EMERGING LAW – TRADE LAW
Atty. Elpidio V. Peria
22 May 2011
Banana Split to Australia ?
What the Filipino Banana Exporter May Do to Make Sense
of Australia's Sanitary and Phytosanitary (SPS) Measures
Malaya's online edition last May 20, 2011 headlined that Filipino banana growers are “going bananas” over Biosecurity Australia's requirement that the Philippine bananas exported to Australia should be plants that have eight leaves, and these eight leaves should be there in the plant before the bananas are harvested and not only that, the Filipino exporters are also required to use a non-perforated plastic to wrap the fruits.
The application of this strict or strange rule, whichever way one looks at it, not only threatens the export prospects of Philippine bananas to Australia but highlights an obscure part of trade law dealing with sanitary and phytosanitary (SPS) measures which is part of a set of agreements in the World Trade Organization (WTO), to which both the Philippines and Australia are members.
According to a handbook from the World Trade Organization (WTO) website, The WTO Agreements Series, the Agreement on the Application of Sanitary and Phytosanitary Measures (“the SPS Agreement”) sets out the basic rules for food safety and animal and plant health requirements.
The Series says that while the SPS Agreement allows countries to set their own standards on food safety and animal and plant health requirements, it also specifies that regulations must be based on scientific findings and should be applied only to the extent that they are necessary to protect human, animal or plant life or health; they should not unjustifiably discriminate between countries where similar conditions exist.
The question that must be asked here is whether the eight-leaf rule as well as the non-perforated plastic requirement is a reasonable requirement in accord with WTO rules and one approach which Filipino banana exporters may do to clarify this is to recall art. 2.2 of the SPS Agreement which states:
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.
This provision, among its other details, deals mainly with the question on whether there is enough scientific evidence to justify the SPS requirement.
From the WTO analytical index on the SPS Agreement found in the WTO website, based on the WTO Dispute Settlement Panel on Japan-Apples case, the kind of scientific evidence to be considered here is
evidence gathered through scientific methods, excluding by the same token information not acquired through a scientific method. We further note that scientific evidence may include evidence that a particular risk may occur … as well as evidence that a particular requirement may reduce or eliminate that risk ….
What this means is that there has to be a clear scientific basis for the eight-leaf rule, including that of the non-perforated plastic requirement, which is based on a study which uses the scientific method. There must also be scientific evidence that a particular risk may occur if the banana is harvested not from an eight-leaf plant and it should also be shown that the eight-leaf requirement will reduce this risk.
Who has the burden of proof in raising this matter relating to scientific evidence?
In the same Japan-Apples case found in the WTO website analytical index, the Appellate Body said that : “although the complaining party bears the burden of proving its case, the responding party is responsible for proving the case it seeks to make in response”.
What the Filipino exporter has to do is to raise a presumption that there were no relevant scientific studies or reports to prove that the measure at issue imposed by Australia was not supported by sufficient scientific evidence.
Another aspect of the WTO SPS rules that the Filipino exporter can raise against Australia is whether the disputed rule is in accord with art. 2.3 of the SPS Agreement which reads :
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.
From the same WTO analytical index, this provision has the following elements based on the Panel on Australia — Salmon (Article 21.5 — Canada) :
“[T]hree elements, cumulative in nature, are required for a violation of this provision:
(1) the measure discriminates between the territories of Members other than the Member imposing the measure, or between the territory of the Member imposing the measure and that of another Member;
(2)the discrimination is arbitrary or unjustifiable; and
(3)identical or similar conditions prevail in the territory of the Members compared
There are a lot more things to be considered in relation to these provisions and also a thoroughgoing assessment of emerging legal principles from WTO jurisprudence, and the Filipino exporters' lawyers familiar with the nuances of world trade law would know all of these things.
If only to clarify these matters so as to guide the actions of the rest of the Filipino banana exporting community, there must be initiated some action here, actions which are not limited to diplomatic initiatives but also to other means at our disposal to address the concerns of Australia on Filipino banana exports not limited to the implementation mechanisms established under the ASEAN-Australia New Zealand Free Trade Agreement (AANZFTA) of which this issue is a legitimate concern.
The said bilateral trade agreement is based on the parties' commitments to the WTO's SPS Agreement, there should be no problem raising the same principles outlined above as both of the parties to this case are WTO members.
Short of this, if this issue is not resolved, the exporters concerned should take this issue, with the help of the DTI and the DFA and our Permanent Mission to the WTO, before the WTO and initiate legal action before the dispute settlement body of such organization, to clarify the application of this rule, once and for all.
Now, if the exporters find this process tedious costly or too complicated beyond their understanding and experience, why don't they just repackage instead those fresh bananas and export processed bananas, like, among other incarnations of the fruit, banana splits, though that will most likely require another discourse on what sorts of trade rules will apply to these kinds of products.
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