WTO Panel Grants Victory to Argentina in Beef Dispute With US

30 July 2015

A WTO panel (DS447) found last Friday that a US import ban on animals and beef from Argentina violates global trade rules, citing inconsistencies with the relevant rules on measures to protect food safety and animal and plant health. 

The ban, which was imposed in response to an outbreak of foot-and-mouth disease (FMD) in northern Argentina in 2001, violates various provisions under the WTO's Agreement on the Application of Sanitary and Phytosanitary Measures (SPS Agreement), the panel ruled.

FMD is a highly contagious disease that primarily affects cloven-hoofed livestock and wildlife and is often fatal to non-vaccinated young animals. It can also lead to decreased milk yield, permanent hoof damage, and chronic mastitis. Vaccinating animals is considered one way to fight the disease.

Disease status

The WTO uses the World Organization for Animal Health (OIE) as the reference organisation for standards relating to animal health and zoonoses, including the latter’s Terrestrial Animal Health Code (OIE Code).

Chapter 8.5 of this code is specifically devoted to foot-and-mouth disease. It aims to provide for safe trade in FMD-susceptible animals and products from them by recommending particular mitigating measures for both exporting and importing members, which are to be adopted depending on the exporting country or zone’s FMD-status.

The OIE recognised the entire Argentine territory as free of foot-and-mouth disease where vaccination is not practised in 2000. This country-wide determination was then suspended in May 2001 following new FMD outbreaks.

Between 2003 and 2007, northern Argentina obtained OIE recognition as FMD-free where vaccination is practised, though the status was suspended three times following disease outbreaks in certain areas. This status was renewed annually after it was reinstated in 2007. In 2011 the OIE recognised the protection zone established along the Argentine border with Bolivia, Paraguay, and Brazil as FMD-free where vaccination is practised.

In 2002, the OIE recognised the part of Patagonia south of the 42nd parallel as FMD-free where vaccination is not practised, extending the same recognition to the northern part of Patagonia between the 42nd parallel and Rio Negro in 2007.

Import ban

The US has been FMD-free for over 80 years and does not vaccinate cattle or other FMD-susceptible species. The OIE has formally acknowledged the disease’s absence in the US. Following various disease outbreaks in Argentina, Washington moved to prohibit imports of beef from the South American country, though such imports were allowed from neighbouring Uruguay, despite not being declared by the US Animal and Plant Health Inspection Service (APHIS) to be free of the disease.

After filing a request for consultations in 2012, Argentina then asked for a WTO panel to review the US’ beef import ban, citing questions over its scientific justification and consistency with international standards, along with allegedly undue delays in US approval of imported fresh beef and recognising the Patagonia region as being disease-free.

Harmonisation, international standards, review process

The SPS Agreement encourages governments to “harmonise” or base national SPS measures on international standards, guidelines, and recommendations developed in other international organisations, such as the OIE.

The panel found that the relevant provisions of the OIE Code provides that imports from countries or zones that vaccinate cattle can be safely traded and should be permitted subject to the relevant mitigating protocols.

Under certain conditions, beef trade would still be allowed for a country or zone that does have the disease if it vaccinates in line with the relevant protocols outlined by the OIE. Given that northern Argentina does vaccinate, the panel concluded that the US import ban was not based on relevant international standards, such as the OIE Code.

The US regulation at issue prohibited imports of the relevant products from all of Argentina, thus preventing imports from specific zones, namely Patagonia. The panel said that measures that do not recognise variations in disease status between zones within the same country go against the OIE Code, and therefore WTO rules.

Separately, the panel also found that the US did not undertake and complete the procedure to review Argentina’s request for imports of beef from northern Argentina as well as the request for declaring Patagonia as FMD-free without undue delay, as required by the SPS Agreement. Following this finding, the panel said that Washington failed to fulfil its obligations to provide Argentina requested updates or explanations for the delay.

Risk assessment

WTO rules require members to ensure that their SPS measures are based on an assessment of the risks to human, animal, or plant life or health, taking into account risk assessment techniques developed by the relevant international organisations.

The panel noted that the US’ 2001 beef import ban referred to the standard scientific understanding of foot-and-mouth disease of that time, information on the situation in Argentina, and a review of the economic impact of potential measures – and therefore contained a risk assessment under the SPS Agreement.

Since the US has a higher appropriate level of protection than that outlined by the OIE, the panel found that the adaptation of the 2001 import ban was rationally related to the science and that the measures were based on the risk assessment, as required by the WTO.

Nonetheless, the panel noted that the US received significant new scientific information about Argentina’s SPS situation in 2002 and thereafter, meaning that the 2001 risk assessment was no longer sufficient grounds for keeping the ban.

Given its earlier finding on the US’ “undue delays” in completing new risk assessments, the panel said that maintaining the import ban violates this particular trade rule.

Trade restrictiveness

The panel found that the US’ appropriate level of protection is “to prevent the introduction or dissemination of foot-and-mouth disease within the United States,” which can be described as being higher than that achieved by the Terrestrial Code.

However, the panel accepted Argentina’s argument that using “mitigating protocols” outlined under US regulations, which apply to imports from Uruguay, would achieve the US’ appropriate level of protection if applied to Northern Argentina.

The panel also said that adding Patagonia to the list of FMD-free countries or regions under US regulations, coupled with the use of mitigation protocols on the relevant imports, would achieve Washington’s appropriate level of protection from the disease.

The panel said that scientific evidence shows that northern Argentina and Patagonia have the veterinary capacity and infrastructure to prevent and control the disease and prevent its spread from neighbouring regions or those of higher FMD-risk; therefore, Argentina should be able to adopt and properly implement the mitigation protocols in question.

Ultimately the panel said that the US’ import bans for northern Argentine and Patagonian beef are more restrictive than required to achieve this protection, violating trade rules.

Discrimination

The panel sided with Argentina in finding that the US’ decision to import Uruguayan beef while blocking that from northern Argentina constituted arbitrary or unjustifiable discrimination between members where the same conditions prevail, and is applied in a way that serves as a disguised restriction on trade – thus violating trade rules.

Regarding imports from Patagonia, the panel also found the US ban to be at fault, noting that imports of animals from this region are similarly able to achieve Washington’s appropriate level of protection as those from Santa Catarina and Chile, subject to the use of mitigation requirements.

The panel also said that the US failed to justify a regulatory distinction between Patagonia, Santa Catarina, and Chile. While imports are banned from the former, imports are accepted from the latter two, subject to these mitigation requirements.

Regionalisation

The panel said that at the time of the panel’s establishment, Argentina had provided the necessary evidence to “objectively demonstrate” that Patagonia as a whole was disease-free and likely to remain so.

Therefore, the panel found that the US’ decision not to recognise Patagonia as disease-free is a failure to adapt its general import prohibition of FMD-susceptible animals and products from Argentina to the specific SPS characteristics of the Patagonia region, thus violating the SPS Agreement’s regionalisation obligations.

Next steps

In August 2014, after the panel was established, APHIS announced that it was adding the Patagonia region of Argentina to the lists of regions that are considered free of FMD and rinderpest, thus allowing exports of products to the US. Last month, APHIS announced it was lifting the import ban on beef from northern Argentina, effective 28 September 2015.

Both sides have 60 days from when the report was circulated to appeal the panel's findings. Under WTO rules, the Appellate Body can review aspects of law, such as legal interpretation, but generally will not interfere with the panel’s factual findings.

ICTSD reporting.

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