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WTO disputes

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: Opening Statement
of Australia – Executive Summary

10 September 2008


This case is about the basic right of all WTO Members to
protect plant life and health within their territory. It
is about the level of risk that Australia is prepared to
tolerate and Australia's particular quarantine
circumstances. It is about serious plant pests not
present in Australia but endemic in New Zealand – fire
blight, European canker and apple leafcurling midge. It
is about the comprehensive and transparent science-based risk
assessment undertaken by the IRA Team and set out in the Final Import Risk Analysis Report for apples from New
. It is about Australia's reasonable
quarantine measures, necessary to mitigate the risk of serious
plant pests entering Australia. It is about the
application of scientific and technical judgment by the
qualified and respected experts who inform Australia's
quarantine regulatory decisions. It is about the extent
to which a WTO panel is permitted to intervene in such
decisions. It is about the trade liberalising reality of
Australia having opened its market to New Zealand apples in
March 2007.

Australia is free of many of the world's major plant
pests. Australia's unique biodiversity and
distinctive native flora and fauna are of world renown.
In addition, Australia's favourable plant-health status
is vital to its multi-billion dollar agricultural sector.
In order to protect these significant assets, Australia invests
heavily in quarantine. As a result, Australia has one of
the most comprehensive and effective quarantine systems in the

As recognised in the SPS Agreement, Australia has the
right to maintain its favourable plant health status. In
this regard, Australia is not asking to be treated differently
to other WTO Members when it urges the Panel to pay close
attention to Australia's particular quarantine
circumstances. In order to maintain its favourable
plant-health status, Australia must be able to rely on
the WTO bargain that it signed up for – including the delicate and carefully negotiated balance of rights and
obligations set out in the SPS Agreement. In
undertaking its role in this dispute, the Panel should respect
this delicate balance.

Australia's appropriate level of protection in

The SPS Agreement does not require international
harmonisation of Members' quarantine measures. In
fact, the determination of a Member's acceptable level of
risk, also known as the appropriate level of protection, is the
Member's sole prerogative. No-one may impinge on
that prerogative – not trading partners, not WTO panels,
not the Appellate Body. This position has been clearly
articulated by the Appellate Body,[1] and is widely accepted by the WTO
membership.[2] To deny a Member's sovereign right to
determine its own appropriate level of protection would
disregard the balance of rights and obligations set out in the SPS Agreement.

Whether other Members may be content to tolerate the risk of an
event occurring once in every five years or five thousand
years, is irrelevant. The SPS Agreement does not
require Members to accept the same level of risk or a certain minimum level of risk. It is entirely up to each
Member to judge whether its national interest is best served by
a higher or lower appropriate level of protection. What
matters in the present case is the risk that Australia is
prepared to tolerate
, not the risk that New Zealand or any
other Member is prepared to tolerate.

The Australian community demands that its Government takes
responsible action to protect Australia's agricultural
sector and biodiversity from exotic pests, and
Australia's appropriate level of protection is set to
reflect this. It explicitly and transparently expressed
as requiring quarantine risks to be managed to a very low
level, although not to zero.

The concept of appropriate level of protection cannot be seen
in isolation. The appropriate level of protection is
integral to each Member's quarantine system. In
order to implement their appropriate level of protection,
Members have a basic right under the SPS Agreement to
take SPS measures for the protection of human, animal and plant
life or health. The appropriate level of protection is
the benchmark, and the SPS measures are the instrument used to
achieve that benchmark.

A Member's appropriate level of protection fundamentally
shapes its decision on SPS measures. The first step is to
determine the level of unrestricted risk posed by the product
at issue. If that risk is higher than the Member's
acceptable level of risk, then the Member may adopt measures to
achieve its appropriate level of protection.

The Final IRA Report provides the basis for
Australia's measures

The relevant level of risk posed to Australia by the
importation of apples from New Zealand was rigorously examined
in the Final IRA Report. This document provides
the basis for the SPS measures central to this dispute and
cannot be ignored. The risk assessment conducted by the
IRA Team, as set out in the Final IRA Report, is fully
consistent with the SPS Agreement and with
internationally recognised scientific method.

New Zealand is critical of the Final IRA Report and the
measures applied by Australia to New Zealand's apple
exports. This flows from a broad argument that there is a
single correct view of science; that for there to be two
opposing views in any scientific disagreement means that one of
those views must necessarily be wrong. This is simply not
the case.

In this dispute, New Zealand relies on the superficially
attractive notion of scientific "certainty" around
the transfer and spread of the pests at issue. The
reality is that there are different views on many scientific
issues based on the same set of facts, often held by equally
qualified and respected scientists. Moreover, the state
of scientific knowledge is limited and constantly

In this dispute, the Panel is faced with competing scientific
opinion and evidence, and Australia asks that the Panel bear in
mind the Appellate Body's statement that responsible and
representative governments may act in good faith on the basis
of so-called "divergent" scientific opinion, coming
from qualified and respected sources.[3] In other words, there is no
need for the Panel to try to choose what it considers the
"correct" view to be. To do so would
constitute an error of law.

The Final IRA Report takes into account some thousand
scientific references, including scientific references cited by
New Zealand in its written submission. This literature
needs to be interpreted in light of Australia's
particular circumstances. The IRA Team, a group of highly
qualified and respected scientists and technical experts,
performed this role.

The IRA Team applied its expert judgment and elaborated its
reasoning at every step in the Final IRA Report. On the
basis of its detailed analysis of the level of risk associated
with the importation of New Zealand apples, the IRA Team
concluded that certain risk mitigation measures were required
in order to achieve Australia's appropriate level of
protection. New Zealand can export apples to Australia,
provided that it observes the reasonable measures recommended
in the Final IRA Report.

This dispute is not a re-run of Japan –

It is clear that New Zealand believes that this dispute is
simply a re-run of Japan – Apples. New
Zealand continues to treat Japan – Apples as some
form of scientific process, not a legal process. This is
a major error by New Zealand, a fact that third parties in this
dispute have recognised.[4] Japan – Apples is not a risk
assessment and is not scientific evidence.
Moreover, there are significant differences between the two
sets of circumstances, including the pests at issue,
appropriate level of protection, climatic conditions, potential
host plants, and the volume and mode of trade.

The product and measures at issue must be identified

The product at issue in this dispute, as set out in the Final
IRA Report, is "mature apple fruit free of trash, either
packed or sorted and graded bulk fruit from New
Zealand."[5] Any attempt by New Zealand to characterise the
product at issue as "mature symptomless apples" must be dismissed.
"Symptomless" apples are not necessarily

The measures at issue also define the scope of this dispute and
warrant careful consideration by the Panel. In the
Panel's preliminary ruling of 6 June 2008,[6] the Panel clearly
limited its terms of reference to the 17 measures specifically
identified in New Zealand's panel request. The onus
is on New Zealand to establish that each measure meets the
definition of an "SPS measure", as set out in Annex
A(1) of the SPS Agreement. In any event, as
explained in Australia's written submission, two of these
17 measures are not live issues in this dispute.

Not all of the measures can be challenged individually, as
several are ancillary measures which support, verify and
operationalise the principal risk reduction measures. In
Australia's view, the Panel should only examine such
ancillary measures when "taken as a whole" with the
principal risk reduction measures to which they relate.

On this, Australia notes that New Zealand's challenge
does not cover the whole of the Final IRA Report. The
Final IRA Report covers pests and diseases which are not at
issue in this dispute, and this needs to be borne in mind,
particularly when examining the ancillary

New Zealand has not backed up its claims with evidence and
legal argument

New Zealand bears the burden of raising a prima facie case of inconsistency in relation to each of the provisions it
is challenging under the SPS Agreement. To do
this, New Zealand must present sufficient evidence and legal argument to support that prima facie case.
Only if New Zealand succeeds in doing so must Australia rebut
the alleged inconsistencies. Until that point, Australia
is entitled to the presumption of WTO-consistency.
Australia emphasises this point because it believes that the
assertions made by New Zealand in its first written submission
are simply not supported by legal argument or evidence. Neither
the Panel, nor the third parties, are permitted to "make
the case" for New Zealand.

New Zealand is required to discharge its burden of proof in
relation to each of the measures at issue under each of the challenged provisions of the SPS
. Australia is firmly of the view that New
Zealand's case is fatally flawed as it has failed to meet
its burden of proof. Australia nonetheless demonstrates,
through solid scientific evidence and legal argument, that the
measures at issue are fully consistent with the SPS

The Panel's role in this dispute is not

Another critical threshold issue relates to the role that the
Panel is required to perform in this dispute. The
Panel's role is not unfettered. Rather, there are
parameters within which the Panel must operate, which are
imposed in the standard of review to be applied by the
Panel. The Appellate Body has stated that a failure to
apply the proper standard of review constitutes a legal
Australia therefore considers it essential that the Panel apply
the appropriate standard of review throughout this

Contrary to what New Zealand has suggested, the final word on
standard of review is not Article 11 of the Dispute Settlement
Understanding. While the "objective
assessment" standard under Article 11 is certainly the
starting point for the Panel's standard of review, it
nevertheless provides limited guidance on the precise nature
and intensity of the review required by panels in their
fact-finding role. Accordingly, as indicated by the
Appellate Body, the appropriate standard of review must also be
informed by the particular covered agreement and, within that
agreement, the particular obligation at issue.[8]

Upon signing up to the WTO bargain, Members consciously
conceded their jurisdiction on certain issues to the WTO,
effectively nominating the WTO as arbiter of those
issues. However, on other issues, Members'
jurisdictional competences were deliberately retained.
The effect of this delicate and carefully negotiated balance is
that there is a line that traces its way through the SPS
– on one side lies the areas of
jurisdictional competence that Members conceded, on the other
side, the areas they did not.

The Panel should observe that line. In the context of the SPS Agreement, the Appellate Body has explicitly stated
that the standard of review must "reflect the balance
established in that Agreement between the jurisdictional
competences conceded by the Members to the WTO and the
jurisdictional competences retained by the Members for

The standard of review has important implications for this
dispute. It means that the Panel should not conduct its
own risk assessment for Australia. A WTO panel should not
attempt to choose its preferred view of the science and thereby
substitute its judgment for that of the risk assessor –
in this case, the IRA Team.

Australia is not suggesting that the Panel's role in this
dispute is marginal. Rather, the Panel has the centrally
important role of determining whether Australia's
measures are based on a valid risk assessment in accordance
with the relevant provisions of the SPS Agreement; of
determining whether that risk assessment is objective and

Australia submits that the Panel should be guided by the
compliance panel's approach in Australia –
Salmon (Article 21.5 – Canada)
. The Panel must
be satisfied that it has reasonable confidence in the risk
assessment, and only if New Zealand establishes flaws in the
Final IRA Report which are so serious that they would
prevent the Panel from having that confidence, should the Panel
be required to intervene in the findings or conclusions of the
Final IRA Report.[10]

Australia notes that the European Communities "largely
agrees" with Australia's position on standard of

New Zealand disregards the special relationship between
Articles 5.1 & 2.2

A further important issue in this dispute is the nature of the
relationship between Articles5.1 & 2.2 of the SPS
. Australia believes that New
Zealand's approach to these provisions is confused and

According to the Appellate Body, Articles 5.1 & 2.2 should
"constantly be read together", as the elements of
each provision inform and impart meaning to the other.[12] In fact, the
Appellate Body has indicated that Article 5.1 is a specific
application of Article 2.2,[13] meaning that Article 5.1, and its associated
provisions, elaborate specific conditions which, if met, will
establish the consistency of the relevant measures with Article

Australia's view of the relationship between Articles 5.1
& 2.2 is firmly grounded in the text of the SPS
. Both Articles concern whether the
available evidence demonstrates the existence of risk. That risk provides the basis for the
adoption of SPS measures.

New Zealand has effectively ignored the clear and consistent
guidance of the Appellate Body by treating Articles 5.1 &
2.2 in virtual isolation from each other. New Zealand has
neglected to illuminate how it considers the two provisions
relate to each other.

Risk assessments involve the expert evaluation of scientific
evidence and technical and economic factors, in accordance with
an appropriate methodology. They must also be appropriate
to the circumstances. Accordingly, if measures are based
on a valid risk assessment under Article5.1, the Article
2.2 requirement that measures not be maintained without
sufficient scientific evidence is satisfied. As
acknowledged by the Appellate Body, Article 5.1 marks out and
elaborates a particular route leading to the same destination
set out in Article2.2.[14]

Australia notes that the European Communities agrees that the
question of whether Australia has maintained measures
"without sufficient scientific evidence" under
Article 2.2 can only be answered by considering whether
Australia's measures are based on a valid risk assessment
under Article 5.1.[15]

In light of the special legal relationship between Articles 5.1
& 2.2, and the fact that the Final IRA Report provides the
basis for the measures at issue, Australia urges the Panel in
this dispute to commence its assessment of New Zealand's
technical and scientific arguments under Article5.1 in
this dispute.

Consequences are an integral part of risk

New Zealand wrongly implies that the notion of
"risk" should be confined to the likelihood of
entry, establishment or spread. However, pursuant to the
relevant provisions of the SPS Agreement, a valid
assessment of phytosanitary risk must evaluate both likelihood, as well as the associated potential
biological and economic consequences. New Zealand
cannot paper over the inconvenient truth that the pests at
issue in this dispute – fire blight, European canker and
apple leafcurling midge – all have serious biological and
economic consequences.

Australia's measures address real

New Zealand also confuses the notion of mere
"possibility" or "theoretical risk"
with events that have a very small or "negligible"
probability of occurring. This effectively amounts to an
assertion that risk assessments are required to identify a
minimum magnitude of risk – a proposition which has been
expressly rejected by the Appellate Body.

The careful use of statistical distributions by the IRA Team in
estimating probability reflects the range and variability of
available scientific evidence, accommodating small but
significant probabilities as well as uncertainties, consistent
with the relevant international standard for pest risk
analysis, the ISPM No. 11.

New Zealand's and the United States' scientific
and technical arguments lack merit

Australia's first written submission comprehensively
rebuts New Zealand's scientific and technical arguments
and clearly demonstrates that the Final IRA Report is a valid
risk assessment under Article 5.1. As such,
Australia's measures are consistent with Article 5.1,
and, accordingly with Article 2.2 of the SPS

Australia notes that the United States has lodged a lengthy
submission with a heavy focus on scientific and technical
evidence in relation to fire blight and European canker.
Australia will vigorously and comprehensively rebut the serious
flaws in the arguments raised by the United States in its
rebuttal submission.

New Zealand's secondary claims are flawed

In addition to its primary claims under Articles 5.1 & 2.2,
New Zealand's first written submission sets out a number
of secondary claims relating to Articles 2.3, 5.2, 5.5 and 5.6
of the SPS Agreement. Australia has already
comprehensively addressed these claims in its written
submission and notes that a number of the third parties also
question the validity of New Zealand's claims.

New Zealand's undue delay claim is outside the scope
of this dispute

The Panel has asked the parties to address Australia's
request for a ruling in relation to New Zealand's claim
of undue delay under Article 8 and Annex C(1)(a) of the SPS
. Australia's position is clear.
The Panel issued a preliminary ruling on 6 June 2008, in which
it made it very clear that New Zealand's panel request is
limited to the items specified by bullet point in that panel
request.[16] All other matters are therefore outside the
scope of this dispute.

Despite the Panel's preliminary ruling, New Zealand has
proceeded with a claim that the IRA process was subject
to undue delay. Australia considers that this is legally
untenable. It is clear from New Zealand's panel
request, and the Panel's preliminary ruling, that the IRA
process is not a measure at issue in this dispute; the
IRA process is not one of the items specified by bullet
point in New Zealand's panel request.

Australia therefore wrote to the Panel on 22August 2008
asking it to apply its preliminary ruling of 6 June by making a
further ruling explicitly stating that New Zealand's
undue delay claim is outside the scope of these

Australia notes that paragraph 16 of the Panel's Working
Procedures clearly allows for a jurisdictional ruling at any
stage of the proceedings upon the showing of good cause.
Australia believes that there is very good cause for a
ruling at this stage of proceedings, as the respondent should
not be required to defend claims which the Panel has indicated
are not within its jurisdiction. In any event,
Australia is not seeking a ruling on a new issue; Australia is
merely asking the Panel to apply its preliminary ruling of 6

This is a complex dispute involving detailed legal argument and
voluminous scientific and technical evidence. It concerns
three pests - bacterial, fungal and insect – each with
quite different biology. The Panel, the Parties and the
Secretariat all have limited resources, and there is no need to
expend those limited resources on a moot point. Australia
believes that a ruling at this stage would help secure a
positive solution to the dispute.

The Panel may take into account amicus curiae submissions
as necessary

Australia does not see amicus curiae submissions as having the
same status as party or third party submissions. However,
they may provide a useful perspective on issues under
consideration in this dispute. Accordingly, the Panel
should accept amicus curiae submissions into the record.
Beyond that, it is up to the Panel whether or not to take such
submissions into account in resolving the issues raised in this

Australia is ready to provide its views on the role of

Australia notes that the Panel may decide to consult experts in
relation to scientific and technical issues in this
dispute.[17] If the Panel chooses to
do so, Australia emphasises that, in its view, the selection of
such experts requires careful deliberation, and their role
requires demarcation from the outset.


Australia is an active Member which takes its WTO obligations
seriously. Australia is not seeking to resile from the
disciplines contained in the SPS Agreement. On the
contrary, Australia has opened its market to New Zealand apples
subject to reasonable risk mitigation measures set out in the
science-based Final IRA Report. These measures are
directed at protecting plant life and health within Australia
from serious pests not present in Australia but endemic in New
Zealand. The measures are fully WTO-consistent and are
required to achieve Australia's appropriate level of

[1] Australia – Salmon, para. 199.

[2] See for
example: TPKM's Third Party Submission, para. 20;
Chile's Third Party Submission, para. 8; EC's
Third Party Submission, paras. 31 & 61; and US'
Third Party Submission, paras. 78-79.

[3] EC
– Hormones
, para. 194.

[4] Chile's Third Party Submission, paras. 11-13;
Japan's Third Party Submission para. 2; EC's
Third Party Submission para. 47; US' Third Party
Submission para. 11.

[5] Final
IRA Report, Part B, p. 9.

[6] WT/DS367/7, para. 13(b).

[7] Appellate Body Report, US – Countervailing Duty
Investigation on DRAMS,
para. 187.

[8] Appellate Body Report, US –
Softwood Lumber VI (Article 21.5 Canada)
, para. 92.

[9] Appellate Body Report, EC – Hormones para.

[10] Panel
Report, Australia – Salmon (Article 21.5 –
, para. 7.57.

[11] EC's Third Party Submission, para. 28-30, 84.

[12] Appellate Body Report, EC – Hormones, para. 180;
Appellate Body Report, Australia – Salmon, para.
130; Appellate Body Report, Japan – Agricultural
Products II
, para. 82.

[13] Appellate Body Report, EC – Hormones, para.

[14] Appellate Body Report, Australia – Salmon, paras

[15] EC's Third Party Submission para. 13.

[16] WT/DS367/7, para. 13(b).

[17] Article 11.2 of the SPS Agreement and Article 13.2 of
the DSU.

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Last Updated: 9 January 2013
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