WORLD TRADE WT/DS26/AB/R WT/DS48/AB/R 16 January 1998 ORGANIZATION (.) Appellate Body EC MEASURES CONCERNING MEAT AND MEAT PRODUCTS (HORMONES) AB-1997-4 Report of the Appellate Body WT/DS26/AB/R WT/DS48/AB/R Page i I. Introduction: Statement of the Appeal. Arguments of the Participants and Third Participants. Claims of Error by the European Communities - Appellant.
Burden of Proof. Standard of Review. The Precautionary Principle. Objective Assessment of the Facts.
Temporal Application of the SPS Agreement. Arguments by the United States - Appellee. Burden of Proof. Standard of Review.
The Precautionary Principle. Objective Assessment of the Facts. Temporal Application of the SPS Agreement. Arguments by Canada - Appellee.
Burden of Proof. The Precautionary Principle. Objective Assessment of the Facts. Temporal Application of the SPS Agreement.
Claims of Error by the United States - Appellant. Claims of Error by Canada - Appellant. 29 WT/DS26/AB/R WT/DS48/AB/R Page ii F. Arguments by the European Communities - Appellee.
Arguments by the Third Participants. Issues Raised in this Appeal. Allocating the Burden of Proof in Proceedings Under the SPS Agreement. The Standard of Review Applicable in Proceedings Under the SPS Agreement.
The Relevance of the Precautionary Principle in the Interpretation of the SPS Agreement. Application of the SPS Agreement to Measures Enacted Before 1 January 1995. The Requirement of Objective Assessment of the Facts by a Panel Under Article 11 of the DSU. Evidence with Regard to MGA.
Evidence with Regard to the Five Other Hormones. Evidence with Regard to the Issue of Control. Evidence on Article 5. Certain Procedures Adopted by the Panel.
The Selection and Use of Experts. Additional Third Party Rights to the United States and Canada. The Difference Between Legal Claims and Arguments. The Interpretation of Articles 3.3 of the SPS Agreement.
The Meaning of "Based On" as Used in Article 3.1 of the SPS Agreement. Relationship Between Articles 3.3 of the SPS Agreement. The Requirements of Article 3.3 of the SPS Agreement. The Reading of Articles 5.2 of the SPS Agreement: Basing SPS Measures on a Risk Assessment.
The Interpretation of "Risk Assessment". Risk Assessment and the Notion of "Risk". Factors to be Considered in Carrying Out a Risk Assessment. The Interpretation of "Based On".
76 WT/DS26/AB/R WT/DS48/AB/R Page iii 1. A "Minimum Procedural Requirement" in Article 5.Substantive Requirement of Article 5.1 - Rational Relationship Between an SPS Measure and a Risk Assessment. The Reading of Article 5.5 of the SPS Agreement: Consistency of Levels of Protection and Resulting Discrimination or Disguised Restriction on International Trade. General Considerations: the Elements of Article 5.
Different Levels of Protection in Different Situations. Arbitrary or Unjustifiable Differences in Levels of Protection. Resulting in Discrimination or a Disguised Restriction on International Trade. Appeals by the United States and Canada: Articles 2.6 of the SPS Agreement.
Findings and Conclusions .102 WT/DS26/AB/R WT/DS48/AB/R Page 1 WORLD TRADE ORGANIZATION APPELLATE BODY EC Measures Concerning Meat and Meat AB-1997-4 Products (Hormones) Present: European Communities, Appellant/Appellee Feliciano, Presiding Member United States, Appellant/Appellee Ehlermann, Member Canada, Appellant/Appellee Matsushita, Member Australia, New Zealand and Norway, Third Participants I. Introduction: Statement of the Appeal 1. The European Communities, the United States and Canada appeal from certain issues of law and legal interpretations in the Panel Reports, EC Measures Concerning Meat and Meat Products (Hormones).1 These two Panel Reports, circulated to Members of the World Trade Organization ("WTO") on 18 August 1997, were rendered by two Panels composed of the same three persons.2 These Panel Reports are similar, but they are not identical in every respect. The Panel in the complaint brought by the United States was established by the Dispute Settlement Body (the "DSB") on 20 May 1996.
On 16 October 1996, the DSB established the Panel in the complaint brought by Canada. The European Communities and Canada agreed, on 4 November 1996, that the composition of the latter Panel would be identical to the composition of the Panel established at the request of the United States. The Panel dealt with a complaint against the European Communities relating to an EC prohibition of imports of meat and meat products derived from cattle to which either the natural hormones: oestradiol-17, progesterone or testosterone, or the synthetic hormones: trenbolone acetate, zeranol or melengestrol acetate ("MGA"), had been administered for growth promotion purposes. This import prohibition was set forth in a series of Directives of the Council of Ministers that were enacted before 1 January 1995.
Those Directives were: 1 Complaint by the United States, WT/DS26/R/USA, (the "US Panel Report") and Complaint by Canada, WT/DS48/R/CAN, (the "Canada Panel Report"). 2 As the composition of both Panels was identical, we will refer to the Panels as "the Panel". WT/DS26/AB/R WT/DS48/AB/R Page 2 1. Council Directive 81/602/EEC of 31 July 1981 ("Directive 81/602")3; 2.
Council Directive 88/146/EEC of 7 March 1988 ("Directive 88/146")4; and 3. Council Directive 88/299/EEC of 17 May 1988 ("Directive 88/299"). Directive 81/602 prohibited the administration to farm animals of substances having a hormonal action and of substances having a thyrostatic action. It also prohibited the placing on the European market of both domestically produced and imported meat and meat products derived from farm animals to which such substances had been administered.
Two exceptions to this prohibition were provided for. One exception covered substances with an oestrogenic, androgenic or gestagenic action when used for therapeutic or zootechnical purposes and administered by a veterinarian or under a veterinarian's responsibility. The other exception related to three natural hormones (oestradiol - 17, progesterone and testosterone) and two synthetic hormones (trenbolone acetate and zeranol) used for growth promotion purposes if allowed under the regulations of the Member States of the European Economic Community ("EEC"), until a detailed examination of the effects of these substances could be carried out and until the EEC could take a decision on the use of these substances for growth promotion. The sixth hormone involved in this appeal, MGA, was not included in the second exception; it was covered by the general prohibition concerning substances having a hormonal or thyrostatic action.
Seven years later6, Directive 88/146 was promulgated prohibiting the administration to farm animals of the synthetic hormones: trenbolone acetate and zeranol, for any purposes, as well as the administration of the natural hormones: oestradiol - 17, progesterone and testosterone, for growth promotion or fattening purposes. This Directive permitted Member States of the EEC to authorize, under specified conditions, the use of the three natural hormones for therapeutic and zootechnical purposes. Directive 88/146 explicitly prohibited both the intra-EEC trade and the importation from third countries of meat and meat products obtained from animals to which substances having oestrogenic, androgenic, gestagenic or thyrostatic action had been administered. Trade in meat and meat products 3 Official Journal, No.
4 Official Journal, No. 5 Official Journal, No. 6 It should be noted that on 31 December 1985 the Council of Ministers adopted Directive 85/649/EEC prohibiting the use in livestock farming of certain substances having a hormonal action, Official Journal, No. This Directive prohibited the use of all the hormones (except MGA, the use of which had been previously prohibited) for growth promotion purposes and established more detailed provisions concerning authorized therapeutic uses.
This Directive was challenged in the Court of Justice of the European Communities, which annulled it on procedural grounds in its Judgment of 23 February 1988, [1988] E. Shortly afterwards, the European Commission submitted to the Council a proposal for a substantively identical Directive, which the Council adopted on 7 March 1988 as Directive 88/146/EEC. WT/DS26/AB/R WT/DS48/AB/R Page 3 derived from animals treated with such substances for therapeutic or zootechnical purposes was allowed only under certain conditions. Those conditions were set out in Directive 88/299.
Effective as of 1 July 1997, Directives 81/602, 88/146 and 88/299 were repealed and replaced with Council Directive 96/22/EC of 29 April 1996 ("Directive 96/22").7 This Directive maintains the prohibition of the administration to farm animals of substances having a hormonal or thyrostatic action. As under the previously applicable Directives, it is prohibited to place on the market, or to import from third countries, meat and meat products from animals to which such substances, including the six hormones at issue in this dispute, were administered. This Directive also continues to allow Member States to authorize the administration, for therapeutic and zootechnical purposes, of certain substances having a hormonal or thyrostatic action. Under certain conditions, Directive 96/22 allows the placing on the market, and the importation from third countries, of meat and meat products from animals to which these substances have been administered for therapeutic and zootechnical purposes.
The Panel circulated its Reports to the Members of the WTO on 18 August 1997. The US Panel Report and the Canada Panel Report reached the same conclusions in paragraph 9.1: (i) The European Communities, by maintaining sanitary measures which are not based on a risk assessment, has acted inconsistently with the requirements contained in Article 5.1 of the Agreement on the Application of Sanitary and Phytosanitary Measures. (ii) The European Communities, by adopting arbitrary or unjustifiable distinctions in the levels of sanitary protection it considers to be appropriate in different situations which result in discrimination or a disguised restriction on international trade, has acted inconsistently with the requirement contained in Article 5.5 of the Agreement on the Application of Sanitary and Phytosanitary Measures. (iii) The European Communities, by maintaining sanitary measures which are not based on existing international standards without justification under Article 3.3 of the Agreement on the Application of Sanitary and Phytosanitary Measures, has acted inconsistently with the requirements of Article 3.1 of that Agreement.
In both Reports, the Panel recommended in paragraph 9. that the Dispute Settlement Body requests the European 7 Official Journal, No. WT/DS26/AB/R WT/DS48/AB/R Page 4 Communities to bring its measures in dispute into conformity with its obligations under the Agreement on the Application of Sanitary and Phytosanitary Measures. On 24 September 1997, the European Communities notified the DSB of its decision to appeal certain issues of law covered in the Panel Reports and certain legal interpretations developed by the Panel, pursuant to paragraph 4 of Article 16 of the Understanding on Rules and Procedures Governing the Settlement of Disputes (the "DSU"), and filed two notices of appeal8 with the Appellate Body pursuant to Rule 20 of the Working Procedures for Appellate Review (the "Working Procedures").
Pursuant to Rule 21 of the Working Procedures, the European Communities filed an appellant's submission on 6 October 1997. On 9 October 1997, the United States and Canada filed appellants' submissions pursuant to Rule 23(1) of the Working Procedures. On 20 October 1997, the United States and Canada each filed an appellee's submission pursuant to Rule 22 of the Working Procedures and the European Communities filed its own appellee's submission pursuant to Rule 23(3) of the Working Procedures. On the same day, Australia, New Zealand and Norway filed separate third participants' submissions in accordance with Rule 24 of the Working Procedures.
The oral hearing was held on 4 and 5 November 1997. The participants and third participants presented oral arguments and responded to questions put to them by the Members of the Division hearing this appeal. The participants and third participants also gave oral concluding statements. Arguments of the Participants and Third Participants A.
Claims of Error by the European Communities - Appellant 1. Burden of Proof 9. The European Communities argues that the Panel erred in its allocation of the burden of proof in this dispute in three respects. In the view of the European Communities, the Panel erred on the issue of burden of proof under the Agreement on the Application of Sanitary and Phytosanitary Measures (the "SPS Agreement") in general; in allocating the burden of proof under Article 3.3 of the SPS Agreement; and in allocating the burden of proof under Article 5.