EC — Hormones (United States) (DS26)

WTO case memo
European Communities – Measures Concerning Meat and Meat Products (United States) (DS26)

General case information
Panel report
Appellate Body report
Complainant
United States
Respondent
European Communities
Third parties
Australia, New Zealand, Norway, Canada
Request for consultations
26 January 1996
Panel request
25 April 1996
Panel established
20 May 1996
Panel report
18 August 1997
Appellate Body report
16 January 1998
Measures at issue
Prohibition on imports of meat and meat products obtained from bovine animals (cattle) which were administered the following six hormones for growth promotion purposes* (8.16):

Natural hormones:
1. Oestradiol-17β
2. Testosterone
3. Progesterone

Synthetic hormones:
4. Zeranol
5. Trenbolone (trenbolone acetate, TBA)
6. MGA (melengestrol acetate).

Two exceptions to the general ban (8.1):
— the administration for therapeutic treatment of oestradiol-17β, testosterone, progesterone and some of their derivatives; and
— the administration for zootechnical treatment of substances having an oestrogenic, androgenic or gestagenic action which are authorized in accordance with EC Directives on veterinary medicinal products.


* The ban applied (and still applies) to both live animals and meat, and to bovine as well as other animals, but the panel found that only a ban on meat of bovine animals (cattle) falls within the scope of the dispute as the United States did not raise arguments or submit evidence against the ban as it relates to meat of other farm animals. (8.17) A ban on live animals (as opposed to their meat), on the other hand, did not fall within the panel's terms of reference as in its panel request, the US only claimed that the contested EC measures "adversely affect[ed] imports of meat and meat products". (8.18)
United States' legal claims
The United States claimed inconsistency with, generally, Articles 2, 3 and 5 of the SPS Agreement.

The panel considered and ruled on the following claims:

Article 3.1 SPS Agreement
The measures at issue are not based on the international standards adopted by the Codex Alimentarius Commission.

Article 3.3 SPS Agreement
There is no scientific justification for the EC's measures under Article 3.3 as the measures, contrary to the requirements of Article 3.3, are inconsistent with Articles 5.1 and 5.5.

Article 5.1 SPS Agreement
The measures at issue are not based on a risk assessment.

Article 5.5 SPS Agreement
The measures at issue result in a disguised restriction on international trade.
SPS Agreement
Article 3. Harmonization
1. To harmonize sanitary and phytosanitary measures on as wide a basis as possible, Members shall base their sanitary or phytosanitary measures on international standards, guidelines or recommendations, where they exist, except as otherwise provided for in this Agreement, and in particular in paragraph 3.
[…]
SPS Agreement
Article 3. Harmonization
[...]
3. Members may introduce or maintain sanitary or phytosanitary measures which result in a higher level of sanitary or phytosanitary protection than would be achieved by measures based on the relevant international standards, guidelines or recommendations, if there is a scientific justification, or as a consequence of the level of sanitary or phytosanitary protection a Member determines to be appropriate in accordance with the relevant provisions of paragraphs 1 through 8 of Article 5.2 Notwithstanding the above, all measures which result in a level of sanitary or phytosanitary protection different from that which would be achieved by measures based on international standards, guidelines or recommendations shall not be inconsistent with any other provision of this Agreement.
[...]

2 For the purposes of paragraph 3 of Article 3, there is a scientific justification if, on the basis of an examination and evaluation of available scientific information in conformity with the relevant provisions of this Agreement, a Member determines that the relevant international standards, guidelines or recommendations are not sufficient to achieve its appropriate level of sanitary or phytosanitary protection.
SPS Agreement
Article 5. Assessment of Risk and Determination of the Appropriate Level of Sanitary or Phytosanitary Protection
1. Members shall ensure that their sanitary or phytosanitary measures are based on an assessment, as appropriate to the circumstances, of the risks to human, animal or plant life or health, taking into account risk assessment techniques developed by the relevant international organizations.
[...]
SPS Agreement
Article 5. Assessment of Risk and Determination of the Appropriate Level of Sanitary or Phytosanitary Protection
[...]
5. With the objective of achieving consistency in the application of the concept of appropriate level of sanitary or phytosanitary protection against risks to human life or health, or to animal and plant life or health, each Member shall avoid arbitrary or unjustifiable distinctions in the levels it considers to be appropriate in different situations, if such distinctions result in discrimination or a disguised restriction on international trade. [...]
[...]
Panel's main substantive findings
I. The EC measures are not 'based on' international standards (adopted by the Codex Alimentarius Commission) and are therefore inconsistent with Article 3.1 SPS Agreement

Codex Alimentarius standards exist for five of the six hormones at issue (i.e., for all hormones at issue other than MGA). (8.58)

For this reason, the panel decided to deal with the EC ban on MGA in a separate section (fn 411 to paragraph 8.207) (see section V below).

With respect to the three natural hormones in dispute, oestradiol-17β, progesterone and testosterone (classified by Codex as "veterinary drugs"), JECFA (Joint FAO/WTO Expert Committee on Food Additives) considered it "unnecessary" to establish an ADI or MRL. For all three hormones the following footnote explained the word "unnecessary": "Establishing an ADI and an [MRL] for a hormone that is produced endogenously at variable levels in human beings was considered unnecessary by [JECFA]. Residues resulting from the use of this substance as a growth promoter in accordance with good animal husbandry practice are unlikely to pose a hazard to human health". (8.62)
JECFA noted that the total residue levels in treated animals fall well within the normal range of levels found in untreated animals of different types and ages. (8.62)

With respect to two of the three synthetic hormones at issue, zeranol (weak oestrogen which mimics the action of oestradiol-17β) and trenbolone (androgen which mimics the action of testosterone) (both classified by Codex as "veterinary drugs"), the following Codex standards apply: an ADI of 0-0.5 and 0-0.02 μg/kg body weight, respectively, and an MRL of 2 μg/kg β-trenbolone in bovine muscle and 10 μg/kg α-trenbolone in bovine liver. (8.63-8.65)

The panel therefore found that international standards existed with respect to the EC measures in dispute, to the extent they relate to five of the six hormones at issue (all but MGA), in the sense of Article 3.1 and paragraph 3(a) of Annex A. (8.70)

To the panel, for a sanitary measure to be based on an international standard in accordance with Article 3.1, that measure needs to reflect the same level of sanitary protection as the standard. (8.73)

Since the EC measures in dispute do not allow the presence of any residues of zeranol and trenbolone in any meat or meat product or any of these residues to be ingested by humans (imposing what it calls a "no residue" level), the level of protection reflected in the EC measures is significantly different from the level of protection set by the Codex standards (a "no residue" level as opposed to an ADI of maximum 0.5 and 0.02 μg/kg of body weight and an MRL of 2 and 10 μg/kg for, respectively, bovine muscle and bovine liver). The EC measures in dispute, in as far as they relate to zeranol and trenbolone, are, therefore, not based on existing international standards as specified in Article 3.1. (8.75)

Codex considered it "unnecessary" to set an ADI or MRL for residues of oestradiol-17β, testosterone and progesterone (the three natural hormones), i.e. set an "unlimited residue level". The EC measures in dispute, on the other hand, do not allow the presence of any residues of these three hormones administered for growth promotion purposes (again imposing what the European Communities calls a "no residue" level). The level of protection reflected in the EC measures is, therefore, significantly different from the level of protection reflected in the Codex standards (a "no residue" level as opposed to an unlimited residue level). The EC measures in dispute, in so far as they relate to oestradiol-17β, testosterone and progesterone, are, therefore, not based on existing international standards as specified in Article 3.1. (8.76)

More about the parties' arguments and the panel's reasoning on this issue
μg
μg = microgram = 1/1,000,000 g
1 μg/kg = 1 microgram of veterinary drug residue per 1 kg of meat (or other animal product, e.g. milk)
Whether the EC's measures are based on an international standard as required by Article 3.1 SPS Agreement?

The panel noted that Paragraph 3(a) of Annex A of the SPS Agreement defines "international standards, guidelines or recommendations" as "the standards, guidelines and recommendations established by the Codex Alimentarius Commission relating to food additives, veterinary drug and pesticide residues, contaminants, methods of analysis and sampling, and codes and guidelines of hygienic practice" (emphasis added). (8.56)

The panel then found that Codex Alimentarius standards exist for five of the six hormones at issue (i.e., for all hormones at issue other than MGA). (8.58)

The Codex Alimentarius Commission ("Codex"), an international body of which most WTO Members (including the United States and the EC Member States) are members, establishes, inter alia, Acceptable Daily Intakes ("ADIs"), Maximum Residue Limits ("MRLs") and other recommendations for veterinary drugs. It does so on the basis of the advice of the Codex Committee on Residues of Veterinary Drugs in Foods and the recommendations of the Joint FAO/WHO Expert Committee on Food Additives ("JECFA"). While Codex is composed of government representatives of EC member States, JECFA is composed of independent scientists. JECFA makes scientific evaluations and recommendations; Codex takes the decision whether or not to adopt these recommendations. However, once adopted Codex recommendations are, according to the General Principles of Codex, not binding upon Codex members. They are only of an advisory nature. (8.59)

An ADI set by Codex is "an estimate by JECFA of the amount of a veterinary drug, expressed on a body weight basis, that can be ingested daily over a lifetime without appreciable health risk (standard man = 60 kg)" (emphasis added). This ADI is derived from the experimental no observable effect level in the most appropriate animal species, by applying an appropriate safety factor. (8.61)

A Codex MRL, on the other hand, if implemented in national law, determines the amount of residues which is legally permitted or recognized as acceptable in food and is primarily a regulatory tool to ensure that intake does not exceed the ADI and that good practice is observed. A Codex MRL is frequently set at levels below (even far below) the theoretical safe levels determined from an ADI. Codex MRLs for veterinary drugs are normally expressed in μg*/kg on a fresh weight basis in meat. (8.61)

*μg = microgram = 1/1,000,000 g

With respect to the three natural hormones in dispute, oestradiol-17-β, progesterone and testosterone (classified by Codex as "veterinary drugs"), similar Codex standards apply. For all three hormones, when used for growth promotion purposes, it was considered "unnecessary" to establish an ADI or MRL. For all three hormones the following footnote explained the word "unnecessary": "Establishing an ADI and an [MRL] for a hormone that is produced endogenously at variable levels in human beings was considered unnecessary by the Committee. Residues resulting from the use of this substance as a growth promoter in accordance with good animal husbandry practice are unlikely to pose a hazard to human health". (8.62)
JECFA noted that the total residue levels in treated animals fall well within the normal range of levels found in untreated animals of different types and ages. (8.62)

With respect to two of the three synthetic hormones at issue, zeranol (weak oestrogen which mimics the action of oestradiol-17β) and trenbolone (androgen which mimics the action of testosterone) (both classified by Codex as "veterinary drugs"), the following Codex standards apply: an ADI of 0-0.5 and 0-0.02 μg/kg body weight, respectively, and an MRL of 2 μg/kg β-trenbolone in bovine muscle and 10 μg/kg α-trenbolone in bovine liver. (8.63-8.65)

The European Communities argued that (8.66-8.68):

  1. The Codex standards outlined above are not relevant to this dispute because the EC measures in dispute do not set maximum residue levels. Moreover, the Codex standards invoked are levels of protection, not measures, and since there is no obligation in the SPS Agreement to adopt Codex recommended level of protection, the standards invoked are irrelevant for the EC measures in dispute.
  2. The decision by Codex (of July 1995) to formally adopt the five Codex standards at issue was taken by a majority of only 33 votes in favour, 29 votes against and 7 abstentions; a very close vote which is unusual in Codex practice where proposals are normally adopted by consensus, indicating that the issue of hormone growth promoters has been and continues to be very controversial.
  3. The process which led to the adoption of the Codex standards started long before the entry into force of the SPS Agreement and was only completed six months after that date. At the time the standards were discussed, Codex members were, therefore unaware of the fact that the Codex standards, which within the Codex system are only of an advisory nature, would in the future become "binding" by virtue of the SPS Agreement.

The panel responded that as a panel making a finding on whether or not a Member has an obligation to base its sanitary measure on international standards in accordance with Article 3.1, it only needed to determine whether such international standards existed. For these purposes, it needed not consider (i) whether the standards reflected levels of protection or sanitary measures or the type of sanitary measure they recommended, or (ii) whether these standards had been adopted by consensus or by a wide or narrow majority, or (iii) whether the period during which they had been discussed or the date of their adoption was before or after the entry into force of the SPS Agreement. (8.69)

The panel therefore found that international standards existed with respect to the EC measures in dispute, to the extent they related to five of the six hormones at issue (all but MGA), in the sense of Article 3.1 and paragraph 3(a) of Annex A. (8.70)

The panel then decided that for a sanitary measure to be based on an international standard in accordance with Article 3.1, that measure needs to reflect the same level of sanitary protection as the standard. In this dispute a comparison thus needed to be made between the level of protection reflected in the EC measures in dispute and that reflected in the Codex standards for each of the five hormones at issue. (8.73)

An ADI or MRL can reflect a level of protection (without stricto sensu itself being a level of protection). At the same time, an ADI or MRL can also be a sanitary measure in the sense of the SPS Agreement. (8.74)

Conclusion as to two synthetic hormones (zeranol and trenbolone)
Since the EC measures in dispute do not allow the presence of any residues of these two hormones in any meat or meat product or any of these residues to be ingested by humans (imposing what it calls a "no residue" level), the level of protection reflected in the EC measures is significantly different from the level of protection set by the Codex standards (a "no residue" level as opposed to an ADI of maximum 0.5 and 0.02 μg/kg of body weight and an MRL of 2 and 10 μg/kg for, respectively, bovine muscle and bovine liver). The EC measures in dispute, in as far as they relate to zeranol and trenbolone, were, therefore, not based on then-existing international standards as specified in Article 3.1. (8.75)

Conclusion as to three natural hormones (oestradiol-17β, progesterone and testosterone)
When establishing the other three Codex standards applicable to the EC measures in dispute, Codex considered it "unnecessary" to set an ADI or MRL for residues of oestradiol-17-β, testosterone and progesterone (the three natural hormones). The amount of residues of these hormones administered for growth promotion purposes allowed by these Codex standards is, therefore, in any event higher than zero (a maximum level of such residues has not even been prescribed; this level is hereafter referred to as an "unlimited residue level"). The EC measures in dispute, on the other hand, do not allow the presence of any residues of these three hormones administered for growth promotion purposes (again imposing what the European Communities calls a "no residue" level). The level of protection reflected in the EC measures is, therefore, significantly different from the level of protection reflected in the Codex standards (a "no residue" level as opposed to an unlimited residue level). The EC measures in dispute, in so far as they relate to oestradiol-17-β, testosterone and progesterone, were, therefore, not based on then-existing international standards as specified in Article 3.1. (8.76)
II. The EC measures at issue are not justified under Article 3.3 SPS Agreement because, contrary to its requirements, they are inconsistent with Article 5.1 (they are not based on a risk assessment) and Article 5.5 (they are discriminatory)

To the panel, for a sanitary measure to be justified under Article 3.3, it needs, first of all, to "result in a higher level of sanitary protection than would be achieved by measures based on the relevant international standards, guidelines or recommendations". (8.80)

The panel assumed that the level achived by the EC measures is higher than the level achieved by following the Codex standards, in line with the first sentence of Article 3.3. (8.80)

The panel inferred from the text of Article 3.3 that a sanitary measure can only be justified under Article 3.3 if it is consistent with the requirements contained, inter alia, in Article 5. (8.83)

The panel deemed that it is for the defending party to justify its measures under Article 3.3. Since in this dispute the panel had already found that there exist international standards and that the EC measures at issue were not based on these standards, the panel found that it was for the EC to justify the measures in dispute under Article 3.3, and in particular under the first sentence thereof. (8.88)

Since the panel later concluded that the EC measures (in so far as they ban the import of meat and meat products from animals treated with any of the five hormones at issue (all but MGA) for growth promotion purposes in accordance with good practice) are inconsistent with Article 5.1 as they are not based on a risk assessment, and with Article 5.5 as they are discriminatory (see the sections on Articles 5.1 and 5.5), it also conlcuded that these measures cannot be justified under Article 3.3 which includes as one of the requirements for justification consistency with Article 5.1. (8.159, 8.245)

The EC measures, in so far as they relate to five of the six hormones at issue for which international standards exist, are, therefore, also inconsistent with the requirements of Article 3.3. (8.159, 8.245)

More about the parties' arguments and the panel's reasoning on this issue
SPS Agreement
Article 5. Assessment of Risk and Determination of the Appropriate Level of Sanitary or Phytosanitary Protection
[...]
7. In cases where relevant scientific evidence is insufficient, a Member may provisionally adopt sanitary or phytosanitary measures on the basis of available pertinent information, including that from the relevant international organizations as well as from sanitary or phytosanitary measures applied by other Members. In such circumstances, Members shall seek to obtain the additional information necessary for a more objective assessment of risk and review the sanitary or phytosanitary measure accordingly within a reasonable period of time.
[...]
SPS Agreement
Article 5. Assessment of Risk and Determination of the Appropriate Level of Sanitary or Phytosanitary Protection
1. Members shall ensure that their sanitary or phytosanitary measures are based on an assessment, as appropriate to the circumstances, of the risks to human, animal or plant life or health, taking into account risk assessment techniques developed by the relevant international organizations.
[...]
SPS Agreement
Article 5. Assessment of Risk and Determination of the Appropriate Level of Sanitary or Phytosanitary Protection
[...]
5. With the objective of achieving consistency in the application of the concept of appropriate level of sanitary or phytosanitary protection against risks to human life or health, or to animal and plant life or health, each Member shall avoid arbitrary or unjustifiable distinctions in the levels it considers to be appropriate in different situations, if such distinctions result in discrimination or a disguised restriction on international trade. [...]
[...]
Whether EC measures are nevertheless consistent with SPS Agreement by virtue of Article 3.3

The panel observed that for a sanitary measure to be justified under Article 3.3 the measure needs, first of all, to "result in a higher level of sanitary protection than would be achieved by measures based on the relevant international standards, guidelines or recommendations". (8.80)

Recalling the comparison made between the level of protection reflected in the EC measures and that implied in the Codex standards for each of the hormones at issue (see the panel's reasoning under Article 3.1), in particular that the level reflected in the EC measures is different from that implied in the Codex standards, the panel assumed that the level achived by the EC measures is higher than the level achieved by following the Codex standards, in line with the first sentence of Article 3.3. (8.80)

The panel then noted that, under Article 3.3, the sanitary measure also needs to fulfil one of the following two conditions (8.80):
  • there is a "scientific justification" for imposing the measure, i.e., the Member imposing the measure has determined "on the basis of an examination and evaluation of available scientific information in conformity with the relevant provisions of [the SPS] Agreement, ... that the relevant international standards, guidelines or recommendations are not sufficient to achieve its appropriate level of sanitary ... protection" ("the first exception"); or
  • the measure is "a consequence of the level of sanitary ... protection a Member determines to be appropriate in accordance with the relevant provisions of paragraphs 1 through 8 of Article 5" ("the second exception").
According to the second sentence of Article 3.3, even if one of these conditions is fulfilled, the party imposing the measure must still comply with [all] the other provisions of the SPS Agreement. (8.80)

The panel therefore concluded that, whatever the difference might be between the two exceptions, a sanitary measure can only be justified under Article 3.3 if it is consistent with the requirements contained, inter alia, in Article 5. If the panel were to find that the EC measures in dispute are inconsistent with the requirements imposed by Article 5, these measures cannot be justified under Article 3.3. (8.83)

As regards the burden of proof, the panel deemed that it is for the defending party to justify its measures under Article 3.3. Since in this dispute the panel had already found that there exist international standards and that the EC measures at issue were not based on these standards, the panel found that it was for the EC to justify the measures in dispute under Article 3.3, and in particular under the first sentence thereof. (8.88)

Since the panel later concluded that the EC measures (in so far as they ban the import of meat and meat products from animals treated with any of the five hormones at issue (all but MGA) for growth promotion purposes in accordance with good practice) are inconsistent with Article 5.1 as they are not based on a risk assessment, and with Article 5.5 as they are discriminatory (see the sections on Articles 5.1 and 5.5), it also conlcuded that these measures cannot be justified under Article 3.3 which includes as one of the requirements for justification consistency with Articles 5.1 and 5.5. (8.159, 8.245)

The EC measures, in so far as they relate to five of the six hormones at issue for which international standards exist, are, therefore, also inconsistent with the requirements of Article 3.1. (8.159, 8.245)
III. The EC measures at issue are not 'based on' a risk assessment contrary to the requirement of Article 5.1 SPS Agreement

The panel explained that an assessment of risks is, at least for risks to human life or health, a scientific examination of data and factual studies, while the risk management phase involves non-scientific considerations, such as social value judgments. (8.94, 8.97)

The panel recalled that paragraph 4 of Annex A of the SPS Agreement defines "risk assessment" with respect to contaminants (including residues of the hormones at issue) as "the evaluation of the potential for adverse effects on human or animal health arising from the presence of ... contaminants ... in food, beverages or feedstuffs". (8.98)

The EC presented several scientific materials on which, it claimed, its measured were based. The panel assumed that the European Communities had met its burden of demonstrating the existence of a risk assessment carried out in accordance with Article 5." (emphasis added) (8.111)

The panel then went on to determine whether the EC measures at issue were based on that risk assessment. To the panel, this determination had both a procedural and a substantive aspect. (8.112)

The panel considered that, according to the ordinary meaning of the words based on put in their context and in light of the object and purpose of Article 5, there is a minimum procedural requirement contained in Article 5.1: the Member imposing a sanitary measure needs to submit evidence that at least it actually took into account a risk assessment when it enacted or maintained its sanitary measure in order for that measure to be considered as based on a risk assessment. (8.113)

The panel concluded that the EC had not provided any evidence that the studies it referred to or the scientific conclusions reached therein, have actually been taken into account by the competent EC institutions either when it enacted the measures at issue (in 1981 and 1988) or at any later point in time. None of the preambles to the EC measures at issue mention any of the scientific studies referred to by the European Communities. These preambles only refer to the non-scientific reports and opinions of the European Parliament and the EC Economic and Social Committee, which cannot be considered as part of a risk assessment (because they are not a scientific exercise). (8.114)

The panel thus found that the European Communities had not met its burden of proving that it had met the minimal procedural requirement contained in Article 5.1 and that, therefore, the EC measures in dispute were inconsistent with the requirements of Article 5.1. (8.116)

As for the substantive (as opposed to procedural) element of Article 5.1, the panel consisdered that, to determine whether the EC measures at issue were based on a risk assessment, it needed to (8.117):
  • identify the scientific conclusions reached in each of the studies referred to by the European Communities;
  • identify the scientific conclusion reflected in the EC measures in dispute;
  • determine whether the scientific conclusion reflected in the EC measures can be considered as being in conformity with any of those reached in the studies referred to by the European Communities.

After reviewing the materials presented by the EC and listed above, the panel concluded that none of the scientific evidence referred to by the European Communities which specifically addresses the safety of some or all of the hormones in dispute when used for growth promotion, indicated that an identifiable risk arises for human health from such use of these hormones if good practice is followed. (8.124)

At the same time, the panel noted that the 1987 IARC Monographs, in so far as they relate to human health, do contain evidence with respect to three general categories of hormones, namely oestrogens, androgens and progestins, without distinguishing the specific hormones falling within each of these categories or the natural hormones from the synthetic hormones. The Monographs classify oestrogens as agents which are carcinogenic (meaning that there is sufficient evidence of carcinogenicity in humans); androgens as agents which are probably carcinogenic; and progestins as agents which are possibly carcinogenic. (8.126)

However, the Monographs do not specifically evaluate, as is required on the basis of paragraph 4 of Annex A of the SPS Agreement, the potential for adverse effects arising from the presence in food (in casu meat or meat products) of residues of the hormones in dispute or from residue levels comparable to those present in food. (8.127)

Moreover, according to the scientific experts advising the panel, the data and studies contained in these Monographs with respect to the carcinogenic potential of the hormones in dispute had been fully taken into account in the 1988 and 1989 JECFA Reports which, at several occasions, explicitly refer to these Monographs. (8.128)

As regards articles and opinions of individual scientists referred to by the EC, the panel concluded that, similar to the IARC Monographs, those articles and opinions did not specifically evaluate, as is required on the basis of paragraph 4 of Annex A of the SPS Agreement, the potential for adverse effects arising from the presence in food (in casu meat or meat products) of residues of the hormones in dispute or from residue levels comparable to those present in food. (8.130)

Furthermore, the panel noted that, according to the Codex expert advising the panel, most of the evidence contained in those articles and opinions and the potential risks addressed therein had already been evaluated and taken into account in the 1988 and 1989 JECFA Reports. (8.132)

The panel conluded that the European Communities had not demonstrated that the scientific evidence it referred to, which generally addresses the safety of some or all of the hormones in dispute, would indicate that an identifiable risk arises for human health from the use of these hormones for growth promotion purposes if good practice is followed. All scientific experts advising the Panel confirmed this conclusion and stated that, as of the time of the panel proceedings, no scientific evidence was available which concluded that an identifiable risk arises from the use of any of the hormones at issue for growth promotion purposes in accordance with good practice. (8.134)

The panel observed that the scientific conclusion reflected in the EC measures in dispute, i.e., that the use of the hormones in dispute for growth promotion purposes, even in accordance with good practice, is not safe, does not conform to any of the scientific conclusions reached in the evidence referred to by the European Communities. For this reason, the EC import ban of meat and meat products from animals treated with any of the five hormones at issue for growth promotion purposes, allegedly necessary to protect human health, in so far as it also applies to meat and meat products from animals treated with any of these hormones in accordance with good practice, is, therefore, not based on the scientific evidence submitted to the Panel. (8.137)

The panel also rejected the EC's "additional arguments", i.e. the EC's invocation of 6 risks that its measures were allegedly based upon (8.138, 8.139):

  1. risks arising from the nature and mode of action of the hormones;
  2. risks arising from the action of metabolites;
  3. risks arising from the action of combinations (or cocktails) of hormones and from multiple exposure of humans;
  4. risks arising from problems related to detection and control of hormones;
  5. risks arising from the administration and use of hormones; and
  6. risks arising from various other parameters, in particular the inherent limits to science.
Specifically, with respect to risks 1 to 3, the scientific experts advising the panel stated that the available data relating to these risks had all been taken into account by the JECFA Reports and/or the Lamming Report and/or the 1995 EC Scientific Conference. (8.142)

With respect to risks 4 and 5, the European Communities had restricted itself to pointing out the condition contained in many of the scientific conclusions mentioned above, namely that the safety of the hormones is to a certain extent conditional upon their administration in accordance with good practice, without further providing an assessment of the potential adverse effects related to non-compliance with such practice. (8.143)

With respect to risk 6, the European Communities argued that none of the studies it referred to as part of a risk assessment proved beyond doubt or concluded in an unqualified manner that the presence of residues of the hormones in dispute in meat or meat products present no risk whatsoever. The European Communities referred, inter alia, to the conclusions of the 1988 JECFA Report which state that residues arising from the hormones at issue used as growth promoters are only unlikely to pose a hazard to human health and to the basic premise of JECFA recommendations which aim at establishing standards which correspond to a no appreciable or no significant risk increase due to the exposure to the substances in question and not to a zero risk increase. (8.149)

The panel noted that, since science can never provide a certainty, i.e. exclude once and for all that a specific substance can ever have adverse health effects, these risks can a priori not be assessed by scientists (as required in Article 5.1). In this sense, these potential risks, which are present for any substance (also for substances or uses of substances allowed in the European Communities), are only the consequence of science not being capable of assuring that no risks will ever arise from a substance. (8.152—8.153)

The panel additionally noted that the EC objective of "zero risk" cannot be achieved in practice; not even under the EC ban itself since the European Communities cannot guarantee that there is a zero probability that illegal use of the hormones at issue will occur. Moreover, this "zero risk" objective cannot, as further examined below369, in any case be achieved for the three natural hormones in dispute since the European Communities allows the ingestion of these same hormones occurring endogenously in meat and other foods as well as the use of these hormones for therapeutic or zootechnical purposes. (8.154)

For these reasons, the panel found that the EC import ban of meat and meat products from animals treated with any of the five hormones at issue for growth promotion purposes, in so far as it also applies to meat and meat products from animals treated with any of these hormones in accordance with good practice, is not based on an assessment of any of the six general categories of risks invoked by the European Communities. (8.156)

Finally, the panel rejected the EC's invocation of the precautionary principle. The panel stated: "To the extent that this principle could be considered as part of customary international law and be used to interpret Articles 5.1 and 5.2 on the assessment of risks as a customary rule of interpretation of public international law, we consider that this principle would not override the explicit wording of Articles 5.1 and 5.2 outlined above, in particular since the precautionary principle has been incorporated and given a specific meaning in Article 5.7 of the SPS Agreement. We note, however, that the European Communities has explicitly stated in this case that it is not invoking Article 5.7." (8.157)

More about the parties' arguments and the panel's reasoning on this issue
Whether the EC's measures are based on a risk assessment (Article 5.1 SPS Agreement)

The panel noted at the outset that according to Article 5.1, a Member needs to ensure that its sanitary measures are based on an assessment of risks. To the panel, the obligation to base a sanitary measure on a risk assessment may be viewed as a specific application of the basic obligations contained in Article 2.2 of the SPS Agreement which provides that "Members shall ensure that any sanitary ... measure is applied only to the extent necessary to protect human, animal or plant life or health, is based on scientific principles and is not maintained without sufficient scientific evidence ...". Articles 5.1 to 5.3 sum up factors a Member needs to take into account in making this assessment of risks. (8.93)

Having conducted risk assessment, said the panel, the Member wishing to impose a sanitary measure must take a risk management decision, i.e. it must decide the extent to which it can accept the potential adverse effects related to a specific substance which have been identified in the risk assessment. This decision is referred to in the SPS Agreement as the determination and application of the appropriate level of sanitary protection by that Member against the risks to human, animal or plant life or health which have been assessed in accordance with Articles 5.1 to 5.3. (8.95)

To the panel, Articles 5.4 to 5.6 may be viewed as specific applications of the basic obligations provided for in Article 2.2 which, inter alia, states that "Members shall ensure that any sanitary or phytosanitary measure is applied only to the extent necessary to protect human, animal or plant life or health" and Article 2.3 which provides that "Members shall ensure that their sanitary and phytosanitary measures do not arbitrarily or unjustifiably discriminate between Members where identical or similar conditions prevail..." and that "Sanitary and phytosanitary measures shall not be applied in a manner which would constitute a disguised restriction on international trade". (8.96)

The panel explained that an assessment of risks is, at least for risks to human life or health, a scientific examination of data and factual studies, while the risk management phase involves non-scientific considerations, such as social value judgments. (8.94, 8.97)

The panel recalled that paragraph 4 of Annex A of the SPS Agreement defines "risk assessment" with respect to contaminants (including residues of the hormones at issue) as "the evaluation of the potential for adverse effects on human or animal health arising from the presence of ... contaminants ... in food, beverages or feedstuffs". (8.98)

Guided by the wording of these provisions, the panel considered that, in this dispute, a risk assessment carried out in accordance with the SPS Agreement should:
  • identify the adverse effects on human health (if any) arising from the presence of the hormones at issue when used as growth promoters in meat or meat products, and
  • if any such adverse effects exist, evaluate the potential or probability of occurrence of these effects. (8.98)
The European Communities referred to the following scientific evidence concerning the five hormones at issue (8.108):
  • the 1982 Report of the EC Scientific Veterinary Committee, Scientific Committee for Animal Nutrition and the Scientific Committee for Food on the basis of the Report of the Scientific Group on Anabolic Agents in Animal Production ("Lamming Report");
  • the 1983 Symposium on Anabolics in Animal Production of the Office international des epizooties ("OIE") ("1983 OIE Symposium");
  • the 1987 Monographs of the International Agency for Research on Cancer ("IARC") on the Evaluation of Carcinogenic Risks to Humans, Supplement 7308 ("1987 IARC Monographs");
  • the 1988 and 1989 JECFA Reports;
  • the 1995 European Communities Scientific Conference on Growth Promotion in Meat Production ("1995 EC Scientific Conference");
  • articles and opinions by individual scientists relevant to the use of hormones (three articles in the journal Science, one article in the International Journal of Health Service, one report in The Veterinary Record and separate scientific opinions of Dr. H. Adlercreutz, Dr. E. Cavalieri, Dr. S.S. Epstein, Dr. J.G. Liehr, Dr. M. Metzler, Dr. Perez-Comas and Dr. A. Pinter, all of whom were part of the EC delegation at the panel's joint meeting with experts).

In deciding whether this scientific evidence constitutes risk assessment for the purposes of Article 5.1 of the SPS Agreement, the panel made the following statement (8.111):
"We note that the European Communities has invoked several scientific reports which appear to meet [the] minimum requirements [to] a risk assessment (in particular the Lamming Report and the 1988 and 1989 JECFA Reports) and that the scientists advising the Panel seemed to consider these reports, from a scientific and technical point of view, to be risk assessments. We shall, therefore, for the purposes of this dispute, assume that the European Communities has met its burden of demonstrating the existence of a risk assessment carried out in accordance with Article 5." (emphasis added)

The panel then went on to determine whether the EC measures at issue were based on a risk assessment. To the panel, this determination had both a procedural and a substantive aspect. (8.112)

The panel considered that, according to the ordinary meaning of the words based on put in their context and in light of the object and purpose of Article 5, there is a minimum procedural requirement contained in Article 5.1: the Member imposing a sanitary measure needs to submit evidence that at least it actually took into account a risk assessment when it enacted or maintained its sanitary measure in order for that measure to be considered as based on a risk assessment. (8.113)

The panel concluded that the EC had not provided any evidence that the studies it referred to or the scientific conclusions reached therein, have actually been taken into account by the competent EC institutions either when it enacted the measures at issue (in 1981 and 1988) or at any later point in time. None of the preambles to the EC measures at issue mention any of the scientific studies referred to by the European Communities. These preambles only refer to the non-scientific reports and opinions of the European Parliament and the EC Economic and Social Committee, which cannot be considered as part of a risk assessment (because they are not a scientific exercise). (8.114)

The panel thus found that the European Communities had not met its burden of proving that it had met the minimal procedural requirement contained in Article 5.1 and that, therefore, the EC measures in dispute were inconsistent with the requirements of Article 5.1. (8.116)

As for the substantive (as opposed to procedural) element of Article 5.1, the panel consisdered that, to determine whether the EC measures at issue were based on a risk assessment, it needed to (8.117):
  • identify the scientific conclusions reached in each of the studies referred to by the European Communities;
  • identify the scientific conclusion reflected in the EC measures in dispute;
  • determine whether the scientific conclusion reflected in the EC measures can be considered as being in conformity with any of those reached in the studies referred to by the European Communities.

After reviewing the materials presented by the EC and listed above, the panel concluded that none of the scientific evidence referred to by the European Communities which specifically addresses the safety of some or all of the hormones in dispute when used for growth promotion, indicated that an identifiable risk arises for human health from such use of these hormones if good practice is followed. All of the scientific studies had come to the conclusion that the use of the hormones at issue (all but MGA, for which no evidence was submitted) for growth promotion purposes was safe; most of these studies adding that this conclusion assumes that good practice is followed. This conclusion was also confirmed by the scientific experts advising the Panel. (8.124)

At the same time, the panel noted that the 1987 IARC Monographs (see, above, the list of scientific evidence presented by the EC), in so far as they relate to human health, do contain evidence with respect to three general categories of hormones, namely oestrogens, androgens and progestins, without distinguishing the specific hormones falling within each of these categories or the natural hormones from the synthetic hormones. The Monographs classify oestrogens as agents which are carcinogenic (meaning that there is sufficient evidence of carcinogenicity in humans); androgens as agents which are probably carcinogenic; and progestins as agents which are possibly carcinogenic. (8.126)

However, the panel observed that the scientific evidence included in these Monographs relates to the carcinogenic potential of entire categories of hormones or the hormones at issue in general. The Monographs do not consider the carcinogenic potential of these hormones when used specifically for growth promotion purposes or with respect to residue levels comparable to those present after such use. Moreover, the Monographs do not specifically evaluate, as is required on the basis of paragraph 4 of Annex A of the SPS Agreement, the potential for adverse effects arising from the presence in food (in casu meat or meat products) of residues of the hormones in dispute or from residue levels comparable to those present in food. (8.127)

Moreover, according to the scientific experts advising the panel, the data and studies contained in these Monographs with respect to the carcinogenic potential of the hormones in dispute had been fully taken into account in the 1988 and 1989 JECFA Reports which, at several occasions, explicitly refer to these Monographs. Nowhere do the 1988 and 1989 JECFA Reports reject the conclusions reached in the 1987 IARC Monographs. On the contrary, the Monographs constitute part of the evidence on which the JECFA Reports are based. JECFA recognized that all five hormones at issue have a carcinogenic potential but concluded that this potential was linked to the hormonal effect of these hormones. Since JECFA considered that the additional residues of the three natural hormones present in treated meat are not capable of exerting any toxic effect, it decided that it was unnecessary to set ADIs or MRLs for these hormones. With respect to zeranol and trenbolone, JECFA identified a no-hormonal-effect level and adopted, on that basis, ADIs and MRLs which, if respected, would ensure the safe use of these hormones. From this, the panel concluded that the IARC Monographs and JECFA Reports did not reach contradictory but rather complementary scientific conclusions. (8.128)

As regards articles and opinions of individual scientists referred to by the EC, the panel concluded that, similar to the IARC Monographs, the scientific evidence included in these articles and opinions related to the carcinogenic or genotoxic potential of entire categories of hormones or the hormones at issue in general; not when used specifically for growth promotion purposes or with respect to residue levels comparable to those present after such use. Those articles and opinions did not specifically evaluate, as is required on the basis of paragraph 4 of Annex A of the SPS Agreement, the potential for adverse effects arising from the presence in food (in casu meat or meat products) of residues of the hormones in dispute or from residue levels comparable to those present in food. (8.130)

Furthermore, the panel noted that, according to the Codex expert advising the panel, most of the evidence contained in those articles and opinions and the potential risks addressed therein had already been evaluated and taken into account in the 1988 and 1989 JECFA Reports. (8.132)

The panel conluded that the European Communities had not demonstrated that the scientific evidence it referred to, which generally addresses the safety of some or all of the hormones in dispute, would indicate that an identifiable risk arises for human health from the use of these hormones for growth promotion purposes if good practice is followed. All scientific experts advising the Panel confirmed this conclusion and stated that, as of the time of the panel proceedings, no scientific evidence was available which concluded that an identifiable risk arises from the use of any of the hormones at issue for growth promotion purposes in accordance with good practice. (8.134)

The panel observed that the scientific conclusion reflected in the EC measures in dispute, i.e., that the use of the hormones in dispute for growth promotion purposes, even in accordance with good practice, is not safe, does not conform to any of the scientific conclusions reached in the evidence referred to by the European Communities. For this reason, the EC import ban of meat and meat products from animals treated with any of the five hormones at issue for growth promotion purposes, allegedly necessary to protect human health, in so far as it also applies to meat and meat products from animals treated with any of these hormones in accordance with good practice, is, therefore, not based on the scientific evidence submitted to the panel. (8.137)

The panel also rejected the EC's "additional arguments", i.e. the EC's invocation of 6 risks that its measures were allegedly based upon (8.138, 8.139):
  1. risks arising from the nature and mode of action of the hormones;
  2. risks arising from the action of metabolites;
  3. risks arising from the action of combinations (or cocktails) of hormones and from multiple exposure of humans;
  4. risks arising from problems related to detection and control of hormones;
  5. risks arising from the administration and use of hormones; and
  6. risks arising from various other parameters, in particular the inherent limits to science.
Specifically, with respect to risks 1 to 3, the scientific experts advising the panel stated that the available data relating to these risks had all been taken into account by the JECFA Reports and/or the Lamming Report and/or the 1995 EC Scientific Conference. (8.142)

With respect to risks 4 and 5, the European Communities had restricted itself to pointing out the condition contained in many of the scientific conclusions mentioned above, namely that the safety of the hormones is to a certain extent conditional upon their administration in accordance with good practice, without further providing an assessment of the potential adverse effects related to non-compliance with such practice. (8.143)

With respect to risk 6, the European Communities argued that none of the studies it referred to as part of a risk assessment proved beyond doubt or concluded in an unqualified manner that the presence of residues of the hormones in dispute in meat or meat products present no risk whatsoever. The European Communities referred, inter alia, to the conclusions of the 1988 JECFA Report which state that residues arising from the hormones at issue used as growth promoters are only unlikely to pose a hazard to human health and to the basic premise of JECFA recommendations which aim at establishing standards which correspond to a no appreciable or no significant risk increase due to the exposure to the substances in question and not to a zero risk increase. (8.149)

The panel noted that, since science can never provide a certainty, i.e. exclude once and for all that a specific substance can ever have adverse health effects, these risks can a priori not be assessed by scientists (as required in Article 5.1). In this sense, these potential risks, which are present for any substance (also for substances or uses of substances allowed in the European Communities), are only the consequence of science not being capable of assuring that no risks will ever arise from a substance. (8.152—8.153)

The panel additionally noted that the EC objective of "zero risk" cannot be achieved in practice; not even under the EC ban itself since the European Communities cannot guarantee that there is a zero probability that illegal use of the hormones at issue will occur. Moreover, this "zero risk" objective cannot in any case be achieved for the three natural hormones in dispute since the European Communities allows the ingestion of these same hormones occurring endogenously in meat and other foods as well as the use of these hormones for therapeutic or zootechnical purposes. (8.154)

For these reasons, the panel found that the EC import ban of meat and meat products from animals treated with any of the five hormones at issue for growth promotion purposes, in so far as it also applies to meat and meat products from animals treated with any of these hormones in accordance with good practice, is not based on an assessment of any of the six general categories of risks invoked by the European Communities. (8.156)

Finally, the panel rejected the EC's invocation of the precautionary principle. The panel stated: "To the extent that this principle could be considered as part of customary international law and be used to interpret Articles 5.1 and 5.2 on the assessment of risks as a customary rule of interpretation of public international law, we consider that this principle would not override the explicit wording of Articles 5.1 and 5.2 outlined above, in particular since the precautionary principle has been incorporated and given a specific meaning in Article 5.7 of the SPS Agreement. We note, however, that the European Communities has explicitly stated in this case that it is not invoking Article 5.7." (8.157)
IV. The EC measures at issue are inconsistent with Article 5.5 SPS Agreement as they are discriminatory

The United States argued that the European Communities had failed to justify the following differences in regulatory treatment:
  • a ban on natural and synthetic hormones when used for growth promotion purposes as opposed to not setting any limit for residues of the natural hormones present endogenously in untreated meat and other foods (such as milk, cabbage, broccoli or eggs;
  • a ban on natural and synthetic hormones when used for growth promotion purposes as opposed to not setting any limit for residues of these hormones when used for therapeutic or zootechnical purposes;
  • a ban on the hormones in dispute when used for growth promotion purposes as opposed to allowing the use of the veterinary drug carbadox as a growth promoter in swine production.
Only with respect to the last mentioned difference in treatment did the United States invoke and address Article 5.5 (and claimed the existence of a disguised restriction on international trade rather than discrimination). (8.171, 8.180)

The panel identified three elements to be assessed to determine if there is a violation of the obligation in Article 5.5:
  1. the Member concerned adopts different appropriate levels of sanitary protection in "different situations";
  2. the distinction in levels of protection for the different situations is "arbitrary or unjustifiable";
  3. the distinction in levels of protection results in "discrimination or a disguised restriction on international trade".
In order to find a sanitary measure to be inconsistent with Article 5.5, all three elements need to be present. (8.173)

The panel found that the distinction in treatment of natural hormones used as growth promoters as opposed to those occurring endogenously in meat and other foods is arbitrary or unjustifiable (8.197) because:
  1. The experts advising the Panel concluded that both categories of hormones (either exogenously administered to animals or endogenously present in animals, meat, other foods or human beings) pose the same potential adverse effects. (8.193)
  2. The 1988 JECFA Report concluded that the total residue level of natural hormones in meat from treated animals falls well within the physiological range of levels found in meat from untreated animals, which levels vary according to the sex and age of the animal. (8.194)
  3. According to data submitted to the Panel, the residue level of natural hormones in many natural products (such as eggs and soya oil) is much higher than the level of residues of these hormones administered for growth promotion as well as the total residue level of these hormones in treated meat. (8.194)

This distinction also results in "discrimination or a disguised restriction on international trade" because (8.203, 8.206):
  1. The difference in levels of protection, namely a "no residue" level as opposed to an unlimited residue level, is significant. (8.203)
  2. The European Communities did provide any plausible justification for this significant difference. (8.203)
  3. This difference in levels of protection results in an import ban (on meat and meat products treated with any of the three natural hormones in dispute for growth promotion purposes) which restricts international trade. (8.203)

This finding, said the panel, is supported by two additional factors:
  1. When enacting or maintaining this ban, the EC had in mind some objectives other than the protection of human health, namely harmonizing the regulatory schemes of the different EC Member States, thereby removing competitive distortions and barriers to intra-Community trade in beef, and bringing about an increase in the consumption of beef, thereby reducing the internal beef surpluses and providing more favourable treatment to domestic producers. (8.204)
  2. Before the EC ban came into force, the percentage of animals treated with any of the hormones in dispute was significantly lower in the European Communities than in the United States. By imposing the ban, the European Communities favoured the consumption of domestic meat and, therefore, de facto discriminated against US meat in favour of EC meat. (8.205)

The panel therefore found that the EC measures in dispute, in so far as they relate to the three natural hormones at issue, were inconsistent with the requirements imposed in Article 5.5. (8.206)

The panel considered it unnecessary to decide whether or not the distinction made by the European Communities between natural hormones used as growth promoters and those used for therapeutic or zootechnical purposes was justified (the panel exercised judicial economy). (8.200)

The panel also found that the difference in treatment of zeranol, on the one hand, and oestradiol-17β occurring endogenously in meat and other foods (zeranol mimics the action of oestradiol-17β), on the other hand; as well as the difference in treatment of trenbolone, on the one hand, and testosterone occurring endogenously in meat and other foods (trenbolone mimics the action of testosterone), on the other hand, is arbitrary or unjustifiable (8.214) because:
  1. The European Communities had not provided convincing evidence that the synthetic hormones (which mimic the natural hormones) are inherently more dangerous than the natural hormones. (8.213)
  2. According to the scientists advising the panel, synthetic hormones can also be better detected and controlled than natural hormones. (8.213)
  3. The fact that ADIs and MRLs exist for zeranol and trenbolone and not for the natural hormones does not, according to the experts advising the panel, per se mean that the latter are inherently safer than the former since the international standards for both synthetic and natural hormones reflect essentially the same level of protection, namely a "no appreciable risk" level. (8.213)
This distinction results in discrimination or a disguised restriction on international trade (8.216, 8.218) because:
  1. The difference in levels of protection, namely a "no residue" level as opposed to an unlimited residue level, is significant. (8.216)
  2. The European Communities did not provide any plausible justification for this significant difference. (8.216)
  3. This difference in levels of protection results in an import ban (on meat and meat products treated with zeranol or trenbolone) which restricts international trade. (8.216)

This finding, said the panel, is supported by the same "two additional factors" as discussed above. (8.217)

The panel therefore found that the EC measures in dispute, in so far as they relate to zeranol and trenbolone, were inconsistent with the requirements imposed in Article 5.5. (8.218)

In addition, the panel found that the unjustifiable difference in the EC's treatment of all the hormones in dispute (except MGA), on the one hand, and the veterinary drug carbadox (allowed in the EC at the time of the dispute), on the other hand, resulted in discrimination or a disguised restriction on international trade (8.241, 8.244) because:
  1. The difference in levels of protection for the five hormones at issue when used as growth promoters and carbadox, namely a "no residue" level as opposed to an unlimited residue level, was significant. (8.241)
  2. The European Communities had not provided any plausible justification for this significant difference. (8.241)
  3. This difference in levels of protection results in an import ban (on meat and meat products treated with any of these five hormones at issue) which restricts international trade. (8.241)

This finding, said the panel, is supported by the same "two additional factors" as discussed above. (8.242)

One additional factor, which, the panel said, indicated that the distinction in treatment resulted in "discrimination or a disguised restriction on international trade", was that the hormones at issue, which were banned in the European Communities, are used for growth promotion in the bovine meat sector where the European Communities seemingly wanted to limit supplies and was arguably less concerned with international competitiveness, whereas carbadox, which was allowed in the European Communities, is used for growth promotion in the pork meat sector where the European Communities had no domestic surpluses and where international competitiveness was a higher priority. (8.243)

The panel therefore found that the EC measures, in so far as they relate to the five of the six hormones in dispute, were inconsistent with the requirements imposed in Article 5.5. (8.244)

More about the parties' arguments and the panel's reasoning on this issue
Whether the EC measures are inconsistent with Articles 5.4 to 5.6 of the SPS Agreement

The panel
noted at the outset that if there is no scientific evidence of an identifiable risk, there is no basis on which to adopt a measure to achieve a level of sanitary protection under the SPS Agreement, except as provided in Article 5.7. If this were not the case, i.e., if a Member could adopt a level of protection and implementing sanitary measures even if it did not provide scientific evidence of an identifiable risk, no effect would be given to the obligation contained in Article 5 to base sanitary measures on an assessment of risks. (8.161)

Since the European Communities did not establish the existence of any identifiable risk against which the EC measures at issue, in so far as they also ban the use of the five hormones when used as growth promoters in accordance with good practice, can protect human life or health, it is not possible for the European Communities to ban the use of these hormones as growth promoters in accordance with good practice. (8.162)

However, the panel decided to examine the consistency of the EC measures at issue with Articles 5.4 to 5.6, which, according to the panel, establish obligations in relation to risk management. (8.163 in combination with 8.160 and 8.161)

The panel concluded that Article 5.4, which uses the word "should" instead of "shall" ( Members should, when determining the appropriate level of sanitary or phytosanitary protection, take into account the objective of minimizing negative trade effects), does not impose an obligation. (8.166)

Article 5.5 provides, in particular, that "each Member shall avoid arbitrary or unjustifiable distinctions in the levels it considers to be appropriate in different situations, if such distinctions result in discrimination or a disguised restriction on international trade".

The United States argued that the European Communities had failed to justify the following differences in regulatory treatment:
  • a ban on natural and synthetic hormones when used for growth promotion purposes as opposed to not setting any limit for residues of the natural hormones present endogenously in untreated meat and other foods (such as milk, cabbage, broccoli or eggs)
  • a ban on natural and synthetic hormones when used for growth promotion purposes as opposed to not setting any limit for residues of these hormones when used for therapeutic or zootechnical purposes;
  • a ban on the hormones in dispute when used for growth promotion purposes as opposed to allowing the use of the veterinary drug carbadox as a growth promoter in swine production.
Only with respect to the last mentioned difference in treatment did the United States invoke and address Article 5.5 (and claimed the existence of a disguised restriction on international trade rather than discrimination). (8.171, 8.180)

The panel identified three elements to be assessed to determine if there is a violation of the obligation in Article 5.5:
  1. the Member concerned adopts different appropriate levels of sanitary protection in "different situations";
  2. the distinction in levels of protection for the different situations is "arbitrary or unjustifiable";
  3. the distinction in levels of protection results in "discrimination or a disguised restriction on international trade".
In order to find a sanitary measure to be inconsistent with Article 5.5, all three elements need to be present. (8.173)

NATURAL HORMONES
A ban on natural hormones when used for growth promotion purposes as opposed to not setting any limit for residues of the natural hormones: (i) present endogenously in untreated meat and other foods (such as milk, cabbage, broccoli or eggs) (ii) when used for therapeutic or zootechnical purposes

The panel stated that the treatment of the three natural hormones in dispute (oestradiol-17β, testosterone and progesterone) when used for growth promotion purposes as opposed to the treatment of these hormones which occur endogenously in meat and other foods or which have been administered for therapeutic or zootechnical purposes constitute comparable situations in the sense of Article 5.5. (8.186)

The panel observed that the European Communities had not submitted any evidence in support of its claim that these hormones have different effects. Moreover, all scientific experts advising the panel had concluded that residues of the three natural hormones present endogenously in meat and other foods or administered for therapeutic or zootechnical purposes are qualitatively the same as the residues of these hormones administered for growth promotion and that if any differences between these hormones could exist (e.g., differences in pathways taken or metabolites), these differences would in any event not have consequences for the potential adverse effects of these hormones. Therefore, even if these hormones would not be totally identical substances, they pose, in any event, the same adverse health effect and can, therefore, be considered as comparable situations for the purposes of Article 5.5. (8.187)

The European Communities did not consider that it was acceptable to expose consumers to any hormones in their food over and above the levels which occur in nature, as any such additional exposure could be a hazard to health. (8.189)

On the other hand, the appropriate level of protection set by the European Communities for natural hormones present endogenously in meat and other foods or administered for therapeutic or zootechnical purposes is an unlimited residue level. (8.190)

The panel concluded that the level of protection adopted by the European Communities for the three natural hormones in dispute in these different situations is different ("no residue" level as opposed to an unlimited residue level) and that, therefore, distinctions in levels of protection for those comparable situations exist in the sense of the first element of Article 5.5. (8.191)

The distinction in treatment of natural hormones used as growth promoters as opposed to those occurring endogenously in meat and other foods is furthermore arbitrary or unjustifiable (8.197) because:
  1. The experts advising the Panel concluded that both categories of hormones (either exogenously administered to animals or endogenously present in animals, meat, other foods or human beings) pose the same potential adverse effects. (8.193)
  2. The 1988 JECFA Report concluded that the total residue level of natural hormones in meat from treated animals falls well within the physiological range of levels found in meat from untreated animals, which levels vary according to the sex and age of the animal. (8.194)
  3. According to data submitted to the Panel, the residue level of natural hormones in many natural products (such as eggs and soya oil) is much higher than the level of residues of these hormones administered for growth promotion as well as the total residue level of these hormones in treated meat. (8.194)
  4. Even if some form of justification could be deduced from the arguments submitted by the European Communities, such could not, in any event, justify so significant a difference in levels of protection between a "no residue" level for natural hormones administered for growth promotion and an unlimited residue level for natural hormones endogenously present in meat and other foods. (8.196)

Having reached the above conclusion, the panel considered it unnecessary to decide whether or not the distinction made by the European Communities between natural hormones used as growth promoters and those used for therapeutic or zootechnical purposes is justified. (8.200)

This distinction also results in "discrimination or a disguised restriction on international trade" because (8.203, 8.206):
  1. The difference in levels of protection for the three natural hormones in dispute when administered for growth promotion purposes and residues of the same hormones present endogenously in meat and other foods, namely a "no residue" level as opposed to an unlimited residue level, is significant. (8.203)
  2. The European Communities did provide any plausible justification for this significant difference. (8.203)
  3. This difference in levels of protection results in an import ban (on meat and meat products treated with any of the three natural hormones in dispute for growth promotion purposes) which restricts international trade. (8.203)
This finding, said the panel, is supported by two additional factors:
  1. As stated in the preambles of the EC measures in dispute and in the reports of the European Parliament and the opinions of the EC Economic and Social Committee referred to by the European Communities, when enacting or maintaining this ban, the EC had in mind some objectives other than the protection of human health, namely harmonizing the regulatory schemes of the different EC Member States, thereby removing competitive distortions and barriers to intra-Community trade in beef, and bringing about an increase in the consumption of beef, thereby reducing the internal beef surpluses and providing more favourable treatment to domestic producers. (8.204)
  2. Before the EC ban came into force, the percentage of animals treated with any of the hormones in dispute was significantly lower in the European Communities than in the United States. By imposing the ban, the European Communities favoured the consumption of domestic meat and, therefore, de facto discriminated against US meat in favour of EC meat. (8.205)
The panel therefore found that the EC measures in dispute, in so far as they relate to the three natural hormones at issue, were inconsistent with the requirements imposed in Article 5.5. (8.206)


SYNTHETIC HORMONES

Two of the three synthetic hormones in dispute for which international standards exist (zeranol and trenbolone) vs. the natural hormones in dispute occurring endogenously in meat and other foods

The panel said it would compare treatment of zeranol with that of oestradiol-17β occurring endogenously in meat and other foods (zeranol mimics the action of oestradiol-17β) and treatment of trenbolone with that of testosterone occurring endogenously in meat and other foods (trenbolone mimics the action of testosterone). Both parties in the dispute and the experts advising the panel agreed that the situations thus compared involve at least the same adverse health effect, namely carcinogenicity. The panel therefore found those are comparable situations for the purposes of Article 5.5. (8.208, 8.209)

Since the European Communities adopted a "no residue" level as its appropriate level of protection with respect to zeranol and trenbolone, but an unlimited residue level with respect to the natural hormones occurring endogenously in meat and other foods, a distinction in levels of protection for these comparable situations exists in the sense of the first element of Article 5.5. (8.211, 8.212)

This distinction is arbitrary or unjustifiable (8.214) because:
  1. The European Communities had not provided convincing evidence that the synthetic hormones (which mimic the natural hormones) are inherently more dangerous than the natural hormones. (8.213)
  2. According to the scientists advising the panel, synthetic hormones can also be better detected and controlled than natural hormones. (8.213)
  3. The fact that ADIs and MRLs exist for zeranol and trenbolone and not for the natural hormones does not, according to the experts advising the panel, per se mean that the latter are inherently safer than the former since the international standards for both synthetic and natural hormones reflect essentially the same level of protection, namely a "no appreciable risk" level. (8.213)

This distinction results in discrimination or a disguised restriction on international trade (8.216, 8.218) because:
  1. The difference in levels of protection for zeranol and trenbolone and that for the natural hormones in dispute which occur endogenously in meat and other foods, namely a "no residue" level as opposed to an unlimited residue level, is significant. (8.216)
  2. The European Communities did not provide any plausible justification for this significant difference. (8.216)
  3. This difference in levels of protection results in an import ban (on meat and meat products treated with zeranol or trenbolone) which restricts international trade. (8.216)

This finding, said the panel, is supported by the same "two additional factors" as discussed above. (8.217)

The panel therefore found that the EC measures in dispute, in so far as they relate to zeranol and trenbolone, were inconsistent with the requirements imposed in Article 5.5. (8.218)


ALL HORMONES IN DISPUTE (EXCEPT MGA) VS. CARBADOX

The panel recalled that the substances being compared are different, however, the situations compared involve the same adverse health effect, namely carcinogenicity. Therefore, the treatment of the five hormones at issue when used as growth promoters as opposed to that of carbadox are comparable situations in the sense of the first element of Article 5.5. (8.220, 8.221)

The panel noted that at the time of the dispute, the European Communities allowed the use of carbadox as a growth promoter in pigs and had not set any MRL for that substance. The European Communities thus, in principle, accepted an unlimited residue level of these substances in pork meat. Since "no residue" level cannot be achieved in practice when use of the substance concerned is allowed (even under strict conditions), the European Communities, said the panel, could not reasonably claim that its level of protection for carbadox was a "no residue" level. (8.225)

Therefore, the level of protection adopted by the European Communities for the hormones at issue when used for growth promotion purposes as opposed to that adopted for carbadox is different (a "no residue" level as opposed to an unlimited residue level) and a distinction in the levels of protection for these comparable situations therefore existed in the sense of the first element of Article 5.5. (8.226)


The European Communities claimed that the distinction in levels of protection was justified on the following grounds (8.229):
  1. carbadox is not a hormone;
  2. carbadox only indirectly acts as a growth promoter by combating the development of bacteria and by aiding the intestinal flora of piglets, thereby also exerting preventive therapeutic effects (whereas the hormones directly act as growth promoters and have no preventive therapeutic action when used as growth promoters);
  3. carbadox is only commercially available in prepared feedstuffs (not as injections or implants) in predetermined dosages;
  4. there are no alternatives to carbadox available which have the same therapeutic action;
  5. carbadox cannot be abused since it only has growth promotion effects in piglets up to four months old and a withdrawal period of at least 28 days is fixed;
  6. carbadox is used in such small quantities and is hardly absorbed that it leaves practically no residues at all in meat destined for human consumption.

The panel, however, rejected all of these arguments and concluded that the distinction was arbitrary or unjustifiable (8.238) because:
  1. With respect to the first EC argument, the European Communities did not submit any reason why this difference could in itself justify a different regulatory treatment in the light of their potential carcinogenic effect. (8.231)
  2. With respect to the second EC argument, according to scientific experts advising the panel, the hormones at issue when administered as growth promoters may also have beneficial effects (such as improved composition of the carcass upon treatment in terms of more lean meat and less fat). Moreover, the hormones at issue are, effectively, used for therapeutic purposes and such use of the three natural hormones in dispute is allowed in the European Communities. (8.232)
  3. With respect to the third EC argument, one of the scientific experts advising the panel stated that injections or implants are more accurate and reliable methods to administer growth promoters than additives in feedstuffs (because of carry-over risks from treated to untreated feed). The experts also stated that additives in feedstuffs pose additional risks in that they may harm the persons handling the feedstuff. In addition, according to the experts advising the panel, the commercially available products containing any of the five hormones at issue for implantation or injection also contain predetermined dosages of these hormones. (8.233)
  4. With respect to the fourth EC argument, one of the experts advising the panel stated that there are readily available alternatives, such as oxytetracycline. (8.234)
  5. With respect to the fifth EC argument, according to the experts advising the panel, there is no guarantee that the piglets treated with carbadox will not be slaughtered. Residues of this substance or its metabolites may thus enter the food chain. Also, as is the case for the use of carbadox in the European Communities, the use of the hormones at issue as growth promoters may also be made subject to strict conditions. (8.235)
  6. With respect to the sixth EC argument, according to the experts advising the panel, once a substance has been administered to an animal there will always be some residue level of this substance or a metabolite left, albeit a very small one, in the meat of that animal. Further, according to the 36th JECFA Report of 1991 which assessed the risks related to carbadox, not only carbadox itself (for which no ADIs could be established) but also one of its metabolites, quinoxaline-2-carboxylic acid (for which an MRL was adopted) may present a health risk. Finally, according to the scientific experts, residue levels of the hormones at issue will also rapidly decline after administration to an animal or ingestion by humans. (8.236)

This difference resulted in discrimination or disguised restriction on international trade (8.241, 8.244) because:
  1. The difference in levels of protection for the five hormones at issue when used as growth promoters and carbadox, namely a "no residue" level as opposed to an unlimited residue level, was significant. (8.241)
  2. The European Communities had not provided any plausible justification for this significant difference. (8.241)
  3. This difference in levels of protection results in an import ban (on meat and meat products treated with any of these five hormones at issue) which restricts international trade. (8.241)
This finding, said the panel, is supported by the same "two additional factors" as discussed above. (8.242)
One additional factor, which, the panel said, indicated that the distinction in treatment resulted in "discrimination or a disguised restriction on international trade", was that the hormones at issue, which were banned in the European Communities, are used for growth promotion in the bovine meat sector where the European Communities seemingly wanted to limit supplies and was arguably less concerned with international competitiveness, whereas carbadox, which was allowed in the European Communities, is used for growth promotion in the pork meat sector where the European Communities had no domestic surpluses and where international competitiveness was a higher priority. (8.243)

The panel therefore found that the EC measures, in so far as they relate to the five of the six hormones in dispute, were inconsistent with the requirements imposed in Article 5.5. (8.244)

As regards Article 5.6, the panel stated that, since it had found that the EC level of protection reflected in the EC measures in dispute has been adopted in violation of Article 5.5, it did not consider it necessary to further examine whether those measures were also more trade restrictive than required to achieve that level in the sense of Article 5.6. (8.247)

Finally, the panel recalled that the European Communities had explicitly stated that its measures were not provisional measures in the sense of Article 5.7 and it did, therefore, not need to examine that provision. (8.249)


V. The EC measures with respect to MGA are not based on a risk assessment contrary to the requirement of Article 5.1 SPS Agreement and are discriminatory contrary to the requirement of Article 5.5 SPS Agreement

The panel observed that the European Communities had not submitted any scientific evidence in which the potential for adverse effects on human health of MGA residues is evaluated. Moreover, the scientists advising the panel had at several occasions stated that they were not aware of any publicly available scientific study which evaluates the safety of MGA. (8.255)

The panel therefore found that the EC measures in dispute, in so far as they relate to the hormone MGA, were not based on an assessment of risks (either from a procedural or a substantial point of view) in accordance with Article 5. (8.258, 8.261)

The panel also found that the EC measures in dispute, in so far as they relate to the hormone MGA, were inconsistent with Article 5.5 for all the same reasons that they are inconsistent with Article 5.5 in so far as they relate to the other five hormones at issue. (8.266, 8.269)

More about the parties' arguments and the panel's reasoning on this issue
Whether the EC measure with respect to MGA is consistent with Article 5.1 and Article 5.5 SPS Agreement

The panel observed that the European Communities had not submitted any scientific evidence in which the potential for adverse effects on human health of MGA residues is evaluated. Moreover, the scientists advising the panel had at several occasions stated that they were not aware of any publicly available scientific study which evaluates the safety of MGA. (8.255)

The European Communities argued that the EC measures in dispute regulate hormones on the basis of their physiological action, not on the basis of individual substances and that the administration of any substance having an oestrogenic, androgenic or gestagenic action was covered by the EC ban including MGA which has a gestagenic action. (8.256)

The panel noted, however, that with respect to all five other hormones in dispute, JECFA, Codex and the European Communities itself had conducted or invoked risk assessments for each individual substance. Furthermore, said the panel, one of the basic principles of a risk assessment appears to be that it needs to be carried out for each individual substance. (8.257)

In reaching this conclusion, the panel referred to a scientific expert consulted by the panel, the practice of JECFA (fn 458 to para 8.257) and 1995 EC Scientific Conference Proceedings, which stated: "It must be emphasised that a separate risk assessment must be conducted on each growth promoting substance. It is not appropriate to attempt to produce a detailed generic risk assessment for a class of growth promoters". (8.257)

The panel therefore found that the EC measures in dispute, in so far as they relate to the hormone MGA, were not based on an assessment of risks in accordance with Article 5. (8.258)

The panel said, in particular, that the European Communities had not met its burden of providing evidence to the panel that its measures in dispute, in so far as they relate to the hormone MGA, were, either from a procedural or a substantial point of view, based on a risk assessment. (8.261)

As regards Article 5.5, the United States argued that the European Communities had failed to justify the following differences in regulatory treatment (8.262):
  1. a ban on MGA when used for growth promotion purposes as opposed to not setting any limit for residues of the natural hormones present endogenously in untreated meat and other foods (such as milk, cabbage, broccoli or eggs)
  2. a ban on MGA when used for growth promotion purposes as opposed to not setting any limit for residues of the natural hormones when used for therapeutic or zootechnical purposes;
  3. a ban on MGA when used for growth promotion purposes as opposed to allowing the use of carbadox as a growth promoter in swine production.
Only with respect to the last mentioned difference in treatment did the United States explicitly invoke Article 5.5. (8.262)

MGA for growth promotion compared to the natural hormones occurring endogenously in meat and other foods
The panel considered that its reasoning and findings with respect to five other hormones equally applied to the EC measures in dispute relating to MGA (the third synthetic hormone in dispute):
  • the European Communities had adopted different levels of protection (a "no residue" limit as opposed to an unlimited residue level) for comparable situations, in casu situations posing the same adverse health effect (i.e., carcinogenicity);
  • the European Communities had not submitted evidence that this difference in levels of protection was justified;
  • the European Communities had not met its burden of rebutting the arguments and evidence submitted by the United States that this difference in levels of protection resulted in "discrimination or a disguised restriction on international trade" in the sense of the third element of Article 5.5. (8.265)
Therefore, the EC measures in dispute, in so far as they related to MGA, were inconsistent with the requirements imposed by Article 5.5. (8.266)


MGA for growth promotion compared to carbadox
The panel also considered that its reasoning and findings with respect to comparison of treatment by the EC of five other hormones, on the one hand, and the veterinary drug carbadox, on the other, equally applied to comparison of MGA and carbadox:
  • the European Communities had adopted different levels of protection (a "no residue" limit as opposed to an unlimited residue level) for comparable situations;
  • the European Communities had not submitted any evidence that this difference in levels of protection was justified;
  • the European Communities had not met its burden of rebutting the arguments and evidence submitted by the United States that this difference in levels of protection resulted in "discrimination or a disguised restriction on international trade" in the sense of the third element of Article 5.5. (8.268)

Therefore, the EC measures in dispute, in so far as they related to MGA, were inconsistent with the requirements imposed by Article 5.5. (8.269)
VI. The panel exercised judicial economy in respect of the US claims under Article 2 SPS Agreement and Article I and Article III GATT (8.271, 8.272)
SPS Agreement
Article 2. Basic Rights and Obligations
[...]
2. Members shall ensure that any sanitary or phytosanitary measure is applied only to the extent necessary to protect human, animal or plant life or health, is based on scientific principles and is not maintained without sufficient scientific evidence, except as provided for in paragraph 7 of Article 5.
3. Members shall ensure that their sanitary and phytosanitary 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. Sanitary and phytosanitary measures shall not be applied in a manner which would constitute a disguised restriction on international trade.
[...]
General Agreement on Tariffs and Trade
Article I. General Most-Favoured-Nation Treatment
1. With respect to customs duties and charges of any kind imposed on or in connection with importation or exportation or imposed on the international transfer of payments for imports or exports, and with respect to the method of levying such duties and charges, and with respect to all rules and formalities in connection with importation and exportation, and with respect to all matters referred to in paragraphs 2 and 4 of Article III,* any advantage, favour, privilege or immunity granted by any contracting party to any product originating in or destined for any other country shall be accorded immediately and unconditionally to the like product originating in or destined for the territories of all other contracting parties.
[...]
General Agreement on Tariffs and Trade
Article III. National Treatment on Internal Taxation and Regulation
[...]
4. The products of the territory of any contracting party imported into the territory of any other contracting party shall be accorded treatment no less favourable than that accorded to like products of
national origin in respect of all laws, regulations and requirements affecting their internal sale, offering for sale, purchase, transportation, distribution or use. The provisions of this paragraph shall not prevent the application of differential internal transportation charges which are based exclusively on the economic operation of the means of transport and not on the nationality of the product.
[...]
Appellate Body's main findings
I. The panel misconceived the relationship between Article 3.1, Article 3.2 and Article 3.3 SPS Agreement

Article 3.1 vs. Article 3.3
The Appellate Body ruled that the panel had erred in finding that Article 3.3 constitutes an exception from the general rule established by Article 3.1. (104, 106)

The Appellate Body held that Article 3.1 of the SPS Agreement simply excludes from its scope of application the kinds of situations covered by Article 3.3, which recognizes the autonomous right of a Member to establish a higher level of protection than that which would be achieved by following the relevant international standard, provided that that Member complies with certain requirements (e.g., Article 5.1) in promulgating SPS measures to achieve that level. (104, 172, 176)

Accordingly, it is the complainant claiming a violation of Article 3.3 that bears the burden of proof under Article 3.3 (and in particular, the burden to prove that the respondent's measures are inconsistent with other provisions of the SPS Agreement, e.g. that they are not based on a risk assessment). (108, 109)

Article 3.1 vs. Article 3.2
The panel also erred in reading away the terminological difference between Articles 3.1 and 3.2 (measures 'based on' international standards vs. measures which 'conform to' international standards). (169)

According to the Appellate Body, a measure which 'conforms to' an international standard (Article 3.2) embodies the international standard completely and, for practical purposes, converts it into a municipal standard. By virtue of Article 3.2, such a measure enjoys the benefit of a presumption (albeit a rebuttable one) that it is consistent with the relevant provisions of the SPS Agreement and of the GATT 1994. (170)

A measure which is 'based on' an international standard (Article 3.1) may adopt some, not necessarily all, of the elements of the international standard. The Member imposing this measure does not benefit from the presumption of consistency set up in Article 3.2; but the Member is not penalized by exemption of a complaining Member from the normal burden of showing a prima facie case of inconsistency with Article 3.1 or any other relevant article of the SPS Agreement or of the GATT 1994. (171)

More about the parties' arguments and the Appellate Body's reasoning on this issue
SPS Agreement
Article 3. Harmonization
1. To harmonize sanitary and phytosanitary measures on as wide a basis as possible, Members shall base their sanitary or phytosanitary measures on international standards, guidelines or recommendations, where they exist, except as otherwise provided for in this Agreement, and in particular in paragraph 3.
[…]
SPS Agreement
Article 3. Harmonization
[…]
2. Sanitary or phytosanitary measures which conform to international standards, guidelines or recommendations shall be deemed to be necessary to protect human, animal or plant life or health, and presumed to be consistent with the relevant provisions of this Agreement and of GATT 1994.
[…]
SPS Agreement
Article 3. Harmonization
[...]
3. Members may introduce or maintain sanitary or phytosanitary measures which result in a higher level of sanitary or phytosanitary protection than would be achieved by measures based on the relevant international standards, guidelines or recommendations, if there is a scientific justification, or as a consequence of the level of sanitary or phytosanitary protection a Member determines to be appropriate in accordance with the relevant provisions of paragraphs 1 through 8 of Article 5.2 Notwithstanding the above, all measures which result in a level of sanitary or phytosanitary protection different from that which would be achieved by measures based on international standards, guidelines or recommendations shall not be inconsistent with any other provision of this Agreement
[...]

2 For the purposes of paragraph 3 of Article 3, there is a scientific justification if, on the basis of an examination and evaluation of available scientific information in conformity with the relevant provisions of this Agreement, a Member determines that the relevant international standards, guidelines or recommendations are not sufficient to achieve its appropriate level of sanitary or phytosanitary protection.
Article 3.1 vs. Article 3.2 SPS Agreement

Explaining why measures 'based on' international standards (Article 3.1) are different from those that 'conform to' international standards (Article 3.2), the Appellate Body stated:
"In the first place, the ordinary meaning of 'based on' is quite different from the plain or natural import of 'conform to'. A thing is commonly said to be 'based on' another thing when the former 'stands' or is "founded" or 'built' upon or 'is supported by' the latter. In contrast, much more is required before one thing may be regarded as 'conform[ing] to' another: the former must 'comply with', 'yield or show compliance' with the latter. [...] A measure that 'conforms to' and incorporates a Codex standard is, of course, 'based on' that standard. A measure, however, based on the same standard might not conform to that standard, as where only some, not all, of the elements of the standard." (163)

"In the second place, 'based on' and 'conform to' are used in different articles, as well as in differing paragraphs of the same article. Thus, Article 2.2 uses 'based on', while Article 2.4 employs 'conform to'. Article 3.1 requires the Members to 'base' their SPS measures on international standards; however, Article 3.2 speaks of measures which 'conform to' international standards. Article 3.3 once again refers to measures 'based on' international standards. The implication arises that the choice and use of different words in different places in the SPS Agreement are deliberate, and that the different words are designed to convey different meanings. A treaty interpreter is not entitled to assume that such usage was merely inadvertent on the part of the Members who negotiated and wrote that Agreement. Canada has suggested the use of different terms was 'accidental' in this case, but has offered no convincing argument to support its suggestion. We do not believe this suggestion has overturned the inference of deliberate choice." (164)

"In the third place, the object and purpose of Article 3 run counter to the panel's interpretation. That purpose, Article 3.1 states, is '[t]o harmonize [SPS] measures on as wide a basis as possible ...'. The preamble of the SPS Agreement also records that the Members '[d]esir[e] to further the use of harmonized [SPS] measures between Members on the basis of international standards, guidelines and recommendations developed by the relevant international organizations ...'. (emphasis added) Article 12.1 created a Committee on Sanitary and Phytosanitary Measures and gave it the task, inter alia, of 'furtherance of its objectives, in particular with respect to harmonization' and (in Article 12.2) to 'encourage the use of international standards, guidelines and recommendations by all Members'. It is clear to us that harmonization of SPS measures of Members on the basis of international standards is projected in the Agreement, as a goal, yet to be realized in the future. To read Article 3.1 as requiring Members to harmonize their SPS measures by conforming those measures with international standards, guidelines and recommendations, in the here and now, is, in effect, to vest such international standards, guidelines and recommendations (which are by the terms of the Codex recommendatory in form and nature) with obligatory force and effect. The Panel's interpretation of Article 3.1 would, in other words, transform those standards, guidelines and recommendations into binding norms. But, as already noted, the SPS Agreement itself sets out no indication of any intent on the part of the Members to do so. We cannot lightly assume that sovereign states intended to impose upon themselves the more onerous, rather than the less burdensome, obligation by mandating conformity or compliance with such standards, guidelines and recommendations. To sustain such an assumption and to warrant such a far-reaching interpretation, treaty language far more specific and compelling than that found in Article 3 of the SPS Agreement would be necessary." (165)

To support this interpretation, the Appellate Body, inter alia, invokes the interpretative principle of in dubio mitius. (fn 154)


Article 3.3 SPS Agreement
The Appellate Body recognized that "Article 3.3 is evidently not a model of clarity in drafting and communication". (175)

The Appellate Body added: "Consideration of the object and purpose of Article 3 and of the SPS Agreement as a whole reinforces our belief that compliance with Article 5.1 was intended as a countervailing factor in respect of the right of Members to set their appropriate level of protection. In generalized terms, the object and purpose of Article 3 is to promote the harmonization of the SPS measures of Members on as wide a basis as possible, while recognizing and safeguarding, at the same time, the right and duty of Members to protect the life and health of their people. The ultimate goal of the harmonization of SPS measures is to prevent the use of such measures for arbitrary or unjustifiable discrimination between Members or as a disguised restriction on international trade, without preventing Members from adopting or enforcing measures which are both "necessary to protect" human life or health and "based on scientific principles", and without requiring them to change their appropriate level of protection. The requirements of a risk assessment under Article 5.1, as well as of "sufficient scientific evidence" under Article 2.2, are essential for the maintenance of the delicate and carefully negotiated balance in the SPS Agreement between the shared, but sometimes competing, interests of promoting international trade and of protecting the life and health of human beings. We conclude that the Panel's finding that the European Communities is required by Article 3.3 to comply with the requirements of Article 5.1 is correct and, accordingly, dismiss the appeal of the European Communities from that ruling of the Panel." (177)

II. Interpretation and application of Article 5.1 and Article 5.2 SPS Agreement

1. Article 2.2 and Article 5.1
Firstly, the Appellate Body agreed with the panel that Article 5.1 may be viewed as a specific application of the basic obligations contained in Article 2.2 of the SPS Agreement and said, moreover, that Articles 2.2 and 5.1 should constantly be read together. Article 2.2 informs Article 5.1: the elements that define the basic obligation set out in Article 2.2 impart meaning to Article 5.1. (180)

2. 'Risk assessment' includes 'risk management'
Secondly, the Appellate Body disagreed with the distinction the panel drew between risk assessment and risk management. To the Appellate Body, the term 'risk assessment' as used in the SPS Agreement includes what is ordinarily understood as risk management: 'Article 5 and Annex A of the SPS Agreement speak of "risk assessment" only and that the term "risk management" is not to be found either in Article 5 or in any other provision of the SPS Agreement. Thus, the Panel's distinction, which it apparently employs to achieve or support what appears to be a restrictive notion of risk assessment, has no textual basis. The fundamental rule of treaty interpretation requires a treaty interpreter to read and interpret the words actually used by the agreement under examination, and not words which the interpreter may feel should have been used.' (181)

3. No threshold of risk
The Appellate Body agreed with the panel that theoretical uncertainty is not the kind of risk which is to be assessed under Article 5.1. (The panel had stated in its report, referring to scientific experts, that science can never provide a certainty, i.e. exclude once and for all that a specific substance can ever have adverse health effects. 8.152)

This does not mean, however, that a certain magnitude or threshold level of risk has to be demonstrated in a risk assessment if an SPS measure based thereon is to be regarded as consistent with Article 5.1. According to the Appellate Body, the imposition of such a quantitative requirement finds no basis in the SPS Agreement. A panel is authorized only to determine whether a given SPS measure is "based on" a risk assessment. As will be elaborated below, this means that a panel has to determine whether an SPS measure is sufficiently supported or reasonably warranted by the risk assessment.

Accordingly, the word 'potential' in the definition of the term 'risk assessment' in Annex A(4) SPS Agreement (the evaluation of the potential for adverse effects on human or animal health arising from the presence of additives, contaminants, toxins or disease-causing organisms in food, beverages or feedstuffs) is not to be confused with 'probability' (as the panel did), which would introduce a quantitative dimension to the notion of risk. (184)

4. All factors are to be taken into account in a risk assesment
Importantly, the risk that is to be evaluated in a risk assessment under Article 5.1 is not only risk ascertainable in a science laboratory operating under strictly controlled conditions, but also risk in human societies as they actually exist, in other words, the actual potential for adverse effects on human health in the real world where people live and work and die. (187) In other words, adverse effects relating to misadministration of a veterinary drug are to be taken into account in a risk assessment as well as adverse effects arising from the drug per se, i.e. when administered in accordance with good veterinary practice.

In the view to the Appellate Body, 'there is nothing to indicate that the listing of factors that may be taken into account in a risk assessment [under] Article 5.2 was intended to be a closed list.' (187)

Accordingly, the panel erred when it excluded on an a priori basis from the scope of application of Articles 5.1 and 5.2 risks other than those that can be identified in laboratory conditions. Risks arising from failure to comply with the requirements of good veterinary practice in the administration of hormones for growth promotion purposes, as well as risks arising from difficulties of control, inspection and enforcement of the requirements of good veterinary practice may also be taken into account in a risk assessment. (205)
[T]he object and purpose of the SPS Agreement justify the examination and evaluation of all such risks for human health whatever their precise and immediate origin may be. (206)

Importantly, most, if not all, of the scientific studies referred to by the European Communities, in respect of the five hormones involved, concluded that their use for growth promotion purposes is 'safe' if the hormones are administered in accordance with the requirements of good veterinary practice. Where the condition of observance of good veterinary practice (which is much the same condition attached to the standards, guidelines and recommendations of Codex with respect to the use of the five hormones for growth promotion) is not followed, the logical inference is that the use of such hormones for growth promotion purposes may or may not be "safe". (206)

However, the European Communities did not provide any assessment of such risks to the panel. (208)

5. There is no 'minimum procedural requirement' in Article 5.1
The panel had stated in its report that 'there is a minimum procedural requirement contained in Article 5.1'. That requirement is that 'the Member imposing a sanitary measure needs to submit evidence that at least it [formally] took into account a risk assessment when it enacted or maintained its sanitary measure in order for that measure to be considered as based on a risk assessment." The Appellate Body held that no textual basis exists in Article 5 of the SPS Agreement for such a "minimum procedural requirement". (188, 189) In particular, there is no requirement that preambles of legislative or quasi-legislative acts make reference to the relevant risk assessments. (191)

To the Appellate Body, 'based on' is appropriately taken to refer to a certain objective relationship between two elements, that is to say, to an objective situation that persists and is observable between an SPS measure and a risk assessment. (189)

In this connection, Article 5.1 does not insist that a Member that adopts a sanitary measure shall have carried out its own risk assessment. It only requires that the SPS measures be "based on an assessment, as appropriate for the circumstances ...". The SPS measure might well find its objective justification in a risk assessment carried out by another Member, or an international organization. (190)

6. Degree of flexibility in adopting SPS measures 'based on' risk assessment
There is no rigid requirement that the conclusions of the risk assessment coincide with the 'scientific conclusions implicit' in the SPS measure. The results of the risk assessment must sufficiently warrant — that is to say, reasonably support — the SPS measure at stake. The requirement that an SPS measure be 'based on' a risk assessment is a substantive requirement that there be a rational relationship between the measure and the risk assessment. (192, 193)

The Appellate Body concluded that the scientific materials provided by the EC did not rationally support the EC import prohibition. (The Appellate Body found that the United States and Canada, although not required to do so by the Panel, had, in fact, made a prima facie case that the SPS measures related to the hormones involved, except MGA, were not based on a risk assessment.) (197, fn 180)

7. Minority science acceptable
Again, there is no requirement that a risk assessment come to a monolithic conclusion that coincides with the scientific conclusion or view implicit in the SPS measure. The risk assessment could set out both the prevailing view representing the 'mainstream' of scientific opinion, as well as the opinions of scientists taking a divergent view. Article 5.1 does not require that the risk assessment must necessarily embody only the view of a majority of the relevant scientific community. In some cases, the very existence of divergent views presented by qualified scientists who have investigated the particular issue at hand may indicate a state of scientific uncertainty. Sometimes the divergence may indicate a roughly equal balance of scientific opinion, which may itself be a form of scientific uncertainty. In most cases, responsible and representative governments tend to base their legislative and administrative measures on 'mainstream' scientific opinion. In other cases, equally responsible and representative governments may act in good faith on the basis of what, at a given time, may be a divergent opinion coming from qualified and respected sources. By itself, this does not necessarily signal the absence of a reasonable relationship between the SPS measure and the risk assessment, especially where the risk involved is life-threatening in character and is perceived to constitute a clear and imminent threat to public health and safety. Determination of the presence or absence of that relationship can only be done on a case-to-case basis, after account is taken of all considerations rationally bearing upon the issue of potential adverse health effects. (194)

However, the Appellate Body refused to take into account a divergent opinion of one of the panel experts, Dr Lucier, who had stated to the panel:

'For every million women alive in the United States, Canada, Europe today, about a 110,000 of those women will get breast cancer. This is obviously a tremendous public health issue. Of those 110,000 women get breast cancer, maybe several thousand of them are related to the total intake of exogenous oestrogens from every source, including eggs, meat, phyto-oestrogens, fungal oestrogens, the whole body burden of exogenous oestrogens. And by my estimates one of those 110,000 would come from eating meat containing oestrogens as a growth promoter, if used as prescribed.' (fn 181)

The Appellate Body explained that '[that' opinion by Dr. Lucier [did] not purport to be the result of scientific studies carried out by him or under his supervision focusing specifically on residues of hormones in meat from cattle fattened with such hormones. Accordingly, [...] the single divergent opinion expressed by Dr. Lucier is not reasonably sufficient to overturn the contrary conclusions reached in the scientific studies referred to by the European Communities that related specifically to residues of the hormones in meat from cattle to which hormones had been administered for growth promotion.' (198)

The Appellate Body further observed in a footnote:
'Assuming that Dr. Lucier's estimate is realistic, it is noteworthy that there could be up to 371 persons who, under the conditions identified by Dr. Lucier, would get cancer in the Member States of the European Union. The total population of the Member States of the European Union in 1995 was 371 million.' (fn 182)


8. Risk assessment must be specific
The Appellate Body affirmed the panel's ruling as to the IARC Monographs:
'The 1987 IARC Monographs and the articles and opinions of individual scientists submitted by the European Communities constitute general studies which do indeed show the existence of a general risk of cancer; but they do not focus on and do not address the particular kind of risk here at stake — the carcinogenic or genotoxic potential of the residues of those hormones found in meat derived from cattle to which the hormones had been administered for growth promotion purposes — as is required by paragraph 4 of Annex A of the SPS Agreement. Those general studies, are in other words, relevant but do not appear to be sufficiently specific to the case at hand.' (200)


The Appellate Body ultimately agreed with the panel that no risk assessment that reasonably supports or warrants the import prohibition embodied in the EC Directives had been furnished to the panel and, therefore, affirmed the ultimate conclusion of the panel that the EC import prohibition was not based on a risk assessment within the meaning of Articles 5.1 and 5.2 of the SPS Agreement and was, therefore, inconsistent with the requirements of Article 5.1 and, consequently, Article 3.3. (208, 209)

SPS Agreement
Article 5. Assessment of Risk and Determination of the Appropriate Level of Sanitary or Phytosanitary Protection
1. Members shall ensure that their sanitary or phytosanitary measures are based on an assessment,
as appropriate to the circumstances, of the risks to human, animal or plant life or health, taking into
account risk assessment techniques developed by the relevant international organizations.
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SPS Agreement
Article 5. Assessment of Risk and Determination of the Appropriate Level of Sanitary or Phytosanitary Protection
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2. In the assessment of risks, Members shall take into account available scientific evidence; relevant
processes and production methods; relevant inspection, sampling and testing methods; prevalence of specific diseases or pests; existence of pest- or disease-free areas; relevant ecological and environmental conditions; and quarantine or other treatment.
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SPS Agreement
Article 2. Basic Rights and Obligations
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2. Members shall ensure that any sanitary or phytosanitary measure is applied only to the extent necessary to protect human, animal or plant life or health, is based on scientific principles and is not maintained without sufficient scientific evidence, except as provided for in paragraph 7 of Article 5.
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III. Interpretation and application of Article 5.5 SPS Agreement

According to the Appellate Body, Article 5.5 must be read in context. An important part of that context is Article 2.3 of the SPS Agreement. When read together with Article 2.3, Article 5.5 may be seen to be marking out and elaborating a particular route leading to the same destination set out in Article 2.3. (212)

The Appellate Body agreed with the panel that the desired 'consistency in the application of the concept of appropriate level of sanitary or phytosanitary protection' is defined as a goal to be achieved in the future and that the statement of that goal does not establish a legal obligation of consistency of appropriate levels of protection. (213)

Furthermore, the goal set is not absolute or perfect consistency, since governments establish their appropriate levels of protection frequently on an ad hoc basis and over time, as different risks present themselves at different times. It is only arbitrary or unjustifiable inconsistencies that are to be avoided. (213)

Legal test under Article 5.5
1. The Member imposing the measure complained of has adopted its own appropriate levels of sanitary protection against risks to human life or health in several different situations.
2. Those levels of protection exhibit arbitrary or unjustifiable differences ('distinctions' in the language of Article 5.5) in their treatment of different situations.
3. The arbitrary or unjustifiable differences (i.e., the measure embodying or implementing a particular level of protection) result(s) in discrimination or a disguised restriction of international trade.
(214)

The above three elements of Article 5.5 are cumulative in nature; all of them must be demonstrated to be present if violation of Article 5.5 is to be found. In particular, both the second and third elements must be found. The second element alone would not suffice. (215)

The presence of the second element — the arbitrary or unjustifiable character of differences in levels of protection considered by a Member as appropriate in differing situations — may in practical effect operate as a 'warning' signal that the implementing measure in its application might be a discriminatory measure or might be a restriction on international trade disguised as an SPS measure for the protection of human life or health. (215)

Natural hormones when used for growth promotion v. when occurring endogenously in meat and other foods

The Appellate Body did not agree with the Panel's conclusion that the differences in levels of protection in respect of added hormones in treated meat and in respect of naturally-occurring hormones in food, are merely arbitrary and unjustifiable. According to the Appellate Body, there is a fundamental distinction between added hormones (natural or synthetic) and naturally-occurring hormones in meat and other foods:

'In respect of the latter, the European Communities simply takes no regulatory action; to require it to prohibit totally the production and consumption of such foods or to limit the residues of naturally-occurring hormones in food, entails such a comprehensive and massive governmental intervention in nature and in the ordinary lives of people as to reduce the comparison itself to an absurdity.' (221)

Natural hormones when used for growth promotion v. when used for therapeutic or zootechnical purposes
(Recall that the panel exercised judicial economy in this respect)

In the view of the Appellate Body, on balance, the difference in the levels of protection concerning hormones used for growth promotion purposes, on the one hand, and concerning hormones used for therapeutic and zootechnical purposes, on the other, is not, in itself, 'arbitrary or unjustifiable'. (225)

The European Communities explained this difference by two factors:
1. The frequency and scale of the treatment: Therapeutic use is occasional as opposed to regular and continuous use that characterizes growth promotion. Therapeutic use is selective as it concerns only individual sick or diseased animals; growth promotion involves the administration of hormones to all herds and all the members of a herd of cattle. Zootechnical use may relate to entire herds but would occur only once a year. It is thus clearly distinguishable from the use of hormones continuously and over long periods of time (apparently most of the lifespan of the animals involved). This difference has been stressed in particular by Dr. André, one of the experts advising the Panel. (223)
2. The mode of administration of hormones, which the European Communities has regulated in substantial detail. The hormones must, in the first place, be administered by a veterinarian or under the responsibility of a veterinarian. In addition, Directive 96/22/EC specifies detailed conditions, such as, for example: strict withdrawal periods; administration by injection or, in case of varying disfunctions, by vaginal spirals, but not by implants; clear identification of the individual animal so treated; and recording of the details of treatment by the responsible veterinarian (e.g. type of treatment, type of veterinary drug used or authorized, date of treatment, identity of the animals treated). (224)

Natural and synthetic hormones for growth promotion v. carbadox
Carbadox induces and does not merely promote cancer. The experts advising the Panel confirmed that carbadox was genotoxic in character. (226)

Having reviewed the arguments of the EC and the reasoning of the panel, the Appellate Body agreed with the panel that the difference in the EC levels of protection in respect of the hormones in dispute when used for growth promotion, on the one hand, and carbadox, on the other, is unjustifiable in the sense of Article 5.5. (235)

However, the question remains whether this unjustifiable difference results in discrimination or a disguised restriction on international trade.
According to the Appellate Body, the degree of difference, or the extent of the discrepancy, in the levels of protection, is only one kind of factors which, along with others, may cumulatively lead to the conclusion that discrimination or a disguised restriction on international trade in fact results from the application of a measure or measures embodying one or more of those different levels of protection. (240)

The answer to the question whether arbitrary or unjustifiable differences or distinctions in levels of protection established by a Member do in fact result in discrimination or a disguised restriction on international trade must be sought in the circumstances of each individual case. (240)

The Appellate Body reversed the panel's finding that in this case, the arbitrary or unjustifiable difference in the levels of protection results in discrimination or a disguised restriction on international trade. (246)

The Appellate Body said it did not attribute the same importance as the panel to the supposed multiple objectives of the European Communities in enacting the EC Directives that set forth the EC measures at issue. To the Appellate Body, the documentation that preceded or accompanied the enactment of the prohibition of the use of hormones for growth promotion and that formed part of the record of the Panel made clear the depth and extent of the anxieties experienced within the European Communities concerning the results of the general scientific studies (showing the carcinogenicity of hormones), the dangers of abuse (highlighted by scandals relating to black-marketing and smuggling of prohibited veterinary drugs in the European Communities) of hormones and other substances used for growth promotion and the intense concern of consumers within the European Communities over the quality and drug-free character of the meat available in its internal market. A major problem addressed in the legislative process of the European Communities related to the differences in the internal regulations of various Member States of the European Union (four or five of which permitted, while the rest prohibited, the use for growth promotion of certain hormones), the resulting distortions in competitive conditions in and the existence of barriers to intra-community trade. The necessity for harmonizing the internal regulations of its Member States was a consequence of the European Communities' mandate to establish a common (internal) market in beef. Reduction of any beef surplus through an increase in the consumption of beef within the European Communities, is not only in the interests of EC farmers, but also of non-hormone using farmers in exporting countries. (245)

The Appellate Body stated it did not share the panel's view that the import ban on treated meat and the Community-wide prohibition of the use of the hormones in dispute for growth promotion purposes in the beef sector were not really designed to protect its population from the risk of cancer, but rather to keep out US and Canadian hormone-treated beef and thereby to protect the domestic beef producers in the European Communities. (245)
SPS Agreement
Article 5. Assessment of Risk and Determination of the Appropriate Level of Sanitary or Phytosanitary Protection
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5. With the objective of achieving consistency in the application of the concept of appropriate
level of sanitary or phytosanitary protection against risks to human life or health, or to animal and plant
life or health, each Member shall avoid arbitrary or unjustifiable distinctions in the levels it considers
to be appropriate in different situations, if such distinctions result in discrimination or a disguised
restriction on international trade. [...]
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SPS Agreement
Article 2. Basic Rights and Obligations
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3. Members shall ensure that their sanitary and phytosanitary 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. Sanitary and phytosanitary measures shall not be applied in a manner which would constitute a disguised restriction on international trade.
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IV. Article 2.2 and Article 5.6 SPS Agreement

The Appellate Body agreed with the panel's application of judicial economy to the claims under these articles. (250—252)
SPS Agreement
Article 5. Assessment of Risk and Determination of the Appropriate Level of Sanitary or Phytosanitary Protection
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6. Without prejudice to paragraph 2 of Article 3, when establishing or maintaining sanitary or phytosanitary measures to achieve the appropriate level of sanitary or phytosanitary protection, Members shall ensure that such measures are not more trade-restrictive than required to achieve their appropriate level of sanitary or phytosanitary protection, taking into account technical and economic feasibility3.
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3 For purposes of paragraph 6 of Article 5, 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.
SPS Agreement
Article 2. Basic Rights and Obligations
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2. Members shall ensure that any sanitary or phytosanitary measure is applied only to the extent necessary to protect human, animal or plant life or health, is based on scientific principles and is not maintained without sufficient scientific evidence, except as provided for in paragraph 7 of Article 5.
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