they may affect international trade, either directly or indirectly.

FINDINGS AND CONCLUSIONS

In light of its findings, the Panel reached the following conclusions:

a. Regarding the scope of the SPS Agreement:

i. Mexico has demonstrated that Resolutions DSFE-002-2018 and DSFE-003-2018, which contain the phytosanitary requirements, individually constitute phytosanitary measures subject to the SPS Agreement.

ii. Mexico has failed to demonstrate that Reports ARP-002-2017 and ARP-006-2016 and Manual NR-ARP-PO-01_M-01 individually constitute phytosanitary measures subject to the SPS Agreement.

iii. Mexico has failed to demonstrate the existence of one phytosanitary measure consisting of the five measures identified by Mexico taken as a whole. However, in order to analyse the claims put forward by Mexico, the Panel decided that it would read Resolutions DSFE-002-2018 and DSFE-003-2018, which contain the phytosanitary requirements, together with Reports ARP-002-2017 and ARP-006-2016 and Manual NR-ARP-PO-01_M-01, and would make any necessary findings and recommendations in relation to those instruments, with a view to securing a positive solution to the dispute.

b. Regarding Mexico’s claims on risk assessment:

i. Costa Rica has acted inconsistently with Article 5.1 of the SPS Agreement, by failing to ensure that its phytosanitary measures are based on an assessment, as appropriate to the circumstances, of the risks to plant life or health.

ii. Costa Rica has acted inconsistently with Article 5.2 of the SPS Agreement, because, in the assessment of risks, it failed to take into account available scientific evidence and the prevalence of specific disease or pests.

iii. Costa Rica has acted inconsistently with Article 5.3 of the SPS Agreement, because, in assessing the risk to plant life or health and determining the measure to be applied for achieving the appropriate level of phytosanitary protection from such risk, it failed to take into account as relevant economic factors: the potential damage in terms of loss of production or sales in the event of the entry, establishment or spread of ASBVd; the costs of control or eradication in Costa Rica’s territory; and the relative cost-effectiveness of alternative approaches to limiting risks.

iv. Costa Rica has acted inconsistently with Article 2.2 of the SPS Agreement, by failing to ensure that its phytosanitary measures, i.e. Resolutions DSFE-002-2018 and DSFE-003-2018, which contain the phytosanitary requirements, are based on scientific principles and are not maintained without sufficient scientific evidence.

c. Regarding Mexico’s claims on discrimination:

i. In respect of the first two situations that Mexico has indicated as comparable, i.e. fresh avocados imported for consumption from countries where ASBVd is present vis-a-vis domestic Costa Rican avocados in which ASBVd is likely to be present, there are arbitrary or unjustifiable distinctions in the levels of protection that Costa Rica considers to be appropriate in different situations, which result in discrimination or a disguised restriction on international trade. Therefore, Costa Rica has acted inconsistently with Article 5.5 of the SPS Agreement.

ii. Costa Rica’s phytosanitary measures, i.e. Resolutions DSFE-002-2018 and DSFE-003-2018, which contain the phytosanitary requirements, arbitrarily or unjustifiably discriminate between its own territory and that of Mexico, and are applied in a manner which constitutes a disguised restriction on international trade. Thus, Costa Rica has acted inconsistently with the first and second sentences of Article 2.3 of the SPS Agreement.

d. Regarding Mexico’s claim on trade restrictiveness, Mexico has failed to demonstrate that Costa Rica’s phytosanitary measures, i.e. Resolutions DSFE-002-2018 and DSFE-003-2018, which contain the phytosanitary requirements, are more trade-restrictive than required to achieve its appropriate level of phytosanitary protection, taking into account technical and economic feasibility. Therefore, Mexico has failed to demonstrate that Costa Rica has acted inconsistently with Article 5.6 of the SPS Agreement.

e. Regarding the claims concerning adaptation to regional conditions:

i. Mexico has failed to demonstrate that Costa Rica has acted inconsistently with its obligation under the first sentence of Article 6.1 of the SPS Agreement to ensure that its sanitary or phytosanitary measures are adapted to the phytosanitary characteristics of the area to which the product is destined.

ii. Mexico has failed to demonstrate that Costa Rica has acted inconsistently with its obligation under the second sentence of Article 6.1, in assessing the sanitary or phytosanitary characteristics of a region, to take into account, inter alia, the level of prevalence of specific diseases or pests, the existence of eradication or control programmes, and appropriate criteria or guidelines which may be developed by the relevant international organizations.

f. Regarding Mexico’s claims on harmonization, the Panel exercised judicial economy with regard to Mexico’s claims under Articles 3.1 and 3.3 of the SPS Agreement.

g. Regarding Mexico’s claims relating to general conformity with the SPS Agreement:

i. Costa Rica has acted inconsistently with Article 1.1 of the SPS Agreement, by failing to develop and apply its phytosanitary measures, i.e. Resolutions DSFE-002-2018 and DSFE-003-2018, which contain the phytosanitary requirements, in accordance with the provisions of the SPS Agreement.

ii. Costa Rica has acted inconsistently with Article 2.1 of the SPS Agreement, by adopting phytosanitary measures, i.e. Resolutions DSFE-002-2018 and DSFE-003-2018, which contain the phytosanitary requirements, that are inconsistent with the provisions of the SPS Agreement.

h. Regarding Mexico’s claims and Costa Rica’s defence under the GATT 1994, the Panel exercised judicial economy with regard to Mexico’s claims under Articles III:4 and XI:1 of the GATT 1994, and to Costa Rica’s defence under Article XX(b) of the GATT 1994.