Relationship between Article 2.2 and Article 5.7 of the SPS

a、 Substantive Relationship and Applicable Sequence thereof

The Panel referred first to the Appellate Body report in EC-Tariff Preferences, which provided some inspiration for the distinction between exception and autonomous right, stating that:

In case where one provision permits, in certain circumstances, behavior that

would otherwise be inconsistent with an obligation in another provision, and

one of the two provisions refers to the other provision, the Appellate Body has

found that the complaining party bears the burden of establishing that a

challenged measure is inconsistent with the provision permitting particular

behavior only where one of the provisions suggests that the obligation is not

79 Id. para. 7.2961.

45 applicable to the said measure.⁸⁰

Furthermore, the Appellate Body also cited its own opinion in EC-Hormone regarding the relationship between Articles 3.1 and 3.3 of the SPS Agreement. The Appellate Body recognized Article 3.3 as an autonomous right to Article 3.1. It stated that Article 3.1 of the SPS Agreement simply excludes from its scope of application the kinds of situation covered by Article 3.3 of that Agreement, . . ..⁸¹

The Panel found that Article 5.7 which permits provisional adoption of SPS measure in case where scientific evidence is insufficient on the basis of available pertinent information would otherwise be inconsistent with an obligation in Article 2.2.⁸² Furthermore, Article 2.2 refers to Article 5.7 and suggests that the obligation in Article 2.2 is not applicable to measures falling within the scope of Article 5.7.⁸³ From the above analysis, it can be found that Article 5.7 fully satisfies the criteria provided in EC-Tariff Preferences as an autonomous right, instead of an exception.

The Panel also found that the structure and terms in Article 2.2 of the SPS

Agreement are quite similar to those in Article 3.1 thereof. Both of them contained

80 Appellate Body Report, European Communities - Conditions for the Granting of Tariff Preference to Developing Countries, WT/DS246/AB/R, para. 88 (Apr. 7, 2004)(adopted Apr. 20, 2004) [hereinafter EC–Tariff Preference].

81 Appellate Body Report, EC–Hormones, supra note 18, para. 104.

82 EC–Biotech Products, supra note 10, para. 7.2968.

83 Id.

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the clause “except as otherwise provided for….” The Panel decided that the interpretation regarding the relationship between Article 2.2 and Article 5.7 of the SPS Agreement should be consistent with the one between Article 3.1 and Article 3.3 thereof.⁸⁴ Recalling the Appellate Body Report in EC-Hormones, the Panel concluded that Article 5.7 should be an autonomous right, instead of an exception to Article 2.2.⁸⁵ Since Article 5.7 is an autonomous right in the SPS Agreement, it is the complaining parties that should bear the burden of proof to demonstrate that the measure taken by the responding party is inconsistent with Article 5.7.⁸⁶

After determining the relationship between Article 2.2 and Article 5.7, the Panel proceeded to analyze what the sequence was when applying these two provisions.

The Panel referred to two previous rulings of the Appellate Body, i.e.

Japan-Agriculture II and Japan Apples. In Japan-Agriculture II, the Appellate Body

enunciated that “Article 5.7 operates as a qualified exemption from the obligation under Article 2.2 not to maintain SPS measures without sufficient scientific evidence.”⁸⁷ The Appellate Body also made it clear that “there are four cumulative requirements in Article 5.7 which must be met in order for a Member to adopt and

84 Id. para. 7.2967.

85 Id. para. 7.2969.

86 Id. para. 7.2976.

87 Appellate Body Report, Japan–Measures Affecting Agricultural Products, WT/DS76/AB/R, para. 80 (Feb. 22, 1999)(adopted Mar. 19, 1999) [hereinafter Japan–Agriculture Products II].

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maintain a provisional SPS measure consistently with Article 5.7.”⁸⁸ The Panel thought that these requirements were the reasons why the Appellate Body emphasized that “Article 5.7 operates as a qualified exemption from the obligation under Article 2.2.”⁸⁹ Based on the above, the Panel (in this case) deduced that if the measure at issue is not consistent with one of the four criteria provided in Article 5.7, the situation is not “as provided for in paragraph 7 of Article 5” (Article 2.2). As a result, the relevant obligations in Article 2.2 would be applicable to the challenged measures, provided there are no other elements which render Article 2.2 inapplicable.⁹⁰ After clarifying the substantive relationship, the Panel proceeded to review the examining sequence in the two cases aforementioned.

Both of the Panel in the aforementioned two cases examined the measure under Article 2.2 of the SPS Agreement first. If the measure was inconsistent with Article 2.2 of the SPS Agreement, it would be examined under Article 5.7 thereof provided that the responding party invoked Article 5.7. If the measure was inconsistent with Article 5.7 of the SPS Agreement, then the Panel could ultimately decide that the measure was inconsistent with Article 2.2 (and Article 5.7). The Panel in Japan-Agriculture II stated that “[i]f the [challenged measure] meets the requirements

88 Id. para. 89.

89 Id. para. 80.

90 EC–Biotech Products, supra note 10, para. 7.2974.

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[in Article 5.7], we cannot find that it violates Article 2.2.”⁹¹ The Panel in the Japan-Apple case recalled and agreed with the approach taken in Japan-Agriculture II

and stated that “it would therefore make no final findings with respect to the consistency of the measure at issue with Article 2.2 until it had completed its analysis under Article 5.7.⁹²

From the analysis of the Panel in the instant case, which referred to Japan-Agriculture II and Japan-Apple, it seems that the rule of the sequence for the

application of Articles 2.2 and 5.7 of the SPS Agreement has been well established.

In this sequence, we must first examine the disputed measure under Article 2.2. If the measure is inconsistent with Article 2.2, then we must examine its consistency with Articles 5.7 and 2.2. If the measure is consistent with Article 5.7, then its consistency with Articles 5.7 and 2.2 can be ultimately affirmed.

However, it is worth noting that the authorities the Panel referred to are the Panel reports of the two cases, instead of the Appellate Body reports thereof. Since these two cases were appealed, it would be helpful to refer to the Appellate Body’s rulings in reviewing the decisions of the Panels. Indeed, the Appellate Body in Japan-Agriculture II stated that “it is clear that Article 5.7 of the SPS Agreement, to

which Article 2.2 explicitly refers, is part of the context of the latter provision.”

91 Panel Report, Japan-Agriculture Products II, WT/DS76/R, para. 8.48 (Oct. 27, 1998).

92 Panel Report, Japan-Apples, WT/DS245/R, para. 8.201 (July 15, 2003).

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Nevertheless, the Appellate Body in both cases basically followed the same sequence by examining the consistency with Article 2.2 first, followed by an examination of the consistency with Article 5.7. The Appellate Body seemed to deal with Article 2.2 and Article 5.7 individually.

It is interesting to see the discrepancy between the rulings of the Panel and the Appellate Body. However, the Appellate Body did not explicitly express its view on this point as adopting an apparently different method from the one taken by the Panel.

The difference of the approaches taken by the Appellate Body and the Panel might have significant implication on the nature of Article 2.2 and Article 5.7 and further affect the rulings and recommendation of the dispute settlement especially where the third and/or fourth criteria under Article 5.7 is not met, i.e. the responding member taking provisional SPS measure fails to satisfy its obligations to seek additional information and/or review the measure in dispute after the measure is taken. A full analysis on the appropriateness of the Panel’s approach will be further discussed in section IV.C. below.

b、 Burden of Proof

Another important issue is the burden of proof regarding the inconsistency between the challenged measure and Article 5.7 of the SPS Agreement. The Panels in Japan-Agriculture II and Japan-Apples held different points of view on this issue.

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The former ruled that the complaining party should bear the burden in providing that the measure adopted by the responding party was inconsistent with Article 5.7 of the SPS Agreement. In contrast, the latter Panel opined that the burden lied with the responding party. Because this issue had not been appealed in Japan–Apples, the Appellate Body did not have the standing to make further elaboration or reverse the decision of the Panel in this regard. The Panel in GMOs case, basing its analysis on the Appellate Body report of EC–Tariff Preference ruled that Article 5.7 of the SPS Agreement was an exemption, not an exception to Article 2.2 thereof, and concluded that “it is incumbent on the complaining party to establish a prima facie case of inconsistency with both Article 2.2 and 5.7.”⁹³

In response to the arguments proposed by Canada, the Panel further strengthened its conviction that Article 5.7 of the SPS Agreement is an exemption from Article 2.2 thereof, rather than an exception thereto. The Panel agreed with Canada and recognized that, although the structural and textual similarity between Articles 3.1 and 3.3 and Articles 2.2 and 5.7 existed, there were substantive differences between them.⁹⁴ In the scenario where Articles 3.1 and 3.3 apply, a Member is free to choose whether to base a SPS measure on a relevant international standard in line with Article 3.1 or, alternatively, to avail itself of the qualified right not to do so under Article

93 EC–Biotech Products, supra note 10, para. 7.2979.

94 Id. para. 7.2983.

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3.3.⁹⁵ However, the application of Articles 2.2 and 5.7 is another story. Whether there is sufficient evidence is a factual issue that cannot be decided or altered by members. Therefore, Article 5.7 should be viewed as a qualified exemption from the relevant obligation in Article 2.2, which confirms the right of Members to enact measures where the available scientific evidence is “insufficient. ”⁹⁶

The issue as to whether Article 5.7 is an exception or an exemption from Article 2.2 is indeed a complicated legal one that is difficult to decide. The interpretation of distribution of burden of proof is not only of purely legal task, but of a policy decision.

It is to recall that the preamble of the SPS Agreement, which confirms the right to adopt SPS measure provided that such measure should not result in unjustified effect on international trade. Thus, it can be inferred that Members shall be entitled to take necessary SPS measures, no matter whether or not there is sufficient scientific evidence to support them. The sufficient or insufficient scientific evidence scenarios are parallel without priority relationship. Since the sufficiency of scientific evidence is a factual issue that the Members cannot change, it is necessary, as the SPS Agreement provides, to accord Members a right to adopt certain SPS measures under Article 5.7, which should be valued equally with the obligation under Article 2.2.

Interpreting Article 5.7 as an exemption to Article 2.2 and imposing the burden of

95 Id.

96 Id.

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proof on the complaining party therefore reaffirms and shows respect to the legitimate right of WTO Members to adopt necessary SPS measures.