Appellate Body Report, Australia - measures affecting the importation of apples from New Zealand, WTO Doc WT/DS367/AB/R (29 November 2010).

• Author: Lennings, Nicholas

I Introduction

The place of agriculture under the World Trade Organization (WTO) and its predecessor, the General Agreement on Tariffs and Trade (GATT), (1) has, for some time, been somewhat vexed. Indeed, the road to the incorporation of agriculture under the WTO's specific jurisdiction was a long one. GMT had limited scope to deal with issues relating to agriculture until the finalisation of the Uruguay Round and the creation of the WT0. (2) Nations were not prepared, and the proliferation of disputes in this area continues to demonstrate a continuing reluctance, (3) to cease subsidising domestic farmers. (4) The Uruguay Round, which resulted in a number of agriculture-specific agreements, (5) after much lobbying by the 'Cairns Group', (6) was finally signed at. Marrakesh on 15 April 1994, more than seven years after initial negotiations commenced in September 1986.

The SPS Agreement, which takes centre stage in the Australia--Apples dispute, (7) was a product of that Round. Australia has, on a number of occasions, been involved in agricultural disputes, (8) including quarantine matters under the SPS Agreement. (9) In general terms, the SPS Agreement allows nations to set quarantine measures as they see fit, subject to the terms of articles 2 and 5. The measures are to be based, as far as is possible, On objective, scientific information and must be 'necessary in the circumstances. (10) In that sense, the SPS Agreement seeks to balance the necessary protectionism of preventing the spread of harmful disease against restrictions on trade, particularly undue or unqualified restrictions. Of course, for a nation such as Australia, which prescribes some of the highest health and Safety standards, (11) the globalisation and equalisation of these standards is not necessarily in the public (or private) interest, particularly where such standards must be lowered to facilitate world trade. (12)

II The Panel Report

It is not necessary here to canvas in detail the facts giving rise to the Australia--Apples dispute, or the findings of the Panel Report. (13) What is pertinent, however, is the nature of the dispute. The dispute arose over Australia's decision to lift an 89-year-old ban on the importation of apples from New Zealand. The ban had been in place to prevent the spread of diseases. (14) Initially, in 1999, the Australian Quarantine and Inspection Service conducted a preliminary risk assessment on allowing imports, and in 2006, Biosecurity Australia delivered its import risk analysis report ('IRA'), which recommended 17 measures (16 of those were in issue in the Australian--Apples proceedings) that were later implemented. (15) New Zealand argued, inter alia, that those measures were inconsistent with the SPS Agreement. (16)

The Panel Found substantially in New Zealand's favour. It found that the measures in issue contained in the IRA were measures correctly under the scope of the SPS Agreement per annex A(1), (17) however the specific measures were contra articles 5.1, 5.2 (and thereby 2.2) (18) and 5.6 of the SPS Agreement. (19) New Zealand also demonstrated that the general measures adopted by Australia were inconsistent with articles 5.1, 5.2 and 2.2, (20) although not article 5.6. (21) New Zealand's claim with respect to article 5.5 (and 2.3) (22) was rejected, and the claim under annex C(1)(a) and article 8 was considered outside the terms of reference. (23)

III The Appeal

Despite Australia's poor history with the WTO Appellate Body with respect to the SPS Agreement, (24) there was little hesitation in the decision to appeal the Panel's findings. (25) Australia notified the Dispute Settlement Body ('DSB') of its intention to appeal the decision on 31 August 2010.26 Along with Australia and New Zealand, a number of third-party participants also provided submissions, including Chile, the European Union, Japan, Pakistan, the Separate Customs Territory of Taiwan, Ponghu, Kinmen and Matsu, and the United States (US).

The grounds of appeal were manifested in five categories, the first four the subject of Australia's appeal, and the latter New Zealand's cross-appeal:

(1.) whether Australia's measures (per the IRA) were SPS measures under annex A(1);

(2.) whether the specific and general measures were inconsistent with articles 5.1, 5.2 and 2.2;

(3.) whether the Panel failed to objectively assess the matter before it contra to article 11 of the Dispute. Settlement Understanding ('DSU'); (27)

(4.) whether the specific measures were inconsistent with article 5.6; and

(5.) whether, in respect of New Zealand's appeal, the argument in relation to 'without undue delay' per annex C(1)(a) and article 8 was outside the Panel's terms of reference.(28)

Each of these issues shall be dealt with in turn.

A Annex A(1)

Australia appealed against the Panel's finding that the 16 measures in issue espoused in the IRA were, in fact, measures both individually and as a whole under the SPS Agreement it was Australia's submission that there were only lour such measures, the rest being ancillary by way of effectual dependency upon the four principal measures. (29) It follows, therefore, that it was incumbent on the Panel to consider each of the 16 measures individually as to their nature (which, on Australia's submission, it did not do). New Zealand submitted that to characterise the IRA measures as ancillary was an erroneous construction of the annex and noted that the 'ancillary' measures were similar to examples of measures in annex A(1). (30)

Annex A(1) of the SPS Agreement defines sanitary and phytosanitary measures as measures for the protection of human, animal or plant health from, inter alia, diseases, pests and toxins. The Appellate Body noted that measures per annex A(1) must be linked to an objective, namely, to provide protection for those items listed in annex A(1)(a)--(d). (31) The assessment of that link is objective and can be determined in a fashion similar to article III: 1 of the GATT 1994; (32) that is, by looking to the overall 'design, architecture and structure'. (33) In terms of what may constitute a measure, annex A(1) specifies a number of examples, but on its terms, does not purport to be exhaustive. (34)

The Appellate Body rejected Australia's contention that the measures ought to have been considered separately--there was no error in the Panel's reasoning that the IRA's purpose as a whole was entirely in line with annex A(l) and so could be determined...