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One of the major achievements of the Uruguay Round of WTO negotiations was to set in place a binding procedure for resolving trade disputes arising between members. WTO members agree not to take unilateral action when they think their rights have been violated. Instead they put their grievance through the WTO dispute settlement system and agree to abide by its rules and findings.
The WTO system deals with all trade disputes arising from any of the agreements contained in the Final Act of the Uruguay Round including agreements on:
The WTO dispute settlement process involves three main stages:
This dispute settlement process takes between 12-18 months (depending on whether or not it goes to appeal) and sometimes longer in more complicated cases.
If a New Zealand business is encountering an obstacle to trade in a particular product, or feels the requirements being set by the importing country are unreasonable, it should raise the issue with the Ministry of Foreign Affairs and Trade.
In assessing whether an action should be taken, the Ministry considers:
The preferred option is to try to resolve the matter bilaterally (by a direct approach to the Government concerned) before going to the WTO. Many small, and a number of large, trade problems have been resolved this way. Only after all other options for resolving the dispute have been exhausted would the Government consider formal proceedings under the WTO.
More information about the WTO dispute settlement system, including detailed information on past and current disputes, can be found on the WTO website [external link].
The World Trade Organisation (WTO) dispute settlement panel hearing the Australia – Apples case has released its final report. The report represents a solid win for New Zealand. This section details the background to the case and the findings of the panel report.
Findings
On 9 August 2010, the WTO panel released its final report to the Parties and the wider WTO Membership. The report represents a solid win for New Zealand. The panel has 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.
Parties have the right to appeal any or all of a Panel’s findings. An appeal would need to be triggered within two months of the release of the panel report , and would be completed inside six months.
Background
The Australian market has been closed to New Zealand apples since 1921, when the disease fire blight was discovered in New Zealand. Since 1986, New Zealand has sought actively to have the ban lifted, because studies have found no scientific evidence that fire blight 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.
A copy of the panel report can be found at the WTO website.
A copy of the Minister of Trade's press release can be found at the Beehive website.
Key stages in the indicative timetable for the dispute are 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 |
New Zealand continues to pursue its systemic interests in maintaining WTO disciplines through participation as a third party in a number of current WTO dispute settlement proceedings.
New Zealand is involved as a third party in several disputes:
New Zealand reserved its rights to participate as a third party in the WTO dispute brought by the US, Canada and Argentina in 2003 in relation to EC GM approvals (EC – Measures Affecting the Approval and Marketing of Biotech Products). New Zealand have a systemic interest in ensuring the proper application of the relevant WTO rules which underline the importance of decision-making based on objective risk assessment and scientific principles. New Zealand submitted its third party submission in May 2004.
The Panel’s final report was circulated to Members on 29 September 2006 and found that the EC had applied a general moratorium on the approval of biotech products, inconsistent with its obligations under the SPS agreement.
The parties involved settled on a reasonable period of time for implementation of the Panel report, which has since been amended by mutual agreement. In July 2009, the EC and Canada reached a mutually agreed solution to their dispute. The EU and Argentina reached a similar mutually agreed solution in March 2010. The EU is still working with the US on implementation of the Panel’s findings.
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These are two parallel cases brought by the EC against the US and Canada in November 2004. The dispute concerns the US and Canada’s ongoing suspension of concessions (retaliation) against the EC following the EC’s loss in the earlier Beef Hormones case. The EC claimed that it has brought its beef hormones measures into compliance with the WTO ruling. New Zealand is interested from a systemic viewpoint in the “post retaliation” aspects of the case – ie what procedures apply where there is DSB authorisation to retaliate is in place and the Member concerned claims it has brought itself into compliance. There are also SPS aspects (do the new EC measures comply with the SPS Agreement?) that New Zealand did not address directly in its submission, made in August 2005. The first panel hearing took place on 12-15 September 2005. Due to the complexity of the dispute, the panel report was not circulated to Members until 31 March 2008. The Panel held both sides to be in breach of certain obligations under the DSU. On 29 May 2008, the EC notified its decision to request the Appellate Body to review certain issues of law.
The Appellate Body decision was released in late 2008. It sets out the Appellate Body’s view of the procedures that apply in a situation where: WTO-authorised retaliation has been taken; the Member being retaliated against claims subsequently to have brought itself into compliance but the Member/s taking the retaliatory action do not consider this to be the case. The Appellate Body’s findings make clear that, in such a situation, the duty to cease retaliatory action is not triggered until substantive compliance is determined through multilateral dispute settlement proceedings. On the substantive question of the EC's compliance with the SPS Agreement, the Appellate Body recommended that the Parties jointly initiate compliance proceedings to address that issue.
On 8 January 2009, in response to the Appellate Body decision, the EC requested consultations with the US and Canada to determine its substantive compliance with the SPS Agreement. New Zealand has joined as a Third Party to this latest phase of the dispute. Consultations took place in February 2009 but failed to resolve the dispute. On 30 September 2009, the EC and US circulated a Memorandum of Understanding, which set out a pathway towards a mutually agreed solution in relation to the dispute. Under this agreement, neither Party will request the establishment of a compliance panel under Article 21.5 of the DSU for at least 18 months.
In December 2008 the United States and Mexico requested consultations regarding certain grants, loans and other incentives offered by China which the US and Mexico allege are inconsistent with the Agreement on Subsidies and Countervailing Measures , the GATT and, to the extent that they relate to agricultural products, the Agreement on Agriculture.
In February 2009, New Zealand requested to join the consultations as a third party. New Zealand has a strong systemic interest in seeing the disciplines of the WTO Agriculture and Subsidies Agreements upheld, and New Zealand is a vocal proponent of the elimination of all export subsidies, particularly in the agricultural sector.
In October 2008 Mexico requested consultations regarding the United States’ refusal to allow Mexican tuna to be marketed in the US using domestic “dolphin-safe” labelling. New Zealand has both a systemic and commercial interest in the case; environmental labelling is a growing phenomenon in international trade and New Zealand expects that this case will therefore be an important one for the WTO system.
Mexico filed its request for the establishment of a Panel in March 2009 and the Panel was composed on 14 December 2009. New Zealand lodged it’s third party submission on 28 April 2010. The first panel hearing, originally scheduled for May 2010, has been delayed with the date yet to be advised.
In late 2009, Canada and Mexico requested the establishment of a WTO panel to settle a dispute over United States’ measures requiring country of origin labelling in respect of certain products, including meat products, for sale in the US. Canada and Mexico argue that the measures at issue are inconsistent with US obligations under the GATT, the Technical Barriers to Trade Agreement (TBT) and the Agreement on Rules of Origin, including: national treatment; the requirement that technical regulations not create unnecessary obstacles to trade; the use of existing international standards as the basis for regulations; and the administration of laws and regulations in an uniform, impartial and reasonable manner.
As an export economy faced with an increasing number of mandatory and voluntary country of origin labelling measures in its export markets, New Zealand has a systemic interest in the development of WTO jurisprudence around the consistency of CoOL measures with the WTO agreements.
On 19 November 2009, the DSB established a single panel to examine Canada and Mexico’s complaints, pursuant to Article 9.1 of the DSU. The panel was composed on 10 May 2010, however, a timetable for filing of submissions has not yet been released.
In January 2009 the US requested consultations regarding EC measures requiring pathogen-reduction treatment for imported poultry as inconsistent with the EC's WTO obligations, in particular under the SPS Agreement, as well as under the GATT 1994, Agriculture Agreement and TBT Agreement.
The DSB established a Panel to consider the case on 19 November 2009.
On 27 November 2009, New Zealand reserved its right to participate in the dispute as a third party. As an agricultural exporter, New Zealand has systemic interests in the effective application of the Agreements at issue in the dispute, in particular application of the requirements that SPS measures be supported by sufficient scientific evidence and based on a risk assessment under the SPS Agreement.
