WT/DS392/R
Page 1
Organization
WT/DS392/R
29 September 2010
(10-4731)
Original: English
UNITED STATES – CERTAIN MEASURES AFFECTING IMPORTS OF POULTRY FROM CHINA
Report of the Panel
WT/DS392/R
Page 1
TABLE OF CONTENTS
Page
I.introduction......
II.factual aspects......
A.Background......
B.The measure at issue......
C.The UnitedStates' regime for the importation of poultry......
1.First Stage: Initial equivalence determination......
(a)Document review......
(b)On-site audit......
(c)Publication in the Federal Register......
2.Second Stage: Certification of establishments for export by the eligible exporting country
3.Third Stage: Ongoing equivalence verification......
D.China's request for equivalence......
III.parties' requests for findings and recommendations......
IV.ARGUMENTS OF THE PARTIES......
A.Executive summary of the first written submission of China......
1.Introduction......
2.The measures at issue......
(a)Section727 of the Agriculture Appropriations Act 2009......
(b)Ongoing moratorium on the establishment or implementation of authorization for the importation of poultry products from China
3.US regulations and procedures applicable to the authorization of poultry products.....
(a)US regulations and procedures......
(b)Application of procedures before and after the moratorium......
(i)China......
(ii)All other WTO Members......
4.Legal analysis and argument......
(a)Section727 and the moratorium each violate ArticleI:1 of GATT1994..
(b)Section727 and the moratorium each violate ArticleXI:1 of GATT1994
(c)Section727 and the moratorium each violate Article4.2 of the Agreement on Agriculture
(d)Claims under the Agreement on the Application of Sanitary and Phytosanitary Measures
(i)To the extent they are SPSmeasures, the measures are inconsistent with Article2.3 of the SPSAgreement
(ii)To the extent they are SPSmeasures, the measures are inconsistent with Article5.5 of the SPSAgreement
(iii)To the extent they are SPSmeasures, the measures are inconsistent with Article5.1 and 5.2 of the SPSAgreement
(iv)To the extent they are SPSmeasures, the measures are inconsistent with Article2.2 of the SPSAgreement
(v)To the extent they are SPSmeasures, the measures are inconsistent with Article5.6 of the SPSAgreement
(vi)To the extent they are SPSmeasures, the measures are inconsistent with Article8 of the SPSAgreement
5.The US Preliminary Ruling Request must fail, as consultations pursuant to the SPSAgreement were requested and held
(a)China's consultations request clearly invoked Article11 of the SPSAgreement
(b)Pursuant to its consultations request, China actually consulted regarding the SPSAgreement, and in a manner fully consistent with Article4 of the DSU
B.Executive summary of the first written submission of the UnitedStates......
1.Introduction......
2.Section727 is the only measure at issue in this dispute......
3.China mischaracterizes the legal effect of Section727 in US domestic law......
4.Of the three claims presented by China, the Panel need only consider the claim under ArticleXI of the GATT1994
5.Section727 is justified pursuant to GATT ArticleXX(b)......
6.China has not made a prima facie case in support of its claims under the SPSAgreement
7.Reply to China's response and third party comments on US Preliminary Ruling request of 1 October
C.Executive summary of the opening oral statement of China at the first substantive meeting of the Panel
1.Introduction and background......
2.Section727 of the Agriculture Appropriations Act 2009......
(a)Section727 is inconsistent with Articles2.2, 2.3, 5.1, 5.2, 5.5, 5.6, and 8 of the SPSAgreement
(i)Relationship between the SPSAgreement and GATT ArticleXX(b)......
(ii)Section727 is inconsistent with Articles5.5 and 2.3 of the SPSAgreement
(iii)Section727 is inconsistent with Articles2.2, 5.1, and 5.2 of the SPSAgreement
(iv)Section727 is inconsistent with Article5.6 of the SPSAgreement......
(v)Section727 is inconsistent with Article8 of the SPSAgreement......
(b)Section727 is inconsistent with ArticleI:1 of GATT1994......
(c)The UnitedStates concedes that Section727 is inconsistent with GATT ArticleXI:1 and Article4.2 of the Agreement on Agriculture
(d)Inconsistency of Section727 with GATT1994and the Agreement on Agriculture cannot be justified on the basis of GATT ArticleXX(b)
(i)Section727 is not "necessary" within the meaning of GATT ArticleXX(b).....
(ii)Section727 does not comply with the chapeau of GATT ArticleXX......
3.Section743 of the Agriculture Appropriations Act of 2010......
4.Request for enhanced third party rights......
D.Executive summary of the closing statement of China at the first substantive meeting of the Panel
E.Executive summary of the oral statement of the UnitedStates at the first substantive meeting of the Panel
F.Executive summary of the second written submission of China......
1.Introduction and summary......
2.The UnitedStates cannot sustain its argument that China and the UnitedStates did not consult under the SPSAgreement
3.China has established prima facie claims under ArticlesI:1 and XI:1 of GATT1994and the Agreement on Agriculture
(a)China's claims under ArticleI:1 of GATT1994......
(b)China's claims under ArticleXI:1 of GATT1994......
(c)China maintains its claim under Article4.2 of the Agreement on Agriculture
4.The UnitedStates has not established that Section727 falls within the exception under ArticleXX(b) of GATT1994
(a)Introduction......
(i)Section727 is not "necessary" to the protection of human life and health under paragraph (b) of ArticleXX
(ii)Section727 does not fulfil the requirements of the chapeau to ArticleXX......
(b)Various US Arguments related to its ArticleXX(b) defence are unsupported by the evidence and legally erroneous
(i)China did not have access to normal PPIA/FSIS procedures, by the explicit terms of Section727 and its predecessor
(ii)Section727 was not necessary because there were no "imminent" imports of Chinese poultry at the time it was enacted
(iii)FSIS equivalence procedures for poultry are not inherently more risky for human life and health than non-equivalence safety and inspection procedures
(iv)US arguments alleging a fear of a breach of APHIS Regulations and avian influenza do not support a conclusion that Section727 is necessary
(v)The UnitedStates references anecdotal news reports on eggs and animal feed, but provides no evidence of food safety problems related to processed poultry
(vi)The UnitedStates fails to demonstrate that china is different than all other countries in a manner that justifies arbitrary discrimination
Pool of countries to assess whether "same conditions" prevail......
Issue of "imminent" imports of Chinese poultry......
Applicability of US – Shrimp
Poultry risk factors in countries seeking to export poultry to the UnitedStates......
5.China's claims under the SPSAgreement
G.Executive summary of the second written submission of the UnitedStates......
1.Introduction......
2.Section727 is justified under GATT ArticleXX(b)......
3.China has failed to show that Section727 results in a breach of any obligation under the SPSAgreement
H.Executive summary of the opening oral statement of China at the second substantive meeting of the Panel
1.Section727 is inconsistent with the SPSAgreement
(a)Section727 is not an intermediate step in FSIS equivalence procedures......
(b)727 is subject to Articles2.2, 2.3, 5.1, 5.2, 5.5, 5.6, and 8 of the SPSAgreement
(c)China has sustained its burden of proving a violation of Article5.5 of the SPSAgreement
(i)The two situations identified by China are comparable under Article5.5 of the SPSAgreement
(ii)The UnitedStates applies distinct ALOPs to comparable situations......
(d)In addition to Article5.5, Section727 is inconsistent with Articles2.2, 2.3, 5.1, 5.2, 5.6, and 8 of the SPSAgreement
(e)SPS violations cannot be justified on the basis of GATT ArticleXX(b)......
(i)Violations of GATT1994 and of the Agreement on Agriculture cannot be justified under ArticleXX(b)
(f)Section727 was not "necessary"......
(i)Section727 did not materially contribute to its objective......
(ii)FSIS procedures are a reasonably available alternative to Section727......
(g)Section727 is inconsistent with the requirements of the ArticleXX chapeau...
I.Closing statement of China at the second substantive meeting of the Panel......
J.Executive summary of the oral statement by the UnitedStates at the second substantive meeting of the Panel
V.ARGUMENTS OF THE THIRD PARTIES......
A.European Union......
1.Executive summary of the third party written submission by the EuropeanUnion
(a)Concerning the existence of the alleged measures......
(i)On the notion of "future closely-related measures"......
(ii)On the notion of the "moratorium"......
(iii)On the expiry of Section727 and the letter of 12 November 2009......
(b)Claims relating to the application of the GATT......
(i)On the application of GATT XI......
(ii)On the relation between GATT XX(b) and the SPSAgreement......
(c)Claims relating to the application of the SPSAgreement
(d)Request for enhanced third party rights......
B.Korea
1.Executive summary of the thirdparty submission of Korea
C.Chinese Taipei......
1.Oral statement by Chinese Taipei......
D.Turkey......
1.Oral statement by Turkey......
VI.INTERIM REVIEW......
A.General......
B.China's comments on the interim report......
1.Factual aspects......
2.Whether Section 727 is an SPS measure......
3.Miscellaneous......
C.UnitedStates' comments on the interim report......
1.General comments on judicial economy......
2.Factual aspects......
3.Whether Article4 is the only provision of the SPSAgreement applicable to Section 727
4.Whether Section727 is based on scientific principles and is not maintained without sufficient scientific evidence as required by Article2.2 of the SPSAgreement
5.Whether Section727 is inconsistent with Article5.5 of the SPSAgreement
6.Miscellaneous......
VII.FINDINGS......
A.Preliminary issues......
1.Terms of reference of the panel......
(a)Introduction......
(b)Request for a preliminary ruling by the UnitedStates......
(i)Background
(ii)Arguments of the parties
(iii)Analysis by the Panel......
The relevance of the consultations request and the holding of consultations to a panel's terms of reference
Whether China has requested consultations pursuant to the SPSAgreement
(iv)Conclusion......
2.Whether the Panel may rule on an expired measure......
(a)Background......
(b)Arguments of the parties......
(c)Analysis by the Panel......
(d)Conclusion......
3.European Union's request for enhanced third party rights......
B.Order of analysis of China's claims and the United States' defence......
C.Whether Section 727 is an sps measure within the scope of the SPSAgreement
1.Background......
2.Arguments of the parties......
3.Analysis by the Panel......
(a)The concept of SPSmeasure under the SPSAgreement
(i)Definition of SPSmeasures......
(ii)Directly or indirectly affect[s] international trade......
(b)Whether Section727 is an SPSmeasure under the SPSAgreement
(i)The measure at issue......
(ii)Whether Section727 falls within the definition of AnnexA(1)......
AnnexA(1)(a) through (d)......
Second part of AnnexA(1)......
(iii)Whether Section727 affects directly or indirectly international trade......
(c)Conclusion......
D.Whether Article 4 is the only provision of the SPSAgreement applicable to Section 727
1.Background......
2.Arguments of the parties......
3.Analysis by the Panel......
E.Order of analysis of China's claims under the SPSAgreement
F.Whether Section727 is inconsistent with Articles2.2, 5.1 and 5.2 of the SPSAgreement
1.Arguments of the parties......
2.Analysis by the Panel......
(a)Relationship between Articles2.2, 5.1 and 5.2 of the SPSAgreement – Order of analysis
(b)Article5.1 and 5.2 of the SPSAgreement
(i)The concept of risk assessment pursuant to AnnexA(4) of the SPSAgreement..
(ii)When is a measure "based" on a risk assessment?......
(c)Whether the UnitedStates has conducted a risk assessment and whether Section727 is based on such a risk assessment
(d)Whether Section727 is based on scientific principles and is not maintained without sufficient scientific evidence as required by Article2.2 of the SPSAgreement
(i)Arguments of the parties......
(ii)Analysis by the Panel......
(e)Conclusion......
G.Whether Section727 is inconsistent with Article5.5 of the SPSAgreement
1.Arguments of the parties......
2.Analysis by the Panel......
(a)Article5.5 of the SPSAgreement
(b)The importation of Chinese poultry products vis-à-vis that of poultry products from other WTO Members
(i)Whether Section727 results in distinctions in ALOPS in different yet comparable situations
Whether different yet comparable situations exist......
Whether distinctions in ALOPs exist......
Conclusion......
(ii)Arbitrary or unjustifiable differences in ALOPs......
(iii)Discrimination or disguised restriction on international trade......
(iv)Conclusion......
(c)The importation of Chinese poultry products vis-à-vis that of other food products from China.
Whether different yet comparable situations exist......
H.Whether Section727 is inconsistent with Article2.3 of the SPSAgreement
1.Arguments of the parties......
2.Analysis by the Panel......
(a)Article2.3 of the SPSAgreement
(b)Conclusion......
I.Whether Section727 is inconsistent with Article5.6 of the SPSAgreement
1.Arguments of the parties......
2.Analysis by the Panel......
(a)Article5.6 of the SPSAgreement
(b)Conclusion......
J.Whether Section727 is inconsistent with Article8 of the SPSAgreement
1.Arguments of the parties......
2.Analysis by the Panel......
(a)Article8 and AnnexC(1)(a) of the SPSAgreement
(b)Whether the procedures applied by the FSIS in the equivalence determination process are control, inspection and approval procedures within the scope of AnnexC(1) of the SPSAgreement
(c)Whether Section727 has resulted in an undue delay of the FSIS equivalence determination process in respect of poultry products from China within the meaning of AnnexC(1)(a) of the SPSAgreement
(d)Whether by failing to observe the provisions of AnnexC(1)(a) of the SPSAgreement, the UnitedStates has acted inconsistently with Article8 of the SPSAgreement
(e)Conclusion......
K.Whether Section 727 is inconsistent with Articlei:1 of the GATT1994......
1.Arguments of the parties......
2.Analysis by the Panel......
(a)ArticleI:1 of the GATT1994......
(b)Whether Section 727 is a measure subject to the disciplines of ArticleI:1 of the GATT1994
(c)Whether the UnitedStates confers an advantage of the type covered by ArticleI:1 of the GATT1994
(d)Whether like products from other Members are granted an advantage within the meaning of ArticleI:1 of the GATT1994
(e)Whether the UnitedStates confers an advantage that is not extended "immediately and unconditionally" to poultry products from China
(f)Conclusion......
L.Whether Section727 is inconsistent with ArticleXI:1 of the GATT1994
1.Arguments of the parties......
2.Analysis by the Panel......
(a)ArticleXI:1 of the GATT1994......
(b)Section727 as an "other measure"......
(c)Whether Section727 is a "prohibition or restriction" within the meaning of ArticleXI:1 of the GATT1994
(d)Conclusion......
M.Whether Section 727 is justified under ArticleXX(B) of the GATT1994.....
1.Background......
2.Relationship between ArticleXX(b) of the GATT1994and the SPSAgreement
(a)Arguments of the parties......
(b)Analysis by the Panel......
(c)Conclusion......
N.Whether Section727 is inconsistent with Article4.2 of the Agreement on Agriculture
VIII.Conclusions and recommendations......
WT/DS392/R
Page 1
LIST OF REPORTS CITED IN THIS REPORT
Short Title / Full Case Title and CitationAustralia – Salmon / Appellate Body Report, Australia – Measures Affecting Importation of Salmon, WT/DS18/AB/R, adopted 6November 1998, DSR1998:VIII, 3327
Australia – Salmon / Panel Report, Australia – Measures Affecting Importation of Salmon, WT/DS18/R and Corr.1, adopted 6November 1998, as modified by Appellate Body Report WT/DS18/AB/R, DSR1998:VIII, 3407
Australia – Salmon
(Article21.5 – Canada) / Panel Report, Australia – Measures Affecting Importation of Salmon – Recourse to Article21.5 of the DSU by Canada, WT/DS18/RW, adopted 20March 2000, DSR2000:IV, 2031
Argentina – Footwear (EC) / Appellate Body Report, Argentina – Safeguard Measures on Imports of Footwear, WT/DS121/AB/R, adopted 12January 2000, DSR2000:I, 515
Argentina – Footwear (EC) / Panel Report, Argentina – Safeguard Measures on Imports of Footwear, WT/DS121/R, adopted 12January 2000, as modified by Appellate Body Report WT/DS121/AB/R, DSR2000:II, 575
Argentina – Hides and Leather / Panel Report, Argentina – Measures Affecting the Export of Bovine Hides and Import of Finished Leather, WT/DS155/R and Corr.1, adopted 16February 2001, DSR2001:V, 1779
Border Tax Adjustments / GATT Report of the Working Party on Border Tax Adjustments, L/3464, adopted 2 December 1970, BISD18S/102
Brazil – Aircraft / Appellate Body Report, Brazil – Export Financing Programme for Aircraft, WT/DS46/AB/R, adopted 20August 1999, DSR1999:III, 1161
Brazil – Aircraft / Panel Report, Brazil – Export Financing Programme for Aircraft, WT/DS46/R, adopted 20August 1999, as modified by Appellate Body Report WT/DS46/AB/R, DSR1999:III, 1221
Brazil – Desiccated Coconut / Appellate Body Report, Brazil – Measures Affecting Desiccated Coconut, WT/DS22/AB/R, adopted 20March 1997, DSR1997:I, 167
Brazil – Desiccated Coconut / Panel Report, Brazil – Measures Affecting Desiccated Coconut, WT/DS22/R, adopted 20March 1997, upheld by Appellate Body Report WT/DS22/AB/R, DSR1997:I, 189
Brazil – Retreaded Tyres / Appellate Body Report, Brazil – Measures Affecting Imports of Retreaded Tyres, WT/DS332/AB/R, adopted 17 December 2007, DSR 2007:IV, 1527
Brazil – Retreaded Tyres / Panel Report, Brazil – Measures Affecting Imports of Retreaded Tyres, WT/DS332/R, adopted 17 December 2007, as modified by Appellate Body Report WT/DS332/AB/R, DSR 2007:V, 1649
Canada – Continued Suspension / Appellate BodyReport, Canada – Continued Suspension of Obligations in the EC – Hormones Dispute, WT/DS321/AB/R, adopted 14 November 2008
Canada – Continued Suspension / Panel Report, Canada – Continued Suspension of Obligations in the EC – Hormones Dispute, WT/DS321/R, adopted 14 November 2008, as modified by Appellate Body Report WT/DS321/AB/R
Canada – Periodicals / Appellate Body Report, Canada – Certain Measures Concerning Periodicals, WT/DS31/AB/R, adopted 30July 1997, DSR1997:I, 449
Canada – Periodicals / Panel Report, Canada – Certain Measures Concerning Periodicals, WT/DS31/R and Corr.1, adopted 30July 1997, as modified by Appellate Body Report WT/DS31/AB/R, DSR1997:I, 481
Canada – Pharmaceutical Patents / Panel Report, Canada – Patent Protection of Pharmaceutical Products, WT/DS114/R, adopted 7April 2000, DSR2000:V, 2289
Canada – Wheat Exports and Grain Imports / Appellate Body Report, Canada – Measures Relating to Exports of Wheat and Treatment of Imported Grain, WT/DS276/AB/R, adopted 27September 2004, DSR2004:VI, 2739
Canada – Wheat Exports and Grain Imports / Panel Report, Canada – Measures Relating to Exports of Wheat and Treatment of Imported Grain, WT/DS276/R, adopted 27September 2004, upheld by Appellate Body Report WT/DS276/AB/R, DSR2004:VI, 2817
Chile – Price Band System / Appellate Body Report, Chile – Price Band System and Safeguard Measures Relating to Certain Agricultural Products, WT/DS207/AB/R, adopted 23October 2002, DSR2002:VIII, 3045 (Corr.1, DSR 2006:XII, 5473)
Chile – Price Band System / Panel Report, Chile – Price Band System and Safeguard Measures Relating to Certain Agricultural Products, WT/DS207/R, adopted 23October 2002, as modified by Appellate Body Report WT/DS207AB/R, DSR2002:VIII, 3127
China – Publications and Audiovisual Products / Appellate Body Report, China –Measures Affecting Trading Rights and Distribution Services for Certain Publications and Audiovisual Entertainment Products, WT/DS363/AB/R, adopted 19 January 2010
China – Publications and Audiovisual Products / Panel Report, China –Measures Affecting Trading Rights and Distribution Services for Certain Publications and Audiovisual Entertainment Products, WT/DS363/R and Corr.1, adopted 19 January 2010, as modified by Appellate Body Report WT/DS363/AB/R
Colombia – Ports of Entry / Panel Report, Colombia – Indicative Prices and Restrictions on Ports of Entry, WT/DS366/R and Corr.1, adopted 20 May 2009
Dominican Republic – Import and Sale of Cigarettes / Appellate Body Report, Dominican Republic – Measures Affecting the Importation and Internal Sale of Cigarettes, WT/DS302/AB/R, adopted 19May 2005, DSR 2005:XV, 7367
Dominican Republic – Import and Sale of Cigarettes / Panel Report, Dominican Republic – Measures Affecting the Importation and Internal Sale of Cigarettes, WT/DS302/R, adopted 19May 2005, as modified by Appellate Body Report WT/DS302/AB/R, DSR 2005:XV, 7425
EC – Approval and Marketing of Biotech Products / Panel Report, European Communities – Measures Affecting the Approval and Marketing of Biotech Products, WT/DS291/R, WT/DS292/R, WT/DS293/R, Add.1 to Add.9, and Corr.1, adopted 21November 2006, DSR 2006:IIIVIII, 847
EC – Bananas III / Appellate Body Report, European Communities – Regime for the Importation, Sale and Distribution of Bananas, WT/DS27/AB/R, adopted 25September 1997, DSR1997:II, 591
EC – Bananas III (Ecuador) / Panel Report, European Communities – Regime for the Importation, Sale and Distribution of Bananas, Complaint by Ecuador, WT/DS27/R/ECU, adopted 25September 1997, as modified by Appellate Body Report WT/DS27/AB/R, DSR1997:III, 1085
EC – Bananas III (Guatemala and Honduras) / Panel Report, European Communities – Regime for the Importation, Sale and Distribution of Bananas, Complaint by Guatemala and Honduras, WT/DS27/R/GTM, WT/DS27/R/HND, adopted 25September 1997, as modified by Appellate Body Report WT/DS27/AB/R, DSR1997:II, 695
EC – Bananas III (Mexico) / Panel Report, European Communities – Regime for the Importation, Sale and Distribution of Bananas, Complaint by Mexico, WT/DS27/R/MEX, adopted 25September 1997, as modified by Appellate Body Report WT/DS27/AB/R, DSR1997:II, 803
EC – Bananas III (US) / Panel Report, European Communities – Regime for the Importation, Sale and Distribution of Bananas, Complaint by the UnitedStates, WT/DS27/R/USA, adopted 25September 1997, as modified by Appellate Body Report WT/DS27/AB/R, DSR1997:II, 943
EC – Bananas III
(Article21.5 – EcuadorII) /
EC – Bananas III
(Article21.5 – US) / Appellate Body Reports, European Communities – Regime for the Importation, Sale and Distribution of Bananas – Second Recourse to Article21.5 of the DSU by Ecuador,WT/DS27/AB/RW2/ECU, adopted 11 December 2008, and Corr.1 / European Communities – Regime for the Importation, Sale and Distribution of Bananas – Recourse to Article21.5 of the DSU by the UnitedStates, WT/DS27/AB/RW/USA and Corr.1, adopted 22 December 2008
EC – Bananas III
(Article21.5 – EcuadorII) / Panel Report, European Communities – Regime for the Importation, Sale and Distribution of Bananas – Second Recourse to Article21.5 of the DSU by Ecuador, WT/DS27/RW2/ECU, adopted 11 December 2008, as modified by Appellate Body Report WT/DS27/AB/RW2/ECU
EC – Commercial Vessels / Panel Report, European Communities – Measures Affecting Trade in Commercial Vessels, WT/DS301/R, adopted 20June 2005, DSR 2005:XV, 7713
EC – Hormones / Appellate Body Report, EC Measures Concerning Meat and Meat Products (Hormones), WT/DS26/AB/R, WT/DS48/AB/R, adopted 13February 1998, DSR1998:I, 135
EC – Hormones (Canada) / Panel Report, EC Measures Concerning Meat and Meat Products (Hormones), Complaint by Canada, WT/DS48/R/CAN, adopted 13February 1998, as modified by Appellate Body Report WT/DS26/AB/R, WT/DS48/AB/R, DSR1998:II, 235