New Zealand: Australia, New Zealand – and the poisoned apple?

Last Updated: 28 October 2010
Article by Daniel Kalderimis

Apples have been a source of friction in the trans-Tasman relationship for almost 90 years, but the dispute may be about to enter a new, more dangerous and more decisive phase.

Australia's WTO Appellant Body appeal was heard on 11 and 12 of October 2010 in Geneva and a ruling is expected before the end of the year. The most likely result is that (at least some aspects of) the WTO Panel's decision will be upheld and Australia will be instructed to come into compliance with the WTO Sanitary and Phyto-Sanitary Agreement (SPS Agreement). And it is then that the weapons of engagement may change.

But first, a little history.

Australia banned New Zealand apple imports in 1921 after the discovery in New Zealand of fire blight. Since 1986 New Zealand has been agitating against the ban after scientific studies failed to produce evidence that the disease can be transmitted through commercially traded apples.

In 2006 Australia moved from a blanket ban to the imposition of numerous stringent biosecurity provisions which achieved the same effect by proxy. The justification for the precautions was contained in a 600 page document, issued by Biosecurity Australia in November 2006, and was based on alleged risks from three diseases – fire blight, European canker and apple leaf curling midge.

New Zealand brought WTO proceedings in December 2007 contending that 16 of the restrictions were inconsistent with the SPS Agreement. These proceedings were joined by several third parties, including Chile, the EC, Japan and the US.

The dispute is highly technical but New Zealand's position is essentially that the import ban does not comply with several provisions of the SPS Agreement which broadly require that any SPS measure is: applied only to the extent necessary to protect human, animal or plant life or health; based on a scientific risk assessment; not maintained without sufficient scientific evidence; and not more trade-restrictive than necessary.

Australia's case, in essence, is that not all of the measures complained of fall within the scope of the SPS Agreement and that it has in any event carried out a scientific risk assessment under Article 5 of the SPS Agreement, which should be accorded deference.

Oral hearings before a WTO Panel were conducted in September 2008 and June 2009 and, on 6 August 2010, the WTO Panel delivered a comprehensive win to New Zealand.

It found that all 16 contested measures were SPS measures and were inconsistent with articles in the SPS Agreement. In general terms, it faulted Australia for:

  • failing to ground its import restrictions on a proper risk assessment, and
  • pursuing a response which – even taking into account Australia's chosen level of SPS protection – was more trade-restrictive than necessary.

In its argument on appeal, Australia relies heavily on the Appellate Body's 2008 decision in Round II of the WTO dispute between the US, Canada and the EC concerning the latter's ban on hormone-treated beef. In that case, the Appellate Body disagreed with the WTO Panel that the EC's new measures – implemented following the EC's 1998 loss in Round I – were not based on a proper risk assessment. Australia's overall argument is that, like the Hormones Panel, the Apples Panel has conducted an over-intensive review into Australia's risk assessment process and, in so doing, impermissibly substituted its judgement for that of Australia. (New Zealand also filed a cross-appeal on certain aspects of the Panel's legal interpretation, but this is a largely cautionary step.)

Given the breadth, detail and clarity of the Panel's findings, it seems unlikely that the Appellate Body will entirely overturn the Panel's decision. Completely successful WTO appeals, whilst not unknown, are rare. It is much more common for the Appellate Body to disturb selected factual findings and legal conclusions in what are typically long and technical decisions. Thus, the most likely scenario is that the substance of the Panel's decision will be upheld, even if it is not sustained in every particular, and that Australia will be instructed to bring its measures into line with the SPS Agreement.

Even such an outcome may, however, not be entirely unhelpful from Australia's perspective, as any doubt which is cast on the authority of the Panel's ruling will strengthen Australia's leverage in the enforcement phases of the dispute.

Because delay has value to Australia, we can assume that it will be careful rather than concerted in revising any offending measures. There is a real risk that any revised measures it implements may be seen by New Zealand as unsatisfactory and insufficient.

In this event, the dispute could follow the same trajectory as the US-Japan Apples case (which also concerned measures to prevent infestation of fire blight). Japan lost its appeal and accordingly relaxed its rules; but not to the US's satisfaction. The US successfully established its complaint before a WTO compliance panel, at which stage Japan and the US finally entered direct negotiations and were able a month later – and 38 months after the US first engaged the WTO dispute process – to announce a mutually agreed solution. (Interestingly, US apple exports to Japan are still negligible but not seemingly because of trade barriers.)

Should Australia refuse to bring its measures into line, WTO rules allow New Zealand to retaliate by suspending access agreements to the New Zealand market for selected Australian goods (and possibly services), including those unconnected with trade in apples. Such retaliatory action would have a significant impact for the broader CER relationship between New Zealand and Australia.

Possibly because of its venerable age, but partly also due to diplomatic finesse, the Apples dispute has thus far been tacitly cordoned off from the broader trans-Tasman relationship and has not been allowed to become a serious irritant. To allow extended brinkmanship over compliance with a final Appellate Body decision would be well outside the spirit of the CER relationship and single economic market work programme. It is hard to imagine either government would allow such a situation to persist.

This means that – after 89 years and much elaborate legal skirmishing before the WTO – the two countries will likely sit down to negotiate an arrangement which will, by the nature of these things, please neither but be acceptable to both.

A more detailed analysis of the WTO Panel decision can be found in the September 2010 edition of Chapman Tripp's Connected Asia Pacific newsletter.

The information in this article is for informative purposes only and should not be relied on as legal advice. Please contact Chapman Tripp for advice tailored to your situation.

To print this article, all you need is to be registered on Mondaq.com.

Click to Login as an existing user or Register so you can print this article.

Authors
 
Some comments from our readers…
“The articles are extremely timely and highly applicable”
“I often find critical information not available elsewhere”
“As in-house counsel, Mondaq’s service is of great value”

Related Topics
 
Related Articles
 
Up-coming Events Search
Tools
Print
Font Size:
Translation
Channels
Mondaq on Twitter
 
Register for Access and our Free Biweekly Alert for
This service is completely free. Access 250,000 archived articles from 100+ countries and get a personalised email twice a week covering developments (and yes, our lawyers like to think you’ve read our Disclaimer).
 
Email Address
Company Name
Password
Confirm Password
Position
Mondaq Topics -- Select your Interests
 Accounting
 Anti-trust
 Commercial
 Compliance
 Consumer
 Criminal
 Employment
 Energy
 Environment
 Family
 Finance
 Government
 Healthcare
 Immigration
 Insolvency
 Insurance
 International
 IP
 Law Performance
 Law Practice
 Litigation
 Media & IT
 Privacy
 Real Estate
 Strategy
 Tax
 Technology
 Transport
 Wealth Mgt
Regions
Africa
Asia
Asia Pacific
Australasia
Canada
Caribbean
Europe
European Union
Latin America
Middle East
U.K.
United States
Worldwide Updates
Registration (you must scroll down to set your data preferences)

Mondaq Ltd requires you to register and provide information that personally identifies you, including your content preferences, for three primary purposes (full details of Mondaq’s use of your personal data can be found in our Privacy and Cookies Notice):

  • To allow you to personalize the Mondaq websites you are visiting to show content ("Content") relevant to your interests.
  • To enable features such as password reminder, news alerts, email a colleague, and linking from Mondaq (and its affiliate sites) to your website.
  • To produce demographic feedback for our content providers ("Contributors") who contribute Content for free for your use.

Mondaq hopes that our registered users will support us in maintaining our free to view business model by consenting to our use of your personal data as described below.

Mondaq has a "free to view" business model. Our services are paid for by Contributors in exchange for Mondaq providing them with access to information about who accesses their content. Once personal data is transferred to our Contributors they become a data controller of this personal data. They use it to measure the response that their articles are receiving, as a form of market research. They may also use it to provide Mondaq users with information about their products and services.

Details of each Contributor to which your personal data will be transferred is clearly stated within the Content that you access. For full details of how this Contributor will use your personal data, you should review the Contributor’s own Privacy Notice.

Please indicate your preference below:

Yes, I am happy to support Mondaq in maintaining its free to view business model by agreeing to allow Mondaq to share my personal data with Contributors whose Content I access
No, I do not want Mondaq to share my personal data with Contributors

Also please let us know whether you are happy to receive communications promoting products and services offered by Mondaq:

Yes, I am happy to received promotional communications from Mondaq
No, please do not send me promotional communications from Mondaq
Terms & Conditions

Mondaq.com (the Website) is owned and managed by Mondaq Ltd (Mondaq). Mondaq grants you a non-exclusive, revocable licence to access the Website and associated services, such as the Mondaq News Alerts (Services), subject to and in consideration of your compliance with the following terms and conditions of use (Terms). Your use of the Website and/or Services constitutes your agreement to the Terms. Mondaq may terminate your use of the Website and Services if you are in breach of these Terms or if Mondaq decides to terminate the licence granted hereunder for any reason whatsoever.

Use of www.mondaq.com

To Use Mondaq.com you must be: eighteen (18) years old or over; legally capable of entering into binding contracts; and not in any way prohibited by the applicable law to enter into these Terms in the jurisdiction which you are currently located.

You may use the Website as an unregistered user, however, you are required to register as a user if you wish to read the full text of the Content or to receive the Services.

You may not modify, publish, transmit, transfer or sell, reproduce, create derivative works from, distribute, perform, link, display, or in any way exploit any of the Content, in whole or in part, except as expressly permitted in these Terms or with the prior written consent of Mondaq. You may not use electronic or other means to extract details or information from the Content. Nor shall you extract information about users or Contributors in order to offer them any services or products.

In your use of the Website and/or Services you shall: comply with all applicable laws, regulations, directives and legislations which apply to your Use of the Website and/or Services in whatever country you are physically located including without limitation any and all consumer law, export control laws and regulations; provide to us true, correct and accurate information and promptly inform us in the event that any information that you have provided to us changes or becomes inaccurate; notify Mondaq immediately of any circumstances where you have reason to believe that any Intellectual Property Rights or any other rights of any third party may have been infringed; co-operate with reasonable security or other checks or requests for information made by Mondaq from time to time; and at all times be fully liable for the breach of any of these Terms by a third party using your login details to access the Website and/or Services

however, you shall not: do anything likely to impair, interfere with or damage or cause harm or distress to any persons, or the network; do anything that will infringe any Intellectual Property Rights or other rights of Mondaq or any third party; or use the Website, Services and/or Content otherwise than in accordance with these Terms; use any trade marks or service marks of Mondaq or the Contributors, or do anything which may be seen to take unfair advantage of the reputation and goodwill of Mondaq or the Contributors, or the Website, Services and/or Content.

Mondaq reserves the right, in its sole discretion, to take any action that it deems necessary and appropriate in the event it considers that there is a breach or threatened breach of the Terms.

Mondaq’s Rights and Obligations

Unless otherwise expressly set out to the contrary, nothing in these Terms shall serve to transfer from Mondaq to you, any Intellectual Property Rights owned by and/or licensed to Mondaq and all rights, title and interest in and to such Intellectual Property Rights will remain exclusively with Mondaq and/or its licensors.

Mondaq shall use its reasonable endeavours to make the Website and Services available to you at all times, but we cannot guarantee an uninterrupted and fault free service.

Mondaq reserves the right to make changes to the services and/or the Website or part thereof, from time to time, and we may add, remove, modify and/or vary any elements of features and functionalities of the Website or the services.

Mondaq also reserves the right from time to time to monitor your Use of the Website and/or services.

Disclaimer

The Content is general information only. It is not intended to constitute legal advice or seek to be the complete and comprehensive statement of the law, nor is it intended to address your specific requirements or provide advice on which reliance should be placed. Mondaq and/or its Contributors and other suppliers make no representations about the suitability of the information contained in the Content for any purpose. All Content provided "as is" without warranty of any kind. Mondaq and/or its Contributors and other suppliers hereby exclude and disclaim all representations, warranties or guarantees with regard to the Content, including all implied warranties and conditions of merchantability, fitness for a particular purpose, title and non-infringement. To the maximum extent permitted by law, Mondaq expressly excludes all representations, warranties, obligations, and liabilities arising out of or in connection with all Content. In no event shall Mondaq and/or its respective suppliers be liable for any special, indirect or consequential damages or any damages whatsoever resulting from loss of use, data or profits, whether in an action of contract, negligence or other tortious action, arising out of or in connection with the use of the Content or performance of Mondaq’s Services.

General

Mondaq may alter or amend these Terms by amending them on the Website. By continuing to Use the Services and/or the Website after such amendment, you will be deemed to have accepted any amendment to these Terms.

These Terms shall be governed by and construed in accordance with the laws of England and Wales and you irrevocably submit to the exclusive jurisdiction of the courts of England and Wales to settle any dispute which may arise out of or in connection with these Terms. If you live outside the United Kingdom, English law shall apply only to the extent that English law shall not deprive you of any legal protection accorded in accordance with the law of the place where you are habitually resident ("Local Law"). In the event English law deprives you of any legal protection which is accorded to you under Local Law, then these terms shall be governed by Local Law and any dispute or claim arising out of or in connection with these Terms shall be subject to the non-exclusive jurisdiction of the courts where you are habitually resident.

You may print and keep a copy of these Terms, which form the entire agreement between you and Mondaq and supersede any other communications or advertising in respect of the Service and/or the Website.

No delay in exercising or non-exercise by you and/or Mondaq of any of its rights under or in connection with these Terms shall operate as a waiver or release of each of your or Mondaq’s right. Rather, any such waiver or release must be specifically granted in writing signed by the party granting it.

If any part of these Terms is held unenforceable, that part shall be enforced to the maximum extent permissible so as to give effect to the intent of the parties, and the Terms shall continue in full force and effect.

Mondaq shall not incur any liability to you on account of any loss or damage resulting from any delay or failure to perform all or any part of these Terms if such delay or failure is caused, in whole or in part, by events, occurrences, or causes beyond the control of Mondaq. Such events, occurrences or causes will include, without limitation, acts of God, strikes, lockouts, server and network failure, riots, acts of war, earthquakes, fire and explosions.

By clicking Register you state you have read and agree to our Terms and Conditions