WTO's Highest Court Rules in EU-Russia Pork Dispute

2 March 2017

The WTO’s Appellate Body ruled last week that Russia’s import bans on live pigs, pork, and other pig products from the European Union were imposed in violation of global trade rules. This finding upholds the bulk of an earlier panel’s conclusions published last August.

The trade row (DS475) was triggered by Russia’s alleged rejection of certain pig and pork product imports from the entire bloc following the detection of African swine fever (ASF) in four individual member states – Lithuania, Estonia, Latvia, and Poland. ASF is a highly contagious, lethal haemorrhagic disease affecting pigs.

The EU claimed that it had acted quickly, as had its member states, to contain the spread of disease and address it where present. Russia, however, refused to recognise those actions, keeping the import ban in force even for products from non-affected areas, according to the bloc. In contrast, the EU said, Russia allowed live pigs and pork products to be imported from Ukraine and Belarus, despite some ASF cases in both countries.

The 28-nation bloc subsequently requested consultations with Russia in April 2014, challenging both the EU-wide ban and the individual member state bans, with a dispute panel established later that year to hear the case. (See Bridges Weekly, 10 April 2014)

In its report published last August, the panel found that aside from banning imports from these four EU member states, Russia had indeed imposed a bloc-wide ban. The panel also deemed that most aspects of these bans went against the regionalisation requirement of the WTO’s Sanitary and Phytosanitary Measures (SPS) Agreement. The panel also said that Russia’s measures had resulted in arbitrary and unjustifiable discrimination in violation of SPS rules.

Moscow and Brussels both filed appeals last November on certain legal aspects of the panel report. The Appellate Body circulated its report last Thursday with the majority of the panel’s ultimate findings upheld.

EU-wide ban, Russia’s accession terms

During earlier proceedings, the original dispute panel reviewed letters and instructions from Russian authorities submitted by the EU, ultimately determining that Moscow’s move to block EU exports was tantamount to a bloc-wide ban, attributable to Russia.

The Appellate Body agreed with the panel and clarified that the measure challenged is Russia’s refusal to accept EU imports, not the condition of the EU overall being free of African swine fever for three years as set forth by bilaterally agreed veterinary certificates between the EU and Russia. Russia had said it was rejecting imports because the latter condition was not met and Russia cannot recognise the EU-issued certificates.

Furthermore, the Appellate Body said that this condition is part of Russia’s broader import regulatory framework, and the import ban was given effect by Russia’s enforcement of such conditions.

Russia also referred to the part of its accession commitment relating to the bilateral veterinary certificate, seeking justification for the import ban. The Appellate Body disagreed with Russia’s reading of its accession documents.

WTO members must adjust SPS measures as needed to account for regional developments, with the Appellate Body deeming that Russia’s accession terms still meant that the country needed to “act in good faith” to update the relevant certificates to ensure the WTO-consistency of its measures.

“Regionalisation” requirements

Article 6 of the SPS Agreement requires WTO members to ensure that any SPS measures are adapted to regional characteristics, in what is known as a “regionalisation” requirement, along with outlining what both importing and exporting countries must do in this area. Russia and the EU appealed various findings of the panel under this provision.

The Appellate Body upheld the panel’s finding that, excepting Latvia, the EU had provided the necessary evidence for an “objective demonstration” to Russia that there were areas within the EU and affected member states that were and would continue to be ASF-free.

The Appellate Body also said, among other findings, that Russia failed to adjust its import ban on Latvia in light of regional SPS characteristics in Russia – thus violating this “regionalisation” rule.  

That same article also outlines requirements on recognising concepts of low or zero disease/pest areas. The Appellate Body disagreed with the earlier panel’s finding that importing members only need to abstractly recognise this regionalisation concept, instead agreeing with the EU that this requires them to “render operational the concepts.”

The Appellate Body was, however, not able to complete its analysis regarding whether Russia had complied with the recognition obligation.

Trade ties, sanction context

The Putin administration had also banned the imports of most products under review in this case in August 2014 in response to EU sanctions imposed in the wake of the Ukrainian crisis.

Bilateral EU-Russia trade dropped by approximately 36 percent during the years 2013-15. According to EU statistics, the 28-nation bloc made up about 40 percent of Russia’s total exports in 2015, Russia-bound goods made up a far smaller share of the EU’s overall exports.

Within the WTO, the two parties have been involved in eight disputes in the five years since Russia joined the global trade body. Responding to the Appellate Body ruling, the European Commission in a press release stressed that “Russia should withdraw its unjustified measures and allow EU companies to resume normal business with their Russian partners.”

The release referred to the ban as “politically motivated,” noting that the bulk of the goods involved are still subject to trade prohibitions and affirming that the EU will “continue to use WTO procedures to ensure that international trade rules are effectively respected.”

Next steps

Under WTO dispute settlement practices, if immediate compliance cannot be achieved, the parties can seek a mutual agreement on the reasonable period of time for bringing the relevant measures in line with global trade rules. Should these joint efforts fail, parties can then resort to arbitration.

ICTSD reporting.

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