BEFORE THE WTO APPELLATE BODY. European Communities - Measures concerning meat and meat products (Hormones) (AB ) APPELLEE SUBMISSION

Transcription

1 BEFORE THE WTO APPELLATE BODY European Communities - Measures concerning meat and meat products (Hormones) (AB ) APPELLEE SUBMISSION OF THE EUROPEAN COMMUNITIES UNDER RULE 23 OF THE WORKING PROCEDURES FOR APPELLATE REVIEW SERVICE LIST Mr. A. L. Stoler, Office of the United States Trade Representative, Geneva Mrs. H.Forton, Permanent Mission of Canada, Geneva H.E.T.Delofski, Permanent Mission of Australią Geneva H.E.W. Armstrong, Permanent Mission of New Zealand, Geneva H.E. T. Johannessen, Permanent Mission of Norway, Geneva. 20 OCTOBER 1997

2

3 TABLE OF CONTENTS I. INTRODUCTION 1 II. SCOPE OF APPELLATE REVIEW AND FINDINGS OF NECESSARY FACTS 1 A. The appellants' claims are not within the scope of appellate review 2 B. The Panel has not made the necessary findings of fact to sustain the appellants claims on appeal 3 III. SUBSTANTIVE DISCUSSION OF THE ISSUES UNDER APPEAL 6 A. The EC measure is consistent with article 2:2 of the SPS agreement 6 1. The conditions for the application of Article 2:2 SPS 6 a) The ordinary meaning of the phrase "sufficient scientific evidence" in context - object and purpose - drafting history 7 b) Criticism of the arguments made by the U.S 10 B. THE EC MEASURE IS CONSISTENT WITH ARTICLE 5:6 SPS Introduction - the conditions for application of Article 5:6 SPS The EC's level of protection Analysis of three requirements of Article 5.6 applied to this case 14 a) Alternative measures achieving the same level of protection 14 b) Alternative measures reasonably available and technically feasible 16 c) Alternative measures not significantly less trade restrictive Criticism of arguments made by Canada and US 16 a) Canada 16 b)u S 17 IV. CONCLUSION 19

4

5 I. INTRODUCTION 1. On 9 October 1997, the United States (US) appealed from the fact that the panel report on hormones 1 declined to make findings concerning two provisions of the SPS Agreement which the US alleges to have been violated by the measures of the European Communities (EC), i, e.: Article 2:2 SPS prohibiting members from maintaining a sanitary measure without sufficient scientific evidence; and Article 5:6 SPS requiring members to ensure that a sanitary measure is not more trade-restrictive than required to achieve their appropriate level of sanitary protection. 2. On 9 October 1997, Canada also appealed from the refusal of the panel report on hormones 2 to make a finding concerning the alleged violation of Article 5:6 of the SPS Agreement by the EC measures at issue. 3. This submission responds to both of the above appellant submissions, in accordance with the Appellate Body's Working Schedule of 25 September The EC respectfully requests the Appellate Body to reject the claims of the appellants regarding the two provisions of the SPS Agreement alleged to have been violated by the EC measure, on the grounds that either they are not admissible or not covered by the scope of appellate review and that they have no foundation in law. II. SCOPE OF APPELLATE REVIEW AND FINDINGS OF NECESSARY FACTS 5. In this section, the EC examines the preliminary question whether the two grounds of appeal fall within the scope of appellate review and whether the panel has made the necessary findings of fact to which, if they were, the Appellate Body could apply the relevant provisions of the SPS Agreement. 1 WT/DS 26/R/USA of , hereinafter US report. 2 WT/DS48/R/CAN of 18.08/1997, hereinafter Canada report Hormones Panel - EC Appellee Submission - 20 October p. 1

6 A. The appellants' claims are not within the scope of appellate review 6. Article 17:6 DSU and Article 23(1) of the Working Procedures for Appellate Review provide that the appeal "shall be limited to issues of law covered in the panel report and legal interpretations developed by the panel" (emphasis added). 7. The question, therefore, is whether the two alleged failures by the panel in this case to consider Articles 2:2 and 5:6 of SPS fall within the remit of Article 17:6 DSU. 8. The submission of the US says nothing on this point, whereas the submission of Canada is extremely short. Canada argues that "there is no requirement that such an appeal alleges an error in the issues of law covered in the panel report" (at para. 15). 9. The EC does not disagree with this statement by Canada. Yet, Canada does not discuss the more pertinent question, i.e. whether the ground of its appeal is an issue of law covered in the panel report and legal interpretation developed by the panel. 10. In the instant case, the panel has said as regards Article 2:2 the following: "Since we have found that the EC measures in dispute are inconsistent with the requirements of Articles 3 and 5 of the SPS Agreement and considering that Articles 3 and 5 provide for more specific rights and obligations than the "basic rights and obligations " set out in Article 2, we see no need to further examine whether the EC measures in dispute also violate Article 2." And as regards Article 5:6: "Since we found above that the EC level of protection reflected in the EC measures in dispute has been adopted in violation of Article 5:5, we do not consider in necessary to further examine whether these measures are also more trade restrictive than required to achieve that level in the sense of Article 5.6." In the view of the EC, it is questionable whether the above two statements amount to issues of law covered in the panel report. It is also questionable whether they amount to a legal interpretation developed by the panel. Although the reason for which the panel declined to rule on Articles 2:2 and 5:6 SPS rests on a certain legal interpretation of the relationship between Articles 2 and 5 of SPS by the panel, still it is probably more accurate to argue that the decline by the panel to consider these two Articles in substance puts them outside the scope of appellate review. 13. It has been argued in the literature that Article 17.6 DSU enables the Appellate Body to examine "only questions of law actually examined in the panel report and raised by the appellant". 5 In other words, the Appellate Body has to judge the acceptability of the panel report "on specific legal grounds previously broached" in order to judge 3 Paras (US) and (Canada). 4 Paras (US) and (Canada). 5 See P. Pescatore. Drafting and Analysing Decisions on Dispute Settlement, p. 40 (1997), reprint of Pescatore. Davev & I.owenfeld. Handbook of WTO/GATT Dispute Settlement. Hormones Panel - EC Appellee Submission - 20 October p. 2

7 whether the legal findings and conclusions of the panel may be upheld, modified or reversed according to Article of DSU The panel's refusal to consider Articles 2:2 and 5:6 SPS does not satisfy the above requirements. The panel did not broach the substantive requirements of Articles 2:2 and 5:6 and, in addition, has not made the necessary factual findings as regards in particular Article 5:6 SPS. 15. As Canada explained, in the present case the problem for the appellants "is how to raise arguments with respect to Article 5:6, in the event that the Appellate Body decides to modify or reverse the panel's findings with respect to Articles 3:1, 5:1 or 5:5". 7 It would appear, therefore, that Canada does not seek to reverse, upheld or modify (in the proper sense of this word) the panel's findings, but rather seeks to add one more (new) violation in the conclusions of the panel report If we were to assume that the present case is comparable to the situations examined by the Appellate Body in the United States Gasoline case% and the Canadian Periodicals сазещ then it is important to consider whether there is "a sufficient basis in the panel report" 11 which can allow the Appellate Body to apply the provisions of the SPS Agreement claimed to have been violated without having itself to constitute de novo the factual basis for its findings. B. The Panel has not made the necessary findings of fact to sustain the appellants claims on appeal 17. The substance of the appellants' claims are examined in the next section. In this subsection, the EC examines the preliminary question whether the Appellate Body disposes of all the necessary factual findings in the panel report to evaluate the requested legal findings regarding Articles 2:2 and 5:6 SPS. 18. The US argues that the panel failed to take "the final step" despite the fact that it made "all the findings necessary" to find that the EC violated Article 2:2 and 5:6 12. Canada's 6 Ibid., p See para. 11 and para. 5 of Canada's submission. 8 The same is true for the US appeal, which aims at addmg two new violations for Articles 2:2 and 5:6 SPS in the conclusions of the panel report. 9 AB , WT/DS2/AB/R, , p. 22 et seq. 10 AB , WT/DS31/AB/R, , p. 24 et seq. 11 The criterion of "a sufficient basis in the panel report" was employed by the Appellate Body in the Canadian Periodicals case to justify it reviewing a legal provision not undertaken in the panel report. See note 10 supra. 12 See paras. 4, 9, 17 (as regards Article 2:2) and paras. 20, 32 and 34 (as regards Article 5:6). Hormones Panel - EC Appellee Submission - 20 October p. 3

8 argument is similar. 13 In its view, the panel's findings that there is "no scientific evidence of an identifiable risk" implies "by definition" that there is no sanitary measure that could be adopted that would not be more trade restrictive than required, The Appellants base their claims on certain paragraphs of the panel report which the EC has explained in its appeal are founded on a manifest misunderstanding, clear distortion of the facts or inadequate reasoning. 20. The factual findings of the panel relate almost exclusively to the concept of risk assessment and the factors that need to be taken into account in accordance with Article 5:1-5:2 SPS. They also discuss the factual basis of the EC measures for the purposes of Article 5:5 SPS, in particular from the perspective of consistency with regard to the levels of sanitary protection adopted by the EC in various situations. 21. The panel has not made, therefore, the necessary findings of facts (at least not all of them) required for adjudicating the compatibility of the EC measures with Articles 2:2 and 5:6 SPS. The EC has also complained in its appellant submission of 6 October 1997 that the panel has arbitrarily refrained from examining Article 5 in the light of the basic provisions of Article 2:2 SPS In particular, as regards Article 2:2, the panel has not made the necessary findings on the issue whether the EC's scientific evidence is sufficient. As regards Article 5:6, the panel has made no findings that the EC measures are: more trade-restrictive than required to achieve the EC's appropriate level of protection; that there is another measure reasonably available taking into account technical and economic feasibility; and that this other measure achieves the EC's level of sanitary protection and is significantly less restrictive to trade. 23. In their written and oral submissions to the panel both parties confined themselves to simply pointing out that the EC should adopt the same type of measure as the one applied by them. They came to that conclusion on the basis of an extrapolation and reasoning by analogy. They claimed that since the EC should be held to have violated Articles 3:1 and 5:1-5:2 SPS, it should also be held to have violated Articles 2:2 and 5:6 SPS. 24. The same reasoning both parties apply now in their appellant submissions. They do not point to factual and scientific evidence that was before the panel and which it has 13 In fact, Canada's argument appears to be the same as that suggested (although in the alternative) in para. 33 of the US submission. 14 See para. 22 of Canada's submission. 15 See, e.g., paras. 71, 139, 189, 190, 193, 253, 357 and 376 of EC appeal. Hormones Panel - EC Appellee Submission - 20 October p. 4

9 failed to consider. They rather argue that the panel has made all the necessary findings, but failed to take the "last step". For them, finding a violation of Article 5:1-5:2 SPS "hv definition" implies a violation of Articles 2:2 and 5:6 SPS Both appellants agree that Articles 2:2 and 5:6 SPS do not form a logical continuum in the analysis of the obligations arising under Articles 3, 5:1 and 5:5 SPS. 17 As the US has also argued, nothing in the text of Articles 2, 3 and 5 SPS indicates that all of the obligations of Article 2 are subsumed under the provisions of Articles 3 and 5. The same is true of Article 5:6, whose object and purpose is closer to that of Article 2:3 than to Articles 3:1 and 5:5 SPS. 18 The questions, therefore, to consider under Articles 2:2 and 5:6, both from the factual, procedural and substantive points of view, are different from the questions examined by the Panel under Articles 3:1, 5:1-5:2 and 5:5 SPS. 26. There is virtually nothing in the panel report on Article 5:6 and there is very little on Article 2:2, far short of what could be considered to be "a sufficient basis". As the EC has shown with its appeal of 6 October, the panel has completely misunderstood the relationship of Articles 2, 3 and 5 SPS. As the EC will show below, the panel should have examined first Article 2:2 (and possibly 2:3) and should have come to the conclusion opposite to that request now by the appellants. 27. Instead of discussing in substance the real issues of Article 2:2, the US appeal attempts to disposed of them in a footnote, 19 arguing that "this dispute does not present the question of how much evidence is "sufficient" for the purposes of Article 2:2". 28. Also on Article 5:6 SPS the parties have singularly failed to establish the conditions of its application. As the EC has shown in its appeal, the burden of proving that the conditions for the application of Article 5:6 is with the complaining members 20. They have both failed to discharge that burden of proof, even to make a prima facie showing, in particular as regards Article 5:6 SPS. 29. It appears, therefore, to the EC that there is no "sufficient basis" in the panel report for the Appellate Body to rule on these claims, both as regards Article 2:2 and Article 5:6 SPS. 16 See paras. 33 of US submission and para. 22 of Canada's submission. If that were so, one may reasonably wonder why the appellants do not claim that the EC measures are also inconsistent with Article 2:3 SPS. Equally, the US draws a lot in its argumentation from the panel's discussion of the socalled "therapeutic or zootechnical use" of some of these hormones in the EC. In that instance too, the panel declined to make a finding on whether "therapeutic or zootechnical use" in the EC is inconsistent with Article 5:5 SPS. Yet, neither the US nor Canada claim now that the panel also erred in declining to rule on these two provisions. 17 See para. 18 of US submission as regards Article 2:2, and para. 13 of Canada's submission as regards Article 5:6 SPS. 18 See para. 18 of US submission. 19 See footnote no. 3 of US submission. 20 See in particular paras and of EC appeal. Hormones Panel - EC Appellee Submission - 20 October p. 5

10 29a. In addition the EC submits that if the Appellate Body accepts to examine the applicability of Article 2.2 SPS, it must also examine the applicability of Article 5:7, which is expressly referred to in Article 2:2. III. SUBSTANTIVE DISCUSSION OF THE ISSUES UNDER APPEAL 30. In this section, the claims of the appellants are examined from a substantive point of view, in the event the Appellate Body were to consider that they can be reviewed on appeal in this case. First, a short analysis of the legal provisions of the SPS Agreement claimed to have been violated is offered and, subsequently, a systematic review of the factual findings of the panel is carried out in order to determine whether the entire factual and scientific record that was before the panel lends support to the claims of the appellants or rather supports the views developed by the EC in its appeal. A. The EC measure is consistent with article 2:2 of the SPS agreement 1. The conditions for the application of Article 2:2 SPS 31. Article 2:2 SPS requires that three conditions be satisfied when applying or maintaining a sanitary measure. The measure should be: applied only to the extent necessary to protect human health; based on scientific principles; and not maintained without sufficient scientific evidence, except as provided for in paragraph 7 of Article The US curiously does not discuss the first two conditions; it argues only that the third condition is not fulfilled. As explained above, the US reasons by analogy and extrapolation, arguing that since the panel had found that the risk assessment of the EC is "not based on the scientific evidence submitted to the panel", it should have also found that "the ban is maintained without sufficient scientific evidence" See para of US submission. Hormones Panel - EC Appellee Submission 20 October p. в

11 a) The ordinary' meaning of the phrase "sufficient scientific evidence" in context - object and purpose - drafting history 33. The SPS Agreement does not define the terms "scientific", "scientific principles", 22 "scientific justification", "available scientific information", 23 "available scientific evidence", 24 and "sufficient scientific evidence" 25. Their interpretation, therefore, should be based on the customary rules of interpretation of public international law as codified in the 1969 Vienna Convention on the law of treaties The EC has explained in its appeal that the word "scientific" in the various provisions of the SPS Agreement should be interpreted consistently to mean "of, relating to, or exhibiting the methods or principles of science". 27 The NAFTA agreement, for example, defines the term "scientific basis" as meaning "a reason based on data or information derived using scientific methods" However, the use of the word "sufficient" does not appear in the corresponding provision of NAFTA. 29 This difference in the wording, however, cannot be taken to suggest that WTO panels can review the adequacy of the scientific data underlying a sanitary measure in a manner which is inconsistent with the basic principles of adjudicatory review of science in the regulatory process of the WTO members 30 and the appropriate standards of review, as explained in the EC appeal of 6 October The context within which the term "sufficient" is to be interpreted is, therefore, very important. Under international legal principles, "there is no such thing as an abstract ordinary meaning of a phrase, divorced from the place which that phrase occupies in 22 Article 2:2 SPS. 23 Article 3:3 SPS 24 Article 5:2 SPS 25 Article 2:2 SPS 26 See also US Statement of Administrative Action on the WTO Agreements, p. 746, Appendix 1 to EC appeal. 27 See para 337 of EC appeal. 28 See Article 724, last sentence, of NAFTA Agreement. 29 Article 712(3) of NAFTA provides that a sanitary measure is "not maintained where there is no longer a scientific basis for it". 30 See, e.g. D. A. Wirth. The role of science in the Uruguay Round and NAFTA trade disciplines, 27 Cornell Intern'1 L.J. 817, 857 (1994). 3! See, e.g. paras of EC appeal. Hormones Panel - EC Appellee Submission - 20 October p. 7

12 the text to be interpreted" 32. Since the concept of "risk" and "risk assessment" in the SPS Agreement is a qualitative not quantitative concept, the word "sufficient" also cannot be taken to refer to the quantitative but rather to the qualitative aspects of the scientific evidence used by the regulatory authorities of a member. 37. The use of the words "scientific principles" in the same Article adds further support to the argument that Article 2:2 and the SPS Agreement in general do not require the sanitaiy measures to be based on the "best" scientific evidence or the "weight" of available scientific evidence. 38. The supplementary means of interpretation under the 1969 Vienna Convention may include the preparatory work of a treaty, the circumstances of its conclusion and, where appropriate, the interpretations of individual parties to the treaty. The US has, for instance, explained the concept of "sufficient scientific evidence" in the provision of Article 2:2 as follows: "Л is clear that the requirement in the S&P Agreement that measures be based on scientific principles and not be maintained "without sufficient scientific evidence " would not authorize a dispute settlement panel to substitute its scientific judgement for that of the government maintaining the sanitary or phytosanitary measure. For example, by requiring measures to be based on scientific principles (rather than, for instance, requiring measures to be based on the "best" science) and not to be maintained without sufficient scientific evidence (rather than, for instance, requiring an examination of the "weight of evidence "), the S&P Agreement recognizes the fact that scientific certainty is rare and many scientific determinations require judgements between differing scientific views. The S&P Agreement preserves the ability of governments to make such judgements." The preparatory work of the SPS Agreement also confirms the above view. It appears that the more stringent standard of "sound science", implying the preponderance of scientific thinking, was explicitly rejected during the negotiations of the SPS As the EC has explained in its appeal, the proper context of the SPS and the more broad context of the WTO Agreement, compared also to the way this issue is regulated in the various models of economic integration and in the various systems of WTO members, support clearly the proposition that the question is not whether the sanitary measure is based on the "best" science or the "preponderance" of science or whether there is conflicting science. Rather, as the US has explained: "The question is only whether the government maintaining the measure has a scientific basis for it. This is because [the NAFTA section on SPS measures] is 32 See I. Sinclair. The Vienna Convention on the Law of Treaties, p. 121, 2nd. ed (1984). 33 See U.S. Statement of Administrative Action on SPS Agreement, p. 746, in Appendix 2 of EC appeal of See, e.g., M A. Echols. Sanitary and phytosanitary measures, in T.P. Stewart (ed.) the World Trade Organization - The Multilateral Trade Framework for the 21st Century and U.S. Implementing Legislation, ch. 6, p. 199 and note 67 (1996). Hormones PaneI - EC Appellee Submission - 20 October p. 8

13 based on a recognition that there is seldom, if ever, scientific certainty and consequently any scientific determination may require a judgement among differing scientific opinions. The NAFTA preserves the ability of governments to continue to make those judgements" Legal authors have also concluded on this issue as follows: "In keeping with the above principles, the best interpretation of this passage [not be maintained without sufficient scientific evidence] is probably that there is a need for a minimal level of scientific evidence. With this perspective, panels would not have the wholesale power to substitute their judgement for that of national authorities with respect to the adequacy of the scientific evidence. Rather, panels could only ask whether the empirical data are minimally adequate to support the national government 's scientific conclusions", The above view has further explicitly been endorsed by the Office of the U.S. Trade Representative in a document prepared in conjunction with the U.S. Food and Drug Administration, the U.S. Department of Agriculture and the U.S. Environmental Protection Agency, where it is stated: "Moreover, by requiring that a measure be based on scientific principles (rather than, for instance, requiring that a measure be based on the "best" science or on the "weight of evidence") the [SPS] Agreement recognizes the fact that scientific certainty is rare and many scientific determinations require a judgement among differing scientific views. The SPS Agreement preserves the ability of governments to make such judgements." "Moreover, the SPS Agreement includes language which limits the issues which may be presented to panelists in disputes involving technical issues. As discussed above, the Agreement provides that SPS measures should be "based on scientific principles, " rather than be based on the "best" science or on the "weight of evidence. " Consequently, dispute settlement panels will not be responsible for choosing among competing scientific views, but will only determine whether a particular SPS measure has a scientific basis." To conclude on this point, the EC submits that the requirement in Article 2:2 not to maintain a sanitary measure without "sufficient scientific evidence" does not authorize the panel (and the Appellate Body) to substitute its judgement for that of the EC regulatory authorities, but only to examine whether the scientific data invoked by the EC are based on scientific principles and provide a support to the scientific basis of the 35 See U.S. Statement of Administrative Action on NAFTA, p. 542, in Appendix 3 to the EC's appeal of See P.A. Wirth, supra, at pp See U.S. Office of Trade Representative. Report on U.S. Food Safety and the Uruguay Round, Protecting Consumers and Promoting U.S. Exports, pp. 5, 15, June 1994, appended in Annex 1 to this appellee submission. Hormones Panel - EC Appellee Submission - 20 October p. 9

14 EC measures at issue. This is what the EC argued also before the panel and in its appeal of 6 October b) Criticism of the arguments made by the U.S. 44. The US does not engage in any discussion on what constitutes "sufficient" scientific evidence 38. In doing so it commits the same fundamental error as that made by the panel, which examined the concept of "risk assessment" and the requirement to base it on "available scientific evidence" in complete isolation from the basis provisions of Article 2: As the EC has explained in its appeal of 6 October 1997, the panel's error in the interpretation of the legal relationship between Articles 2:2 and 5:1-5:2 SPS was further compounded by the following mistakes: it decided that it could substitute its own scientific judgement for that of the competent authorities of the EC on the definition or risk, risk assessment and available scientific evidence;40 it based its judgement on the majority of conflicting scientific advice by the five experts it has chosen in this case and frequently even on the minority of the scientific views expressed by those five scientists;41 it decided that complex scientific issues about substances that may cause cancer to millions of people can be resolved on the basis of the "weight" of the evidence causally presented to the panel by some of the experts it has selected for that purpose;42 38 See para. 8 and footnote no 3 of US submission. It may be of relevance to note that the U.S. Consumers Union has explicitly found that the EC measure at issue "offers a scientific justification and should be able, therefore, to pass the Uruguay Round proposal's test": See U.S. Consumers Union. Publisher of Consumer Reports, page 10 (1992). 39 The basis of the panel's error consists in considering that Article 5:1 "may be viewed as a specific application of the basic obligations contained in Article 2:2 SPS..." (at para US and 8.96 Canada). Clearly, Article 5:1 is not a specific application of Article 2:2. And even if that were so, the provisions of Article 5 and their interpretation by the panel should have taken due account of the text of Article 2:2, in particular as regards the concepts of "scientific principles" and "sufficient scientific evidence", and the way they should have influenced the interpretation of the concepts "available scientific evidence" and "risk assessment" in Article 5:1-5:2. The US also admits that Article 5 addresses questions different from those of Article 2:2, and that the obligations of the latter Article are not subsumed under the provisions of Articles 3 and 5. See para. 18 of US submission. 40 See paras , 188, 204 and of EC appeal. 41 See, e.g., paras and footnote no. 437, and footnote no 442, of Canada report and paras and footnote no 331, and footnote no 335, of US report. 42 See para of Canada and para U.S., and paras , of EC appeal. Hormones Panel - EC Appellee Submission - 20 October p. 10

15 it decided in fact to "freeze" the scientific record to three formalized reports,43 thus wrongfully restricting the information-base of "available" scientific evidence only to out of date reports and, hence, declined to take into account the scientific views that are explicitly mentioned in the preamble of the EC measures ;44 it imposed in a law-making fashion new substantive requirements on the EC not provided for in Article 5:1-5:2 SPS Agreement, by requiring that sanitary measures should comply with the conclusions of scientific committees and conferences in order to be considered to be "based on" a risk assessment;45 it imposed the entire burden of proof on the EC to show that these hormones are dangerous, contrary to the ordinary practice in the regulatory systems of the SPS members which normally requires the applicant wishing to commercialize these substances to establish that they are safe The evidence offered by the US in support of its claim under Article 2:2 is based, therefore, on the same evidence which the EC argued in its appeal that is arbitrary or manifestly erroneous or constitutes a distortion of the evidence before the panel. It should, therefore, be rejected here for the same legal reasons for which the EC proposed to reverse the panel's finding under Article 5:1-5:2 and under Article 3:1-3:3 SPS. 47. In addition, this discussion of the US claim under Article 2:2 SPS clarifies and strengthens further the EC arguments under Articles 5:1-5:2 SPS. The concepts of "risk", "risk assessment", and "available scientific evidence" must be interpreted by the panels in the light of the basic provisions of Article 2:2; not vice-versa and not in complete isolation of the guiding provisions of Article 2:2, as the panel and the US have done. "Available" scientific evidence certainly includes minority scientific views, even if they are not contained in formalised committee reports, as long as they are presented to the proceedings before the panel and have not been rejected as being completely non scientific The 1982 and 1987 Lamming Committee reports, the 1987/1988 JECFA reports and the 1995 EC Conference report. 44 See paras Canada and paras US report, and paras of EC appeal. 45 See para Canada and US report, and paras of EC appeal. 46 See, e.g., paras and of Canada and and of US report, and paras of EC appeal. 47 This is indeed what the panel did to the scientific evidence presented to it by the EC: none of the five experts advising the panel said that the evidence produced before the panel by the EC (including the EC's six written scientific opinions) were not based on scientific principles, and none of them argued that this evidence does not support the EC conclusions as reflected in the EC measures at issue. Only 3 out of the 5 scientific experts of the panel argued that "as it stands today" the evidence produced to the panel by the EC does not invalidate or contradict the scientific conclusions mentioned in the three formalized scientific reports accepted by the panel as constituting a risk assessment of these hormones for growth promotion in accordance with good veterinary practice. Hormones Panel - EC Appellee Submission - 20 October p. 11

16 48. Only such an interpretation can help discover the proper meaning of Article 2:2 and Article 5:1-5:2, respect their object and purpose within the SPS and WTO context, and be faithful to the rights and obligations agreed among the WTO members when concluding the SPS Agreement. 49. The EC proposes, therefore, the Appellate Body to reject as completely unfounded the US claim under Article 2:2 SPS. В. THE EC MEASURE IS CONSISTENT WITH ARTICLE 5:6 SPS 1. Introduction - the conditions for application of Article 5:6 SPS 50. Article 5:6 SPS provides that : "Without prejudice to paragraph 2 of Article 3, when establishing or maintaining sanitary or phytosanitary measures to achieve the appropriate level of sanitary or phytosanitary protection, Members shall ensure that such measures are not more trade-restrictive than required to achieve their appropriate level of sanitary or phytosanitary protection, taking into account technical and economic feasibility" 51. A footnote to this provision elaborates as follows : "For purposes of paragraph 6 of Article 5, a measure is not more trade-restrictive than required unless there is another measure, reasonably available taking into account technical and economic feasibility, that achieves the appropriate level of sanitary or phytosanitary protection and is significantly less restrictive to trade," 52. The "appropriate level" of protection, it should be recalled, is defined in Annex A (Definitions) as: "The level of protection deemed appropriate by the Member establishing a sanitary or phytosanitary measure to protect human, animal or plant life or health within its territory." And notes that "Many Members otherwise refer to this concept as the 'acceptable level of risk'." 53. As the Office of the United States Trade Representative ("USTR") has correctly stated 48, three specific conditions need to be met to establish a violation of this provision: (1) an alternative measure would need to exist that would achieve the level of protection demanded by the importing country; (2) the alternative measure would need to be reasonably available and technically and economically feasible; and 48 See report of USTR on US Food safety and the Uruguay Round Annex 1. page 7. Hormones Panel - EC Appellee Submission - 20 October p. 12

17 (3) the alternative measure would need to be significantly less trade restrictive. 54. Instead of considering the above conditions in turn, the US and Canada try to deduce that there is a violation from the reasoning of the Panel on other provisions. The EC will return to consider the arguments of US and Canada in sub-section 4 below, but will first for the purpose of clarifying the debate explain what its "level of protection" is (sub- section 2) and why there can be no violation of Article 5:6 by examining each of the above requirements in turn (sub-section 3). 2. The EC 's level of protection 55. The EC has explained in its own Appellant's submission (in particular in Section VI of Part Three on the Panel's misunderstanding or misrepresentation of the concept of zero risk) that the level of protection which it seeks to achieve with the contested measures is no risk of exposure to carcinogenic residues from added hormones for growth promotion It was also explained that the EC is fully conscious of the existence of exposure to hormones and their residues from other sources but that the existence of these made it all the more important to avoid any additional exposure. 57. The EC did not develop an additional but related point - that the acceptability of a contaminant depends on the reasons why it is present - in particular because the Panel had declined to make any comparison between the use of hormones for growth promotion purposes and for therapeutic and zootechnical purposes. Since the US returns to this comparison to support its arguments on Article 5:6 SPS, it is necessary to briefly consider this matter. 58. The EC will illustrate the point with the more easily accessible example of food additives, but the principles involved apply just as well to other substances. 59. Many additives serve useful technological purposes in many different foodstuffs but are also potentially dangerous when consumed in excessive quantities. They may facilitate manufacture, prevent the food going bad so quickly, improve flavour, or simply enhance appearance. Often they may be used in many different foods and alternatives may be available. To control the dangers to health they may cause, "admissible daily intakes" or ADIs may be fixed. It may well be that in one country a particular additive has long been allowed in a given foodstuff (A) because of the manufacturing or culinary traditions, climate, eating habits etc. of that country. It may also be that for this reason, perhaps combined with other reasons (e.g. natural exposure), the additive is ingested in doses approaching the ADI. In another country, with different manufacturing or culinary traditions, climate, eating habits etc., the additive is not used in the foodstuff A but is used in foodstuff В for similar or different 49 See the similar approach adopted by the US in the Delaney Clause, defended as compatible with the SPS in the Report of USTR on US Food safety and the Uruguay Round, Annex 1. page 4. Hormones Panel - EC Appellee Submission - 20 October p. 13

18 purposes (oui of facilitation of manufacturing, preservation, colouring, etc.) and exposure to the additive may also be approaching the ADI (but for different reasons). As trade between these countries develops, exporters may seek to have the additives allowed in each country for the purpose allowed in the other country. The first country might decide not to allow the additive in foodstuff В and the second not to allow it in foodstuff A. In view of the danger of surpassing the ADI, both would be justified in doing so, but trade might be restricted in that the exporters would have to use alternative additives. 60. The point of the above example is to show that the purpose for which an additive is employed and the product in which it is used are essential factors in deciding whether it should be allowed or not. In the above example, both countries could argue that since the other allows the additive for one purpose/product, it should allow it for the other as well. But if their claims were to prevail their populations would be exposed to dangerous levels of the contaminant (as the additive would be present in both foodstuff A and B). So far as the EC is aware, WTO Member do not allow a new additive simply because it is already allowed for another purpose. The only solution to the potential barrier to trade described above is harmonisation and that is why the SPS takes the first tentative steps towards this goal. 61. So also in the present case, it is not correct to argue that, since hormones may be used for one purpose, they should also be allowed for another. It is perhaps because the Panel realised this that it did not pursue the comparison between the use of hormones for growth promotion purposes and for therapeutic and zootechnical purposes It is for these reasons that the EC defines its level of protection in terms of "no additional risk" from hormones. The universal practice of WTO Members regulatory authorities shows that the EC is entitled to define its level of protection in this way. 3. Analysis of three requirements of Article 5.6 applied to this case a) Alternative measures achieving the same level of protection 63. The EC's objective, it will be recalled, is to ensure that consumers are not exposed to any residues of hormones used for growth promotion purposes. It accepts that some hormones are present naturally and cannot be avoided. It also accepts that some hormones are administered to cattle for therapeutic and zootechnical purposes and that these purposes are unavoidable and beneficial. But it decided that the exposure of its 50 Such use is explicitly left out of the 1987 JECFA report and it is typically said not to be relevant for use of hormones or substances for specific purposes, such as animal growth promotion, because the doses, routes of administration, method of administration (by a veterinarian), withdrawal periods, etc. are frequently different from the case of use for growth promotion. Hormones Panel - EC Appellee Submission - 20 October p. 14

19 population to hormones above this level should be avoided and that in particular there should be a zero level of tolerance for hormones used for growth promotion purposes. 64. In order not to restrict trade from third countries which do allow the administration of hormones for growth promotion purposes, any more than necessary, the EC does not ban the sale of bovine meat from these countries but applies the less restrictive measure of requiring assurances from those countries that the meat sent to the EC comes from cattle to which hormones have not been administered for growth promotion purposes. In the case of the US and Canada this has been implemented by means of agreements with those countries. 65. Alternatives to the option chosen by the EC of preventing imports of bovine meat containing residues of hormones administered for growth promotion by means of an agreement with the exporting country might have been : a) The application of MRLs to such meat; b) The application of some kind of control to all imports of meat to determine whether hormones had been administered for growth promotion purposes; c) Reliance on the exporters labelling their meat to indicate whether hormones had been administered for growth promotion purposes. 66. The first of these measures would not have achieved the EC's level of protection since MRLs would have allowed residues in meat to which hormones had been added for growth promotion purposes. 67. As regards the second measure, the EC would point out that this measure would not satisfy the US or Canada (which consider meat containing residues from hormones used for growth promotion should be allowed into the EC) and also that this control would have to be extensive and systematic if this measure is to approach the EC's level of protection. 68. Finally, although labelling is a useful measure where consumer protection and fair competition are involved, it is ineffective where public health is concerned since the consumer may be ignorant of or not fully understand the risk None of the above measures, therefore, constitute an alternative and nor would any of them achieve the EC's level of protection. 70. In addition these alternative measures do not satisfy the other conditions of Article 5:6, which we will now consider. 51 See paragraphs of EC second oral statement of in panel requested by Canada, the summary of EC's argument at para (Canada), and the further references in the following footnote. Hormones Panel EC Appellee Submission - 20 October p. 15

20 b) Alternative measures reasonably available and technically feasible 71. As the Panel stated itself on numerous occasions 52, it is not practically possible to distinguish residues of exogenous and endogenous natural hormones when present in the meat. The fixing of MRLs is not therefore a technically feasible alternative measure for protecting against natural hormones administered for growth promotion purposes. 72. As indicated above, control measures would have to be extensive and systematic to approach the level of protection achieved by the EC through its policy of allowing imports of beef from countries which permit the use of hormones for growth control purposes by entering into agreements with the governments to ensure that the beef exported to the EC does not come from cattle to which hormones had been administered for growth promotion purposes. Such extensive and systematic control would be unduly expensive and burdensome and, therefore, cannot be considered to be "reasonably available". Such controls are also not technically feasible. 73. Labelling is difficult to apply to a product such as meat which is often sold unwrapped, cannot be traced back to the producer and therefore is also not "reasonably available" or technically feasible 53. c) Alternative measures not significantly less trade restrictive 74. The second and third of the alternative measures described above (extensive controls and labelling) would also be much more costly and therefore not less trade restrictive than the measure applied by the EC (agreements with exporting countries). 4. Criticism of arguments made by Canada and US a) Canada 75. As noted above, Canada does not even attempt to identify an alternative measure. It refers to the Panel's reasoning under Articles 5.1 and 5:2 SPS and concludes that (para 22): 52 See e.g. paras (Canada) and 8.62 (US) 53 On the non-feasibility of labelling see the EC comments summarised at (Canada) and (US) and the answers of the scientific experts to question 28 (paras to (Canada) and to (US) ) and the comments during the meeting with experts (para 838 et seq. of the transcript). Hormones Panel - EC Appellee Submission - 20 October p. 16

21 "It is patent that if there is no scientific evidence of an identifiable risk, and therefore no basis on which to adopt a measure to achieve a level of sanitary protection under the SPS Agreement, except as provided in Article 5.7, then by definition there is no sanitary measure that could be adopted that would not be more trade restrictive than required. Therefore, applying the Panel's findings above with respect to the six hormones at issue to the requirements of Article 5.6, the EC measures must be more trade restrictive than required, and inconsistent with Article 5.6, i.e. no control at all possible for MGA." 76. The EC would merely reply that it is also "patent" that if the Panel's findings on 5:1 and 5:2 SPS are reversed (as the EC has argued in its own Appellant's submission that they should be), then Canada's argument on 5.6 SPS has no foundation. In other words, Canada's argument under 5.6 SPS adds nothing to the Panel's arguments on Article 5:1 and 5:2, which the EC has already refuted. b) US 77. The US' reasoning does contain some suggestions of "alternative measures" which will be considered below. For the most part, the US refers to findings of the Panel under Article 5:5 SPS, which the EC has already refuted in its own Appellant's submission. 78. The US commences its argument (para 26) by referring to the Panel's reasoning on Article 5:5 SPS and recalls the Panel's view that the EC was adopting "dramatically different measures" in different circumstances and concludes that "contrary to Article 5.6, in each instance the EC has chosen the most trade-restrictive approach (a ban on trade) with respect to the six hormones used for growth promotion purposes, rather than seeking the approach that is not more trade restrictive than required" (emphasis of US). 79. A "ban on trade" might have been the most restrictive approach but it is contrary to the evidence to assert that there is a "ban on trade". The US and Canada do both export beef to the EC. And if the US does not export as much as before the introduction of the EC measure is simply because the US Government refuses to take full advantage of the export potential. It is on record that US producers were (and apparently still are) prepared to export to EC as much hormone-fřee meat as EC would be willing to take, save for the refusal of the US Government. 54 As regards the last part of the abovequoted concluding sentence from paragraph 26 of the US submission, it is not sufficient to assert that the EC has not "sought" a less restrictive solution, it is necessary to find one. 80. The US then goes on to argue (paragraphs 27 to 29), in respect of the natural hormones, that residues from hormones administered to cattle for growth promotion purposes are identical to and therefore just as "safe" as residues from hormones administered for therapeutic and zootechnical purposes. Therefore, it argues, allowing residues from hormones administered for growth promotion at the same level as 54 See M.A. Echols, supra, at p Hormones Panel EC Appellee Submission - 20 October 1997 p. 17

22 allowed for residues of hormones administered for therapeutic and zootechnical purposes would be the less restrictive "alternative measure", that this would be reasonably available, technically feasible and significantly less trade restrictive. 81. The fallacy with this argument is that it is comparing residues from an existing use (therapeutic and zootechnical) with a new use for a different purpose (growth promotion) which will lead overall to an increase of exposure. As was illustrated with the analogy of additives above, this reasoning is not admissible and is not followed in the practice of WTO Members. 82. In addition, the EC explained to the Panel that it takes a measures to ensure that there are no residues from therapeutic or zootechnical use in meat for human consumption. These are: - Animals treated for therapeutic or zootechnical purposes (by qualified veterinarians) are not allowed to be slaughtered for food; - Animals at the end of their reproductive careers after being treated with hormones are not allowed to be slaughtered before a sufficiently long fattening period. 83. Statistics show that no more than 1 to 2% of animals treated in this way ever enter the food chain at all Even if such a comparison were possible in principle, it would still be necessary to take account of the fact that hormones used in different proportions for growth promotion (male hormones to female animals and female hormones to male animals) and in practice are administered for growth promotion, i.e. combinations or "cocktails" including synthetic hormones. 85. In the case of the synthetic hormones for which Codex MRLs exist, the US is much more brief (para 30) simply asserting that the Codex MRLs are "an alternative measure that is reasonable available to the EC, technically and economically feasible, and significantly less restrictive to trade". Apart from the fact that the Panel made no such findings of fact (the US merely refers to its own arguments), the problem with this argument is that it entirely neglects any consideration of the question of "level of protection". The Codex MRLs cannot achieve the EC's chosen level of protection because it is a measure that reflects a different level of protection. 86. For the sixth hormone, MGA, the US is even more succinct, alleging that the Panel had reached similar conclusions for MGA, which it manifestly had not 56. The footnote references made by the US to the Report are merely to passages where the Panel refers back to its findings on the other synthetic hormones. Accordingly, for MGA, the US has not even suggested a less restrictive measure, let alone satisfied the other conditions of Article 5:6 SPS. 55 See paras 4.69 to 4.71 Report (US). 56 As Canada states at para 4 of its Appellants Submission, the Panel omits to state even that it will not examine the applicability of Article 5:6 SPS to MGA. Hormones Panel - EC Appellee Submission - 20 October p. 18