Chapter Two - The WTO Case
Introduction
2.1
Australia's
commitment to a scientific assessment of risk as required by the World Trade
Organisation's Agreement on the Application of Sanitary and Phytosanitary
Measures (SPS Agreement) is exemplified by the existence of an agency to
undertake the work.
2.2
During this inquiry, Biosecurity Australia
reinforced the importance of science to the risk assessment process. In
evidence to other inquiries the Committee has conducted into import risk
analyses, Biosecurity Australia
has also expressed this view. Biosecurity Australia's
import risk analysis review panel has the responsibility of making assessments
of the science in the risk modelling process. The then Executive Manager of
Biosecurity Australia
informed the Committee that:
The expert panel is responsible for considering the available
scientific information and producing a draft report. Included in the draft
report is the panel's view on the quarantine risks and risk management measures
...[20]
2.3
In relation to the IRA for apples from New
Zealand, the Committee was informed of the
conflicting scientific information available to the panel:
Some studies have found that, at the end of the season, and when
you pick, some apples have got some levels of bacteria on them at picking. Other
studies – even from severely blighted orchards, with severe symptoms throughout
the orchards – have reached the conclusion that there are no viable bacteria
left on apples at maturity and harvest.
So there is a mixed set of information there. The panel itself
has gone through all this information, and the draft conclusions are of course
in the draft report.[21]
2.4
Science is neither unequivocal nor static and the
results of one scientific study are not necessarily applicable to field
situations. The interpretative nature of the data for the risk modelling
process is governed by the terms of the agreement and science, but it is a
qualitative assessment. For some, the jurisprudence emerging from WTO appellate
cases should be taken into consideration to provide some guidance to this
process.
Japan – US
dispute and WTO determination
2.5
In June 2002, a Panel was formed by the WTO's Dispute
Settlement Body to hear a complaint from the US
challenging Japan's
existing SPS measures applied to US apples for export to Japan.
In July 2003 the Panel found Japan's
restrictions on US apples to be in breach of their obligations under the WTO's
SPS Agreement, and on 12 November
2003 the WTO's Appellate Body upheld the findings of the Panel.[22] Australia
and New Zealand
were third parties to both decisions.
2.6
Principally, Japan
was found to have established its SPS measures in a manner inconsistent with
its obligations under Article 2.2 of the SPS Agreement, which states that:
Members shall ensure that any sanitary or phytosanitary measure
is applied only to the extent necessary
to protect human, animal or plant life or health, is based on scientific
principles and is not maintained without
sufficient scientific evidence, except as provided for in paragraph 7 of
Article 5 (emphasis added).[23]
2.7
In Japan –
Measures Affecting the Import of Apples the Appellate Body affirmed the
principle that a test of a "rational or objective relationship"
between an SPS measure and the available scientific evidence applied. This test
is determined by an assessment of whether an SPS measure is "clearly
disproportionate to the risk identified on the basis of the scientific evidence
available".[24] In the context of
Article 2.2, scientific evidence is only considered "sufficient" to
justify an SPS measure if it demonstrates that the risk is proportional to its
mitigation.
2.8
The facts of this case led the Panel and Appellate Body
to conclude no rational or objective relationship between Japan's
restrictions and the empirical risks.[25]
According to the WTO, the evidence before the Panel suggested that the risk of
mature, symptomless apples serving as a pathway for the spread of fire blight
was negligible.[26]
2.9
Japan's
SPS measure comprised of a number of cumulative elements including:
- prohibition from orchards not completely blight-free;
- 500 metre buffer zone around designated
orchards;
- joint visual inspections by US and Japanese
officials; and
- chlorine treatment.[27]
The Panel and the
Appellate Body concluded that this measure was not proportionate to the risk of
fire blight being introduced to Japan
by mature US
apples.
2.10
However, the WTO Appellate Body was careful to
emphasise that determining the appropriateness of a risk mitigation measure
with regards to its basis of "sufficient scientific evidence", as
required by Article 2.2, depends on the particular circumstances of each case.[28]
2.11
It is this aspect of the SPS agreement which is central
to the debate as to whether risk mitigation protocols proposed by Australia
for New Zealand
apples is sufficiently scientifically based. Essentially, the question of
proportionality is indicative of whether or not Biosecurity Australia's
IRA protocols are more trade restrictive than necessary to achieve an
appropriate level of protection (ALOP) from quarantine pests and disease.
Appropriate level of protection (ALOP)
2.12
According to Biosecurity Australia,
the purpose of the International Agreement on the Application of Sanitary and
Phytosanitary Measures is to:
... [define] the concept of an 'appropriate level of sanitary or
phytosanitary protection (ALOP)' as the level of protection deemed appropriate
by the WTO Member establishing a sanitary or phytosanitary measure to protect
human, animal or plant life or health within its territory.[29]
2.13
The risk of an identified pest or disease entering Australia
as a result of the importation of any given product, in this case apples from New
Zealand, must fall below Australia's
appropriate level of protection. The IRA
Panel assess the risk as being a combination
of the likelihood and the consequences of an identified pest or disease
entering as a result of importing that product. If the risk does not fall below
the ALOP, strategies to reduce the risk to an appropriate level of protection
should be examined. The WTO Appellate Body's ruling clarified that any risk mitigation
strategy proposed must bear a scientific relationship to the level of the assessed
risk.
2.14
Australia
is one of a number of countries that uses qualitative terms to express its
appropriate level of risk. According to the revised draft IRA, the level of
risk established by government policy reflects community expectations. This is
currently expressed as "providing a high level of sanitary and
phytosanitary protection, aimed at reducing risk to a very low level, but not
to zero."[30]
2.15
Biosecurity Australia
argues that a very low level of risk is the highest standard of protection
possible, without limiting the movement of goods.[31] In discussing the implied level of risk
of fire blight entering Australia,
Dr Roberts,
the chairman of the IRA panel, indicated that:
It is exactly the same as eight million tourists coming through
the border. I can guarantee, although I cannot identify the number or who, that
some of them have fire blight bacteria on them. I guarantee that some of them
have backyards, gardens or businesses with fire blight hosts in them. So the
bacteria are already crossing our border. It is unavoidable unless you say that
nothing moves.[32]
2.16
However, the import risk assessment made by the expert
panel combines that risk with the consequences of such entry. It is the outcome
of that calculation that must be below Australia's
ALOP.
Industry response
2.17
The outcome of the WTO Panel and Appellate Body
consideration of the Japan – Measures
Affecting the Import of Apple dispute
and its implications for Biosecurity Australia's
draft IRA was a matter of substantial comment in Committee hearings and
submissions, with the New Zealand
government and Australian industry representatives offering different interpretations
of the WTO's position.
New Zealand
2.18
The New Zealand
government's submission placed considerable weight on the determination of the
WTO in Japan – Measures Affecting the
Import of Apples. They particularly emphasised the WTO Panel's conclusion,
on the basis of the evidence before it, that "with respect to mature,
symptomless apple fruits, the risk that the transmission pathway be completed
is negligible".[33] Accordingly:
In New Zealand's view, the fact that there is not sufficient
scientific evidence that apple fruit can serve as a pathway for transmission of
fire blight means that any measures imposed to address risk of fire blight
transmission from imported apples will be disproportionate to such risk and not
based on science within the meaning of the SPS agreement.[34]
The upshot of the New
Zealand government's argument is that the
WTO has determined that any risk
mitigation strategy with respect to mature apples would be inconsistent with Article
2.2 of the SPS Agreement.
2.19
These views are echoed in the comments made by the
Chairman of Pipfruit New Zealand in evidence he gave to
the Committee:
I guess the moot point is at what level, how it is transmitted,
what is the pathway and so on. It is along the lines of the WTO saying mature
apples pose no risk.[35]
2.20
The Committee considers New
Zealand's position to be an optimistic one when
held against the WTO's findings. Firstly, their view fails to reflect the
Appellate Body's important qualifying statement. That is, assessing the
proportionality of SPS measures in the context of Article 2.2 is a matter to be
determined on a case by case basis. Secondly, Japan
had not based its SPS measures on scientific evidence specifically related to
the proposed export of apple fruit.[36] The
WTO Panel consequently declared that Japan
had not properly conducted their risk assessment as defined by the SPS
Agreement.[37]
2.21
The Committee notes that the scientific evidence the WTO
Panel relied on in Japan – Measures
Affecting the Import of Apples is specific to that case and Japan's
own assessment of risk. Alternative scientific evidence presented in accordance
with Article 2.2 of the SPS Agreement requirements could facilitate the WTO
Panel in adopting a different assessment of the risk of fire blight carried by
mature apples.
2.22
The European Journal of International Law review of the
decision suggests the possibility that a future dispute could produce a
different outcome :
The Japanese [SPS] measure at issue seems not to have raised
difficult legal issues, because it had significant factual deficiencies.[38]
2.23
In this case, the WTO – through its 'case by case'
caveat - articulated that no precedent has been established with regards to the
factual question of transmitting fire blight via the importation of mature
apples. Instead, the case affirms the principle of proportionality between SPS
measures and scientifically assessed risk. The Committee believes that the New
Zealand request for no risk mitigation at
all is inconsistent with this principle and Australia's
stated ALOP.
Australia
2.24
Australian industry representatives have also disputed New
Zealand's interpretation of the implications
of Japan – Measures Affecting the Import
of Apples. They highlighted the failure of the Japanese to adequately
demonstrate the consistency of their measure with the SPS Agreement. In
submissions to the inquiry, industry organisations contended that the main
reasons for the outcome were Japan's
failure to:
(a)
demonstrate that risk mitigation protocols were based
on relevant science; and
(b)
conduct an appropriate risk assessment.[39]
2.25
The Australian industry's concern over Japan – Measures Affecting the Import of
Apples is the impact the decision has had on Biosecurity Australia's
approach to this IRA. The Apple and Pear Industry Taskforce claimed the
decision had influenced Biosecurity Australia
to make the revised draft IRA less trade restrictive:
There is no doubt that Biosecurity have a high level of concern
in relation to a W.T.O. challenge by New Zealand. From our observation this is a common
occurrence in all I.R.A.’s undertaken by Biosecurity.
It is relevant that Biosecurity personnel are not trade experts,
and do not have legal training. Our
contention is that an I.R.A. should be undertaken with W.T.O. policy issues
left to trade and legal experts.
There is a very real danger that protecting Australia
from any potential W.T.O. challenge will result in taking the “easy or safe
options” when faced with issues that are reliant on opinions to resolve.[40]
2.26
The Tasmanian Apple and Pear Association also suggested
that BA had interpreted the decision as a precedent that would be applied to
any challenge against Australia's
protocols:
This whole process is being undertaken in an environment where
Biosecurity Australia is intimidated by the possibility that if New Zealand
does not like what is proposed then they will take Australia to the WTO on the
basis that science does not support the proposed measures and that they are too
trade restrictive.
The recent WTO ruling against Japan
has been interpreted as a precedent and seems to have a strong influence on the
manner in which Biosecurity Australia has managed this revised draft IRA.[41]
2.27
Apple and Pear Australia Limited (APAL) also claimed
that trade issues were BA's foremost consideration:
There is no doubt that what is the least trade restrictive is
what influences Biosecurity’s thinking. There is no doubt that everything they
do is based on what the WTO would think about it, and I think it would be
equally true to say that there is a free trade culture within Biosecurity and
AFFA that pushes the lead on these issues.[42]
2.28
Biosecurity Australia
has repeatedly stated to the Committee that its revised draft IRA is entirely
science based:
The reassurance I give you is that the panel’s deliberations on
risk assessment measures and the judgment of risk are their own and are based
on an Australian risk assessment—an Australian assessment of the scientific
situation for Australia’s
position on quarantine risk in relation to New
Zealand apples. It is a distinct,
independent Australian assessment.[43]
2.29
The Committee accepts these reassurances, while noting
that Biosecurity Australia also acknowledges that its approach to quarantine is
consistent with the terms of the WTO's SPS agreement.[44]
2.30
Further, the Committee notes the use of the phase
"the judgement of risk are their own" in the above quotation. This implies
the qualitative nature of risk assessments.
Qualitative vs quantitative
2.31
In its 2001 report, the Committee's predecessor
recommended that:
Biosecurity Australia
incorporate a full quantitative risk evaluation in the final IRA on the
possible importation of New Zealand
apples, in preference to the current unsatisfactory qualitative risk evaluation
used in the draft IRA.[45]
2.32
A quantitative likelihood model was used in the 2004
revised draft IRA to "represent pathways relevant to the importation and
utilisation of apple fruit, the disposal of fruit waste, and the possible
exposure of susceptible host plants in Australia."[46]
2.33
The revised draft IRA states that the quantitative
model provides the following four important technical facilities:
- a framework upon which to base the logical
structure of each assessment;
- evaluation of the effect of the 'volume of
trade' during a specified period;
- accommodation of 'uncertainty' or 'natural
variation' in the likelihood estimate assigned to individual steps in pathways;
and
- use of 'sensitivity analysis' to identify
critical steps in each scenario, and thus focus information needs and (where
relevant) risk management.[47]
2.34
However, the revised draft IRA also indicates that
quantitative data:
... was not always available to support estimation of many of
the probabilities assigned to the pathway steps considered in this analysis.
The likelihoods assigned to these steps were subsequently based on expert
judgements, and modelled using the qualitative likelihoods described in
Biosecurity Australia's Guidelines for
Import Risk Analysis (2001) [the Guidelines]. [48]
2.35
The Guidelines set out the boundaries adopted for
qualitative likelihoods, indicating that in choosing the boundaries it was
important to:
- provide a system that could be adopted by those experts
whose take it was to review scientific evidence and estimate likelihoods;
- ensure that the categories were neither overly
precise nor constrictive; nor so broad as to lose the precision that may have
been present in the original body of scientific evidence.[49]
2.36
The revised draft IRA indicates that it "was not critical that the categories were of
equal width, or that they were assigned according to a predefined arithmetic or
logarithmic scale."[50] Rather, it
is argued, the
... emphasis was on useability and, once defined, a system that
would enable experts to use the corresponding terms and definitions
consistently, and for stakeholders to be clear on the meaning of the likelihood
terms used.[51]
2.37
The Committee acknowledges that the modelling allows
for a standard that can be used to assess quarantine risks over a range of
imports and to assess them in an open and transparent way. However, it also
creates an environment where there are no absolutes and judgements can be
called into question. Biosecurity Australia
are aware of the dilemmas that can arise:
The panel spent many meetings discussing this issue [the risk
unit part of the model] with various experts. If you get a room full of experts
on this particular issue you will get two rooms full of answers from them.[52]
2.38
Such problems are only heightened when the available
scientific evidence does not relate specifically to the matter at hand or when
there is conflicting evidence. The interpretative nature of the assessment
requires judgements to be made over "best fit" to local circumstance
and as with any judgements, differing views are likely to exist. Thus, Australian
apple and pear industry representatives contended:
... from the industry's viewpoint, we believe there is a very
strong case that could be argued about the transmission of fire blight to
mature fruit. Our view would always be: you back it and you go in on that basis
and work from there.[53]
The precautionary principle
2.39
The Committee recognises that it is tempting, in the
midst of conflicting scientific evidence, to argue that Biosecurity Australia would
be justified in applying a cautious approach to imposing protocols for the
importation of New Zealand apples. This method of assuming the worst case
scenerio in the face of scientific uncertainty is frequently referred to as the
'precautionary principle'.
2.40
Article 5.7 of the SPS Agreement states that:
In cases where relevant scientific evidence is insufficient, a
Member may provisionally adopt sanitary or phytosanitary measures on the basis
of available pertinent information, including that from the relevant
international organisations as well as from sanitary or phytosanitary measures
applied by other Members. In such circumstances, Members shall seek to obtain
the additional information necessary for a more objective assessment of risk
and review the sanitary or phytosanitary measure accordingly within a
reasonable period of time.[54]
2.41
One possible interpretation of this provision is its
role as an invitation to invoke the precautionary principle where scientific
evidence is insufficient.
2.42
In the context of establishing SPS measures to prevent
the transmission of fire blight, it is unlikely that the precautionary
principle could be so invoked. Notwithstanding its possible broader
application, the WTO in Japan – Measures
Affecting the Import of Apples determined that there was sufficient
scientific evidence pertaining to the transmission of fire blight through the
importation of mature apples.[55] The
WTO Panel and Appellate Body further clarified the issue, concluding that
scientific uncertainty did not constitute insufficient evidence. [56]