Jan 19, 1998
COMPLICATED RULING ON HORMONE-BEEF
Geneva, 16 Jan (Chakravarthi Raghavan) -- The Appellate body of the World Trade Organization handed down Friday a complicated ruling on the dispute over EC ban on imports of beef and beef products from cattle raised on growth-promoting hormones that left both parties to the dispute claiming success.
While the appellate body ruling is automatically binding, the EC will get a 15-month time to implement the ruling, and during that period would be able to keep in place the current decade-old ban, imposed by the EC based on consumer pressures against beef from cattle raised on Bovine Growth Hormones (BGHs).
The appellate body ruling also appears to have left enough scope, procedurally, for the EC perhaps to set standards higher than those agreed upon by the FAO-based Codex Alimantaire body, conduct a new 'risk assessment' by a panel of scientific experts, and impose restrictions on that basis.
The dispute was brought up by the United States and Canada against the European Community which bans beef and products from cattle raised on any of six specified bovine growth hormones.
The panel ruled against the EC, and the appellate body partially reversed some of the panel's findings, and upheld some others, and asked the Dispute Settlement Body (DSB) to request the EC to bring its Sanitary and Phytosanitary (SPS) measures into conformity, with its obligations as determined by the panel, and modified by the appellate body.
However, the exact implications of the ruling is going to take some time for experts,
While the 105-page ruling was circulated to members Friday noon, and made public immediately, even before that, both Washington and Brussels claimed on Thursday to have won their points. And some analysts in some private sector banking and financial institutions came out with their own views and comments.
The appellate body has upheld a key finding of the panel, namely, that the EC import ban was not based on a "risk assessment" - an evaluation of the potential for adverse effects on human health, of residues in meat of hormones used by growth promotion purposes, and therefore inconsistent with Art. 5.1 of the WTO's Sanitary and Phytosanitary (SPS) Agreement.
But procedurally and on some substantive points, it has either reversed or cast some doubts on the panel's approach, to warrant an initial assessment that not only can the EC maintain its present ban for another 15 months, but rescind them and impose new restrictions, armed with its own "risk assessment".
The appellate body questioned the propriety of the panel, after having correctly found that the EC ban was inconsistent with Art. 5.1 and its requirement of a "risk assessment", to have gone further and examined whether the EC had also violated Art. 2.2 of the SPS (about SPS measures to be applied only to the extent necessary to protect human, animal or plant life or health, and is based on scientific principles and is not maintained without sufficient scientific evidence...)
The appellate body then says that Art. 2.2 of the SPS "informs" Art 5.1, and similarly Art. 2.3 informs Art. 5.5, and that if the appellate body had reversed the panel ruling on Art. 5.1, the appellate body would have gone into the question whether that risk assessment would be justified in terms of scientific evidence and scientific principles (Art2.2 or that even then whether it was arbitrary and unjustified discrimination (Art. 2.3 and 5.5), but that further analysis of the relationship of these provisions should await another case.
However justified in leaving the issue open, in accord with the 'notion of judicial economy' in domestic courts, the ruling in effect invites the EC to cure its defective procedures (in respect of 5.1) and try again.
One trade diplomat, while not wishing to comment or assess the outcome without detailed study, nevertheless suggested cynically that the ruling ensures that the appellate body and the panel system and secretariats can continue to be in business, leaving enough hope for trade partners, particularly the rich countries with enough human and other resources, to think they can win a dispute over their trade policy measures.
[A detailed analysis of the ruling will be carried in SUNS #4133]
The panel ruling was handed down on 18 August (see SUNS #4049), but was appealed against by the EC.
In its findings and conclusions, the appellate body
* reversed the panel's general interpretative ruling that the SPS Agreement allocated the evidentiary burden (of proving the legality of the trade measure) on the WTO member imposing an SPS measure, and the panel's conclusion that when a Member's measure is not based on an international standard in accordance with Art. 3.1, the burden is on that member to show that an SPS measure is consistent with Art. 3.3 of the SPS;
* concluded that the panel applied the 'appropriate standard of review' under the SPS;
* upheld the panel view that the 'precautionary' principle would not override the explicit wording of Art 5.1 and 5.2 and that the precautionary principle has been incorporated in, inter alia, Art. 5.7 of the SPS;
* upheld the finding that the SPS, and in particular its Articles 5.1 and 5.5, applied to measures enacted before the entry into force of WTO, but remain in force thereafter;
* concluded that though the panel sometimes 'misinterpreted' some of the evidence before it, but nevertheless the panel had complied with its obligations under Art. 11 of the DSU to make an objective assessment of the facts of the case;
* concluded that the procedures followed by the panel -- in the selection and use of experts, in granting additional third party rights to the US and Canada and in making findings based on arguments not advanced by the parties -- are consistent with the DSU and the SPS;
* reversed the panel's conclusion that the term "based" on used in Art. 3.1 and 3.3 (...that members shall base their SPS measures, or introduce or maintain measures for higher level of SPS protection, on international standards, guidelines or recommendations) has the same meaning as the provisions in 3.2, that SPS measures that "conform to" internationally based standards to be presumed to be consistent with GATT 1994;
* reversed the panel's view of the relationship between Art. 3.1, 3.2 and 3.3 of the SPS and reversed the panel's conclusion that the EC by maintaining, without justification under Art. 3.3, SPS measures not based on international standards, had acted inconsistently with Art 3.1 of the SPS;
* upheld the panel view that a SPS measure, to be consistent with Art. 3.3, must comply with, inter alia, the requirements of Art 5 of the SPS,
* modified the panel's interpretation of the concept of 'risk assessment' by holding that neither Art. 5.1 and 5.2 nor the Annex A.4 of the SPS require a risk assessment to establish a minimum quantifiable magnitude of risk, nor do these provisions exclude a priori, from the scope of risk assessment, factors which are not susceptible of quantifiable analysis by empirical or experimental laboratory methods commonly associated with the physical sciences;
* reversed the panel finding that the term 'based on' used in Art. 5.1 of the SPS Agreement entails "a minimum procedural requirement" that a Member imposing an SPS measure must submit evidence that it actually took into account a risk assessment when it enacted or maintained the measure;
* upheld the finding that EC measures at issue are inconsistent with the requirements of Art. 5.1 of the SPS, but modified the Panel's interpretation, by holding that Art 5.1 read in conjunction with Art.2.2 requires that the results of the risk assessment must sufficiently warrant the SPS measure at stake;
* reversed the finding and conclusions of the panel on Art. 5 of the SPS; but concluded that the Panel exercised appropriate judicial economy in not making findings on Art 2.2 and 5.6 of the SPS.