European Union: The Dispute On The Importation Of Pigs And Certain Pig Products From The EU

Last Updated: 21 September 2016
Article by Sayenko Kharenko

Most Read Contributor in Ukraine, August 2016

PANEL REPORT

The dispute "Russia – Pigs" deals with a ban imposed by Russia on the importation of pigs and certain pig products from the European Union (the "EU") because of a limited number of cases of African Swine Fever (the "ASF") in certain EU regions. The EU initiated panel proceedings since Russia refused to accept the imports even from the non-affected areas within the EU. The impugned measures were challenged on the basis of the WTO Agreement on the Application of Sanitary and Phytosanitary Measures (the "SPS Agreement").

SUMMARY

In early 2014, Russia banned all imports of live pigs, pork and other pig products coming from the EU (the "Products"). It based its decisionon four individual cases of the ASF outbreaks detected in some regions of Estonia, Latvia, Lithuania and Poland. The EU challenged two sets of measures taken by Russia in this respect:

  • the prohibition on the importation of the Products from the entire EU (the "EU-wide ban"); and
  • the prohibition on the importation of the Products from Estonia, Latvia, Lithuania and Poland(the "individual import bans").

According to Russia, the basis for its bans on the importation of the Products is the requirement contained in the veterinary certificates negotiated with the EU. This requirement provides that the EU territory, except for Sardinia, has to be ASF-free for three years in order for the Products to be imported into Russia. Russia stated that following the ASF outbreaks in Lithuania, the Products from the EU could not meet this requirement any more.

The EU, in its turn, acknowledged the outbreak of ASF in certain regions of Estonia, Latvia, Lithuania and Poland. However, the EU had taken measures to prevent the further spread of the ASF immediately after its discovery based on international standards of the World Organization for Animal Health (the "OIE"). Furthermore, the EU demonstrated to Russia that there were areas within its territory that were ASF-free and that were likely to remain so. Under such circumstances, it is arguable whether Russia was entitled to restrict the importation of the Products from the whole EU on the basis of sanitary concerns.

SIGNIFICANCE OF THE REPORT

The Panel's Report in this case sends a strong signal to Russia regarding its obligation to respect the international standards, in particular the OIE Code standards on the ASF (the "Terrestrial Code").

The Panel emphasizes that a WTO Member may indeed establish a higher level of sanitary protection than recognized by international standards but only when this is done in line with its WTO obligations under the SPS Agreement.

Upon joining the WTO, Russia committed to ensure that its SPS measures protecting animal life and health are (1) based on scientific principles and on sufficient scientific evidence, and are (2) neither discriminative, (3) nor more trade restrictive than necessary. The Panel's findings in this case demonstrate that Russia does not comply with these obligations and that this cannot be arbitrarily ignored.

In this dispute, the Panel, inter alia, gave an extensive interpretation of (1) the principles of harmonization and adaptation to regional conditions; (2) the risk assessment under the SPS Agreement; and (3) the compliance with SPS non-discriminatory provisions.

HARMONIZATION AND REGIONALIZATION

Article 3.1 of the SPS Agreement encourages WTO Members to base their SPS measures on international standards. Should an SPS measure conform to the relevant international standard, it is presumed to be consistent with the other provisions of the SPS Agreement.

The applicable standard for the measures at issue is to be found in the Terrestrial Code. Its relevant provisions pertaining to regionalization call upon the OIE Members to allow for the possibility of recognition of the ASF-free status on a country/zone basis.1 The principle of regionalization allows the Members on the parts of territory of which an outbreak of a disease has place to demonstrate that the disease has not spread to other parts of its territory and therefore to continue trade while meeting an appropriate level of protection established by the importing WTO Member.

In the case at hand, the Panel found that the EU objectively demonstrated to Russia that:

  • there were areas within the EU territory outside Estonia, Latvia, Lithuania and Poland, which were ASF-free; and
  • there were ASF-free areas within Estonia, Lithuania and Poland.

Russia, nonetheless, has not allowed for the possibility for importation of the Products from the unaffected EU territories. Consequently, its measures do not conform to the Terrestrial Code, and thus are inconsistent with Russia's obligation to base its SPS measures on international standards.

SPS PTOTECTION BASED ON RISK ASSESSMENT

The SPS Agreement allows a WTO Member to deviate from the use of international standards and to adopt a higher level of protection than those recognized if there is a scientific justification. Moreover, any SPS measure of the WTO Member should be based upon scientific evidence and a risk assessment.2

The Panel found that Russia has not assessed the risk to animal life or health within its territory in relation to trade in the Products from those areas unaffected by the ASF, either within the four affected EU Members (Estonia, Latvia, Lithuania and Poland) or EU-wide.

This failure cannot be justified based on the exceptions set forth in Article 5.7 of the SPS Agreement.3 Contrary to its requirements, Russia did not provisionally adopt the measure on the basis of available pertinent information, did not seek to obtain additional information and did not review the EU-wide ban within a reasonable period of time.

By not basing the measure on a risk assessment,Russia could not take into account a number of relevant economic factors, which also leads to the violation of Article 5.3 of the SPS Agreement.4

In addition, the EU-wide ban as well as individual import bansin respect to Estonia, Lithuania, and Poland violate Article 5.6 of the SPS Agreement because they are significantly more trade restrictive than required to achieve Russia's appropriate level of protection.5

Moreover, the EU has provided the alternative measures that could have been adopted by Russia under the circumstances, and those are the measures derived from the application of the Terrestrial Code. As it was already mentioned, the Code recommends regionalization and trade from the ASF-free countries/zones if the products underwent specific treatments. The Panel found that such alternatives were technically and economically feasible, would achieve Russia's appropriate level of sanitary or phytosanitary protection, and would be significantly less restrictive to trade than the EU-wide ban as well as individual import bansin respect to Estonia, Lithuania and Poland.

DISCRIMINATORY CHARACTER

Articles 2.3 and 5.5 of the SPS Agreement articulate non-discrimination obligations of the WTO Members and condemn disguised restrictions on international trade. Accordingly, the WTO Members shall ensure that their sanitary and phytosanitary measures do not arbitrarily or unjustifiably discriminate between other Members where identical or similar conditions prevail, including between their own territory and that of the others. The Panel draws guidance for the analysis of these requirements from the chapeau of Article XX of the GATT 1994.6

In the case at hand, despite the numerous outbreaks of the disease on its own territory, Russia did not close its entire market to all domestic products, but limited its measure to the zones affected by the disease. The Panel discerned from this that those risks associated with the disease were present both in the territory of the EU and of Russia. Thus, the relevant conditions are identical or similar between Russia and the EU for the purposes of the analysis.

Likewise, Russia accepted imports from Belarus and, until recently, Ukraine, despite notified cases of ASF in these countries. However, the Panel considered it to be appropriate to exercise judicial economy with regard to the EU's allegations on this matter.

To find whether the measures at issue constituted "arbitrary or unjustifiable discrimination" the Panel analyzed whether there was a rational connection between the reasons given for the discriminatory treatment and the stated objective of the measure. Russia asserted that its measures were designed to ensure the protection of its territory against the import and spread of contagious animal disease pathogens, and goods, which do not comply with the veterinary requirements. The Panel established that by allowing domestic trade of the Products from the ASF-free areas, and prohibiting imports of the same products from ASF-free areas within the EU, Russia's measures arbitrarily or unjustifiably discriminate in respect of domestic trade in the Products and of imports of those Products.

The finding of the Panel mentioned above in conjunction with Russia's failure to conduct a risk assessment justifying its measures entailed a conclusion that the EU-wide ban and individual import bans (with respect to Estonia, Lithuania, and Poland) were applied in a manner which constituted a disguised restriction on international trade.

The EU failed to demonstrate that there were areas within Latvia, which were ASF-free, and thus the Panel declined to rule on the EU's claims in respect of the ban on the imports of the Products from Latvia. The Panel also declined to rule on the EU's claims on transparency and exercised the principle of judicial economy in respect of Article 5.5 of the SPS Agreement.7

CONCLUSIONS

Finally, the impugned measures were declared inconsistent with the rules of the SPS Agreement. In particular, the Panel found that the EU-wide ban as well as the individual bans (with respect to Estonia, Lithuania and Poland) violated a number of the provisions of the SPS Agreement and requested Russia to bring its measures into conformity with its WTO obligations.

Each Party may appeal a Panel report to the standing Appellate Body within 60 days. If no appeal is filed within that deadline, the report will be adopted and Russia will be bound to comply with Panel's recommendations.

Footnotes

1 The same arises under Article 6 of the SPS Agreement, which sets forth the rules on adaptation to regional conditions, including disease-free areas and areas of low disease prevalence.

2 Article 2.2 in conjunction with Article 5.1 and 5.2 of the SPS Agreement.

3 Article 5.7 of the SPS Agreement sets forth four cumulative requirements that must be met for a Member to justify its measure on the basis of this article: (i) it is imposed in respect of a situation where relevant scientific evidence is insufficient; (ii) it is provisionally adopted on the basis of available pertinent information; (iii) the Member maintaining the measure seeks to obtain the additional information necessary for a more objective assessment of risk; and (iv) the Member reviews the measure within a reasonable period of time.

4 Article 5.3 of the SPS Agreement establishes that in assessing the risk to animal or plant life or health and determining the measure to be applied for achieving the appropriate level of sanitary or phytosanitary protection from such risk, Members shall take into account as relevant economic factors: the potential damage in terms of loss of production or sales in the event of the entry, establishment or spread of a pest or disease; the costs of control or eradication in the territory of the importing Member.

5 According to Article 5.6 of the SPS Agreement the measure can be considered more trade restrictive than necessary, given that there is an alternative measure that:

  • is reasonably available taking into account technical and economic feasibility;
  • achieves the Member's appropriate level of protection; and
  • is significantly less trade restrictive than the contested measure.

6 The chapeau of Article XX of the General Agreement on Tariffs and Trade prescribes that the measure can be justified thereby if it is not applied in a manner, which would constitute a means of arbitrary or unjustifiable discrimination between countries where the same conditions prevail, or a disguised restriction on international trade.

7 This conclusion is based on the fact that the Panel had already made findings in respect of the EU's arguments on discrimination under Article 2.3.

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.

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