Dispute Settlement
WTO Panel Cases to which Canada is a Party
Australia - Measures Affecting Importation of Salmon - Recourse to Article 21.5 by Canada
Backgrounder
History of the Dispute
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In 1975 Australia introduced a quarantine measure requiring salmon products to be heat-treated for certain prescribed durations and temperatures prior to importation into Australia.
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The result of Australia's measure was to prohibit the importation of fresh, chilled and frozen salmon, effectively limiting importation of salmon to either smoked or canned salmon.
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The reason given by Australia for prohibiting the importation of fresh, chilled and frozen salmon was, allegedly, to protect Australia's salmon population from the introduction of pathogens which could be responsible for various fish diseases.
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Canada has maintained all along that trade in dead, eviscerated salmon for human consumption does not present any risk of introducing fish diseases to Australia's salmon population.
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Canada is not alone in maintaining this position. Evisceration of fish for human consumption has become the internationally accepted practice of sanitary protection against the establishment of diseases in a country's fish population.
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In 1994, Canada held GATT consultations to press Australia to remove the ban. Following the consultations, Australia agreed to conduct an Import Risk Assessment (IRA) of wild Pacific salmon imports.
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In May 1995, Australia issued a draft IRA, concluding that imports of wild, headed, and eviscerated Pacific salmon from Canada and the United States should be permitted. These findings were endorsed by two further reports released by the Australian Bureau of Resource Sciences and the Commonwealth Scientific Industrial Organization.
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The draft IRA encountered strong domestic opposition in Australia, mainly from the Tasmanian salmon growers and some sportfishing groups. Australia undertook to conduct a comprehensive review of the comments and to publish a second version of the IRA.
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After many delays, Australia released a revised IRA for public comment in May 1996. Canada noted that the revised IRA backtracked from the conclusions of the IRA of May 1995.
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In December 1996, Australia finalized the IRA and announced that the import ban would be maintained on imports of Canadian fresh, chilled, and frozen salmon.
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On April 10, 1997, a World Trade Organization (WTO) Dispute Settlement Panel was established to hear Canada's complaint on the Australian ban.
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On June 12, 1998, the Panel found that Australia's ban on fresh, chilled and frozen salmon from Canada was not based on a risk assessment, was maintained without scientific evidence and reflected an arbitrary and unjustifiable distinction in levels of protection that resulted in discrimination or a disguised restriction on trade, in violation of the WTO Agreement on the Application of Sanitary and Phytosanitary Measures (SPS Agreement).
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Following an appeal by Australia, the WTO Appellate Body upheld the Panel rulings on October 20, 1998.
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On November 6, 1998, the WTO Dispute Settlement Body adopted the WTO Panel and Appellate Body reports.
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On February 22, 1999, a WTO arbitrator gave Australia until July 6, 1999, to implement the WTO rulings.
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Australia failed to meet the WTO deadline and on July 15, 1999, Canada submitted a request to the WTO Dispute Settlement Body to retaliate against Australia in an amount of $45 million annually.
Recent Developments
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On July 19, 1999, Australia announced new measures allowing limited access for fresh, chilled and frozen salmon. Under the new measures, Canadian salmon must be eviscerated, headed, gilled, washed, inspected, graded, and come from a population for which there is a documented health surveillance system. Additional certification is needed for Atlantic salmon. In addition, only salmon products in "consumer-ready" form (defined by Australia as skinless fillets of any size, skin-on fillets or steaks of less than 450g or products further processed) can be released from quarantine.
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Canada reviewed Australia's new fish import policies and concluded they were inconsistent with Australia's WTO obligations because they were, among other things, unnecessarily trade restrictive and there was no scientific basis for limiting products to "consumer-ready" form.
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A WTO Panel was therefore set up to determine whether Australia's new fish import policies are consistent with Australia's WTO obligations.
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In parallel to the WTO process and in an effort to facilitate trade wherever possible, technical discussions took place between Canada and Australia. Canada was able to negotiate an interim fish health certificate allowing limited access for wild-caught and farmed salmon subject to the restrictions outlined in the July 19 announcement.
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On February 18, 2000, the Panel confirmed Canada's position that Australia's July 19 import measures were not consistent with its WTO obligations.
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In particular, the Panel concluded that Australia's requirements that Canadian salmon be in "consumer-ready" form before it can be released from quarantine were not based on science and were more trade restrictive than necessary.
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At Canada's request, Canada and Australia held discussions during the week of February 14 in an attempt to find a mutually acceptable solution. However, these failed since Australia still maintains it must replace the consumer-ready requirements with some other, yet unspecified, post-importation restrictions.
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Canada's position is that for eviscerated, headed and gilled salmon that meets all Australia's pre-exportation requirements, there is no justification for trade-limiting post importation restrictions.
Next Steps
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Canada is now in a position to retaliate against Australia.
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However, before it can do so, WTO arbitrators will be asked to rule on the amount of retaliation Canada will be authorize to take. The arbitration process is expected to start shortly and to take 60 days. No retaliation can be authorized until the arbitration process is completed.
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On May 29, 1999, Canada announced a 30-day consultation period on a proposed list of products that might be subject to a 100 percent surtax in the event Canada retaliates against Australia.
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The final retaliation list will be based on the comments received and the level of retaliation determined by the WTO arbitrators.
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As an alternative to retaliation, WTO rules allow Australia to negotiate with Canada to provide compensation on a temporary basis pending full compliance with the WTO rulings. However, to date, Australia has made no compensation offer.
February 18, 2000
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