A comparative analysis of EC-Hormones I and Japan-Apples

The Agreement on Technical Barriers to Trade (TBT) and the Agreement on the Application of Sanitary and Phytosanitary Measures (SPS) are both lex specialis to the GATT, triggering the application of the specialia generalibus derogant principle. As stated in Article 1 SPS, the SPS Agreement[1] governs domestic regulatory (non-tariff) measures related to food safety and disease control, aiming to protect human, animal, and plant life or health. Article 2.2 SPS stipulates that sanitary and phytosanitary measures must be “applied only to the extent necessary” and “based on scientific principles”. WTO members must “on an assessment as appropriate to the circumstances, of the risks to human, animal or plant life or health, taking into account risk assessment techniques developed by the relevant international organisation” (Article 5.1 SPS). These measures must not discriminate unjustifiably or arbitrarily or serve as a disguised international trade restriction (Articles 2.3 and 5.5 SPS). The Agreement emphasizes the use of international standards for the sake of harmonisation and regulatory convergence, which are foundational principles of both the TBT and SPS Agreements. In contrast with the TBT, the SPS Agreement identifies the Codex Alimentarius Commission (for food safety), the International Office of Epizootics, and the International Plant Protection Convention as an illustrative list of international standard-setting organisations. Article 3.3 SPS permits higher protection levels than those based on the relevant international standards if scientifically justified or determined as such via risk assessment. Moreover, the SPS Agreement incorporates the Precautionary Principle, allowing for the adoption of provisional measures by members “in cases where relevant evidence is insufficient” (Article 5.7 SPS), and also it includes, in Article 10 SPS, a clause for special and differential treatment for developing countries and least developed countries (LDCs).[2] This short paper aims at providing a comparative analysis of risk assessment in two important WTO cases which dealt with the SPS Agreement – EC-Hormones I[3] and Japan-Apples[4].

The measure at issue in EC-Hormones I was the EU’s prohibition on the importation of beef meat and derived products treated with certain hormones. The complainants were the US and Canada. Important for the scope of this paper are certain findings: the AB held that WTO members can unilaterally define the level of protection they deem appropriate and that they have no duty to use quantitative terms to express it; the AB also clarified that the risk to be assessed should be ascertainable; the AB also stated that zero risk is acceptable provided that this is the will of the WTO Member. The EC-Hormones I is one of the rare cases where the AB’s ruling has not been complied with.[5] Thus, “the EC-Hormones II is a natural consequence of the EC-Hormones I case”[6], having been based on the complaints of the US and Canada about the EU’s non-compliance with the previous decision.

Japan-Apples followed the 1999 Japan-Agricultural Products case[7], which concerned the Japanese government’s imposition of limitations on the importation of eight different kinds of fruit from the US implemented in order to prevent the codling moth from entering Japan.[8] The contested measure in the Japan-Apples case comprised of a number of phytosanitary regulations that Japan had put in place to protect against the risk of fire blight spreading to its territory through the importation of apples from the US. The US asserted, inter alia, that the regulations were maintained in the absence of adequate scientific evidence. Japan denied this, and, alternatively, it contended that its action would still be justified under Article 5.7 SPS even if this were the case.[9]

With the exception of those imposed by the trade-related provisions of Articles 5.4, 5.5, and 5.6 SPS, the AB vehemently maintains that WTO adjudicating bodies cannot impose any restrictions on Members’ choices with respect to the level of SPS protection desired in their risk regulations, characterizing the determination of an “appropriate level of SPS protection” as a right of WTO Members.[10] This means that even a zero-risk approach is acceptable, which the AB has clarified in EC-Hormones I and later reiterated in Australia-Salmon.[11] The decision in the Japan-Apples case reflects a conflicting conclusion of the AB that negligible risk (although, evidently, higher than zero risk) is not a sufficient basis for an SPS measure. This finding of the AB is indefensible, considering that the above-described “discretion of WTO Members to set their appropriate level of protection has been respected in all but [this] case”[12]. As criticised in doctrinal literature – “This unfortunate AB report flies against the letter and the spirit of the SPS Agreement.”[13].  Therefore, the Japan-Apples case and the difference in interpretation and approach in comparison to EC-Hormones I teach us that in the future, at the level of WTO dispute settlement, a delicate and consistent equilibrium between the need for SPS measures to have a proper scientific basis and the acknowledgement of national regulatory autonomy shall be sought.[14]

In conclusion, applying different standards of review resulting in irreconcilable conclusions for cases regarding the SPS Agreement can have a detrimental impact on future understanding of salient concepts, such as the level of protection and risk assessment under the SPS Agreement. Consequently, the reasoning and decision from Japan-Apples should not be repeated, and zero-risk should remain acceptable, as held by the AB in EC-Hormones I.

[1] Agreement on the Application of Sanitary and Phytosanitary Measures (SPS Agreement) [1994].

[2] B. S. Chimni, WTO and Environment: Shrimp-Turtle and EC-Hormones Cases (2000), Economic and Political Weekly 35(20) ,1757.

[3] European Communities—Measures Concerning Meat and Meat Products (EC-Hormones I), Appellate Body Report WT/DS26/AB/R (13 February 1998).

[4] Japan-Measures Affecting the Importation of Apples (Japan-Apples), Appellate Body Report, WT/DS245/AB/R (10 December 2003).

[5] B. Wilson, Compliance by WTO Members with Adverse WTO Dispute Settlement Rulings: The Record to Date (2007), JIEL 10, 397–403.

[6] Michael M, Du, Standard of Review under the SPS Agreement after EC-Hormones II (2010), The International and Comparative Law Quarterly 59(2), 451.

[7] Japan — Measures Affecting Agricultural Products (Japan-Agricultural Products), Appellate Body Report,
WT/DS76/AB/R (19 March 1999)

[8] Caroline E. Foster, Japan – Measures Affecting the Importation of Apples: Rotten to the Core? (2010), Australian Year Book of International Law 25, 312.

[9] Denise Prévost, What Role for the Precautionary Principle in WTO Law after Japan-Apples? (2005), EcoLomic Policy and Law 2(4), 7.

[10] Jacqueline Peel, Risk Regulation Under the WTO SPS Agreement: Science as an International Normative Yardstick? (2004), Jean Monnet Working Paper 02/04, 81-82.

[11] Australia – Measures Affecting Importation of Salmon (Australia-Salmon), Appellate Body Report, WT/DS18/AB/R (20 October 1998), para. 125.

[12] P.C. Mavroidis, Trade in Goods – The GATT and the Other Agreements Regulating Trade in Goods, 2^nd edition (2012), Oxford University Press, 722.

[13] Ibid, 723.

[14] Caroline E. Foster, Japan – Measures Affecting the Importation of Apples: Rotten to the Core? (2010), Australian Year Book of International Law 25, 328.