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The World Trade Organisation (WTO) Appellate Body released its report in the Australia – Apples case on 29 November 2010. The report represented a solid win for New Zealand. It upheld the key findings of the dispute panel report released in August 2010. Australia had until 17 August 2011 to implement the findings of the Apellate Body.
This web page details the background to the case and the findings of the panel and appeal processes.
The panel report
On 9 August 2010, the WTO panel released its final report to the Parties and the wider WTO Membership. The panel found that all sixteen of Australia’s quarantine measures applied to New Zealand apples and challenged by New Zealand, as well as Australia’s Final Import Risk Analysis Report for Apples from New Zealand (‘Final IRA’), are inconsistent with Australia’s legal obligations as a WTO Member under the WTO Agreement on the Application of Sanitary and Phytosanitary Measures (‘SPS Agreement’).
The key matter New Zealand asked the Panel to decide was whether the science around the three pests at issue in the case – fireblight, European canker and apple leaf-curling midge - was sufficient to support Australia’s risk assessment and justify the plant quarantine-related measures applied.
The Panel found that Australia’s Final IRA is not a valid risk assessment for the purposes of the SPS Agreement. New Zealand had identified fundamental flaws in the Final IRA’s overall methodology. The Panel agreed that these methodological flaws exaggerated the assessment of risk. The Panel also found with respect to the Final IRA’s analysis of the likelihood of entry, establishment and spread of the three pests, and in its analysis of potential consequences, that the Final IRA was not supported by the scientific evidence.
In addition, the Panel agreed that there were other less trade restrictive measures available to Australia that would achieve its appropriate level of protection. The Panel found that restricting New Zealand apples to mature, symptomless fruit, with straight-forward sample inspections at the border, would fully achieve Australia’s appropriate level of protection.
Following the release of the panel report, on 31 August 2010 Australia appealed several findings of the report relating to fire blight and apple leaf-curling midge. Australia lodged its apellant submission on 7 September. New Zealand lodged its appellee submission in response on 27 September.
Alongside Australia's appeal, New Zealand filed a cross appeal on 15 September. This cross appeal challenges the Panel's finding that the issue of 'undue delay' in the preparation by Australia of its risk assessment lay outside the Panel's terms of reference. Australia filed its appellee submission in response to New Zealand's cross appeal on 27 September.
The Appellate Body hearing took place in Geneva on 11-12 October.
The key elements of the Panel’s findings on the inadequacy of Australia’s risk assessment and insufficiency of science to support its measures have been upheld at appeal.
The Appellate Body upheld the Panel’s findings that the science around fire blight and ALCM, as well as the general measures relating to these pests, was not sufficient to support Australia’s risk assessment and justify the plant quarantine-related measures applied. The Appellate Body also held that the Panel acted consistently with its duty to conduct an objective assessment of the matter.
The Appellate Body found that the Panel had erred in its approach to analysing New Zealand’s claim that Australia's measures were more trade restrictive than required to meet Australia’s appropriate level of protection. The Appellate Body considered whether it could complete the analysis itself but found that there were insufficient uncontested facts or factual findings by the panel for it to do so.
In relation to New Zealand’s cross appeal, the Appellate Body found that the Panel had erred in concluding that New Zealand's claim was outside the Panel's terms of reference. However, the Appellate Body was not satisfied that the evidence before it justified a finding that Australia had breached its Annex C(1)(a)/Article 8 obligations.
The Appellate Body's findings are binding, following their adoption, by the WTO Dispute Settlement Body on 17 December 2010. Following release of the Apellate Body Report, Australia indicated that it had accepted the decision and would carry out a review of the import risk analysis for New Zealand apples. However, Australia indicated that it would not be able to comply immediately with the WTO findings, but required a reasonable period of time for implementation. Australia and New Zealand agreed on an eight month period for Australia to implement the findings and bring its measures into compliance with its WTO obligations. This eight month period will expire on 17 August 2011. From this date, Australia will be in a position to issue import permits for New Zealand apples, based on any conditions that may arise out of the review.
The Australian market has been closed to New Zealand apples since 1921, following the discovery in New Zealand in 1919 of the bacterial disease fireblight. Since 1986, New Zealand has sought actively to have the ban lifted, because studies have found no scientific evidence that fireblight can be transmitted through commercially traded apples.
In November 2006, Biosecurity Australia responded to New Zealand’s fourth request for access, issuing the Final IRA. The Final IRA recommended that imports of apples from New Zealand be permitted, subject to a range of conditions (known as ‘phytosanitary measures’ or ‘risk management measures’) which Australia deemed necessary to reduce the risks of various pests and diseases associated with New Zealand apples. On 27 March 2007, Australia’s Director of Animal and Plant Quarantine issued a policy determination confirming the conditions in the Final IRA.
New Zealand considers that many of the risk management measures imposed by Australia in the Final IRA are not justified by science, in particular those measures relating to two diseases of apples (fire blight and European canker) and one insect pest (apple leafcurling midge). Consequently, New Zealand considers these measures to be inconsistent with Australia’s obligations under the SPS Agreement. On 31 August 2007, New Zealand requested consultations with Australia under Article 11 of the SPS Agreement and Article 4 of the WTO Understanding on Rules and Procedures Governing the Settlement of Disputes (‘DSU’). The consultations took place in Geneva on 4 October 2007, but failed to resolve the dispute. On 6 December 2007 New Zealand requested the establishment of a WTO panel. The Panel was established at the meeting of the WTO Dispute Settlement Body on 21 January 2008, and was composed on 12 March 2008, comprising Mr J P A (Attie) Swart (Chair), Mr William Ehlers and Ms Kirsten Hillman. Six WTO members - Chile, Chinese Taipei, the European Communities, Japan, Pakistan and the United States - reserved the right to participate as third parties in the dispute.
On 13 March 2008, Australia lodged a request for a preliminary procedural ruling from the Panel, claiming that New Zealand’s request for the establishment of a panel was inconsistent with Article 6.2 of the DSU. Australia alleged that New Zealand’s panel request did not identify the specific measures at issue, and did not provide a brief summary of the legal basis of New Zealand’s complaint sufficient to present the problem clearly. New Zealand filed a response to these claims on 7 April 2008. Australia lodged a second submission on the procedural issue on 14 April 2008, and New Zealand responded on 16 April 2008. New Zealand also took the opportunity to respond to third party submissions filed by Chile and the European Communities on 9 May 2008.
On 6 June 2008, the Panel released its Preliminary Ruling on the procedural issue, ruling that “the Panel will allow this proceeding to continue with respect to the 17 measures specifically identified in New Zealand's panel request and to the alleged inconsistency of such measures with the provisions of the SPS Agreement cited therein”.
On 20 June 2008, New Zealand lodged its first written submission in the dispute. Australia then lodged its first submission on 18 July 2008. The parties presented their first oral submissions at a panel hearing in Geneva on 2-3 September 2008. New Zealand and Australia's second written submissions were tabled on 21 April 2009, with the second panel hearing taking place in Geneva on 30 June - 2 July 2009. The panel released its interim decision to the Parties in confidence on 31 March 2010, and circulated its final report to the wider WTO membership on 9 August 2010. Australia appealed the several findings of the Panel report on 31 August 2010 and the appeal was heard in Geneva on 11-12 October 2010. The section above details the appeal process.
Key stages in the timetable for the dispute were as follows:
- New Zealand’s First written submission - 20 June 2008
- Australia’s first written submission - 18 July 2008
- Third parties’ written submissions - 23 July 2008
- First panel hearing - 2-3 September 2008
- Solicitation of expert advice October - 2008 - February 2009
- Second written submissions of the parties - 21 April 2009
- Second panel hearing 30 June - 2 July 2009
- Panel report circulated publicly - 9 August 2010
- Australia appeals - 31 August 2010
- Australia's appellant submission - 7 September 2010
- New Zealand lodges a cross appeal - 13 September 2010
- New Zealand's other appellant (cross appeal) submission - 15 September 2010
- New Zealand's appellee submission 27 September 2010
- Australia's appellee submission (in relation to the cross appeal) - 27 September 2010
- Appellate Body Hearing - 11-12 October 2010
- Appellate Body report circulated - 29 November 2010
- New Zealand’s 6.2 submission, 7 April 2008 [PDF 158 KB]
- Letter to the Panel, 16 April 2008 [PDF 62 KB]
- New Zealand's response to Third Party submissions, 9 May 2008 [PDF 72 KB]
- New Zealand's first written submission, 21 June 2008 [PDF 1.8 MB]
- New Zealand's opening statement- First Panel Hearing, 2 September 2008 [PDF 148 KB]
- New Zealand's closing statement- First Panel Hearing, 3 September 2008 [PDF 20 KB]
- Letter to the Panel from New Zealand & Australia, 19 December 2008 [PDF 55 KB]
- New Zealand's second written submission, 21 April 2009 [PDF 2.1 MB]
- Executive summary of New Zealand's appellee submission, 27 September 2010 [PDF 35 KB]
- New Zealand's opening statement - Second Panel Hearing, 1 July 2009 [PDF 1.2 MB]
- New Zealand's closing statement - Second Panel Hearing, 2 July 2009 [PDF 200 KB]
- New Zealand's cross appeal, 15 September 2010 [PDF 100 KB]
- New Zealand's appellee submission, 27 September 2010 [PDF 880 KB]