Starting in 1975, Australia prohibited imports of fresh chilled and frozen salmon, allegedly to avoid the introduction of exotic fish diseases to Australia. Import of heat-treated salmon, including canned salmon, was permitted if it met the treatment conditions established by Australia. In 1994, Canada requested formal consultations under the GATT dispute settlement provisions. Following these consultations, Australia agreed to undertake an analysis of the disease risks of importing uncooked salmon, examining, in the first instance, adult, wild, ocean-caught Pacific salmon from Canada and the United States.

A draft import risk assessment was published in May 1995, concluding that if certain certification conditions were met, imports of adult, wild, ocean-caught Pacific salmon posed a negligible risk to Australia and should be permitted. Following public comments on the draft report, a second draft report was issued in May 1996, which made no recommendation, but identified a number of alternative measures for managing the risk. The Final Report on the risk assessment, issued in December 1996, concluded that there was a possibility that up to 20 exotic fish diseases could be introduced by imports of this category of salmon, and that although the probability was small, the economic consequences of these diseases could be great. On the basis of the Final Report, the Australian government announced in December 1996 that it was maintaining its ban on the importation of fresh chilled and frozen salmon.

The Panel back to top

A WTO panel was established in April 1997. The Panel members were Mr. Michael Cartland (chairman), a Hong Kong lawyer and trade diplomat, Mr. Kari Bergholm, a Finnish trade diplomat who had been the first chairman of the SPS Committee, and Ms. Claudia Orozco, a Colombian lawyer and trade diplomat. The Panel decided to consult scientific experts chosen in consultation with the parties on the basis of lists of experts provided by the OIE. Expert advice was sought on fish diseases, risk assessment and the OIE.

Legal issues and findings back to top

Risk assessment — Articles 5.1 and 5.2

Australia had conducted a risk assessment on adult, wild, ocean-caught Pacific salmon, and the Panel assumed — without making a finding on this issue — that this risk assessment met the requirements of a risk assessment contained in Articles 5.1 and 5.2. However, the Panel found the measure was not based on the risk assessment, i.e. there was no rational relationship between this risk assessment and the import ban on this type of salmon. For all other types of salmon, the Panel found that Australia had not done a risk assessment and was thus in violation. The Panel considered that Australia’s measure prohibiting imports of fresh chilled or frozen salmon could also be described as a requirement that the salmon be heat-treated.

The Appellate Body rejected the Panel’s premise that the heat-treatment requirement was the SPS measure at issue. However, the Appellate Body then examined Australia’s risk assessment concluding that, based on the definition in Annex A of the Agreement, an animal health risk assessment must

identify the diseases in question, as well as their associated biological and economic consequences;
evaluate the likelihood of entry, establishment or spread of these diseases, as well as the associated biological and economic consequences; and
evaluate the likelihood of entry, establishment or spread of these diseases according to the SPS measures which might be applied.

The Appellate Body found that Australia’s risk assessment identified the diseases in question, but did not evaluate the likelihood according to the second and third criteria. Australia had acted inconsistently with Article 5.1 of the SPS Agreement because the existing risk assessment did not fulfil the requirements of the SPS Agreement, and there was no risk assessment for the remaining types of salmon. The Appellate Body noted that a proper risk assessment did not have to be quantitative, but could be qualitative.

Consistency — Article 5.5

The Panel compared Australia’s levels of protection reflected in the ban on salmon imports with the importation of whole frozen herring for bait, and with the importation of live ornamental finfish (aquarium fish). The Panel considered whether:

there were differences in the levels of protection adopted in different, but comparable situations;
these differences were arbitrary or unjustifiable; and
these resulted in discrimination or a disguised restriction on trade.

Although in both situations there was at least one disease in common, the Panel found that the levels of protection were quite different. Salmon importation was prohibited, while herring was allowed in without controls, and ornamental fish were allowed with few controls. The Panel found that these differences in the levels of protection were arbitrary or unjustifiable, since bait was routinely introduced into the aquatic environment, and ornamental fish were often released into the wild, and thus posed a higher risk to Australia’s fish population. Because of these arbitrary or unjustifiable differences, the violation of Article 5.1, plus the sudden change in conclusions between the 1995 and 1996 versions of the risk assessment, and the lack of restrictions on the internal movement of salmon, the Panel concluded that the ban on salmon imports was discriminatory and resulted in a disguised restriction on trade. The Appellate Body upheld this finding.

Least trade-restrictive measure — Article 5.6

The Panel next examined whether Australia violated Article 5.6, which requires that a measure be no more trade-restrictive than required to achieve the appropriate level of protection. It examined whether another measure

was reasonably available, taking into account technical and economic feasibility;
achieved Australia’s appropriate level of protection; and
was significantly less restrictive to trade.

The Panel noted that Australia’s risk assessment identified seven possible policy options, all of which were presumably technically and economically feasible, and further indicated that it was “extremely difficult to distinguish between the levels of risk” that each option presented. Some of these options were clearly less trade-restrictive than the import ban/heat treatment requirement imposed by Australia. The Panel thus concluded that Canada had made a prima facie case that less trade-restrictive measures existed, and that Australia had failed to provide evidence to rebut this.

The Appellate Body reversed this finding because the Panel had based much of its considerations on the heat-treatment requirement, not on the import prohibition. Because of insufficient factual findings, the Appellate Body was not able to come to a conclusion on whether Australia had violated Article 5.6.

Implementation back to top

The parties did not agree on what constituted a “reasonable period of time” for Australia to implement the findings of the Panel and Appellate Body. They referred the matter for arbitration, with the result that Australia received eight months to bring its measure into conformity with the SPS Agreement.

The reasonable period of time for compliance with the rulings and recommendations of the DSB expired on 6 July 1999. Australia claimed to have fully implemented the DSB’s recommendations by 19 July 1999. Australia had carried out a new import risk analysis for fresh chilled and frozen salmon for human consumption and other non-viable marine finfish, and a separate risk analysis for live ornamental fish. Based on the 1999 risk analysis, Australia’s new measure allowed the importation of all kinds of Canadian salmon under certain conditions. However, Canada did not agree that Australia had done enough.

Canada asked the original Panel to examine Australia’s implementation measures to see if Australia had complied. In addition, it requested authorization to suspend concessions on Canadian exports worth CDN$ 45 million, and Australia asked for arbitration over the amount of suspension of concessions (often called “retaliation”). The DSB requested the original Panel to consider the question of Australia’s compliance (Article 21.5 of the DSU) and appointed an arbitrator to decide on the appropriate level of “retaliation” (Article 22.6 of the DSU). Both countries agreed that they would wait until the Panel had decided on compliance before proceeding with arbitration over the level of suspension of concessions. The US, which in the meantime had asked for a panel against Australia on the same issue, also decided to wait until the Panel had completed its examination of Australia’s compliance.

Determination of compliance back to top

Australia’s new measure, based on a new risk assessment for all fresh chilled and frozen salmon, set new conditions on imports. In addition to requiring that fish be eviscerated, head and gills removed, washed internally and externally and certified, Australia specified that the product had to be processed to a “consumer-ready” state to be released from quarantine. The definition of what constituted consumer-ready product included a requirement that skin be removed from all products larger than 450 grams. Salmon that was not in consumer-ready form would have to be processed to consumer-ready form in approved premises to reduce risks from improper disposal of large quantities of skin, bone, etc.

Legal reasoning of the Panel

The Panel noted that the deadline for compliance was 6 July 2000, and that Australia’s new measure took effect on 19 July 2000. In addition, some of the new measures on fish other than salmon (to comply with the consistency requirement) were being phased in at later dates. Thus, the Panel found that there were periods of time during which Australia had failed to bring its measures into compliance with the SPS Agreement as called for in the DSB rulings and recommendations.

Next, the Panel considered whether Australia’s measures affecting salmon imports were based on a risk assessment. In the Panel’s opinion, the 1999 IRA met the three requirements of a risk assessment set out in the SPS Agreement, i.e. it (i) identified the diseases whose entry, establishment or spread Australia wanted to prevent, and the associated potential biological and economic consequences; (ii) evaluated the likelihood of entry, establishment or spread of these diseases, as well as the associated biological and economic consequences; and (iii) evaluated the likelihood of entry, establishment or spread of these diseases according to the SPS measures which might be applied.

The Panel found, however, that by requiring salmon products to be in a particular consumer-ready form in order to be released from quarantine, Australia was maintaining sanitary measures which were not based on a risk assessment, contrary to Article 5.1 of the SPS Agreement.

Furthermore, the Panel found that the definition of consumer-ready product was more restrictive than required to achieve Australia’s desired level of health protection, contrary to Article 5.6 of the SPS Agreement. Australia argued that the purpose of its consumer-ready requirement was to limit the risk from untreated waste from salmon processing plants. The Panel thought that Australia could introduce less trade-restrictive requirements, for example consumer packaging, which would also avoid unsafe processing and thus achieve Australia’s appropriate level of health protection.

In the original dispute, the Panel had found that Australia maintained arbitrary or unjustifiable differences in its levels of protection as applied to salmon when compared to herring for bait and live ornamental fish. Since Australia had modified its measures applying to salmon, as well as considerably tightened its measures affecting herring and ornamental fish imports, the Panel found that Australia no longer maintained arbitrary or unjustifiable differences in its levels of protection, and thus was no longer in violation of Article 5.5.

Current situation back to top

The report of the Panel on compliance was adopted without appeal on 20 March 2000. Australia and Canada reported that they had reached a mutually agreed solution on 18 May 2000, although by April 2002 no official confirmation of the settlement had been submitted. The United States and Australia notified in November 2000 that they had reached a mutually agreed solution.

For an update on the state of play of WTO disputes, go to the WTO website at http://www.wto.org/english/tratop_e/dispu_e/dispu_e.htm#news.

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