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United States – Certain measures affecting imports of poultry from China: the fascinating case that wasn't

  • JAN BOHANES (a1)
Abstract

Professor Regan's paper on the US–Poultry (China) case provides highly interesting insight both into the facts of the case and the Panel's reasoning, as well as the broader systemic issues lurking behind them. The author has identified a number of thought-provoking aspects in a case that, at first glance, appears to be a relatively bland SPS dispute.

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1 Professor Regan's article, Section 3.1.

2 Some might say that the significance of the allocation of the burden of proof is generally overstated in WTO dispute settlement. This is probably true, but it does remain of practical significance.

3 What is clear from the case law is that, if both agreements are invoked, the legal analysis would start with the more specific agreement, that is the SPS Agreement. Appellate Body Report, United States – Final Countervailing Duty Determination with Respect to Certain Softwood Lumber from Canada, WT/DS257/AB/R, adopted 17 February 2004, DSR 2004:II, 571, para. 134. The most recent statement of the above proposition was by the Panel in United States – Measures Concerning the Importation, Marketing and Sale of Tuna and Tuna Products, WT/DS381/R, circulated to WTO Members 15 September 2011 [adoption/appeal pending], para. 7.40. This is precisely what the Panel did in this case.

4 One of the most salient sub-issues is, of course, the applicability of Article XX of the GATT to non-GATT agreements and provisions, an issue that has been subject to debate both in the case law and in academic debate. See Appellate Body Report in China – Measures Affecting Trading Rights and Distribution Services for Certain Publications and Audiovisual Entertainment Products, WT/DS363/AB/R, adopted 19 January 2010, which applied Article XX to China's obligations in China's Protocol of Accession. Appellate Body Report, China–Publications and Audiovisual Products, paras. 205–233. See also Panel Reports, China – Measures Related to the Exportation of Various Raw Materials, WT/DS394/R and Corr.1, WT/DS395/R and Corr.1, WT/DS398/R and Corr.1, circulated to WTO Members 5 July 2011 [appeal in progress], in which the Panel refused to apply Article XX to another provision in China's Protocol of Accession. Panel Reports, China–Raw Materials, para. 7.159.

5 In addition to the Panel's, as well as Professor Regan's convincing analysis as to why Section 727 was an SPS measure, see also the discussion in Gruszczynski Lukasz (2011), ‘United States: Certain Measures Affecting Imports of Poultry from China – Just Another SPS Case?’, 2:3 European Journal of Risk Regulation, 432, 435. Moreover, the definition of an SPS measure is to a large extent based on the health-protection purpose of a measure, and once a defendant claims such a purpose, it becomes more difficult for a complainant to credibly assert the contrary.

6 See WT/DS270/1 and WT/DS271/1, which identify the SPS Agreement as a relevant agreement ‘should Australia assert that the measure is an SPS measure’. In turn, WT/DS284/1 states that ‘[i]f the measures listed above are sanitary or phytosanitary measures as defined in the SPS Agreement, they would, in the view of Nicaragua, not be consistent with’.

7 Appellate Body Report, Mexico – Definitive Anti-Dumping Measures on Beef and Rice, Complaint with Respect to Rice, WT/DS295/AB/R, adopted 20 December 2005, DSR 2005:XXII, 10853, para. 138.

8 Panel Report, China – Measures Affecting Trading Rights and Distribution Services for Certain Publications and Audiovisual Entertainment Products, WT/DS363/R and Corr.1, adopted 19 January 2010, as modified by Appellate Body Report, WT/DS363/AB/R, para. 7.115.

9 Perhaps the one thing that China could have done differently would have been not to attach the condition to the statement that it requested consultations with the United States. It could have instead stated that it was requesting consultations with the United States on a certain measure, namely Section 727; it then could have alleged that ‘this measure is inconsistent with Article XI of the GATT and, if the United States were to argue that it is an SPS measure, also with the SPS Agreement’. (This is what complainants in other disputes have done, see footnote 6.) But are we going to make the admissibility of a consultations request, and a panel's jurisdiction, depend on formal aspects of this kind?

10 Appellate Body Report, European Communities – Conditions for the Granting of Tariff Preferences to Developing Countries, WT/DS246/AB/R, adopted 20 April 2004, DSR 2004:III, 925, para. 117ff. (emphasis added).

11 Appellate Body Report, India – Additional and Extra-Additional Duties on Imports from the United States, WT/DS360/AB/R, adopted 17 November 2008, para. 190.

12 Arguably, this case law (especially the India–Additional Import Duties variant) injects unnecessary uncertainty and unpredictability into a complainant's life, and this uncertainty and unpredictability outweighs any concerns that may have led the Appellate Body to adopt this approach.

13 Professor Regan's paper, Section 4.

14 Professor Regan's paper, Section 4.

15 See Article 5.1 of the SPS Agreement.

16 Appellate Body Report, EC – Measures Concerning Meat and Meat Products (Hormones), WT/DS26/AB/R, WT/DS48/AB/R, adopted 13 February 1998, DSR 1998:I, 135, para. 187.

17 See for instance the Codex Alimentarius Commission's Principles and Guidelines for the Conduct of Microbiological Risk Assessment, CAC/GL-30 (1999), p. 4, which states: ‘Factors that must be considered for Exposure Assessment include the frequency of contamination of foods by the pathogenic agent and its level in those foods over time. For example, these factors are influenced by the characteristics of the pathogenic agent, the microbiological ecology of the food, the initial contamination of the raw material including considerations of regional differences and seasonality of production, the level of sanitation and process controls, the methods of processing, packaging, distribution and storage of the foods, as well as any preparation steps such as cooking and holding.’ See www.fao.org/docrep/005/y1579e/y1579e05.htm (last visited 9 November 2011).

18 As an example, see for instance the Codex Alimentarius Code of Hygienic Practice for Milk and Milk Products or Code of Hygienic Practice for Meat, Food and Agriculture Organization.

19 As an example, see the standards/assessments promulgated by the World Organisation for Animal Health with respect to foot and mouth disease, http://www.oie.int/animal-health-in-the-world/official-disease-status/fmd/ (last visited 9 November 2011).

20 The FSIS concluded, based on its previous on-site audit, that China's poultry-inspection system was equivalent to that of the United States for processed foreign poultry products. The FSIS published notification in the Federal Register that it would be adding China to the list of countries eligible to export processed poultry products not slaughtered in China. The FSIS, again based on a previous on-site audit, had also made a preliminary decision finding China's inspection system for domestically slaughtered poultry products equivalent to that of the United States. US congressional legislation then precluded any further steps in these procedures through a series of budgetary measures, of which Section 727 was one.

21 Panel Report, US–Poultry (China), para. 7.185.

22 Ibid., paras. 7.195–7.196.

23 See for instance Lukasz Gruszczynski, who argues that the Panel should have explained more thoroughly the interpretative significance of the Decision on the Implementation of Article 4 of the Agreement on the Application of Sanitary and Phytosanitary Measures for construing Article 4. Gruszczynski Lukasz (2011), ‘United States: Certain Measures Affecting Imports of Poultry from China – Just Another SPS Case?’, 2:3 European Journal of Risk Regulation, 431, 436.

24 By way of examples, consider the EU's GMO regime as well as the EU's Novel Foods regime; the Australian quarantine regime for products such as fruits and vegetables; and, of course, the United States' very own PPIA.

25 Professor Regan's article, Section 7.

26 See WT/DS287/1, consultations request by the EU against Australia. See also WT/DS270/1 and WT/DS271/1, consultation requests filed by the Philippines against Australia, which are less explicit than the EU request, but nevertheless also appear to challenge, inter alia, the Australian quarantine regime as such.

27 I am grateful for a thought-provoking discussion of these questions with my colleague Hunter Nottage.

28 Appellate Body Report, EC Measures Concerning Meat and Meat Products (Hormones), WT/DS26/AB/R, WT/DS48/AB/R, adopted 13 February 1998, DSR 1998:I, 135, para. 186.

29 Perhaps one could make the argument that until either some other Member or at least a foreign producer asks for authorization, there is no way for the importing Member to know that it is restricting trade in that specific product. I am indebted for this idea to Professor Don Regan.

30 Panel Report, US–Poultry (China), para. 7.250.

31 Ibid., para. 7.249.

32 Ibid.

33 Ibid., para. 7.263.

34 In addition, I see two other problems. First, there is (yet another) misleading statement on the burden of proof – clearly, a defending Member does not (initially) have to demonstrate anything, because the burden of proof is on the complainant. The panel finding should probably be viewed again in the specific context of this case, where there was no scientific justification for Section 727, which to the Panel apparently amounted to a prima facie case, such that the burden of proof shifted to the United States.

Second, the statement that what should be demonstrated is that there are differing ‘levels of risk’ seems, strictly speaking, incorrect. What matters under Article 5.5 is whether (1) there are different ‘levels of protection’ (something conceptually different from the ‘level of risk’), (2) whether the difference between the levels of protection is ‘arbitrary’ or ‘unjustifiable’, and (3) whether, as a consequence of (1) and (2), there is discrimination or a disguised restriction on international trade. A level of risk is given by objective reality, and is determined in scientific fashion, whereas the level of protection (tolerated level of risk) is a policy target defined by the importing Member. Depending on the intrusiveness and restrictiveness of the measures taken by the importing Member, a level of protection can be anything from zero risk/high level of protection to medium to low, while the level of risk remains the same. Hence, the Panel's analysis seems to be directed at the wrong concept. Even if there are different levels of risk in comparable situations, that does not per se tell us anything about the respective levels of protection and about whether this difference deserves the label ‘arbitrary’ or ‘unjustifiable’.

(Admittedly, when a Member adopts no measure in the face of a particular risk, then the (natural) level of risk translates directly into a level of protection or a tolerated level of risk. I am grateful to Lukasz Gruszczynski for highlighting this point to me. At the same time, the conceptual differences between level of risk and level of protection remain. A level of risk occurs naturally and a level of protection is a policy choice. Article 5.5 is about comparing these policy choices. So the Panel's ‘test’ cannot be the general test under (2)).

35 See, in particular, Panel Report, US–Poultry (China), para. 7.261.

36 See for instance Bohanes Jan (2002), ‘Risk Regulation in WTO Law: A Procedure-Based Approach to the Precautionary Principle’, 40:2 Columbia Journal of Transnational Law 323.

37 Appellate Body Report, EC Measures Concerning Meat and Meat Products (Hormones), WT/DS26/AB/R, WT/DS48/AB/R, adopted 13 February 1998, DSR 1998:I, 135, para. 213.

38 Lukasz Gruszczynski also agrees with the outcome of the Panel's analysis, even if he criticizes the Panel's reasoning. Gruszczynski Lukasz (2011), ‘United States: Certain Measures Affecting Imports of Poultry from China – Just Another SPS Case?’, 2:3 European Journal of Risk Regulation, 431, 437.

39 See Professor Regan's article, Section 8. ‘No amount of context can make the ‘ordinary meaning’ of the word ‘necessary’ in GATT XX(b) encompass, say, the requirement to do a risk assessment.’ In my opinion, assessing whether a measure is ‘necessary’ includes considering the scientific justification of a measure. In demonstrating such scientific justification under Article XX(b), a WTO Member may rely on preexisting studies or may have to produce its own scientific study – which is also choice permissible under Article 5.1 of the SPS Agreement. Professor Regan also states that ‘‘[n]ecessary’ refers to the relation that exists between the measure and its goal, whereas the SPS is about requiring specific techniques for investigating that relation.’ I am not certain about how this distinction would play out in a dispute – the SPS Agreement does not necessarily require a WTO Member to perform a risk assessment (a Member can rely on preexisting studies); it merely requires that a measure be demonstrably scientifically justified as assessed at the time of a dispute settlement proceeding. And, in my view, this is also what an important part of ‘necessity’ under Article XX(b) is about.

40 Prof. Regan's Article, footnote 53.

41 For instance, the Annex I – Illustrative List of Export Subsidies in the SCM Agreement contains subsidies that do not fit within the ordinary meaning of the definition of a subsidy in Article 1 – especially within the ‘benefit’ prong – but Annex I is a deeming provision, and that is enough.

42 See Annex B of the SPS Agreement.

43 Appellate Body Report, Brazil – Measures Affecting Desiccated Coconut, WT/DS22/AB/R, adopted 20 March 1997, DSR 1997:I, 167, p. 14 (quoting with approval the statement of the Panel in that dispute).

* The views set forth here are attributable to the author alone and are not those of the Advisory Centre. The author would like to thank Lukasz Gruszczynski and Don Regan, as well as other friends and colleagues, for valuable comments.

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