Presentation of the Appellate Body s findings in India Agricultural Products

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1 TALKING DISPUTES 3 JULY 2015 Geneva, Switzerland Presentation of the Appellate Body s findings in India Agricultural Products Eugenia Costanza Laurenza Senior Associate, FratiniVergano European Lawyers

2 Table of Contents (I) Background (II) Key findings by the Appellate Body

3 (I) Background CLIMATE AND NERGY This dispute concerns import prohibitions imposed by India on various agricultural products because of concerns related to Avian Influenza. Disease at issue: Avian Influenza (AI) all AI subtypes classified according to ability to cause disease in birds: (i) highly pathogenic AI (HPAI) and (ii) low pathogenicity AI (LPAI). The Animal Health Organisation (OIE) requires its members, including the US and India, to notify any occurrence of HPAI and certain types of LPAI in their territories.

4 (I) Background CLIMATE AND NERGY Measure at issue India s AI measures: those measures that prohibit the importation of various agricultural products into India from those countries reporting notifiable avian influenza (NAI) maintained through, inter alia: o Indian Livestock Importation Act, 1898 (Livestock Act), published on 12 August 1898, as amended by the Live-Stock Importation (Amendment) Act (No. 28 of 2001) (Livestock Amendment Act) and published in the Gazette of India on 29 August 2001; and o S.O. 1663(E), issued by India s Department of Animal Husbandry, Dairying, and Fisheries (DAHD) pursuant to the Livestock Act, and published in the Gazette of India on 19 July 2011.

5 (I) Background CLIMATE AND NERGY The US claimed inconsistency of India s AI measures with: o Articles 2.2, 2.3, 3.1, 5.1, 5.2, 5.5, 5.6, 6.1, 6.2, 7 of the SPS Agreement and Annex B, paragraphs 2 and 5(a) (d) of the SPS Agreement; o Article XI of the GATT The panel found inconsistencies with: o Articles 3.1 and 3.2: not based on/conform to Chapter 10.4 OIE Terrestrial Code; o Articles 5.1, 5.2 and 2.2: not based on risk assessment and on scientific principles; o Article 2.3: arbitrary and unjustifiable discrimination and applied in manner which constituted disguised restriction to international trade; o Articles 5.6 and 2.2: more trade-restrictive than required for India s appropriate level of protection (ALOP) with respect to products covered by Chapter 10.4; o Articles 6.2 and 6.1: recognition concept disease-free areas and areas of low disease prevalence.

6 (II) Appeal: Key findings by the Appellate Body CLIMATE AND NERGY Four core aspects treated in the Appellate Body s report Scientific basis and risk assessment, and, in particular the relationship between Article 2.2 and Article 5.1 of the SPS Agreement; The compliance of India s measures with international standards / use of experts in disputes; The application of the provisions on regionalization; and The trade restrictiveness of India s measures / ALOP.

7 (II) Appeal: Key findings by the Appellate Body CLIMATE AND NERGY Relationship SPS Agreement Articles 5.1 and India: o Member may choose to comply with either Articles 5.1 and 5.2, or Article 2.2; o India based its SPS measures on compliance with Article 2.2, panel presumed inconsistency with Article 2.2 based on violation of Articles 5.1 and 5.2; o India seeks reversal of panel s findings under Article 2.2. US: o Request to uphold panel s findings: presumption of inconsistency 2.2 following violation 5.1 and 5.2 correct.

8 CLIMATE AND NERGY (II) Appeal: Key findings by the Appellate Body Appellate Body: o Article 5.1 and 5.2 SPS Agreement are a specific applications of basic obligation of Article 2.2, yet Members required to comply with all obligations; o Rational or objective relationship between SPS measure and scientific evidence; o Appellate Body case-law: presumption inconsistency with Article 2.2 in case of Article 5.1/5.2 violation; o Yet, panel had not given India the chance to rebut presumption regarding two product categories: fresh meat poultry and eggs. Hence, reversal panel s findings inconsistency Article 2.2 regarding import ban fresh meat poultry and eggs.

9 (II) Appeal: Key findings by the Appellate Body CLIMATE AND NERGY Compliance of India s measures with international standards India: o Appeal panel s findings of inconsistency with Article 3.1 SPS Agreement, no entitlement to benefit of the presumption of consistency under Article 3.2; o Panel exceeded permissible scope of consultation with OIE, not in line with Article 11.2 SPS Agreement and 13.2 Dispute Settlement Understanding (DSU); o Failure of the panel to make an objective assessment regarding OIE Code within meaning of Article 11 DSU. US: o Articles 11.2 SPS Agreement and 13.2 DSU offer considerable leeway to a panel to seek relevant information. Panel correctly asked experts to what extent India s measures diverge from OIE Code; correct assessment, India s IA not based on OIE Code.

10 CLIMATE AND NERGY (II) Appeal: Key findings by the Appellate Body Appellate Body: o First, authority of panels to consult experts is broad under Article 13.2 DSU. Article 11.2 SPS Agreement allows panels to seek experts advice in SPS cased involving scientific or technical issues, which are normally SPS cases, thus together with broad discretion under 13.2 DSU, Article 11.2 SPS Agreement provides broad discretion to seek information; o The Appellate Body rejected India s interpretation of OIE Code. It recalled Annex A(3)(b) as referring to OIE relevant international standards. Chapter 10.4 OIE Code is the relevant international standard for AI measures, benchmark for assessing based on or conforming to within the meaning of Article 3.1 and 3.2 of the SPS Agreement. o Hence, no violation of Article 11 DSU and no entitlement to benefit from the presumption of consistency for India.

11 (II) CLIMATE Appeal: AND NERGY Key findings by the Appellate Body Adaptation to regional conditions India: o Obligation for importing Member under Article 6.1 of the SPS Agreement arises only after exporting Member invokes claim under Article 6.3; o Legal error of the panel in the application of Article 6.2, first sentence, to India s AI measures. US: o Disagreement with India s interpretation. Panel correctly concluded that the request under Article 6.3 of the SPS Agreement is an unnecessary condition for the existence of the obligation under Article 6.1.

12 CLIMATE AND NERGY (II) Appeal: Key findings by the Appellate Body Appellate Body: o Firstly, explanation of Article 6 SPS Agreement as a whole and relationship between three paragraphs; o Two observations on Article 6.1: (i) importing Member obliged to ensure adaptation of each of its SPS measures; (ii) adaptation of SPS measures is continuous, not specific in time; o Note on Article 6.2: terms in particular concepts pest- or disease free areas and areas of low pest or disease prevalence subset of all the SPS characteristics for adaptation of SPS measure obligation in Article 6.1; o Article 6.3: specific situation of exporting Member claiming area within territory pest- or disease-free area or areas of low pest or disease prevalence.

13 (II) CLIMATE Appeal: AND NERGY Key findings by the Appellate Body Appellate Body: o In sum: three paragraphs of Article 6 interconnected; o Main obligation under Article 6.1, other paragraphs specific aspects of this obligation; o Disagrees with India that obligation under Article 6.1 only arises after invocation by exporting Member of Article 6.3. o Upheld the panel s finding that since S.O. contradicted the requirement to recognise the concepts of disease-free areas, India s AI measures, taken together do not recognise these concepts.

14 CLIMATE AND NERGY (II) Appeal: Key findings by the Appellate Body Trade Restrictiveness India: o Failure US to identify the correct ALOP because based on wrong measure, hence US failure to fulfil burden of presenting alternative measure. o ALOP identification always on basis of measure at issue. US: o No adequate statement by India on its ALOP, therefore the ALOP is supported by the evidence on the record.

15 CLIMATE AND NERGY (II) Appeal: Key findings by the Appellate Body Appellate Body: o Application of Article 5.6 of the SPS Agreement requires reasonably available significantly less traderestrictive measure that achieves ALOP of SPS-measure taking Member; o Identification ALOP of importing Member and level of protection of alternative measure by complainant; o Disagreement with India that complainant needs to identify ALOP from measure at issue: circular reasoning and contrary to case-law of the Appellate Body; o Hence, panel not erred in finding US identified alternative measure achieving India s ALOP.

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