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Complaint by New Zealand.
On 31 August 2007, New Zealand requested consultations with Australia concerning measures imposed by Australia on the importation of apples from New Zealand.
On 27 March 2007, Australia's Director of Animal and Plant Quarantine determined a policy for the importation of apples from New Zealand: “Importation of apples can be permitted subject to the Quarantine Act 1908, and the application of phytosanitary measures as specified in the Final import risk analysis report for apples from New Zealand, November 2006”.
New Zealand considers that these restrictions are inconsistent with Australia's obligations under the SPS Agreement, and in particular Articles 2.1, 2.2, 2.3, 5.1, 5.2, 5.3, 5.5, 5.6, 8 and Annex C.
On 13 September 2007, the European Communities requested to join the consultations. On 14 September 2007, the United States requested to join the consultations. Subsequently, Australia informed the DSB that it had accepted the requests of the European Communities and the United States to join the consultations. On 6 December 2007, New Zealand requested the establishment of a panel. At its meeting on 17 December 2007, the DSB deferred the establishment of a panel.
Panel and Appellate Body proceedings
At its meeting on 21 January 2008, a panel was established. Chile, the European Communities, Japan, Chinese Taipei and the United States reserved their third-party rights. Subsequently, Pakistan reserved its third-party rights. On 3 March 2008, New Zealand requested the Director-General to compose the Panel. On 12 March 2008, the Director-General composed the Panel.
On 19 September 2008, the Chairman of the Panel informed the DSB that due to the nature and scope of the dispute, including the Panel's decision to seek scientific and technical expert advice pursuant to Article 11 of the SPS Agreement and Article 13 of the DSU, the Panel would not be able to issue its report within six months. The Panel expected to issue its final report to the parties by July 2009. On 22 June 2009, the Chairman of the panel informed the DSB that as a result of the time required for the expert consultation process, including the time needed to identify and select experts, to prepare the questions for the experts in consultation with the parties; the time required by experts to prepare their responses and the time provided to parties to comment on these responses, it would not be possible for the panel to issue its final report to the parties by July 2009. The panel estimated that it would issue its final report to the parties by January 2010. On 29 January 2010, the Chairman of the panel informed the DSB that due to the technical complexity of the issues and the volume of material to be reviewed, the panel would not be in a position to issue the final report in January 2010. The panel estimated that it will issue its final report to the parties by May 2010.
On 9 August 2010, the panel report was circulated to Members. The report addressed 16 phytosanitary measures adopted by Australia for the importation of New Zealand apples, including eight measures adopted against the risk of fire blight, four against European canker, one against apple leafcurling midge (ALCM) and three measures applying generally to all of these three pests. The panel found that the 16 measures were not based on a proper risk assessment and, accordingly, were inconsistent with Article 5.1 and 5.2 of the SPS Agreement. The panel also concluded that, by implication, these 16 measures were inconsistent with Article 2.2 of the SPS Agreement, which requires that SPS measures be based on scientific principles and not be maintained without sufficient scientific evidence.
The panel additionally found that 13 of the 16 measures, namely the pest-specific ones, were more trade-restrictive than required to achieve Australia's appropriate level of phytosanitary protection (ALOP), and were therefore also inconsistent with Article 5.6 of the SPS Agreement. The panel considered that the importation of mature, symptomless apples, suggested by New Zealand, was an appropriate alternative under Article 5.6 for Australia's eight fire blight and four European canker measures, and that the inspection of a 600-unit sample from each import lot, suggested by New Zealand, was an appropriate alternative for Australia's ALCM measure.
On 31 August 2010, Australia notified its decision to appeal to the Appellate Body certain issues of law covered in the panel report and certain legal interpretations developed by the panel. On 13 September 2010, New Zealand notified its decision to appeal to the Appellate Body certain issues of law covered in the panel report and certain legal interpretations developed by the panel. On 29 October 2010, the Chairman of the Appellate Body informed the DSB that due to the time required for completion and translation of the report, the Appellate Body would not be able to circulate its report within the 60-day period. It was estimated that the Appellate Body report would be circulated no later than 29 November 2010.
On 29 November 2010, the Appellate Body report was circulated to Members. Australia appealed the panel's findings under Annex A(1), and Articles 2.2, 5.1, 5.2 and 5.6 of the SPS Agreement. Australia did not appeal the finding on European canker, nor those related to the panel's selection of experts. New Zealand appealed the panel's findings that the claims under Annex C(1)(a) and Article 8 of the SPS Agreement fell outside the panel's terms of reference, but it did not appeal the findings under Articles 2.3 and 5.5 of the SPS Agreement.
The Appellate Body upheld the panel's finding that the 16 measures at issue, both as a whole and individually, constituted SPS measures within the meaning of Annex A(1) and were covered by the SPS Agreement. The Appellate Body also upheld the panel's finding that the 16 measures were not based on a proper risk assessment and, accordingly, were inconsistent with Articles 5.1 and 5.2 of the SPS Agreement and that, by implication, those measures were also inconsistent with Article 2.2 of the SPS Agreement.
The Appellate Body reversed the panel's finding that Australia's measures regarding fire blight and ALCM were inconsistent with Article 5.6 of the SPS Agreement, but it found itself unable to complete the legal analysis as to what level of protection would be achieved by New Zealand's proposed alternative measures for fire blight and ALCM. Additionally, the Appellate Body reversed the panel's finding that New Zealand's claims of undue delay pursuant to Annex C(1)(a) and Article 8 of the SPS Agreement were outside the panel's terms of reference. The Appellate Body then completed the legal analysis and found that New Zealand had not established that the 16 measures at issue were inconsistent with Australia's obligations under these provisions of the SPS Agreement.
At its meeting on 17 December 2010, the DSB adopted the Appellate Body report and the panel report, as modified by the Appellate Body report.
Reasonable period of time
At the DSB meeting on 25 January 2011, Australia informed the DSB that it intended to implement the DSB's recommendations and rulings in a manner that meets its WTO obligations. Australia said it would conduct a review of the existing policy for New Zealand apples for the three pests at issue and that it needed a reasonable period of time to do so.
On 31 January 2011, Australia and New Zealand informed the DSB that they had agreed that the reasonable period of time to implement the DSB's recommendations and rulings shall expire on 17 August 2011. The agreed period of time for implementation would allow Australia to be in a position to issue import permits for New Zealand apples from that date, based on any conditions that may arise out of the current review.
At the DSB meeting on 2 September 2011, Australia reported that it had adopted the measures necessary to comply with the DSB's recommendations and rulings and that imports of New Zealand apples into Australia had commenced as of 19 August 2011. New Zealand questioned whether Australia had fulled complied with the DSB's recommendations and rulings. New Zealand noted that efforts continued to be made at both state and Federal levels to change the current measures. One example was a proposal to introduce a Private Members Bill in the Australian Senate that would prevent the importation of New Zealand apples. Furthermore, New Zealand noted that some states had indicated that they would seek to prevent the entry of New Zealand apples. In response, Australia said that its Government opposed the Private Members Bill and would work hard to prevent its passage. Australia further noted that discussions were on-going with the State Governments to ensure that all SPS measures in Australia are consistent with Australia’s obligations under the SPS Agreement.
On 13 September 2011, New Zealand and Australia informed the DSB of Agreed Procedures under Articles 21 and 22 of the DSU.
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