Summary

Decision:

A WTO Panel has ruled that the Russian Federation violated its WTO obligations by imposing an EU-wide ban on live pigs and pork products, in breach of the food safety rules of the WTO Agreement on the Application of Sanitary and Phytosanitary Measures (the "SPS Agreement").

The Panel found multiple violations of the SPS Agreement, including the failure of Russia to conduct a risk assessment or to base its measures on international standards, the failure to adapt the ban to regional conditions in the EU, the use of a measures that were "more trade-restrictive than required", and "arbitrary or unjustifiable discrimination" against imported products. Russia's invocation of the "precaution" provision of the SPS Agreement was rejected.

Significance of Decision:

This dispute arose after African swine fever ("ASF") was detected in the swine herds of four EU countries: Estonia, Latvia, Lithuania and Poland. ASF, according to the EU, is "a lethal, infectious disease of pigs which is harmless to humans or other animals". Following what the EU claimed were "a few infected wild boars at the borders with Belarus", Russia closed its borders to imports of pigs and related products from the entire EU. It did so without conducting a risk assessment. The EU had a very strong case that this did not comply with the science-based rules of the SPS Agreement and the Panel repeatedly ruled against Russia's actions.

One notable feature of this decision is the application of the provisions of the SPS Agreement as they apply to regions. SPS Article 6 sets out rules on adapting SPS measures to regional conditions, including "pest or disease-free areas" and "areas of low pest or disease prevalence". The Agreement provides that in such instances, the exporting country shall provide the necessary evidence to "objectively demonstrate" to the importing Member that areas within its territory are disease-free. This case is the first time that a WTO Panel has interpreted this term. After reviewing the evidence, the Panel concluded that the EU "objectively demonstrated to Russia that there are areas within the European Union territory, outside of Estonia, Latvia, Lithuania, and Poland, which are free of ASF and are likely to remain so". It ruled that Russia, by "imposing an outright ban" and "failing to recognize the existence of ASF-free areas within the European Union's territory", breached its obligations under the SPS Agreement with respect to the regional application of SPS measures.

The idea behind these "regionalization" provisions is to allow the application of SPS measures by importing countries that are targeted to the regions where diseases have occurred, while permitting trade to continue with areas unaffected by an outbreak. Such rules are particularly compelling when trade is with a WTO Member as geographically vast as the EU.

Report

Background: EU-wide ban susceptible to WTO challenge

As noted above, Russia imposed a ban on live pigs and pork products from Estonia, Latvia, Lithuania and Poland, the only countries where ASF had been detected. Russia also refused to accept "imports of the products at issue from the entire EU, amounting to an EU-wide ban".

The Panel first ruled that the EU-wide ban was "a measure susceptible to challenge under the WTO dispute settlement mechanism". It noted that the basis for Russia's refusal was the requirement in the veterinary certificates negotiated with the EU. The Panel noted that under this requirement, "the whole of the European Union's territory, except for Sardinia, has to be ASF free for three years in order for the products at issue to be imported into Russia". Following the ASF outbreaks in Lithuania in early 2014, "the products from the European Union do not meet that requirement". Therefore, the Panel found that "the actions by Russia to apply this general requirement to the current situation in the European Union results in an EU-wide ban of the products at issue attributable to Russia". The Panel then assessed this Russian measure against the requirements of the SPS Agreement.

EU-wide ban a "fundamental departure" from international standards

Article 3.1 of the SPS Agreement provides in part that Members shall base their SPS measures on "international standards, guidelines or recommendations, where they exist". An Annex to the Agreement lists the relevant standard-setting organizations, including, for animal health, those developed by the Paris-based International Office of Epizootics. (This body has since changed its name to the World Organisation for Animal Health, but it still uses its former French acronym of "OIE".) The Panel noted that the OIE Terrestrial Animal Health Code "sets out standards for the improvement of terrestrial animal health and welfare and veterinary public health worldwide, including through standards for safe international trade in terrestrial animals".

After concluding that the EU-wide ban did not comply with the requirements of the SPS Agreement for regional application (see below), the Panel found that this measure breached Russia's obligations under Article 3.1 because it was not based on the relevant international standard. It ruled that "[g]iven that the relevant provisions of the Terrestrial Code call upon OIE members to allow for the possibility of recognition of ASF-free status… on a country or 'zone' basis, the failure of Russia to even allow for the possibility for imports from the unaffected EU member States… amounts, in our view, to a 'fundamental departure' from the provisions of the Terrestrial Code…." The Panel thus ruled that "the EU-wide ban contradicts the relevant international standards and therefore it cannot be considered to be 'based on' that standard for the purposes of Article 3.1 of the SPS Agreement".

EU-wide ban not "adapted" to regional conditions in the EU

The core obligation of the SPS Agreement with respect to regionalization is set out in Article 6.1, which provides in part that Members shall ensure that their SPS measures are "adapted" to the SPS characteristics of the area, "whether all of a country, part of a country, or all or parts of several countries", from which "the product originated and to which the product is destined". Article 6.2 adds that "Members shall, in particular, recognize the concepts of pest- or disease-free areas and areas of low pest or disease prevalence". Article 6.3 states that "[e]xporting Members claiming that areas within their territories are pest- or disease-free areas or areas of low pest or disease prevalence shall provide the necessary evidence thereof in order to objectively demonstrate to the importing Member that such areas are, and are likely to remain, pest- or disease-free areas or areas of low pest or disease prevalence, respectively".

The Panel found that Russia's legislative framework "recognizes the concepts of pest- or disease-free areas and areas of low pest or disease prevalence in respect of ASF", and therefore the EU-wide ban was not inconsistent Article 6.2.

However, the Panel ruled that the EU had "objectively demonstrated" to Russia that there are areas within the EU, outside Estonia, Latvia, Lithuania, and Poland, which are "free of ASF and are likely to remain so" within the meaning of Article 6.3.

The Panel considered that "objectively demonstrate" meant "to prove something in an impartial manner". It added that "the exporting Member cannot merely provide general information in support of its claim, but rather sufficient relevant scientific and technical evidence, as relevant for the circumstances of the particular dispute, to prove in an impartial manner that an area within its territory is free of a disease and is likely to remain so".

After reviewing the evidence, the Panel concluded that the EU "objectively demonstrated to Russia that there are areas within the European Union territory, outside of Estonia, Latvia, Lithuania, and Poland, which are free of ASF and are likely to remain so". Based on this, it ruled that "imposing an outright ban… such as the one imposed by Russia through the EU-wide ban, and failing to recognize the existence of ASF-free areas within the European Union's territory amounts to not adapting the measure to the sanitary and phytosanitary characteristics of the European Union territory outside Estonia, Latvia, Lithuania, and Poland". It therefore found Russia to be in breach of its obligations under SPS Article 6.1.

Russia's "precaution" arguments rejected

SPS Article 5.1 provides that Members must ensure that their SPS measures are based on a risk assessment. As noted by the Panel, the Appellate Body had previously ruled that if a measure is not based on a risk assessment, "it can be presumed not to be based on scientific principles or to be maintained without sufficient scientific evidence" in breach of SPS Article 2.2.

Russia acknowledged that it had not conducted any risk assessment. However, it argued that it had taken action on the basis of "precaution" under SPS Article 5.7. This provision states that where "relevant scientific evidence is insufficient, a Member may provisionally adopt" SPS measures on the basis of "available pertinent information".

The Panel recalled prior Appellate Body jurisprudence that "Article 5.7 of the SPS Agreement sets out 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". It also noted the Appellate Body's admonition that the four requirements are "cumulative in nature" and that "whenever one of these four requirements is not met, the measure at issue is inconsistent with Article 5.7" (original emphasis).

After reviewing the evidence, the Panel ruled that Russia did not satisfy any of the four tests set out under Article 5.7. It found that "there was sufficient scientific evidence for Russia to conduct a risk assessment of the ASF situation in the non-affected EU member States, as appropriate to the circumstances". Moreover, "Russia did not provisionally adopt the measure on the basis of available pertinent information, did not seek to obtain the additional information necessary for a more objective assessment of risk, and did not review the EU-wide ban within a reasonable period of time". Therefore, the EU-wide ban did "not fall within the scope of Article 5.7" and the "qualified exemption" was "not available to Russia".

The EU-wide ban thus violated Russia's obligations under SPS Articles 5.1, 5.2, and 2.2.

"Relevant economic factors" not taken into account

SPS Article 5.3 provides 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 must "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; and the relative cost-effectiveness of alternative approaches to limiting risks".

This was the first WTO Panel to consider a claim under SPS Article 5.3. The Panel stated that "[i]n the context of Article 5.3, we consider that a Member has the obligation to give consideration to the relevant economic factors listed therein when either assessing the risk to animal or plant life or health or determining the measure to be applied for achieving the appropriate level of sanitary or phytosanitary protection, and not to other economic factors". It added that "[t]his obligation does not imply, however, that consideration of the relevant economic factors will require a particular course of action from the Member imposing an SPS measure".

In the context of the EU claims in the present case, the Panel found that "the EU-wide ban is inconsistent with Article 5.3 of the SPS Agreement, because by not basing that measure on a risk assessment in circumstances in which Article 5.7 is not applicable, Russia could have not taken into account the relevant economic factors listed in Article 5.3…."

EU-wide ban "more trade-restrictive than required"

SPS Article 5.6 provides that when establishing or maintaining SPS measures, Members shall ensure that such measures "are not more trade-restrictive than required" to achieve their appropriate level of SPS protection, taking into account technical and economic feasibility. A footnote to this provision adds that "a measure is not more trade-restrictive than required unless there is another measure, reasonably available taking into account technical and economic feasibility, that achieves the appropriate level of sanitary or phytosanitary protection and is significantly less restrictive to trade".

The Panel found that measures based on the OIE Terrestrial Code were "a reasonably available alternative to the EU-wide ban". It considered that this alternative was "technically and economically feasible", would achieve Russia's required level of protection, and was "significantly less restrictive to trade than the EU-wide ban". Therefore, the Panel ruled that the EU-wide ban breached SPS Article 5.6 and 2.2.

"Arbitrary or unjustifiable discrimination" against imported products

SPS Article 2.3 provides that Members must ensure that their SPS measures do not "arbitrarily or unjustifiably discriminate between Members where identical or similar conditions prevail, including between their own territory and that of other Members" and cannot be "applied in a manner which would constitute a disguised restriction on international trade".

The EU argued that Russia was in breach of this provision because "Russia bans imports of the products at issue from the entire territory of the European Union, while it allows for trade in the products at issue from non-affected areas within Russia…." The Panel agreed.

The Panel considered that there was "a clear distinction in the treatment of the products under the same conditions, i.e. imports of products from areas not affected by ASF". It noted that it was an "undisputed fact" that ASF has been present in Russia since 2007. It observed that the "imported products coming from non- ASF affected areas within the European Union are not allowed to enter into Russia's market, while intra-Russian trade is possible for those products coming from non-ASF affected areas". The Panel concluded that "the EU-wide ban discriminates against products originating in the non-ASF affected areas of the European Union compared to the treatment granted to trade in domestic products", in breach of Article 2.3.

National bans also breach SPS Agreement

The EU won most of its claims against the national bans on imports from Estonia, Latvia, Lithuania and Poland. It also established certain procedural violations.

The Report of the WTO Panel in Russian Federation – Measures on the Importation of Live Pigs, Pork and Other Pig Products from the European Union (DS475) was released on August 19, 2016.