Australia – Measures Affecting the Importation of Apples from New Zealand (DS367)
Panel established pursuant to Article 6 of the Understanding on Rules
and Procedures Governing the Settlement of Disputes
Panel's First Substantive Meeting with the Parties: Closing Statement
of Australia – Executive Summary
10 September 2008
In Australia's view, the statements of the parties and
their answers to questions over the last two days have
evidenced the complexity of the legal, scientific and technical
issues involved in this dispute. Australia has sought to
respond directly and substantively to the Panel's
questions to assist the Panel in dealing with this
complexity. In particular, Dr Roberts has provided a
direct account of key aspects of the IRA Team's work.
Contrary to New Zealand's assertions, Australia is not
seeking to avoid scrutiny of its comprehensive and transparent Final Import Risk Analysis Report for Apples from New
Zealand and the reasonable risk reduction measures
recommended therein. Nor is Australia seeking to rewrite
the SPS Agreement, or indeed the DSU. Rather,
drawing on Appellate Body guidance, Australia has advanced
reasoned interpretations of its obligations under the SPS
Agreement that can be applied practically by the Panel to
the circumstances of this dispute.
The product at issue is clear
New Zealand seeks to run a dual-track argument on product at
issue. On the one hand, New Zealand asserts that the
product at issue is apples imported from New Zealand into
Australia. On the other hand, New Zealand asserts that,
"in practice", it would only export mature symptomless apples. Clearly, despite New
Zealand's equivocation on the matter, there can only be
one product at issue in this dispute.
In principle, Australia agrees with New Zealand's
assertion in paragraph 23 of its opening statement that the
"product at issue is determined by the terms of reference
of the Panel". These terms of reference are defined
by New Zealand's panel request. The first paragraph
of that panel request clearly indicates that the importation of
apples from New Zealand can be permitted subject to the
application of measures as specified in the Final IRA
Report. Page 9 of the Final IRA Report defines its scope
as "mature apple fruit free of trash, either packed or
sorted and graded bulk fruit from New Zealand."
Logic therefore dictates that this definition establishes the
product at issue in this dispute. It also follows that
any variation to the product at issue would require the IRA
Team to conduct a new risk assessment.
There is a sound basis for the distinction between
principal and ancillary measures
The distinction between principal and ancillary measures is
based on the definition of "SPS measure" in Annex
A(1) of the SPS Agreement, and the reasoning of the
panel in the US – Export Restraints dispute.
Contrary to New Zealand's assertions in its opening
statement, the issue of whether a measure can individually give
rise to a violation of WTO obligations was discussed at a
general level in US – Export Restraints. The
relevance of that panel's reasoning in that dispute is
accordingly not limited to the SCM Agreement.
According to Annex A(1), an "SPS measure" is
defined as "any measure applied to protect against"
certain categories of risk. In Australia's view, a
measure that aims to protect against risks must aim to reduce
those risks in some concrete way. If a measure does not
protect against risks, or reduce those risks by itself, then it
cannot fall within the definition of "SPS
Australia's contention is supported by the relevant
international standards for phytosanitary measures.
Ancillary verification measures are broadly used in
international quarantine arrangements to ensure that principal
risk reduction measures are properly applied. Australia
understands that New Zealand itself requires ancillary measures
to be met as part of its own quarantine risk reduction
The appropriate standard of review in this
In this dispute, the standard of review reflects the balance of
jurisdictional competences between Members and the WTO
established in the SPS Agreement. As Australia
explained in response to questions from the Panel, the standard
of review must be considered in light of the specific
obligations at issue, a notion explicitly recognised by the
Australia notes that the lack of an explicit standard of review
under other covered agreements has not prevented panels and the
Appellate Body from applying a specific standard of review in
disputes relating to covered agreements other than the Anti-Dumping Agreement. For example, the standard
of review has been a significant issue in both safeguards
disputes and under the SCM Agreement. More
particularly, in EC – Hormones, the Appellate Body
clearly recognised that panels must "adopt a standard of
review…clearly rooted in the text of the SPS
Accordingly, in Australia's view, the absence
of an express provision in the SPS Agreement addressing
standard of review does not mean that there is not a carefully
delimited division of competences between Members and the WTO
which must be reflected in the standard of review applied by
For example, in relation to Article 5.1, unless New Zealand can
demonstrate flaws so serious that the Panel cannot have
reasonable confidence in the assessment of risk in the Final
IRA Report, the Panel must not substitute its own assessment
for that of the IRA Team.
Australia may rely on divergent scientific
New Zealand's opening statement illustrates its continued
discomfort with the Appellate Body's express recognition
that Members are entitled to rely on "divergent"
scientific opinion from qualified and respected sources.
In understanding the Appellate Body's guidance, it is
important to recognise that scientific evidence does not exist
in a vacuum; it does not have an autonomous reality. In
the context of the quarantine regulatory system, scientific
evidence needs to be interpreted by experts and applied to the
specific circumstances of the importing Member. This is
the role that was undertaken by the IRA Team.
By way of example, New Zealand claims that divergent scientific
opinion on fire blight does not exist. However, it is
illustrative to examine one of the technical issues raised by
New Zealand – that of the number of bacteria needed to
start an infection. The scientific opinion on this issue
reflects diverging scientific papers that showed variously that
the number of bacteria needed to start infection varies from 1
bacterium to around 10,000 bacteria. This is just one
small example of the divergent scientific opinion that was
considered in great detail in the Final IRA Report.
New Zealand's continued reliance on Japan
– Apples is misguided
Australia notes that the United States did not mention the Japan – Apples dispute in its opening
statement. This evidences the fact that the United
States, the complainant in that dispute, takes a more moderate
approach than New Zealand to this issue.
Likelihood combined with consequences equals risk
New Zealand alleges that Australia is trying to shift the
emphasis of risk assessment from likelihood to
consequences. This is simply untrue. As explained
today, Australia's risk estimation matrix takes full
account of both elements of risk: likelihood and
consequences. Australia's matrix is firmly grounded
on the definition of risk assessment in Annex A(4) of the SPS Agreement.
Articles 5.1 and 2.2 exist in a special legal
New Zealand has misrepresented and mischaracterised
Australia's interpretation of Article 2.2 and Article
5.1. Contrary to "inverting" the relationship
between the two provisions, or interpreting those provisions in
a way that deprives Article 2.2 of substance, Australia has
sought to provide the Panel with a workable, good faith
interpretation of those closely connected provisions,
consistent with the established guidance of the Appellate
Body. Article 2.2 is not an invitation for the Panel to
assess the validity of the scientific basis of
Australia's measures on a basis other than the Final IRA
As indicated in Australia's first written submission,
Australia's interpretation in relation to Articles 5.1
and 2.2 is the one that it considers to be applicable in this case. It makes no submissions about the
"correct" approach in all cases.
Australia's position is simply this. In the present
case, where the Final IRA Report is both a current and
comprehensive risk assessment, the question of whether
Australia's measures are maintained without sufficient
scientific evidence should be answered by considering whether
the Final IRA Report is a valid risk assessment.
Australia has comprehensively rebutted New
Zealand's Article 2.2 arguments
Australia firmly rejects any suggestion that it has not made a
serious attempt to rebut New Zealand's arguments in
relation to Article 2.2. In paragraph 344 of
Australia's first written submission, Australia notes
that there is a substantial overlap in New Zealand's
technical and scientific arguments under Articles 5.1 and 2.2,
and that it would therefore address them together.
Australia then proceeds with a 150 page comprehensive rebuttal
of New Zealand's scientific and technical
arguments. In addition, Australia's first written
submission also contains a substantive alternative argument in
relation to Article2.2. Accordingly, there is no
doubt whatsoever that Australia has responded very directly to
New Zealand's arguments in relation to Article 2.2.
New Zealand has attempted to reverse the burden of proof in
relation to Article 2.2. Australia's position on
the burden of proof applicable to Article 2.2 is based on a
straightforward application of the customary rules of
interpretation of public international law to that
provision. Put simply, the third requirement of Article
2.2 is couched in negative terms. Namely, Members must
ensure that their measures are "not maintained without sufficient scientific evidence". The
provision does not say that Members must ensure that their
measures are "maintained with sufficient scientific
In Australia's view, the drafters of the SPS
Agreement very deliberately chose this formulation of words
to emphasise that complainants bear a heavy evidentiary burden
in establishing a breach of the third requirement of Article
2.2. It requires the complainant to positively prove
insufficiency of the scientific evidence in relation to the
measures at issue. In the context of this dispute, this
means that New Zealand must positively demonstrate that the IRA
Team's evaluation of the scientific evidence was not
objective and credible.
Scientific and technical arguments
New Zealand has introduced a few new scientific and
technical arguments in relation to European canker and apple
leafcurling midge. Nothing new has been introduced in
relation to fire blight.
Australia firmly rejects New Zealand's assertion that it
is attempting to re-write the Final IRA Report in relation to
European canker, or any other pest at issue. As the
respondent in this dispute, Australia is clearly entitled to
rebut New Zealand's claims and arguments in order to
defend the consistency of its measures. This is not
equivalent to re-writing the Final IRA Report; it is simply
usual practice under the WTO dispute settlement system.
New Zealand criticises Australia for introducing an
"alternative climate analysis", suggesting that
this somehow acknowledges the inadequacy of the "original
climatic risk assessment" in the Final IRA Report.
However, New Zealand fundamentally misunderstands
Australia's position. Environmental conditions,
including climate, are only one of the three key criteria which
determine disease development. New Zealand's
fixation with climate analysis ignores the other two key
criteria, the pathogen and the host. In contrast, the IRA
Team took into account all three criteria in its assessment of
European canker as demonstrated by the Final IRA Report.
Moreover, contrary to what New Zealand alleges, the climate
analysis contained in Annex 2 of Australia's first
written submission is not directed at "patching up"
the Final IRA Report. Rather, it was merely introduced to
rebut New Zealand's climate analysis - in doing so it
confirms the credible and objective analysis set out in the
Final IRA Report.
New Zealand continues to erroneously equate the significant
apples trade from Tasmania with insignificant apples
trade from the four diseased orchards in Spreyton.
Apple leafcurling midge
New Zealand claims in its opening statement at paragraph 105
that Australia included AQIS inspections at the border as a
component of Australia's unrestricted risk analysis in
relation to apple leafcurling midge. This is simply not
true. In this regard, Australia refers the Panel to page
23 of the Final IRA Report, which states that "possible
AQIS on-arrival inspection for quarantine pests associated with
apples is not considered in the assessment of unrestricted
Australia notes that New Zealand has introduced a purported
clarification of the Rogers et al 2006 paper on apple
leafcurling midge. Australia does not consider that it
clarifies how New Zealand derives an overall viability rate of
15% from that study. Australia will further address the
content of the Rogers et al 2006 study, together with Exhibit
NZ-102, at a later stage of the proceedings. Suffice to
say, New Zealand's assertion with respect to this paper
does not impugn the IRA Team's assessment of the
probability of importation of apple leafcurling midge.
The AQIS audit requirement has been misunderstood by New
The AQIS auditing requirement continues to be a contentious
issue for New Zealand but, in Australia's view,
needlessly so. Despite repeated clarifications from
Australia, both before and during these proceedings, New
Zealand continues to misquote and misunderstand the AQIS audit
requirements. In practice, Australia expects that the
audit requirements would not be onerous as, following normal
practice, New Zealand and Australia would negotiate
arrangements for minimising duplication and maximising
Australia also points out that its import requirements for
apples from New Zealand, including the AQIS audit requirements,
are subject to review after the first year of trade. Australia
applies such a review mechanism in relation to all import risk
assessments. Australia highlights US table grapes as an
example where Australia has adjusted the relevant import
requirements a number of times.
New Zealand's secondary claims continue to lack
In addition to its primary claims under Article 5.1 & 2.2,
New Zealand's oral statement recycles the arguments made
in its first written submission regarding its secondary claims
under Articles 5.2, 5.5, & 5.6 of the SPS
Agreement. Australia has already comprehensively
rebutted these arguments in its first written submission.
Moreover, a number of the third parties have also called into
question the validity of New Zealand's secondary
Australia continues to be of the view that New Zealand has
failed to discharge its burden of proof by establishing a prima facie case. In all legal proceedings,
including this one, the burden of proof is a critical issue,
contrary to what New Zealand has asserted in its closing
statement. Australia reiterates its position that New
Zealand cannot be permitted to introduce new evidence to make a prima facie case by way of its rebuttal submission.
In its opening statement, New Zealand appears to query whether
Australia has acted in good faith by reserving its position in
relation to New Zealand's claim of undue delay under
Article 8 and Annex C(1)(a). New Zealand goes on to
allege that, as a consequence, the Panel is entitled to accept
New Zealand's claim as it has not been challenged by
This argument is completely devoid of merit. New
Zealand's claim on undue delay has been challenged by
Australia as being outside the scope of the Panel's terms
of reference. Australia has done so by
"reasoned" and compelling argument, in stark to
contrast to New Zealand's acrobatics on the issue.
Australia has acted in good faith in doing so and reserves
further argument until the Panel delivers its ruling.
Australia also notes New Zealand's reference in its
closing statement to Australia's IRA process being
"intermingled" with a political process. Australia
absolutely rejects any inference that its science-based IRA
process was intermingled with any political process. As
noted in Australia's written submission, New Zealand has
provided no evidence to back up such inferences and Australia
has asked the Panel to disregard them completely.
In conclusion, there is no question that New Zealand and
Australia enjoy a harmonious relationship based on shared
values, partnership and mutual interest. Our bilateral
trade agreement is one of the most comprehensive and successful
worldwide. There is no better basis on which to found a
mutually agreeable resolution to this dispute. Australia
welcomes the comments offered in this regard by the Chairman,
and would like to assure the Panel that we will continue to
work closely with our neighbour and close friend, New Zealand,
towards this end.
 Appellate Body Report, US – Softwood Lumber VI
(Article 21.5), para. 92.
 Appellate Body Report, EC – Hormones, para.
IRA Report, p. 325.