Australia - measures affecting the importation of apples from New Zealand, WTO Panel Report, WTO Doc. WT/DS367/R (9 August 2010).

• Author: Star, Shaun

Introduction

The message that, trade liberalisation will deliver global benefits has been fundamental in the operation of the World Trade Organisation (WTO). (1) Accordingly, any state that implements mechanisms to protect their local produce, and in the process creates barriers for foreign imports, may be acting counter to the basic tenets underpinning the WTO. (2) It is axiomatic that the strategies used by many countries to protect local agricultural produce from disease have been targeted in recent years and labelled as protectionist policies. (3) This practice poses an interesting question as to the permissible scope of quarantine measures given that their inherent objective is to protect a country from health problems and disease. (4)

The WTO Agreement on the Application of Sanitary and Phytosanitary Measures (SPS Agreement) (5) recognises this dilemma by providing for certain rights and responsibilities with respect to protecting local products for each Member, state. (6) The SPS Agreement allows countries to set their own standards with respect to protecting food safety, and animal and plant health within its borders. However, the SPS Agreement also requires that:

... in seeking to protect health, WTO members must not use SPS measures that are; unnecessary, nor science-based, arbitrary, or which constitute a disguised restriction on international trade. (7) As such, all regulations adopted by a state must be based on scientific evidence. (8) This requirement restricts a Member state's ability to use technical barriers to trade, and in particular quarantine measures, as a means of restricting imports for the protection of domestic producers from foreign competition. (9)

In interpreting the SPS Agreement, the WTO must balance the rights and obligations that Member States must follow. (11) As has been highlighted in the recent Australia Apples Case, (11) these obligations are often construed as more important than the rights under the Agreement. This case is significant because of the WTO's strict interpretation of the 'risk analysis' and 'scientific evidence' obligations under the SPS Agreement. This interpretation may cause confusion for governments that have already adopted quarantine measures, based on available 'scientific evidence' or conducted their own risk assessments. (12) Accordingly, there is scope--and it is indeed desirable--for a clearer jurisprudence to develop in considering what quarantine protection measures should be permissible.

1. Background

Australia first imposed a ban on New Zealand apple imports in 1921 in order to prevent the spread of 'fire blight': a bacterial disease that damages apple trees and reduces their ability to produce fruit. In March 2007, Australia agreed to lift the then 86-year-old ban on New Zealand apple imports, but insisted on implementing strict quarantine measures to prevent the spread of disease. While the Australian Government is well within its rights to set its own parameters for the process of quarantining imports, prior to their entry into the country, such regulations must comply with the SPS Agreement. (13)

In the present case, the New Zealand Government contended that Australia's quarantine approach, as dictated by the Quarantine Act 1908 (Cth), was in breach of its obligations under the SPS Agreement. Conversely, Australia argued that its 'science-based approach to quarantine is consistent with the WTO rules'. (14) The quarantine process involved inspecting the fruit at packing houses in New Zealand before it was allowed into the country, and '[i]f there [were] any signs of fire blight or European canker, the import would be stopped'. (15) This rationale is consistent with the purpose of the measures adopted under the Quarantine Act; namely, to ensure:

the prevention or control of the introduction, establishment and spread of diseases or pests that will or could cause significant damage to human beings, animals, plants, other aspects of the environment or economic activities. (16) The WTO has interpreted the SPS Agreement in a number of key recent cases, including EC-Hormones, (11) Australia-Salmon, (18) and japan-Apples. (19) Each case highlights that a Member State is entitled to implement its own SPS measures; however, these measures must be based on sufficient scientific evidence and an appropriate risk analysis. (20) In the Japan Apples Case, (21) the WTO's dispute panel condemned Japan for failing to lift its strict trade restrictions on imports of apples from the United States. (22) The WTO Appellate Body then held that, despite Japan's intention to prevent the spread of fire blight, their SPS measures were maintained 'without sufficient scientific evidence' and were therefore inconsistent with Article 2.2 of the SPS Agreement, (23) and that Japan's measures were 'clearly disproportionate' to the 'negligible risk' identified on the basis of the scientific evidence. (24) In the Australia-Salmon Case, the WTO Panel held that Australia had violated Articles 5.1 and 2.2 of the SPS Agreement by adopting a measure that effectively prohibited the importation of certain Canadian salmon products without basing it on a risk assessment and without sufficient scientific evidence. (25) Consequently, Australia published a risk analysis that included a more thorough analysis of the risk associated with imported fresh salmon from Canada, and it slightly reformed its quarantine process. (26) These cases, which indicate the importance of an appropriate risk analysis underpinning all quarantine measures, provide a useful starting point when considering the Australia-Apples case.

2. Facts of the Dispute

   The WTO Dispute Review Panel was established on 21 January 2008. (27) The complaint was brought to the WTO by New Zealand and concerned the measures imposed by Australia on the importation of apples from New Zealand. On 27 March 2007, the Australian Director of Animal and Plant Quarantine confirmed Australia's position with respect to the importation of apples from New Zealand. He stated that:

   Importation of apples can be permitted subject to the Quarantine Act 1908, and the application of phytosanitary measures as specified in the final import risk analysis report for apples from New Zealand, November 2006. (28) New Zealand claimed that this strict policy stance was inconsistent with Australia's obligations under the SPS Agreement.

   New Zealand argued before the WTO Dispute Review Panel that the ruling against Japan over the importation of US apples strengthened its case against Australia on the same...