SUBJECT: INTERNATIONAL TRADE LAW

Project topic:
SANITARY AND PHYTOSANITARY MEASURES

Submitted By
AKANKSHA DIPANKAR
Roll no. 14121005
3 Year, 6 Semester, B.b.A.LL.B(Hons.)
th

Submitted to
Dr. P.P. RAO
Faculty of ITL

Chanakya national Law University, Patna

11 MARCH, 2019

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 ACKNOWLEDGEMENT

I take this privilege to express my heartful gratitude and indebtedness to all these people whose
moral support helped me a lot in completing this project. Firstly I would like to thank my subject
teacher “Dr. P.P. Rao ” who contributed his valuable time in explaining me about the topic and
providing necessary information about the project. I am very grateful to him.

I would like to express my gratitude towards my parents and my friends for their kind
co-operation and encouragement which helped me in the completion of this project.

I owe a big thanks to my librarian who provided me several books and relevant
materials on the topics which proved beneficial in completing this project.

At last I would like to thank the almighty god who gave me the strength and
opportunity to complete it as per my aspiration.

PRESENTED BY:

AKANKSHA DIPANKAR

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OBJECTIVES

The objectives of this Chapter are to:

(a) facilitate bilateral trade in food, plants and animals, including their products, while
protecting human, animal or plant life or health in the territory of each Party;

(b) Deepen mutual understanding of each Party’s regulations and procedures relating to sanitary
and phytosanitary measures;

(c) Strengthen cooperation between Australian and Chinese government agencies with
responsibility for sanitary and phytosanitary matters; and

(d) Enhance implementation of the SPS Agreement.

HYPOTHESIS

Sanitary and Phyto-Sanitary (SPS) Measures play a significant role in trade between developing
countries.

RESEARCH METHODOLOGY

The researcher proposes to follow the Doctrinal research methodology whereby…..

SECONDARY DATA: Books, websites, Journals etc.

SCOPE AND LIMITATION

This Chapter applies to all sanitary and phytosanitary measures of a Party that may, directly or
indirectly, affect trade between the Parties.

Though this is an immense project and pages can be written over the topic but because of
certain restrictions and limitations I was not able to deal with the topic in great detail.

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 TABLE OF CONTENTS

1) Introduction………………………………………………………….5

2) Sanitary and phytosanitary measures and its provision………...……7

3) Misuse and abuse of SPS……………………………………………16

4) Case Study……………………………………………………….….20

5) Conclusion………………………………………………………..…23

Bibliography

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 Chapter - 1

INTRODUCTION
The days when agriculture was somehow excluded from many of the disciplines of international
trade law ended with the Uruguay Round. The Uruguay Round achieved two things. It
introduced new disciplines on market access, domestic subsidies and export subsidies and
volumes for agricultural products. At the same time it removed the “fig leaf” behind which, since
after the Second World War, agriculture had been shielding itself from the impact of the GATT.

The Uruguay Round agreements were designed to increase agricultural trade. As trade increases
there is an increasing need to address the issue of health and safety. If WTO members could
replace one set of non-tariff barriers such as variable levies or quotas with other non-tariff
barriers such as standards then the achievement of the Agreement on Agriculture would be
undermined.

The trade aspects of health and safety are addressed in the Agreement on the Application of
Sanitary and Phytosanitary Measures (the SPS Agreement)1 and the Agreement on Technical
Barriers to Trade (the TBT Agreement).2 The object of these agreements is to determine when
barriers to trade based on health and safety standards should be considered as compatible or
incompatible with trade rules.

Sanitary and Phyto-Sanitary (SPS) Measures play a significant role in trade between developing
countries and the EU and other developed countries, as agricultural and food items, fish, and
forestry and timber products account for a large share of the goods traded. In these trade
relations, there is a balance to be maintained between protecting consumers and creating a
supportive international environment for animal and plant-based exports from developing
countries.

Increased awareness of and concern about food safety in the EU and other developed countries
has resulted in developing countries having to deal with stricter SPS requirements when
exporting their produce. Such requirements relate to the protection of animal or plant life and

1The Agreement on the Application of Sanitary and Phytosanitary Measures, see on http://www.wto.org, “SPS Agreement”.
2 The Agreement on Technical Barriers to Trade, see on http://www.wto.org, “TBT Agreement”.

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health; risks arising from additives, contaminants or disease-causing organisms in foods,
beverages or feedstuffs; or the entry, establishment or spread of pests.

International SPS measures are based on the World Trade Organisation (WTO) SPS Agreement,
international standards and recommendations or guidelines. The World Trade Organisation’s
SPS measures provide for a number of rules which aim to ensure that standards and related
conformity assessment procedures do not become unnecessary barriers to trade.

As part of its general trade-related assistance to developing countries, the EU supports these
countries in setting up quality standards and conformity assessment procedures and systems that
facilitate their access to the European and other developed country markets. This includes
strengthening national administrations and competent authorities, supporting farmers and private
sector comply with regulatory and commercial requirements for SPS measures, and facilitating
developing countries have their say on the global stage.

The SPS Agreement aims to achieve a balance between the right of WTO members to implement
legitimate health protection policies and the goal of allowing the smooth flow of goods across
international borders without unnecessary restrictions. The SPS Committee provides a forum for
the exchange of information and gives WTO members the opportunity to resolve specific trade
concerns. Nearly half of the concerns raised in the Committee have subsequently been
completely or partially resolved among the members concerned.

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 Chapter - 2

SANITARY AND PHYTOSANITARY AGREEMENT AND PROVISIONS

Food safety was not an unknown issue in international law prior to the SPS Agreement. There
are a number of international organisations established to regulate problems of the spread of
pests and diseases and to set food standards.

Article XX (b) of the original GATT Agreement in 1947 covered sanitary and phytosanitary
measures impinging on trade.3 This article allowed GATT contracting parties to impose
standards “necessary to protect human, animal, or plant life or health” which would otherwise be
incompatible with market access commitments so long as “such measures are not applied in a
manner that would constitute a means of arbitrary or unjustifiable discrimination between
countries where the same conditions prevail, or as a disguised restriction on international trade”.

However, Article XX had “no teeth”. There was no definition of the criteria by which to judge
“necessity,” and there was no specific procedure for settling disputes on such matters. The
attempt in the Tokyo Round to improve this situation through a technical barriers to trade
agreement in 1979 known as the Standards Code also failed. Though a dispute settlement
mechanism was introduced and countries were encouraged to adopt international standards,
relatively few countries signed the code, and a number of basic issues were still unresolved.

2.1. The aim of the SPS Agreement

The aim of the SPS Agreement is to set out a series of rules within which WTO Members can set
health and safety standards. The object is not to limit the right of Members to set a standard
which they consider to be the appropriate standard for their citizens. Rather the object is to
provide a series of rules by which these health and safety standards should be set and enforced.
And further, a series of presumptions in relation to their compatibility with the “right” of free
movement.

3For the GATT 1947, 1994 and all other WTO Agreements as well as subsequent "understanding" documents in either word or
pdf formats, see http://www.wto.org/english/docs_e/legal_e/final_e.htm.

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2.2. Basic right of a Member to adopt SPS measures

Unlike the rules governing the GATT, the SPS Agreement goes beyond the general principle of
non-discrimination and provides a system that gives WTO Members specific rights and
obligations in relation to SPS measures.

The key to the SPS Agreement is the right of WTO Members to set the health and safety
standards they deem appropriate but to do so in a way which least hinders continued trade.

The basic system of the SPS Agreement is simple. WTO Members remain free to set whatever
human, plant and animal health and safety standards that they consider appropriate to their
domestic circumstances. Article 2 of the SPS Agreement begins by stating that WTO Members
have the right to adopt SPS measures that are necessary to protect health, provided that they are
consistent with the provisions of the SPS Agreement. However, this right is qualified in three
ways:

1) SPS measures should only be applied to the extent necessary to achieve their objective;

2) They should be based on scientific principles and not maintained without sufficient scientific
evidence (except as provided in Article 5.7); and

3) SPS measures may not be applied in a manner which would constitute a disguised restriction
on international trade.

 Measures covered by SPS agreement

To fall under SPS Agreement’s provisions, a measure must first of all have the subjective intent
to protect human, animal or plant life or health.4 Once this intent has been established, two
additional criteria must be met. First, the measure must aim to protect against either food-borne
risks or against pest or disease related risks. Generally, the first of these types of risk refers to
human or animal life or health and the latter refers to plants. The second additional requirement
that needs to be met for the SPS Agreement to apply is that the measure needs to “directly or
indirectly affect international trade”.5

4
See Agreement on the Application of Sanitary and Phytosanitary Measures, Annex A., § 1.
5 See SPS Agreement, Art. 1.1.

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The SPS Agreement does not set out any specific SPS measure per se. It operates by mandating
general procedural requirements for the setting of such standards. This skeleton system aims to
ensure that any SPS measure is scientifically based and protects against actual health risks and is
not a disguised non-tariff barrier to trade.

SPS measures are one of the very few types of measures that have the potential to directly
benefit or harm the consumer. Because of this fact, the trade context of SPS regulation is more
complex and, on the economic side, the cost/benefit analysis to judge the efficacy of such
regulations is more difficult to make. For this reason, the SPS Agreement is more specific and
stricter than many of the other WTO Agreements and, in particular, the GATT 1994.

 Standards based on science

Although WTO Members do have a certain degree of flexibility with regard to SPS measures,
Article 2 of the SPS Agreement provides that measures not based on scientific principles are not
valid within the terms of the Agreement. Article 2.2 of the SPS Agreement provides that:

“Members shall ensure that any sanitary or phytosanitary measure is applied only to the extent
necessary to protect human, animal, or plant life or health, is based on scientific principles and is
not maintained without sufficient scientific evidence...”.

This Article is the central pillar of the SPS Agreement. For example, even though WTO
Members may establish a “zero risk” standard of SPS protection, that determination and the
measure itself must still be based on science.6

The one exception to this basic obligation appears in article 5.7 of the SPS Agreement, which
establishes a temporary precautionary principle as part of the Agreement.

 Standards based on international standards

Because scientific agreement is a rarity, WTO Members are encouraged in Article 3 of the SPS
Agreement to harmonize their measures by conforming to international standards, guidelines or
recommendations, where they exist. Many international bodies develop international SPS
standards. Three are expressly mentioned in the text of the SPS Agreement: in the field of food

6 See EC-Hormones, (Panel Report WT/DS26/R/USA, adopted 18 August 1997, Appellate Body Report WT/DS48/AB/R,
adopted 16 January, 1998, EC Measures Concerning Meat and Meat Products) Appellate Body Report, §§ 184 and 186.

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safety, the Codex Alimentarius Commission (Codex);7 for animal health standards, the
International Office of Epizootics (OIE)8 and for plant health, another UN/FAO organization, the
Secretariat of the International Plant Protection Convention (IPPC).9

If a country bases its food standards on an international standard accepted by one of these three
organisations, it is presumed that the standard is based on science, is proportionate to the
objective and, if it restricts trade that it is compatible with WTO rules.

 Standards based on risk assessment

Some consumers and governments are not satisfied with some Codex standards. If a WTO
Member chooses to ignore an international standard and decide for itself what level of protection
is appropriate, there is obviously no presumption of conformity, but so long as WTO Members
follow certain rules, they may deviate from international standards without violating the SPS
Agreement. Specifically, WTO Members must be sure that any more-stringent measures can be
scientifically justified and are based on risk assessments as provided for in Article 5 of the Agreement
which states:

“Members should ensure that their sanitary or phytosanitary measures are based on an
assessment, as appropriate to the circumstances, of the risks to human, animal or plant life or
health, taking into account risk assessment techniques developed by the relevant international
organizations.”

The Article 5 risk assessment requirement should be read together with Article 2.2, which states
that SPS measures should be based on science, not maintained without sufficient scientific
information and only applied to the extent necessary.10

Annex A (4) of the SPS Agreement recognizes two distinct types of risk assessment. The first
applies to SPS measures whose aim is to protect against the establishment or spread of a pest or
disease. The second applies to any measures designed to protect humans and animals from so-
called “food-borne” risks.

7For the Codex Alimentarius Commission, see http://www.fao.org/WAICENT/faoinfo/economic/ESN/codex/Default.htm.

8 http://www.oie.int/overview/a_oie.htm
9 For the IPPC Homepage, see http://www.fao.org/WAICENT/FaoInfo/Agricult/AGP/AGPP/PQ/En/IPPCe.htm
10 See Australia-Salmon, (Panel Report WT/DS18/R, adopted 12 June 1998, Appellate Body Report WT/DS18/AB/R, adopted 20

October, 1998, Australia – Measures Affecting Importation of Salmon (from Canada)), Appellate Body Report, §§ 137-138.

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Article 5.5 of the SPS Agreement aims to achieve consistency in the application of appropriate
levels of protection that WTO Members choose to adopt through their SPS measures. Article 5.5
prohibits discrimination between similar products or situations when assessing risk. It obliges
WTO Members to:

“… avoid arbitrary or unjustifiable distinctions in the levels they consider to be appropriate in

different situations, if such distinctions result in discrimination or a disguised restriction on
international trade.”

This language aims to prevent WTO Members from maintaining different levels of protection for
different products that, in reality, pose a similar risk to health. There is no distinction here, as
there is in other parts of GATT law about discrimination based on the origin of products. Article
5.5 applies equally to imported and domestic products.

2.3 The SPS Agreement and the promotion of trade

Even though the SPS Agreement recognizes the basic right of WTO Members to set their
appropriate SPS measures, which could in turn result in barriers to trade, two other concepts in
the SPS Agreement are designed to promote trade. These are the concept of harmonization and
equivalence. Under the SPS Agreement, WTO Members are firstly encouraged to harmonise
standards. In fact, where standards are the same in the different WTO Members, they clearly
cannot result in barriers to trade. If it is not possible to reach agreement on the harmonisation of
standards, WTO Members are then encouraged to accept other standards as being equivalent to
their own. Article 4 of the SPS Agreement provides that WTO Members must accept the SPS
measures of other Members as equivalent, even if these measures differ from their own or from
those used by other WTO Members trading in the same product. The exporting country must
objectively justify to the importing country that its measures achieve the importing WTO
Member’s appropriate level of protection.11 For this reason, the SPS Agreement provides that
exporting countries shall give importing countries “reasonable access for the purpose of
inspection, testing and other relevant procedures”. WTO Members are further obligated to enter

11 See SPS Agreement, Article 4.1.

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into consultations with the aim of achieving bilateral and multilateral agreements on recognition
of equivalence of specified SPS measures.12

2.4 Transparency of Sanitary and Phytosanitary Regulations

Publication of regulations

1. Members shall ensure that all sanitary and phytosanitary regulations13 which have been
adopted are published promptly in such a manner as to enable interested Members to become
acquainted with them.

2. Except in urgent circumstances, Members shall allow a reasonable interval between the
publication of a sanitary or phytosanitary regulation and its entry into force in order to allow time
for producers in exporting Members, and particularly in developing country Members, to adapt
their products and methods of production to the requirements of the importing Member.

3. Each Member shall ensure that one enquiry point exists which is responsible for the provision
of answers to all reasonable questions from interested Members as well as for the provision of
relevant documents regarding:

(a) Any sanitary or phytosanitary regulations adopted or proposed within its territory;

(b) any control and inspection procedures, production and quarantine treatment, pesticide
tolerance and food additive approval procedures, which are operated within its territory;

(c) risk assessment procedures, factors taken into consideration, as well as the determination of
the appropriate level of sanitary or phytosanitary protection;

(d) the membership and participation of the Member, or of relevant bodies within its territory, in
international and regional sanitary and phytosanitary organisations and systems, as well as in
bilateral and multilateral agreements and arrangements within the scope of this Agreement, and
the texts of such agreements and arrangements.

12See ibid., Art. 4.2; see also, Annex B, § 3 (d), providing that WTO Members are obliged to publish any such membership or
arrangements concerning their enquiry points.
13 Sanitary and phytosanitary measures such as laws, decrees or ordinances which are applicable generally

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4. Members shall ensure that where copies of documents are requested by interested Members,
they are supplied at the same price (if any), apart from the cost of delivery, as to the nationals of
the Member concerned14.

Notification procedures

5. Whenever an international standard, guideline or recommendation does not exist or the

content of a proposed sanitary or phytosanitary regulation is not substantially the same as the
content of an international standard, guideline or recommendation, and if the regulation may
have a significant effect on trade of other Members, Members shall:

(a) publish a notice at an early stage in such a manner as to enable interested Members to become
acquainted with the proposal to introduce a particular regulation;

(b) notify other Members, through the Secretariat, of the products to be covered by the regulation
together with a brief indication of the objective and rationale of the proposed regulation. Such
notifications shall take place at an early stage, when amendments can still be introduced and
comments taken into account;

(c) provide upon request to other Members copies of the proposed regulation and, whenever
possible, identify the parts which in substance deviate from international standards, guidelines or
recommendations;

(d) without discrimination, allow reasonable time for other Members to make comments in
writing, discuss these comments upon request, and take the comments and the results of the
discussions into account.

6. However, where urgent problems of health protection arise or threaten to arise for a Member,
that Member may omit such of the steps enumerated in paragraph 5 of this Annex as it finds
necessary, provided that the Member:

14When "nationals" are referred to in this Agreement, the term shall be deemed, in the case of a separate customs territory
Member of the WTO, to mean persons, natural or legal, who are domiciled or who have a real and effective industrial or
commercial establishment in that customs territory.

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(a) immediately notifies other Members, through the Secretariat, of the particular regulation and
the products covered, with a brief indication of the objective and the rationale of the regulation,
including the nature of the urgent problem(s);

(b) provides, upon request, copies of the regulation to other Members; (c) allows other Members
to make comments in writing, discusses these comments upon request, and takes the comments
and the results of the discussions into account.

7. Notifications to the Secretariat shall be in English, French or Spanish.

8. Developed country Members shall, if requested by other Members, provide copies of the
documents or, in case of voluminous documents, summaries of the documents covered by a
specific notification in English, French or Spanish.

2.5. Provisions relating to developing countries

Articles 9 and 10 of the SPS Agreement contain provisions related to developing countries.
These provisions principally exist as recognition that less developed WTO Members will have
difficulty meeting the obligations of the SPS Agreement. They also seek, by ensuring
cooperation between WTO Members, to facilitate harmonization of worldwide SPS standards
and governmental transparency.

Article 9.1 requires WTO Members to agree to facilitate the provision of technical assistance to
developing countries either bilaterally or through the appropriate international organizations to
help them adjust to and comply with the obligations of the SPS Agreement. Similarly, Article 10
instructs WTO Members to take account of the special needs of developing countries and to give
them longer time frames for compliance.

Article 10 also provides that the SPS Committee may grant such countries, upon request,
specified time-limited exceptions from obligations under the SPS Agreement, considering the
financial, trade and development needs of those countries.15 Finally, Article 10.4 directs WTO
Members to encourage and facilitate the active participation of developing countries in the

15See SPS Agreement, Article 10, § 3.

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relevant international organizations. This last provision is particularly important because the
international organizations mentioned in the SPS Agreement set their standards by the vote of
each member country’s delegates.

Article 14 of the SPS Agreement provided for delays in complying with SPS rules and principles
for 5 years for least-developed countries (until 2000), and 2 years for other developing countries
(until 1997). This delay was intended to give developing countries the time necessary to adopt
international standards or otherwise develop their national sanitary and phytosanitary regulatory
framework on the basis of scientific principles. During this grace period, their sanitary and
phytosanitary measures directly or indirectly affecting trade flows could not be challenged under
WTO rules.

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 Chapter - 3

MISUSE AND ABUSE OF SPS

Sanitary and phytosanitary (SPS) measures create unusual challenges for the World Trade
Organization (WTO). On the one hand, all WTO members accept the right of governments to use
such measures to protect public health and safety. On the other hand, many members,
particularly in the developing world, worry that governments will use SPS measures for purely
protectionist ends. The challenge is thus to ensure that SPS measures can be legitimately used
without being abused. This memo asks whether political economists can help meet this
challenge. But they can, in two ways. First, they can point to institutional reforms that would
improve the WTO’s dispute settlement system. Second, they can identify which SPS measures
reflect concerns about public welfare and which serve purely protectionist ends.

The SPS Agreement defines SPS measures as any policies “that protect human, animal or plant
life and health within the territory of the Member from risks related to diseases, pests, and
disease-carrying or –causing organisms, as well as additives, contaminants, toxins or
diseasecausing organisms in food, beverages, or feedstuffs” (Roberts 1998: 382). As noted
above, there is general agreement that SPS measures should be allowed when genuine risks exist.
Anecdotal evidence suggests that this is sometimes the case: consider, for example, recent
outbreaks of avian flu in Asia or melamine-contaminated infant formula in China.

Although the SPS Agreement reaffirms governments’ right to employ SPS measures for
legitimate ends, its primary raison d’être is to control the abuse of such measures. The concern is
that governments might invoke health and safety concerns to justify purely protectionist SPS
measures16.

First, although research has only just begun, the evidence indicates that SPS measures can be a
potent barrier to trade. For example, in Henson and Loader’s (2001: 91) survey, a sample of 65
developing-country governments identified SPS measures as the main obstacle to agricultural
and food exports, significantly ahead of “other technical requirements,” “transport and other
direct export costs,” tariffs, and quantitative restrictions. These subjective perceptions are echoed
in more objective indicators: for example, Otsuki, Wilson and Sewadeh (2001) find that the

16 https://www.princeton.edu/~pcglobal/conferences/wtoreform/Kono

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European Union (EU)’s proposed aflatoxin standard would, relative to existing international
standards, reduce African food exports to the EU by 64 percent. The potential impact of such
measures is also illustrated by the longstanding US ban on Mexican avocados: when this ban was
finally relaxed in the late 1990s, annual US imports of Mexican avocados jumped from less than
$1 million to over $50 million in just a few years (Zahniser 2006). Hence, whatever their
rationale, SPS measures clearly have the potential to impede trade.

Second, SPS measures hit poor countries particularly hard. This is partly because SPS measures
fall mostly in the food and agriculture sector, on which developing countries are dependent:
agriculture accounts for 20 and 9 percent of GDP in low and middle-income countries,
respectively, and accounts for over half of employment in most of the developing world (World
Bank 2008). The abuse of SPS measures would thus reduce poor countries’ gains from trade and
worsen North-South trade relations. SPS measures also threaten poor countries more than rich
ones because the former are less able to challenge such measures through the WTO’s dispute
settlement system.17

Finally, there is both anecdotal and statistical evidence that SPS measures have been abused. For
example, the US avocado ban survived for decades after the US Department of Agriculture
concluded that Mexican avocados posed no risk of fruit-fly infestation, largely because efforts to
relax the ban were strenuously opposed by US avocado growers (Lamb 2006). Likewise,
European officials have tended to cite political (in this case, public) pressures rather than
scientific evidence to support the EU’s ban on hormone-treated beef (Davis 2003, ch.9). More
generally, Kono (2006) finds that TBTs are unrelated to proxies for consumer concerns, such as
stringent domestic regulations, but are significantly related to traditional interest-group
determinants of protection. And while Otsuki, Wilson and Sewadeh’s (2001) finding on the
impact of the EU’s aflatoxin standard does not in itself prove that the measure has protectionist
motives, the fact that the standard is expected to save only 0.7 lives per year out of a population
of 500 million does raise questions about exactly whom EU officials are trying to protect.

In sum, while health and safety concerns cannot be trivialized, neither can the risk that SPS
measures will be used for protectionist ends. The challenge is to devise a system that allows for

17
http://spsims.wto.org/.

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the legitimate use of such measures while controlling their abuse. In practice, this task falls to the
WTO’s dispute settlement system. Members have the right to challenge each other’s SPS
measures if they feel that the latter constitute unwarranted barriers to trade. If members cannot
resolve their differences bilaterally, WTO dispute settlement panels and appellate bodies may
rule on the measures’ legality. While a thorough review of SPS jurisprudence is beyond the
scope of this memo, four questions are particularly relevant to the assessment of SPS measures.

First, is the standard consistent with those of international standard-setting bodies such as the
Codex Alimentarius, the International Organization of Epizootics, and the International Plant
Protection Convention? If so, the measure is presumed to be WTO-compliant. The remaining
questions thus pertain to measures that exceed the recommendations of such bodies.

Second, is the measure based on a scientific risk assessment? This is the principal requirement of
Article 2.2 of the Agreement, which states that SPS measures should be “based on scientific
principles and…not maintained without sufficient scientific evidence.” The EU’s failure to meet
this condition was, for example, the WTO panel’s main objection to the EU’s ban on hormone-
treated beef (Roberts 1998).18

Third, is the measure “necessary,” as required by Article 2.2? As Correa (2000) observes,
“necessary” has in practice been interpreted to mean “least trade-restrictive.” In other words, the
question is whether the desired consumer protection could be achieved through less trade-
restrictive measures. Failure to meet this requirement was, for example, the GATT panel’s
principal objection to the Thai government’s ban on imported cigarettes (Correa 2000).

Fourth, does the measure discriminate “arbitrarily or unjustifiably,” either across trading
partners (Article 2.3) or across sectors (Article 5.5) where similar conditions prevail? If so, this
could also disqualify the measure. Cross-partner discrimination was, for example, the WTO
panel’s main objection to the US ban on shrimp from countries that did not require turtle
exclusion devices (TEDs). Although the panel upheld the US right to use such measures for
environmental ends, it also concluded that the US measure discriminated arbitrarily against some
trading partners, for example by giving some partners more time than others to phase in their

18Article 5.7 provides an exception to this rule based on the “precautionary principle”: when scientific evidence is scarce,
members may adopt SPS measures provisionally, provided they conduct risk assessments within a “reasonable period of time.”
Such measures must, however, have explicitly provisional status.

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TED programs. Cross-sector discrimination was a factor in the Hormones case: while the EU
claimed that the disputed hormones were potentially genotoxic, the WTO panel noted that the
EU permitted the

use of carbadox, a known genotoxin, in pork production. The panel concluded that the EU was
more tolerant of such inputs in the internationally competitive pork sector than in the less
competitive beef sector, a distinction that is hard to justify on health and safety grounds alone
(Roberts 1998).

As the above questions reveal, the evaluation of SPS measures lies largely beyond the expertise
of political economists. The first question—on conformance with international standards—is a
purely technical one. The second question, on risk assessment, is a matter for scientists. The third
question, regarding necessity, is for public-policy analysts. Political economists are thus ill-
prepared to answer most of the important questions regarding the legality of SPS measures.
Nonetheless, there are two ways in which political economy can make a contribution: first, by
proposing reforms to the dispute settlement system; second, by identifying which SPS measures
are arbitrarily or unjustifiably discriminatory.

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 Chapter - 4

CASE STUDY
Sanitary and phytosanitary measures are applied to prevent the entry of diseases and pests from
abroad, taking into account their prevalence in exporting countries and importing countries, and
other relevant factors, based on scientific and technical grounds. Although differences in the
sanitary and phytosanitary systems adopted by different countries naturally exist, in no case
should they be used to disguise restrictions on international trade.

Measures Concerning Meat and Meat Products (Hormones)19

In December 1985, the EU, referring to consumer concerns, decided that beginning in January
1988, all imports of meat from animals raised using hormones would be banned (a decision not
to use hormones within the region was made in March 1988). The United States requested
consultations under Article XXIII of the GATT, arguing that the measures lacked scientific
evidence and were inconsistent with Article 7.2 of the Tokyo Round Standards Code. In January
1989, the EU began enforcing a total ban on imports of meat raised with growth hormones. The
United States, in response, invoked retaliatory measures that same month under Section 301
trade remedy: 100-percent hikes in tariffs on beef, tomato-based products, coffee, alcoholic
beverages, and pet food, in total worth about $90 million.

The impasse remained unresolved. As a result, in June 1995, the United States charged that the
EU measures lacked a scientific basis and were in violation of both the GATT and the SPS
Agreement. The Unites States intended to refer the matter to the WTO dispute settlement
procedures, if the dispute was not resolved by the end of 199520.

In response, the EU convened a “Scientific Conference on the Use of Growth Promoters in Meat
Production” for scientists and consumer groups. The conference’s report, published in January
1996, concluded that the data on the use of natural and artificial hormones and related
compounds had shown no evidence of human health risk. The EU agriculture ministers,
however, decided nonetheless to continue the import ban.

19 Part II Chapter 10 Standards and Conformity Assessment Systems

20 http://www.meti.go.jp/english/report/downloadfiles/gCT0221

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 In January 1996, the United States requested consultations under Article XXII of the GATT,
alleging that the EU measures were inconsistent with Articles III and XI of the GATT, and
Articles 2, 3, and 5 of the SPS Agreement. In May 1996, a panel was established. In July 1996,
Canada also requested consultations under Article XXII of the GATT and in October 1996 a
different panel was set up.

In August 1997, the panel report was issued. The Panel found that the EU measures were based
on neither international standards nor any risk assessment, and that the arbitrary or unjustifiable
distinctions in the level of protection resulted in discrimination or a disguised restriction on
international trade. The Panel therefore found the EU measures in violation of SPS Agreement
Articles 3.1, 5.1 and 5.5.

In September 1997, the EU appealed the panel finding to the Appellate Body. In January 1998,
the Appellate Body submitted its report, finding that the EU measures were not to be regarded as
discrimination or as a disguised restriction on international trade and were therefore not
inconsistent with Article 5.5 of the SPS Agreement. It, however, upheld the panel's findings that
the EU measures were not based on sufficient assessment of risk, and therefore found the
measures to be in violation of Article 5.1 of the SPS Agreement. Lastly, the Appellate Body
reversed the Panel’s interpretation regarding the burden of proof and instead found that the
burden of proof to establish a WTO infraction remains on the complaining country (in this case,
the United States) when a country introduces or maintains sanitary or phytosanitary measures
that result in a higher level of protection than would be achieved by relevant international
standards. In February 1998, the Appellate Body report was adopted, and the DSB advised the
EU to take appropriate measures in light of the Appellate Body report21.

The EU had an obligation to follow the Appellate Body decision and bring its measures into
conformance to the WTO by May 1999. The EU, however, failed to withdraw the import ban by
the deadline, prompting the United States and Canada on 14 May to seek approval from the
WTO for temporary suspension of concessions on imports from the EU equivalent to $220
million and $70 million respectively.

21 Part II Chapter 10 Standards and Conformity Assessment Systems

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On 12 July, the WTO announced the results of arbitration, finding that the economic damage to
the United States and Canada from the EU beef import ban to be worth $117 million and $11.3
million respectively. The DSB approved a suspension of concessions based on these findings. In
accordance with WTO procedures, the United States hiked tariff rates effective 29 July. Canada
did likewise, effective 1 August.

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 Chapter - 5

CONCLUSION
Sanitary and phytosanitary (SPS) measures are measures to protect humans, animals, and plants from
diseases, pests, or contaminants. The Agreement on the Application of Sanitary and Phytosanitary
Measures is one of the final documents approved at the conclusion of the Uruguay Round of the
Multilateral Trade Negotiations. It applies to all sanitary (relating to animals) and phytosanitary (relating
to plants) (SPS) measures that may have a direct or indirect impact on international trade. The SPS
agreement includes a series of understandings (trade disciplines) on how SPS measures will be
established and used by countries when they establish, revise, or apply their domestic laws and
regulations. Countries agree to base their SPS standards on science, and as guidance for their actions, the
agreement encourages countries to use standards set by international standard setting organizations. The
SPS agreement seeks to ensure that SPS measures will not arbitrarily or unjustifiably discriminate against
trade of certain other members nor be used to disguise trade restrictions. In this SPS agreement, countries
maintain the sovereign right to provide the level of health protection they deem appropriate, but agree that
this right will not be misused for protectionist purposes nor result in unnecessary trade barriers. A rule of
equivalency rather than equality applies to the use of SPS measures.

Sanitary and Phyto-Sanitary (SPS) Measures play a significant role in trade between developing
countries and the EU and other developed countries, as agricultural and food items, fish, and
forestry and timber products account for a large share of the goods traded. In these trade
relations, there is a balance to be maintained between protecting consumers and creating a
supportive international environment for animal and plant-based exports from developing
countries.

Increased awareness of and concern about food safety in the EU and other developed countries
has resulted in developing countries having to deal with stricter SPS requirements when
exporting their produce. Such requirements relate to the protection of animal or plant life and
health; risks arising from additives, contaminants or disease-causing organisms in foods,
beverages or feedstuffs; or the entry, establishment or spread of pests.

International SPS measures are based on the World Trade Organisation (WTO) SPS Agreement,
international standards and recommendations or guidelines. The World Trade Organisation’s

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SPS measures provide for a number of rules which aim to ensure that standards and related
conformity assessment procedures do not become unnecessary barriers to trade.

The SPS Agreement aims to achieve a balance between the right of WTO members to implement
legitimate health protection policies and the goal of allowing the smooth flow of goods across
international borders without unnecessary restrictions. The SPS Committee provides a forum for
the exchange of information and gives WTO members the opportunity to resolve specific trade
concerns. Nearly half of the concerns raised in the Committee have subsequently been
completely or partially resolved among the members concerned.

SPS measures serve both legitimate and illegitimate ends. Ensuring that they are used to protect
public health and safety but not for protectionist ends is a difficult but urgent task for the WTO.
To a large extent, this task lies in the hands of scientists, lawyers and policy analysts rather than
those of political economists. Nonetheless, this memo has highlighted two ways in which
political economists can help: by identifying potential reforms to the WTO’s dispute settlement
system and by identifying the motives behind SPS measures. These are also difficult tasks, but I
hope that this memo will stimulate discussion on how best to tackle them.

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 References

 Bagwell, Kyle, Petros Mavroidis, and Robert Staiger. 2004. “The Case for Tradable
Remedies in WTO Dispute Settlement.” World Bank Working Paper. No. 3314.
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Interested Parties, and Free Riders.” World Bank Economic Review 19(2): 287-310.
 Busch, Marc and Eric Reinhardt. (2003) “Developing Countries and GATT/WTO
Dispute Settlement.” Journal of World Trade 37.
 Correa, Carlos M. (2000) “Implementing National Public Health Policies in the
Framework of WTO Agreements.” World Health Organization Draft Working Paper
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 Davis, Christina L. (2003) Food Fights over Free Trade: How International Institutions
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 World Bank. (2008) World Development Report 2008: Agriculture for Development.
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