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Rural and Regional Affairs and Transport Legislation Committee-Senate Standing Australian Quarantine and Inspection Service and the importation of salmon Report: An appropriate level of protection? The importation of salmon products: A case study of the administration of Australian quarantine and the impact of international trade arrangements, June 2000


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-A au A U S T R A L IA .,^

A n A ppr o pr ia te L ev el of P r o t e c t io n?

The Im portation o f Salmon Products:

A case study o f the Adm inistration o f A ustralian Quarantine and the Im pact o f International Trade Arrangem ents

Report of the

Senate Rural and Regional Affairs and Transport Legislation Committee

June 2000

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Parliament o f the Commonwealth o f Australia

An Appropriate Level of Protection?

The Importation of Salmon Products: A case study of the Administration of Australian Quarantine and the Impact of International Trade Arrangements

R ep ort b y the

S en ate R ural an d R eg io n a l A ffairs a n d T ran sp ort L eg isla tio n C o m m ittee

June 2000

ii

© Commonwealth o f Australia 2000 ISBN 0 642 71082 1

This document was produced from camera-ready copy prepared by the Senate Rural and Regional Affairs and Transport Legislation Committee, and printed by the Senate Printing Unit, Department of the Senate, Parliament House, Canberra.

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M EM BERS OF THE C OM M ITTEE

Members Senator Winston Crane LIB, Western Australia Chairman Senator Michael Forshaw ALP, New South Wales Deputy Chairman Senator Jeannie Ferris LIB, South Australia Senator Paul Calvert LP, Victoria [substituting for Senator Julian McGauran

(NP, Victoria)]

Senator Kerry O ’Brien ALP, Tasmania [substituting for Senator Sue Mackay (ALP, Tasmania)] Senator Shayne Murphy ALP, Tasmania Senator John Woodley AD, Queensland

Participating Members Senator Abetz Senator Eggleston Senator Mason

Senator Bartlett Senator Faulkner Senator McKieman

Senator Boswell Senator Ferguson Senator McLucas

Senator Brown Senator Gibson Senator Payne

Senator Brownhill Senator Harradine Senator Schacht

Senator Calvert Senator Harris Senator Tchen

Senator Chapman Senator Hutchins Senator Tierney

Senator Coonan Senator Knowles Senator Watson

Senator Crossin Senator Lightfoot

SECRETARIAT

Mr Andrew Snedden (Secretary)

Ms Robina Jaffray (Principal Research Officer)

Mr John O’Keefe (Senior Research Officer)

Ms Trish Carling (Senior Research Officer)

Mr Stephen Frappell (Senior Research Officer)

Ms Lyn Fairweather (Estimates Officer)

Ms Ruth Clark (Executive Assistant)

Ms Emma Jane Will (Executive Assistant)

The Senate Parliament House Canberra ACT 2600

Telephone (02) 6277 3511 Facsimile (02) 6277 5811 Internet www.aph.gov.au/senate Email rrat.sen(o>aph.gov.au

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TER M S OF R EFER EN C E

On 11 August 1999, the Senate referred the following matter to the Rural and Regional Affairs and Transport legislation Committee for inquiry and report by the last sitting day o f the Senate in October 1999. (Various extensions o f time to the reporting date were granted, with a final reporting date o f on or before

8 June 2000).

The effectiveness o f the legal and regulatory regimes governing the Australian Quarantine and Inspection Service (AQIS) and the need to ensure transparency, consistency, scientific rigour and the highest standards o f protection o f the environment, the local fish population and the fishing and recreational fishing industries o f Australia, having regard, in particular, to the administrative procedures and decision­ making processes involved in the recent AQIS decision to allow the importation o f salmon products into Australia.

C O NDUCT OF THE INQ UIRY

On 11 August 1999, the Senate referred the inquiry into the importation of salmon products to the Senate Rural and Regional Affairs and Transport Legislation Committee for inquiry and report by October 1999. Various extensions of time to the reporting date were granted, with a final reporting date of 11 May 2000. The terms of

reference were advertised in the press on 18 August 1999.

A total of 66 written submissions were received. A list of the submissions is at Appendix 1. A large number of non-government organisations sent submissions (49). A number of these are from professional associations or clubs (19). Other submissions came from industry (20), members of parliament or political parties (3),

and academics (5).

Hearings were held in Canberra on 24 September, 11 November, 22 November 1999 and 18 February 2000 and in Hobart on 5 October 1999. Oral contributions were taken from 25 witnesses or groups of witnesses (see Appendix 2), and 409 pages of evidence were taken. The Hansard of the hearings is available at the Hansard site at www.aph.gov.au.

The Committee also expresses its gratitude to Mr Gerard Brennan, solicitor and formerly Legal Adviser to the Department of Foreign Affairs, and to Professor Malcolm Naim, Chairman of the Quarantine and Exports Advisory Council, for their valuable input to the Committee's deliberations.

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TABLE OF CONTENTS

MEMBERS OF THE CO M M ITTEE..................................................................I ll

SECRETARIAT........................................................................................................ I ll

TERMS OF RE FER EN C E.....................................................................................IV

CONDUCT OF THE INQ UIRY............................................................................. V

TABLE OF CONTENTS....................................................................................... VII

ABBREVIATIO NS...................................................................................................XI

EXECUTIVE SUMMARY AND RECOM M ENDATIONS.......................XIII

Australia's Membership of the WTO.........................................................................xiii

Impact of the Amended Measures............................................................................ xiii

Referral of the Inquiry..............................................................................................xiv

Major Issues............................................................................................................. xiv

RECOM M ENDATIONS.................................................................................. XVIII

CHAPTER O N E ........................................................................................................... 1

QUARANTINE POLICY AND ANIMAL QUARANTINE POLICY ARRANGEMENTS.......................................................................................................1

Introduction................................................................................................................ 1

Structure of the Report................................................................................................ 1

Quarantine Policy Development...................................................................................2

The Review of Quarantine Policy................................................................................4

Salmon Quarantine Regulations in force until July 1999...............................................8

The Policy Impact of the WTO and the Dispute......................................................... 10

Current Quarantine Policy on Salmonids and Non-Salmonid Marine Finfish...............10

Further WTO Findings.............................................................................................. 17

Major Issues.............................................................................................................. 17

Committee Approach to the Inquiry and its Significance............................................ 19

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CHAPTER TW O....................................................................................................... 22

CONCERNS REGARDING THE IMPACT OF REVISED QUARANTINE ARRANGEMENTS.....................................................................................................22

Introduction..............................................................................................................22

Salmonids in Australia............................................................................................. 23

The Aquaculture Industry..........................................................................................24

Concerns in Relation to the Potential Consequences of the Decision..........................31

Other Issues.............................................................................................................. 38

CHAPTER T H R E E .................................................................................................. 43

THE WORLD TRADE ORGANISATION AND THE CANADIAN CHALLENGE 43

The Legal and Administrative Quarantine Framework............................................... 43

Establishment of the WTO and the Major International Agreements.......................... 44

The Obligations under the SPS Agreement.................................................................48

The Dispute Settlement Procedures in the WTO.........................................................50

The Jurispmdence of the SPS Agreement.................................................................. 55

Australia and the WTO..............................................................................................56

The Challenge in the WTO on Salmon...................................................................... 57

The 1999 Panel Process.............................................................................................. 61

The Tasmanian Government's Ban on Imported Salmon Products..............................64

Disease Free Area Status............................................................................................ 70

The Conduct of the Litigation.................................................................................... 72

Committee Comment..................................................................................................79

CHAPTER FO U R ...................................................................................................... 81

THE APPROPRIATE LEVEL OF PROTECTION................................................... 81

Determination of the Appropriate Level of Protection................................................. 81

Submission Concerns.................................................................................................87

Submission Comment................................................................................................. 88

The Precautionary Principle....................................................................................... 95

Committee Comment..................................................................................................97

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CHAPTER F IV E ........................................................................................................ 99

IMPORT RISK ANALYSIS - PURPOSE AND PROCESS...................................... 99

Objectives of Import Risk Analysis............................................................................ 99

The Role of Risk Analysis in Quarantine Policy........................................................100

The IRA Process.................................................................................................... 101

The Principles of Risk Analysis............................................................................... 104

The 1996 Import Risk Analysis................................................................................ 107

The 1999 Import Risk Analysis................................................................................ 110

The Effect of the Findings of the 1999 Import Risk Analysis.....................................112

Generic Risk Analysis Approach............................................................................. 116

The Conduct of the Import Risk Analysis Process.....................................................117

AQIS IRA Process................................................................................................... 117

Submission Comment.............................................................................................. 124

Committee Comment....................................................................... 127

CHAPTER SIX ......................................................................................................... 129

THE METHODOLOGY OF THE IMPORT RISK ANALYSIS AND THE SCIENCE ....................................................................................................................................129

Introduction.............................................................................................................129

Import Risk Analysis Methodology and WTO Requirements....................................129

The 1999 Import Risk Analysis Methodology.......................................................... 130

Committee Comment............................................................................................... 142

The IRA Matrix..................................................................................................... 143

Submission Concerns.............................................................................................. 161

The Policy Implications of the IRA...........................................................................172

The Import of Non-Viable Salmonid Product from New Zealand..............................174

CHAPTER SE V E N ................................................................................................. 177

CONCLUSIONS AND RECOMMENDATIONS......................................................177

Introduction.............................................................................................................177

Conduct of the Import Risk Analysis........................................................................178

The Appropriate Level Of Protection........................................................................188

Australia's Membership of the WTO and International Law......................................190

APPENDIX ONE 197

SUBMISSIONS.........................................................................................................197

APPENDIX T W O ...................... 201

LIST OF WITNESSES............................................................................................... 201

APPENDIX T H R E E ................................................................................................207

MINISTERIAL STATEMENT 17 MAY 2000.........................................................207

APPENDIX 4 ............................................................................................................. 215

WTO CHRONOLOGY OF EVENTS....................................................................... 215

APPENDIX 5 ............................................................................................................. 219

ANIMAL QUARANTINE POLICY MEMORANDUM 1999/51............................. 219

APPENDIX 6 ............................................................................................................. 233

AGREEMENT ON THE APPLICATION OF SANITARY AND PHYTOSANITARY MEASURES........................................................... .................................................. 233

APPENDIX 7 ............................................................................................................. 253

ORGANISATIONAL CHART - AUSTRALIAN SAFEGUARDS AND NON­ PROLIFERATION OFFICE..................................................................................... 253

ABBREVIATIONS

ABARE Australian Bureau of Agricultural and Resource Economics

AFFA Agriculture Forestry and Fisheries Australia

AGD Amoebic Gill Disease

AGS Australian Government Solicitor

ALOP Appropriate Level of Protection

AQIS Australian Quarantine and Inspection Service

AQPM Animal Quarantine Policy Memorandum

BKD Bacterial Kidney Disease

BRS Bureau of Resource Sciences

CVO Chief Veterinary Officer

DFAT Department of Foreign Affairs and Trade

DSB Dispute Settlement Body

DSU Dispute Settlement Understanding

EC European Community

EEZ Exclusive Economic Zone

GATT General Agreement on Tariffs and Trade

IHNV Infectious haematopoietic necrosis virus

IPNV Infectious pancreatic necrosis virus

IRA Import Risk Analysis

ISAV Infectious salmon anaemia virus

ISA Infections salmon anaemia

MOU Memorandum of Understanding

NFF National Farmers' Federation

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ΟΙΕ Office Internationale des Epizootics [International Animal Health Organisation]

OIL Office of International Law [Attorney-General's Department]

RAP Risk Assessment Panel

SPS Agreement on Sanitary and Phytosanitary Measures

TBT Agreement on Technical Barriers to Trade

TSGA Tasmanian Salmonid Growers' Association

WTO World Trade Organisation

E X EC U TIV E SUM M ARY A N D RECO M M ENDATIO NS

On 19 July 1999, AQIS announced amended quarantine measures for salmon products, non-marine finfish and ornamental finfish. The amended measures resulted from a successful challenge in the World Trade Organisation [WTO] by Canada

against Australia's quarantine measures for salmon. Australia was required to make its quarantine measures for salmon less trade restrictive, but at the same time tightened import controls on bait fish and ornamental finfish. The amended arrangements met with significant criticism within Australia and were the subject of a further challenge by Canada.

Australia's Membership of the WTO

Australia's membership of the World Trade Organisation (WTO) carries with it rights and obligations, which affect the legal and regulatory regime established by Australia for the importation of goods. In particular, it is a signatory state to the Agreement on Sanitary and Phytosanitary Measures, the principal agreement governing the use of import controls, the aim of which was to allow only scientifically-based health

protection, and not to allow measures implemented as trade restrictive measures. It is the requirements of this agreement which were the subject of the salmon dispute within the WTO.

Impact of the Amended Measures

Concerns about the potential negative impact of the decision were expressed by representatives of the aquaculture industry in Tasmania and Victoria, recreational fishing bodies and environmental interests. However, the AQIS decision, which

included the tightening of measures for the import of baitfish and ornamental finfish, also had implications for the tuna fishing industry, the cray fishing industry and importers of goldfish and other ornamental finfish.

Australia commands a premium in the international market for food products as a result of its disease free status. Should diseases not currently found in fish be introduced into Australia as a result of the amended quarantine measures, the consequences are potentially significant.

Tasmania's 'clean and green' image is a prime marketing device, allowing that state to charge a premium on many of its products. Any disease incursion has the potential to undermine the image and impact negatively on that premium. Opponents of the AQIS 19 July 1999 decision argue that the environment and native fish species are also at

risk.

However, the decision had potential to impact negatively on importers of baitfish for the tuna and cray fishing industries, sited principally in South Australia and Western Australia respectively, by restricting the quarantine requirements on imports of baitfish. The pet industry was also concerned that any further restrictions on the

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import of ornamental finfish and particularly goldfish, would affect the viability of sections of the industry.

Referral of the Inquiry

The Senate referred the inquiry to the Committee, charging it with the investigation of the following matters:

The effectiveness of the legal and regulatory regimes governing the Australian Quarantine and Inspection Service (AQIS) and the need to ensure transparency, consistency, scientific rigour and the highest standards of protection of the environment, the local fish population and the fishing and recreational fishing industries of Australia, having regard, in particular, to the administrative procedures and decision-making processes involved in the recent AQIS decision to allow the importation of salmon products into Australia

Major Issues

The following major matters became the focus of the inquiry:

a) The defining of Australia's Appropriate Level of Protection;

b) The import risk analysis process, particularly the consultation and notification procedures set out in the AQIS handbook and the science and methodology of the Import Risk Analysis itself; and

c) The legal and regulatory regime, including the international agreements to which Australia is a signatory and the obligations incurred by those agreements.

The Appropriate Level o f Protection

A country can set its ALOP at whatever level it chooses, but a country cannot impose quarantine measures beyond what is necessary 'to protect human, animal and plant life or health.

The ALOP is further constrained by the 'consistency' requirement - a country must be consistent in its application of SPS measures and cannot apply such measures in a more stringent way in one area than in another like area. It is contrary to Article 5.5 to adopt a low risk policy in one field, while not doing so in a comparable field. Thus, the import of whole marine finfish for bait for the tuna and cray fishing industries and of live goldfish for the pet industry must be subject to the same SPS measures as those applying to the importation of uncooked salmon products. The barrier cannot be set at one level for one species and at another for other like products.

It would appear that, while a member has considerable freedom to determine its ALOP, because the extent of quarantine measures are constrained by the requirements of the various international agreements entered into by Australia, the determination of the ALOP may be of little practical significance. In effect, the ALOP is constrained by the requirement that quarantine measures must be scientifically justifiable. To this

extent, the Committee considers that the ALOP can be rendered meaningless by the process.

The Committee acknowledges that the concept provides an overarching principle, which serves to indicate the conservative nature of Australia's quarantine arrangements. The Committee considers that determination of the ALOP should be more explicit and must take account of environmental considerations and the precautionary principle.

Import Risk Analysis

There are two elements to any consideration of import risk analysis - the methodology and the science of any single import risk analysis and the process by which such investigations are undertaken and finalised.

The science and the methodology

While the science per se was not an issue, the incompleteness of scientific data at present was. Many submissions argued that, in the face of scientific uncertainty, the precautionary principle should be applied and no imports allowed until the precise extent of the risk to human, animal and plant life and the environment could be

assessed. They argued that, however slight the risk might be, the consequences were such that due caution should be exercised.

The Committee recognises that import risk analysis is a relatively new technique.; At the same time, it is a vital process for a country that has a high reliance on agricultural exports. AQIS must consider imports that may carry diseases which could be devastating to our agricultural industries and natural environment. The importance of getting it right is magnified even more when taking account of the limited disease problems we have in comparison with other countries.

The Committee considers that it is essential for Australia to be at the forefront of developments in this area and therefore recommends the establishment of a Key Centre for Risk Analysis, as was also recommended by the Naim Review of Quarantine.

There are different and equally appropriate methodologies and approaches to the conduct of risk analysis, although there are both international and domestic guidelines on the conduct of IRA's. While it is the Committee's view that AQIS relied too much on qualitative risk analysis in the 1999 IRA, that IRA was endorsed by the WTO in Febmary, 2000. However, the Committee is firmly of the view that quantitative risk analysis skills must be enhanced and that technique used to its best advantage.

The import risk analysis procedures

AQIS consultation processes were heavily criticised by some stakeholders. They argued that, while AQIS provided information, they were not able to participate in the process - their contributions were not actively sought and neither were they able to have their input properly considered and incorporated.

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The Committee considers that consultation is a participative process, whereby stakeholders views are sought, considered and incorporated into any analysis. AQIS has been criticised for its consultation processes over a number of years and the Committee retains its concerns about AQIS' performance in this area.

The Committee is also concerned about the procedures by which AQIS undertakes the IRA process, principally the extensive publication of the draft IRA, which ultimately was damaging to Australia's case in the WTO. The Committee notes that WTO guidelines only require the notification of final measures to other WTO members. There is absolutely no requirement to publish draft documentation or preliminary findings. The Committee considers that a far greater level of caution must be exercised by AQIS and that no draft documentation or preliminary findings should be given broad publication, as currently happens.

Indeed, such documentation should only be distributed to domestic parties who are deemed to have a relevant interest in the process and then only on a confidential basis. The procedures and Handbook should be amended to reflect this.. The Committee also considers that, to further enhance the consultative approach, a Risk Assessment Committee for each import risk analysis should be established at an early stage of the risk analysis process. Such committees should comprise relevant domestic

stakeholders nominated by their respective representative bodies.

International Law and the Conduct o f the Case in the WTO

The Committee's major concerns, so far as international law and litigation are concerned, relate to:

a) The significance attached by successive governments over the last two decades to international law and litigation in international bodies such as the WTO;

b) The conduct of the salmon case in the WTO; and

c) The availability and utilisation of legal expertise within the Australian Government.

The world trade arena is one of increasing political and economic importance. However, the Committee is concerned about the failure to appreciate the expanding significance of international law. The Committee is particularly concerned that there is no single specialist office of international law with overriding responsibility for dealing with international legal matters. The Committee is apprehensive about the quantum and quality of resources currently devoted to international law and for the conduct of litigation in international courts.

The international law function is broader than merely the conduct of litigation and any responsible agency must be involved at an earlier point in time than the point of dispute. The Committee considers that it is in Australia's interests to ensure that legal input is a fundamental part of any negotiation or policy development process, but that the specialist ability to litigate the case before the WTO must also be available.

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The Committee considers that it is imperative that the Government establish a statutory office of international legal adviser, within the Attorney-General's portfolio, to provide a mechanism for more effective international legal outcomes for Australia.

xviii

R ECO M M EN DA TIO N S

Recommendation 1

That the Australian Government make application to the WTO for a variation to the WTO Rules to have disease free area status applied to fish and fish products that are untreated.

Recommendation 2

That AQIS maintain an ongoing review of its import protocols and develop procedures that enable it to implement new import protocols as a response to any changes in perceived risk or any new scientific evidence which might arise.

Recommendation 3

The Committee affirms recommendation 8.17 in its 1996 report on AQIS and recommends that, prior to the publication of documentation, AQIS consult with stakeholders, incorporating the outcome of such consultations in any documentation.

Recommendation 4

The Committee recommends that AQIS, in its review of the IRA processes and procedures, amend the procedures to allow for the direct involvement of domestic stakeholders through the establishment of a Risk Assessment Committee for each import risk analysis.

Recommendation 5

That the Import Risk Analysis procedures and Handbook be amended to ensure that the consultation process takes place prior to the development and publication of documents such as issues papers and the like.

Recommendation 6

That draft Import Risk Analysis documents and other like documentation not contain any proposed or indicative conclusions.

xix

Recommendation 7

That:

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Page xix

Recommendation 8

That, wherever possible, AQIS support their qualitative analysis with quantitative risk assessment techniques.

Recommendation 9

That, given the fundamental significance of risk analysis, the Government establish a Key Centre for quarantine related risk analysis, consistent with that proposed by the Naim Committee in Australian Quarantine - A Shared Responsibility.

Recommendation 10

That the Commonwealth Government, in consultation with the community and with State and Territory governments, be responsible for the establishment o f an appropriate level of protection for Australia.

Recommendation 11

That the ALOP be more explicit and include as part of its determination enviromnental factors and the application of the precautionary principle.

Recommendation 12

That an International Legal Adviser's Office be established to provide high quality international legal advice from the early stages of Australia's relationships with other countries and international organisations.

R ECO M M EN DA TIO N S

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Recommendation 7

That:

a) The publication of documentation be limited to the requirements of our international obligations; and

b) Discussion papers or draft documents should have limited distribution on a strictly confidential basis and be restricted to domestic stakeholders and the seeking of expert opinion.

Recommendation 9

That, wherever possible, AQIS support their qualitative analysis with quantitative risk assessment techniques.

Recommendation 10

That, given the fundamental significance of risk analysis, the Government establish a Key Centre for quarantine related risk analysis, consistent with that proposed by the Naim Committee in Australian Quarantine - A Shared Responsibility.

Recommendation 11

That the Commonwealth Government, in consultation with the community and with State and Territory governments, be responsible for the establishment of an appropriate level of protection for Australia.

Recommendation 12

That the ALOP be more explicit and include as part of its determination environmental factors and the application of the precautionary principle.

Recommendation 13

That an International Legal Adviser's Office be established to provide high quality international legal advice from the early stages of Australia's relationships with other countries and international organisations.

Recommendation 13

That the International Legal Adviser's Office be established as a statutory authority within the Attorney-General's Department.

Recommendation 14

That the Head of that Office, the Legal Adviser, be appointed at the highest level, reporting to the Attorney-General and to the Prime Minister.

Recommendation 15

That a thorough evaluation be undertaken of the approach to and conduct of international litigation by such countries as Canada and the United States, especially in disputes under agreements governed by the WTO. The investigation could be via an independent agent/adviser or a parliamentary committee.

C H A PT E R ONE

QUARANTINE POLICY AND ANIMAL QUARANTINE POLICY ARRANGEMENTS

Structure of the Report Quarantine Policy Development The Review of Quarantine Policy Salmon Quarantine Regulations in force until July 2000

The Policy Impact of the WTO and the Dispute Current Quarantine Policy on Salmonids and Non-Salmonid Marine Finfish Further WTO Findings Major Issues

Committee Approach to the Inquiry and its Significance

Introduction

1.1 Until the recent amendment to the regulations, an Australian ban (Quarantine Proclamation 86A) on the imports of fresh, chilled or frozen, wild, ocean caught salmon from Canada and the USA had been in force since 1975. The justification for the ban was to prevent the introduction of exotic disease agents into Australia, with negative consequences for the health of fish in this country. Canada has been seeking

access to the Australian market for uncooked salmon products since that time, culminating in 1994 with the initiation of formal General Agreement on Tariffs and Trade [GATT] dispute settlement consultations and ultimately the challenge in the World Trade Organisation [WTO] by Canada and the United States.1

1.2 As a result of that challenge Australia was required to undertake an Import Risk Analysis [IRA] on the importation of salmonid products and non-salmonid marine finfish, which resulted in changes to import measures for both types of product. In the case of salmonids, quarantine restrictions were relaxed; in the case of

marine finfish, quarantine restrictions were tightened.

Structure of the Report

1.3 The report discusses the development of quarantine policy, the significance of the aquaculture and recreational trout fishing industries and industry concerns in relation to the changed quarantine arrangements for salmon, the dispute in the WTO and the impact of Australia's membership of the WTO on quarantine policy, the methodology and science of the Import Risk Analysis and the process by which the IRA was developed. The Committee conclusions and recommendations are set out in the final chapter.

1 Australian Quarantine and Inspection Service, Submission 17, p 68

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1.4 The Committee acknowledges that the IRA for salmonids also considered importation of non-salmonid marine finfish. The Committee has concentrated its discussion on the salmonid product, but comments on non-salmonid marine fmfish where appropriate.

Quarantine Policy Development

1.5 The Australian Quarantine and Inspection Service [AQIS], is responsible for Australia's national quarantine and inspection systems, including the safeguarding of animal, plant and human health status, a significant factor in the value of some exports, including salmon and trout. AQIS' objective is to adopt quarantine policies that, wherever appropriate, are based on international standards and which provide the health safeguards required by government policy in the least trade-restrictive way.2 However, if measures go beyond the relevant international standard, AQIS must undertake an import risk analysis in order to justify the measure on a scientific basis.

1.6 The Quarantine Act 1908 provides the legislative basis for human, animal and plant quarantine in Australia.3 Since 1908 there has been a firm commitment to prevent the unplanned introduction of pathogens and parasites of animals and plants to Australia. Such measures as bans on invasive pathogens are particularly important where the potential damage would be irretrievable.

1.7 Section 4 of the Act defines the scope of quarantine and Subsection 13(1) provides the power to issue quarantine proclamations 'prohibiting the importation into Australia of any articles likely to introduce any infectious or contagious disease, or disease or pest affecting persons, animals or plants'. This power can be applied either generally or subject to conditions.

1.8 AQIS advises:

Implicit in the development of quarantine policy and practice is the understanding that natural movements, such as those of migratory birds and wind home organisms, and the entry of people (7.5 million international visitors in 1998-99), aircraft (56 000 first port aircraft), cargo (2.5 million containers), vessels (11 000 commercial vessels) and mail (260 million

2 AQIS, Import Risk Analysis on Non-viable Salmonids and Non-Salmonid Marine Finfish, July 1999, p 5

3 Section 4 of the Act states:

In this Act, Quarantine has relation to measures for the inspection, exclusion, detention, observation, segregation, isolation, protection, treatment, sanitary regulation, and disinfection of vessels, installations, persons, goods, things, animals, or plants, and having as their object the prevention o f the introduction, establishment or spread o f diseases or pests affecting human beings, animals, or plants.

Subsection 13(1) of the Act provides, inter alia, that the Governor-General in Executive Council may, by proclamation, prohibit the importation into Australia of any articles likely to introduce any infectious or contagious disease, or disease or pest affecting persons, animals or plants. This power of prohibition may be applied generally or subject to any specified conditions or restrictions, which if applied, must relate to pest or disease concerns.

3

articles) will bring pests and diseases of animal, plants and people into Australia. Through the application of quarantine measures, AQIS aims is to reduce the risks associated the entry of people and goods to an acceptably low level...4

1.9 Both AQIS and the Department of Agriculture, Forestry and Fisheries [AFFA] affirmed the conservative nature of Australia's quarantine arrangements, both in their submissions and at public hearing, citing the following reason for the conservative approach:

...we would openly say we are conservative for one very justifiable reason: this country has a unique status in terms of pest and disease incidence, and it is our wish, both in the private and the public sector, to protect that status.5

1.10 AQIS advises in its Import Risk Analysis:

The matters to be considered when deciding whether to issue a permit are set out in section 70 of QP [Quarantine Proclamation] 1998 and include the quarantine risk, whether the imposition of conditions would be necessary to limit the quarantine risk to a level that would be acceptably low and anything else that is considered relevant. Quarantine risk means the likelihood that the importation of introduction, establishment or spread of a disease or a pest in Australia, the likelihood that harm will result (to humans, animals, plants the environment or economic) activities and the

likely extent of any such harm.6 7

Trade Considerations

1.11 Australia is a relatively small economy in world terms and one which is highly dependent on trade. Within the agriculture sector, approximately 80% of the gross value of production or $25 billion is exported.'

1.12 AQIS advised that, in the years preceding the GATT and WTO Agreements, Australia had become increasingly vulnerable to the use of quarantine measures as a means of discrimination against its agricultural production. AQIS stated that 'exporters were highly vulnerable to the use of quarantine measures for trade protection and in particular to blanket bans on imports of products from the whole of Australia's territory, notwithstanding the absence of diseases or pests at least in some major

agricultural production regions'8. Australia's dependence on agricultural exports provided the impetus for it to become active in the negotiation of multilateral

4 AQIS, Supplementary Submission 62, 10 February 2000, pp 3-4

5 Dr Simon Hearn, Evidence, RRAT, 24 September 1999, p 6

6 AQIS, Import Risk Analysis on Non-viable Salmonids and Non-Salmonid Marine Finfish, July 1999, p 6

7 National Farmers Federation, Submission 33, p 2

8 AQIS, Submission 17, p 11

4

agreements that would contribute to improved market access and which would provide greater security and predicability in market access.9

1.13 Many submissions noted that it is in Australia's interests to remain in conformity with WTO requirements. Australia's dependence on trade has provided the impetus to its commitment to the freeing up of trade barriers. With the signing of such agreements as the Sanitary and Phytosanitary [SPS] Agreement and the Agreement on Technical Barriers to Trade [TBT], Australia has agreed to be bound by those agreements and must abide by decisions of the WTO in relation to any perceived breaches. Before Australia can implement or maintain quarantine restrictions, it must consider whether its quarantine arrangements breach WTO Agreements.

The Review of Quarantine Policy

1.14 Quarantine policy has been the subject of a number of reviews over the last several years, principally by the Bureau of Resource Sciences [BRS], a National Taskforce Review and by Professor Malcolm Naim. The principal findings of these reviews are set out below.

Bureau o f Resource Sciences and National Taskforce Reports

1.15 In 1992 AQIS commissioned the Bureau of Resource Sciences to conduct a major review of aquatic animal health and quarantine, to form the basis of a comprehensive examination of Australia’s quarantine policies, practices and procedures for aquatic animals and their products. The objective of the review was to develop a scientifically justified, consistent quarantine policy that would provide the desired level of quarantine security for Australia but not unjustifiably restrict trade.10

1.16 The report recommended that, although there was a need to consider species on a case-by-case basis, in principle the importation of wild-harvested salmon could be permitted if the salmon:

a) Could be derived from stocks with no known epidemics and be certified as such by a responsible authority of the exporting government; and

b) Were certified as not being derived from finfish slaughtered due to quarantine emergencies or disease outbreaks; and

c) Were individually inspected for evidence of muscle, skin, visceral or other lesions or abnormalities, and certified as free of such by a competent government authority; and

9 AQIS, Submission 17, pp 10-11

10 ibid, p 68

5

d) Were imported as eviscerated, filleted flesh to minimise possible contamination by exotic pathogens, unless other safeguards were taken to minimise possible risks.11

1.17 The Government then established in June 1995 a National Task Force on Imported Fish and Fish Products to examine the BRS report and related issues. The National Task Force included representatives of relevant Commonwealth agencies, the States/Territories, commercial fisheries, recreational fisheries, importers, aquaculture

interests, research organisations and the environmental movement. The task force was required to consider:

a) The nature and extent of reliance by the Australian fishing industry and aquaculture industries on imported fish and fish products; and

b) The implications of aquatic uses of such products for current and future fisheries operations and management; and

c) Changing industry practices in specific areas such as the use of imported product for feed in aquaculture and bait in commercial and recreational fisheries; and

d) Issues arising from interstate trade in fish and fish products intended for aquatic use; and

e) The range of pathways by which imported fish and fish products could be introduced into the aquatic environment and international best practice in managing these pathways; and

f) Relevant aspects of the BRS Report on aquatic animal quarantine.

1.18 The report of the National Task Force, released in December 1996, did not specifically address the importation of salmon product from the United States and Canada, but provided 46 recommendations for extensive review of existing quarantine policies for aquatic animals in general. It also made recommendations on how to undertake the review.12

1.19 Objectives of the two studies, the BRS review and the National Taskforce report, 'included laying the groundwork for the development of a comprehensive and consistent aquatic animal quarantine regime to support aquaculture and fisheries development, while meeting the requirements of Australia's obligations under the WTO SPS Agreement'.13

1.20 Other significant events around that time included:

11 ibid, p 69

12 ibid

13 ibid

6

a) The conclusion of the Uruguay Round of the General Agreement on Tariffs and Trade,

b) The negotiation of the Agreement on the Application of Sanitary and Phytosanitary Measures by members of the WTO,

c) The increasing use of Australia’s ‘clean, green’ reputation as a marketing tool,

d) Rapid increases in the volume of world trade and international passenger movements, and

e) Significant scientific advances in surveillance and identification procedures for plant and animal pests and diseases.14

The Nairn Report

1.21 In 1996, the Australian Quarantine Review Committee (Department of Primary Industries and Energy), chaired by Professor Malcolm Naim, was established to undertake a comprehensive review of quarantine issues facing Australia. That review resulted in the report, 'Australian Quarantine - A Shared Responsibility, published in December 1996. The report made 109 recommendations, addressing all aspects of policy and procedure.1" In particular, the report made a number of recommendations relating to the import risk analysis process, all of which were accepted by Government.

The Revised Policy Framework

1.22 Following the review of the Naim committee the Government announced a new quarantine policy framework. The impetus for the review and the policy were described in the government's response as:

The development of a global marketplace, the increased movement of people and goods internationally, and breakthroughs in communication and technology that span continents are trends that are likely to accelerate as trade and investment barriers tumble throughout the world. This is the environment in which we live, and one that exerts new and ever-changing pressures on our quarantine system.16

1.23 The 1997 Government Statement on Quarantine is based on seven key quarantine themes:

a) Managed risk, based on science;

14 Naim ME, Allen PG, Inglis AR & Tanner C, Australian Quarantine - A Shared Responsibility, 1996, PP 3-4

15 ibid, p ix

16 Australian Quarantine - the Government Response, 1997, p 8

7

b) A continuum of quarantine, [pre-border, border and post-border];

c) Community responsibility;

d) Consultative decision-making;

e) External input to quarantine policy;

f) Enhanced capacity in plant and fish quarantine protection and policy; and

g) Delivering quarantine obj ectives.17

1.24 The statement also noted the necessity for quarantine decisions to be justifiable scientifically and emphasised the continuation of a cautious and conservative approach to quarantine policy. However, the Government also noted that, while retaining as an essential primary quarantine objective the protection of the

health of humans, animals, plants and the environment, that objective had to be balanced with the broader trading and national interests and to take note of the very close linkage between Australia's quarantine status and export future.18 The response stated:

Australia's export future depends on our relative freedom from pests and diseases. Further, our ability to overcome quarantine barriers in potential export markets depends partly on Australia having a credible quarantine

policy that is consistent with international rales and standards.19 2 0

1.25 The Government's stated approach to quarantine is that of 'managed risk', ie to manage the risks within an appropriately conservative quarantine framework as opposed to the impossible goal of a zero risk policy. The policy response acknowledges the rights and responsibilities incurred by Australia as a member of the

WTO and as a signatory to the SPS Agreement and TBT Agreement.

Revised Quarantine Administrative Arrangements

1.26 Following its consideration of the recommendations contained in the Report of the Naim Committee and those contained in the Report of National Taskforce on Imported Fish and Fish Products, the Government revised quarantine legislation 'to ensure it reflected a realistic approach to quarantine risk analysis, and the concept of a continuum of pre-border, border and post border quarantine arrangements'.21

17 ibid,p 9

18 ibid, p 8

19 ibid

20 ibid

21 AQIS, Submission 17, p 66

8

1.27 The revised arrangements were published in the Australian Government Gazette on 7 July 1998 and revoked all previous arrangements. AQIS advises that the revised arrangements implemented a uniform system by which anything likely to introduce pests or diseases could be prevented from entering Australia or would only be permitted entry subject to conditions limiting the quarantine risk to an acceptably

low level.

Salmon Quarantine Regulations in force until July 1999

1.28 Quarantine restrictions on the importation of fresh and frozen Pacific salmon, genetic material and trout product have been in place since 30 June 1975, when stringent import restrictions on salmonid products were imposed through Quarantine Proclamation No 86A, gazetted on 21 February 197 522. The proclamation was made on the recommendation of the Australian Fisheries Council, comprising the Commonwealth and State Ministers for Fisheries, to protect trout recreational fisheries from disease incursion.23 Commercial salmon farming had not yet commenced, although preliminary importation of ova and breeding had begun in the 1960s.

1.29 The Proclamation prohibited the import of the following products:

a) Live fish of the sub-order Salmonidae; and

b) Semen or ova of fish of the sub-order Salmonidae unless the Director of Quarantine, has by instrument in writing, consented to the importation;

c) Dead fish of the sub-order Salmonidae, or any parts (other than semen or ova) of fish of that sub-order, in any form unless:

i) Prior to importation into Australia, the fish or fish parts have been subject to such treatment as, in the opinion or the Director of Quarantine is likely to prevent the introduction of any infectious or contagious disease or a disease or pest affecting persons, animals, or plants; and

ii) The Director of Quarantine, or a person authorised by him, has, by instrument in writing, consented to the importation.24

1.30 One of the reasons advanced for the prohibition on the importation of non- viable salmonid products was to protect Australia’s virtual disease-free salmonid population, including the recreational trout fisheries, from specific exotic diseases. Canned products and salmon smoked at certain specified temperatures were not prohibited. The policy predated the establishment of commercial salmonid farming in Australia.

22 ibid, p 65

23 ibid

24 ibid

9

1.31 Section 43 of the Quarantine Proclamation 199825, and amending quarantine policy generally, dealt with the importation of fish of the salmonidae family as follows:

(1) The importation into Australia of fish of the family Salmonidae, or any part of such a fish, in any. form (including canned fish, dried fish, processed fish and fish meal) is prohibited.

(2) The importation into Australia of the roe or caviar of fish of the family Salmonidae is prohibited.

(3) However, subsections (1) and (2) are not taken to prohibit the importation of canned fish, canned roe or canned caviar of that family if the fish: (a) is contained in a hermetically sealed container; and (b) has been heat-treated in that container so as not to require refrigeration or

freezing to maintain its quality.

(4) Also, subsections (1) and (2) are not taken to prohibit the importation by a person of fish, fish parts, roe or caviar of that family if: (a) a Director of Quarantine has granted the person a permit to import the fish, fish parts, roe or caviar into Australia; and (b) when the fish, fish parts, roe or caviar is landed at a place in Australia;

(i) the permit or a copy is produced to an officer at the place; or (ii) the details necessary to identify the permit are given to an officer electronically.

(5) Also subsections (1) and (2) are not taken to prohibit the importation by a person of fish, fish parts, roe or caviar of those families of a Director of Quarantine has granted the person a permit to import the fish, fish parts, roe or caviar into Australia.

1.32 AQIS advised that:

a) The provisions in section 43 maintained the position of general prohibition with entry permission of individual consignments being considered by the Director of Quarantine and subject to specific conditions; and

b) This system of controls was consistent with that expressed in the previous Proclamation 86A.26

1.33 A further amendment of the quarantine regulations was gazetted on 4 May 1999, permitting small amounts of canned or smoked product for personal consumption or use to be imported.

25 Gazetted on 7 July 1998

26 AQIS Submission 17, p 66

10

The Policy Impact of the WTO and the Dispute

1.34 Australia is a signatory to many international agreements. The principal agreement affecting quarantine policy is the Sanitary and Phytosanitary [SPS] Agreement. The most significant provisions in this agreement and the other major agreements are discussed in detail in Chapter Two. However, it is appropriate to touch on the impact of the recent decisions of the WTO on current policy.

1.35 Canada challenged Australia's import controls under the terms of the SPS Agreement. The dispute was decided in 1998, when the Panel found against Australia on two principal grounds:

a) Australia's import risk analysis on uncooked wild caught Pacific salmon from Canada did not fulfil all the requirements of the SPS Agreement in relation to a risk analysis and there was no risk analysis to support the restrictions on the importation of other uncooked salmon products; and

b) There were arbitrary or unjustifiable distinctions in the level of protection applied by Australia in relation to salmon and other fish, and these distinctions resulted in a disguised restriction on international trade.27

1.36 The WTO decision, upheld on appeal, argued that the 1975 Proclamation 86A breached WTO rules, because it was not based upon a risk assessment as defined in Section 5.1 of the SPS Agreement. The December 1996 IRA was deemed not to be a proper risk assessment 'principally because its assessment did not go beyond disease identification to address the probability of entry establishment or spread according to the measures which might be applied to reduce or manage the risk.'28

Current Quarantine Policy on Salmonids and Non-Salmonid Marine Finfish

1.37 Following the ruling in the WTO, a further risk assessment process on salmonids, ornamental finfish and non-salmonid marine finfish was undertaken and as a result of that later process, revised quarantine arrangements were announced on 19 July 1999. The revised measures were implemented through a series of Animal Quarantine Policy Memoranda [AQPM], released over the ensuing few months.

Animal Quarantine Policy Memoranda

1.38 AQIS issues AQPMs when advising proposed or actual changes to quarantine policy. A series of AQPMs have been issued since the IRA was completed. The most significant are discussed below.

27 AQPM 1999/51, 19 M y 1999, p 3

28 Department of Foreign Affairs and Trade, Submission 21, p 14

11

Animal Quarantine Policy Memorandum 1999/5129

1.39 AQPM 1999/51, published on 19 July 1999, contains the outcomes of the risk analyses and the criteria to be used when deciding whether to grant import permits. The AQPM relaxed the import controls on salmon, however, following the publication of this AQPM, in order to be able to bring salmon product to Australia, exporting countries had to be able demonstrate to AQIS that they were able to meet Australia's conditions and that the product was consumer ready.

1.40 AQIS argues that, while there was some relaxing of controls on salmon products, the net impact on imports was a tightening of controls:

...the new policies are intended to have the net effect of tightening quarantine control over about 100,000 tonnes of imports whereas it is unlikely that additional imports of salmonids will exceed several thousand tonnes. A proportion of this is likely to be sourced from New Zealand

whose aquatic health status is similar to Australia’s, and under AQIS’s new policies (particularly for control of risk of whirling disease) presents negligible disease risk.30

1.41 The policies as announced in the AQPM provide for:

a) Measures for the importation of fresh, frozen and chilled non-viable salmonid product [Attachment 1 to the AQPM];

b) The introduction of additional quarantine conditions for the importation of non-viable marine finfish products [Attachment 2 to the AQPM];

c) The tightening of the quarantine conditions for live ornamental finfish [Attachment 3 to the AQPM].31

Measures for Non-viable Salmonids

1.42 The policy determination permitted the import into Australia of fresh, frozen and chilled non-viable salmonid product under certain conditions:

a) The fish should be eviscerated;

b) The fish should not be derived from a population slaughtered as an official disease control measure;

c) The fish should not be juvenile salmonids or sexually mature adults/spawners;

29 Appendix 5

30 AQPM 1999/51,19 July 1999, p 2

31 ibid, pp 2-3

12

d) The fish should be processed in premises under the control of a competent authority;

e) The head and gills should be removed and internal and external surfaces thoroughly washed;

f) The fish should be subjected to an inspection and grading system supervised by a competent authority;

g) In addition, for farmed fish, the fish should be derived from a

population for which there is a documented system of health monitoring and surveillance administered by a competent authority;

h) Consignments exported to Australia should be accompanied by official certification confirming that the exported fish fully meet Australia’s import conditions (as specified on an import permit issued by AQIS).32 3 3

1.43 In the case of non-viable salmonid product from New Zealand, the importation restrictions were relaxed to permit the importation of salmonids, other than rainbow trout, without the head and gills removed. Product from countries other than New Zealand derived from non-viable salmonids meeting the policies would be released from quarantine if imported in consumer ready form, as specified in the AQPM.

1.44 The AQPM further provided for the importation of non-viable salmonid product from countries other than New Zealand, "in consumer ready form", ie:

For the purpose of these policies, consumer ready product is product that is ready for the householder to cook/consume, such as cutlets, fillets (without skin), skin-on fillets if less than 450g weight and headless fish of ‘pan-size’ (ie less than 450g weight). Product that has been cooked for human consumption (eg canned, hot smoked, flash fried) is also regarded as consumer-ready product. Imported head-off, gilled and gutted salmonids of greater than 450g weight (ie, not consumer ready) should be processed to consumer-ready form in premises approved by AQIS before release from quarantine.13

1.45 It was this last requirement which was the subject of the adverse finding by the WTO in February 2000.

Measures for non-salmonid marine finfish

1.46 While the import controls for salmonids were relaxed, those for non-salmonid marine finfish were tightened. With effect from 1 December 1999, importers of non-

32 AQPM 1999/51. Attachment 1

33 ibid

13

salmonid marine finfish product were required to obtain an import permit. AQIS advised that this requirement is warranted by the outcome of the import risk analysis.

1.47 The policies applying to the importation of non-viable, non salmonid marine finfish are that either:

a) The fish should be processed in a premises under the control of a competent authority; and

b) The fish should be eviscerated;

c) The fish should be subjected to an inspection and grading system supervised by a competent authority;

d) The head and gills should be removed and internal and external surfaces thoroughly washed;

e) Consignments exported to Australia should be accompanied by official certification confirming that the exported fish meet Australia’s import conditions in full; or

f) For product that has been further processed (beyond that described above) to a consumer-ready state, AQIS will not require an official health certificate.

1.48 If neither of the above options applies, the policies require an importer to apply for an import permit, specifying:

a) Details of the finfish species to be imported;

b) The waters in which the fish were farmed (if applicable) and

harvested;

c) The intended end use of the imported fish.

1.49 AQIS assesses the application in light of the quarantine risks presented and if the delegate concludes that the proposed importation is consistent with Australia’s appropriate level of protection (ie it presents an equivalent level of risk to certified, inspected, headless, eviscerated, washed fish), a permit for the importation of single or

multiple consignments during a specified timeframe will ordinarily be granted.

1.50 Under the amended policies, AQIS states that non-salmonid marine finfish may continue to be imported into Australia. However, imports of certain marine finfish species would be subjected to additional controls to address risks associated with specified diseases.34 For non-susceptible species, the most significant change

34 For whole, round, commercially-harvested, market-size non-salmonid finfish, the disease agents which require specific risk management are: aquabirnaviruses, IPNV, Iridovirus of red sea bream, A. salmonicida and Photobacterium damsela subsp. piscicida. For A. salmonicida, risk management applies to all farmed marine

14

was that importers would be required to obtain an import permit from AQIS, except for consignments of fish that are head-off, gilled, gutted, inspected and accompanied by an official health certificate (when no import permit would be required) or for consumer-ready product (as defined above).

1.51 Non-viable marine finfish caught in New Zealand's EEZ were required to be accompanied by official certification stating that they were of New Zealand origin.

The importation of live ornamental finfish

1.52 The policy for all ornamental finfish is that each consignment is to be accompanied by:

a) An animal health certificate from a competent authority attesting to the health of the fish in the consignment and the health status of the premises of export;

b) Certification from a competent authority that the premises of export are currently approved for export to Australia; and

c) Certification from a competent authority that the fish had not shared water with food-fish aquaculture premises.

1.53 Consignments are subject to post-arrival quarantine detention for a minimum period in approved private facilities under quality assurance arrangements approved by AQIS. The minimum period of quarantine is three weeks for goldfish and one week for all other Schedule 6 listed finfish.

1.54 In addition to the above policies, delegates must have regard to the following risk management measures singly or in combination, as appropriate to the pathogens of concern, to the importation of ornamental finfish to address specific disease concerns:

a) Health certification from the competent authority that the source of the fish was free of specified disease agents;

b) Testing of the source population of the fish for specified disease agents;

c) Pre-export visual inspection;

d) Visual inspection at the border to identify overtly diseased

consignments and to ensure that the fish are of species listed on Schedule 6;

finfish species but not to wild-caught non-salmonid marine finfish. For all other disease agents, risk management applies only to susceptible species (as specified in the IRA).

15

e) Quarantine security over procedures in quarantine premises, including the disposal of sick and dead fish, transport water, packaging materials and other waste;

f) Testing of imported fish, on a random or routine basis, to address the likelihood that unwanted disease agents may be present in a consignment, and/or to provide additional data to improve targeting of risk management measures generally;

g) If the presence of specific disease agents is suspected or confirmed by diagnostic testing, AQIS may require appropriate treatment of imported fish;

h) Increased post-arrival quarantine over the minimum indicated period (for example, due to concerns over the risks posed by iridoviruses, the minimum quarantine period for gouramis and cichlids will be 2 weeks).

1.55 The arrangements set out above were clarified in a series of AQPM's issued subsequent to the AQPM 99/51, including:

a) AQPM 1999/64 dated 22 September 1999, which summarised new policies for the importation of product derived from freshwater and marine fmfish other than salmonids;

b) AQPM 1999/65 of 23 September 1999, which advised new policies for the importation of personal consignments of non-viable salmonid product and continuation of non-viable salmonid product and continuation of pre­ existing policy for the importation of other salmonid products not intended for

human consumption;

c) AQPM 1999/66 of 23 September 1999, which set out proposed revised quarantine policies for the importation of salmonid roe and uncanned, thermally-treated salmonid products, ie smoked salmon;

d) AQPM 1999/69 of 20 October 1999, which clarified arrangements for the importation of uncanned salmonid product in accordance with the policies announced in AQPM 1999/51;

e) AQPM 1999/70 of 21 October 1999, which confirmed the

arrangements for importation of specified thermally-treated salmonid products in accordance with the proposals in AQPM 1999/66.

AQPM 1999/64 - product other than salmonids

1.56 AQPM 1999/64 dated 22 September 1999 summarised new policies for the importation of product derived from freshwater and marine fmfish other than salmonids. This memorandum clarifies the administrative arrangements for the importation of non-salmonid marine and fresh-water fmfish product. These arrangements are set out in Appendix 1, which contains a summary and 4 parts, as follows:

16

a) Part A: Importation of non-salmonid finfish product in consumer- ready form.

b) Part B: Importation of non-salmonid finfish product from New Zealand.

c) Part C: Importation of eviscerated, head-off non-salmonid finfish product in a consignment accompanied by a health certificate.

d) Part D: Importation of other non-salmonid finfish product.

1.57 The general effect of the rulings in the AQPMs is:

a) For non-viable salmonid products importation is prohibited unless the Director of Animal and Plant Quarantine has issued a permit for importation, with some exceptions;

b) With the exception of salmonid fish, prior permission is generally not required to import non-viable marine finfish or their products;

c) Compounded fish feeds and meals derived from aquatic animals (eg fish meal) require prior permission but may be imported subject to compliance with the requirements set out in an AQIS import permit;

d) Prior permission is required to import live salmonids and their genetic material [no imports have been approved since 1975];

e) Live ornamental finfish may be imported, subject to inspection on arrival;

f) Other species of marine finfish require prior permission, which has only been granted on a case-by-case basis for public display or scientific purposes.35

1.58 Companies wishing to import and process salmon must enter into a compliance agreement with AQIS under Section 66B of the Quarantine Act 1908. Companies wishing to enter into a compliance agreement, which will incorporate the company’s operations manual, to be submitted to AQIS for approval, must demonstrate to AQIS that they can provide the following:

a) A system of control over all parts of the process that will quickly detect any significant departure from AQIS’s conditions and implement corrective action;

35 AQIS, Import Risk Analysis on Non-viable Salmonids and Non-Salmonid Marine Finfish, July 1999, p 7. The exceptions are canned fish, roe or caviar o f salmonid fish, which can be imported without a permit.

17

b) A system of record keeping that clearly reports when corrective action has been required and implemented and the action taken to prevent the recurrence of similar problems;

c) Suitably trained company staff and employees who will carry out all their tasks to the standards specified in the manual and approved by AQIS.36

1.59 As at 10 February 2000, AQIS had issued 19 permits for the importation of salmon product from New Zealand, three for Canada and two for the United States. A total of 16,605 kg of salmon had been imported from New Zealand through Sydney, Melbourne, Perth or Brisbane.37

Further WTO Findings

1.60 On 18 February 2000, the WTO released the findings of the subsequent Canadian challenge on the restrictions remaining in place in Australia. The WTO supported the Australian risk analysis approach and most of the import controls imposed by Australia. However, the WTO found that the consumer ready requirement was unnecessarily restrictive.

1.61 The Panel found against Australia on the following measures:

a) The consumer ready requirements were not supported by the risk assessment and were more trade restrictive than necessary to meet Australia’s appropriate level of protection;

b) The Tasmanian measures were found to be inconsistent with the WTO agreement and not supported by the AQIS IRA.

1.62 On 17 May 2000, the Minister for Trade, the Hon Mark Vaile, announced that Australia and Canada 'had reached a mutually satisfactory settlement of Canada's WTO complaint on salmon'.38 The Minister announced that the consumer ready requirement had been replaced by controls on processing including detailed packaging

and certification requirements and legally enforceable compliance conditions for processors.39 The text of the Bilateral Statement is at Appendix Three.

Major Issues

1.63 The Committee received considerable evidence from a number of groups and individuals from industry, government, academics and the community in relation to the decision to allow the importation of some salmon products into Australia. The

36 AQIS Submission 17, Part C, pp 78-79

37 AQIS, Supplementary Submission 62, p 5

38 Trade News, 17 May 2000

ibid 39

18

issues of concern which have emerged as a result of the salmon dispute and the resulting quarantine policy changes include:

a) The potential impact of the decision on certain industries, principally the aquaculture and recreational trout fishing industries;

b) The conduct of the risk analysis process by AQIS, including the public understanding of risk assessment and risk management in policy making;

c) The consultation process, including the transparency requirement under the international agreements;

d) Concerns in relation to the uncertainty or incompleteness of the science;

e) The determination of the Appropriate Level of Protection [ALOP] and the communication of that standard;

f) Insufficient consideration of the consequences of the decision, especially economic consequences and the impossibility of eradicating diseases, once established;

g) The role of the WTO and its impact on the development of Australian quarantine policy and procedure;

h) The dispute settlement process in the WTO and Australia's

arrangements for handling such disputes;

i) The actual conduct of the litigation in the WTO and the adequacy of Australia's administrative arrangements for international law.

1.64 Another significant issue which arose during the course of the inquiry was the Tasmanian decision to undertake its own IRA and to implement its own quarantine measures. This matter is further discussed in the body of the report.

1.65 Submissions expressed concern about the potential impacts of the decision, both in terms of economic impacts and potential disease risks.

1.66 The Committee notes that representations were both supportive and critical of the decision, depending on the potential impact on a particular industry. For example, the pet industry advocates and those from the tuna and lobster industries were critical of any attempt to tighten import restrictions further, while the trout and salmon industry stakeholders were concerned at the potential impact of the relaxation import restrictions. Similarly, export industries, such as the sugar and beef industries, are vulnerable to reprisals if AQIS does not act promptly in response to WTO mlings. The Committee received advice from the Cattle Council of Australia that the draft retaliatory list published by the Canadian Government includes Australian beef

19

products worth approximately $4 million, to an industry worth $91.8 million in 1998.40

1.67 These contrasting views are indicative of competing trade interests and serve to highlight the difficulty faced by government which must balance the competing interests when making judgements about the determination of policy and consequential supporting measures.

Committee Approach to the Inquiry and its Significance

1.68 The inquiry is an examination of the effectiveness of the legal and regulatory regimes within AQIS, having regard, in particular, to the administrative procedures and decision-making processes involved in the recent decision to allow the importation of salmon products into Australia. However, the Committee considers

that the inquiry is of considerably broader significance than an examination of the decision to relax import controls on salmon. In particular, the Committee is concerned about the degree of importance placed on international law in general and dispute settlement in particular. The present arrangements appear to be unsatisfactory.

1.69 If Australian quarantine arrangements are to maintain their integrity and survive challenges in the WTO or not be subject to challenge in the first instance, Australia's internal arrangements for determining its ATOP and quarantine measures, and for undertaking its import risk analyses, must be rigorous. The WTO and

litigation under such agreements as the SPS Agreement will be increasingly significant for Australian quarantine arrangements. It is essential that agencies such as AQIS and DFAT ensure that their processes and the quarantine regime safeguards Australia's interests and able to withstand challenge.

1.70 Some submissions to the inquiry and oral comment were critical of the competence and integrity of AQIS and its staff. The Committee wishes to place on record that it has no reservations in relation to the personal integrity of AQIS staff in the conduct of their duties.

1.71 However, the Committee is seriously concerned about some critical aspects of AQIS' operations and its procedures in relation to the IRA process and the WTO challenge. For example, the Committee is particularly concerned about the widespread release of the draft IRA, including indicative conclusions. In the

Committee's view, the release of the document to such parties as Canada was prejudicial to Australia's interests in the WTO.

40 Cattle Council o f Australia, Submission 14, p 1

CHAPTER TWO

CONCERNS REGARDING THE IMPACT OF REVISED QUARANTINE ARRANGEMENTS

Salmonids in Australia The Aquaculture Industry

Concerns in Relation to the Potential Consequences o f the Decision Other Issues

Introduction

2.1 Australia commands a premium in the international market for food products as a result of its disease free status. Should diseases not currently found in fish be introduced into Australia as a result of the relaxation of quarantine measures, the consequences are potentially severe, both in terms o f the health of the animal

population and the resultant economic costs.

2.2 AQIS argues that, as a result of the IRA process, the amended measures have substantially tightened Australia's aquatic and marine quarantine security:

It is in our view unarguable that, collectively, these measures have substantially tightened Australia's marine and aquatic security. It is not the end of the process. As resources become available AQIS will be examining existing measures applying to a range of other aquatic animal products including crustaceans, molluscs and other aquatic invertebrates.

2.3 However, significant concerns have been expressed by some sectors of the industry. The following comment is indicative:

Obviously, industry is disappointed with the decision that has been made. That disappointment is on three levels. The first one is the decision itself, which reverses the 1996 decision and, in so doing, exposes the industry to what we believe is an avoidable and unacceptable level of risk."

A worst case scenario of an introduction of disease that wiped out salmonid fisheries completely would be a billion dollars over five years.3

AQIS, Evidence, RRAT, 24 September 1999, p 25

Mr Anthony Smithies, Tasmanian Salmonid Growers Association, Evidence, RRAT, 5 October 19 , p 98

Mr Ray Walker, Recfish Australia, Evidence, RRAT, 24 September 1999, p 98

22

2.4 Some concerns expressed in submissions related to the perceived dismissal of concerns of the aquaculture and recreational fishing industries, with no guarantee of high standards of protection, as a result of AQIS' findings:

The risks to the environment and to native fish populations have been largely dismissed by generalised statements to the effect that these diseases have not been reported in native fish populations, and hence significant effect on the natural environment is not expected. The risks to the salmonid population have been grossly played down, and the consequent concerns of the aquaculture and recreational fishing industries have been largely dismissed.4

Salmonids in Australia

2.5 Australia has both native and introduced salmonids. The introduced species are brown trout, introduced from Europe, and rainbow trout, brook trout, Atlantic salmon and chinook salmon introduced from North America. As far as it is known the fish are free from serious pathogens and parasites and are considered to be among the most disease and parasite-free populations of these species anywhere in the world.5

2.6 Of these species, brown, brook and rainbow trout have established self- sustaining wild populations, while wild populations of Atlantic and chinook salmon are sustained by release of hatchery-bred fish. Although chinook salmon is found only in Victoria, the other species are found both in the wild and in aquaculture populations in most states and territories, with the exception of Queensland and the

Northern Territory.6

2.7 Native salmonids comprise 25-30 species - small galaxias, minnows, darters, smelt, mudfish and associated genera, and the larger Australian grayling. These fish are primarily important in conservation terms.7 8 Native salmoniforms, or galaxids, are found in south eastern Australia and the south west of the Western Australia. Recently it has been argued that these fish do not belong in the same order of salmoniformes with the introduced salmonids. Nevertheless they generally remain susceptible to the

same diseases. Four of the native species are listed as endangered, and a further three are listed as threatened.s

2.8 All of the species of salmonids which form the basis of the recreational fisheries were originally introduced into Australia, some as long ago as the early 1800s. Many populations of trout have since established themselves as self- reproducing 'wild' populations which do not require supplementary stocking. In many

4 Tassal Ltd, Submission 41, p 4

5 Dr B Pratt, Submission 22, p 2

6 AQIS, Import Risk Analysis on Non-viable Salmonids and Non-Salmonid Marine Finfish, July 1999, pp 44-45

7 ibid

8 ibid, p 50

23

waters which are suitable for trout and salmon, but where reproduction cannot or does not occur naturally, stocking of hatchery reared fish has taken place over long periods of time. Both wild and stocked trout and salmon populations are the basis of recreational fisheries in all of the areas listed above.9

The Aquaculture Industry

2.9 Most concern about the relaxed measures for salmon was expressed by stakeholders in Tasmania, Victoria and southern New South Wales. The major industries in these areas are salmon production in Tasmania, the trout industry in

Victoria and New South Wales and the recreational fishing industry in all three states.

2.10 Aquaculture began in Tasmania in the mid 1970s, with the establishment of two trout farms. Smolt entering the State was quarantined over a lengthy period to ensure that no diseases were imported. The Tasmanian aquaculture industry now produces a range of products which it exports to a number of countries. The major market for Atlantic salmon is North Asia. The Tasmanian commercial aquaculture

industry is worth $120 million per annum."1

2.11 Salmonid production in Australia, based on the introduced Atlantic salmon, operates at the edge of the climatic range for salmonid survival. The salmon was last imported live into Australia in the early 1960's for the establishment of domestic populations. For this reason, the majority of Australian commercial salmonid

production is concentrated in Tasmania, where water temperatures are cooler, and to a lesser extent, in the alpine and sub-alpine regions of southern New South Wales and Victoria. The primary recreational salmonid fisheries, nearly all of which target brown and rainbow trout, occur throughout Tasmania, over large parts of Victoria, in the Snowy Mountains and New England areas of New South Wales and to a lesser

extent in Western Australia and South Australia.

2.12 There are eleven hatcheries in Tasmania - three major Atlantic salmon hatcheries, six rainbow trout and two trout/salmon. Hatcheries provide juvenile fish to both freshwater lakes and saltwater farms.11

2.13 The farming of Atlantic salmon in Tasmania began in 1985 through a joint venture between the State government, a Norwegian company Noraqua, and a group of private Australian companies. Currently there are seven Atlantic salmon farming companies in Tasmania, of which three dominate the market - Tassal, Aquatas and Nortas Aquaculture.12 The first commercial production took place in Tasmania in

1986-87.13 Sea-cage farming of Atlantic salmon and rainbow trout is the major part of

9 Australian Fishing Tackle Association, Submission 36, pp 2-3

10 Tasmanian Government, Submission 42, p 3

11 ibid, p 14

12 Industry Commission, Australian Atlantic Salmon - Effects o f Import Competition, 20 December 1996, p7 13 WTO Panel Report, p 3

24

the Tasmanian aquaculture industry.14 Production of Atlantic Salmon has grown from about 20 tons in 1986-87 to around 6,192 tons in 1994-95. Output for 1997-98 was valued at $A63.6 million, making it the third highest value aquaculture industry in Australia.15

2.14 The Australian market for domestic-produced salmonids in 1997-98 was about 7,000 tonnes. Australia exports about one third of its salmonid production volume, mainly to Japan, with the remainder being consumed domestically. There has been a shift to increased domestic supply, as producers have redirected output from the export market to the domestic market. ABARE estimates the size of the domestic market to be around 8,600 tonnes in 1998-99.16

2.15 In 1997-98 the domestic market imported approximately 56,000 tonnes of all fresh, chilled and frozen edible fish products, 47,000 tonnes of fish for other purposes, particularly bait, and about 6.5 million ornamental fish.1'

Commercial Significance o f Aquaculture

2.16 The commercial aquaculture industry is estimated by the Tasmanian Government to be worth $120 million per annum and set to increase its annual turnover by $300 million by 2005.18 Salmonid aquaculture in Tasmania is undergoing a major expansion as additional water for finfish farming becomes available through planning developments. According to the Tasmanian Government, this expansion is identified as a primary opportunity for growth:

The current value of salmonid aquaculture is over $100 million per annum. Projections are for this to double by 2000 and to increase by 15% each year thereafter. The industry presently employs around 800 people, mostly in regional coastal communities where unemployment is particularly high. Contribution from expansion is expected to be in the order of $300 million per annum by 2005, with expected increases in employment estimated at

1000 full-time equivalents.19

2.17 The value of the aquaculture industry to Tasmania is set out in the Launceston Chamber of Commerce submission:

Tasmania’s aquaculture industry is seen as one of the saviours for the State - it has enjoyed rapid growth, popularity and has helped to position Tasmania as a producer of fine, ‘clean green’ produce in the eyes of the

14 Industry Commission, Australian Atlantic Salmon - Effects o f Import Competition, 20 December 1996, P 5

15 ABARE, Salmon Imports into Australia, November 1999, p 1

16 ibid

17 AQPM 1999/51, 19 July 1999, p 2

18 Tasmanian Government, Submission 42, p 3

19 ibid, p 14

25

local, national and international markets. It is one of the products that has made the rest of the world take notice of our State’s potential to produce high quality product.20

2.18 In Victoria, the 25 year old trout industry produces approximately 2,500 tonnes annually. It is currently valued at $20 million and is growing at a compounding rate of 10 per cent per annum. The industry directly employs about 400 people. Most of the product is sold domestically, although there is some export to Asia. The industry is largely based on the Goulbum River and its tributaries in north­ eastern Victoria.21

2.19 The total expenditure on recreational fishing in Australia is approximately $2.9 billion of which an estimated 11 per cent or $243 million is spent on fishing for salmonids. Of the approximately $584 million expenditure on freshwater fish, 41 per cent is directed towards salmonids."2

Because the salmonid recreational fishery in Australia is worth so much in terms of the whole freshwater fishery and is such a high proportion, [the introduction of disease] is a perceived direct threat to that definable sector of

the recreational fishery.23

2.20 On a state basis, expenditure on salmonids, as a proportion of expenditure on freshwater fish, is estimated to be:

a) Approaching 100% in Tasmania...............$34 million

b) 40% in New South Wales..........................$70 million

c) 5 0% in Victoria........................................ $ 121 million

d) 10% in Western Australia..........................$ 11 million24

2.21 According to the Australian Fishing Tackle Association [AFTA], it is estimated that between 2,400 and 4,800 persons are employed as a direct result of recreational fishing for salmonids. In addition, AFTA claimed that the contribution to rural economies in or near major salmonid fishing regions is highly significant and that there is an interdependence between tourism and recreational fisheries in these areas which offer few alternative activities.25 The Association concluded that:

20 Launceston Chamber o f Commerce, Submission 29, p 3

21 Mr Edward Meggitt, Victorian Trout Association, Evidence, RRAT, 11 November 1999, p 291

22 Mr Ray Walker, Recfish Australia, Evidence, RRAT, 24 September 1999, p 98

23 Dr Julian Pepperell, Australian Fishing Tackle Association, Evidence, RRAT, 24 September 1999, p 80

24 Australian Fishing Tackle Association, Submission 36, p 4

ibid 25

26

If one or more diseases invaded the naturally occurring salmonid populations, or stopped supply of hatchery reared fmgerlings, major economic impacts would result."'6

2.22 The Tasmanian Government estimates the value to Tasmania of recreational fisheries to be approximately $70 million per annum. Their submission notes that fly­ fishing is one of the fastest growing recreational pursuits in the world, with growth in tour guiding alone increasing from two operators in 1979 to 35 in 1999 with a further

16 set to become established, all of whom are owner operators of businesses. The submission also notes that growth in visiting anglers has stimulated growth in the industry through an increase in the number of angling guides, as well as expansion and refurbishment of accommodation, investment in boats and vehicles, the publication of a new international calibre fly fishing magazine and investment in new tour products. At least four new fishing lodges are being planned with an estimated

capital investment of $10 million. Three other lodges are in the discussion stages.2 6 27

2.23 Tourism associated with Tasmania’s wild trout fishing industry is valued at approximately $40 million a year.28 In the niche market of eco-tourism, angling is valued at $6 million to the State.29 The daily expenditure of a fishing visitor is between $550 and $750 compared with the average tourist expenditure of $130 per day. International visitors spend almost $1,000 per day. The average fishing trip lasts for 10 to 12 days. Visitors to the State inject about $4 million into Tasmania’s economy per year.30

Angling has enormous potential for growth in Tasmania and Tourism Tasmania, in conjunction with its Commonwealth counterparts, are currently undertaking and encouraging a specific marketing strategy to attract more international visitors on trout fishing alone. These efforts have successfully developed a marketing image and established Tasmania with the reputation as a world class-angling destination. This is consequently an extremely important Tasmanian and Australian asset with major growth potential that should be recognised and protected.31

Industry Commission Report - Australian Atlantic Salmon - Effects o f Import Competition

2.24 The Industry Commission was requested in 1996 to undertake a study into the potential effects of fresh and frozen North American 'wild caught' Pacific salmon imports on the performance of the Australian farmed Atlantic salmon industry and the

26 Australian Fishing Tackle Association, Submission 36, p 3

27 Tasmanian Government, Submission 42, p 3

28 The Liberal Party of Australia - Tasmania, Submission 26, p 2

29 Freshwater Anglers Council o f Australia, Submission 8, p 3

30 Tasmanian Government, Submission 42, p 15

31 ibid, p 16

27

Australian economy. The terms of reference required the Commission to specifically examine:

a) The potential effects of imports on fresh and frozen salmon prices, as well as on investment, incomes and profits in the short and long term;

b) The potential effects of imports on Tasmanian farmed Atlantic salmon regions, in particular employment, regional economic growth and other social impacts;

c) Whether there are any impediments to adjustment of the farmed Atlantic salmon industry, including the ability of the industry to diversify aquaculture operations;

d) Export market opportunities and impediments faced by the Australian farmed Atlantic salmon industry; and

e) The scope of the Commonwealth, States and industry to improve the efficiency and international competitiveness of the Australian industry.32

2.25 The Commission was also required to take account of:

a) The influence that current quarantine policy and World Trade Organisation requirements would have on the level and impact of imports;

b) Commonwealth and State Government policies towards the industry; and

c) The views of stakeholders, including industry, input providers, processors, retailers and consumers.33

2.26 It is important to note that the Industry Commission's conclusions are premised on no diseases being introduced as a result of the importation of salmon. The key findings of the report, therefore, were that:

a) Fresh Australian Atlantic salmon received a price premium over other fresh salmon imports to Japan, mainly as a result of its high quality and largely chemical and disease free status;

b) On average, fresh Atlantic salmon on the domestic market currently received a small premium above prices received from exports to Japan. This premium was declining.

32 Industry Commission, Australian Atlantic Salmon - Effects o f Import Competition, 20 December 1996, p xi

33 ibid

28

c) The view of the Tasmanian Salmon Growers Association was that, disease apart, the effect of imports would be minimal, and that the industry would not seek assistance under an industry restructuring program;

d) Imports of fresh and frozen North American wild caught Pacific salmon would expand the range of products available to Australian consumers but the benefit was likely to be small. Provided no new salmon diseases entered Australia, no major effect on Australian Atlantic salmon producers was likely [in the absence of imported disease];

e) Any imports were likely to be mainly high value frozen Pacific salmon. Imports would compete more strongly with medium priced fin fish and meat products than with fresh Atlantic salmon. Scope existed for cost reductions in the future which should permit adjustment to any likely competitive pressure from imports.34

2.27 The Commission considered that:

...the domestic demand for Australian Atlantic salmon is unlikely to be affected significantly by imports of fresh and frozen wild caught Pacific salmon from Canada and the United States. Imports of Pacific salmon are likely to be frozen, rather than fresh. Allowing for this quality difference, the landed cost of frozen Pacific salmon is unlikely to make it highly competitive with domestic salmon. Imports would compete more strongly with lower value fin fish and meat products than with fresh Atlantic salmon. Consequently, allowing imports is unlikely to have any major effect on profits, investment and employment in the Australian Atlantic salmon industry.35

The ABARE study - Salmon Imports into Australia

2.28 Following the revised quarantine arrangements for salmon, ABARE undertook a study to assess the impact such imports will have on the domestic market. Australian salmon producers are now selling an increased proportion of production within Australia and will face significantly altered market conditions as a result of the

importation of salmon.

2.29 ABARE described the current domestic market as follows:

a) Prices on the world market have tended to fall as world supplies have grown rapidly, although Australia has consistently received a price premium compared with fresh salmon supplies from other countries;

34 ibid, p xii

35 ibid, p xvi

29

b) The outlook for domestic demand for salmon is positive, however prices are likely to decline from their current historically high levels as increased domestic production enters the market in late 1999;

c) In the absence of disease the industry is cost competitive with imports.36 3 7

2.30 The report assessed the potential level of import penetration in the Australian market by comparing the relative free on board prices of salmon exports from Australia, Canada, the United States, New Zealand Chile and Norway to a common market, Japan. The analysis assumed that the imported and domestic products were

close substitutes. Transport costs to Australia were added and the analysis assumed no disease incursion.

2.31 The report concluded:

a) New Zealand appeared to be the only country that could land fresh salmon in Australia at a competitive price. Canada has been unable to compete in the New Zealand fresh or frozen market since the relaxation of import controls several years earlier;

b) New Zealand could land whole king salmon in Sydney at around 8.5% below the Australian fob (free on board) export price to Japan. However, if the New Zealand product is not perceived as being homogeneous with the Australian product the price differential may not be sufficient for

consumers to switch to the imported product;

c) If the product from New Zealand was perceived to be a close

substitute, exports from New Zealand could amount to 2189 tonnes and 20% of the Australian market;

d) Supply by Australian producers would fall by approximately 730 tonnes or about 8% of domestic production.'-2.32 The report found that it was difficult to estimate the impact for exports of

frozen salmon, for the following reasons:

a) There were concerns over the reliability of the available data for exports of frozen salmon;

b) Fresh and frozen salmon were not regarded as substitutes at the high end of the market;

36 AB ARE, Salmon Imports into Australia - Potential Market Penetration, November 1999, p 1

37 ibid, p 2

30

c) Frozen salmon may compete with other food products, however, the market for frozen salmon was significantly underdeveloped and would depend on the actions of the major retail chains;

d) Domestic smokehouses had indicated a willingness to import frozen product for further processing, although the extent to which Australian smokehouses could compete with overseas suppliers was unclear.38

2.33 The report ultimately concluded that:

a) If Australia's disease free status was lost, Australia would lose its competitive edge in the domestic market and the potential market penetration of imports would be greater; and

b) The loss of disease free status would jeopardise export markets and the price premium received through high quality product.39 4 0

Concerns in Relation to the Potential Consequences of the Decision

2.34 The concern expressed in many submissions relates to the potential gravity of the consequences should previously absent diseases enter Australia and the impossibility of eradication and difficulty of control once in the aquatic environment:

In an aquatic ecosystem it is rare to have the luxury of such opportunities, [to have the opportunity to immediately notice the initial symptoms of disease, to determine the geographic area involved, to quarantine that area and take other measures necessary to limit the spread of the causal agent], for disease control and eradication. Under normal circumstances there may be a considerable delay before disease symptoms are noticed and by that time it is not possible to limit the area where the pathogen or parasite is active because of waterflows through the system or migration of the host animal or carrier species.411

2.35 The AQIS amendments to the import controls for salmonids has caused significant concern in certain sectors of the aquaculture and recreational fishing industries within Australia, due to fears that identified diseases could be transmitted within fish flesh, bones and offal. Major concerns in relation to the potential economic consequences of the decision include:

a) The potential to jeopardise thousands of jobs in the recreational fishing community throughout Australia, should disease be introduced; and

38 ABARE, Salmon Imports into Australia - Potential Market Penetration, November 1999, p 3

39 ibid

40 Dr B Pratt, Submission 22, pp 3-4

31

b) The potentially disastrous effect on the Tasmanian economy through disease and the putting at risk of the competitive advantage of its ‘clean green’ image in the international arena.

2.36 There is widespread concern amongst many stakeholders about the perceived devastating economic consequences to industry and communities of salmonid diseases from overseas entering Australia. In particular, the Committee received evidence relating to the economic impacts of disease on:

a) The commercial aquaculture industry, especially in Tasmania and Victoria;

b) Recreational fishing and tourism; and

c) Australia’s ‘clean and green’ image.

The Impact on Commercial Aquaculture in Tasmania

2.37 The impact on local industry was summed up as follows:

Our company is a privately owned company. We live in the regional area that we work in. We employ 60 people in our business now, directly. Therefore, we are responsible for probably 120 mortgages and 240 breakfasts every morning. This document that AQIS has produced, and this

decision, will rebound on our regional area... None of that has been taken into account within the AQIS document.41

2.38 The Tasmanian Government noted that, following the decision by the Commonwealth in 1996 to continue the ban on uncooked salmon, the Atlantic salmon industry in that state made investment decisions of approximately $50 million on the strength of the decision.42 That investment is considered to be exposed.

2.39 The other major concern to Tasmania is the impact on employment in depressed areas of the state. The commercial aquaculture industry was generally located in areas of the state where unemployment is high. The industry provides one of the few economic opportunities in those areas and the Tasmanian government in particular is concerned that such limited economic opportunities should not be put at

risk.43

2.40 However, the Tuna Boat Owners Association of Australia, while sympathising with the Tasmanian situation and recognising the importance of salmonids to the Tasmanian economy, argued that tuna farming is even more important to the South Australian economy. The submission stated that the Southern Bluefin Tuna industry exported $180 million in 1999, compared with the export value

41

42

43

Mrs Frances Bender, Huon Aquaculture Co Pty Ltd, Evidence, RRAT, 5 October 1999, p 160

Tasmanian Government, Submission 42, p 3

ibid

32

of Tasmanian salmon production in 1997/98 of $17 million.44 4 5 The submission argued that, because of the consistency requirement, if salmon import restrictions were increased, there would have to be a corresponding tightening of controls on imports of bait fish. This consequence was potentially disastrous for industries, such as tuna farming, dependent on bait fish:

.. .the reality is that the economic options are:

(1) either the very limited possibility of a disease incursion into Tasmania under the WTO position;

(2) Or the certain cut by 95% of an industry in SA which is double the size of the Tasmanian industry.43

Susceptibility to disease and potential consequences

2.41 There is a strong view held by industry and some scientists that aquaculture farms are particularly vulnerable to disease outbreaks due to their intensive farming practices. In addition, the susceptibility of farmed fish to increased levels of stress, and subsequently to a lowering of their immune systems, due to the combination of handling and warmer water temperatures in summer, makes the likelihood of disease infestation greater.

Australia is in a unique position in the salmon farming world in that it is free of all the major salmonid diseases. It is also unique in that we are farming naive populations of salmon on the edge of their tolerance limits in regard to temperature. I think this is a point that AQIS have largely overlooked.46

2.42 This view is supported by Professor Nigel Forteath who stated at public hearing:

Our farmed salmon... become very stressed in summer months here, particularly when they have to be bathed. Unhealthy fish are really under some stress. That is when they become more susceptible to disease, when their immune system is suppressed because of these stresses. We have to ran a farm management program here to reduce that stress...

In still weather in the summer we have considerable problems managing our salmon and it is only the skill of the people on the farm that brings them through.47

2.43 Freshwater commercial aquaculture farms, such as those operating in Victoria and the Snowy Mountains area of NSW, believe that they are highly vulnerable to

44 Tuna Boat Owners Association o f Australia Inc, Submission 58, p i

45 Tuna Boat Owners Association o f Australia Inc, Supplementary Submission 58A, p 4

46 Mr Peter Bender, Huon Aquaculture Company Pty Ltd, Evidence, RRAT, 5 October 1999, p 155

47 Emeritus Professor Nigel Forteath, Evidence, RRAT, 5 October 1999, p 142

33

disease transmission because of possible contamination from the water supply. Sweet Water Pty Ltd in Victoria, for example, argued that its use of untreated water, which is gravity-fed from the Rubicon River, will jeopardise its operation if disease enters the river:

Let me provide a very straightforward example of how disease may be introduced to our farm site ie, suppose a fisherman on the Rubicon River uses diseased salmon flesh as bait. If the bait dislodged from the hook and floated into our inlet water supply it would almost certainly be consumed by

our brood fish. Once a viral disease has infected a single brood-fish the 3,000 to 5,000 eggs she produced would almost certainly carry the viral disease into the next generation.44

As many vimses only result in high mortalities in young fish it is quite probable in the above example that no warning sign would occur prior to the onset of high mortalities in the progeny of these 3,000 to 5,000 eggs. As my

business is major supplier of fertilised ova and salmon ‘fry’ to other farms in Victoria and South Australia the industries in these two states could be decimated within a very short period of time.4 8 49

2.44 The Victorian Trout Association claimed that it is the proximity of freshwater trout farms to thriving tourist destinations, such as Lake Eildon, which will inevitably lead to an outbreak of salmonid disease on these farms. The use of imported uncooked salmon as bait for recreational fishing by visiting tourists is just one example of how

transmission could occur.50

2.45 In Tasmania, aquaculture farms and hatcheries may not only be susceptible to disease but may in turn help to transmit disease to the wild:

It is possible that hatcheries may provide a means by which disease can spread between fresh and saltwater environments... The movement of escapees, transfer from hatcheries to farms, ingress of wild fish and a common water supply are all means by which disease may be spread amongst communities.51

2.46 Industry claims that the ultimate impact of disease on aquaculture farms and hatcheries will be the devastation of those enterprises, due to the likelihood that once an outbreak occurs, it will be irreversible. The Huon Aquaculture Company, for example, explained to the Committee how an outbreak of disease would impact on its

farm:

[Infectious salmon anaemia] would kill many of the fish and it would make so many of the procedures we use from day to day to harvest our fish, feed

48 Sweet Water Pty Ltd, Submission 4, p 2

49 ibid

50 Mr Edward Meggitt, Victorian Trout Association, Evidence, RRAT, 11 November 1999, pp 291-292

Tasmanian Government, Submission 42, p 14 51

34

them and grow them — very basic things - so difficult that we would not be able to do them. We would lose so many fish that we would not be economically viable and the company would quite literally collapse within weeks - months at most.52

2.47 Even the threat of disease may have a detrimental impact on the economic viability of the commercial aquaculture industry. In its submission to the Committee, the Tasmanian Government advised that the Tasmanian salmon industry had made major investment decisions on the strength of the decision in December 1996 to maintain the 1975 ban on uncooked salmon imports. To date, following that decision, investment in the order of $50 million has been made or is committed. According to the Tasmanian Government, that investment is now exposed to increased risk from the July 1999 decision by the Commonwealth.53

2.48 Industry in Tasmania also believes that the investment environment for salmonid aquaculture may change due to the AQIS decision:

Our investment decisions earlier this year had been based on a risk being established here as being very low because of the current import protocols. If those import protocols are changed, the investment risk is increased. I can say that as a person that is very sensitive to those issues, with my money on the line, it really makes you wonder whether you should be investing in an industry now which has a much higher risk profile or another that has not...54

From my direct contact with our bankers and people, they are very aware of these issues and it dominates a good part of the discussions we have with them on a regular basis. We are constantly updating them on the position. They are certainly concerned about it and aware of it and they are also aware of the financial impacts of what has happened in Scotland and Canada of recent times.55

The Impact on Recreational Fishing and Tourism

2.49 The recreational fishing industry is similarly concerned about the impact of the introduction of disease on the viability and value of the industry. The industry regards the threat of disease as potentially devastating on the recreational fishing sector, through what is regarded as an inevitable eventual outcome of the decision to relax import controls:

52 Mr Innes Weir, Huon Aquaculture Company Pty Ltd, Evidence, RRAT, 5 October 1999, p 161

53 Tasmanian Government, Submission 42, p 3

54 Mr Richard Doedens, Nortas Pty Ltd, Evidence, RRAT, 5 October 1999, p 203

55 Mr Steven John, Nortas Pty Ltd, Evidence, RRAT, 5 October 1999, p 203

35

Over time the introduction of new diseases is almost certain. It is incredible that a government should deliberately place recreational and sport fishing in such a situation.56 5 7

2.50 According to the Freshwater Anglers Council of Australia:

Tasmania can rightly lay claim to having the last true wild fishery in existence. Anglers from all over the world come to fish our rivers, lakes and tarns. The Western Lakes, situated in the World Heritage Area of Tasmania's Central Plateau, are considered the ultimate in sight fishing

experiences. Last season 31,176 licences were sold, 25,373 of these were held by Tasmanians, highlighting the high participation of freshwater fishing.67

2.51 In their submission to the Committee, the Tasmanian Government emphasised the economic consequences of the demise of recreational fishing in that State due to disease, especially in regional areas:

Angling activity occurs on thousands of lakes and streams throughout the State and consequently has a positive impact on those areas where other forms of tourism are difficult to attract and where other economic opportunities are limited. This leads to decentralisation of development and job creation outside the major urban centres. Bronte Park and Miena derive

a significant proportion of their revenue from recreational fishers, and would be economically devastated if disease were to reduce fishing activity.58

2.52 This view was also shared by industry:

The outlook for country and regional Tasmania would be catastrophic, resulting in high unemployment and growth retardation. Tackle outlets readily acknowledge that freshwater angling products make up a minimum of 65% of all sales. Small business would be lost, large businesses would

see a major reduction in sales and as such would have to lay off staff, thus increasing unemployment significantly...

Lodges, situated throughout Tasmania and especially in our highlands, are assets to the state and worth millions of dollars. They employ 150-200 people directly, depending on the time of the season. Together with private fisheries, 80% of all clients partake in angling of one form or another.59

56 Recfish Australia, Submission 25, p 3

57 Freshwater Anglers Council of Australia, Submission 8, p 3

58 Tasmanian Government, Submission 42, p 3

59 Freshwater Anglers Council of Australia, Submission 8, p 3

36

Australia’s and Tasmania’s ‘clean green ’ Image

2.53 AFFA acknowledged at public hearing that Australia's conservative quarantine arrangements were appropriately conservative in order to protect its 'unique status in terms o f pest and disease incidence'. Dr Heam stated:

...the clean green image of Australia is a very important marketing point. I believe it most certainly contributes to our export performance not only in the region but also globally.60

2.54 A number of stakeholders argued that Australia was in danger of losing one of its major competitive advantages - its ‘clean green’ image - if salmonid diseases were allowed to enter Australia through uncooked salmon imports. The introduction of disease would impact severely on the ability of local companies to export Australian salmon to overseas markets, especially to markets such as Japan, where a premium of around 17% is obtained for the product produced in Tasmania, largely as a result of the disease free status, environmental factors and the antibiotic free nature of the product:

Certainly in the Japanese market... our product receives something like a 20-odd per cent premium over fish from anywhere else in the world. That is largely due to its quality, and the quality is largely due to its freedom from disease.61

2.55 Several witnesses to the inquiry also suggested to the Committee that overseas anglers were visiting Australia in increasing numbers because of the favourable nature of its fishery, including its disease free status. Typical of the comment to the Committee was Mr Ken Orr's statement:

The comments extend to saying, ‘What you have here is fantastic. Make sure you protect it. Don’t let it go the way ours has gone.’ And they cover a wide range of comments about their home fishery—it may be overfishing, it may be disease problems and those sort of things; it goes across the board. Certainly disease is a problem to them. They come out here and they know they are fishing in pristine waters, they know they are fishing in a pristine environment. Our main thrust is to protect that. As I said before, we have the unique situation in Australia of being the only nation in the world which has a disease free fishery. It seems to me a crime to give that away, to let that be taken from us.62

2.56 Sweet Water Pty Ltd, a company specialising in the freshwater farming of Atlantic salmon primarily for their roe, advised:

60 Dr Simon Hearn, Department of Agriculture, Fisheries and Forestry, Evidence, RRAT, 24 September 1999, p 8

61 Mr Peter Bender, Huon Aquaculture Company Pty Ltd, Evidence, RRAT, 5 October 1999, p 169

62 Mr Ken Orr, The Tasmanian Professional Trout Guides Association, Evidence, RRAT, 5 October 1999, p 120

37

Key to our success in both our salmon 'caviar' and our fresh fish produce has been our primary focus on minimising the usage of chemicals, antibiotics and other non-natural ingredients in all phases of our production process. We believe that many of the natural processes we employ to achieve this

aim are unique within Australia.. 63

2.57 According to both the Tasmanian Government and the Tasmanian Opposition, the preservation of that State’s ‘clean green’ image in relation to the salmon industry is a critical priority:

Tasmania’s ‘clean green’ image is our competitive advantage. If this image were tarnished, access to lucrative markets and high sale prices would be denied. Tasmania’s environmental status has opened many doors around

the world and if we can retain this image, it will continue to do so.64

Tasmania has led the nation in protection of its environment. It has built an image around its clean, green environment and Brand Tasmania - as it is known - is entirely dependent on that image remaining intact. Any action that will cause new disease to infect our products would be significantly

damaging to the State's food producers, its economy and its job market. We must keep protecting our environment with the type of regimes and practices that have helped build our clean, green and clever reputation.65

2.58 The concerns expressed by the two major political parties outlined above were reiterated in the many submissions received from or on behalf of Tasmanian businesses. The submission from the Tasmanian Government stated:

Tasmania enjoys some of the cleanest strains of salmonids in the world. Local fish stocks, both farmed and wild are virtually disease-free, and the State has based its fishing industries around this claim. Tasmania’s clean, green status has opened many doors around the world.

Canadian salmon contains 27 diseases not found in Australia. If disease were to enter local fish populations, growth rates, quality and marketability may be affected.66

Other Issues

2.59 The Committee also received significant comment on the impact of disease incursions on:

a) Native fish populations; and

b) The environment.

63 Sweet Water Pty Ltd, Submission 4, p 1

64 Tasmanian Government, Submission 42, p 16

65 The Liberal Party o f Australia - Tasmania, Submission 26, p 4

66 Tasmanian Government, Submission 42, p 11

38

The Impact on Native Fish Populations

2.60 The Tasmanian Government, along with a number of other organisations, particularly the recreational fishing bodies, expressed concern about the impact on native fish populations should diseases be introduced:

Native species in Tasmania [galaxids] are closely related to salmonids. There are 25 native fish species in Tasmania, 12 of which are endemic. Five of the endemic and 2 of the native species have been defined as endangered,

vulnerable or rare. If disease were to develop, Tasmania could lose these species and others. Tasmanian fish have historically avoided serious diseases, and therefore have no resistance to them.

Tasmanian coastal and inland fisheries are closely linked by species that migrate between fresh and salt water. If disease were to develop in a coastal area, fish such as whitebait or sea-run trout could transport the disease inland or vice versa. Tasmanian Whitebait mn up most of our estuaries to their fresh water spawning grounds. Sea-run trout follow them up and would provide an ideal host for transferring disease to the unprotected wild fishery.

Whilst commercially farmed fish can be chemically treated if disease strikes, this is simply not feasible for wild fish. The wide ranging area over which wild species are found rales out systematic treatment, as does the prohibitive cost. If disease were to enter the aquatic environment, it may never be completely removed/'7

2.61 The Northern Tasmanian Fisheries Association Inc pointed out that Tasmania is the last bastion of true wild brown trout in the world, and as such, the Inland Fisheries Commission exports the ova of these disease free trout throughout the world6 7 68. The Tasmanian submission stressed the importance of the purity of the strain of brown trout, currently present in Tasmanian waters:

Tasmania now boasts some of the purest strains of brown trout anywhere on earth. Australia has based its recreational fishing industry around having the only disease free recreational fishery in the world. Tasmania may be called upon in the future to provide clean populations to other nations where disease has withered or destroyed local stock.69

Environmental Concerns

2.62 Environmental concerns are grave because of the impossibility of eradication once a disease enters the aquatic environment. Submitters generally recognised the advantage to Australia of the WTO arrangements and continued commitment to free trade principles. However, they argue that this should not be at the expense of denigrating the Australian environment. The IF A argues that it is not against the

67 Tasmanian Government, Submission 42, p 12

68 Northern Tasmanian Fisheries Association Inc, Submission 40, p 1

69 Tasmanian Government, Submission 42, p 15

39

importation of salmon per se but it is against the importation of uncooked salmon arguing that prevention in this situation is better than cure, and salmon imports should be restricted to cooked salmon70.

The Introduction o f Disease

2.63 There have been a number of incursions of animal diseases into Australia. These have been eliminated primarily through either quarantine procedures, destruction of actual or potentially infected individuals and movement controls to limit spread. Such techniques are not possible to eliminate disease incursions in an

aquatic environment. One submission from Dr T St George, an ex CSIRO scientist, stated:

All foreign diseases that have been impossible to eliminate remain a continuing financial cost on the relevant industry or government...I am not aware of any virus disease of cultivated fish that has been eliminated.71

2.64 Recfish Australia criticised the relaxation of import controls for salmonids, stating:

This new approach is incompatible with the precautionary principle that in the absence of good information, decisions that cause irreversible changes should be avoided. This new system depends on knowing whether a specific disease is present or absent in Australia and on judging whether the

introduction of the disease will or will not significantly reduce Australia's appropriate level of protection. It seems that [a] country somewhere has to have disease problem before Australia can take action to protect its fish.72

The Aquarium Industry

2.65 A number of submissions expressed concerns about maintaining import controls in opposition to WTO findings. The aquarium industry was particularly concerned that, as a result of the consistency requirement, any further tightening of import controls on salmon from those announced on 19 July 1999 would impact

severely and adversely on that industry.

2.66 The Pet Industry Joint Advisory Council [PIJAC] describes the significance of the industry:

The aquarium industry is present the entire length and breadth of Australia. More and more households are now keeping fish as pets. The latest estimates indicate that 16% of households have fish as pets. That's over 3 million Australians. This figure doesn't include the many households that keep multiple tanks of aquarium fish. There are a large number of people

70 Institute of Freshwater Anglers (NSW) Inc, Submission 30, Attachment 2

71 Dr T George, Submission 1, p 1

72 Recfish Australia, Submission 25, p 3

40

employed all over Australia in the aquarium stores employing approximately 5000 staff.73

2.67 PIJAC indicated that the industry was still awaiting a 'sound scientific reason for the imposition of quarantine on marine ornamental fish' and stated:

The Australian aquarium industry is too important to be put at risk by over regulation not of our own cause and as a result of a separate industry.74

2.68 The Council expressed concern about the impact of increased controls on imports of ornamental finfish:

The point I make to you is that should the Tasmanian salmon industry have its way and the decision by AQIS is changed, there is a possibility that AQIS will be forced by the World Trade Organisation to increase the regulations on our aquarium fish imports to keep our import conditions consistent. This would force even more Australians out of business. The Australian aquarium fish industry does not want or need any more regulations - especially due to a reason outside our control. Any more regulations on our industry will lead to us being regulated out of existence.75

The Rock Lobster and Tuna Industries

2.69 The 19 July 1999 announcement had significant implications for those industries relying on imported bait - the rock lobster, tuna longlining and tuna farm operations. One submission, from the Tuna Boat Owners Association of Australia, set

out the significance of that industry:

The Southern Bluefin Tuna (SBT) industry exported $180 million in 1999 (Source: ABS)... SBT farming generates over 2,500 jobs throughout Australia and is fundamental to the whole Eyre Peninsula economy. The

SBT industry farms over 95% of its catch. The farms depend on imported feed for over 90% of its feed requirements.76

2.70 The submission expressed support for the IRA process followed by AQIS:

Our consistent documented view, well before the IRA outcome was known, has always been that the accelerated IRA was a responsible and rational process. It was rigorous and highly consultative, with adequate time to

comment on issues as they arose.

Again, we have no expertise on salmonids. What we can say about the non- salmonids used for bait is, that the AQIS process was the most comprehensive survey possible. This is our judgement after researching

73 Pet Industry Joint Advisory Council of Australia Ltd, Supplementary Submission 57, p 2

74 ibid

75 Pet Industry Joint Advisory Council of Australia Ltd, Submission 34, p 1

76 Tuna Boat Owners Association o f Australia Inc> Submission 58, pp 1-2

41

IRA’s from other countries, and matching the IRA against the advice of experts available to us.

We say this despite the fact that the outcome of the IRA is to leave the tuna industry in a very exposed situation, confronted by the loss of some key import species and sources and a new system of rigid import permits which can be cancelled at any time. Please note also that the international

agreements under scrutiny - the OIE and SPS have a marked bias against imports. As a result the IRA by AQIS is not allowed to consider the economic impact of any import restrictions.77

2.71 The Tuna Boat Owners' Association argued that no association between the import of bait and any disease event has ever been shown.78 The submission further emphasised the importance of a continued supply of imported bait for these industries, arguing that there were no apparent alternatives at this stage.

2.72 The WA Fishing Industry Council [WAFIC] described the rock lobster industry as the largest individual fishery by value in Australia with annual exports in the order of A$300 million. Their submission stated:

Imported baits have been extensively used in the fishery for at least the past twenty years with an estimated total import tonnage of 140,000 metric tonnes at a cost of A$100 million over that period. It is important to note that in the same twenty year period approximately 210,000 tonnes of western rock lobster have been caught with an export value of A$5,000

million.79

2.73 The WAFIC submission, in support of the import protocols which ensured the continued supply of imported bait, noted that 'Australia cannot supply the tonnages of bait required for the fishery hence there is a major reliance on continued access to imported bait'.80

77 ibid

78 ibid, p 4

79 WAFIC, Submission 60, p 1

ibid 80

'

Vi

C H A PT E R THREE

THE WORLD TRADE ORGANISATION AND THE CANADIAN CHALLENGE

The Legal and Administrative Quarantine Framework Establishment of the World Trade Organisation and the Major International Agreements The Obligations under the SPS Agreement

The Dispute Settlement Procedures in the WTO The Jurisprudence of the SPS Agreement The Australia and the WTO The Challenge in the WTO on Salmon

The 1999 Panel Process

The Tasmanian Government 's Ban on Imported Salmon Products Disease Free Area Status The Conduct of the Litigation Committee Comment

The Legal and Administrative Quarantine Framework

3.1 The World Trade Organisation [WTO] is the only international organisation dealing with the global rules of trade between nations. Its main function is to ensure that trade flows as smoothly, predictably and freely as possible.1 Australia's membership of the WTO carries with it rights and obligations, which affect the legal

and regulatory regime established by Australia for the importation of goods.

3.2 AQIS is responsible for administering the Quarantine Act 1908 and the Imported Food Control Act 1992. AQIS can make regulations under these acts in relation to the importation of goods. However, the regulations must conform with Australia's obligations under the various international agreements to which it is a

signatory. There are a number of significant agreements, which are detailed below.

3.3 Access to free markets is critical to many of Australia's export industries. It is recognised that Australia must continue to be diligent in its commitment to free trade, however, it must be fair. Consequential to that is the requirement that Australia

conform with its international obligations so far as import controls are concerned. The Cattle Council of Australia notes that the 'rules-based system of international trade, as represented by the WTO, is vital to the future of Australian agribusiness'2.

1 WTO Website - introductory information

2 Cattle Council o f Australia, Submission 14, p 1

44

3.4 Australia's submission to the WTO, dated 21 August 1997, highlighted the international importance to Australia, given the level of agricultural exports, of the WTO disciplines on sanitary and phytosanitary measures:

Australia has a vested interest in ensuring that SPS measures are not used for the purposes of trade protection against its exports to third markets. Australia also has a vested interest in the maintenance of its agricultural asset base and in ensuring that its agricultural produce maintains a privileged health status that will enable it to meet the legitimate quarantine conditions of other markets. In many cases Australian agricultural produce commands a premium in other markets because of its privileged health status. This is particularly the case of exports of Australian salmon to Japan.1

3.5 DFAT states that 'the WTO dispute settlement system underpins Australia's access to the markets of the 134 WTO Members' and describes the system as 'powerful leverage for adherence to WTO obligations across a wide range of goods and services'.3 4 The system enables member states to enforce obligations through a legal process which requires defaulting members to bring their measures into conformity with their obligations within a reasonable period of time.

Establishment of the WTO and the Major International Agreements

3.6 The major agreements affecting the Australian quarantine regime are:

a) The General Agreement on Tariffs and Trade [GATT], 'the WTO's principal mle book for trade in goods'5;

b) The Agreement on Technical Barriers to Trade [TBT]; and

c) The agreement on Sanitary and Phytosanitary Measures [SPS Agreement], which references the standards, guidelines and recommendations adopted by the Codex Alimentarius Commission, the Office Internationale des Epizootics [OIE]6.

3.7 The SPS and TBT Agreements came into force with the creation of the WTO on 1 January, 1995. The agreements are complementary, the former applying to measures that aim to protect human, animal and plant life and health, while the latter covers all other technical regulations and voluntary standards, and the procedures to ensure that these are met.7

3 First Submission by Australia, Measures Affecting the Importation o f Salmon, 2 1 August 1997, p 3

4 DFAT, Correspondence to Committee, 28 February 2000

5 WTO Website

6 The OIE is the International Animal Health Organisation

7 Gascoine D, Wilson D and McRae C, Quarantine policy in the World Trade Organisation environment, Outlook 2000, p 171

45

3.8 Following the conclusion of the Uruguay round of GATT negotiations in 1994, the WTO was established on 1 January 1995. It replaced the General Agreement on Tariffs and Trade, however, the responsibilities of the new organisation were much broader than those under the GATT agreement and include:

a) The setting of trade rules;

b) The provision of a forum for trade negotiations; and

c) The provision of a legally binding dispute settlement mechanism.

3.9 The dispute settlement mechanism provides for either bilateral negotiations between disputing parties or for the pursuit of formal legal processes, which are binding on signatories and include sanctions should WTO rulings be ignored.

General Agreement on Tariffs and Trade [GATT]

3.10 The GATT agreement was amended and incorporated into the new WTO agreements at the conclusion of the Uruguay Round. The General Agreement on Tariffs and Trade [GATT] covers only trade, whereas the range of agreements under the WTO umbrella cover services and intellectual property, as well as trade issues.

3.11 The basic GATT principles require that countries are not able to use quarantine measures as 'a means of arbitrary or unjustifiable discrimination against countries where the same conditions prevailed' and that a contracting country should choose the 'least restrictive approach to securing the human, animal or plant life and

health objective'8. Under the GATT Agreement quarantine reasons provided an 'exceptional right' to deviate from other free trade provisions, such as those prohibiting discrimination between third countries or between domestic and imported produce. The provisions proved difficult to enforce, mainly because of a lack of objective criteria by which to justify such measures and the voluntary nature of the code.

The Agreement on Technical Barriers to Trade

3.12 The Agreement of Technical Barriers to Trade [TBT Agreement] recognises countries' rights to adopt the standards they consider appropriate, either to protect animal, human or plant life or health, protection of the environment or to meet other consumer interests. The Agreement contains a code of good practice for the preparation, adoption and application of standards by central government bodies and

also provides that procedures to determine whether a product conforms have to be fair and equitable. Domestically produced goods are not to be accorded any unfair advantage.

8 AQIS, Submission 17, p 10

46

The SPS Agreement

3.13 The SPS Agreement was a result of the recognition by negotiators that, following the elimination of the right of countries to impose non-tariff barriers on imports of agricultural goods, pressures would increase on governments to use other means, such as sanitary and phytosanitary measures, to restrict trade. The SPS Agreement was therefore negotiated to apply the same disciplines to all measures taken for the purpose of protecting human, animal and plant life or health. The aim was to allow only scientifically-based health protection, without protectionism.

3.14 The SPS Agreement defines the basic rights and obligations in relation to sanitary and phytosanitary measures necessary to protect human, animal or plant life or health. DFAT describes the effect of the Agreement as follows:

The SPS Agreement accords sovereignty to members in regard to appropriate levels of health protection. Broadly, the Agreement accords a basic right (as compared to an exceptional right under GATT) to members to take measures with trade effect that may be necessary for the protection of human, animal or plant life and health, provided that the measures are based on sufficient scientific evidence and provided also that there is consistency in treatment between products having diseases or pests in common and on condition that the measures are the least trade restrictive for achieving appropriate levels of human, animal or plant health protection.9

3.15 The underlying principles of the SPS Agreement include:

a) Harmonisation - measures should be based on international standards where appropriate;

b) Scientific basis - measures should have a scientific basis, particularly if international standards are not followed;

c) National treatment - imports are not subject to more restrictive treatment than domestic product;

d) Transparency - comments of interested parties to be invited and taken into account so as to achieve an open and transparent decision-making process;

e) Regionalisation - absence or low prevalence of pests or diseases in parts of a country can be taken into account in the specification of measures;

f) Equivalence - the same objectives may be achieved by alternative means;

9 DFAT, Submission 21, p 4

47

g) Risk assessment - measures are to be based on an assessment of risk; and

h) Risk management - the risk to be managed in a consistent way.10

3.16 AQIS advised the three major requirements under the SPS Agreement:

a) The necessity to avoid arbitrary or unjustifiable distinctions in the application of the ALOP, ie Australia is unable to take different approaches to the acceptance of risk from one commodity to another;

b) The quarantine measures put in place cannot be more trade restrictive than what is required to meet the ALOP; and

c) There must be no discrimination between quarantine measures that are applied nationally within Australia and measures applied to similar commodities produced by another country where similar conditions prevail [the concept of equivalence],11

3.17 The National Farmers' Federation expressed support for the SPS Agreement in its submission, arguing that its importance to Australia results from its protection of and extension to the degree of agricultural trade liberalisation that was achieved in the Uruguay Round. The NFF argues that it is an ’important lever for Australian exporters

seeking access to foreign markets':

Where quarantine barriers have been used to block Australian exports the SPS Agreement can provide new market openings without jeopardising our own health status.12

The Role o f the OIE and the International Animal Health Code

3.18 Australia is a member of the Office International des Epizooties, or International Organisation for Animal Health [OIE], which includes the Fish Diseases Specialist Commission. The list of fish diseases developed by the OIE forms the reference point for diseases considered in the IRA, which underpins the quarantine

import controls on salmon.

3.19 The SPS Agreement makes reference to the 'relevant international standards and guidelines'. Annex A: 3(b) of the SPS Agreement states that the international standards, guidelines and recommendations relevant for animal health and zoonoses are those developed under the auspices of the OIE, contained in the OIE's animal health code. The OIE is an inter-governmental organisation, created in 1924 by

international agreement, and signed by 28 countries. Based in Paris with 153 member

10 AQIS, Salmon Import Risk Analysis 1996, para 1.3.1

11 AQIS, Evidence, RRAT, 24 September 1999, p 21

12 National Farmers Federation, Submission 33, p 3

48

countries, its role is the development of international animal health standards. The main objectives of the OIE are to:

a) Inform governments of the occurrence and course of animal diseases throughout the world and ways to control these diseases;

b) Co-ordinate studies devoted to the surveillance and control of animal diseases; and

c) Harmonise regulations for trade in animals and animal products among its member countries.13

3.20 The organisation has a permanent working relationship with the WTO, with the WTO’s SPS Agreement being developed under the auspices of the OIE. Australia takes an active role within the organisation, with the Chief Commonwealth Veterinary Officer being a permanent member of the OIE.

3.21 The OIE is divided into specialist and regional commissions, one of which is the Fish Diseases Specialist Commission. This Commission is responsible for aquatic animal health, as determined by the International Aquatic Animal Health Code. The Fish Diseases Specialist Commission classifies aquatic animal health diseases and harmonises mles for governing trade in aquaculture products.

The Obligations under the SPS Agreement

3.22 The most significant articles in relation to quarantine measures are Articles 2, 3 and 5:

a) Article 2.1 gives members the right to 'take sanitary and phytosanitary measures necessary for the protection of human, animal or plant life or health'. Article 2.2 places restrictions on the exercise of that right, ie the measures must be based on scientific principles and evidence, and Article 2.3 provides that they must not 'arbitrarily or unjustifiably discriminate between members where identical or similar conditions prevail' or could be 'applied in a manner which would constitute a disguised restriction on international trade14', [the consistency rule];

b) Article 3 emphasises that members should base their measures on international standards, guidelines or recommendations. This provision is qualified in paragraph 3, which permits the introduction of a higher level of protection if there is scientific justification or if the member considers the appropriate level of protection should be set at the higher level;

13 WTO, Report of the Panel, 12 June 1998, p 7

14 Agreement on the Application o f Sanitary and Phytosanitary Measures, p 2

49

c) Article 5 of the Agreement refers to the assessment of risk to the member's environment and industry, and its determination of the 'Appropriate Level of Sanitary or Phytosanitary Protection' (ALOP).

3.23 Under Articles 3 and 5, members are able to determine their own level of quarantine protection, even if this exceeds relevant international or exporting country standards. There is no obligation to adopt an international standard, but where the international standard is adopted, the Member is not required to undertake a risk

assessment. Measures not based on an international standard, guideline or recommendation must be based on a risk assessment and the adoption of the higher standard must be justified scientifically.

3.24 Under Article 5, while there is scope for a nation's declared Appropriate Level of Protection [ALOP] to stand in the face of scientific uncertainty, these rights are strongly conditional on that country having first developed a credible assessment o f risk to domestic lifeforms and industries, and on the ALOP being applied in a

consistent manner, ie one which avoids 'arbitrary or unjustifiable distinctions' in the levels considered to be appropriate, if such distinctions result in discrimination or a disguised restriction on international trade'.15

The Concept o f Equivalence

3.25 The SPS Agreement, in Article 4, contains formal recognition of the concept of equivalence:

Members shall accept the sanitary and phytosanitary measures of other Members as equivalent, even if these measures differ from their own or from those used by other members trading in the same product, if the exporting member objectively demonstrates to the importing member that

its measures achieve the importing member's appropriate level of sanitary or phytosanitary protection. For this purpose, reasonable access shall be given, upon request, to the importing member for inspection, testing and other relevant procedures.16

3.26 AQIS points out in its submission that the concept of equivalence does not mean parity between the stringency of one country's SPS regime and another country's regime as they relate to trade between the two countries, nor to measures applying to similar hazards.17 In its response to a question on notice, AQIS advised:

Inclusion of the principle of equivalence in the SPS Agreement recognises the legitimacy of different approaches to achieving the same animal and plant health objectives. Differences may apply to methods of pest and disease monitoring and surveillance, animal and plant health services

15 ibid, pp 3-4

16 ibid, Article 4

17 AQIS, submission 17, p 13

50

infrastructure, approaches to the control and eradication of pests and diseases, procedures for commodity testing, and inspection systems in processing plants.

In this context, equivalence may be defined as the acceptance by an importing country of alternative animal and plant health measures demonstrated by an exporting country to achieve the importing country's ALOP.

The SPS Agreement obliges Members to enter into negotiations aimed at recognising equivalence. It places an obligation on the importing country to accept an objective demonstration of equivalence and on the exporting country to allow the importing country all reasonable means of verification, which may include the provision of relevant information and access to farms

and facilities.18

The Dispute Settlement Procedures in the WTO

3.27 The principal aims and objectives of the WTO dispute settlement system are set out in Articles 3 (General Provisions) and 23 (Strengthening o f the Multilateral System) of the Dispute Settlement Understanding [DSU], reproduced in the DFAT submission.

3.28 The DSU provides signatory countries to the WTO with an integrated framework for the settlement of disputes relating to the consistency of actions by signatory governments under the WTO Agreements, including the SPS Agreement. The DSU is administered by the WTO Dispute Settlement Body (DSB), consisting of all WTO members. The jurisdiction of the DSU is compulsory on members and findings adopted by the DSB are legally binding on the parties to a dispute.19 Adoption of the DSU by WTO members has meant the development of proceedings which are quite legalistic in character.

3.29 The DSB has the following powers:

a) The authority to establish panels;

b) The authority to adopt Panel and Appellate Body reports;

c) The ability to maintain surveillance of implementation of rulings and recommendations; and

d) The ability to authorise suspension of concessions as an outcome of legal processes.20

18 AQIS, Correspondence to Committee, 1 March 2000

19 DFAT, Submission 21, p 4

20 ibid

51

3.30 DSB decisions are determined by consensus, including reverse consensus21 in the case of adoption of reports and authorisation for suspension of concessions. The DSB has no authority to interpret or amend WTO legal rights and obligations.

The Dispute Settlement Process

3.31 DFAT sets out the process in its submission. Figure 3.1 shows the process by which a dispute comes before the WTO. The process comprises six stages:

a) Consultations,

b) Panel review;

c) Appeal;

d) Implementation;

e) Compensation; and retaliation.

The Consultation Phase

3.32 A WTO member may formally request consultations under the provisions of Article 4 of the DSU. A request for consultations must be notified to other WTO members and include details of the measures complained against, together with the

legal provisions at issue. Consultations may either represent leverage to negotiate a bilateral outcome (depending on the strength of legal claims) or form part of preparations for judicial determination.

3.33 The respondent party is required to respond to a request for consultations within 10 days of receipt and to enter into consultations within 30 days of receipt, although these time limits can be extended by agreement of the parties.

3.34 In certain circumstances, third party WTO members having a significant commercial or policy interest in the dispute may join in the consultations subject to the agreement of the respondent party.

3.35 Under standard procedures, a complainant has the option of:

a) Lodging a request for a panel 60 days after its request for

consultations;

b) Holding further WTO consultations, with a view to negotiating a bilateral outcome; or

c) Suspending its complaint, which can be reactivated at any time in the future.

21 Reverse consensus means a report is adopted if no appeals are notified

52

Figure 3.1 The Dispute Settlement Process

WTO DISPUTE SETTLEMENT PROCESS

1. Once request for consultation received, reply within 10 days and consultation must begin within 30 days - can be accelerated in urgent cases, such as with perishable goods.

2. If consultation fails to settle the dispute within 60 days, consideration by a Panel may be requested.

3. Panel required to report within six months - can be accelerated to three months in urgent cases, such as with perishable goods.

4. Once report handed down, there is a three week interim review period.

5. If parties wish to appeal, Appellate body convened - the appeal process generally takes no longer than 60 days and in no case more than 90 days.

6. Within 30 days of adoption of Appellate body’s report, members must inform the Dispute Settlement Body of intentions regarding the implementation of recommendations.

7. If it is deemed impractical to comply immediately, the member shall have a "reasonable period of time" to do so.

8. The member proposes a timeframe. The parties have 45 days to agree on timeframe. If no agreement, the matter goes to arbitration. The arbitrator’s guidelines state that the "reasonable period of time" should not exceed 15 months.

9. If a member does not implement the DSB’s recommendations, the parties have to come to an agreement on compensation. If they cannot, within 20 days of the expiry of the "reasonable period", a member can issue a formal request to the DSB for compensation/retaliation. (This is to be seen as an absolute last resort measure. It is only to be temporary and preferably in the same area as the original dispute.)

10. The DSB will make a ruling on the request within 30 days of the expiry of the "reasonable period".

11. If there is disagreement about this finding, the matter goes to arbitration, to be completed within 60 days of the expiry of the "reasonable period".

53

The Panel Phase

3.36 Panels are established by the DSB at the request of a complainant, the request for establishment forming the terms of reference of the panel, unless otherwise agreed between the parties in consultation with the DSB chair. Following establishment of a panel, a three member panel is constituted, with panellists selected by agreement of

the parties or by the WTO Director-General in consultation with the Chair of the DSB in the event of disagreement. Panellists are required to be well-qualified governmental and/or non governmental persons, who are sufficiently independent and of a sufficiently diverse background (Article 8.1 of the DSU). Citizens of members who are parties or third parties to a dispute are excluded, except by agreement between the parties (Article 8.2).

3.37 The function of panels is to make an objective assessment of the matters before them, against the legal rights and obligations of the parties. Panel outcomes cannot impose new rights or obligations on the parties.

3.38 Panels have the following powers and responsibilities:

a) Panels may call on experts, who are selected in consultation with the parties to the dispute;

b) Panel processes are required to be completed within six months, depending on the complexity of the matters before it. The processes involve written submissions from parties and oral hearings in Geneva;

c) A panel may suspend its work at any time at the request of the

complainant, for a period not exceeding 12 months. If suspended for more than 12 months, a panel's authority will lapse. The complaint may also be withdrawn at the panel stage and it remains possible to negotiate a bilateral solution up to the time of the panel's report;

d) The panel circulates a report to DSB members at the conclusion of its examination, including its legal findings. The panel's findings are adopted by the DSB, subject to a reverse consensus, or in the event of an appeal on matters of law;

e) Once a Panel report is adopted by the DSB, the findings have the force of law and require the respondent party to repair any WTO inconsistencies within a reasonable period of time.

The Appellate Phase

3.39 Either party to the dispute may appeal to the WTO Appellate Body on questions of law. The Appellate Body is required to complete its report within 60 days, subject to exceptional circumstances. The processes involve written submissions from parties and oral hearings in Geneva. The proceedings are confidential, but may be published with the final report.

54

3.40 Appellate Body reports are automatically adopted at scheduled meetings of the DSB, subject to a reverse consensus. Once adopted by the DSB, the findings have the force of WTO law, requiring the respondent party to repair any inconsistencies within a reasonable period of time.

Implementation and Arbitration

3.41 A responding party must implement measures consistent with the WTO agreements. If a party is found to have a measure in place which is inconsistent with the WTO agreements, that party must take action to bring the measure into conformity with the Agreements. If it is impracticable to comply immediately, the responding party may be given 'a reasonable period of time', but not normally longer than 15 months.”2 The time period for implementation commences on adoption by the DSB of a Panel/Appellate Body report.

3.42 The time period can either be negotiated between the parties or be subject to binding arbitration. Arbitration is conducted by an Appellate Body member. Arbitration must be completed within 90 days from the date of DSB adoption of findings. To date, negotiated or arbitrated time periods have ranged between 3 to 15 months. WTO arbitrators have taken the position that a "reasonable period of time" should be the shortest period possible within a WTO member's legal system, but that the time period relating to administrative decision-making should be considerably shorter than the period for legislative implementation.

3.43 In the event of failure to implement within an agreed or arbitrated time period, a complaining party may elect to negotiate compensatory arrangements with the other party, or seek DSB authorisation to suspend concessions against the other party, up to an assessed level of trade damage. The request is granted subject to a reverse

consensus, but authorisation is suspended if the respondent seeks arbitration on the level of trade damage (the product coverage itself cannot be arbitrated). Arbitration must be completed within 60 days of the expiry of a reasonable period of time, unless otherwise agreed between the parties.

Compensation and Retaliation

3.44 In circumstances of disagreement about the consistency of implementing measures, the DSU provides for special, accelerated procedures of 90 days duration (unless otherwise agreed). The procedures involve examination by the original panel, wherever possible. To date, these procedures have been invoked on only two occasions - EC banana import quotas and salmon. Special accelerated Panel processes on salmon were finalised on 18 February 2000. The level of trade damage will now be arbitrated by the original panel.

3.45 To determine the extent of retaliation, the following procedure applies: 2 2

22 DFAT, Correspondence to the Committee, 28 February 2000, Annex B

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a) The complainant lodges a submission about proposing a methodology for the assessment of damage;

b) There is then an opportunity for the respondent to challenge that methodology, through submissions to the arbitrator and for counter submissions by the applicant;

c) A meeting then takes place between the parties and the panel, which can seek advice on, for example, the extent of potential market penetration and the damage.

The Jurisprudence of the SPS Agreement

3.46 In its submission, AQIS advised that a number of principles governing the introduction and maintenance of quarantine measures have been established since the Agreement came into force in 1995. These principles have been developed out of the three disputes which have been finalised since the Agreement's inception and include:

a) The sovereignty of a WTO member to determine its appropriate level of protection;

b) A zero level of risk is not excluded under the Agreement, provided there is consistency in application of the ALOP to comparable products;

c) There is no obligation on WTO members to adhere to an international standard, but when a relevant international standard is not followed, a measure must be based on sufficient scientific evidence and on a risk assessment conforming with SPS criteria;

d) A risk assessment must:

i) Identify the diseases or pests whose entry, establishment or spread the member wants to prevent, as well as the potential biological and economic consequences associated with entry, establishment or spread;

ii) Evaluate the probability of entry, establishment or spread, as well as the associated biological and economic consequences;

iii) Evaluate the probability of entry, establishment or spread, according to the measure which might be applied;

e) In respect of the object of 'consistency' in the application of the ALOP, consistency should be examined on the following basis:

i) Whether there are differences in measures between products having one or more diseases/pests in common;

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ii) Whether any such distinctions in measures between products having one or more diseases/pests in common;

iii) Whether these distinctions result in discrimination or a disguised restriction on international trade;

f) Adoption of the least trade restrictive measure available that would achieve the appropriate level of protection, taking into account economic and technical feasibility, should be examined on the following basis:

i) Whether there is another measure reasonably available, taking into account economic and technical feasibility;

ii) Whether any such alternative measure would meet the appropriate level of protection; and

iii) Whether any such alternative measure is significantly less trade restrictive;

g) The right to take provisional measures in the absence of sufficient scientific evidence is conditional on a WTO member obtaining the additional information necessary to a more objective assessment and reviewing existing measures in that light.23

3.47 However, AQ1S advises that guidelines on the application of the consistency rule have yet to be finalised.24

Australia and the WTO

3.48 Since the inception of the WTO in 1995, Australia has been involved in 19 disputes, four as a complainant, five as a respondent and 10 as a third party in disputes involving Australia's export interests. The DFAT submission set out the profile and outcome of cases to which Australia is a party or has been a party.

3.49 Australia has initiated four WTO complaints: Hungarian agricultural subsidies, Indian import restrictions, United States lamb safeguards, and Korean restrictions on imported beef. DFAT advised that the disputes with Hungary and India were settled with positive outcomes for Australian commercial export interests, while panel processes are under way on Korean beef restrictions and US lamb safeguards.

3.50 The complaints against Australia include:

a) Two complaints by Canada on salmon quarantine measures;

b) A US complaint on quarantine measures on salmon and trout;

23 AQIS, Submission 17, pp 21-22

24 AQIS, Evidence, RRAT, 24 September 1999, p 55

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c) A complaint by Switzerland about provisional anti-dumping measures on plastics; and

d) A US complaint about assistance to the automotive leather sector.

3.51 Australia is a third party in a wide range of disputes involving commercial or wider policy interests. Many of these disputes are pending, such as that on Canadian dairy assistance measures, which is at the appeal stage. Others are at the implementation stage (eg. restrictions on access to the US prawn market and European

Community health measures relating to the use hormonal growth promotants in cattle production).

3.52 The majority of matters brought by complainants proceeding to judicial determination have been successful, although some panel findings have been modified on appeal. There have only been two unsuccessful legal challenges, both involving the United States as a complainant.

3.53 In all completed disputes to date, only one WTO member (the European Community) has not implemented legal findings. The EC is still to complete implementation in the beef hormones dispute and its implementing measures on bananas were found to be WTO inconsistent. In both cases, WTO authorisation was

given to the complainant parties for the application of retaliatory measures.

The Challenge in the WTO on Salmon

3.54 Since 1975, Canada has been seeking access to the Australian market for uncooked salmon products. Despite the many technical exchanges between Australia and Canada on the matter, no mutually satisfactory outcome was reached. AQIS sets out the history of the dispute in Part C of its submission, as does DFAT in Part E of its

submission. The chronology of events is set out in Appendix Four.

3.55 Canada complained that:

a) The measure was maintained without sufficient scientific evidence contrary to Article 2.2;

b) The measure arbitrarily or unjustifiably discriminated between Members where identical or similar conditions prevailed contrary to Article 2.3;

c) There were relevant international standards, guidelines or

recommendations in existence;

d) The measure was not based on existing international standards, guidelines or recommendations contrary to Article 3.1 and did not meet the conditions set out in Article 3.3 for introducing measures that result in a higher level of protection than would be achieved by measures based on the

relevant international standards, guidelines or recommendations;

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The measure was not based on a risk assessment contrary to Article e) 5.1;

f) The measure reflected arbitrary or unjustifiable distinctions in the levels of protection that Australia considered appropriate in different situations, and that such distinctions resulted in discrimination or a disguised restriction on international trade, contrary to Article 5.5; and

g) The measure was more trade restrictive than necessary, taking into account technical and economic feasibility, contrary to Article 5.6.25

The Major Issues Raised by Australia fo r Consideration by the Panel

3.56 The burden of proof under the SPS Agreement lies initially with the complaining party, which must establish a prima facie case of inconsistency with a particular provision of the Agreement on the part of the defending party or of its SPS

measure complained about. Once the prima facie case is made, it is then up to the defending party to refute the claimed inconsistency.26

3.57 In defence of its position, Australia raised a primary argument that, given the established practice before the GATT and WTO for the complaining party to present a prima facie case of inconsistency, it was for Canada, in the first instance, to provide sufficient evidence to raise a presumption that Australia's measure was inconsistent

with the rights and obligations under the GATT 1994 and SPS Agreement, ie Canada bore the evidentiary burden of proof.27

3.58 The Panel report of June 1998 stated that it was for Canada to establish a prima facie case of inconsistency of the Australian measure at issue with each of the provisions of the SPS Agreement invoked by Canada and it was then up to Australia to refute the claims. The Panel cited a previous Appellate Body report on United

States - Measures Affecting Imports o f Woven Wool Shirts and Blouses from India, when it stated:

In other words, if Canada 'adduces evidence sufficient to raise a resumption that what is claimed is true, the burden then shifts to [Australia], who will fail unless it adduces sufficient evidence to rebut the presumption'.28

The Panel's Findings

3.59 The Panel ultimately found that Australia had acted inconsistently with Articles 5.1, the requirement that SPS measures be based on a risk assessment; 5.5, the consistency provision, and 5.6, the requirement that measures not be more trade

25 First Submission by Australia, Measures Affecting the Importation o f Salmon, 21 August 1997, p 20

26 WTO, Report o f the Panel, June 1998, p 147

27 First Submission by Australia, Measures Affecting the Importation o f Salmon, 21 August 1997, pp 18-19

28 WTO, Report o f the Panel, June 1998, p 147

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restrictive than required to achieve the ALOP; and by implication, Articles 2.2, measures to be applied only to the extent necessary to protect human, animal and plant life or health, and 2.3, no arbitrary or unjustifiable discrimination between Members, of the SPS Agreement. The Panel report stated:

(i) Australia, by maintaining a sanitary measure which is not based on a risk assessment, has acted (both in so far as the measure applies to salmon products at issue from adult, wild ocean-caught Pacific salmon and the other

categories of salmon products in dispute), inconsistently with the requirements contained in Article 5.1 of the Agreement on the Application of Sanitary and Phytosanitary Measures and, on that ground has also acted inconsistently with requirements of Article 2.2 of the SPS Agreement;

(ii) Australia, ‘by adopting arbitrary or unjustifiable distinctions in the levels of sanitary protection it considers to be appropriate in different situations (on the one hand, the salmon products at issue from adult, wild ocean-caught Pacific salmon, and, on the other hand, whole, frozen herring

for use as bait and live ornamental fmfish), which result indiscrimination or a disguised restriction on international trade, has acted inconsistently with the requirements contained in Article 5.5 of the Agreement on the Application of Sanitary and Phytosanitary Measures and, on that ground, has also acted inconsistently with the requirements contained in Article 2.3

of that Agreement;

(iii) Australia, by maintaining a sanitary measure (with respect to those salmon products at issue from adult, wild ocean-caught Pacific salmon) which is more trade-restrictive than required to achieve its appropriate level of sanitary protection, has acted inconsistently with the requirements

contained in Article 5.6 of the Agreement on the Application of Sanitary and Phytosanitary Measures.21'

3.60 The Panel concluded that:

a) The measures applying to salmon other than adult fresh chilled or frozen wild ocean caught Pacific Salmon were not based on a risk assessment as defined in Article 5 of the SPS Agreement;

b) There were arbitrary and unjustifiable distinctions in the levels of sanitary protection between adult fresh chilled or frozen wild ocean caught Pacific salmon and whole frozen herring for use as bait and live ornamental fmfish. This resulted in a disguised restriction on international trade;

c) The measures applying to the Pacific Salmon product were more trade restrictive than required to achieve Australia's appropriate level of sanitary protection, because heat-treated salmon was allowed access although no 2 9

29 WTO, Report of the Panel, 12 June 1998, p 206

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scientific data was supplied to support the quarantine temperature specifications.30

3.61 In summary, the Panel concluded that Australia had acted inconsistently with the SPS Agreement and had nullified or impaired the benefits accruing to Canada under that Agreement. The Panel recommended that the DSB request Australia to bring its relevant sanitary measures in dispute into conformity with its obligations under the SPS Agreement.31 The Panel made no finding on Canada's claim that Australia had breached Article XI of the GATT or Article 3 of the SPS Agreement, the harmonisation provision.

The Appeals to the Appellate Body

3.62 Following the Panel Report, both Canada and Australia filed submissions with the WTO Appellate Body. The appeals panel reversed the decisions which referred to the heat treatment (thus absolving Australia of being inconsistent with Article 5.6 of the SPS), along with the complaint that Australia had breached Article 2.3, but upheld the bulk of the earlier findings.32 The Appellate Body made the following findings against Australia:

a) The 1996 Final Report was not a risk assessment within the meaning of Article 5.1 and the first definition in paragraph 4 of Annex A of the SPS Agreement, and Australia, had acted inconsistently with Article 5.1 and, by implication, Article 2.2 of the SPS Agreement;

b) By maintaining the measure at issue as it applied to ocean-caught salmon, Australia acted inconsistently with its obligations under Article 5.5 and, by implication, Article 2.3 of the SPS Agreement;

c) The Panel erred in its application of the principle of judicial economy by limiting its findings under Articles 5.5 and 5.6 to ocean-caught Pacific salmon, and in considering that it was unnecessary to address Articles 5.5 and 5.6 of the SPS Agreement with respect to other Canadian salmon;

d) By maintaining the SPS measure at issue with regard to other Canadian salmon, Australia acted inconsistently with Article 5.5 of the SPS Agreement.33

3.63 In November 1998, the WTO Dispute Settlement Body adopted the Panel Report as modified by the Appellate Body’s report.

30 AQIS, Submission 17, pp 71-72; Department of Foreign Affairs and Trade, Submission 21, p 13

31 AQIS, Submission 17, p 72

32 AQIS, Submission 17, pp 72-74; Department o f Foreign Affairs and Trade, Submission 21, p 14;

AQIS, Submission 17, pp 72-74 33

61

The Implementation Period

3.64 At that point a dispute arose between Canada and Australia over the time allowed to Australia to respond to the WTO findings. On 25 November 1998, Australia informed the DSB, pursuant to Article 21.3 of the DSU, that it would implement the findings, but also indicated that it would require a reasonable period of

time to complete the implementation process.

3.65 Australia sought Canada's agreement to 15 months as a 'reasonable period of time' for implementation. AQIS argued that it would legitimately take 15 months to revise the IRA, to allow for research, scientific peer review and public and industry

consultation. Canada refused the request, arguing that further risk assessment was unnecessary and that Australia should comply within weeks by allowing fresh imports that had been eviscerated. Canada requested binding arbitration, and in February, the WTO Arbitrator ruled that Australia should implement the WTO decision by 6 July

1999, ie eight months from 6 November 1998.34 3 5 This was the decision that necessitated the accelerated IRA process.

3.66 Australia missed the arbitrated implementation date of 6 July for salmon by approximately 14 days. Canada sought WTO authorisation to retaliate up to a level of CAN$45 million, with Australia requesting arbitration on this figure. The arbitration processes are suspended pending the outcome of other legal processes, as is the US complaint on salmonids. °

The 1999 Panel Process

3.67 Following the outcome of the initial Panel and Appellate Body reports, AQIS amended its measures to bring Australia into conformity with its obligations under the SPS Agreement. After the announcement of the revised measures on 19 July 1999, (see Chapter One and Appendix Five) Canada initiated new proceedings, arguing that both the consistency and existence of the Australian measures were in doubt. Canada

claimed that:

a) Australia failed to take the measures necessary to comply with the recommendations and rulings of the DSB in the original dispute;

b) Even if Australia has implemented some measures purporting to comply with the recommendations and rulings of the DSB, those new measures were inconsistent with several provisions of the SPS Agreement.

More specifically, Canada claimed that the new measures would not remedy Australia's violation of Articles 5.1, 2.2, 5.5 and 2.3 of the SPS Agreement

34 AQIS, Submission 17, pp 74-75; Department o f Foreign Affairs and Trade, Submission 21, pp 14-16

35 Australia was found to have acted inconsistently with its subsidy obligations to the United States in regard to assistance to the automotive leather sector and has implemented those findings. The Swiss complaint was withdrawn at the consultation stage.

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and are also inconsistent with Articles 5.6, 8 and Annex C, paragraph 1(c), of that Agreement. 'h

3.68 Australia defended the claim, arguing that the measures announced on 19 July 1999, brought it into full compliance with the recommendations and rulings of the DSB. Australia argued:

a) In product scope the measures went beyond measures applied to fresh, chilled or frozen salmon from Canada, as well as going beyond the measures relevant to the findings under Article 5.5 of the SPS Agreement (whole frozen herring for use as bait and live ornamental finfish);

b) The transparency of the process and techniques, together with the scientific and analytical rigour employed, resulted in the least trade restrictive measures whilst achieving Australia's appropriate level of protection (ATOP);

c) With respect to the finding that the quarantine import prohibition on fresh chilled or frozen salmon was being maintained without a proper risk assessment (Article 5.1 and by implication Article 2.2), a risk assessment was undertaken on fresh chilled or frozen salmon from Canada as part of a generic Import Risk Analysis (IRA) on non-viable salmonid products and other non- viable marine finfish;

d) With respect to the finding that there were arbitrary or unjustifiable distinctions in the levels of protection considered to be appropriate in different situations (between fresh chilled or frozen salmon on the one hand and on the other hand whole frozen herring for use as bait and live ornamental finfish) which resulted in a disguised restriction on international trade (Article 5.5 and second sentence Article 2.3), in addition to the measures applying to the salmon product based on a risk assessment, risk assessments were undertaken, inter alia, on the disease risks associated with whole frozen herring for use as bait and on the disease risks associated with live ornamental finfish. ’

3.69 Australia argued that it had implemented the appropriate measures, citing the issue of a certificate for the import of Canadian salmon and the granting of an import permit as irrefutable evidence that Australia had removed the import prohibition on fresh chilled or frozen salmon from Canada and that the measures as described were being applied to fresh chilled or frozen salmon from Canada.3 6 3 7 38

3.70 On 28 October 1999, following the announcement by the Tasmanian Government that it would ban imports of salmon into that state, the WTO

36 Australia - Measures affecting importation o f salmon - recourse to Article 21.5 by Canada, Report of the Panel, 18 February 2000, p 12

37 Australia - Measures affecting importation o f salmon - recourse to Article 21.5 by Canada, Report of the Panel, 18 February 2000, p 13

38 ibid

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acknowledged the Canadian Government's request to lodge a supplementary submission concerning the Tasmanian action. AQIS advised that:

a) Canada had opposed the new policies on the grounds that the

conditions for salmon were unnecessarily restrictive and went beyond what was justified with regard to quarantine risk;

b) Canada had also asserted that there was a continuing inconsistency between policies on salmonid and non-salmonid product.39

The Report o f the Panel - February 2000

3.71 The WTO Panel released its report on the consistency of Australia's measures on 18 February 2000. The Panel found for Australia in the following matters:

a) The AQIS IRA met the requirements of a risk assessment under the WTO;

b) While there were delays in introducing the measures for bait fish and ornamental fish, which meant that Australia remained inconsistent for short periods of time, Australia did not act inconsistently in respect of different requirements between salmon and other fish - Australia was found not to be

acting in an arbitrary, discriminatory way in relation to salmon and other fish and not to be applying a disguised restriction to trade;

c) The different requirements between salmon and domestic fish that are applied did not discriminate between Australian and Canadian fish and it found that the inspection and approval information requirements that AQIS introduced were not beyond what was necessary to reach Australia's

appropriate level of protection.

3.72 The Panel found against Australia on the following measures:

a) The consumer ready requirements were not supported by the risk assessment and were more trade restrictive than necessary to meet Australia’s ATOP;

b) The Tasmanian measures were found to be inconsistent with the WTO agreement and not supported by the AQIS IRA.

3.73 The major implications of the 18 February decision were that:

a) The Government and AQIS, in particular, in accordance with its decision of 19 July last year, was required to consider alternative, less trade restrictive options in relation to the measures that were found not to be consistent;

39 AQIS, Supplementary Submission 59, p 10

64

b) Canada had retaliation rights with regard to the impact of the

consumer ready requirements on its trading prospects, however, the amount of retaliation is limited to that determined by a WTO arbitrator;

c) There was the possibility of reactivation of the United States

challenge and claims to retaliation rights and/or compensation.

3.74 On 21 March 2000, Minister Vaile announced that Australia would not be appealing the decision of the WTO, given the high appeal risks. The Minister stated that an appeal, for which only limited grounds were available, would invite a cross­ appeal, which would, which 'could have re-opened the many positive findings in Australia's favour, including the 10 approved measures'.40

3.75 On 17 May 2000, Minister Vaile released the text of a Bilateral Statement on the outcome of discussions with Canada on the salmon issue. The new arrangements replaced the consumer ready requirement with the following requirements:

a) Imported salmon product must be in at least head-off, gilled and gutted form.

b) Holders of import permits would be required to provide a declaration in relation to each imported consignment of salmon product that such product will only be sold for commercial processing at AQIS approved premises, for processing fo r retail sale or for direct retail sale. Alternatively holders of permits could enter into compliance agreements with AQIS that provide for importation under the same conditions.

c) The existing condition that commercial processors must have a compliance agreement with AQIS would remain in place. A compliance agreement would also be required for premises processing imported product for retail sale where such processing would lead to the generation of volumes of waste comparable with that produced in commercial processing (ie the processing of more than 300kg o f imported salmon product daily in a single

location) . 41

3.76 The full text of the Bilateral Statement is at Appendix Three.

The Tasmanian Government's Ban on Imported Salmon Products

3.77 In response to the AQIS July 1999 decision to relax import controls on salmon, the Tasmanian Government declared a protected area on 19 October 1999, under Section 42 of the Tasmanian Animal Health Act 1995.42 The measures

40 Minister for Trade, Media Release, 21 March 2000

41 Trade News, 17 May 2000

42 24 (1) If the Chief Veterinary Officer considers that there is an immediate risk of a disease being introduced into or further spread in Tasmania, the Chief Veterinary Officer may make an emergency restriction notice that -

65

prohibited the entry into mainland Tasmania of fish that were not sourced from an area certified as free from bacterial kidney disease, furunculosis, infectious salmon anaemia, infectious haematopoietic necrosis virus, infectious pancreatic necrosis virus and whirling disease. The declaration means that Tasmania permits the importation of

fish product sourced from an area that is free of all the specified diseases or of canned fish.

3.78 The ban was for a period of 60 days, with a once only option to renew for another period of not more than 60 days. When, the Tasmanian IRA was released on 23 February 2000, the ban remained in place. The issue is now one of some political sensitivity between the federal and state governments.

Memorandum o f Understanding on Animal and Plant Quarantine Measures

3.79 On 21 December 1995 the Commonwealth, State and Territory Governments signed a Memorandum of Understanding [MOU] on Animal and Plant Quarantine Measures. The Memorandum was deemed to have come into effect on 1 January 1995, when Australia assumed its obligations as a member of the WTO. The preamble to the Memorandum notes that the States and Territories have legal

competence for establishing and maintaining quarantine measures to the extent that they are consistent with Commonwealth legislation. The Memorandum specifically states that it does not create binding legal obligations on the parties.43

3.80 The Memorandum recognises the responsibility of States and Territories to implement quarantine measures, but requires them to ensure that any measures which may directly or indirectly affect trade into Australia comply with the provisions of the SPS Agreement. Clauses 9 and 11 of the Memorandum state:

9 States and Territories shall consult fully with the Commonwealth before implementing any relevant sanitary or phytosanitary measures which could inhibit trade into Australian and which may not conform with the provisions of the SPS Agreement.

11 States and Territories shall not apply any relevant sanitary or phytosanitary measures within their jurisdictions which would not conform with the provisions of the SPS Agreement.

3.81 If a State or Territory implements quarantine measures which are found (under the WTO’s provisions for the settlement of disputes) to contradict the SPS Agreement, the State or Territory is required to take appropriate corrective action as a matter of urgency [clause 12]. Under clause 13, all parties to the Memorandum

a) specifies that a class of animal material must not be imported; or b) specifies that a class of animal material may only be imported in accordance with the conditions specified in the emergency restriction notice.

43 Memorandum o f Understanding (1995), p 3. Cited in AQIS, Submission 17, Attachment C

66

agreed to make all relevant information available to the other parties to facilitate implementation of the Memorandum and to consult with other parties as appropriate.

3.82 In its submission to the Committee, the Tasmanian Government argued that the Commonwealth Government had not honoured the agreement with the States and Territories in relation to the SPS Agreement and the ATOP. Part of the MOU, it claimed, was an agreement that the States and Territories would be factored into quarantine considerations:

Part of that memorandum of understanding was an agreement that the states and territories would be factored into environmental considerations. The offset of that was that we would cede those powers, once agreed, to the Commonwealth to take forward internationally. We have not been properly considered in the process and therefore we believe that the Commonwealth has breached that understanding in that respect.44

3.83 The Tasmanian Government further argued that it was implicit in the Memorandum, that the Commonwealth would not do anything to damage the interests of those parties.45

The Tasmanian Ban on Salmon Imports and its IRA

3.84 Following the release of the IRA and amendments to quarantine arrangements for the import of salmon, the Tasmanian Government was critical of the revised IRA, arguing that it did not satisfy the SPS Agreement, because it did not 'attribute due weight to some important means of introduction, establishment and spread of the disease ... they do not reflect the full extent of the risk, especially to this State'. In a letter to the Prime Minister, dated 2 August 1999, the Premier of Tasmania announced the Government's intention to prohibit the importation of all raw fish which posed an unacceptable disease risk to Tasmania and to develop its own risk assessment of imported salmon consistent with WTO guidelines.'46

3.85 Division 1 of Part 4 of the Tasmanian Animal Health Act 1995 provides powers to prevent the importation of animals, restricted materials and infected animal materials into Tasmania or to determine conditions under which importations of those things may occur. The powers are vested in the Chief Veterinary Officer [CVO], who is able to make decisions on import access requests and the determination of measures to reduce the quarantine risk to a level acceptable to Tasmania.47

44 The Hon. David Llewellyn, Minister for Primary Industries, Water and Environment, Tasmanian Government, Evidence, RRAT, 5 October 1999, p 222

45 Tasmanian Government, Submission 42, p 4

46 ibid,p 2

47 Tasmanian Government Import Risk Analysis for the Importation of Non-viable Salmonids and Non- salmonids Marine Finfish, February 2000, p 1

67

3.86 The Tasmanian Government amended its Animal Health Act in December 1999. The justification for the amendment and the intent of the legislation were stated to be:

The potential exists for a State's quarantine controls to be held contrary to section 92 of the Australian Constitution. That section requires trade between the States to be absolutely free. The provisions of this bill are intended to provide a robust mechanism to provide protection against the

introduction of serious animal disease into Tasmania in infected products should our interstate quarantine measures be held to be in breach of section 92 of the Australian Constitution. These same provisions also reinforce existing powers in the act to deal with incursions of serious animal diseases.

The bill creates an offence to possess specified things unless the person possessing those things can establish that they are not infected. This provision is intended to provide protection against the introduction of disease either in conjunction with the existing quarantine powers of the act

or alone in the event of interstate quarantine measures being stmck down. 48

3.87 The provisions of the amendment relate to those animals and animal products and the associated relevant animal diseases which have been listed for this purpose and published in the Tasmanian Government Gazette. A person in possession of a listed animal or animal product will need to be able to demonstrate that the product has been derived from animals from an area known to be free of the diseases of concern or that it has been treated in an appropriate manner so that it is no longer considered to be infected.49

3.88 Part of the Tasmanian justification for its actions, apart from the potential for harm to its aquaculture, trout fishing and tourism industries in a state with limited employment opportunities, relates to state sovereignty and the misgivings about AQIS'

ability to develop a set of quarantine measures which will be applicable to every part of Australia:

Tasmania is concerned that the Commonwealth unilaterally determines a level of quarantine protection 'appropriate for Australia' without regard to the sovereignty of States and Territories in such matters. Also, in a country as large and diverse as Australia, the suitability of a 'one size fits all' set of

quarantine measure is highly questionable given that the Sanitary and Phytosanitary (SPS) Agreement requires that countries adopt least trade restrictive measures. The need for different quarantine measures in different parts of Australia is quite apparent when considering precautions necessary to prevent establishment of salmonid diseases in Australia.50

48 Tasmanian House o f Assembly Hansard, 23 November 1999

49 Second Reading Speech, Hon David Llewellyn, 23 November 1999

50 Hon David Llewellyn, Correspondence dated 11 January 2000, p 2

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The Tasmanian IRA

3.89 The Tasmanian Government's Import Risk Analysis report was released on 23 February 2000. The IRA was undertaken 'to address the particular circumstances and quarantine requirements of Tasmania taking account of the potentially serious consequences of diseases of salmonids to Tasmania'.51 5 2 The scope of the IRA was described as follows:

This IRA considers the quarantine risks potentially associated with the importation into Tasmania of non-viable salmonids and non-salmonid marine finfish from any source. Tasmania will evaluate the risks associated with individual diseases/disease agents and identify measures consistent with Tasmania's Appropriate Level of Protection [ALOP] in respect of the risks presented by the importation of non-viable salmonids and non-

salmonid marine finfish. In the case of this IRA, eviscerated [ie head on, gills in] salmonids and non-salmonid marine finfish are the base commodity under consideration.32

3.90 The Tasmanian IRA provides the basis for Tasmania's quarantine policy and practice in respect of non-viable salmonids and non-salmonid marine finfish.

Ministerial Media Release o f 21 March 2000

3.91 The Hon Mark Vaile, Minister for Trade, released a press statement on 21 March. The statement advised of consultations with the Tasmania Government, that:

a) The Tasmanian Government had been made fully aware of the risks involved in any appeal; and

b) That an appeal could only be on points of law and could not be used to introduce new evidence, such as the draft risk assessment as released by the Tasmanian Government on 23 February.

3.92 A request from the Minister for Agriculture, Fisheries and Forestry, the Hon Warren Tmss, is to be forwarded to his Tasmanian counterpart under the terms of the MOU with State Governments, to request that Tasmania align its quarantine measures with the national standards.

3.93 Should Tasmania not comply, and there is a recognised obligation on the Commonwealth to bring Australia's measures into conformity, the Committee was advised that the following action would be the likely outcome:

51 Tasmanian Government Import Risk Analysis for the Importation of Non-viable Salmonids and Non- salmonids Marine Finfish, February 2000, p 1

52 Tasmanian Government Import Risk Analysis for the Importation of Non-viable Salmonids and Non- salmonids Marine Finfish, February 2000, p 1

69

If there was some need to change legislation to ensure that Australia's domestic legislation complied with the requirements of a treaty, the legislation could be enacted at Commonwealth level and under the Constitution any inconsistent state legislation would be of no effect." "1

3.94 The Tasmanian Minister for Primary Industries, the Hon David Llewellyn, argued in response that the SPS Agreement provides specifically for countries to recognise and take account of different circumstances in parts of both an exporting and importing country when considering measures necessary to prevent spread of

disease, 'that in a country as large and diverse as Australia different quarantine measures should apply to different areas and that this is provided for in the SPS Agreement'.

3.95 On 17 May 2000, Minister Vaile, in his announcement on the final outcome of the discussions with Canada, advised that one of the terms of the settlement on the salmon issue was that the Commonwealth would continue to seek observance on the part of Tasmania and discussions would continue to that end.

Regionalisation Principle

3.96 The SPS Agreement allows members to accommodate the regionalisation principle, where absence of or low prevalence of pests or diseases in parts of a country can be taken into account in the specification of measures. In response to a request

from the Committee in relation to Minister Llewellyn's statement, AQIS advised:

In a broad sense Minister Llewellyn’s statement is correct. It is the fact that there are differences in the pest/disease status of different parts of Australia. These differences are preserved in part by natural barriers against the spread of pests and diseases (eg climatic differences or the presence or absence of

host species), in part by industry practices and in part by regulatory interventions by government (eg restrictions under State legislation on interstate or inter-regional movement of plants, animals or their products).5 3 54

3.97 At public hearing, AQIS advised the following in response to Senator Calvert's comments:

Senator CALVERT—But the problem I have is this: we have the right to stop meat coming in from an area that has foot and mouth disease but we do not have the right to stop fish coming in from an area that has disease.

Mr Hickey—That is correct. It is because the starting point under the mles is the international codes and standards. The question you are raising, which is a valid one, is whether there is actually consistency amongst the standards themselves across a whole range of products. That is an entirely separate and very complex set of questions that we grapple with. Our response to that

53 Mr Mark Zanker, Attorney General’s Department, Evidence, RRAT, 18 February 2000, p 390

54 AQIS, Correspondence to Committee, 10 April 2000

70

has to be to be involved in international processes, like the ones that Ms Findlay has been involved in, which ultimately feed into international standard determination processes. We have to seek to influence those processes in ways that best meet our requirements, but we are not starting from a perfect position. We concede that.55

3.98 However, AQIS went on to say:

The ...SPS Agreement says that WTO Members ‘shall ensure that their sanitary or phytosanitary measures are adapted to the sanitary or phytosanitary characteristics of the area — whether all of a country, part of a country, or all or parts of several countries - from which the product originated and to which the product is destined’.

AQIS recognises regional differences within Australia in its approach to quarantine risk management. In the case of importation of table grapes from California, for example, AQIS has chosen measures which, inter alia, would preclude import into Western Australia because that state, unlike the rest of Australia, is free from downy mildew. Because of Western Australia’s isolation it is feasible to reliably prevent entry of Californian table grapes into that state even if the same product is permitted to be marketed freely in the other State and Territories.56

3.99 AQIS argued that, in the case of salmon, it is not practicable to introduce and maintain controls which would prevent imported product from coming into proximity of vulnerable fish populations in Australia, while allowing the same product to be freely sold and consumed elsewhere in the country and that import conditions specified are 'fully adequate to protect the most vulnerable domestic populations' against pest and disease risks. AQIS argues that, 'if it were practical to segregate these latter areas in terms of the trade in imported salmonids, AQIS would apply to the vulnerable areas the same restrictions as it has already specified and apply much less stringent conditions to product imported for use in other areas'57.

3.100 AQIS concluded that the Tasmanian position is unjustified:

Tasmania cannot justify the imposition of its own more restrictive quarantine measures on the basis of regionalisation, because the conditions specified by AQIS for entry of salmonid product into Australia provide the required high level of quarantine safeguard of salmonid populations (including those in Tasmania) necessary to meet Australia’s appropriate level of protection.58

55 Evidence, RRAT, 18 February 2000, p 386-7

56 ibid

57 ibid

58 ibid

71

Disease Free Area Status

3.101 Article 6 of the SPS Agreement59 requires member countries, when formulating and applying sanitary and phytosanitary measures, to recognise disease free or pest free areas. In the past, importing countries often required exporting countries to be wholly free of disease before allowing trade. However, under the SPS Agreement, the importing country is required to allow trade if the product is from a

disease free area within the country. These areas may not correspond to political boundaries. For example, animal diseases such as foot-and-mouth disease may be limited only to a geographical area within a country.

3.102 The SPS Agreement places the burden of demonstrating that a given area within an exporting country is free from disease upon the exporting country. The exporting country is also required to allow experts from importing countries to inspect the area concerned and the controls in place.

The Application o f Disease Free Areas by AQIS

3.103 Quarantine measures are determined in part by the IRA process. According to the results of this process, AQIS has the legislative authority to prohibit or permit imports into Australia with or without conditions.60 The IRA on the importation of

dairy products provides an example of implementation of the requirements of Article 6 of the SPS agreement by AQIS. As stated in the report:

Australia, as a Member of the WTO, agrees under Article 6 of the A g r e e m e n t o n t h e A p p l ic a t io n o f Sa n it a r y a n d P h y t o s a n it a r y

M e a s u r e s to ensure that sanitary or phytosanitary measures are adapted to the area from which the product originated and to which the product is destined. In particular, Australia has committed to accept the concept of pest- or disease-free areas and manage quarantine risk accordingly.

3.104 The IRA on dairy products subsequently implements stringent requirements for the importation of dairy products (other than cheese and butter) of bovine origin from approved countries.

3.105 However, there are also instances where AQIS has not fully implemented the requirements of article 6 of the SPS agreement. In the draft IRA for the importation of bulk maize from the USA for the use as animal feed, AQIS state:

If maize is to be sourced using the principle of “Area Freedom”, this will require detection, monitoring and delimiting surveys for quarantine pests to be carried out annually, as well as the dedication and monitoring of rail cars.

This is not normal practice in the USA.

3.106 The report went on to state:

59 Appendix 6

60 See sections 4 and 13 (1) of the Quarantine Act 1908

72

Maize sourced from areas free of quarantine pests would be acceptable to AQIS, if appropriate phytosanitary measures are taken to prevent contamination during transport. Similarly, a sufficiently low incidence of a pest in areas from which the bulk maize is sourced could reduce the phytosanitary risk to a level acceptable to AQIS.

No maize producing State of the USA was free of all quarantine pests identified in this analysis. In addition to this, there are considerable practical difficulties in preserving the identity of maize sourced from such areas. Given the scope of the proposal, that maize is sourced from the USA as a whole, and difficulties with area preservation, localised area freedom or low

incidence for all quarantine pests has not been addressed in detail in this IRA.

3.107 The view of the maize risk assessment panel was that area freedom is unlikely to be achievable for imports of bulk maize from the USA. However, area freedom remains an option if it can be shown that a region in the USA can demonstrate and maintain area freedom and the integrity of the grain can be satisfactorily maintained in transporting the grain from this area to Australia

3.108 In supplementary advice to the Committee, AQIS argued that the IRAs for dairy products and maize demonstrate the difficulty of comparing quarantine restrictions placed on the import of different products into Australia. Rather, AQIS argued that the more valid comparison is between the extent to which different import restrictions for different products achieve the same ALOP for Australia. Once again however, this raises concern how Australia’s ALOP is defined, and whether it varies for different products.

The Conduct of the Litigation

3.109 As the department with primary responsibility for trade, DFAT takes a lead role in WTO disputes. However, other agencies are also involved. There is an Office of International Law, situated within the Attorney-General's Department. There is within AFFA an International Branch, with responsibility for 'providing overall leadership and direction in portfolio policy responses to international trade and investment related issues'.61 The Office of the Australian Government Solicitor as part of its statutory functions, has responsibility for international law, including

litigation.

WTO Disputes Investigation and Enforcement Mechanism

3.110 The Minister for Trade announced late last year a new mechanism, the WTO Disputes Investigation and Enforcement Mechanism, to provide exporters with a formal means to request the Government to exercise Australia's WTO rights on their behalf. The mechanism has been set up to work with an exporter to:

61 AFFA Website

73

a) Document the nature of the problem;

b) Identify any WTO legal basis for pursuing the access concerns; and

c) To develop a possible road map for maximising identifiable WTO leverage.62

3.111 DFAT advised that as the rules governing international trade have developed and as the practical operation of the WTO agreements has become clearer, 'so too has the need to ensure that Australia's, and Australian exporters', interests are protected and advanced'.63

3.112 The new mechanism 'seeks to facilitate equity of access for all Australian exporters to Government support and assistance in circumstances where other WTO Member governments may not be honouring their obligations under the WTO Agreements' and exercises Australia's WTO rights for the benefit of exporters, and, DFAT states, Australia as a whole.64

Responsibility fo r International Litigation

3.113 However, there is also the question of the appropriate defence of Australia's interests at the WTO. International litigation is a tied matter and able to be undertaken by the Office of International Law within the Attorney-General's Department, the Australian Government Solicitor or the Department of Foreign Affairs and Trade.

The Attorney-General has issued ministerial directions on tied areas of Commonwealth work. Those directions state:

Public international law work of the following kinds is tied to the Attorney- General's Department, AGS and also, in relation to sub-paragraphs (a) to (d), the Department of Foreign Affairs and Trade:

(a) International litigation and arbitration (ie Government to Government) This work covers proceedings before the International Court of Justice, a World Trade Organisation Dispute panel or appellate body,

an arbitral tribunal or some other form of internationally constituted tribunal.

(b) Advice involving Australia's or another country's obligations under international law This work covers requests concerning Australia's or another country's obligations under international law generally or under a particular treaty to which Australia or the country is a party. It also, more

indirectly, covers requests for advice under legislation which

62 Minister for Trade Press Release, 16 September 1999

63 DFAT, Correspondence to Committee, 28 February 2000

64 ibid

74

implements a treaty where the obligations under that treaty are an issue. For example, a request for advice whether certain conduct by the Commonwealth is permitted by legislation which implements a treaty might give rise to a question whether Australia had met its international law obligations under that treaty. However, it does not cover advice on procedural aspects of an exercise of power under the legislation where those procedural aspects are unrelated to a question of Australia's international law obligations.

(c) Advice on treaty negotiation This work covers legal advice preparatory to, or in the course of, treaty negotiations.

(d) Advice on implementing a treaty (including bilateral agreements) This work includes advice on changes to legislation and practice necessary to become a party to a treaty.

(e) Domestic litigation involving a significant public international law issue This work covers litigation where a court will or may decide whether Australia or another country has acted in conformity with its international law obligations (including as an incidental or indirect aspect of the case). Litigation involving legislation which implements a treaty will not be tied if it merely involves interpretation of that legislation or of the treaty for the purposes of applying that legislation or of the treaty for the purposes of applying that legislation and it does not raise the question whether Australia has complied with its international obligations.65

3.114 However, the directions are silent on who should take the lead in the different areas of Commonwealth work, and merely state that for the above matters, they are areas of tied responsibility. The parameters of the respective roles of the different organisations are not clearly defined. The Committee considers that the respective roles need to be clearly defined.

The Role o f the Department o f Foreign Affairs and Trade

3.115 DFAT explained their role in the WTO dispute resolution proceedings as follows:

We take the lead in the Panel processes in Geneva. It depends a little bit on case by case... Also we would draw on the expertise of the mission there in Geneva and certainly Ambassador Raby participated in several of the panel hearings on the salmon case. Also there is clearly legal and trade policy expertise both in Canberra and in Geneva and we draw on that as needs be.66

65 Attorney-General's Department, Correspondence to Committee, 24 February 2000

66 DFAT, Evidence, RRAT, 11 November 1999, p 306

75

3.116 It was clear from the evidence that DFAT's lead role status is to some extent an historical accident, and is a result of the close relationship the Department of Trade (and later DFAT) had with GATT negotiations.

3.117 DFAT did draw on expertise in AQIS about the SPS Agreement and the legal aspects of that agreement, and to a limited extent on advice from the Office of International Law within the Attorney-General's Department, an officer from that Office being seconded to DFAT to assist in the preparation for the Panel hearing. However, strictly legal questions are handled within DFAT.67 In the view of the Committee, this arrangement creates a weakness in Australia's capacity to have the best independent legal advice.

3.118 DFAT, at the hearing on 11 November 1999, affirmed the 'whole of government approach' to defending cases in the WTO:

We do approach all these dispute processes very much from a task force, whole of government approach to them. We did put together on salmon a team that included, besides the Trade Negotiations and Organisations

Division, ourselves in DFAT and people from other areas of the legal area of the department. Clearly, we worked very closely with AQIS colleagues, who were also key parts of the delegations that went to Geneva. We also in this case, as part of the task force, got additional legal support and assistance

from the Attorney-General's Department. An officer was seconded across to my branch for a period particularly to deal with the appeal process of the salmon case.68

...in the WTO, the dispute settlement understanding has been developed over many years. The current version of it came out of the Uruguay Round negotiations but there have been these sorts of processes going under the GATT that preceded it. We have been involved in quite a number of cases

over the years, with a degree of success, in relation to the EU sugar policy, US sugar policy, and Japanese import restrictions. It is an ongoing process and it does involve quite a deal of our own resources. I mentioned that we have in my division a degree of in-house experience, not only in trade policy. We have 10 officers in my division who have legal qualifications.

We have two officers in our WTO mission in Geneva who have legal qualifications. We have within the department a legal office whose services we can call upon. Mr Rowe is the head of that office. ... We do try to bring to bear a very broad range of legal experience and particular expertise in preparing to prosecute or defend cases.69

3.119 The Committee notes the establishment last year of the Disputes Investigation and Enforcement Unit. The unit is a trade facilitation mechanism and appropriately the province of DFAT. It has been established to assist Australians wishing to obtain

67 DFAT, Evidence, RRAT, 11 November 1999, p 307

68 DFAT, Evidence, RRAT, 11 November 1999, p 306

69 DFAT, Evidence, RRAT, 18 February 2000, p 403

76

access for their products to international markets and who may be prevented from accessing those markets as a result of unjustified trade barriers.

3.120 DFAT has further advised that, following the salmon case in the WTO, the legal branch has been expanded.70 In a letter to the Committee, DFAT advised that an additional two lawyers had been added to the Disputes Investigation and Enforcement Unit, as well as additional legal staff within other areas of the Division.71 However, the advice did not specify whether the additional staff were litigation specialists, or in what areas their skills lay.

3.121 The Committee's concern in relation to the role of DFAT in the defence of quarantine restrictions which have the effect of a restraint on trade was discussed at public hearing:

Senator O'BRIEN—The case that you are presenting is a mixture of your trade responsibilities and AFFA’s responsibilities for quarantine; so AQIS were involved. To what extent do trade considerations influence the way that you would present Australia’s case? I suppose that is a very broad question. I am trying to think how I could ask for the information I want. I

suppose - and tell me if I am wrong - that the department has to have an eye on our overall trade interests in pursuing matters such as this before a WTO panel.

Mr Hussin—Yes, that is right. We have a broad trade policy interest in these issues. Australia is an exporter as well as an importer. So, yes, we try to bring a broad view to these sorts of issues. 72 7 3

3.122 However, Mr Hussin went on to state that DFAT was 'not in the business of trading off one set of interests for another' and that DFAT was very conscious that Australia's trade credentials in a lot of areas depend upon having high quarantine standards.71

The Role o f the Attorney-General's Department

3.123 The Office of International Law is located within the Attorney-General's Department and provides specialist advice on international law, including international trade law and human rights and treaties. The Office also assists with developing and implementing projects in the international law field and in international and domestic litigation involving international law. One of the two branches within the Office is the International Trade and Environment Law Branch, responsible for areas of international trade law-related policy, including international

70 DFAT, Correspondence to Committee, 28 February 2000

71 ibid

72 DFAT, Evidence, RRAT, 18 February 2000, p 397

73 Mr Mark Zanker, Attorney General’s Department, Evidence, RRAT, 18 February 2000, p 397

77

commercial arbitration.74 The Office has expertise in the conduct of international litigation. The Office recently pursued a successful application by Australia for provisional measures before the International Tribunal for the Law of the Sea in the Southern Bluefin Tuna case.

Australian Government Solicitor

3.124 The Office of the Australian Government Solicitor [AGS] provides legal services to Australian government departments and agencies. The four major areas of practice within the AGS are Administration and Government, which includes International Law, Litigation and Dispute Resolution, Commercial Law and Revenue

and Regulation.

3.125 AGS advises the following:

The Australian Government Solicitor (AGS) provides legal and related services in support of the full range of activities of Commonwealth departments and agencies nationally. These services include the conduct of litigation and the provision of legal advice and business and commercial

assistance to clients.75

3.126 On 11 March 1998, the AGS became a statutory authority, with the passing of the Judiciary Amendment Bill 1998. While much Commonwealth legal work was no longer tied, public international law work was one of the areas which remains tied to

the Commonwealth.

3.127 The AGS lists International Law as one of its specialist legal services. However, the material provided publically by the AGS, especially that on its website under 'International Consulting', provides little advice on the specific expertise of the office in terms of international law and litigation in which it has been involved.

Co-ordination between DFAT and the Specialist Legal Agencies

3.128 The Department of Foreign Affairs and Trade [DFAT] has generally not sought to involve the Attorney-General's Department or the AGS in WTO cases and the Attorney-General's department was not afforded a significant role in the salmon case.76 The representative from the Office of International Law advised, in response to a question on respective international law responsibilities, that the involvement of the Office of International Law was client driven - it was limited to the extent that the

Office responded to client requests - if no request was received, then no work would be undertaken on the matter:

The matters of international litigation and arbitration, advice on international law treaty negotiation and advice on implementing treaties are

74

75

76

Attorney General's Department Website

Attorney General's Department, Annual Report 1998-99, p 9

Robert Cornall, Attorney-General's Department, Correspondence to Committee, 29 January 2000

78

the shared responsibility of the Attorney-General ’ s Department, the Australian Government Solicitor and the Department of Foreign Affairs and Trade. In terms of the involvement of the Office of International Law in these matters, that will depend entirely on the client agency. If we are asked to do something in relation to any of those particular matters we will do it, but it is customer driven, if you like. If we are not asked to do something, we would not necessarily be aware of it.77

But, if there was a possibility that the government, through one of its departments or agencies, was going to become involved in some sort of international dispute settlement process, that is a matter which should ordinarily come to our office for consideration as to whether the decision to proceed with the litigation is a sound one, and what the prospects of success might be - that sort of stuff.78

3.129 A discussion on the appropriate responsibilities of each department ensued:

CHAIR—Let me ask you another question in regard to that. It seems to me in this whole thing that the only party that can claim independence from the issue is you. The Department of Foreign Affairs and Trade has a dual responsibility. The main emphasis, as I would read it and understand it, is on issues of trade - promoting trade, facilitating trade and all those types of things - yet they go in there to defend the principal defender of Australia in terms of a quarantine issue. That must lead to a conflict of interest looking

into the future as well as the past in some of these negotiations. You have AQIS responsible for quarantine and trade, and they have very different roles. Do you see that in fact there is a potential for conflict of interest in doing two things?

Mr Zanker—There are arguments on either side. Another view could be that disputes in the World Trade Organisation before the dispute settlement panels and the appellate bodies are integral aspects of Australia’s overall trade policy and for the trade people in the Department of Foreign Affairs and Trade to be closely involved in those matters is essential for the proper conduct of trade policy in Australia.

CHAIR—I am not saying that they should not be involved and I am not saying that they do not have an interest. What I am saying is that, in terms of their particular position in trying to do both tasks, it could well be better in future if we had the independence of your department or -Mr Zanker—You could certainly have additional legal skills brought to bear if that is considered to be a desirable course of action.

CHAIR—Concerning expertise, you made a comment that you can utilise outside advocates. Were you talking in terms of outside advocates within the

77 Mr Mark Zanker, Attorney General’s Department, Evidence, RRAT, 18 February 2000, p 390

78 Mr Mark Zanker, Attorney General’s Department, Evidence, RRAT, 18 February 2000, p 392

79

whole of government or were you talking about advocates from the private sector, or both?

Mr Zanker—Obviously international litigation is a pretty rare bird. As I indicated, the case on southern blueftn tuna involved us engaging four advocates: one from my office, the Chief General Counsel from the Australian Government Solicitor, an Australian academic based at

Cambridge University and also the Attorney-General. All of the people involved have particular advocacy skills and are highly qualified and respected international lawyers. What we are interested in is to present Australia’s views in these cases as best we can, in the hope of securing a

victory.79

3.130 It was noted in hearings by the Office of International Law representative that WTO cases are very intensive and require considerable effort. Should the Office be required to take an enhanced role in such cases, resources would be an issue.80

Committee Comment

3.131 The Committee is concerned that Australia's interests have not been sufficiently looked after in the international arena. The Committee considers that is essential to have appropriate legal input at each and every stage of international negotiations and from the commencement of steps towards negotiations, no matter what the issue. To be insufficiently aware of the significance of our international responsibilities and to be ill prepared for any litigation which might ensue is reckless.

79

80

Mr Mark Zanker, Attorney General’s Department, Evidence, RRAT, 18 February 2000, p 390-1

Mr Mark Zanker, Attorney General’s Department, Evidence, RRAT, 18 February 2000, p 391

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C H A PT E R FO UR

THE APPROPRIATE LEVEL OF PROTECTION

Determination o f the Appropriate Level o f Protection Submission Concerns Submission Comment The Precautionary Principle

Committee Comment

Determination of the Appropriate Level of Protection

4.1 The Appropriate Level of Protection [ALOP] allowed for under the SPS Agreement is for determination by the individual member state. As noted in Chapter 3, under Articles 3 and 5 of the SPS Agreement, countries are able to determine their own level of quarantine protection and that level can exceed relevant international or

exporting country standards. There is no obligation to adopt an international standard, but where the international standard is adopted, the Member is not required to undertake a risk assessment. Measures not based on an international standard,

guideline or recommendation must be based on a risk assessment and the adoption of the higher standard must be justified scientifically.

4.2 The SPS Agreement defines the ALOP as the level of protection deemed appropriate by the Member establishing a sanitary or phytosanitary measure to protect human, animal or plant life or health within its territory.1 AQIS, in policy memorandum 1999/26 affirms Australia's sovereign right to determine its ALOP and states that it does so on the basis of a reflection of government policy and community expectations:

Australia has the sovereign right to determine its ALOP which reflects government policy and community expectations. This element of quarantine policy precedes and is separate from the establishment of quarantine measures by AQIS. The ALOP determines the quarantine

measures required; it is not the quarantine measure that determines the ALOP.2

4.3 The SPS Agreement does not require a WTO Member to make a clear statement of the scientific basis for its ALOP. However, the Agreement does place strict conditions on the use of SPS measures to ensure that are applied consistently and are not used as a disguised restriction on international trade.3 The determination of

the ALOP is qualified by the SPS Agreement, as follows:

1 Article 3.3, SPS Agreement

2 AQIS Policy Memorandum 1999/26, 22 April 1999

3 Department o f Foreign Affairs and Trade, Submission 21, Appendix D

82

The SPS Agreement requires, however, that Australia’s quarantine measures are not more trade restrictive than required, that such measures are based on a scientific risk assessment and that we do not apply different standards. In other words, Australia’s freedom to define its level of protection is limited by the test of “consistency” - it is contrary to Article 5.5 to adopt a low risk policy in one field, while not doing so in a comparable field. The WTO panel confirmed this in the Salmon case.4

....The SPS Agreement obliges us to know what our appropriate level of protection is at the national level and then to apply that in a consistent way. The implication of this framework is that the risk assessment and the measures applied to control risk and the appropriate level of protection must have a plausible relationship to each other.5

4.4 However, the precise nature of the ALOP was a source of much confusion throughout the inquiry. AQIS describes the ALOP as follows:

There may be difficulties in describing the ALOP in practical terms. While the ALOP is the objective and the measure is the means of achieving that objective, to imply the ALOP from an existing SPS measure would be to assume that every measure accurately reflects the ALOP set by the Member. While our ALOP is illustrated by the body of quarantine decisions made, among those decisions will be "outliers", made for reasons perhaps significant at the time the measure was adopted, but which do not fit well into the ALOP 'zone'. Review of such decisions is carried out on a continuing basis, within the boundaries of the ALOP. This review may lead to minor changes in import policies or procedures - significant changes are considered in consultation with stakeholders. Older decisions in particular may need such review, and also matters in which new information has emerged or new technologies oblige AQIS to re-examine the outcomes.

A guide to the ALOP may be found in community and industry acceptance of quarantine policy and practice over the years. It reflects value judgements of the Australian community that take into account the benefits of trade and community access to imported goods and the consequences of

pest or disease introductions on industry, the environment and society in general. Australian Governments have consistently adopted a highly conservative approach with respect to the ALOP. However, since the 1980’s, successive Australian Governments have rejected the proposition that it is possible or desirable for Australia to adopt a ‘no-risk’ approach to

quarantine. AQIS’ role is to provide scientific advice enabling the definition of quarantine risk and identification of appropriate approaches to risk management, that provide for a consistent, scientific basis to the maintenance of Australia’s ALOP.6

4 National Farmers Federation, Submission 33, p 2

5 AQIS, Evidence, RRAT, 18 February 2000, p 381

6 AQIS Policy Memorandum 1999/26, 22 April 1999

83

4.5 Dr Gebbie of AFFA, at the Consideration of Estimates hearing, stated that:

.. .1 agree with you that it is the role of the government as its sovereign right to determine what the ALOP will be, but what I was trying to say is that it is a somewhat ill defined concept multilaterally. If you ask different countries what it means I suspect you will get many different answers. We are going

to be dealing with this concept in the WTO, and at the end of the day I would think there has to be a multilateral understanding of its meaning. I would like to see us ...take a lead role in shaping the concept itself as we would want to see it. There is policy development in Australian Quarantine

and Inspection Service and it is followed up multilaterally with the WTO in further elaborating the concept along the terms which we would want to see.7

4.6 AQIS defended the generality of the ALOP, describing it as a qualitative matter and not a quantitative matter.8 AQIS also noted during the course of the inquiry that there was no obligation under the relevant international agreements to state the appropriate level of protection and that it was not the practice of member

states to make statements about what their ALOP is.9 Generally, it seems that states 'infer what other countries' ALOP's are by looking at the measures they apply and comparing their measures with our measures, their restrictions with our restrictions'.10

4.7 The following exchange is indicative of the attempt to clarify what the ALOP ultimately means:

Senator O'BRIEN—So the ALOP is the basis of the sovereign risk acceptance of the country, but there is a general understanding of government policy by AQIS and AQIS interprets that for each case.

Mr Gascoine—That is correct.

Senator O'BRIEN—Do I take it that that means it can vary? I thought it would have to be fixed for cases.

Mr Gascoine—The appropriate level of protection is, in principle, fixed for all cases. Our obligation is to define a set of measures in each individual case which will achieve that appropriate level of protection.11

4.8 AQIS further advised:

The term ALOP as used in the SPS Agreement may be defined as a Member's expressed goals in protecting its animal and plant life or health

7 Consideration o f Estimates, RRAT, 8 February 2000, p 275

8 AQIS, Evidence, RRAT, 24 September 1999, p 35

9 ibid, p 39

10 ibid, p 39

11 AQIS, Evidence, RRAT, 11 November 1999, p 322

84

from hazards, as reflected in legislation and other official documents, policies and procedures. In determining its ALOP, a Member strikes a balance between the risk of pest and disease incursion and its associated

consequences, and the desired benefits from trade which include access to commodities for consumption and genetic improvement.12

4.9 AQIS impliedly acknowledges that the concept o f the ALOP is not well understood. A recent article contained the following statement:

The Quarantine Development Unit is actively pursuing a better understanding of the concept of ALOP, with a view to describing Australia's ALOP in a manner which will provide better guidance to the Australian Quarantine and Inspection Service risk analysts and a clearer view for stakeholders and trading partners of the basis for our quarantine measures.13

4.10 The determination by AQIS of the level of restriction required is a matter of applying the appropriate level of protection set by the government to individual cases, with trade considerations playing no part. However, it is the determination of the ALOP, by whom it is determined and ultimately what the ALOP comprises which is

unclear.

4.11 AQIS notes that:

The determination of a World Trade Organisation member's ALOP is based on a societal value judgment; in effect, it is the community's attitude to risk taking reflected in government policy. In setting its ALOP, a World Trade Organisation member strikes a balance between the risk of pest or disease incursion (and the associated potential for damage) and the benefits of trade (which include access to products of other countries for both consumption and production improvement).14

4.12 However, AQIS further notes that 'a member is not free to describe its ALOP with such vagueness or equivocation that the application of relevant provisions of the sanitary and phytosanitary agreement becomes impossible'.15

4.13 As noted above, the SPS Agreement guarantees, as a matter of national sovereignty, the right to determine the level of acceptable quarantine risk or ALOP. The ALOP is the basis of the sovereign risk acceptance of a member country. It is a fixed policy, and it is AQIS' responsibility to define a set of measures in individual

12 AQIS, Correspondence to Committee, 1 March 2000, p 3

13 Gascoine D, Wilson D and McRae C, Quarantine policy in the World Trade Organisation environment, Outlook 2000, p 171, at p 176

14 ibid

15 ibid

85

cases to achieve the appropriate level of protection. AQIS elaborated on this at public hearing:

...the appropriate level of protection is the same in each case unless and until the government tells us that it wants a wholesale shift in the policy or it wants to tell us that we are not conforming with the policy which it requires us to implement. We are applying, we think, the same appropriate level of

protection in the case of salmon as we apply in the case of imports of any other agricultural product from another country.

4.14 The ALOP is defined under the SPS Agreement as the level of protection deemed appropriate by the Member establishing a quarantine measure. AQIS described the ALOP as 'a judgement which somebody has to make...about where the right balance lies between, on the one hand, protecting Australia s animal and plant

based industries and environment against pest and disease risks and, on the other hand, the advantage of allowing the maximum possible trade which is beneficial to both consumers and our own industry'1 6 1 7 18. AQIS further stated:

That judgment is very difficult to subject to objective, quantitative analysis. To our knowledge, no government anywhere has conducted such an analysis. However, it is a judgment which is made essentially by government and then implemented as policy by AQIS and its counterpart

agencies around the world. When we apply the appropriate level of protection, we are applying it to individual cases. It is in some sense a standard to be achieved in any given situation where we are conducting an import risk analysis. In those individual situations, the trade considerations

are no longer relevant. It is only a matter for AQIS to specify controls or requirements, where they are necessary, in order to ensure that risk is kept to an acceptably low level...19

4.15 In its written submission, AQIS confirmed that the determination of the ALOP is a sovereign right, the prerogative of the Member and not of the WTO, and that determination of the ALOP is a 'societal value judgement needing no scientific basis, although AQIS acknowledged that the determination must take into

consideration negative trade effects. 20 AQIS stated that in establishing the ALOP, a member strikes a balance between:

a) The risks of pest disease incursions and the associated potential for damage associated with trade; and

16 AQIS, Evidence, RRAT, 11 November 1999, p 322

17 ibid, p 323

18 ibid, p 321

19 ibid, p 321

AQIS, Submission 17, p 14 20

86

b) The benefits of such trade which include access to consumer and investment goods at comparative prices and to new genetic material to enhance the productivity of primary industries.21

4.16 AQIS described the extent to which the ALOP is limited by the requirements under the SPS Agreement as follows:

To the extent that we apply an appropriate level of protection—which, in Australian government policy terms, reflects our relative pest and disease free status—and to the extent that the relative status of freedom can be demonstrated on scientific and technical grounds, then it has that underpinning.22

4.17 In their supplementary submission, AQIS argued that there existed a misunderstanding about the central difference between the determination of Australia's ALOP by the government as a matter of policy and the application of that determination by the Director of Quarantine and AQIS in relation to specific quarantine decisions. AQIS stated:

The government determines ALOP at the broad policy level taking into account community expectations regarding the management of risk and the amount of damage which might be done (especially to vulnerable agricultural industries and the environment) by incursions of exotic pests and diseases. It also takes into account the impact which quarantine policy may have on trade; the more restrictive is quarantine policy (ie the higher ALOP is set), the greater are the benefits of trade which are foregone.23

4.18 AQIS further argued that, in this way, quarantine policy does take trade issues into account, but that in the application of the policy to individual cases, no regard is paid to the benefits or disbenefits of trade in salmon products; i.e. that the import risk analysis process identifies those requirements which are sufficient to reduce the risk of pest and disease incursions to a level which is consistent with government policy on the ALOP.24 AQIS stated at public hearing:

It has been said by many who oppose our decision that AQIS has been driven by trade considerations. I want to say unequivocally that AQIS is not and was not influenced in the policies it has announced and which are being examined by this committee by any consideration of trade or trade retaliation.25

21 AQIS, Submission 17, p 14

22 AQIS, Evidence, RRAT, 24 September 1999, p 36

23 AQIS, Supplementary Submission 59, p 8

24 ibid

25 AQIS, Evidence, RRAT, 24 September 1999, pp 25-6

87

Submission Concerns

4.19 Many submissions considered that the ALOP had been seriously undermined and that there existed good reasons for Australia maintaining a very conservative approach to quarantine and the determination of the ALOP:

AVA wishes to express the view that for diseases of great consequence to Australia such as those which would have great economic consequences, or which may not be eradicable or which would have serious public health or environmental implications the ALOP should be very conservative.2b

4.20 The TSGA was concerned about the following aspects of the ALOP:

a) The means by which the ALOP was determined were unclear;

b) The difference between the ALOP in 1996 and 1999 was not evident; and

c) There was no clear division of responsibilities between the

determination of the ALOP and the interpretation of how quarantine decisions mesh with the ALOP.2 6 27

4.21 When asked at public hearing to clarify the principles behind the

determination of the ALOP, and the confusion about the concept, AQIS responded:

Indeed, the SPS agreement obliges us to know what our appropriate level of protection is at the national level and then to apply that in a consistent way. The implication of this framework is that the risk assessment and the

measures applied to control risk and the appropriate level of protection must have a plausible relationship to each other.28

4.22 When questioned at public hearing about conflicts with the measures determined by AQIS and a finding by the WTO which compromised Australia's determined position on our appropriate level of protection, the DFAT representative responded that it would not be a matter for the department but for government to resolve:

Mr Hussin—All the interested areas of government would be involved. Obviously, the Minister for Agriculture, Fisheries and Forestry and the Minister for Trade would be the key ones who were involved, but in some cases it would go broader than that.

Senator O'BRIEN—To the cabinet?

Mr Hussin—To the cabinet perhaps....

26 Australian Veterinary Association, Submission 49, p 3

27 Tasmanian Salmonid Growers Association, Submission 46, p ii

28 AQIS, Evidence, RRAT, 18 February 2000, p 3 81

88

Senator O'BRIEN—But that is the tension, isn’t it, if you come to a position that you believe is the bottom line, as it were, with regard to protection but cannot satisfy the panel for whatever reasons? We were just discussing the tension between our obligations under trade policy and the government’s obligation to maintain a secure quarantine barrier. Where there is a collision, we were discussing who would make the decision as to how we would handle it. I think you have been very clearly saying that that is a matter for government and not the department.

Mr Hussin—That is correct. Obviously, we would review the issues and provide advice, but it would be for government to consider any further measures. Of course, it is the director of quarantine in this process who takes the decision.

Senator O'BRIEN—But that would follow a determination by government on the issue?

Mr Hussin—That is correct.29

4.23 It is the Government, which determines the appropriate level of protection, and the Director of Quarantine who makes the policy determination in relation to quarantine measures to underpin the ALOP. However, the Committee considers that the precise nature of the ALOP is elusive.

Submission Comment

4.24 Stakeholders argued that AQIS had an obligation to base its 1999 import risk analysis decision on a previously defined ALOP. They claimed that, in the salmon case, under the SPS Agreement, Australia was entitled to develop an ALOP for determining IRA protocols which safeguarded stakeholders from imported diseases. They argued that AQIS could have abided by the WTO ruling and still maintained either a complete ban or least a much more limited import protocol than has been allowed.30

Concerns in Relation to the ALOP

4.25 Major concerns in relation to the ALOP included:

a) The determination of the ALOP did not take into account the role of the States and Territories and the need for those jurisdictions to provide for their differing circumstances; and

b) The IRA failed to determine an appropriate level of protection (ALOP) which reflected the level of expectation of the community and therefore denied the community natural justice.

29 DFAT, Evidence, RRAT, 18 February 2000, p 397

30 Nortas Pty Ltd, Submission 37, p 8

89

4.26 During the course of the inquiry, it became clear that the specifics of the ALOP were a source of some confusion for stakeholders and others. It also became clear that both AQIS and DFAT were unable to articulate clearly what the ALOP precisely was and by whom it was determined. This lack of clarity has meant that

stakeholders are confused as to how the sovereign right of a nation to determine its ALOP fits with the WTO requirements for the development of measures under the SPS Agreement, and particularly for the undertaking of Import Risk Analyses. One submission argued that the process was defective given the absence of an ALOP

instruction from Government to AQIS.1

4.27 The Tasmanian Government's submission stated:

There is no evidence available to confimi that Australia has determined an ALOP against which measures decided can be tested. Certainly, there is no evidence that in determining an ALOP the Commonwealth Government has carried out any consultation process to clearly determine the expectations of

the community or of the States and Territories... in the absence of a stated ALOP and considering the removal of protection measures set in 1975 it can only be concluded that the Commonwealth has determined a lower ALOP than previously existed.3 1 32

4.28 Submissions argued that the emphasis on a level of protection acceptable to the community, which applied to the 1996 AQIS IRA, had been ignored in the recent decision. They believed that, had the 1996 ALOP been used, it would not have been possible for AQIS to change its determination in relation to uncooked salmon imports.

In the light of the AQIS decision, stakeholders are convinced that a new ALOP, developed without any consultation with industry, and based partly on trade considerations, has supplanted the old ALOP:

In 1996, the AQIS IRA stated that our ALOP was to provide a level of protection acceptable to the Australian community, with the emphasis on community. In April 1999, Australia’s ALOP was that which reflects government policy and community expectations.

Again, there was emphasis on government policy and community expectations. By contrast, if you look at the AQIS submission to this inquiry, it states: In establishing its broad approach to ALOP, a member in effect strikes a balance between the following: the risks of pest or disease incursions and associated potential for damage associated with trade, and the benefits of such trade, which includes access to consumer investment goods

31 Management Strategy and Innovation Pty Ltd, Submission 18, p I

32 Tasmanian Government, Submission 42, p 8

90

Clearly, the position put by AQIS to this inquiry is one of a trade weighted definition of ALOP. ”

4.29 This viewpoint was supported by the Nortas submission:

We can draw no other conclusion than the science and disease issues have taken a back seat to the concerns of AQIS in relation to the WTO and their perception of what was required to protect Australia’s trade reputation.3 3 34

4.30 The concerns of the Tasmanian Government in relation to the establishment of the ALOP were stated by the Minister for Primary Industries, Water and Environment at public hearing:

The Commonwealth... appears to have disregarded community expectations on the matter, despite its stated policy to reflect community expectations in its quarantine policy settings. Indeed, the ALOP has now moved from being an issue where it was taking into account singular community expectations to one that takes into account government policy and, more recently and I think quite ominously, the issue of trade. These sorts of matters should not be taken into account at all in this question. We are dealing with quarantine and disease issues.35

4.31 The Secretary of the Tasmanian Department of Primary Industries, Water and Environment accused the Commonwealth of a process which was deficient:

In summary, the Commonwealth’s ALOP process fails because it lacks transparency, it has no process for ascertaining community expectations or evaluating non-trade related issues, it assesses risks on the basis of the importance of potentially affected industries to the national economy and not on risk to animal or plant health, it includes no provision for ascertaining state and territory government concerns, and it has not produced an ALOP from which AQIS can develop measures with confidence of withstanding a challenge.36

4.32 It is apparent that stakeholders are confused about the ALOP - what it is at any given time and how it is determined. The Executive Officer of the TSGA stated:

The thing that I find intriguing about the acceptable level of protection is that we have asked on a number of occasions, ‘What has changed between 1996 and 1999?’ The answer that we keep getting back is that the WTO made some decisions which said that the IRA we conducted in 1996 was not

33 Mr Kim Evans, Department o f Primary Industries, Water and Environment, Tasmanian Government, Evidence, RRAT, 5 October 1999, pp 225-226

34 Nortas Pty Ltd, Submission 37, p 7

35 The Hon. David Llewellyn, Minister for Primary Industries, Water and Environment, Tasmanian Government, Evidence, RRAT, 5 October 1999, p 217

36 Mr Kim Evans, Department o f Primary Industries, Water and Environment, Tasmanian Government, Evidence, RRAT, 5 October 1999, p 219

91

appropriate, but nowhere have I heard that the WTO told us that our acceptable level of protection was wrong. The industry is having difficulty accepting that, in 1996, it was not acceptable for us to import Canadian wild caught salmon, whereas, in 1999, it is acceptable for us to import not only Canadian wild caught salmon, but also a whole range of other salmon as well, given the deterioration that has occurred in the health status of salmon around the world in three intervening years. It just does not seem to stack up.37

4.33 Tassal stated:

The Appropriate Level Of Protection (ALOP) is referred to as a goal of successfol quarantine policy. Throughout this process however, there have been no clear explanations of how ALOP is defined for each case, and by whom. It is particularly perplexing that without any apparent review, ALOP

on the issue of raw salmon imports has radically changed between the AQIS reviews of 1996 and 1999. It is of serious concern that AQIS may have built on its legitimate role of adviser to also adopt the roles of arbiter and enforcer of ALOP, which theoretically should reflect the public's aspirations.

This blurring of roles in the administration of ALOP is perhaps fundamental to much of our dissatisfaction, and its resolution a precursor to a consistent and equitable quarantine policy. 8

4.34 The latter comment in relation to the perceived role of AQIS as both the 'adviser' and 'arbiter and enforcer' of the ALOP was discussed by other stakeholders. There is a view held by industry and other groups that, by using a different ALOP in the 1999 IRA process without adequate consultation, AQIS had established itself as the author of the ALOP. Stakeholders expressed a strong view to the Committee that

it should be the Commonwealth Government, in consultation with the community and State and Territory governments, which establishes an appropriate level of protection for Australia.

4.35 It is noted that the criticism of the determination of the ALOP may not be sustainable, given that the Committee has not been able to establish by whom the ALOP is determined, what it is and what significance the ALOP has. It is perhaps unfair to accuse AQIS of usurping the Government's responsibility so far as the ALOP

is concerned39, but AQIS and the Government must share some of the responsibility for the very evident confusion.

37 Mr Anthony Smithies, Tasmanian Salmonid Growers Association Limited, Evidence, RRAT, 5 October 1999, p 212

38 Tassal Limited, Submission 41, p 4

39 The Tasmanian Professional Trout Guides Association, Submission 12, p 14

92

Notification o f Changes to the ALOP

4.36 Stakeholders claimed that AQIS did not clearly enunciate in the IRA process itself, or in its draft report, the precise details of any changes to the ALOP. As a result of this, many stakeholders believed that the scientific assessments that were conducted for the IRA process, published by AQIS as they were received on its website, would lead to a continuation of the restriction on uncooked salmon imports because of the

continuing application of the 1996 ALOP. Instead, stakeholders were concerned by the protocols AQIS derived from the scientific assessments, leading many to conclude that AQIS had changed the ALOP.

We read [the IRA] and the science we believe is fairly well grounded. It is what AQIS has done with that science that we believe is flawed. When you continually say that something meets our acceptable level of protection and no-one can define what our acceptable level of protection is and if AQIS indeed is setting the acceptable level of protection as well as doing the science, it seems to me that we do not have a just outcome.40

The process is fundamentally flawed in that the draft fails to identify Australia’s ALOP, yet it determines measures that would satisfy the unspecified ALOP. It therefore cannot satisfy the transparency requirements of Article 5(8) of the SPS Agreement, which is to provide clear explanation of why the measures implemented, and not others which might be less trade-restrictive, have been applied.41

4.37 It should be noted that AQIS at all times has stated that the ALOP has been constant for a considerable period and any amendments to the ALOP would be advised to AQIS by Government.42

Trade Considerations

4.38 A number of submissions raised concerns that the possible influence of trade pressures over AQIS processes had pushed Australia into a 'race to the bottom' which will lead to an overall weakening of the quarantine protection afforded nations under WTO rules. This was clearly the concern of the Tasmanian Government.43 Nortas Pty Ltd also voiced its suspicion that:

The Canadian Foreign Affairs and Trade Department has pursued this issue as a test case on the SPS Agreement. They have chosen a product they know well in salmon (a product that has been the subject of numerous

international trade disputes) and in Australia they chose a country they expected to "play by the rules" given our very public support for the WTO

40 Mr Ken Orr, The Tasmanian Professional Trout Guides Association, Evidence, RRAT, 5 October 1999, p 126

41 Tasmanian Government, Submission 42, p 9

42 AQIS, Evidence, RRAT, 11 November 1999, p 322

43 Tasmanian Government, Submission 42, p 2

93

... it is clearly in the interest of countries in the northern hemisphere who are already rife with diseases from reduce quarantine barriers for their trade.44

4.39 It was suggested that the Commonwealth Government appeared to see the decisions, not so much as a challenge to make Australia s quarantine standards and procedures more consistent or to make the IRA more comprehensive, but as an embarrassment to Australia's international free trade credentials.45 For example the

Department of Agriculture, Fisheries and Forestry [AFFA] argued that:

The findings against Australia by the WTO panel and Appellate Body have challenged international perceptions of Australia as an advocate of agricultural trade reform. The importance of trade to Australia's agricultural and fisheries industries is undeniable and it is not in Australia's national

interest to place these valuable and hard fought exports at risk through non­ compliance with WTO rulings.46

4.40 AFFA supported AQIS’ July 1999 determination as the proper response to the WTO decisions, arguing that 'the new policies represent a significant strengthening of our overall fish quarantine regime, which is arguably now the strictest fish import regime in the world'.47

4.41 A number of submissions expressed concerns that trade considerations were impinging on the determination of the ALOP and thereby undermining quarantine restrictions. Unlike other industry bodies, such as the Cattle Council of Australia and the Queensland Sugar Corporation, the Pork Council reiterated the necessity for

quarantine measures to remain independent of trade considerations:

AQIS must ensure that overseas trade/WTO pressures do not erode the integrity of Australia's import risk analysis process. As an external observer of the salmon import issue, there is a perception that aspects of the quarantine decision process were 'fast-tracked' in response to trade/WTO pressures from Canada.

PCA considers that AQIS's first obligation should be to Australia and Australian industry, within the framework of the WTO. It is important that AQIS avoid being driven by WTO considerations, rather than by the interests of Australian industry.

The question of concern to industry is whether AQIS is fighting hard enough for Australian industries on quarantine issues, or whether AQIS is more concerned with alignment with the WTO.

44 Nortas Ply Ltd, Submission 37, p 10

45 ibid, p 4

46 Department o f Agriculture, Fisheries and Forestry, Submission 48, p 3

47 ibid, p 4

94

In a similar vein, Australia must avoid pursuing a policy of appeasement towards trading partners when considering import access decisions on quarantine grounds. It is in Australia's immediate and long term interest to maintain a higher quarantine health status than our trading partners.

PCA considers the threats of retaliation or other posturing by trading partners should not be permitted to have any impact on Australia's sovereign right to go through full and due process on any quarantine decision.48

4.42 In response to criticisms that it is influenced by trade considerations AQIS stated:

Our submission points out that AQIS's judgment on which restrictions are required is a matter of applying the appropriate level of protection set by the government to individual cases and that, in the application of the policy, AQIS pays no regard at all to the benefits or disbenefits of trade in salmonids or salmonid products.49

4.43 Dr Simon Hearn, AFFA, confirmed the AQIS position:

One point I would like to make early in this discussion is that the application of the quarantine decisions, whether it be for salmon or whether it be for any other commodity, is categorically not influenced by trade policy considerations—that is to say, they are stand-alone decisions made on objective science, and it is not tolerable that trade policy should impinge on that scientific assessment.50

4.44 However, Dr Hearn qualified this comment later when he said:

It is a stand-alone scientific analysis. Once that analysis is made, there are most distinctive trade implications. I have no doubt that, in the area of community consultation, trade considerations are addressed by community parties in terms of their views as to what is tolerable.51

The ALOP Process

4.45 Stakeholders argued that the ALOP process itself is in urgent need of reform as a result of the 1999 import risk analysis in relation to non-viable salmonids and marine fmfish. AQIS, in their view, failed to abide by the same ALOP that was used in the 1996 IRA process and instead, placed trade considerations above the risks associated with the disease of salmonids. The following comment by the Tasmanian Minister for Primary Industries, Water and Environment is indicative:

48 Pork Council of Australia Ltd, Submission 52, p 3

49 AQIS, Evidence, RRAT, 11 November 1999, p 336

50 AFFA, Evidence, RRAT, 24 September 1999, p 4

51 ibid, p 6

95

We certainly look to the committee to recommend changes to the Commonwealth’s appropriate level of protection and resultant measures so as to restore the level of quarantine protection delivered in the AQIS 1996 IRA report in respect of wild ocean-caught Pacific salmon. We also

recommend the application of that level of protection to any other product posing a threat of introducing the disease of concern to the salmonid health of fish in Australia. We are recommending changes to the Commonwealth quarantine decision making process designed to deliver quarantine decisions

consistent with the appropriate level of protection requirements of the states and territories. That is the basis of our submission and we would like you to take those recommendations on board.5~

4.46 The Pork Council of Australia acknowledged that, although Australia took a very conservative approach to quarantine matters to protect its unique quarantine status in the world, Australia still came under pressure from trading partners with a lesser quarantine status, to reduce quarantine requirements. The Council argued that,

without a more objective definition of the value of Australia's quarantine status, the Government and AQIS are vulnerable to trade and political pressures to accept higher levels of risk than industry and the community are prepared to accept.5 2 53

The Precautionary Principle

4.47 Under the Environment Protection (Impact o f Proposals) Act 1974, AQIS is required to consider whether the granting of an import permit will effect the environment to a significant extent. AQIS states in its 1999 IRA:

Decisions made by AQIS to permit the entry of animal products, made under the Quarantine Act and consistent with Australia’s conservative approach to risk, are unlikely to lead to significant adverse effects on the environment.54

4.48 A key tenet of such risk assessment and management is the precautionary principle. The precautionary principle requires that measures that could potentially lead to environmental damage, such as the decision to grant an import permit, should not be taken when there is a lack of scientific knowledge.

4.49 The principle has been recognised at an international level since as early as the 1970s, although it is only in the 1990s that it has received international endorsement. The 1992 Convention on Biological Diversity, which Australia has ratified, states that:

52 The Hon. David Llewellyn, Minister for Primary Industries, Water and Environment, Tasmanian Government, Evidence, RRAT, 5 October 1999, p 215

53 Pork Council of Australia Ltd, Submission 52, p 4

54 AQIS July 1999, Import Risk Analysis on Non-viable Salmonids and Non-Salmonid Marine Finfish, p 6

96

... where there is a threat of significant reduction or loss of biological diversity, lack of full scientific certainty should not be used as a reason for postponing measures to avoid or minimise such a threat.

4.50 The precautionary principle is also recognised in Australia. Paragraph 3.51 of the 1992 International Agreement on the Environment, to which the Commonwealth, the States, the Northern Territory and the Australian Local Government Association are signatories, reads:

In the application of the precautionary principle, public and private decisions should be guided by:

i) careful evaluation to avoid, wherever practicable, serious of irreversible damage to the environment; and

ii) an assessment of the risk weighted consequences of various options.

4.51 Subsequently, the precautionary principle was adopted in the 1992 National Strategy for Ecologically Sustainable Development, again endorsed by all three levels of government. The strategy sets out a number of factors to be taken into account in achieving ecologically sustainable development, including ‘paying due regard to the precautionary principle’.

4.52 The Commonwealth Government has given legislative effect to the precautionary principle. Section 391 of the Commonwealth Environmental Protection and Biodiversity Conservation Act 1999 requires the Commonwealth Minister for the Environment and Heritage to consider the precautionary principle when making decisions relating to various sections of the Act.

4.53 There is widespread international and domestic acceptance of the precautionary principle. However, Mr Walker from Recfish Australia was critical of AQIS in hearings for failing to apply the precautionary principle in the IRA process. He attributed this to the WTO SPS Agreement:

The WTO SPS Agreement is based on controlling known diseases rather than unknown situations. We would argue that Australia’s approach should be based on avoiding exposing our aquatic ecosystems to risk from exotic organisms rather than responding to known disease situations.55

4.54 In a later meeting with the Committee, Professor Malcolm Naim agreed that the precautionary principle should be adopted in dealing with emerging salmonid diseases on which there is insufficient scientific evidence. For this reason, the Naim Report recommended the establishment of a Key Centre for managing risk.56 The Key Centre proposal is discussed further in Chapter 7.

55 Evidence, RRAT, 24 September 1999, p 95

56 Evidence, RRAT, 22 May 2000, pp 11-12

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Committee Comment

4.55 The Committee is concerned about the difficulty of defining 'Appropriate Level of Protection'. The Committee considers that putting in place quarantine measures determined against a concept which is inherently vague and unsubstantiated, and which can only be inferred from analysing decisions on quarantine applications, is

a recipe for inviting confusion and criticism.

4.56 The inability to determine precisely what is meant by the ALOP is problematic, given that quarantine measures are determined according to the extent to which they allow imports to meet Australia's ALOP. For example, AQIS includes in its IRA, in relation to risk management strategies, (required under s 70 of Quarantine

Proclamation 1998), statements such as:

The risk assessment for the unrestricted importation of eviscerated salmonids...showed that the nsk associated with the establishment of some disease agents would not meet Australia's appropriate level of protection. The next step was to consider how risk management measures could be

implemented to reduce the unrestricted risk to a level that would meet the ALOP.57

4.57 The extent to which a risk management measure is permitted is determined by the extent to which the impact of that measure meets Australia s ALOP.

4.58 If such conclusions are the basis for imposing or relaxing quarantine restrictions, the Committee considers that the standard against which the risk is being determined’ must be subject to some standards, guidelines or definition. The Committee regards the current situation as being entirely unacceptable.

4 59 The Committee further considers that the determination of the ALOP is a matter for Government and not one which is appropriate for individual agencies. Nor should the determination of the ALOP be seen to be within the scope of one particular agency's functions.

57 AQIS, Import Risk Analysis on Non-viable Samonids and Non-Salmonid Marine Finfish, July 1999.

p 140

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C H A PT E R FIVE

IMPORT RISK ANALYSIS - PURPOSE AND PROCESS

Objectives o f Import Risk Analysis The Role o f Risk Analysis in Quarantine Policy The IRA Process The Principles o f Risk Analysis

The 1996 Import Risk Analysis The 1999 Import Risk Analysis The Effect o f the Findings o f the 1999 Import Risk Analysis Generic Risk Analysis Approach

The Conduct o f the Import Risk Analysis Process AQIS IRA Process Submission Comment Committee Comment

Objectives of Import Risk Analysis

5.1 International agreements entered into by Australia now require any quarantine import restrictions either to comply with international standards or to be justified through the import risk analysis process. An Import Risk Analysis [IRA] provides the scientific and technical basis for quarantine measures that determine whether or not an

import may be permitted and any applicable conditions. AQIS describes the purpose of IRA's as follows:

The principal aim of import risk analysis is to provide importing countries with an objective and defensible method of assessing the risks associated with the importation of aquatic animals, aquatic animal products, aquatic animal genetic material, feeds tuffs, biological products and pathological

material. The analysis should be transparent in order that the exporting country may be provided with a clear and documented decision on the conditions imposed for importation, or refusal of importation.

Import risk analysis is preferable to a zero-risk approach because it provides a more objective decision, and enables Competent Authorities to discuss any differences in conclusion which may arise concerning potential risks.1

The International Standard fo r the Importation o f Salmonid Products

5.2 Because whole, eviscerated salmonids are sold for human consumption internationally, the recommendation of the OIE is that there should be no health-

1 OIE International Animal Health Code, p 27

1 0 0

related impediment to trade in such fish.2 In the view of one of the experts who participated in discussions with the Panel during the 1998 Panel process, if the baseline risk, or that generally internationally acceptable, is acceptable to the

importing country then the IRA process is unnecessary. However, once the baseline risk is unacceptable to the importing country and additional safeguards are required, the IRA must assess the level of risk with the most stringent practical combination of safeguards in place and then demonstrate that the risks are still unacceptable.3 The justification requirement for any restrictions/safeguards is therefore substantial.

The Role of Risk Analysis in Quarantine Policy

5.3 The OIE describes the underlying objective of the IRA process as follows:

The principal aim of import risk analysis is to provide importing countries with an objective and defensible method of assessing the disease risks associated with the importation of animals, animal products, animal genetic material, feedstuffs, biological products and pathological material. The analysis should be transparent. This is necessary so that the exporting country is provided with clear reasons for the imposition of import conditions or refusal to import.4

5.4 AQIS states that quarantine risk comprises two related factors - the probability of the disease agent entering and becoming established in Australia, and the expected impact of significance of such establishment.5 AQIS argues that, by describing and addressing both in a standardised way it is possible to achieve consistency both in the management of quarantine risks and in the overall approach to risk management.6

5.5 Quarantine policy recognises the fundamental importance of the risk analysis process to the development of quarantine practices and the defence of those practices domestically and in the international arena. The Government Response on quarantine recognised this factor, stating:

Risks need to be assessed objectively so we have a rational basis for making decisions and defending those decisions, not only to the Australian community but also internationally.7

5.6 AQIS primary role is the protection of Australian human, animal and plant life from exotic diseases and pests. However, there exists a parallel government objective to facilitate trade and the two objectives can be in conflict. In order to meet

2 AQIS, Import Risk Analysis on Non-viable and Non-salmonid Marine Fin fish, July 1999, p 3

3 Dr Wooldridge, Joint Meeting with Experts, Annex 2 to Panel report, 4 February 1998, p 221

4 OIE, Import Risk Analysis, Article 1.4.1.1

5 AQIS, Import Risk Analysis on Non-viable and Non-salmonid Marine Finfish, July 1999, p 8

6 ibid

7 Australian Quarantine - A Shared Responsibility: The Government Response, August 1997, p 10

101

these potentially conflicting objectives, quarantine measures at a level more restrictive than international standards must be based on an import risk analysis, scientifically based, undertaken in an open and transparent manner and in consultation with stakeholders, in order that Australia remains in conformity with its obligations under

international agreements.

5.7 Risk analysis in the area of aquatic animal health field is relatively new. Stuart McDiarmid, at a recent OIE conference, stated:

In the animal health field, as in other areas, it has become apparent that risk analysis is a complex discipline and assessments often do not stand up well in an adversarial climate, such as frequently surrounds trade proposals...even in situations where risk can be quantified relatively

objectively it may be difficult to attain agreement on what constitutes an acceptable risk.8

The IRA Process

5.8 The Naim Committee, in its review of quarantine policy and procedures, recommended that a number of principles should apply to the conduct of import risk analyses. The Committee recommended that import risk analyses are to be:

a) Conducted in a consultative framework, with agreed priorities and timetables;

b) Scientifically based and politically independent;

c) Transparent and open, including peer review and public scrutiny components;

d) Consistent with Government policy and Australia's international obligations, to be achieved by reference to existing policies and procedures, international standards, guidelines and recommendations and through the contribution of participants;

e) Harmonised, by taking account of international standards, guidelines and recommendations; and

f) Subject to appeal on the process.9

5 9 The Government accepted all the Nairn Committee recommendations on the import risk analysis process, including the basic principles listed above. AQIS, m implementing the recommendations, standardised procedures to be followed for the

8 S McDiarmid, Abstract, Address to International Conference on Risk Analysis in Aquatic Animal Health

9 Naim ME, Allen PG. Inglis AR and Tanner C, Australian Quarantine - A Shared Responsibility, 1996.

pp 89-90

1 02

science-based analysis of risks associated with imported animals and plants and their products.

AQISIRA Handbook

5.10 To improve community and stakeholder understanding of the process, AQIS developed the Import Risk Analysis Handbook. The Handbook sets out the framework for quarantine decision making and the consultation and appeal processes available to stakeholders. The Handbook is available on AQIS' website and was also provided to the Committee.

5.11 The Handbook sets out in detail the process followed by AQIS for the determination of an import proposal. That process is reproduced in Figure 5.1. For the purposes of the Committee's inquiry, the most significant processes are included in the non-routine pathway, in sections three and four of the document. The Committee's concern centres on the consultation processes in Section Three.

5.12 Section three provides for the establishment of the scope and timeframe of the IRA, appeal against the process, development and publication of an issues paper, the risk assessment, and publication of the draft IRA with recommendations. Section 3.6

states:

3.6 draft IRA paper with recommendations published and comment invited on technical issues

At the completion of the [Risk Assessment Panel’s] deliberations, AQIS circulates to stakeholders, for comment within 60 days, a draft IRA paper covering technical issues related to disease and pest risk, risk management options and a preliminary view on which option would achieve Australia's appropriate level of protection. AQIS also announces the release of the paper in the AQIS Bulletin, on the Internet homepage and to the WTO.10

5.13 Section four of the Handbook sets out the determination process, where comment is reviewed and the risk analysis recommendations are finalised and published.

10 AQIS IRA Handbook, 1998, p 17

103

Figure 5.1 - AQIS Import Risk Analysis Process'

11— INITIATION

<

:

III

i ·

i

1

I

1.1 Import proposal lodged with AQIS

1.2 Proposal acknowledged

* 1.3 Priority considered (where required

* ■ 1.4 Type o f risk analysis determined by AQIS program specialists

1.5 Proposed IRA approach approved by ED AQIS and stakeholders advised

I

KOI I I M RI SK ANALYSIS

........... ■►2.1 Risk analysis conducted

..► 2.2 draft IRA paper with recommendations published, and comments invited on technical issues

1.6 Initiated by AQIS

I

NON-ROUTINE RISK ANALYSIS 1

3.1 After consultation with stakeholders - issues, timing and Risk Analysis Panel determined

Not Agreed i

3.2 Appeal to Director ^ .. of Quarantine I 3.3 Appeal determined.....

and stakeholders advised ______ |

3.4 Issues paper published and comments invited ^

3.5 Risk analysis conducted ^ ..

i

3.5 Draft IRA paper with recommendations ^ .. published and comments invited on technical issues ___________I

'i /

I I

.

DETERMINATION

4.1 Comments reviewed and risk analysis recommendations finalised i 4.2 Risk analysis recommendations submitted to ED AQIS

4.3 Import proposal determined by ED AQIS

4.4 Determination and final IRA paper published and stakeholders advised _____________ I_____________

Determination Agreed Determination Appealed

4.5 Appeal to Director of Quarantine on the process

4.6 Appeal considered by Import Risk Analysis Appeal Panel

Appeal Rejected I

4.7 Appellant and applicant 1 1

I

Appeal upheld I

4.8 Deficiency addressed

11 Based on the table reproduced in the AQIS IRA Handbook, 1998

104

Appeals

5.14 Once the determination and final IRA paper is published, an appeal opportunity is available, but this is limited to an appeal on the process. Appeals are on the ground that the process outlined in the Handbook has not been properly followed, including failure to consider a significant body of relevant scientific or technical

information. An appeal opportunity is also available at an earlier stage, following AQIS notification of the scope of the IRA, membership of any working groups and panels and the timing of the IRA.

Review o f the Handbook

5.15 The Committee notes the proposal to undertake a review of the import risk analysis process and handbook.12 1 3

The Principles of Risk Analysis

5.16 The OIE, SPS Agreement and AQIS' own documentation all set out principles of risk analysis.

OIE Principles

5.17 The methodology used in both the 1996 and 1999 import risk analyses was modelled on that contained in the OIE International Animal Health Code. That Code identifies the principles of risk assessment as follows:

a) Risk assessment must be flexible enough to deal with the complexity of real life situations, the variety of animal commodities, the multiple hazards that may be identified with an importation and the specificity of each disease, detection and surveillance systems, exposure scenarios and types and amounts of data and information;

b) No single method is applicable in all cases - qualitative and

quantitative risk assessment methods are valid;

c) It must be based on the best available information that is in accord with current scientific thinking, well documented and referenced;

d) Consistency in risk assessment methods should be encouraged and transparency is essential;

e) It must describe the uncertainties, assumptions, and the effect of these on the final estimate;

f) It must be amenable to updating.L'

12 AFFA, Portfolio Budget Statements 2000-2001, p 62

13 OIE, International Animal Health Code, Article 1.4.2.1

105

5 18 The Code provides a standard method for undertaking risk assessments, or the evaluation of the likelihood and the biological and economic consequences of entry, establishment, or spread of a pathogenic agent within the territory of an importing country.14 1 5 1 6 The analyses are required to be transparent, ie to include 'comprehensive

documentation of all data, information, assumptions, methods, results, discussion and conclusions used in the risk analysis'.

5.19 A risk assessment can be qualitative or quantitative:

Qualitative risk analysis provides a textual description of the risk scenario, backed up by qualitative and quantitative information, and develops a logical argument for assessing the acceptability of a risk and the efficacy of any risk reduction measures that might be considered. Quantitative risk

analysis builds on the information and arguments of a qualitative analysis, by using probability theory in an attempt to determine the probability of the risk event occurring and the magnitude of its consequence.

Risk Analysis in the SPS Agreement

5.20 The articles in the SPS Agreement of most relevance are Articles 2 and 5. Article 2 requires members to 'ensure that measures are taken only to the extent necessary to protect human, animal or plant life or health, and measures shall not be applied in a manner which would constitute a disguised restriction on international

trade'.

5.21 Article 5 of the Agreement defines the procedures and conditions for the development of an IRA and sets out specific factors to be taken into account:

a) Available scientific evidence;

b) Relevant processes and production methods;

c) Relevant inspection, sampling and testing methods;

d) The prevalence of specific diseases or pests,

e) The existence of pest or disease-free areas;

f) Relevant ecological and environmental conditions, and

g) Quarantine or other treatments.

14 OIE, International Animal Health Code, Article 1.4.1.1

15 ibid

16 D Vose, Abstract, Address to International Conference on Risk Analysis in Aquatic Animal Health,

February 2 0 0 0

106

The Assessment o f Economic Impact

5.22 In assessing the risk to animal or plant life or health and determining the measure to be applied, the Agreement allows members to take into account the following relevant economic factors:

a) The potential damage in terms of loss of sales in the event of the entry establishment or spread of a pest or disease;

b) The costs of control or eradication in the territory of the importing Member; and

c) The relative cost-effectiveness of alternative approaches to limiting risks.17 1 8

5.23 The assessment o f economic impact is limited to the economic impact of a disease, and does not extend to the potential economic consequences of importation.1 h AQIS advised:

The social and economic considerations arising from the potential impact of pests and diseases that could enter and establish in Australia as a result of importation are taken into account...Relevant economic considerations in quarantine risk analysis include the cost of programs required to manage disease and pest outbreaks, the cost to industry of an outbreak and the cost to industry of loss of markets due to an outbreak.19

5.24 Should domestic industries be subject to substantially greater import competition and consequent stmctural adjustment pressure, the Government may in such circumstances seek relevant economic analysis and consider options available for an appropriate response. AQIS advised that such considerations may occur in parallel with, but in no way influence, the import risk analysis performed in accordance with the procedures outlined in the IRA Handbook.20

The AQIS Approach

5.25 AQIS identified the requirements for a risk analysis as being:

a) Identification of the diseases the entry, establishment or spread of which a WTO member wants to prevent within its territory, as well as the potential biological and economic consequences associated with the entry, establishment or spread of these diseases;

17 Agreement on the Application o f Sanitary and Phytosanitary Measures, Article 5, pp 3-4

18 ibid

19 AQIS, IRA Handbook, p 11

2 0 ibid

107

b) Evaluation of the likelihood of entry, establishment or spread of these diseases, as well as the associated potential biological and economic consequences; and

c) Evaluation of the likelihood of entry, establishment or spread of these diseases according to the SPS measures which might be applied.21

The 1996 Import Risk Analysis

5.26 The IRA process commenced in January 1994, when Canada formally requested GATT Article XXII consultations with Australia. Australia agreed to document an IRA on the quarantine issues of importing uncooked salmon meat from North America. A draft IRA was circulated in May 1995, recommending that

importation of the product be permitted under specified conditions. Issues raised in responses included some matters not canvassed in the draft IRA and it was agreed that a revised draft IRA be distributed. This paper was circulated for public comment in

May 1996.

5.27 The 1996 IRA considered the impact of importation of uncooked, wild, adult, ocean-caught Pacific salmon products from Canada and the United States. Restriction of the IRA to Pacific salmon was agreed to by Canada and the United States, as this was the product of greatest commercial interest. The methodology used in the IRA

was modelled on the OIE recommended methods and addressed risk assessment, risk management and risk communication issues.

5.28 According to AQIS, the major points at issue in the 1996 IRA related primarily to:

a) The presentation and interpretation of the scientific information in the revised draft and its cover memorandum;

b) The interpretation and the weighting placed on some of the

information provided and the meaning of acceptable risk;

c) The question of what was 'acceptable risk' and whether a full and proper process of determining what is acceptable had been followed.22

5.29 The final 1996 report noted the following:

Australia is free of many of the major diseases of fin fish and aquatic invertebrates that occur in other countries. Furthermore, a disease that may not be considered 'major' in an overseas country...could have a significant impact on susceptible stocks in Australia. The unknown susceptibility of

native salmoniforms and commercial species to a wide range of exotic

21 AQIS Import Risk Analysis on Non-viable and Non-salmonid Marine Finfish, July 1999, pp 3-4 and AQIS Policy Memorandum 1999/26

22 AQIS, Salmon Import Risk Analysis, 1996, para 1.1.4

108

disease agents is a central issue. Given this situation, a degree of caution is justified.2’

5.30 At the outset, the report noted the following parameters:

a) The final IRA report needed to be considered in the context of Australia's quarantine policy and international obligations;

b) Despite recent advances in knowledge of diseases, aquatic animal quarantine policy remained significantly undeveloped and, in most instances, had not been subjected to the same scientific scrutiny as traditional livestock policy; and

c) The risk assessment process and methodology were consistent with international standards.2 3 24 2 5

5.31 AQIS listed the key considerations in reaching a decision on imports of salmon product as:

a) The large number of diseases being considered;

b) A lack of definitive scientific information on the disease agents, their hosts, their mode of spread and their prevalence in the fish populations proposed for export;

c) Difficulty in measuring and describing the level of risk, in part because of uncertainty about avenues for post entry exposure of Australian fish to introduced pathogens and difficulty in measuring the likelihood of exposure;

d) Limitations in estimating potential consequences of disease introduction for recreational and wild fisheries, aquaculture and the environment (including rare and endangered species); and

e) Problems in estimating whether the described risk represents an acceptable risk.23

5.32 The 1996 IRA report concluded:

a) Australia was recognised as having a favourable aquatic animal health status;

23 ibid, p 4

24 ibid, pp 3-4

25 ibid, para 1.3.1

109

b) Biological considerations were the key component in a quarantine risk assessment but there were major gaps in knowledge on salmonid diseases:

i) The biological data indicated 20 disease agents or strains present in the North Pacific Ocean rim of North America that had not been found in Australia;

ii) There were major gaps in knowledge in relation to these diseases, eg infectious dose rates, persistence of agents and host response;

iii) There were no reported occurrences of salmonid diseases being spread through uncooked products, although the extent to which the matter had been researched was uncertain;

c) There were risks of exotic disease agents occurring in salmon products, but the risk of establishment was low if suitable risk management interventions are mad;

d) The susceptibility of salmonids could be assumed to be high, particularly given a likely lack of disease resistance,

e) It was most likely any exotic condition would be ineradicable,

f) The potential socio-economic and environmental impacts of an exotic disease incursion could be substantial.

5.33 The major cause for concern from Australia's viewpoint was the potential consequences of irreversibility of disease, should any pathogens enter Australia In the view of the Australian representatives before the WTO, even a disease with a low probability of establishment presented cause for concern, given the seriousness ot the

consequences and the likely irreversibility of the introduction of disease.

5 34 The ultimate conclusion of the 1996 IRA was that entry of uncooked salmon products from Canada and the United States was not permitted. The report stated:

On balance, given the unique circumstances, range of potential disease agents and potential socio-economic and environmental impacts, entry of uncooked salmonid products from Canada and the United States should not be permitted at this time.2 6 27

5 35 In the 1996 IRA, Australia gave a commitment to reviewing new information as it became available.

26 ibid, pp 4-7

27 ibid, p 7

1 10

The 1998 WTO Findings on the IRA

5.36 Following the release of the final 1996 report, Canada applied to the WTO for a Dispute Settlement Body Panel, which reported in June 1998. As noted in Chapter Three, the Panel found Australia had acted inconsistently with Articles 5.1 (measures to be based on an IRA), 5.5 (consistency), and 5.6 (not more trade restrictive than necessary), and Articles 2.2, (departure from international standards) and 2.3 (unjustifiable discrimination) of the SPS Agreement. The finding that Australia had breached Articles 5.6 and 2.3 of the Agreement was subsequently overturned on

appeal.

Joint Meeting o f Panel and Experts

5.37 During the deliberations of the Panel, a Joint Meeting with Experts was convened. At that meeting, the most criticised elements of the IRA as conducted by AQIS were considered to be:

a) The unsatisfactory methodology of the IRA;

b) The different conclusions reached from essentially the same data in the draft report and the final report; and

c) The less transparent nature of the final report as compared with the draft.28

5.38 The experts who appeared before the Panel comprised Drs Burmaster, Rodgers, Winton and Wooldridge. Representatives from Canada and Australia were also present. The representatives were primarily critical of the change in emphasis and amended conclusion in the final report to that appearing in the draft report. This difficulty appears to have been problematic for Australia.

The 1999 Import Risk Analysis29

5.39 The 1999 IRA considered the quarantine risks potentially associated with the importation to Australia of non-viable salmonid and non-salmonid marine finfish from any source country. The product at the centre of the dispute between Canada and Australia was fresh, chilled and frozen salmon product destined for human consumption that had not been subject to heat treatment according to certain prescribed durations and temperatures, prior to importation into Australia.30

The Scope o f the 1999 Import Risk Analysis

5.40 The base products considered in the IRA were non-viable fish - eviscerated salmonids and whole, round (uneviscerated) non-salmonid marine finfish. Whole,

28 WTO Joint Meeting with Experts, 4 February 1998, Annex 2 to Panel report

29 Much of the following section is based on the WTO Panel Report released on 18 February 2000

30 WTO Panel Report, June 1998, p 2

I l l

eviscerated salmonids are sold for human consumption, while non-viable, uneviscerated non-salmonid marine fmfish may be used for human consumption or as feed for fish, bait or for further processing (eg for pet food). The IRA did not cover canned or retorted shelf-stable fish product, live fish or their genetic material.31

5.41 The IRA as undertaken by AQIS was a generic import risk analysis, addressing all potential relevant pests and diseases, for all members of the family Salmonidae, and all other finfish species caught in marine or brackish waters. The 1999 IRA covered the ban on the importation of salmonids and the then largely unrestricted entry of the following range of imported marine fmfish, many of which could carry diseases of concern to salmonids:

a) A range of fish species for human consumption, including herring, nile perch and barramundi, estimated at 60,000 tonnes per annum;

b) Fish species not for human consumption including herring and mackerel that may be used as bait, in fish meal, pet food, estimated at 47,000 tonnes per annum; and

c) Aquarium fish species such as goldfish, tetras and gouramis, estimated at 6.5 million per annum/ 2

5.42 The 1999 IRA identified the disease agents of concern requiring further consideration. A disease agent was given specific consideration in the 1999 IRA if it was infectious, and either exotic to Australia or present in Australia but subject to official control, and if the disease agent was OIE-listed or would be expected to cause

significant harm in Australia. On the basis of these criteria, the disease agents of concern were categorised into those whose consideration is of higher priority (Group 1) or lower priority (Group 2).

5.43 The 1999 IRA stated that seven of the 15 "higher priority" diseases represented risks that were not acceptable to Australia without the application of additional risk management measures beyond evisceration. For the seven specified diseases, the 1999 IRA33 identified various risk management measures which it considered could reduce the risk to an appropriate level considered.

31 AQIS, Import Risk Analysis on Non-viable and Non-salmonid Marine Finfish, July 1999, pp 2-3

32 AQIS, Evidence, RRAT, 24 September 1999, p 22

33 These are:

a) Infectious haematopoietic necrosis virus (IHNV); b) Infectious salmon anaemia virus (ISAV) (for Atlantic salmon); c) Aeromonas salmonicida (not for wild, ocean-caught Pacific salmon); d) Renibacterium salmoninarum;

e) Infectious pancreatic necrosis virus (IPNV) (for juvenile salmonids only); f) Yersinia ruckeri (for juvenile salmonids only); and g) Myxobolus cerebralis (whirling disease) (for rainbow trout and all juvenile salmonids).

112

5.44 The 1999 IRA further considered the Group 2 diseases, and concluded that no additional measures beyond those for the Group 1 diseases were required to satisfy Australia's ALOP.

5.45 The 1999 IRA also indicated that as the seven diseases of concern are either not reported in New Zealand or (for whirling disease) occur at extremely low prevalence in New Zealand Pacific salmon, the selected measures did not apply to Pacific salmon from New Zealand.

The Effect of the Findings of the 1999 Import Risk Analysis

5.46 The effect of the measures introduced by AQIS following the IRA was an overall tightening of quarantine conditions, which are tighter than international standards and stricter than any other country34. The revised arrangements were set out in a series of Animal Quarantine Policy Memoranda, published over several months, following the release of the IRA. These are set out in Chapter One.

Measures for Non-Viable Salmonids

5.47 Revised arrangements were contained in AQPM 1999/51, published and effective as of 19 July 1999 and in AQPM 1999/69 of 20 October 1999, which clarified the conditions announced in the earlier memorandum with respect to documentation, recognition of competent authorities, definition o f 'consumer-ready' product, verification and other requirements.

5.48 Salmonids could be imported subject to the following risk management measures:

a) The fish should be eviscerated;

b) The fish should not be derived from a population slaughtered as an official disease control measure;

c) The fish should not be juvenile salmonids or sexually mature adults/spawners;

d) The fish should be processed in premises under the control of a competent authority;

e) The head and gills should be removed and internal and external surfaces thoroughly washed;

f) The fish should be subjected to an inspection and grading system supervised by a competent authority;

34 AQIS, Evidence, RRAT, 24 September 1999, p 22

113

g) For farmed fish, the fish should be derived from a population for which there is a documented system of health monitoring and surveillance administered by a competent authority; and

h) Consignments exported to Australia should be accompanied by official certification confirming that the exported fish fully meet Australia’s import conditions (as specified on an import permit issued by AQIS). "

5.49 These conditions cover the importation of uncooked salmonids from any country that meets Australia's quarantine requirements. ’1 ’ The measures do not apply to imports from New Zealand, as the diseases are either not found there or occur at low levels.

Measures for Non- Viable, Non-Salmonid Marine Finfish

5.50 The 1999 IRA concluded that 'the importation of non-viable finfish would be permitted, subject to risk management measures to reduce the probability of entry and establishment of specified diseases to an acceptably low level'3 5 3 6 37. The diseases of concern were those identified in the risk analysis as requiring risk management to

meet Australia's ATOP.

5.51 For non-viable, non-salmonid marine finfish, the starting point for the risk analysis was the product that is traded internationally, ie whole, round (uneviscerated) fish. AQIS introduced new restrictions to reflect the risk associated with the commodity. Three options for imports are available:

a) Option 1 - no import permit required:

i) The fish must be processed in a premises approved by and under the control of a competent authority;

ii) The fish must be eviscerated;

iii) The fish must be individually sorted and packaged to facilitate inspection;

iv) The fish must be subjected to an inspection system supervised by a competent authority;

v) The head and gills must be removed and internal and external surfaces thoroughly washed;

35 AQIS, Submission 17, pp 77-78

36 AQIS, Import Risk Analysis on Non-viable and Non-salmonid Marine Finfish, July 1999, p 288

37 ibid, p 287

114

vi) The product must be free from visible lesions associated with infectious disease; and

vii) Consignments exported to Australia must be accompanied by official certification confirming that the exported fish meet Australia's import conditions in full.

b) Option 2 - no import permit required:

i) AQIS will not require an official health certificate for

consumer-ready product that has been processed further than the stage described above.

c) Option 3 - import permit required:

i) If neither options 1 or 2 applies, an importer must obtain a permit from AQIS before importing fish;

ii) The application for the permit should provide details of the finfish species to be imported, the waters in which the fish were farmed (if applicable) and harvested and the intended end use of the imported fish; and

iii) AQIS will assess the application in light of the quarantine risks it presents; if the Delegate concludes that the proposed importation is consistent with Australia's ALOP, a permit for the importation of single or multiple consignments during a specified timeframe would ordinarily be granted. 38

5.52 The restrictions relating to non-viable, non-salmonid marine finfish are more restrictive than previously applied. Less restrictive arrangements apply to fish imported from New Zealand, provided that the fish were caught in New Zealand's Exclusive Economic Zone (EEZ) or in adjacent international waters and the consignment is the product of New Zealand. 39

Measures for Live Ornamental Finfish

5.53 The risk analysis concluded that the importation of live ornamental finfish should be permitted, subject to risk management measures to mitigate the probability of entry and establishment in Australia of diseases of quarantine concern. AQIS noted that live animals generally present a greater risk than product and that there are significant gaps in the knowledge base of the diseases of ornamental finfish. For these reasons, AQIS supplies baseline risk management measures for all ornamental finfish imported and more stringent measures for goldfish.

38 AQIS, Import Risk Analysis on Non-viable and Non-salmonid Marine Finfish, July 1999, p 289

39 ibid

115

5.54 Each consignment of ornamental finftsh must be accompanied by:

a) An animal health certificate from the competent authority attesting to the health of the fish in the consignment and the health status of the source population;

b) Certification from a competent authority that the premises of export or exporter are currently approved for export to Australia; and

c) Certification from a competent authority attesting that the fish had not been kept in water in common with farmed food fish.40

5.55 Each consignment must also be subject to:

a) Visual inspection of all fish on arrival to identify overtly diseased consignments and to ensure that the fish are of a species listed on Schedule 6;

b) Post-arrival quarantine detention for a minimum period in approved private facilities under quality assurance arrangements agreed with AQIS (3 weeks for goldfish, 1 week for other species); and

c) Quarantine security over procedures in quarantine premises, including the disposal of sick and dead fish, transport water, packaging materials and other waste.41

5.56 Other measures to address specific disease concerns include:

a) Health certification from the competent authority that the source of the fish was free of specified disease agents;

b) Treatment either of the source population of the fish or of the fish for export, to address the likelihood that unwanted disease agents may be present;

c) Testing of imported fish during quarantine detention, either on an ad hoc or routine basis, to validate the certification provided by overseas competent authorities, and/or to provide additional data to improve the targeting of risk management measures on imports generally;

d) Treatment of imported fish during quarantine detention by appropriate means if the presence of specific disease agents is suspected or confirmed following diagnostic testing; and

e) Increased post-arrival quarantine detention over the minimum required.42

40 ibid, p 290

41 ibid, p 290

116

5.57 These findings were the culmination of a series of consultations and import risk analysis reports, both draft and final.

Generic Risk Analysis Approach

5.58 AQIS adopted a 'generic' risk analysis approach for the 1999 IRA, addressing 'all relevant pests and diseases, to facilitate assessment of individual access requests according to the health status of the source country'.4 2 43 AQIS elaborated on the basis for this approach:

AQIS uses generic IRA's to address access requests covering multiple countries. The generic approach enables AQIS to use limited technical resources efficiently and, by covering all requesting or potentially requesting countries in a single IRA, we can respond to each country's request in a timely manner. The generic approach also provides for greater consistency in the application of risk management measures.

From the WTO perspective, the generic approach is fairer and less trade restrictive in that it can provide for the establishment of import protocols that address access requests from all countries in a timely manner.44 4 5

5.59 AQIS noted that generic risk analyses are not always appropriate, eg in the case of many plant products, where differences between countries in number, significance and scientific knowledge of insect pests and plant diseases would render the generic approach unworkable.43 AQIS' decision to undertake a generic approach to the salmon dispute in the light of the outcome of the WTO findings, which necessitated consideration of technical issues common to major salmon exporting countries. AQIS noted that, under the SPS Agreement, WTO members have equal rights and to not consider other countries would have left Australia open to claims of discriminatory treatment and retaliatory action.46

5.60 The generic approach has been criticised, with at least one submission arguing that the scope of an IRA should be confined to products where there is existing trade or where an organisation wishes to import, and that by widening the scope of the IRA unnecessarily, scarce public funds were being wasted.

5.61 The Committee considers that the AQIS approach to undertake a generic IRA was appropriate in the circumstances, both in terms of requirements under the SPS Agreement and in relation to the most efficient use of AQIS resources.

42 ibid, p 290

43 ibid, p xiii

44 AQIS, Correspondence to Committee, 1 March 2000, p 3

45 ibid, p 4

ibid, p 4 46

117

The Conduct of the Import Risk Analysis Process

5.62 The conduct of the process, as distinct from the findings, was criticised by many stakeholders. At a recent conference on risk analysis, Dr M Wooldridge emphasised the importance of an open and consultative process in the development of an import risk analysis:

The source of the information for the risk manager is risk communication and this ideally, means an open information exchange between risk assessors’ risk managers, and all those affected by both the risk and the decisions taken. This is vital as those who benefit from a successful risky

endeavour are usually a different group from those who will suffer if it goes wrong. If policies do not take this into account, they will be unpopular, not adhered to, and require extensive policing. 7

AQIS IRA Process

5.63 Figure 5.1 on page 103 shows the IRA process as set out in the AQIS Handbook. The major phases are:

a) Initiation of the IRA, including:

i) Lodgement and acknowledgment of import proposal;

ii) Priority considered;

iii) Type of risk analysis determined;

iv) Proposed IRA approach approved by Executive Director and stakeholders advised;

b) Risk analysis, either routine or non-routine:

i) Routine risk analysis comprises preparation of draft IRA paper with recommendations published, comment invited on technical issues;

ii) Non-routine risk analysis comprising:

^ following consultation with stakeholders, determination of issues, timing and Risk Analysis Panel [if not agreed appeal processes available];

> Issues paper published and comment invited,

> Risk analysis conducted; 4 7

47 M Wooldridge, Abstract, Address to International Conference on Risk Analysis in Aquatic Animal

Health

118

> Draft IRA paper with recommendations published, and comment invited on technical issues;

c) Determination:

i) Comment reviewed and risk analysis recommendations finalised;

ii) Risk analysis recommendations submitted to Executive Director;

iii) Import proposal determined by Executive Director;

iv) Determination and final IRA paper published and stakeholders advised;

v) Appeal to Director of Quarantine on the process;

vi) Appeal considered by Import Risk Analysis Appeal Panel;

vii) Appellant and applicant advised;

d) Policy implemented.48

Consultation

5.64 The principal opportunities for stakeholder input occur during the initiation and risk analysis phases, with the opportunity to appeal against the process following the initiation and determination phases. Stakeholders are able to provide input on:

a) AQIS' plan for handling the IRA and any significant changes to the process which might take place during the course of the IRA;

b) For routine IRA's, the draft IRA and its recommendations;

c) For non-routine IRA's, the scope of the IRA, timetable and proposed risk assessment panel membership, any issues papers developed by technical working groups set up by a RAP, and the draft IRA and its recommendations.

The Transparency Requirement under the SPS Agreement

5.65 One of the principles of the SPS Agreement is transparency in the risk analysis process. Article 7 of the Agreement relates to the transparency requirement and states:

48 AQIS, IRA Handbook, pp 13-19

119

Members shall notify changes in their sanitary or phytosanitary measures and shall provide information on their sanitary or phytosanitary measures in accordance with Annex B.

5.66 Annex B requires:

a) All sanitary or phytosanitary measures to be published promptly in such a manner as to enable interested Members to become acquainted with them;

b) A reasonable interval between the publication of regulations and their entry into force, to allow time for producers in exporting countries to adapt their products and methods of production to the requirements.

5.67 Annex B further requires Members to provide an inquiry point 'responsible for the provision of answers to all reasonable questions from interested members' as well as for the provision of documents, including those regarding sanitary and phytosanitary regulations adopted or proposed and risk assessment procedures and the

determination of the ALOP.

5.68 The Annex further sets out notification procedures, which include detailed requirements to publish documentation where measures differ from the international standard and to notify Members about proposed changes and to supply them with the documentation. The full text of the SPS Agreement and the Annex are set out in Appendix 6.

5.69 Notwithstanding the requirements in Clause 5, it is permissible under the Agreement for a Member to omit such of the steps enumerated in the Agreement as it finds necessary for urgent problems of health protection. The omission of the steps is conditional on the Member taking the following steps:

a) Immediately notifies other Members of the regulation and products covered;

b) Provides copies of the regulation to other Members; and

c) Allows other members to make comments in writing, discusses these comments and takes the comments and results of discussions into account.49

5.70 AQIS advises that the SPS Committee has not provided any guidance on what constitutes an 'urgent problem of health protection', although it has agreed on an 'Emergency Notification' format to be used in such circumstances.50 It is noted that emergency notification has not been an issue to date.

49 SPS Agreement, Annex B, clause 6

50 AQIS, E-mail to RRAT Secretariat, 10 May 2000

12 0

A QIS IRA Procedures

5.71 The domestic procedures for the publication of documents relating to the IRA process and outcome are set out in the AQIS IRA Handbook:

At the completion of the [Risk Assessment Panel's] deliberations, AQIS circulates to stakeholders, for comment within 60 days, a draft IRA paper covering technical issues related to disease and pest risk, risk management options and a preliminary view on which option would achieve Australia's appropriate level of protection. AQIS also announces the release of the paper in the AQIS Bulletin, on the AQIS Internet homepage and to the WTO.51

The WTO Secretariat Handbook on Transparency in the SPS Agreement

5.72 In March 2000 the WTO published a Handbook called How to apply the transparency provisions o f the SPS Agreement. The Handbook is 'a practical guide for governments to facilitate the implementation of the transparency provisions of the SPS Agreement' and has as a primary purpose the provision of 'guidance on the establishment and operation of notification authorities and enquiry points'.52

5.73 The Handbook sets out the definition of the word 'transparency' in the context of the WTO agreements. So far as the SPS Agreement is concerned, the Handbook notes that:

Under the SPS Agreement, notifications are used to inform other Members about new or changed regulations that affect their trading partners. Transparency under the SPS Agreement also implies answering reasonable questions and publishing regulations.53

5.74 It would appear that publication of final regulations, whether new or amended, is what is required, with adequate time for comment by interested and affected parties.

5.75 The Committee also notes advice from the Department of Foreign Affairs and Trade to Senator Murphy on the publication requirements under the WTO agreements. That advice states in part:

Annex B Paragraph 1 requires Members to ensure that all sanitary and phytosanitary regulations are published promptly in such a manner as to enable interested Members to become acquainted with them. Paragraph 5 requires Members to allow reasonable time for other Members to make written comments, discuss these comments upon request, and take the comments and the results of the discussions into account.

51 AQIS, IRA Handbook, p 17

52 WTO Secretariat, How to apply the transparency provisions o f the SPS Agreement, 20 March 2000, p 3

53 ibid, p 4

121

The SPS Agreement does not require Australia to publish draft risk assessments and draft recommendations, or to provide these to other Members. It is only the final measures as intended to be applied which must be published/ 4

5.76 The Committee subsequently wrote to AQIS requesting responses to a number of questions on their procedures as set out in the Handbook. In response to the wide distribution of the draft IRA, AQIS stated:

The AQIS import risk analysis (IRA) process reflects Government policy which addresses (but is not limited to) Australia's international obligations.... In response to the recommendations of the Australian Quarantine Review Committee, the Government decided that procedures

would be implemented to ensure that import risk analysis is, inter alia, consultative and transparent. These procedures include the emulation of documents at various stages of the IRA process for stakeholder comment.

As to the relevant international obligations, whenever an international standard, guideline or recommendation does not exist or the content of a proposed sanitary or phytosanitary regulation is not substantially the same as the content of an international standard, guideline or recommendation,

and if the regulation may have a significant effect on trade of other Members, Paragraph 5 of Annex B of the SPS Agreement requires Members to publish a notice about the proposal "at an early stage, when amendments can still be introduced and comments taken into account" and to allow

reasonable time for other Members to make comments in writing, discuss these comments upon request, and take the comments and the results of the discussions into account". In general practice, as the publication of the draft IRA paper is the stage of the AQIS IRA process which most closely aligns

with the "proposed regulation" referenced in the Annex, AQIS notifies at this stage.53

5.77 However, AQIS confirmed to the Committee during Estimates hearings in May that their consultation arrangements went beyond that which was required under the SPS Agreement, that AQIS was not required to publish draft Import Risk Analyses, nor was it required to notify draft conclusions or recommendations during

the risk analysis process:

In relation to the proposition concerning publication of draft risk assessments, I think we would agree, Senator, that it is not necessary under the provisions of the SPS agreement to publish draft risk assessments, or indeed any risk assessments, although, as Mr Hickey said earlier, those risk

assessments must be made available if called for under dispute settlement proceedings.5 4 5 5 56

54 Stephen Deady, DFAT, Correspondence to Senator Murphy , 27 March 2000

55 AQIS, material provided to Committee, 19 May 2000

56 AQIS, Evidence, RRAT, Estimates Hearings, 22 May 2000, p 25

122

I agree that we do not have an obligation to publish anything other than the measure we intend to put in place. We do not publish our draft risk assessment, which supports that measure, as the result of a WTO obligation. We publish that draft risk assessment as a matter of government policy..'7

5.78 AQ1S asserted that broad publication was motivated by the requirement to give fellow member countries time to consider the proposed measure and to allow time for comment from them to be considered, that it was 'an appropriate way of proceeding in terms of the SPS Agreement':

Annex B, if I may, Senator, says essentially that, where we are going to introduce a new standard or requirement in Australia, we are obliged to publish a notice at an early stage in such a manner as to enable interested members to become acquainted with the proposal and to notify other members, through the secretariat, of the products to be covered, together with a brief indication of the objective and rationale of the proposed regulation. It also says that such notification shall take place at an early stage when amendments can still be introduced and comments taken into account. It is those words in particular which cause us to take the view that the notification should take place when we are publishing a draft of our proposed measure rather than when we have completed all the processes and the government has made, through AQIS, its final decision on the matter.'1 '

5.79 In response to written questions on how other countries inform fellow WTO members, AQIS advised:

AQIS is unaware of any other country which follows a more clearly described and transparent stakeholder consultation process than the standard procedure which is followed in Australia. All issues papers, and draft and final IRA reports are readily available to domestic stakeholders and, by virtue of their being in the public domain, internationally. Other WTO Members may have less open consultation processes but all are under the same obligations of early notification and provision of relevant documents upon request."’

5.80 When questioned about whether AQIS had taken advice on the extent of their obligations under the SPS Agreement and the appropriate procedures to meet those obligations, AQIS advised that no legal advice had been sought 'since the IRA process is an administrative procedure which was not intended to have (and does not have) the force of law'."1 1 5 7 5 8 5 9 6 0

57 AQIS, Evidence, RRAT. Estimates Hearings. 22 May 2000. p 29

58 ibid, p 25

59 AQIS, material provided to Committee. 19 May 2000

60 ibid

123

The Accelerated IRA Process

5.81 The IRA process guidelines, as set out in the handbook, provides that, in exceptional circumstances, AQIS in consultation with stakeholders, can vary the process. The exceptional circumstances providing the basis for an accelerated process

were the findings by the WTO in February 1999 that Australian quarantine regulations were not in conformity with its obligations under the SPS Agreement and that Australia was required to bring them into conformity by 6 July 1999. This timeframe necessitated the accelerated process.

5.82 AQIS issued AQPM 1999/24 on 30 March 1999, seeking submissions on the conduct of an accelerated IRA process, ie omitting the use of risk analysis panels, for non-viable salmonids and salmonid products, non-viable marine finfish products and live ornamental finfish. The Memorandum was sent to 514 stakeholders. AQIS

received 15 submissions in response [3% of the total consulted], of which six supported proposed acceleration of the process, four did not oppose but offered comments and five or 1% opposed the accelerated process.61 On this basis, AQIS

proceeded with the accelerated process and the decision was published in AQPM 1999/27.

5.83 AQIS advised the Committee that its consultation process fulfilled the Government’s commitment to an open and consultative approach to import risk analysis and included the following:

a) Public meetings in five capital cities;

b) Two meetings of key stakeholders in Canberra;

c) Making available each chapter of the draft reports on the AQIS Internet site.

5.84 AQIS further advised that they received 35 submissions on scientific issues on the non-viable salmonid product, non-viable marine finfish product and live ornamental finfish IRA's and a large number of representations, most of which restated the importance of maintaining the current prohibition on importation of

uncooked salmon, but presented no scientific issues requiring consideration in the risk analyses.62

5.85 At public hearing AQIS outlined the steps taken to provide opportunity for stakeholders to have input into the process and to inform stakeholders of the current status of the IRA:

AQIS's import risk analysis, or IRA process, is well documented. It provides for a high level of transparency and opportunity for stakeholder input at

61 AQIS, Submission 17, p 76

62 ibid, p 77

124

various stages of the process. In the salmon case and associated IRAs, the process was accelerated for reasons that were set out in our policy memorandum of 23 April. Nevertheless, AQIS afforded stakeholders every possible opportunity for access to AQIS documents and input into the process.

At page 76 of our submission, we have indicated the steps taken to ensure transparency, including receipt of submissions from stakeholders; a progress report on the consultation steps and scientific reviews of AQIS papers; publication of external consultancy reports relevant to the IRAs; a series of public stakeholder meetings in Hobart, Perth, Adelaide, Sydney and Melbourne; two meetings of key stakeholders in Canberra, and publication of sections of the draft risk analysis for progressive comment on AQIS's web site. In addition, AQIS arranged for input into the process by 14 independent scientists who advised on the completeness and accuracy of scientific information in the report; the balance and objectivity with which scientific information was treated; the extent to which the exercise of professional judgment in the report was supported by and consistent with relevant scientific information; and the consistency of professional judgments on scientific issues that were common to each risk analysis

report.63

Submission Comment

5.86 A large amount of comment critical of AQIS was directed at the IRA process undertaken by AQIS and the fact that the accelerated process did not allow stakeholders sufficient opportunity either to comment or to have their comments considered. Comment in submissions and at public hearing considered the risk analysis process to be flawed, mainly for the following reasons:

a) AQIS approached the import risk analysis process as a trade issue rather than as a matter of quarantine administration;

b) The IRA process was not sufficiently consultative;

c) AQIS did not do enough to create positive and constmctive

relationships with stakeholders;

d) A rushed and inadequate IRA process; and

e) AQIS failed to address the WTO requirements or the SPS Agreement to which Australia is a party and therefore failed to meet its international obligations.

63 AQIS, Evidence, RRAT, 24 September 1999. p 24

Trade Considerations

5 87 Stakeholders believe that both the Commonwealth Government and AQIS gave undue emphasis in the 1999 IRA process to trade policy considerations over comprehensive quarantine assessments. This occurred, they contended, because of a number of incorrect assumptions and errors including:

a) A failure to properly understand Australia’s obligations under the WTO SPS Agreement and a subsequent failure to act to meet them; and

b) A failure to appreciate the potential damage to Australia’s longer term trading interests caused by a hasty response by AQIS and Australian agricultural sectors to the threatened action by Canada.1

The Accelerated Process and Consultation

5 88 DFAT advised the Committee that the eight months allowed Australia to respond (from the time first WTO ruling, thus effectively only four months) was based upon the precedent of previous arbitration awards. According to these precedents, a 'reasonable period’ for implementing a WTO decision is defined as 'the shortest period

possible within a WTO member's legal system' and that this period does not me u e the time taken for undertaking studies. Previous arbitration awards had determined that the time period for implementation by administrative decision making processes should be considerably shorter than for legislative decision making processes'.

5 gg AFFA suggested that the short time allowed Australia for implementation necessitated the amendment of AQIS' normal consultation processes in order to complete the IRA process:

Given the extensive scientific research already conducted into the risks posed by imported salmon, the advanced state of other imported fish risk analyses, the fact that the Naim procedures followed by AQIS permitted the normal IRA process to be varied in exceptional circumstances and the very

negative implications for other portfolio industries of failure to meet the 6 July 1999 deadline set by the WTO, the case for acceleration was compelling.6 4 6 5 66

Transparency o f the Process

5.90 The requirement for an open and transparent process was a significant issue in relation to the consultation phase of the IRA. AQIS was heavily criticised for the widespread public release of documentation containing draft recommendations, prior

to finalisation of stakeholder comment and full consideration of the implications of the proposals. The Committee considers that AQIS took a very broad [and generous in

64 Australian Fishing Tackle Association, Submission 36, pp 6-7

65 Department of Foreign Affairs and Trade, Submission 21, p 15

66 Department of Agriculture, Fisheries and Forestry, Submission 48, p 4

126

WTO terms] view of the requirement for an open and transparent process by circulating an early draft to all stakeholders, including members of the WTO. Industry operators in Tasmania were highly critical of AQIS" action, and advised the Committee that copies of the draft IRA were in the hands of the Canadian officials before they themselves had seen it.

5.91 In defence of the AQIS position, the Director General stated:

In order to be able to assure people who are interested in our processes domestically and internationally that we are committed to those principles, there needs to be an adequate process of communication at various stages through what can often be a very lengthy process. Whether particular aspects of the current process may need to be changed is really a matter ultimately for the minister to decide, having regard to his general portfolio responsibilities for the administration of the Quarantine Act. To that end, we expect that the review we have foreshadowed in the handbook of the current import risk analysis process would ultimately lead to recommendations about any modifications that might be made. Certainly, I know the areas that you have been interested in—whether draft or preliminary conclusions ought to be included in a draft import risk analysis would be one of the areas—and any other comments that the committee might make in its final report would be specific issues that would need to be addressed as part of that review process. The entire process is not cast in concrete, but I would certainly stand by the existing principles that we operate under.67 6 8

Support for AQIS and the IILi Process

5.92 In support of AQIS, the NFF acknowledged the RRAT Committee’s 1996 Report, which stated that the risk analysis process is probably one of the most controversial and misunderstood aspects of AQIS' operations. The NFF argued that public perception of risk is not objectively based, whereas 'the SPS Agreement

imposes this fundamental approach to quarantine policy and practice in a more disciplined way', and that risk analysis guidelines are now being standardised such that these evaluations are probabilistic rather than intuitive, they are based on the

latest scientific evidence'. 66

5.93 Mr Brian Jeffriess, President of the Tuna Boat Owner's Association of Australia, defended the integrity of AQIS's approach to the problem and the IRA:

While many of our members complain bitterly that it does not necessarily totally accord with the science and is done to meet the requirements of the WTO, in our view as a group, it is a rational and responsible response by AQIS to the science. If we want a scientific examination free of other influences, this is it. I cannot speak for salmonids in terms of science, but the quality of the IRA on the non-salmonids is the best we have ever seen. If

67 Evidence, RRAT, Estimates Hearings, 22 May 2000, p 24

6 8 National Farmers Federation, Submission 33, p 3

127

you compare it with the overseas IRAs of similar nature, there is no question that this IRA on non-salmonids, in our opinion, is unsurpassed.

Committee Comment

5.94 The Committee is concerned principally about AQIS’ consultation procedures in general and the consultation process as undertaken by AQIS for the 1999 IRA. Recommendations on appropriate consultation procedures were made in both the Naim report and the 1996 report of this Committee's inquiry into the Australian

Quarantine Inspection Service.

5.95 Appropriate consultation is defined by Professor Naim as follows:

At QEAC we define consultation as having three elements: you have to have a structure where you get parties together; you actually have to listen to what they say; and, thirdly, if you do not agree with them you have to tell them why.6 9 70

5.96 The Committee acknowledges that the dual role of AQIS may be the source of some difficulty. The Pork Council of Australia highlighted the dilemma currently being experienced by AQIS, when it stated:

The pork industry experience is that the relationship between industry and AQIS is improving. However, there is still a difference in dealing with the export area of AQIS compared with the quarantine area. In the export area, the relationship is closer to one of 'team Australia'. In the case of

quarantine, the relationship can be one of 'us and them'. From an industry perspective, it is important for quarantine and export matters to be dealt with in a 'team Australia' way. Obviously, this requires a professional and genuine approach by both industry and AQIS in dealing with quarantine

decisions.71

5.97 The Committee considers that consultation requires more than mere provision of information - it is a participative process. One of the major criticisms of AQIS was the lack of adequate consultation. The Committee notes that AQIS was diligent in its provision of information, but that its actual consultative actions were open to

criticism.

5.98 Consultation does not, however, mean the broad publication of draft documentation. The publication of draft documents was extremely damaging to Australia’s interests.

5.99 The Committee notes the review of the import risk analysis procedures and handbook, foreshadowed in the Portfolio Budget Statements. That review is due to

69 Evidence, RRAT, 11 November 1999, p 278

70 Evidence, RRAT, 23 May 2000, p 3

71 Pork Council of Australia, Submission 52, p 2

128

conclude in approximately September of this year. The Committee commends AQIS’ initiative in commencing the review and expects that some significant changes will be made to AQIS IRA procedures, given the experience of the last several years.

C H A PT E R SIX

THE METHODOLOGY OF THE IMPORT RISK ANALYSIS AND THE SCIENCE

Introduction

Import Risk Analysis Methodology and WTO Requirements The 1999 Import Risk Analysis Methodology Committee Comment The IRA Matrix

Submission Concerns The Policy Implications o f the IRA

The Importation ofNon-Viable SalmonidProductfrom New Zealand

Introduction

6 1 The basis of quarantine restrictions must be scientifically justifiable. AQIS has stated that its 'studies are based on the most comprehensive series of scientific studies undertaken by a quarantine service on the import of fish products for human consumption'.1 However, AQIS has been criticised by some stakeholders for the

rigour of its scientific analysis and particularly for the conclusions and policy ramifications resulting from its 1999 import risk analysis.

Import Risk Analysis Methodology and WTO Requirements

6.2 In preparing the IRA, AQIS drew upon the principles outlined in the OIE International Aquatic Animal Health Code (the Aquatic Code) and the OIE International Animal Health Code.

6 3 The difficulty of undertaking risk analyses and the emerging nature of the process has been recognised by the OIE. That organisation conducted an international forum on risk analysis in aquatic animal health in Paris in February this year. The opening statement to the conference emphasised the difficulties inherent in

undertaking risk analyses for aquatic animals:

The aspects of the life-cycles and survival parameters of fish and shellfish pathogens are often poorly understood and consequently complicate the application of risk assessment to even the most thoroughly studied models. There are certain critical areas, such as diagnostic techniques and the

environmental impact of pharmaceuticals, for which research is lacking and in which risk assessment can be used to highlight research priorities for these topics. Risk analysis is a tool designed to assist decision-makers.

AQPM 1999/51, 19 July 1999, p 2

130

There is a pressing need for a supportive forum to help solve the problems encountered when performing existing risk analysis methods.2 3

The 1999 Import Risk Analysis Methodology

6.4 The International Animal Health Code [Appendix VI to the AQIS submission] contains the guidelines and principles for conducting 'transparent, objective and defensible' import risk analyses. These have been developed by the OIE, which identifies the components of risk analysis as being:

a) Hazard identification;

b) Risk assessment3 - identifying and assessing the risks and evaluating the consequences - this is the component of risk analysis which may be quantitative or qualitative;

c) Risk management - identification, documentation and implementation of measures that can be used to reduce the risks and their consequences; and

d) Risk communication - means of communicating the results of the risk assessment to decision makers, regulators, industry and the public.4

6.5 The AQIS IRA model is shown in Figure 6.1.

Hazard identification

6.6 The starting point of the IRA is hazard identification. In the IRA, AQIS used the following criteria to identify the disease agents of quarantine concern requiring consideration in the IRA. This is one aspect of an IRA which it is agreed is appropriately undertaken qualitatively.

6.7 AQIS gives detailed consideration in the IRA to a disease agent if it is:

1 infectious; and

2 (a) exotic to Australia; or

(b) present in Australia but subject to official control; and

3 (a) OIE listed, and/or

(b) would be expected to cause significant harm in Australia.

2 Welcome message, OIE conference on risk analysis in aquatic animal health, Paris, 8-10 February 2000

3 The compiled responses from the Panel o f Experts set out in the Panel report, noted the confusion within the AQIS documentation on the use of the terms risk analysis and risk assessment, and the use o f the phrase risk analysis, when the more restrictive term, risk assessment, should have been used. Report of the Panel, p 96. This report uses the term in a restrictive way, ie as an element in the risk analysis process.

4 OIE, International Animal Health Code, Article 1.4.1.1

C o nsequence Assessment

The consequences of the establishment of exotic diseases:

1 . Factors relevant to the impact of disease (including biological, and economic).

2. Ecological and environmental effects.

______ V

xtf Assessed according to the 'N significance o f the consequencesCatastrophicHighModerateLowNegligible

132

Prioritisation o f Diseases and Disease Agents

6.8 The OIE's Aquatic Code classifies aquatic animal diseases as diseases notifiable to the OIE (transmissible diseases that are important for public health and/or trade reasons); and other significant diseases (diseases that are of current or potential international significance in aquaculture but of less importance than the notifiable diseases, are less widespread, or have less well-defined aetiology).

6.9 There are four diseases of fish listed in the International Aquatic Animal Health Code as 'notifiable' to the OIE which affect salmonids and non-salmonid marine finfish. There are seven others listed as "significant", but not included in the list of notifiable diseases 'because they are less important than the notifiable diseases; or because their geographical distribution is limited, or is too wide for notification to be meaningful, or is not yet sufficiently defined; or because the aetiology of the diseases is not well enough understood; or approved diagnostic measures are not available'.5

6.10 The four notifiable diseases are epizootic haematopoietic necrosis, infectious haematopoietic necrosis, oncorhynchus masou virus disease and viral haemorrhagic septicaemia. The seven listed as significant are viral encephalopathy and retinopathy, infectious pancreatic necrosis, infectious salmon anaemia, epizootic ulcerative syndrome, bacterial kidney disease, piscirickettsiosis and gyrodactylosis.

6.11 Australia has raised concerns about the way the OIE implements the definitions used for categorisation of diseases and the resulting exclusion of diseases that are of significant concern in countries like Australia, but which do not appear on the list because they are commonly found in Europe and/or North America:

For example, although diseases notifiable to the OIE is a list of transmissible diseases which are considered to be of socio-economic and/or public health importance within countries, and which are significant in international trade of aquatic animals and aquatic animal products, nevertheless a disease is not listed if it has a broad geographical range. Fumnculosis is one of the most significant diseases of salmonids, particularly Atlantic salmon, however, it is not listed by the OIE, presumably because it is endemic in most salmonid producing countries.6

6.12 The Executive Director of AQIS drew attention to the potential problems for Australia and the necessity to have input into the categorisation process:

if you accept that our obligation is to start as the primary reference point for the relevant international standard there is in my mind a legitimate question about the issue of consistency across relevant international standards, which is the point that you are going to. In principle, I understand and accept the

5 Aquatic Code, cited in AQIS, Import Risk Analysis on Non-viable Salmonids and Non-Salmonid Marine Finfish, July 1999, pp 4-5

6 WTO Panel Report, Joint Meeting with Experts, 4 February 1998, p 224

133

point that you are making. There is work that needs to be done. I think Dr Wilson previously explained the work that is carried on through the code commission of the OIE to continually review all of the relevant international standards. One of the things that we clearly have to have regard to in terms

of our interests in that review is that the relevant international standards address our interests.7

Diseases Considered in the IRA

6.13 The list of diseases included in the IRA was criticised by some stakeholders. However, AQIS advised that the diseases for inclusion in the risk analysis was the subject of specific consultation with the scientific reviewers and the final list of diseases was the result of a broad consensus of scientific opinion. AQIS further

argued that no significant new information came to light to warrant changing the list and that AQIS was confident that all issues of quarantine significance had been properly considered.8

6.14 Attention was focussed on the following seven diseases:

a) Amoebic gill disease, which is currently present in Tasmanian salmonid aquaculture populations;

b) Renibacterium solmaninarum bacteria (bacterial kidney disease or BKD);

c) Viral haemorrhagic septicaemia virus [VHS];

d) Infectious pancreatic necrosis virus [IPN];

e) Infectious salmon anaemia vims [ISA];

f) Aeromanas salmonicida bacteria (fumnculosis); and

g) myxobolus cerebralis protozoan (whirling disease).

6.15 Of these seven diseases, only amoebic gill disease is currently present in Australia. Of the remaining six diseases not currently present in Australia, BKD and VHS are listed by the OIE as notifiable diseases9. IPN and ISA vimses are listed by the OIE as significant diseases.

7 Evidence, RRAT, 22 May 2000, p 28

8 AQIS, Supplementary Submission 62, p 3

9 Transmissible diseases that are considered to be of socio-economic and/or public health importance within countries and that are significant in the international trade of aquatic animals and aquatic animal products [AQIS Import Risk Analysis on Non-viable Salmonids and Non-Salmonid Marine Finfish, July 1999, p 4]

134

6.16 Furunculosis and whirling disease are not listed by the OIE, but were assessed in the IRA as 'significant' diseases, and accordingly subject to further analysis.

6.17 A brief description of the diseases follows.

Amoebic Gill Disease

6.18 AGD impairs the gill passages of Atlantic salmon, and is treated in Australia by routine washing of the gills in fresh water. This involves the removal of fish from their pens and their direct handling, placing additional stress on the fish. Dr Alistair Brown, fish veterinarian, noted that he knew of 'no comparable health management practice overseas'.10

Viral Haemorrhagic Septicaemia Virus

6.19 VHS causes haemorrhaging and rapid onset of mortality in rainbow trout, but is also known to infect other salmonids such as grayling and whitefish, together with non-salmonids such as pike. Mortality rates may be as high as 100 per cent in seawater, and 80 per cent in freshwater.

6.20 Outbreaks of the disease have occurred in Europe, Japan and North America. Various submissions to the Committee highlighted the attempt by authorities in the US to contain the spread of the virus after its discovery there in 1988. These efforts appear largely to have been unsuccessful.11

Renibacterium Solmaninarum Bacteria (bacterial kidney disease)

6.21 BKD is caused by infection with renibacterium solmaninarum, and is a serious, slowly progressing disease that leads to internal necrosis of the kidneys and haemorrhaging of the body wall and hind gut. The disease is endemic in wild

salmonids populations of the Pacific coast of North America and has also been reported in Western Europe, Japan and Chile.12

Infectious Pancreatic Necrosis Virus

6.22 IPN is an acute disease of juvenile salmonids, and causes severe damage to the pancreas and other organs. Severe outbreaks have led to mortality rates as high as 100 per cent in other countries, especially under conditions of stress or high temperature. Fish that survive the disease develop immunity.

6.23 IPN is known to be distributed world wide, including continental Europe, Scandinavia, the UK, North America, South America and north Asia, but excluding

10 Ocean Wave Seafoods, Submission 55, p 3

11 AQIS Import Risk Analysis on Non-viable Salmonids and Non-Salmonid Marine Finfish, July 1999, p 61

12 ibid, p 63

135

Australia. It has also been reported in Chile after having been undetected for over 10 years.13

Infectious Salmon Anaemia Virus

6.24 ISA is a blood disorder occurring specifically in North Atlantic salmon, and then almost always in seawater. It is associated with severe mortality rates in affected stock through anaemia, ascites, congestion and enlargement of the liver and spleen, and general haemorrhaging. 14

6.25 ISA was originally recorded in Norway in 1984, but has since been found in Scotland, and more recently in 1996 in Canada. AQIS disputes submissions to the Committee that the disease has also been found in Chile and Ireland.15 The EU attempts to combat ISA by eradicating fish stocks when an outbreak is confirmed. By contrast, in Norway, farmers are only required to slaughter the fish in the same pen as an outbreak, and then only when mortality rates reach 0.05% per day.16

Aeromanas Salmonicida Bacteria (Furunculosis)

6.26 Aeromanas salmonicida is a bacterium that causes a number of acute to chronic disease symptoms in salmonids and other fish, most notably furunculosis. Furunculosis symptoms include anorexia, haemorrhaging of the viscera, softening of the kidney tissues and enlargement of the spleen. The disease has been diagnosed in North America, South America, Britain, Norway, Europe, Japan and South Africa.17

Myxobolus Cerebralis Protozoan

6.27 Infestation with myxobolus cerabralis causes the so-called whirling disease in salmonids. The spores of the parasite attack the nervous system of salmonids, causing death through paralysis and starvation.18 AQIS notes that in newly hatched fry, mortality rates may reach 100%, while fish greater that 6 months of age show few

effects. The disease has been reported in Europe, Asia, North and South America and New Zealand.19

13 ibid, p 59

14 ibid, p 60

15 AQIS, Evidence, RRAT, 11 November 1999, p 338

16 The Hon. Paul Harriss MLC (Tas), Submission 53. pp 4-5

17 AQIS Import Risk Analysis on Non-viable Salmonids and Non-Salmonid Marine Finfish, July 1999, p 363

18 The Liberal Party of Tasmania, Submission 26, p 3

19 AQIS Import Risk Analysis on Non-viable Salmonids and Non-Salmonid Marine Finfish, July 1999, p 66

136

Risk Assessment

6.28 The level of acceptable risk is determined by undertaking a risk analysis, one of the components of which is risk assessment. The OIE defines 'acceptable risk' as the 'risk level judged by Member Countries to be compatible with the protection of animal and public health within their country, taking into account epidemiological, social, and economic factors. 20

Quantitative and Qualitative Risk Assessment

6.29 Risk assessments may be either qualitative or quantitative:

The risk assessment is the component of the analysis which estimates the risks associated with a hazard. Risk assessments may be qualitative or quantitative. For many diseases, particularly for those diseases listed in the

Code where there are well developed internationally agreed standards, there is broad agreement concerning the likely risks. In such cases it is more likely that a qualitative assessment is all that is required. Qualitative assessment does not require mathematical modelling skills to carry out and so is often the type of assessment used for routine decision making. No single method of import risk assessment has proven applicable in all situations, and different methods may be appropriate in different circumstances.21

6.30 A qualitative risk assessment is one where the outputs on the likelihood of the outcome or the magnitude of the consequences are expressed in qualitative terms such as high, medium, low or negligible.22 A quantitative assessment uses probability theory, numerical values being assigned to outputs of the risk assessment to estimate the probability and potential magnitude of a risk. David Vose describes risk analysis and how the two approaches combine in risk analysis as follows:

Qualitative risk analysis provides a textual description of the risk scenario, backed up by qualitative and quantitative information, and develops a logical argument for assessing the acceptability of a risk and the efficacy of any risk reduction measures that might be considered. Quantitative risk analysis builds on the information and arguments of a qualitative analysis, by using probability theory in an attempt to determine the probability of the risk event occurring and the magnitude of its consequence.23

6.31 The OIE states that qualitative risk assessments, those not requiring mathematical modelling skills, will be more commonly used for those diseases, particularly those listed in the Code, where there are well developed internationally

20 OIE, International Animal Health Code, Article 1.4.1.1

21 OIE Import Risk Analysis Guidelines, Article 1.4.1.1

22 OIE, International Animal Health Code, Article 1.4.1.1

23 D Vose, Qualitative versus quantitative risk analysis and modelling, OIE Conference, Paris, February 2000

1 37

agreed standards, and there is broad agreement concerning the likely risks. The OIE argues that qualitative risk assessments will be more appropriate in areas of routine decision making, but also states that 'no single method of import risk assessment has proven applicable in all situations, and different methods may be appropriate in

different circumstances'.24 2 5

6.32 David Vose supports the OIE guidelines, arguing that qualitative risk analysis 'offers a means of making quick, rational and reasonably defensible decisions about prospective risks', but 'it is often difficult to retain and demonstrate consistency between decisions made from qualitative risk analyses'. This difficulty was evident

in the criticisms of the 1996 IRA report. David Vose also argues that the language of qualitative risk analysis is a barrier to correctly communicating the probability of its occurrence - that the descriptive phrases used can mean different things to different people.26 On the other hand, quantitative risk analysis yields a result which 'can be

compared with other accepted and rejected risks'.

6.33 David Vose cautions against the inappropriate use of quantitative risk assessment. He states:

Unfortunately, we have a very limited knowledge of the aquatic environment and its species making a quantitative risk analysis difficult and frequently impossible.27

6.34 David Vose argues that the method outlined in the OIE Aquatic Animal Health Code cannot usually be completed using purely quantitative data - the method requires subjective estimation of the probability of several steps or greatly exaggerating the risk by assuming the unquantifiable steps have a probability of one.

He also notes that the Code, as an overview document, gives no indication of technical issues like the relationship between uncertainty and variability and various types of stochastic28 interdependencies which are usually involved in the correct assessment of a risk.29

6.35 In 1997, David Vose undertook a quantitative risk analysis on 'the risk of establishment of Aeromonas salmonicida and Renibacterium salmoninarum in

24 OIE, International Animal Health Code, Article 1.4.1.1

25 D Vose, Qualitative versus quantitative risk analysis and modelling, OIE Conference, Paris, February 2000

26 ibid

27 ibid

28 stochastic - determined by a random distribution of probabilities, governed by the laws of probability

29 D Vose, Qualitative versus quantitative risk analysis and modelling, OIE Conference, Paris, February 2000

138

Australia as a result of importing Canadian ocean-caught salmon'30. In his report, Mr Vose made some comments on quantitative risk analysis:

Quantitative risk analysis will never be an exact science since one will always be faced with variables in a model that cannot be accurately quantified or where there is conflicting or incomplete information. However, where sufficient information is available, a quantitative analysis of appropriate parts of a model can be reasonably combined with logic and comparison arguments, to determine whether there is sufficient knowledge of the problem to be able to reach an informed and defensible decision. In the current case there is sufficient evidence to perform such an analysis.31

6.36 David Vose disagreed with AQIS' argument that because it was not possible to know exactly the true probability of risk, Canadian salmon should not be allowed into Australia.32 He states in his analysis that the argument is not supported by the level of knowledge available at the time of undertaking the draft and final risk analyses.

6.37 AQIS decided on a qualitative as opposed to a quantitative approach to the conduct of the risk assessment component of its IRA:

In the light of consultations with several independent scientists and risk analysts, AQIS conducted this risk analysis on a qualitative, rather than a quantitative basis... due to the complexity of the analysis (the large number of species and disease agents considered) and in recognition of the limited data on some key questions, such as the lack of data on prevalence of many pathogens, and the uncertainty about some important issues, such as the

susceptibility of native species to the disease agents under consideration.33

6.38 AQIS advised that, 'in the absence of definitive, quantitative data on factors relevant to quarantine risk, AQIS applies appropriately conservative professional judgement based on available scientific information and the advice of experts in relevant fields'.34 AQIS affirmed that this approach was scientifically valid, being

adopted by quarantine authorities throughout the world and therefore consistent with international practice.

30 This report concluded that, for the two diseases o f greatest concern, BKD and furunculosis, the information available to Australia at the time of the draft and final 1996 IRA, was sufficient to show that the risk posed by importing Canadian salmon must be considered negligibly small.

31 David Vose, Quantitative analysis o f the risk o f establishment o f Aeromonas salmonicida and Renibacterium salmoninarum in Australia as a result o f importing Canadian ocean-caught salmon, 11 December 1997, p 4

32 ibid

33 AQIS, Correspondence to Committee, 1 March 2000

34 ibid

139

Criticisms o f Qualitative Risk Analysis in the 1996 IRA

6.39 In the context of the challenge in the WTO to the 1996 IRA and in response to the criticisms of its methodology, Australia argued that it was a highly subjective matter and that there was no obligation to undertake a quantitative risk analysis. It was further argued that, after taking into account all available knowledge, there was

insufficient data to undertake a quantitative analysis and that the approach was consistent with OIE recommendations and the obligations of WTO members.

6.40 However, as noted above, the OIE states in its guidelines that qualitative risk assessments, those not requiring mathematical modelling skills, will be more commonly used for those diseases, particularly those listed in the Code, where there are well developed internationally agreed standards, and there is broad agreement

concerning the likely risks, and that qualitative risk assessments will be more appropriate in areas of routine decision making.

6.41 As part of the 1996 dispute settlement process, the Panel undertook a Joint Meeting with Experts to discuss some of the issues of concern in the case. The experts who participated in the meeting were:

a) Dr David E Burmaster, Alceon Corporation, United States;

b) Dr Christopher Rodgers, fish disease consultant, Spain;

c) Dr James Winton, National Fisheries and Research Center, US Fish and Wildlife Service, United States; and

d) Dr Marion Wooldridge, Department of Risk Research, Central Veterinary Laboratory, United Kingdom.

6 42 The transcript of the Meeting with Experts was made public on 12 June 1998 with the documentation of the Panel's findings. The experts were critical of the methodology by which the IRA had been undertaken and the changes in emphasis and conclusions from the draft IRA to the final report.

6 43 At the meeting, it was suggested that quantitative risk analysis was the appropriate method for the type of risk analysis being undertaken by AQIS in relation to salmonids:

...a risk assessment for this type of issue, I believe should be done in quantitative fashion; that it should involve a numerical calculations as best as is known and with stated uncertainties. At its heart, I believe a risk assessment should be conducted with numerical arguments and to persist on 3 5 3 6

35 Mr R Wells, Joint Meeting with Experts, Annex 2 to Panel report, 4 February 1998, p 224

36 WTO Panel Report, June 1998, p 95

140

that, I would think that it would use probability distributions and those probability distributions could take a number of different forms - there is no unique correct way to do this style of analysis - but I do believe that however one puts together the information that it would include probabilistic descriptions of the variability of what we do know about events and the nature of fish diseases and transmission of fish diseases and so on. It should also somehow state numerically as best as possible the degree of certainty or the degree of uncertainty in human knowledge associated with those calculations.37

6.44 One of the arguments advanced by AQIS for undertaking the analysis qualitatively was the complexity and immensity of the task before it, particularly the multiple fish diseases requiring consideration. However, some of the panel of experts disagreed with this stance. Dr Burmaster argued that it would not be necessary to undertake a risk assessment in relation to every disease, but that a smaller number would suffice.38 Dr Rodgers supported Dr Burmaster's argument, stating that an analysis of a higher risk disease to obtain an answer, rather than looking at every individual disease in turn would be appropriate.

6.45 Dr Winton acknowledged the difficulty created by the gaps in the scientific knowledge for undertaking a quantitative assessment. However, he added that New Zealand 'had made a good effort given the existing scientific information of trying to quantify those risks'.39

6.46 At that meeting Dr Wooldridge set out the appropriate circumstances for the two types of risk assessment:

I initially stated that a risk assessment may be qualitative or quantitative and that a quantitative assessment is often initially undertaken. Now, and I also said that frequently you cannot do a quantitative assessment based on two reasons. Partly the fact that often you would not have the data to actually complete it satisfactorily, but I also put the corollary on that, that when you start doing one you often find that there is a lot more data around then you initially thought. Secondly, very often because time constraints and requirements for action dictate that in the given circumstances a qualitative assessment, which is generally much quicker, is the thing that is required or the only thing that can be done. There is a third reason too, and that is that if you actually do a qualitative assessment more rapidly, and everybody

37 Dr Burmaster, WTO Joint Meeting with Experts, Annex 2 to Panel Report, 4 February 1998, pp 211-212

38 Dr Burmaster, WTO Joint Meeting with Experts, Annex 2 to Panel Report, 4 February 1998, p 211

39 Dr Winton, Joint Meeting with Experts, Annex 2 to Panel Report, 4 February 1998, p 218. The report referred to was released in September 1994 by the New Zealand Ministry of Agriculture and Fisheries, through the MAF Regulatory Authority (Animal Health and Welfare), and was entitled The risk o f introducing exotic diseases o f fish into New Zealand through the importation o f ocean-caught Pacific salmon from Canada. The report used both qualitative and quantitative methods, concluding that the overall risk of introducing disease through the importation of headless, eviscerated, wild, ocean-caught

Pacific salmon appropriately certified by Canadian authorities as to origin and grade was negligible and posed no threat to New Zealand’s fisheries.

141

agrees with the result, there is actually no point in carrying on and doing a quantitative assessment, and mainly this is where, if one concludes that an assessed risk is negligible, from a qualitative assessment, and this assessment is agreed as being correct, and if, in addition, all concerned also

agree that this negligible level is acceptable, then there is unlikely to be a requirement for a quantitative assessment. Now, from this point of view, it really does not matter what people mean by negligible if everybody says "yes it is negligible and we are happy with that" then fine - nobody is

arguing, there is no dispute and there is no problem. The problem, of course, does come when there is a dispute and people do wonder what is meant by 'negligible', and yes, it does mean at lot of different things to a lot of people which is why, when I get to my summary, I actually advise that

one way around that is to carry on with a quantitative assessment.

Anyway, where it is not the case that everybody has actually agreed on a decision that there are negligible risks, or where further demonstration of a low level of probability is required, as I say, a quantitative assessment is in my opinion the next obvious process to attempt. This is what New Zealand

have done, and I cannot actually see any reason Australia did not attempt to undertake the same kind of assessment - selecting the disease which, qualitatively they assessed as the most risky in their Draft Report. In my opinion, as I have stated in my written evidence, the basic New Zealand

method’and much of the data is equally applicable. In addition, and more importantly the attempt to undertake a quantitative assessment, whether you get all the data or not, and whether you can in fact feed everything into to the model and come out with a quantitative answer, clarifies your thought

processes, and will, as a result, highlight those specific data inadequacies if and where they exist. This also helps to remove the subjectivity of a qualitative assessment and separate clearly the issue of assessed risk from acceptable risk.40

6.47 Dr Wooldridge highlighted the difficulty of qualitative risk assessment compared with quantitative risk assessment by comparing the comments on the environmental survival of the renibacterium salmoninarum in the draft and final reports:

The Draft Consideration states that: "Renibacterium salmoninamm does not survive well in the environment..." whereas the Final Report Summary states that: "The organism (Renibacterium salmoninamm) has potential to survive in the environment for significant periods." Checking the data and

the reference given, these conclusions in both cases appear to be derived from the same reference: Austin and Rayment (1985), Journal of Fish Diseases Volume 8, pages 505-509. I think this illustrates as well as anything, the potential problems with, and potentially subjective nature of a

qualitative risk assessment. The bottom line there is: if you do a qualitative

40 Dr Winton, Joint Meeting with Experts, Annex 2 to Panel report, 4 February 1998, pp 219-220

142

assessment and you cannot get to an agreement, I think you are then forced to proceed down the route of attempting a quantitative assessment.41

6.48 Dr Wooldridge, in describing the problems of qualitative analysis, argued that ' if you are left in that position that you have a dispute over what "low probability" or "negligible probability" actually means, you have got to go down the quantitative road'.42 It is argued that there would be a clearer basis for negotiation and challenge and/or agreement or disagreement if the debate were centred around numbers or probabilities or probability distributions.4'

6.49 AQIS, in defending its approach to the risk analysis, stated:

I think we would say that the application of risk analysis to any topic in the quarantine field is unique to the particular issue we are addressing and always presents some difficulties. Those difficulties are not so much methodological difficulties - although they exist - but there are very often problems created by the absence of data. That is a problem in all risk analyses, not merely in the case of salmon. In the case of salmon, and in fact other fish, we have collected a vast amount of information and we have devoted very large resources to the preparation of a series of import risk analyses, these are state-of-the-art import risk analyses in this field, and I believe they are recognised as such internationally. The fact is that risk analysis of this kind has not been performed worldwide in relation to pests and diseases of all fish, and that is a matter which the OIE believes requires greater attention.44 4 5

6.50 In answers to questions on notice, AQIS further defended its use of qualitative risk analysis methodology, advising that the criticisms of the 1996 IRA were not based on Australia's failure to adopt a quantitative approach to the risk analysis, but on its failure to meet SPS requirements because certain judgements, including the interpretation of some data and the conclusions of the analysis were not sufficiently supported by scientific evidence contained in the report.42

Committee Comment

6.51 The Committee considers that the conclusions in the IRA may have been more readily defensible, if supported by quantitative data, at least to some extent. The Committee notes the analyses undertaken by New Zealand and David Vose and the criticisms of the AQIS approach. Notwithstanding the groundbreaking work of these analyses, the Committee considers that, if it is to be truly in the forefront of risk

41 Dr Wooldridge, Joint Meeting with Experts, Annex 2 to Panel report, 4 February 1998, p 220

42 ibid, p 235

43 Drs Wooldridge and Burmaster, Joint Meeting with Experts, Annex 2 to Panel report, 4 February 1998, p 237

44 Hansard, Consideration of Estimates, 8 February 2000, p 219

45 AQIS, Correspondence to Committee, 1 March 2000

143

analysis methodology, AQIS should be more prepared to undertake quantitative risk analysis as part of the risk assessment process. The Committee recognises that quantitative risk assessment is not applicable to all stages of the risk analysis, but does consider that it is highly applicable at the risk assessment stage. More of an emphasis

on quantitative assessment at this stage may assist in ensuring the integrity of the risk analysis.

The IRA Matrix

6.52 In the 1999 IRA, AQIS developed a 'risk evaluation matrix, with the objective of providing a standardised process for evaluating quarantine risk'.46 4 7 For each disease agent, the combination of probability and consequence can be represented by a cell in the matrix. The matrix measures the probability of the establishment of a disease in

Australia on the vertical axis and the significance of the consequences of the disease entering Australia on the horizontal axis. Figure 6.2 sets out the matrix as set out in the IRA.

6.53 AQIS describes how the matrix can be used as follows:

The risk determined on the basis of 'no risk management' is the unrestricted estimate o f risk. If this is in line with Australia's ALOP, the risk would be considered acceptable without specific management ['yes' in the risk matrix...] and the importation would be permitted.

However, if the unrestricted risk exceeds the ALOP, ['no' in the matrix] the next step is to consider whether or how risk management measures may be applied to reduce the quarantine risk to the point where it conforms with Australia's ALOP. If the application of risk management measures cannot

reduce the risk to an acceptably low level, the importation would not be permitted. If after applying risk management measures the risk was in line with Australia's ALOP, the risk would be considered manageable...and the importation would be permitted. It should be noted that, where the

probability of establishment of a disease is negligible, importation would be permitted regardless of consequences.

46 AQIS, Import Risk Analysis on Non-viable Salmonids and Non-Salmonid Marine Finfish. July 1999, p 12

47 ibid, pp 12-13

144

Figure 6.2 Risk Evaluation Matrix

i k

H y e s no no no no

M y e s n o 1 in no no

L y e s yes no no no

VL y e s yes y e s η o η o

EL y e s yes y e s y e s no

N y e s yes y e s y e s y e s

N L M H c

------------------►

S i g n i f i c a n c e o f C o n s e q u e n c e s

Y es' = the risk is a ccep tab le and im p o rtatio n can be perm itted. N o' - the risk is u n a cc ep ta b le and im p o rtatio n c an n o t be perm itted w ith o u t furth er risk m an ag em en t.

6.54 Terms used in the IRA to describe the probability of an event occurring were:

a) High event would be expected to occur

b) Moderate there is a less than even chance of the event

occurring

c) Low the event would be unlikely to occur

d) Very low the event would occur rarely

e) Extremely low the event would occur very rarely

f> Negligible chance of event occurring is so small that it can be ignored in practical terms.

6.55 AQIS noted that these categories are not equidistant from each other, most falling within the range o f zero probability to less than 50% probability.48

48 ibid, p 11

145

6.56 The significance of a disease was assessed through the following key factors:

a) Biological effects on aquatic species;

b) Availability, cost and effectiveness of methods for

control/eradication;

c) Economic effects at an enterprise/industry/national level, including effects on marketing of the product; and

d) Effects on native species and the environment, including any loss of social amenity.49

6.57 Terms used in the matrix to describe the level of significance or severity of the impact were:

a) Catastrophic associated with the establishment of diseases that would be expected to significantly harm economic performance at a national level. Alternatively, or in addition, they may cause serious, irreversible harm to the environment;

b) High associated with the establishment of diseases that

would have serious biological consequences (eg high mortality or high morbidity and causing significant pathological changes in affected animals). Such effects would normally be felt for a prolonged period (greater than or equal to a normal production cycle) and would not be amenable to control or

eradication. These diseases would be expected to significantly harm economic performance at an industry level. Alternatively, or in addition, they may cause serious harm to the environment.

c) Moderate associated with the establishment of diseases that have less pronounced biological consequences. These diseases may harm economic performance significantly at an enterprise/regional level, but they would not have a significant economic effect at the 'whole industry' level.

These diseases may be amenable to control or eradication at a significant cost, or their effects may be temporary. They may affect the environment, but such harm would not be serious or may be reversible,

d) Low associated with the establishment of diseases that

have mild biological consequences and would normally be amenable to control or eradication. Such diseases would be expected to harm exogamic performance at the enterprise or regional level but to have negligible significance at the industry level. Effects on the environment would be minor

or, if more pronounced, would be temporary,

49 ibid, p 12

146

e) Negligible associated with the establishment of diseases that have no significant biological consequences, may be transient and/or are readily amendable to control or eradication. The economic effects would be expected to be low to moderate at an individual enterprise level and insignificant at a regional level. Effects on the environment would be negligible.30

6.58 For each of the 15 "higher priority" diseases (Group 1 diseases), the IRA also considered the probability of a disease agent entering and becoming established in Australia. This probability depends on:

a) The probability of the disease agent being present in the source country/region of the commodity, and if present, its prevalence. The 1999 IRA stated that in examining the available data, account was taken of the extent of surveillance and monitoring by competent authorities in the exporting countries;

b) The probability of the disease agent being present in an infective form in the commodity on entering Australia. This includes consideration of lifecycle stages (for example, the higher prevalence of disease agents in juvenile and/or sexually mature fish); the origin of the fish (i.e. wild vs.

farmed); local dispersal of some disease agents, and time of the year, as well as of inspection and grading of fish. Washing, cold storage or other handling procedures may reduce some risks. Also relevant in this regard is the probability of a disease agent being present in the particular tissues imported,

including the blood, skin, etc;

c) The probability of the disease agent in an infective form entering the aquatic environment of Australia. This depends on the processing, end-use and disposal of the commodity and the capacity of the disease agent to persist, in an infective form, in the commodity after processing, use or disposal. The

1999 IRA details the possible pathways which might be followed by a product imported for human consumption eventually reaching the aquatic environment. With regard to salmon for human consumption, the 1999 IRA identifies as of greatest concern the risks associated with disposal of wastes from the further commercial processing of salmon within Australia.

d) The probability of the disease agent, having entered the aquatic environment, establishing infection in susceptible hosts. This depends on the capacity of the disease agent to survive in the aquatic environment, in an infective form, and the ease of infection of susceptible hosts and subsequent transmission of infection to others within a population. 5 0 51

50 ibid, p 13

51 ibid, p 11

147

6.59 The 1999 IRA identified the biological and consequential effects of the establishment of a new disease agent on the affected fishery industry and on the environment. In considering the "consequence assessment", the 1999 IRA indicated that the effects of a disease can generally be ameliorated by the adoption of methods for control or eradication, but that these measures have associated costs which must also be taken into consideration under the WTO agreements.

6.60 The 1999 IRA noted that the biological effect of the establishment of disease is normally evaluated in terms of morbidity and mortality rates, and the costs associated with controlling or eradicating the disease. The economic effect of the establishment of disease is normally evaluated in terms of the costs arising from the biological effects and the commercial implications for domestic and international marketing of affected animals and products. The establishment of disease may also affect the environment in ways which are not easily evaluated in economic terms.

The Risk o f Salmonid Disease Agents entering Australia

6.61 The IRA conducted by AQIS considered five factors which influence the likelihood of disease agents entering Australia, based on the OIE Aquatic Code:

a) The probability of the disease agent being present in fish in the waters of origin;

b) The probability of the disease agent being present in the particular fish harvested;

c) The probability of infected or contaminated fish/product passing inspection or grading;

d) The probability of the disease agent surviving processing, transport and storage;

e) The probability of the disease agent being present in the particular tissue imported.

The probability of the disease agent being present in fish in the waters of origin

6.62 The standard of surveillance and reporting of disease in aquatic animals varies from country to country. In preparing the IRA, AQIS generally accepted assessment of the presence or absence of disease by those countries with a 'competent authority'. For those countries without 'competent authorities', AQIS generally assumed the presence of widely distributed diseases, except where diseases are known to have a well-defined distribution that have changed little over time.52

52 ibid, pp 16-17

148

6.63 During conduct of the inquiry, the Committee was alerted to the difficulty ol detecting some diseases. For example, the presence of ISA in Canada was noi detected and reported until 6 months after the emergence of indicative haemorrhagic kidney syndrome. In the IRA, AQIS stated:

AQIS acknowledges that the emergence of ISA in Canada was only reported to the DIE after many months of investigation. However, scientific knowledge on ISA and particularly diagnostic methods for it have improved greatly since this time. Therefore, AQIS expects that OIE Member countries would make a definitive diagnosis faster and report disease more promptly in future.

Accordingly, there would be a negligible probability of salmonids (or other finfish) from areas that have not reported the presence of ISA or HKS being infected with ISAV.53

6.64 Various submissions to the Committee were highly critical of AQIS for adopting this position. The submission from Tassal labelled it a 'leap of faith' and 'scientifically naive in the extreme'. Tassal argued that over the past few years, new regions have been 'reporting' ISA sporadically at a rate reflecting detection capability and monitoring effort, rather than occurrence of the virus. As evidence of this, Tassal cited Canadian and US salmon farms just a few kilometres apart in the Bay of Fundy which respectively report and do not report the presence of ISA.54

6.65 Other submissions also questioned AQIS' assertion that diagnostic methods for ISA have improved. In his written submission, the Hon Paul Harriss MFC noted:

In contrast to most other viral diseases, definitive methods for the detection of the ISA vims are not properly validated. Two examples illustrate this. Firstly, isolation of the vims in tissue culture in not always successful even in confirmed cases. Secondly, the indirect fluorescent antibody test (IFAT), carried out on kidneys, occasionally gives a false positive result (about 1 in 70 tests) .55

6.66 As a result of these difficulties, Mr Harriss noted that ISA is identified in the UK and EU simply according to clinical signs and post mortem changes. The international reference laboratory for ISA in Oslo, Norway, indicates that the following criteria need to be satisfied to confirm the presence of ISA:

a) Fish must show clinical disease;

b) There must be visual changes consistent with ISA, including evidence of anaemia, when fish are dissected and examined;

53 ibid, p 82

54 Tassal Ltd, Submission 41. p 3

55 The Hon. Paul Harriss MLC (Tas), Submission 53, p 3

149

c) Microscopic changes must be seen in tissues examined under the microscope, especially in histological sections of the liver, and

d) There must be evidence of the presence of vims, as shown by IF AT, and tests for vims genetic material or vims isolation in tissue.

6.67 Evidence was also presented to the Committee by Mr David Bucke, a freelance consultant specialising in fish and shellfish diseases, of the difficulties involved in detecting other diseases:

a) There is a reliable test for BKD, but it is to culture the organism which generally takes eight and sometimes 20 weeks,

b) Fumnculosis is detectable at the clinical and sub-clinical stages, but very difficult to detect at the covert carrier stage;

c) There are now some very good tests for VHS, but they are still not accurate in every instance; and

d) Because whirling disease is a disease of fmgerlings, there is not a reliable test."'

The probability of the disease agent being present in the particular fish harvested

6.68 Juveniles and/or sexually mature salmonids are more likely to suffer disease than market-size salmonids, and that this may be used to control disease in salmonids. In hearings, Dr Kahn [AQIS] noted that in Scotland, fry and fmgerlings are raised in artificial environments to prevent infestation with disease, thereby breaking the

disease cycle.5 6 5 7 58

6 69 Huon Aquaculture questioned in its written submission the decision of AQIS to allow the importation into Australia of skin-on fillets from young fish of less that 450g, given the greater likelihood of disease being carried in the skin than m the

flesh.59

The probability of infected or contaminated fish/product passing inspection or grading

6 70 The 1999 protocols allow the importation into Australia of non-viable salmonid products from farms that are known to carry diseases other than ISA. In response to Committee concern about this arrangement, whereby salmon from farms in Canada with a known fumnculosis infection could nevertheless be passed for

56 The Hon Paul Harriss MLC (Tas), Submission 53, p 3

57 Mr David Bucke, Evidence, RRAT, 22 November 1999, p 375

58 AQIS, Evidence, RRAT, 24 September 1999, p 45

59 Huon Aquaculture Company Pty Ltd, Submission 19, p 7

150

import into Australia, AQIS confirmed the arrangement, but noted that the protocols also require that fish consignments be accompanied by a health certificate from the competent authority in the exporting country. That health certificate is required to indicate that the fish have been subject to visual inspection and grading, are free from visible lesions associated with infectious disease, and are fit for human consumption.60

6.71 Two concerns arise from this arrangement. Firstly, the only inspection of imported salmon consignments will be by the relevant authority of the exporting country. Inspection at the port of entry into Australia will only be to ensure that the fish are as described on the health certificate. Dr Kahn indicated that this approach is consistent with Australia's quarantine practice on the importation of products of animal origin for human consumption:

We do generally accept the health certification that is provided by a competent authority, and we conduct inspections from time to time to verify that the systems are in place to support the provision of proper certification. That is pretty much the approach across the board. It is not unique to fish.61

6.72 Secondly, the visual inspection of salmonid products entering Australia was raised in submissions as a poor abatement strategy. The Australian Freshwater Fisherman's Assembly submitted that pathogens may be present in the blood, flesh and bone of fish well before visually detectable effects on the host animal become apparent, thereby creating a dangerous window period.62 Similarly, the submission by Huon Aquaculture cited a finding by Willoughby that 'the vast majority of Norwegian

farmed fish (about 70 to 80%) are carriers of IPN without showing any clinical symptoms.'63

6.73 The Committee raised with Mr David Bucke the likelihood of detection by visual inspection of lesions, indicating the presence of diseases like furunculosis. Mr Bucke responded:

You can obviously see a haemorrhaging lesion with your eye. Whether you would see one underneath the skin if the skin was on, is another matter; I do not think you would see it in the muscle if it was a very small lesion. But when you start looking at histology sections of the various organs and muscle and things, you can actually see clumps of bacteria in the muscle bundles, very small foci of bacteria. You would not see these by eye at all, it is just not possible.64

60 AQIS, Evidence, RRAT, 11 November 1999, p 340

61 ibid, p 342

62 Australian Freshwater Fishermen’s Assembly, Submission 31, p 5

63 Huon Aquaculture Company Pty Ltd, Submission 19, p 7

64 Mr David Bucke, Evidence, RRAT, 22 November 1999, p 369

151

The probability of the disease agent surviving processing, transport and storage

6.74 It is noted in the 1999 IRA that the presence of disease agents in non-viable salmonid products may be reduced through evisceration, removal of the head, gills and skin, and washing of internal and external surfaces. These precautions remove a large portion of the pathogens generally found in the bone, cartilage, skin and retobulbar tissue of the head.65

6.75 Dr Alistair Brown agreed that evisceration, removal of the head, gills and skin, and washing of internal and external surfaces is an appropriate means of reducing the risk of disease transfer:

I believe that by only allowing skinless, boneless fillets into Australia we would also significantly reduce the potential for importation of most of the pathogens listed in the IRA.66

6.76 The persistence of disease agents in salmonid products may also be limited through the transport and storage process. Commissioned research conducted by Aquaculture Development and Veterinary Services for the 1999 IRA indicates that cold storage, either freezing or chilling, may inactivate some bacteria, although most

viruses persist at low temperatures for hours or days and are quite stable at freezing temperatures. Cooking at temperatures of 55 - 70 degrees is recognised as far more likely to inactivate aquatic pathogens.67

The probability of the disease agent being present in the particular tissue imported

6 77 The IRA states that infectious diseases are likely to be found in particular tissues according to the mode of infection and pathogenic characteristics of the disease. Some diseases are highly specific to certain cells, such as BKD. Other diseases use cell surface receptors that occur in many tissues of the body. The

submission from Huon Aquaculture stated that at least 15 diseases of concern are carried in the flesh of salmonids, as opposed to the head, skin, cartilage, bone, kidneys and so forth.68

6 78 AQIS also indicated that for diseases such as BKD, evisceration is likely to reduce but not necessarily eliminate the presence of pathogens. Some blood rich organs such as the remnants of the anterior kidney and the retobular tissue of the head remain after evisceration and are unlikely to be removed by washing alone. AQIS

65 AQIS Import Risk Analysis on Non-viable Salmonids and Non-Salmonid Marine Finfish, July 1999,

pp 20-21

66 Dr Alistair Brown, Evidence, RRAT, 11 November 1999. p 331

67 AQIS, Import Risk Analysis on Non-viable Salmonids and Non-Salmonid Marine Finfish, July 1999,

pp 2 1 -2 2

68 Huon Aquaculture Company Pty Ltd, Submission 19, p 7

152

advised that scrubbing or high pressure water sprays can be used to substantial!; remove residual kidney tissues.69

The Risk o f Transmission o f Salmonid Disease Agents within Australia

6.79 The IRA conducted by AQIS considers three factors which influence th< likelihood of disease agents having entered Australia, becoming established it Australia, once more based on the OIE Aquatic Code:

a) The probability of imported product entering the aquatic environment

b) The probability that imported product entering the aquatic

environment initiates an infection;

c) The probability of disease becoming established in Australian salmon.70

The probability of imported product entering the aquatic environment

6.80 In the 1999 IRA, AQIS investigated four principal means by which disease agents may enter the aquatic environment.

6.81 The first is through human consumption. AQIS argued that cooking is an effective method of killing parasites in animal tissue, and although salmon may also be consumed raw as sashimi or cold smoked salmon, most infectious organisms will also be destroyed in the human gastrointestinal tract.71

6.82 The second means AQIS identified by which disease agents may enter the aquatic environment is via wastewater disposal of unprocessed product. AQIS noted that:

the processing of wastewater in the domestic sewerage system would not completely inactivate any aquatic pathogens present in imported product. However, the physical conditions in the sewerage system, including the presence of chlorine and other microorganisms, and competition from other microorganisms for nutrients would be expected to limit the survival of many of the aquatic pathogens considered in this risk analysis.72

6.83 However, AQIS did acknowledge that in certain situations, the proximity of some salmonid fish populations near wastewater discharge points might present a disease risk. For instance, the discharge of treated waste into the marine waters in and around Hobart may pose a higher risk than such discharge into the marine waters of

69 AQIS, Import Risk Analysis on Non-viable Salmonids and Non-Salmonid Marine Finfish, July 1999, pp 20-21

70 ibid, p 25

71 ibid, pp 26-27

72 ibid, p 28

153

mainland Australia, given the various salmonid farms and a large run of brown trout in Macquarie Harbour.''

6.84 The third means AQIS identified by which disease agents may enter the aquatic environment is via disposal of solid salmonid waste such as heads, gills, tails, cartilage and skin. AQIS stated that if this waste is moved to properly designed and maintained landfills, the risk to the aquatic environment is extremely low, although in

other cases the risks might be more significant.

6.85 The disposal of solid salmonid waste received considerable attention during hearings. Professor Nigel Forteath submitted that in Australia, the majority of household offal enters open refuse tips frequented by birds, rodents and feral cats, which can disperse the offal and packaging considerable distances. His submission

also noted the risks from disposal of waste by campers directly into waterways.

6.86 Although noting the risk of disease transmission from solid waste, AQIS argued that the likelihood of disease agents entering the aquatic environment via this means is small. Citing calculations of salmonid disposal in Melbourne, AQIS estimated that salmonid products would constitute a very small proportion of total

solid waste produced in a major Australian city. Furthermore, aquatic pathogens at waste disposal cites may be destroyed by ultraviolet radiation, low oxygen levels, variations in temperature and competition from other microorganisms for nutrients.

6.87 The fourth means AQIS identified by which disease agents may enter the aquatic environment is through the importation, with minimum prior treatment or quarantine restriction, of fish feed or fish bait.

6.88 Fish imported into Australia as feed include whole pilchards and herrings, which are used extensively to feed farmed southern bluefin tuna. As stated m hearings by Mr Jeffriess from the Tuna Boat Owners Association of Australia:

The fact is that something like tuna farming, which is three times the size of the salmon industry, depends 90 per cent on imported bait. There are no alternatives available in Australia.

6.89 Fish imported into Australia as bait include whole or head only fish such as mackeral, travally, north sea herring, kawahai, barracouta, sardines and orange 7 3 7 4 7 5 7 6 7 7

73 ibid, p 30

74 ibid, p 30

75 Omlas Pty Ltd, Submission 13, p 4

76 AQIS, Import Risk Analysis on Non-viable Salmonids and Non-Salmonid Marine Finfish, July 1999, p 31

77 ibid, p 32

154

roughy. These bait are imported to support the rock lobster industry, Australia's largest seafood export industry.78

6.90 The IRA indicated that there is little risk of disease agents entering Australia via the importation of fish feed or fish bait:

... there is no definite evidence that the importation of fish bait into Australia has resulted in the establishment of any exotic diseases to date.79

6.91 The evidence presented to the Committee on this point is uncertain. Mr Tonkin from the Institute of Freshwater Anglers presented evidence from the NSW Fisheries that the recent disease outbreaks amongst pilchards in NSW and Victoria most likely arose from the importation of pilchards and herrings as fish food for tuna:

There was also insufficient factual evidence to take the matter any further, but the most likely cause arose from the importation of bait used in tuna fishing.80

6.92 However, Mr Jeffriess argued against this position, stating that there was no scientific evidence that the 1995 and 1998 disease outbreaks amongst pilchards were the result of introduced pathogens:

The latest scientific assessment by the critics is that the actual 1995 mortality started through a tuna towing pontoon in the middle of the Great Australian Bight. We have shown that there was no towing pontoons anywhere near that area at that time. They now claim the second lot of mortalities started from a snapper farm feeding imported bait. We have shown that there is no snapper farm where they said there was a snapper farm, et cetera. You can do no more.

The fact is that there is not one record of a dead pilchard anywhere near Port Lincoln where all the farms are situated. The answer to that from the critics is that every last pilchard that has been infected has swum right into the middle of the Great Australian Bight and died there. That is just not sustainable. Despite all that, we just do not know. What we are saying is that proper, rigorous science needs to be done.81

6.93 Mr Jeffriess also argued that there is no scientific evidence to indicate that a disease such as ISA, which is specific to salmon, would be transferred to Australia via the importation of fish feed:

78 DPIE December 1996, Report o f the National Task Force on Imported Fish and Fish Products: A Report into the Implications Arising from Aquatic Animal Imports, AGPS

79 AQIS Import Risk Analysis on Non-viable Salmonids and Non-Salmonid Marine Finfish, July 1999, p 32

80 Mr Rodney Tonkin, Institute of Freshwater Anglers, Evidence, RRAT, 24 September 1999, p 91

81 Mr Brian Jeffriess, Tuna Boat Owners Association o f Australia, Evidence, RRAT, 11 November 1999, p 283

155

There is no historical scientific evidence of ISA transferring to other species like that. We have plenty of emotive members as well who strongly complain about the quality of the IRA, not the integrity of it. But the reality is that is what the best science available tells us. As soon as we start to not

question the science but oppose a proper scientific analysis itself, we have little future.82 8 3 8 4 8 5 8 6

6.94 The Committee notes however that tuna are not susceptible to the same range of diseases that affect salmon, meaning that there are no risks^ to tuna farming in Australia from the importation of pilchards infected with disease.

The probability that imported product entering the aquatic environment initiates an infection

6.95 The IRA noted that water temperature influences the transmission of salmonid disease. For example, the transmission of VHS vims mostly occurs at water temperatures ranging from 1-12 degrees, but not above 15 degrees. In the UK, the seasonality of BKD is well recognised, with the result that fish with the disease are

only removed from aquafarms during spring and autumn.8

6.96 Various other submissions reiterated this point. As stated by Dr Brown:

A number of fish pathogens thrive at warmer temperatures, for example, the optimum temperature for the incubation of Aeromonas salvnonicida is 22 C. Infections at low temperatures are more likely to result in carrier status rather than high mortalities, however, as the temperature rises^to the

optimum for the pathogen, clinical disease is likely to be expressed.

6.97 Similarly, Mr Bucke noted:

The temperature is going to make a difference. A lot of these diseases do not clock in until 15 degrees, 18 degrees, 20 degrees.

6.98 There was considerable criticism of the IRA, for failing to give sufficient consideration to the high water temperatures in Tasmania and the need to physically wash salmon in Tasmania during the summer months to combat AGD. This activity places salmon under considerable stress, thereby increasing their susceptibility to

disease. As stated by the Tasmanian Salmon Growers Association:

82 ibid, p 279

83 AQIS, Evidence, RRAT, 11 November 1999, p 286

84 AQIS, Import Risk Analysis on Non-viable Salmonids and Non-Salmonid Marine Finfish, July 1999, p 19

85 Ocean Wave Seafoods, Submission 55, p 2

86 Mr David Bucke, Evidence, RRAT, 22 November 1999, p 368

156

The issues of the importance of the different climatic conditions, and warmer waters combined with the changed farming practices has not been accepted by AQIS.87

6.99 The 1999 IRA did acknowledge that higher water temperatures and the need to handle fish are problems in Tasmania. However, the report argued that the lower stocking densities used by management in Australia and the unpolluted Tasmanian waterways offsets these problems. In support of this position, AQIS noted that Australian salmonids grow to market size in 12 months, compared to 1 8 - 2 4 months in most salmonid producing countries. As AQIS concluded:

Without evidence from experimental infections, it cannot be said with any degree of certainty that the salmonids in Australia are any more or less susceptible to any of the diseases that are stock of those species elsewhere in the world.88

6.100 Various submissions to the Committee rejected this argument, indicating that water temperatures in Tasmania reach the extremes of salmonid tolerance during the summer months. The submission from Houn Agriculture noted that the optimum water temperature for salmon is 17 degrees, with 19 degrees the upper limit over long periods of time. Tasmanian waters are frequently 18 degrees, and can reach 22

degrees at the surface.89

6.101 In addition, although handling of salmon is not recommended, Dr Brown indicated to the Committee that there is no alternative:

A further point that has significance for salmonid farming in Australia is that diseases that are considered minor or not significant overseas can cause serious problems here. The best example is AGD, in Tasmania this condition requires regular monitoring and treatment to prevent mortalities. The same condition has been recognised in New Zealand and Ireland however it doesn't cause problems at their normal temperatures. On occasions when sea temperatures have become unseasonally high in these countries, mortalities due to AGD have occurred.90

6.102 Finally, evidence was also presented to the Committee to suggest that salmonids in Tasmania are more susceptible to disease that fish in other countries due to their relative isolation. Huon argued that 'it is not apparent in AQIS' risk assessment process that any consideration has been made of likely disease epidemiology in Australian conditions'.91

87 Tasmanian Salmonid Growers Association, Submission 46, p 7

8 8 AQIS Import Risk Analysis on Non-viable Salmonids and Non-Salmonid Marine Finfish, July 1999, p 36

89 Huon Aquaculture Company Pty Ltd, Submission 19, p 6

90 Ocean Wave Seafoods, Submission 55, p 4

91 Huon Aquaculture Company Pty Ltd, Submission 19, p 11

157

6.103 The evidence on this point is uncertain, however Dr Brown noted that in personal communication, it had been indicated to him that Tasmanian stock imported from Scotland display increase susceptibility to a range of endemic diseases. Dr Brown also noted the finding of Gjedrem et al (1991) that resistance to furunculosis

could be effectively improved by selective breeding of Atlantic salmon. “

The probability of disease becoming established in Australian salmon

6.104 Infection of disease free aquaculture populations is most likely to occur via the movement of live, infected hosts or parasites from infected areas to disease free areas.

6.105 The Tasmanian Government advised that the transfer of diseased fish from freshwater hatcheries provided one means by which disease can spread between populations. In Tasmania, farming of Atlantic salmon involves the production of early-stage salmon in freshwater facilities. After 12-18 weeks they are acclimatised to

seawater, and are transferred to estuaries and sheltered coastal waters.

6.106 Dr John Purser from the University of Tasmania cited the example of the parasitic lamprey, of which there are two species found in Tasmania. As adults, lamprey attach themselves to the exterior of fish to feed. By doing so they may potentially transmit diseases. Lamprey are also diadromous, moving from the sea to

freshwater in spring and summer to spawn, after which the larvae spend a number of years feeding off micro-organisms before moving back to the sea to attach themselves to a host adult.9 2 9 3 94 9 5

6.107 Dr Purser also advised that the IRA largely ignores movement of fish between freshwater and marine systems. For example, Dr Purser noted that the native species which comprise the whitebait run in Tasmania - the galaxids, Tasmanian whitebait, smelt and grayling - are related to salmon, and could be affected by diseases and act

as carriers. Significantly, all these species are diadromous, moving between freshwater and saltwater during their lifecycle. ' Similar concerns were also expressed by the Tasmanian Government:

Tasmanian coastal and inland fisheries are closely linked by species that migrate between fresh and salt water. If disease were to develop in a coastal area, fish such as whitebait or sea-run trout could transport the disease inland or vice versa. Tasmanian Whitebait run up most of our estuaries to

their fresh water spawning grounds. Sea-run trout follow them up and would

92 Ocean Wave Seafoods, Submission 55, p 1

93 Tasmanian Government, Submission 42, p 14

94 Dr John Purser, Submission 28, p 2

95 ibid, pp 1-2

158

provide an ideal host for transferring disease to the unprotected wild fishery'.96

Risk Management

6.108 The OIE sets out principles of risk management in its IRA guidelines:

1 . Risk management is the process of deciding upon [an acceptable level of risk in the particular circumstances associated with an importation] and implementing [appropriate] measures [that are considered] to achieve the Member Country’s appropriate level of protection [determined by the decision], whilst at the same time ensuring that negative effects on trade are minimised. The objective is to manage risk appropriately to ensure that a balance is achieved between a country's desire to minimise the likelihood or frequency of disease incursions and their consequences and its desire to import goods and fulfil its obligations under international trade agreements.

2. The international standards of the OIE are the preferred choice of sanitary measures for risk management. The application of these sanitary measures should be in accordance with the intentions in the standards.97

6.109 The Guidelines also set out risk management components as follows:

1. Risk evaluation - the process of [deciding upon the acceptable level of risk and] comparing [it with that] estimated in the risk assessment with the Member Country's appropriate level of protection.

2. Option evaluation - the process of identifying, evaluating the efficacy and feasibility of, and selecting measures in order to reduce the risk associated with an importation in line with the Member Country's appropriate level of protection. The efficacy is the degree to which an option reduces the likelihood and/or magnitude of adverse biological and economic consequences. Evaluating the efficacy of the options selected is an iterative process that involves their incorporation into the risk assessment and then comparing the resulting level of risk with that considered acceptable. The evaluation for feasibility normally focuses on technical, operational and economic factors affecting the implementation of the risk management options.

3. Implementation - the process of following through with the risk management decision and ensuring that the risk management measures are in place.

4. Monitoring and review - the ongoing process by which the risk management measures are continuously audited to ensure that they are achieving the results intended.98

96 Tasmanian Government, Submission 42, p 12

97 OIE IRA Guidelines, Article 1.4.2.5

159

6.110 If the risk from proposed importation of a commodity is determined to be greater than Australia's ALOP, implementation of risk management measures must be considered, consistent with Section 70 of Quarantine Provisions 1998. In developing risk management measures AQIS must:

a) Ensure that they are the least trade restrictive necessary to meet the ALOP;

b) Consider the practicability and ease of implementation;

c) Consider the cost of compliance;

d) The cost effectiveness of the measures and impact on trade.

6.111 Additionally:

a) Under Article 4 of the SPS Agreement, if the exporting country can demonstrate that measures other than those proposed will deliver the level of protection, the alternative measures should be acceptable;

b) Quarantine measures must be specified and applied in a way that does not discriminate between the commodities of different exporting countries;

c) There must not be any arbitrary or unjustified distinctions in the level of assessed risk for imported commodities - the consistency requirement.9 8 99 1 0 0

6.112 According to AQIS, there are two principal means of reducing the level of risk:

a) Reducing the likelihood of disease agents entering Australia in imported product by imposing conditions relevant to the source population; and

b) Reducing the likelihood that susceptible host species in Australia would be exposed to imported product or derived waste.1110

Pre-import measures

6.113 Pre-import measures are likely to include inspection, grading and processing practices, such as washing, evisceration, removal of head and gills, skin and fins, filleting and processing of product to a consumer ready state. Official certification

98 OIE IRA Guidelines, Article 1.4.2.6

99 AQIS, Import Risk Analysis on Non-viable Salmonids and Non-Salmonid Marine Finfish, July 1999, pp 140-141

100 ibid, p 141

160

confirming the application of such procedures may be provided by exporting countries.

6.114 Certifying authorities providing assurances must have systems in place to support the issuance of 'accurate, valid certification'.101 The key elements of such systems are:

a) Legislation, providing for notification and control of animal diseases;

b) Official programs for disease surveillance and monitoring;

c) Animal health services supported by competent diagnostic

laboratories;

d) Systems for the inspection of animals and product, including for approval and control of premises processing product for human consumption; and

e) Legislation concerning the issuance of certification, with appropriate sanctions.102

6.115 AQIS advised that importing countries have the right to take appropriate steps to verify that certificates and certification systems are reliable.103

6.116 An exporting country may provide certification on matters such as:

a) The nature and source of exported fish/product;

b) The health status of populations from which the fish/product was derived;

c) Results of health surveillance and monitoring;

d) The processing of the product; and

e) The system of inspection and grading to which the product was subjected.104

Post import measures

6.117 Post import measures include:

101 ibid, p 142

102 ibid

103 ibid

104 ibid

161

a) Restricting the type/presentation of product, to increase the

probability of it being used in a low-risk manner,

b) Restricting the type/presentation of product to reduce the amount of waste generated after arrival in Australia;

c) Processing the product to reduce the likelihood of it containing aquatic pathogens in an infective form; and

d) Restricting the distribution or end use of imported product.

6 118 The specific risk management measures for the seven Group 1 priority disease agents that do not meet Australia's ALOP are set out in section 5.3 of the IRA.

Submission Concerns

6,119 The major concerns expressed in submissions included:

a) The conclusions in the IRA lacked scientific validity, the science was incomplete and uncertain and that is some cases the science presented by AQIS did not support the conclusions reached;

b) Insufficient consideration of the increased susceptibility of native species to exotic disease agents, ie their naivity and the affects of an outbreak of disease on domestic fish populations;

c) The risk management measures proposed by AQIS to deal with an outbreak of disease;

d) Specific concerns in relation to such diseases as ISA; and

e) Environmental concerns.

Criticisms Relating to the Science

6.120 The major criticisms of the science do not relate so much to the actual science as set out in the IRA, and which has now been endorsed by the WTO, as to the uncertainty of the science and the concern that too little is known about disease incursions in fish. In this event, it was argued that the appropriate quarantine

approach should be governed by the precautionary principle, le that quarantine measures should not allow the importation of products unless the extent of risk is

known.

6 121 The IRA risk evaluation matrix establishes a chain of events that must occur for a disease to be introduced and become established in Australia. However, stakeholders highlighted to the Committee various scientific concerns which they argued were not adequately addressed by AQIS in the IRA. These included:

162

a) Difficulties in the initial detection of diseases in salmonid populations overseas;

b) The possibility that pathogens may pass quarantine inspection and enter Australia, either legitimately or because the pathogen is not detected;

c) The possibility that pathogens may survive processing (ie

evisceration, washing, freezing);

d) The increased susceptibility of salmonids in Tasmania to diseases due to the high summer water temperature and the need to treat for AGD;

e) The various avenues by which disease may spread amongst salmonids in Tasmania, including potentially through the import of fish bait and fish feed; and

f) The severity of the impact of any disease outbreak on the salmon farming industry in Tasmania and the trout farming industry in Victoria.

6.122 AQIS advised that it compiled the IRA following a thorough consideration of all issues:

AQIS considered all scientific issues raised in the submissions of respondents and sought the advice of the independent scientific reviewers on significant points in the submissions. All submissions were taken into account in preparing the reports. For each risk analysis, AQIS reviewed each part of the report in light of stakeholder submissions.

The scientific information reviewed in these IRA reports is comprehensive and up-to-date and the independent scientific reviewers have agreed that the scientific analysis is accurate, objective and balanced.105

6.123 Where the scientific evidence is unavailable or uncertain, AQIS stated that it took an appropriately conservative approach, but argued that a lack of evidence did not justify the adoption of no-risk measures or refusal to make a decision.106 AQIS further stated that ' no witness presented significant new scientific information that warranted re-examination of the risk analysis or changes to the new salmonid quarantine policies'.107

6.124 AQIS advised that almost all the scientists with relevant expertise had been involved in this process over the years and outlined the extent of the scientific consultation in developing the IRA in its submission:

105 AQIS, Submission 17, p 77

106 AQIS Policy Memorandum 1999/26

107 AQIS, Supplementary Submission 62, p 4

163

The findings of the risk analyses are based on a comprehensive analysis of relevant scientific literature, including (for non-viable products) scientific information in previous reports of the Australian Government and a report of the New Zealand Government on the importation of non-viable salmonids

into New Zealand. AQIS also obtained detailed comments from a number of experts in fish health and quarantine in Australia and overseas. AQIS took several steps to ensure the scientific validity of the risk analyses, including considering the reports of consultancies (most of which were

commissioned in 1998) on identified gaps in information relating to these risk analyses.108 1 0 9 1 1 0

6 125 AQIS argued in a supplementary submission that throughout the whole process, it had been careful to support its arguments through consultation with independent scientists in Australia and overseas to ensure proper consideration of the scientific evidence and the use of professional judgement m the IRA report.

IRA was subjected to independent review by 14 scientists. The scientists were requested to assess the draft report and to advise on.

a) The completeness and accuracy of scientific information in the report,

b) The balance and objectivity with which scientific information was

treated;

c) The extent to which the exercise of professional judgement m the report was supported by and consistent with relevant scientific information;

d) The consistency of professional judgements on scientjfic issues that were common to each risk analysis report (where appropriate).

6 126 AQIS countered the criticisms of the 1999 IRA with the claim that much of the criticism before the Committee was 'assertion, not supported by substance or is

incorrect':111

Many of the current arguments against importation have been previously presented and re-presented to AQIS in the course of the risk analyses conducted in 1995-96. More recent information, including on the spread ot diseases since 1996, was available through stakeholder submissions made m

May/June and from overseas scientists. All relevant scientific issues have been specifically addressed and AQIS's scientific analysis is robust and , ■ 1 1 2

comprehensive.

108 AQIS, Submission 17, p 76

109 AQIS, Supplementary Submission 59, p 2

110 AQIS, Submission 17, pp 7 6 -7 7

111 AQIS, Supplementary Submission 59, p 3

112 ibid

164

6.127 In response to the questions raised by Professor Forteath at public hearing concerning the scientific analysis, AQIS advised that it had further consulted with a number of independent scientists, who had advised AQIS on the risk analysis. Those who responded were of the view that Professor Forteath had identified no scientific issue that was not considered in the risk analysis, nor had he raised any matter that warranted specific further consideration.113

The impact of a disease outbreak

6.128 Comments on the assessment of disease outbreaks related to:

a) Underestimation of the risk establishment of disease in both farmed and native salmonids, including the naivety and increased susceptability of salmonid populations within Australia;

b) The difficulty of eradication and containment measures;

c) The differences between the susceptibility of salmon and trout populations.

6.129 One of the major criticisms of AQIS by stakeholders was that AQIS had underestimated the probability of disease organisms entering and becoming established in Australia as a consequence of importation of salmonid product. AQIS responded:

In keeping with accepted scientific practice, the risk analysis identified the pathways by which imported product could enter the aquatic environment and took into account the probability (classified as 'probable'), 'less significant' or 'exceptional') of products following these pathways. The risk assessments of each disease take into account the probability of establishment and the significance of the consequences in each case.

For salmonids other than Pacific salmon from New Zealand, AQIS will only release from quarantine imported products that are ready for the consumer to cook or eat, such as salmon cutlets, fillets and pan-size, head-off, gilled and gutted fish. There is minimal uncooked waste likely to derive from these products, so that the probability of material containing any organisms being discarded into water containing susceptible fish is extremely low.114

6.130 Dr Alistair Brown stated:

In my opinion the IRA underestimates the consequences of the establishment of a number of diseases assessed in the IRA, particularly in relation to the ability to control these diseases. One of these is as a result of not fully taking into account the circumstances that are unique to the

113 ibid

114 ibid, p 17

165

Australian salmonid farming industry, that being the effect of temperature."5

6.131 However, a slightly different view was put by Dr Rodgers, at the Panel of Experts Meeting in February 1998:

Perhaps the most relevant factor to my mind, in this particular case is the introduction of potential pathogens into an already stable environment Since the natural balance of an indigenous fish population could be altered perhaps irreversibly, this is one factor which perhaps is overriding in this

particular case of transmission. However, having said that, there is a generally accepted lack of information about the occurrence of fish diseases in wild fish and the potential interactions between wild fish and the mechanisms of disease introduction themselves.

6 132 AQIS, in advising whether the warmer water conditions increased vulnerability, stated:

But the SPS agreement does allow us to take into account in evaluating the risk all of those considerations, including the differences in water temperature, the different vulnerabilities of fish, stocking rates, whatever it is That all goes into the analysis of what is their risk from product coming

into the country. So, yes, we are allowed to take that into account, then we have to make a judgment about what measures we need to apply in order to reduce that assessed risk to an acceptably low level—that is, to reduce it so that it conforms with our appropriate level of protection.

6.133 Dr T D St George, an ex CSIRO scientist, argued:

The basing of imports of raw salmon products on probabilities of it containing live vims is based on a false reasoning. If the chance is one m one million that a particular shipment contains live vims, this shipment may be the first shipment or the last shipment or any one in between. It does not

mean that one million shipments have to be imported before there is a risk. There is not control on persons purchasing fish to dispose of any uneaten portions in a safe way.

The risk analysis should be based on the probabilities of eliminating the risk of disease and cost to the industry or the nation once it has been introduced."8 1 1 5 1 1 6 1 1 7 1 1 8

115 Dr Alistair Brown, Evidence, RRAT, 11 November 1999, p 326

116 Dr Rodgers, WTO Joint Meeting with Experts, Annex 2 to Panel report, 4 February 1998, p 213

1 17 AQIS, Evidence, RRAT, 24 September 1999, p 42

118 Dr T D St George, Submission 1, p 1

166

6.134 It is noted in the IRA that the consequences of serious pathogens such as furunculosis and ISA becoming established amongst aquaculture populations here in Australia 'would be at least as serious as those reported overseas'.119 However, various

submissions argued that this assessment by AQIS still understates the consequences of transmission of disease agents to Tasmania. Mr Weir, stock manager for the Huon Aquaculture Company, expressed similar sentiments:

It is my contention, based on my experience of farming these fish in different environments around the world, that if some of the diseases listed in the draft AQIS IRA were to enter Australian waters, the Australian salmonid aquaculture industry would be destroyed. The only debatable issue would be whether this would occur in two, three of four years' time'.120

6.135 The submission from the Victorian Trout Association (VTA) expressed concern that the IRA largely ignored the impact of diseases on the Victorian trout industry. In particular, the VTA noted that in many instances, freshwater trout are more susceptible to disease, and more likely to carry disease, than salmon. In turn, the establishment of disease amongst rainbow trout in Victoria would increase the likelihood of disease spreading to salmon in Tasmania.121

6.136 As with salmon in Tasmania, rainbow trout farming in Victoria during the summer months is conducted at the biological limits of rainbow trout tolerance, again placing constant stress on the fish, and increasing their susceptibility to disease. In particular, Mr Rogers from the VTA highlighted during hearings the susceptibility of rainbow trout to VHS, prolific kidney disease (PKD), rainbow trout fry syndrome

(RTFS) and steptococcosis.122

6.137 One of the major concerns of the recreational trout fishermen was that the 1999 IRA ignored trout and the different potential for disease incursion and the impact of the incursion.123 The VTA expressed concern that diseases which were of significance to the freshwater trout industry, but which did not affect salmon, were not discussed in the risk management assessment of the IRA:

This disease [VHS] is not significant to the salmon industry, where we feel a lot of the disease information has been slanted to try to justify the lack of the impact on the salmon industry, without giving due consideration to the possible impact to the freshwater trout industry, especially as we are so close to a major metropolitan populace.124

119 AQIS, Import Risk Analysis on Non-viable Salmonids and Non-Salmonid Marine Finfish, July 1999, p 39

120 Huon Aquaculture Company Pty Ltd, Supplementary Submission 54, p 4

121 Victorian Trout Association, Submission 32, p 2

122 Mr Rogers, Victorian Trout Association, Evidence, RRAT, 11 November 1999, pp 297-300

123 Mr Miles Rogers, Victorian Trout Association, Evidence, RRAT, 11 November 1999, p 303

124 Mr Miles Rogers, Victorian Trout Association, Evidence, RRAT, 11 November 1999, p 295

167

6 138 The representatives of the VTA were concerned about the impact of VHS on the freshwater rainbow trout and the AQIS conclusion that there would be only a moderate risk to the Australian environment of the disease:

AQIS has mainly targeted the marine version of this disease. There are four strains. The freshwater European strain of VHS is highly vimlent within fresh water. AQIS also states that it is highly pathogenic, particularly in farmed rainbow trout. This significance has been understated in the IRA due

to the heavy leaning of the report towards the potential threat to the marine salmon farming industry where the significance of VHS is low or irrelevant. However, a potential outbreak of VHS in the Australian freshwater trout industry would be disastrous on a national level due to 80 per cent of the

production coming from one small geographic area.

6.139 In response to these concerns, Dr Kahn from AQIS defended the IRA assessment, noting that the report acknowledges that rainbow trout is the salmomd species most susceptible to disease in Australia. AQIS believes the measure put in place such as evisceration and the removal of head and gills is sufficient to address the

risks associated with rainbow trout, while noting that it does not provide a zero risk setting.1-6

Risk Management Measures

6.140 Some submissions expressed concern about the extent to which risk management practices were an appropriate mechanism for potential prevention and control of disease incursion, with accusations that AQIS has placed undue emphasis on its ability to put in place risk management practices that will reduce the likelihood

of those diseases:

AQIS has placed emphasis on their being able to minimise the risk of disease introduction with risk management strategies. IF A rejects this approach as irresponsible given all the circumstances, and not m the best interests of Australia.1 2 5 1 2 6 127

6 141 Given the concern expressed at the potential effects of disease on introduced and native salmonids in Australia, there was general agreement in submissions to the Committee that once diseases became established in Australia, they would be virtually impossible to eradicate.

125 ibid, p 293

126 AQIS, Evidence, RRAT, 11 November 1999, p 353

127 Institute o f Freshwater Anglers [NSW], Submission 30, p 4

168

6.142 The IRA states that those diseases that have been difficult or impossible to eradicate overseas such as ISA, BKD and whirling disease would be equally difficult to eradicate here in Australia.128

6.143 There is also doubt about the possibility of eradicating disease from hatchery sites. Mr David Bucke cited to the Committee an attempt in the UK to establish disease free trout farms. The five-year programme required that the farms be cleaned out, disinfected and stocked only with certified eggs. However, in the end Mr Bucke stated that 'all of them got one of the diseases - IPN, bacterial kidney disease or whirling disease'.129

6.144 Even containing disease outbreaks in Tasmania would be likely to be very difficult. Dr Brown raised the possibility that in Australian conditions where ambient summer water temperatures routinely exceed 19°C, there is every chance that vaccines used internationally would fail to work. This is because vaccines work by stimulating the immune system to respond to specific antigens, however in temperatures above the tolerance limits of farmed salmonids, immune functions are suppressed:130

Vaccination works by stimulating the immune system. However, salmonids in Australia have to deal with summer temperatures above their optimum range. This results in stress. This stress would be further exacerbated by concurrent diseases such as amoebic gill disease in Tasmania or white spot in Victoria, and the associated practices required to treat these diseases. Stress leads to immunosuppression, which in turn can lead to vaccine

breakdown.131 1 3 2

6.145 If vaccines were to be successfully used in Tasmania, their use in response to a widespread bacterial disease outbreak in Australia would seriously damage the clean, unpolluted image of Tasmanian salmon in the Japanese market. As stated by the Tasmanian Government:

Tasmania's 'clean green' image is our competitive advantage. If this image were tarnished, access to lucrative markets and high sales prices would be denied. Tasmania's environmental status has opened the doors around the world and if we can retain this image, it will continue to do so.1’2

Infectious salmon aneamia

6.146 The 1999 IRA states that the consequences of serious pathogens such as furunculosis and ISA becoming established amongst aquaculture populations here in

128 AQIS, Import Risk Analysis on Non-viable Salmonids andNon-Salmonid Marine Finfish, July 1999, p 39

129 Mr David Bucke, Evidence, RRAT, 22 November 1999, p 374

130 Ocean Wave Seafoods, Submission 55, p 3

131 Dr Alistair Brown, Ocean Wave Seafoods, Evidence, RRAT, 11 November 1999, p 327

132 Tasmanian Government, Submission 42, p 16

169

Australia 'would be at least as serious as those reported overseas'. -J However, various submissions argued that this assessment by AQIS still understates the consequences of transmission of disease agents to Tasmania. Professor Nigel Forteath stated:

I have absolutely many, many hours and days of experience from two countries, Scotland and Denmark, and from here. I can assure you that it is simply the husbandry practice that we put into place here, and the lack of furunculosis and IPNs, et cetera, that allows us to get through that.

6 147 Mr Innes Weir expressed similar sentiments. Prior to working in Tasmania, Mr Weir had worked in Scotland for Norsk Hydro GSP, where he managed the world's largest Atlantic salmon farm producing 2.7 million fish per annum. Mr Weir advised that he had previously dealt with outbreaks of sea lice, furunculosis outbreaks,

pancreas disease, IP A, and ISA, which was first isolated in Scotland on one of the farms of Norsk Hydro GSP. In his submission, Mr Weir stated.

The fact is that Tasmania is not the ideal environment for the farming of Atlantic Salmon. Farming is done here at the upper limits of temperature tolerance for these fish and is dependent for its success on freedom from disease and very intensive fish husbandry practices.

6.148 Mr Weir elaborated on his submission at public hearing, commenting specifically on the potential consequences of an outbreak of ISA locally. Mr Weir

stated:

ISA can remain virtually unnoticed for months. Mortalities happened with us back in Scotland when the water temperature changed in the spring, when the temperature increased quite suddenly over a small amount of time. In Tasmania the banding water temperature of that increase is substantia ly

larger than what it would be in Scotland. Therefore, the virus, whic is being carried within the population, will expand rapidly. It does not matter what stage the fish are at. Because the temperatures get so hot it would just decimate the industry.1 3 3 1 3 4 1 3 5 136

Furunculosis

6 149 In his submission, Mr Weir also commented on the impact of an outbreak of furunculosis disease in Tasmania. He indicated that if furunculosis disease were present in Tasmania, it would prohibit washing of the fish 'for risk of them dyirig^ However, failure to wash the fish would in turn expose them to death from AGD

133 AQIS, Import Risk Analysis on Non-viable Salmonids andNon-Salmonid Marine Finfish, July 1999, p 39

134 Professor Nigel Forteath, Omlas Pty Ltd, Evidence, RRAT, 5 October 1999, p 143

135 Huon Aquaculture Company Pty Ltd, Supplementary Submission 54. p 3

136 Huon Aquaculture Company Pty Ltd, Evidence, RRAT, 5 October 1999, p 161

170

during the summer months, since the only effective treatment of AGD is hand washing in freshwater.137

6.150 Similar concerns were expressed by Dr Alistair Brown:

... the presence of a novel disease such as fumnculosis, would make the procedure of controlling AGD impossibility. As an example, the combination of the concurrent stress of AGD causing gill damage, furunculosis causing a haemorrhagic septicaemia, low oxygen levels due to high water temperatures and nai've stock will undoubtedly result in mass mortality'.138

6.151 Dr Brown on the significance of the impact of furunculosis:

I believe that the impact of furunculosis, should it become established in either the trout industry in south-eastern Australia or in the salmon industry of Tasmania, would have a catastrophic level of significance as these are the national centres for these industries. We would also not be able to eradicate the disease from the environment.139

6.152 Dr Brown further noted that during the early 1990s, authorities in Scotland attempted to control furunculosis through the use of antibiotics, all-in, all-out stocking of farms, lower stocking densities and water based vaccines. However, he stated that 'during the summer months when the water temperature reached 15 degrees the disease was barely under control'. Rather, Dr Brown indicated that control of furunculosis in Europe only became successful following the introduction of oil based vaccines in the mid-nineties, but that such control in Australia would be compromised by the summer temperatures.140

6.153 In the light of these concerns, the Committee raised the possibility of testing the impact of various diseases on Australia's farmed salmonid aquaculture populations prior to any decision being taken on the importation of non-viable salmonid product

into Australia. At present, there is little research to provide guidance on this point, especially given the particular circumstances under which salmonids are farmed in Australia.

6.154 AQIS acknowledged these concerns in its supplementary submission to the Committee, but nevertheless reiterated that its risk management assessment took into account the costs associated with controlling or eradicating diseases, having regard to the relevant scientific factors:

137 Huon Aquaculture Company Pty Ltd, Supplementary Submission 54, p 4

138 Ocean Wave Seafoods, Submission 55, p 3

139 ibid, p 327

140 Dr Alistair Brown, Evidence, RRAT, 11 November 1999, pp 326-327

171

Diseases which would not be amenable to control or eradication or those which are amenable - at a significant cost - are considered as having a moderate or more serious impact and AQIS has imposed strict risk management measures, as warranted by the conclusions of the risk analysis,

in relation to these diseases. 141 1 4 2

Environmental concerns and the impact on native salmonids

6.155 In assessing the impact of disease agents on native salmonids, AQIS assumed that pathogens that infect a wide and non-specific range of hosts, including species that are related or similar to Australian species, would have consequences at least as severe as those reported overseas.

6.156 Various submissions to the Committee were again critical of the AQIS assessment for failing to test the impact of various diseases on native salmonids. For instance, Mr Richards from the Northern Tasmanian Fisheries Association noted in hearings that:

No detailed scientific study has been done by AQIS on susceptibility of native species, or on the consequences and impacts on their population and viability.143

6.157 In response to the suggestion that AQIS should conduct specific investigations of the susceptibility of native fish to exotic disease agents, AQIS advised the following:

a) Such testing would be unlikely to justify any tightening of quarantine policy because AQIS has generally assumed that native species would be at least as susceptible to disease as similar species overseas,

b) Such proposals are impractical because definitive answers to the questions raised by witnesses would require the importation of live exotic disease agents for use in tests on native fish under conditions that plausibly mimic the situation in the natural environment. To secure the biosecurity of

such experiments would require that such tests be conducted in high level containment facilities such as the Australian Animal Health Laboratory (AAHL) and approval to import such disease agents would be unlikely to be obtained.144

6.158 However, while AQIS argued against such a study, Dr Purser stated that it would not be difficult to conduct controlled tests of the reaction of native fish to

141 AQIS, Supplementary Submission 59, p 23

142 AQIS, Import Risk Analysis on Non-viable Salmonids and Non-Salmonid Marine Finfish, July 1999, p 42

143 Mr Peter Richards, Evidence, RRAT, 5 October 1999, p 128

144 AQIS, Supplementary Submission 59, p 3

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diseases, given that a number of disease testing protocols are established for such purposes.145 By contrast, while noting that native species could be 'incredibly susceptible' to introduced diseases, Professor Forteath stated that testing for diseases could be a 'very expensive and long-term business'.146

The Policy Implications of the IRA

6.159 Given the range of concerns expressed regarding aspects of the 1999 IRA, various submissions to the inquiry concluded that there is no scientific justification for reversing Australia's previous prohibition on the import of non-viable salmonid products. The submission from Tassal expressed concern that:

The IRA handles the exposure assessment for the relatively new disease Infectious Salmon Anaemia (ISA), considered to be the equivalent of Foot and Mouth Disease, in a similarly dismissive manner. Section 4.3.1.2 of Chapter 4 lists among key findings that:

- Flesh, even from carrier fish, may be highly contagious, - If introduced, the disease would be expected to spread readily but slowly, - The minimum invective dose for the ISA vims is not known. It then somehow concludes that the likely-hood of infection would be low.147

6.160 Further concerns were expressed by various parties at the perceived failure of AQIS to modify their IRA in response to new information.

6.161 The draft 1999 IRA noted that the intermediate host for the Myxobolus Cerebralis protozoan which causes whirling disease, the freshwater worm Tubifex tubifex, is not widely distributed in Australia:

T. tubifex is not common in Australia. Where it does occur, it is in association with bottom substrates that have high organic content, such as occur in grossly polluted streams...juvenile salmonids are more susceptible to infection than older fish.148

6.162 Subsequently, following consultation with Dr A Finder, the author of a key publication on oligochaetes in Australia, AQIS revised its assessment of the distribution of T. tubifex in Australia. AQIS acknowledge that T. tubifex is to be found widely in Australia, 'but is not at a sufficiently high prevalence to be described as common or ubiquitous'. In his final report, Dr Finder stated:

145 Dr John Purser, Evidence, RRAT, 5 October 1999, p 176

146 Professor George Forteath, Omlas Pty Ltd, Evidence, RRAT, 5 October 1999, p 143

147 Tassal Ltd, Submission 41, p 3

148 AQIS, Supplementary Submission 59, p 14

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T. tubifex has a widespread distribution in Australia, including in regions where there are rainbow trout; although T. tubifex is present at a much lower density than other oligochaetes.149

6.163 On this basis, AQIS was criticised for failing to revise its assessment of the risk posed by whirling disease following its acknowledgment that T. tubifex is found widely in Australia:

An example is the statement in relation to whirling disease, that the host tubifex worm was not common in Australia. The Victorian trout industry submitted information showing that this was not correct. The presence or otherwise of a host capable of transmitting the disease is a major factor in assessing risk, yet the correction of this factor did not result in a change in the AQIS assessment of the risks associated with whirling disease.1' 0

6.164 Given such concerns, the AQIS reversal of the position from that recommended by the 1996 IRA, that the prohibition on the importation of wild, ocean- caught Pacific salmon from North America 'remain in place' was of concern to

stakeholders. Nortas Aquaculture stated:

AQIS has decided to allow imports thereby reversing a decision of only three years ago, based on an Import Risk Assessment (IRA), to maintain the ban on uncooked imports. This reversal has not occurred because of a lessening of the disease threat (in fact the disease threats are greater now than three years ago) or because the consequences of disease introduction have reduced (the potential economic losses alone are now at least double

the levels of three years ago).151 1 5 2

6.165 The TSGA stated:

In 1996, a decision was made to effect that the importation of Canadian wild caught Pacific Salmon was too dangerous. ...Three years later, not only has this decision been overturned, but a decision has also been made to permit the importation of salmon from other areas and other sources (e.g. farmed

salmon) all of which represent a greater level of risk. In the meanwhile, there has been a major deterioration in salmonid health world wide.1 “

6.166 It was noted during hearings that the 1996 IRA did not include an assessment of ISA. The 1996 IRA indicated that ISA was present in Norway, but was 'still unknown in North America and the European Union'. By comparison, the 1999 IRA

149 AQIS, Import Risk Analysis on Non-viable Salmonids and Non-Salmonid Marine Finfish, July 1999, p 126

150 Tasmanian Salmonid Growers Association Ltd, Submission 46, p 7

151 Nortas Pty Ltd, Submission 37, p 3

152 Tasmanian Salmonid Growers Association Ltd, Submission 46, p 7

1 7 4

notes that ISA has since been identified in Canada and Scotland, and that it is a 'significant disease'.

6.167 At a public hearing on 22 November, Mr David Bucke was asked whether there had been any changes in the science of salmonid disease since the 1996 IRA which would justify the change in the AQIS position. Mr Bucke made the following

statements in reply:

I am aware of some changes that have occurred since 1995 and also since the Canadian reply to the 1995 AQIS report, which was in 1996, I believe. First of all, the disease ISA has been identified in Scotland, including the Shetlands, in 1998 and again in Canada in 1997. Bacterial kidney disease has been identified in Denmark in 1997. Pancreas disease, a vims disease of

salmonids, has been reported throughout western Europe, including Norway, and North America. Other diseases that are spreading or have been reported to be spreading include piscirickettsiosia, which has been reported in North America and Europe, but it is only still severe in Chile. There have been new vibrio species reported in Atlantic salmon, reported by Brian Austin at the 1999 European Association of Fish Pathology Conference.

Also, there are other things that seem to be happening now. In the case of VHS or viral haemorrhagic septicaemia, there are different vimses found in marine fish in European waters and nobody really knows whether these are vimlent for salmonids, so I think a lot of things are happening. It is still, I think, a dangerous thing to import.153

The Import of Non-viable Salmonid Product from New Zealand

6.168 The importation of non-viable salmonid product from New Zealand under the new 1999 AQIS protocols received particular attention during submissions. As noted in Chapter One, the new protocols do not require that New Zealand Pacific salmon entering Australia be processed beyond evisceration.

6.169 The New Zealand salmonid industry is generally regarded as free of most diseases affecting salmon, and thus comparable to the Tasmanian industry. The exception is the presence in New Zealand of whirling disease.

6.170 The supplementary submission from AQIS noted that the prevalence of whirling disease in New Zealand is very low. Since whirling disease was detected in New Zealand in 1966, clinical disease154 * has been reported on only two occasions, in rainbow trout in 1966 and 1980, and has never been reported in salmon. Surveillance

153 Mr David Bucke, Evidence, RRAT, 22 November 1999, p 366

154 Clinical disease differs from infection. Pacific salmon may be infected with whirling disease, but are unlikely to display the clinical symptoms. Rainbow trout are most likely to express the disease because they are more susceptible than the other types of salmonids.

175

and monitoring of export farms in 1992-1996 detected only one infected sockeye salmon in a total of 5 ,7 0 ο .15"

6.171 Nevertheless, various parties expressed concern during hearings at the importation of head-on Pacific salmon from New Zealand into Australia. Professor Forteath stated:

I find it extremely odd that originally the heads could come and the gills. Why7 It does cause problems. It should be quite clear to New Zealand that they have to be responsible too, whether they like it or not. We can go on playing statistics till the moon is made into cheese. The fact is that they do

have whirling disease there; they have not got rid of it. There are probably far more fish with it than we imagine, but it is just one of those things we have not had to worry about.1 6

6 172 Similarly, in response to the proposition that removing the head and gills would be 'a step in the right direction as far as risk is concerned', Dr Purser stated:

Yes, that is right. I do not see the relaxation of the New Zealand importation in allowing Australian fish with heads on as being in the right direction. ... should be in reverse. If anything, Australian fish should have their heads off to comply with the New Zealand fish coming in here with heads off.

6.173 Finally, Mr Orr from the Tasmanian Professional Trout Guides Association argued in relation to whirling disease:

The fact is that New Zealand have it - they have what is seen as a small amount; I do not know that you can class nine rivers as a small amount- and eventually it will move through their fisheries. It has been found m salmon. AQIS will tell you it was one fish tested in 5 ,000. Does than mean it

is two fish in 10,000 and four fish in 20,000? If it is, it is four fish too many.1"8

6.174 In response, AQIS reiterated that prohibiting the import of head-on salmon from New Zealand 'is not warranted on quarantine grounds', AQIS also argued that such a prohibition would necessitate under WTO regulations the imposition of far more restrictive policies on other non-viable fish products imported into Australia.

6.175 In subsequent hearings on 11 November, Dr Kahn restated that the prevalence of whirling disease in New Zealand remained very low, even though New Zealand authorities had done extensive testing. Consequently, she stated that the risks pose * 1 5 7 1 5 8

15 5 AQIS, Supplementary Submission 59, p 12

,56 Professor George Forteath, Omlas Pty Ltd, Evidence, RRAT, 5 October 1999, p 152

157 Dr John Purser, Evidence, RRAT, 5 October 1999, p 177

158 Mr Kenneth Orr, Tasmanian Professional Trout Guides Association, Evidence, RRAT, 5 October 1999,

p 124

176

by importation of wild Pacific Salmon from New Zealand, as opposed to rainbow trout or young fish generally, are 'vanishingly small'.159

6.176 Rather than seeking to prohibit the import of head-on Pacific salmon into Australia from New Zealand, AQIS made representations to the New Zealand Ministry of Agriculture and Forestry to permit the import of head-on Australian salmon into New Zealand. This permission was granted on 28 September 1999.160

159 AQIS, Evidence, RRAT, 11 November 1999, p 343

160 AQIS, Supplementary Submission 59. p 22

C H A PT E R SEVEN

C O N C L U S IO N S A N D R E C O M M E N D A T IO N S

Introduction

Conduct o f the Import Risk Analysis The Appropriate Level o f Protection Australia’s Membership o f the WTO and International Law

Introduction

7.1 Following the challenge in the WTO, Australia was required to amend its quarantine regulations or face retaliation by Canada. As noted earlier, a settlement between Canada and Australia was agreed on 17 May 2000. However, many industry and angling groups, along with the Tasmanian Government, still believe the

importation of fish under the current conditions carries substantial disease risk. The Committee shares the concern that any lowering of the standard of quarantine protection may have irreversible effects on human, animal or plant life and health or on the environment.

7.2 The conclusions of the revised Import Risk Analysis (IRA) Report have been strongly questioned in some sectors and supported in others. AQIS argues that the 1999 IRA and amended quarantine regulations gave Australia a strengthened quarantine regime, which underpins a conservative ATOP. While regulations for the

importation of many fish species were made more stringent, those for the importation of uncooked salmon products were required to be less import restrictive The consumer ready requirement, which was found by the WTO to be not supported by the IRA, has been replaced with an alternative method [see Appendix 3], while the

Commonwealth Government is required to continue to seek observance on the part of

Tasmania.

7.3 The Committee's inquiry ultimately focussed around three major areas.

a) The conduct of the import risk analysis - the procedures, the

methodology, science and conclusions;

b) Australia's ALOP; and

c) The conduct of the dispute within the WTO, including the litigation strategy undertaken by Australia, the interpretations put by AQIS and DFAT on the requirements of the relevant international agreements and the extent to which Australia's conduct met those requirements.

AQIS, Evidence, RRAT, 24 September 1999, p 22

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The Conduct o f the Import Risk Analysis

7.4 The Committee considers that the conduct of the 1999 IRA was basically sound. The WTO endorsed the IRA in its report released in February, 2000. However, there were significant deficiencies identified during the process, which included release of the draft 1995 IRA, which in the event must be considered to have been premature and not required under the terms of the SPS Agreement, and poor relations with stakeholders. The premature release of the IRA, which included AQIS' intended actions in relation to quarantine measures, strategically damaged Australia's case from the very early stages. The quality of consultation was also an issue.

The Appropriate Level o f Protection

7.5 The Committee is strongly of the opinion that the ATOP is too vague a concept; it is poorly articulated, with no real guidance as to what it is in reality, how it is determined and by which agencies it is determined. The confusion surrounding the ATOP guaranteed disaffection with the outcome of the 1999 IRA.

International Law

7.6 A significant concern to the Committee, which became apparent during the course of the inquiry, was what seems to be a progressive weakening of the standing of international law generally within government. This may be attributable partially to failure by government to fully understand the implications of Australia's increasing obligations under international agreements, including the growing significance of the WTO. The significance of the salmon dispute with Canada and its implications for Australia, not simply in terms of quarantine protection, but also in the wider arena of

international trade generally, highlights the importance of appropriate recognition at the highest level of the significance of WTO and other international obligations.

7.7 The Committee considers that there is a substantial national interest in having a quarantine regime which is framed to protect Australian agriculture and biodiversity. However, there is a general perception that trade issues take priority over the quarantine regime. Such concerns highlight the very real possibility that one outcome of challenges over quarantine standards could be the emergence of 'lowest common denominator' standards of quarantine protection. The outcome of the salmon dispute has fundamental implications for Australia's national interest, both in terms of its agricultural industries and biodiversity, and in terms of its interest in the fair and safe operation of the WTO system.

Conduct of the Import Risk Analysis

7.8 The major complaints made to the Committee in relation to the conduct of the IRA were:

a) The incomplete nature of the science and the consequential lack of justification for the conclusions, including the failure to consider adequately the consequences of any disease incursion;

179

b) The methodology of the IRA; and

c) The inadequacy of the consultation with stakeholders.

The Incomplete Nature of the Science

7.9 The genuine concerns of many stakeholders included the uncertainty of the science, the seriousness of the consequences if a disease outbreak were to occur and the difficulty or impossibility of any containment or eradication measures. Many submissions acknowledged that chances of a disease outbreak were slight, but

argued that, given the seriousness of the consequences, the ban on imports should remain until more was known about particular diseases. The Committee shares

this view.

7 10 It is the Committee's view that the science as set out in the IRA was an exhaustive analysis of current data. The concerns of the Committee relate primarily to the relative scarcity of data on fish diseases, transmission and virility, and to the failure of the OIE's Aquatic Animal Health Code, which only makes recommendations

in relation to listed diseases and does not include some diseases which are of serious concern to Australia, such as infectious salmon anaemia, a disease prevalent throughout the northern hemisphere.

7.11 The SPS Agreement allows members to have an agreed level of protection higher than international standards, even in the midst of scientific uncertainty, for members to take economic and environmental factors into account when determining the ALOP, and for members to require adequate proof that imports are sourced from

disease free areas. The onus is on individual WTO members to ensure that the quarantine protections afforded by the ALOP are maintained. How such protection is to be maintained in the face of the requirement that quarantine measures must be scientifically justifiable is uncertain. The Committee considers that the WTO

Agreements are ambiguous and potentially contradictory in the meaning and impact ot the two concepts.

7.12 The Committee is concerned that allowing salmon imports from areas known to be infected with disease may set a precedent for imports of other like products and that quarantine requirements for products such as meat and grain may e compromised.

7 13 The Committee notes that, for uncooked and untreated meat and grains, Australia requires imports to be sourced from disease free areas, but that this is not the case with fish or fish products. The Committee considers that there is no justification for the inconsistency in the different arrangements. However, the Committee

considers that it should be possible for the benchmark for salmon and like products to be raised rather than that for other products such as grain and beef to be lowered The Committee is concerned that the decision on salmon could set a precedent which may undermine the quarantine requirements in other areas.

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7.14 The Committee believes that it should be open to Australia, and other signatory states, to adopt the 'precautionary principle' and only allow imports where it is known that they are safe and there is no risk to native species. The adoption of this principle formally would advantage Australia in situations such as importation of fish, where there is a lack of substantial scientific information on some fish diseases.

Recommendation 1

7.15 That the Australian Government make application to the WTO for a variation to the WTO Rules to have disease free area status applied to fish and fish products that are untreated.

The Uncertainty o f the Science

7.16 The Committee is concerned about the uncertainty of the science and the relative immaturity of the WTO and AQIS processes in relation to the conduct of import risk analyses. Should evidence of risk emerge AQIS must be able to respond quickly and effectively. Australia must ensure that it maintains protection of native and farmed fisheries, pending review of any new information or increased risk factors.

Recommendation 2

7.17 That AQIS maintain an ongoing review of its import protocols and develop procedures that enable it to implement new import protocols as a response to any changes in perceived risk or any new scientific evidence which might arise.

The IRA Process - Consultation

7.18 The Committee notes the comments and concerns of stakeholders in this matter. Many of the stakeholders considered the consultation to be inadequate and insufficient - while they were informed for the most part, they were not able to participate in the process.

7.19 The Committee recognises that AQIS was required to conform to a timeframe not of its own choosing and which consequently necessitated a modified consultation process. The Committee notes that AQIS advised stakeholders about the modified process and continued to advise them of developments throughout the process. However, the Committee considers that AQIS was not sufficiently mindful of the concerns of the Tasmanian stakeholders and failed to ensure that they received appropriate information at the same time as other parties, including overseas parties.

7.20 The Committee considers that there is a distinction between consultation where views are actively canvassed and taken into account and consultation where stakeholders are merely informed of updated events and/or progress. The Committee notes the comments in the Naim report on consultation:

Import risk analysis should be conducted in a consultative framework, with agreed priorities and timetables. Consultation should be early and broad,

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with the inclusion of all relevant stakeholders. Early consultation should help to engender the partnership approach advocated by the Review Committee, and avoid the adversarial and confrontational approach that has characterised import risk analysis of some proposed imports in recent years.2 3

7.21 The Naim Committee noted that many submissions to the review stressed that early consultation and use of a partnership approach in considering import risk analyses would address many concerns about the process used. ' The Committee stated that early consultation with key stakeholders would help to obtain consensus on the following matters:

a) Priorities;

b) The need for a detailed risk analysis;

c) The timetable and deadlines;

d) The scope of the risk analysis and the methods employed; and

e) Risk management strategies to allow the proposed import without damaging Australia's animal and plant health status.4

7.22 This Committee also notes its comments in the Senate Rural and Regional Affairs and Transport [RRAT] Committee's 1996 report on the Australian Quarantine Inspection Service:

The Committee, however, was concerned that the standard practice of consulting industry after the development of an initial risk assessment might be unsatisfactory in two respects. First, the initial draft might contain inaccuracies which could be easily avoided by wider consultation during the development of the draft IRA. Secondly, the release of a draft document that has not involved prior input from the industry may lead to expensive and acrimonious disputes. Such a process seems to expose the credibility and

scientific expertise of AQIS to avoidable criticism.

The Committee considers that the disadvantages of the current consultative arrangements are illustrated by the debate over the draft IRA on uncooked Pacific salmon. For example, the Committee finds it difficult to understand

why AQIS did not inspect and have extensive discussions with the salmon industry in Tasmania. The Committee considers that this course of action would have been preferable to what has now become a protracted, acrimonious and seemingly inefficient process.5

2 Naim M et at, Australian Quarantine - A Shared Responsibility, DPIE, 1996, p 89

3 ibid, p 90

4 ibid, p 91

5 RRAT Committee, Australian Quarantine Inspection Service, May 1996, p 101

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7.23 Similar criticisms of AQIS consultation processes were made in the most recent IRA process. Stakeholders were particularly concerned at the form of consultation undertaken by AQIS, whereby they were informed about progress rather than being consulted for their input. This method of consultation effectively meant there was no other appropriate mechanism for consideration of stakeholders' input.

7.24 The RRAT Committee's 1996 report on AQIS made the following recommendation:

8.17 The Committee recommends that AQIS should have wide-ranging consultations with relevant industry groups before publishing a draft IRA. The Committee considers that such an approach will protect the integrity of AQIS' scientific reputation, reduce the likelihood of protracted and acrimonious debates, and ensure stable investment environments in the relevant industries.6

7.25 The Committee is concerned to ensure that domestic stakeholders are given appropriate consideration at an early stage. AQIS was very clear at public hearing on 22 May 2000, about the importance of ensuring that the transparency provisions of the SPS Agreement were met, but appeared to be less concerned with accommodating the interests of domestic stakeholders. A comprehensive consultation process must be pursued with domestic stakeholders prior to the development of any issues papers,

draft risk analysis documents or position papers.

Recommendation 3

7.26 The Committee affirms recommendation 8.17 in its 1996 report on AQIS and recommends that, prior to the publication of documentation, AQIS consult with stakeholders, incorporating the outcome of such consultations in any documentation.

Risk Assessment Panels and Committees

7.27 One of the mechanisms that could assist AQIS in improving its consultation arrangements and relations with stakeholders is domestic stakeholder representation on Risk Assessment Committees. The Committee notes the Naim discussion on the composition and use of such risk assessment panels. However, these panels primarily comprise members with experience and expertise in quarantine risk analysis plus members with scientific expertise relevant to the import access request under consideration.7 The Committee considers that, to further enhance the consultative approach, a Risk Assessment Committee for each import risk analysis should be established at an early stage of the risk analysis process. Such committees should comprise relevant domestic stakeholders nominated by their respective representative bodies.

6 ibid

7 Naim M et al, Australian Quarantine - A Shared Responsibility, DPIE, 1996, p 100

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7.28 The Committee considers that AQIS should not be solely responsible for the nomination of members of Risk Assessment Committees. The Committee considers that stakeholder representation on risk assessment panels could go some way to ensuring that their views are actively considered and incorporated into any risk

analysis process.

Recommendation 4 7.29 The Committee recommends that AQIS, in its review of the IRA processes and procedures, amend the procedures to allow for the direct involvement of domestic stakeholders through the establishment of a Risk

Assessment Committee for each import risk analysis.

The IRA Procedures and Publication o f Draft Documentation

7.30 The Committee notes the procedures set out in the IRA Handbook for consultation and distribution of draft and final documents. In particular, the Committee is concerned about the extent of public release of draft documents, including conclusions.

7 31 The Committee acknowledges the benefit of consultation and the contribution to better and more open decision making that appropriate consultation can bring. However, the Committee's view is that, if anything, the inclusion of extensive

publication of draft documentation in the consultation process undertaken by AQIS and as set out in the Handbook is unnecessarily broad. In particular, wide public release of the draft IRA, including indicative conclusions, was damaging to Australia s defence of the case when it came before the WTO in 1998. When it came time to

release a final IRA with different conclusions from those contained within the draft, Australia and AQIS had to justify the amended conclusions, when the evidence had not altered significantly from that presented in the draft IRA. Had the draft IRA conclusions not been publicly released, the Committee considers that the defence of

the case before the WTO would not have been so difficult.

7.32 The extensive publication of draft documents, while a formal part of the consultation process, is potentially damaging. The draft documents are provided not only to stakeholders, however that term may be defined, but are published in the AQIS Bulletin and on the Internet homepage. The Committee notes the advice from the

Department of Foreign Affairs and Trade, the statements in the WTO Handbook on transparency and AQIS' own admission that publication to this extent goes beyond the requirements of the SPS Agreement. The Committee considers that this degree o f publication was not required to meet Australia's international obligations, nor was it

in Australia's domestic and international interests.

7.33 The Committee is seriously concerned that the premature public release o f documents can positively prejudice Australia's position in WTO litigation. The Committee considers that the Government and its agencies must be mindful of the consequences of premature public release of such documents. It is the Committee's

firmly held view that draft risk analyses should not be publicly released, especially on

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the Internet site. Documentation accessible through the Internet should comprise Australia's rales, regulations and other documentation appropriate for international scrutiny.

WTO notification requirements

7.34 The Committee notes that the WTO process requires Australia to provide notification to the international community of a proposed measure and the mechanism for that notification, ie through inquiry points. The Committee further notes that the WTO only requires notification of a final measure at a stage which will allow interested parties to comment and have those comments taken into account. However, the determination of the final measure is a domestic process. This domestic process is developed by AQIS, which has the freedom to determine the extent to which it consults and precisely what is released into the public domain.

7.35 The processes set out in the Handbook were developed following the recommendations of the Naim Committee review. However, so far as the Committee can ascertain, AQIS neither sought nor received advice on the extent to which AQIS was required to consult under the terms of the SPS Agreement. It appears that, during the development of the procedures and Handbook , no consideration was given to the implications of the extent of the consultation processes developed. Legal advice on the responsibilities incurred under the SPS Agreement and the limits of those responsibilities may have provided AQIS with some appropriate parameters within which to develop their procedures.

7.36 The Committee notes the WTO's own Handbook on the transparency provisions of the SPS Agreement, which does not require publication of draft regulations or draft IRA's. The Committee is firmly of the view that the transparency requirements under the SPS Agreement are appropriately fulfilled through the issue of Animal Quarantine Policy Memoranda.

7.37 The Committee considers that failure to take legal advice while developing the procedures outlined in the Handbook detracted from Australia's case in the WTO, leading to the requirement to ease import restrictions on salmon.

7.38 The Committee considers that the IRA procedures and Handbook developed by AQIS must be amended to provide for domestic procedures which will not require the release of documentation potentially prejudicial to Australia's interests. In particular, the Handbook must be amended to reflect amended consultation arrangements, which, while in accordance with the letter and spirit of the international agreements to which Australia is a signatory, do not compromise or prejudice Australia's interests.

7.39 The concern is compounded by the relative immaturity of the WTO and the potential value as a precedent of all cases coming before that body to date. The WTO is more in the tradition of a court than many of the other international courts and tribunals. AQIS itself notes:

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From the outset the international status of the GATT went beyond that of a 'best endeavours' international treaty and was typified as a multilateral contract involving black letter law, compared to the more charter type language of most other international treaties.8

7.40 It would be highly unusual for parties before the WTO not to cite existing cases as precedents and for the presiding officers not to rely on such cases for their value as a precedent. The Committee considers that AQIS and DFAT should have been more aware of the potential consequences of their actions and should have been more cautious about the processes adopted by both departments, given the implications of challenges within the WTO.

Recommendation 5

7.41 That the Import Risk Analysis procedures and Handbook be amended to ensure that the consultation process takes place prior to the development and publication of documents such as issues papers and the like.

Recommendation 6

7.42 That draft Import Risk Analysis documents and other like

documentation not contain any proposed or indicative conclusions.

Recommendation 7

7.43 That:

a) The publication of documentation be limited to the requirements of our international obligations; and

b) Discussion papers or draft documents should have limited distribution on a strictly confidential basis and be restricted to domestic stakeholders and the seeking of expert opinion.

The Methodology o f the IRA

7.44 A significant factor in the development of the risk analysis is consideration of the relevant economic facts relating to risk reduction and risk management.9 Given that disputes under the SPS and TBT Agreements will require consideration of scientific evidence, most often in the form of a risk assessment, such risk assessments will become increasingly important in dispute settlement cases. It is necessary to

ensure that the methodology is rigorous.1 1 1

8 AQIS, Submission 17, p 10

9 ibid, p 13

David Robertson, 'Incorporating Risk Assessment in Trade Policy', in Industry Competitiveness, Trade and the Environment, Productivity Commission Workshop Papers, Melbourne, 27 November 1998, p 84 10

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7.45 The discussion of quantitative and qualitative risk assessment techniques is set out in Chapter Six. AQIS has continued to defend its use of qualitative risk analysis methodology, arguing that 'it is normal practice to conduct quarantine risk analyses on a qualitative rather than a quantitative basis, ie data are analysed and results presented in descriptive rather than numerical terms'.11 1 2 AQIS also uses the Naim Committee's comments in their 1996 report to further justify qualitative risk analysis, arguing that a good qualitative analysis is better than a poorly executed quantitative risk analysis. The Committee does not disagree with this stance. However, qualitative analysis should not stand alone or be absolute.

7.46 In answers to questions on notice, AQIS stated that the criticisms of the 1996 IRA were not based on Australia's failure to adopt a quantitative approach to risk analysis, but on its failure to meet SPS requirements because certain judgements, including the interpretation of some data and the conclusions of the analysis were not sufficiently supported by scientific evidence contained in the report.1*

7.47 The Committee notes the report of the WTO, released on 18 February 2000, in which that organisation affirmed the validity of the qualitative approach to risk analysis generally and in this particular instance, ie the 1999 IRA. The Committee therefore makes no criticism of the methodology of the 1999 IRA, but does offer the following comments on the methodology of risk analysis generally.

7.48 Quantitative risk analysis is an evolving technique. The Committee further notes the comments of the OIE, which suggest that qualitative risk analysis is preferred i) in situations not requiring mathematical modelling skills; ii) will be more commonly used for those diseases, where there are well developed internationally

agreed standards, where there is broad agreement concerning the likely risks, and iii) in areas of routine decision making. Quantitative risk assessment is a more objective tool.

7.49 The Committee recognises that:

a) The number of variables make quantitative risk analysis more difficult;

b) The methodology is developing.

7.50 The Committee acknowledges that no single method of import risk assessment is applicable in all situations - that different methods will be appropriate for different circumstances. Nevertheless, it is clear from the proceedings of the Panel of Experts that there was considerable criticism of AQIS' failure to undertake a more substantial quantitative analysis in the initial IRA. While the methodology of the

1999 IRA was ultimately endorsed by the WTO, the Committee feels that quantitative

11 AQIS, Supplementary Submission 59, (p 17

12 AQIS, Correspondence to Committee, 1 March 2000

187

risk analysis methodology should be used wherever possible and appropriate, in order that challenges in the WTO are minimised.

7.51 Where AQIS uses qualitative risk analysis methodology, AQIS must ensure that there is no ambiguity in the terminology used to describe risk factors. One of the difficulties with the salmon IRA was the lack of distinction between some of the terminology and language of the conclusions. Either AQIS must ensure that the

terminology is clear and unambiguous or it should attempt quantitative risk analysis to minimise the subjectivity of any conclusions.

7.52 The judgment on the quantitative/qualitative risk analysis was one for AQIS to make. However, the Committee considers that there would be less risk of a challenge were more use to be made of quantitative risk analysis methodology or if the terminology used was explicit and unambiguous.

Recommendation 8 7 . 5 3 That, wherever possible, AQIS support their qualitative analysis with

quantitative risk assessment techniques.

Key Centre fo r Risk Analysis

7.54 The Committee recognises the advantages membership of the WTO has for Australia as a trade dependent nation and one which is vulnerable to retaliation under the rules of the WTO. However, the Committee considers that Australia must ensure that the value of that membership is maximised without harm to Australia's domestic

industries, human, animal and plant life and health and the environment. Australia has a special quarantine status - this significant aspect of Australia as a nation must be protected.

7.55 The Naim Committee recognised the necessity for Australia to develop and maintain a leadership role in quarantine risk analysis. The Committee conceded that Australia had previously had a significant leadership role in this area internationally (particularly in animal health in the late 1980s and early 1990s), but had not

maintained that position in recent years. The Review further commented:

As a significant trading nation, it is in Australia’s interests to lead in this area and to influence international developments through organisations such as the OIE and the IPPC.13

7.56 The Naim Committee also noted the resources being committed to quarantine risk analysis by such countries as Canada, the US and New Zealand . In order to redress this situation, one of the recommendations of the Review was the establishment of a Key Centre for quarantine risk analysis to enhance Australia s

reputation in this field. The Review Committee stated.

13 Nairn M et al, Australian Quarantine - A Shared Responsibility, 1996, p 112

188

One way to re-kindle interest and establish a strong base for this work in Australia is to develop a Key Centre in quarantine-related risk analysis. Such a Centre would provide a base for training and research in risk analysis and related disciplines... Ideally, the Centre should be based at an Australian university, preferably in a relevant faculty or school (eg. of

epidemiology, public health, veterinary science or plant protection), and involve other agencies with expertise and experience in quarantine risk analysis.14 1 5

7.57 The Review Committee stated that the establishment of a Key Centre for quarantine-related risk analysis was 'essential to enhance Australia's intellectual leadership in this area' and recommended that 'the Government provide funds to establish a Key Centre for quarantine related risk analysis to enhance Australia as a world leader in this field'13

7.58 This Committee agrees that the establishment of a Key Centre is fundamental to the enhancement of both the conduct of risk analysis and as a means of participating in a leadership role in the international community in this area.

Recommendation 9

7.59 That, given the fundamental significance of risk analysis, the Government establish a Key Centre for quarantine related risk analysis, consistent with that proposed by the Nairn Committee in A u stra lia n Q u aran tin e - A S h a red R esp o n sib ility.

The Appropriate Level Of Protection

7.60 It is generally agreed that Australia takes a very conservative approach to its ALOP, whatever the specifics of that concept might be. However, it would appear that, while a member has considerable freedom to determine its ALOP, because the extent of quarantine measures which can be imposed is not unfettered, ie they are constrained by the requirements of the various international agreements entered into by Australia, the determination of the ALOP may be of little practical significance. In

effect, the ALOP is constrained by the requirement that quarantine measures must be scientifically justifiable. To this extent, the Committee considers that the ALOP can be rendered meaningless by the process.

7.61 This constraint is best demonstrated by quoting AQIS' submission, which states:

The obligations on members with regard to their SPS measures apply irrespective of the political processes involved in developing policies and applying operational procedures. Measures must be based on scientific

14 ibid

15 ibid, p i 13

189

principles and be applied only to the extent necessary to protect human, animal or plant life or health.16

7.62 A country can set its ALOP at whatever level it chooses, but a country cannot impose quarantine measures beyond what is scientifically justifiable 'to protect human, animal and plant life or health'.

7.63 The ALOP is further constrained by the 'consistency' requirement - a country must be consistent in its application of SPS measures and cannot apply such measures in a more stringent way in one area than in another like area. It is contrary to Article 5.5 to adopt a low risk policy in one field, while not doing so in a comparable field.

Thus, the import of whole marine finfish for bait for the tuna and cray fishing industries and of live goldfish for the pet industry must be subject to the same SPS measures as those applying to the importation of uncooked salmon products. The barrier cannot be set at one level for one species and at another for other like products.

7.64 The Committee notes that environmental considerations and the precautionary principle, discussed in Chapter Four, have not been sufficiently considered in the determination of appropriate quarantine measures. Credible ALOP assessment means that a range of important factors, including the ability of diseases to be contained or

eradicated, the potential impact on industries, the environment and biodiversity should be taken into account as WTO rules allow. The Committee affirms the view that the determination of the ALOP is a matter for government and no one agency should be required to explain or defend the ALOP. It is clear to the Committee that individual

agencies are either reluctant or unable to state authoritatively or explicitly on what basis the ALOP is determined or by whom.

7.65 The Committee acknowledges that the ALOP concept provides an overarching principle, which serves to indicate the conservative nature o f Australia's quarantine arrangements. The Committee considers that determination of the ALOP should be more explicit and must take account of environmental considerations and

the precautionary principle.

Recommendation 10

7.66 That the Commonwealth Government, in consultation with the community and with State and Territory governments, be responsible for the establishment of an appropriate level of protection for Australia.

Recommendation 11

7.67 That the ALOP be more explicit and include as part of its determination environmental factors and the application of the precautionary principle.

16 AQIS, Submission 17, p 14

190

Australia's Membership of the WTO and International Law

7.68 The Committee is mindful of Australia's vulnerability as an exporter and a small nation. It notes the comments made in many submissions in support of Australia's membership of the WTO and the net benefit of that membership. For example, the NFF stated:

...AQIS is obliged to make decisions on many import access requests that are politically sensitive - chicken meat, pork, apples and salmon. In all of these decisions there are both winners and losers. No matter what the decision, AQIS itself is in a no-win position.

Australia has an interest in other WTO Members accepting the judgements of their competent quarantine authorities. Australia must therefore apply the same objective mles to import requests as those against which its own import requests must be judged.

...Through the Cairns Group Australia punches above its weight in WTO negotiations. But because we are highly visible players on the international stage our opponents are ever ready to criticise us...There is not a level playing field for agricultural trade, but Australia has nothing to gain by not playing by the mles of international trade. We lack the resources to compete with larger countries in domestic and export subsidies.17

7.69 The Director of Quarantine, Mr Paul Hickey, affirmed the importance to Australia of its membership of the WTO, and as a signatory to the SPS Agreement in particular, at public hearing:

The dominant view that the SPS agreement is bad news for Australia must be dispelled. In 1998-99 AQIS achieved 44 new commodity/market combinations for our exports. It protected 103 markets from closure or dismption in the face of disease or processing events in Australia. In all of these cases, the disciplines of the SPS agreement are the leverage used by AQIS in its successful negotiations. 18

7.70 It was emphasised that the dispute settlement mechanism at the heart of the WTO system reduces the scope for unilateral action by powerful nations, thereby guaranteeing fair trade:19

Like all WTO Member governments, the Australian Government operates at the interface of a domestic political arena and the international political arena. The domestic pressures to reject an objectively reasonable dispute settlement decision may be great. It is understandable that some domestic constituencies want to protect Australian agriculture by a 'zero-risk' approach to imports, while strongly promoting exports. The need to address

17 National Farmers Federation, Submission 33, p 3-4

18 AQIS, Evidence, RRAT, 24 September 1999, p 24

19 National Farmers Federation, Submission 33, p 1

191

this impossibility was recommended by Professor Malcolm Naim in the 1996 Report of the Australian Quarantine Review Committee.20

7.71 It is noted that the RRAT Committee's 1996 Report on AQIS also affirmed that 'no-risk' quarantine policy 'is not, and never has been, a viable quarantine policy option'."1

International Law and the Conduct o f the Case in the WTO

7.72 The Committee's major concerns, so far as international law and litigation are concerned, relate to:

a) The significance attached by successive governments over the last two decades to international law and litigation in international bodies such as the WTO;

b) The conduct of the salmon case in the WTO; and

c) The availability and utilisation of legal expertise within the Australian Government.

7.73 The world trade arena is one of increasing political and economic importance. However, the Committee is concerned about the failure to appreciate the expanding significance of international law. The Committee is particularly concerned that there is no single specialist office of international law with overriding responsibility for dealing with international legal matters. The Committee considers that the quantum and quality of resources currently devoted to international law and for the conduct of litigation in international courts is inadequate.

7.74 The Committee notes and has referred previously to the increasingly 'legalistic nature' of the WTO compared with other international courts and tribunals. The Committee considers that Australia must take litigation before this body far more

seriously, given the consequences for Australian trade interests. It is the Committee's view that a whole of government approach is required.

7.75 The Committee questions the role of DFAT as the lead agency in WTO litigation matters. This role appears to stem from the historical responsibility of DFAT, and previously the Department of Trade, for the GATT negotiations. The Committee notes the advice from DFAT to the effect that legal resources recently have been enhanced within the Branch.22 However, there was no indication in that advice of the specialist skills the new recruits to the area had - whether they were specialist advocates or generalist lawyers. The Committee considers that

20 ibid, p 3

21 RRAT, Australian Quarantine and Inspection Service, 1996, p 65

22 DFAT, Correspondence to Committee, 28 February 2000

192

responsibility for the conduct of litigation and international law generally should be re-examined by Government.

7.76 The Committee is also concerned about the role the Office of International Law within the Attorney-General's Department has played in this decade. The Committee notes that within the Attorney-General's Department, there was previously an international advisings area, which had responsibility for the gamut of international law advisings. While there is still expertise resident within the Attorney-General's Department, it appears that that expertise is not made available unless requested from a 'client' agency. The difficulty with this arrangement is that, under the current tied arrangements there is no one agency with responsibility for the conduct of international litigation and the accountability that goes with that responsibility.

7.77 In particular, the Committee considers that it is in Australia's interests to ensure that legal input is an essential part of any negotiation or policy development process. The Committee recognises the inherent tension between the trade negotiation and diplomatic roles of the Department of Foreign Affairs and Trade and that of

litigator before international courts and tribunals, albeit trade courts. For this reason, the Committee considers that an office responsible for the provision of international legal advice and the conduct of litigation in the international arena should be a discrete entity, reporting direct to the responsible Minister and able to bring an independent opinion to any matter. However, the Committee also recognises the advantages of being closely integrated with the Department of Foreign Affairs and Trade.

7.78 Notwithstanding any augmentation of DFAT resources, it is the Committee's strongly held view that the conduct of litigation in the WTO requires specialist expert litigation skills, which do not appear to be present in DFAT. Nor is the Office of International Law sufficiently resourced to adequately fulfil the function. The Committee notes the comment of the officer from the Office of International Law, when he noted that additional legal resources would be required to enhance service provision.2'

7.79 The current arrangements under the Administrative Orders present another problem. International law is a tied arrangement, whereby the international law function is the joint responsibility of DFAT and the Attorney-General's Department, with neither agency having the primary responsibility for international law. The Committee is also concerned at the current policy within the Office of International Law, which requires that a client agency approach the Office before that Office can become involved in the conduct of litigation. The Committee is concerned that the

current administrative arrangements are not sufficiently prescriptive to ensure that the responsibility and accountability for international litigation is vested in the appropriate agency. 2 3

23 Attorney General’s Department, RRAT, Evidence, 18 February 2000, p 391

193

7.80 The international law function is broader than merely the conduct of litigation. Any responsible agency must be involved at an earlier point in time than the point of dispute. The Committee notes the establishment of the Disputes Investigation and Enforcement Unit at the domestic level and commends the Government for its

initiative in setting up such a body. However, the Committee remains concerned that insufficient regard has been paid to the international law function.

An International Legal Adviser

7.81 The Committee considers that it would be advantageous to establish an international legal adviser's office to provide a mechanism for more effective international legal outcomes for Australia. The first objective of international legal advising should be either to avoid disputes which require litigation or resolve such disputes at a very early stage. The Committee emphasises that such an office must be part of an integrated approach to the provision of international legal advice to the

government. Such advice should encompass the following:

a) Negotiation of new treaties;

b) Establishment of international bodies;

c) Membership of international legal organisations;

d) Negotiations on the interpretation and application of treaties; and

e) Dispute settlement which will include not only negotiations in respect of an issue but also the possibility of conciliation, mediation, arbitration or finally litigation.

7.82 The Committee discussed the location of the Office and considered three possibilities:

a) Attorney-General's Department;

b) The Department of Foreign Affairs and Trade; and

c) The Department of Prime Minister and Cabinet.

7.83 The Attorney-General's Department is responsible for the provision of legal advice to the government. The Department is required to provide high level legal advice in a wide-ranging number of areas including specialised areas such as constitutional law and international law.

7.84 The Department of Foreign Affairs and Trade is responsible for protecting and advancing Australia's international interests through its dealings with other governments and international organisations.

7.85 The Department of Prime Minister and Cabinet was established to deal with the following principal matters:

194

a) Co-ordination of government administration;

b) Assistance to Cabinet and its committees;

c) Policy advice and administrative support to the Prime Minister;

d) Inter-governmental relations and communications with state and territory governments;

e) Status of women;

f) Aboriginal and Torres Strait Islander affairs; and

g) Government ceremonial and hospitality.

7.86 In the light of the responsibilities listed above, it can be seen that, currently, the departments with responsibilities most aligned with the provision of International legal advice are Attorney-General's and the Department of Foreign Affairs and Trade.

7.87 The Committee reiterates that a whole of government approach to the conduct of international litigation is required. The Committee considers that the first step in providing a more effective system is the creation of an International Legal Adviser's Office. The Committee understands that such an office exists within the United States Department of State. The responsibilities of the Office must encompass the matters listed in paragraph 7.81 above.

7.88 The Committee also concludes that the Office should be established as a statutory authority, albeit located within the Attorney-General's Department and reporting direct to the Attorney-General. The Office should include within it an office of International Litigation. The Committee considers that the establishment arrangements of the Australian Safeguards and Non-Proliferation Office provides an appropriate model.24 The Director-General of ASNO is a statutory office, reporting directly to the Minister for Foreign Affairs and Trade, appointed to 'ensure the independence and integrity of Australia's domestic and bilateral safeguards functions'.25

7.89 For administrative effectiveness the Committee considers that there should be an outposted senior officer from the International Legal Adviser's Office within every division of DFAT, in order to ensure the provision of specialised international legal advice at a very early stage and the consideration of any matter which had the propensity to lead to discussions of an international legal nature or which may impose international legal obligations on Australia. It may also be appropriate for officers to be seconded to AFFA and, in particular, AQIS. The Committee further considers that,

like the Key Centre proposal, the International Legal Adviser's Office will be able to

24 See Appendix 7

25 ASNO Annual Report 1998-99, p 7

195

provide the basis for Australian international lawyers to be placed in international legal organisations of interest to Australia.

Recommendation 12 7.90 That an International Legal Adviser's Office be established to provide high quality international legal advice from the early stages of Australia's relationships with other countries and international organisations.

Recommendation 13 7.91 That the International Legal Adviser's Office be established as a statutory authority within the Attorney-General's Department.

Recommendation 14 7.92 That the Head of that Office, the Legal Adviser, be appointed at the highest level, reporting to the Attorney-General and to the Prime Minister.

Evaluation o f International Arrangements

7.93 The Committee is concerned about Australia's performance to date in the WTO. The Committee notes the aggressive nature of the challenges undertaken by Canada and the United States and considers that Australia may be able to benefit from an examination of the practices and procedures adopted by such countries in their

pursuit of claims within the WTO. The Committee also notes that New Zealand has been proactive in bringing cases before the WTO.

7 94 The Committee believes that Australia failed to fully utilise all the legal expertise available to it within Government in responding to the WTO proceedings, nor did it utilise sufficiently outside expertise. As a consequence, Australia appeared before the WTO ill-equipped and poorly prepared than it might have been.

Recommendation 15 7.95 That a thorough evaluation be undertaken of the approach to and conduct of international litigation by such countries as Canada and the United States, especially in disputes under agreements governed by the WTO. The

investigation could be via an independent agent/adviser or a parliamentary committee.

Senator Winston Crane Chairman

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A PPEN D IX ONE

SUBMISSIONS

1 Virus Consultants International

QLD

2 Mr R W Gee

NSW

3 Mr M Morgan

TAS

4 Sweet Water Pty Ltd

VIC

5 Queensland Sugar Corporation

QLD

6 Sunfish Queensland Inc

QLD

7 NSW Fishing Clubs’ Association

NSW

8 Freshwater Anglers Council of Tasmania TAS

9 Launceston Angling Club

TAS

10 Launceston Field Naturalists Club

TAS

11 Southern Tasmanian Licensed Anglers Association Inc TAS

12 The Tasmanian Professional Trout Guides Association TAS

13 Emeritus Professor Nigel Forteath

TAS

14 Cattle Council of Australia

ACT

15 Mr Gary Wing, President Ulverstone Anglers Club TAS

16 Ulverstone Anglers Club

TAS

17 Australian Quarantine and Inspection Service ACT

18 Management Strategy and Innovation Pty Ltd QLD

19 Huon Aquaculture Company Pty Ltd TAS

20 National Council of Women of Australia VIC

21 Department of Foreign Affairs and Trade ACT

21A Department of Foreign Affairs and Trade ACT

198

22 Dr Bryan Pratt ACT

23 Devonport Branch - North Western Fisheries Association TAS

24 Public Meeting at Lilydale Community Hall TAS

25 Recfish Australia ACT

26 The Liberal Party of Australia - Tasmania TAS

27 South Atlantic Salmon SA

28 Dr John Purser, University of Tasmania TAS

29 Launceston Chamber of Commerce TAS

30 Institute of Freshwater Anglers (NSW) Inc NSW

30A Institute of Freshwater Anglers (NSW) Inc NSW

31 Australian Freshwater Fisherman’s Assembly VIC

32 Victorian Trout Association VIC

32 A Victorian Trout Association VIC

33 National Farmers’ Federation ACT

34 Pet Industry Joint Advisory Council of Australia Ltd NSW

35 Australian Alliance QLD

36 The Australian Fishing Tackle Association Inc NSW

37 Nortas Pty Ltd TAS

38 Ms Fran Bailey MP, on behalf of constituents VIC

39 South Australian Recreational Fishing Advisory Council Inc SA

40 Northern Tasmanian Fisheries Association TAS

41 Tassal Limited TAS

42 Tasmanian Government TAS

43 Tasmanian Ornamental Fish Farm TAS

199

44

45

46

46A

47

48

49

50

51

52

53

54

55

56

57

58

58A

59

60

61

62

63

64

65

66

VRFish

Australian National Sportfishing Association Ltd

Tasmanian Salmonid Growers Association Limited

Tasmanian Salmonid Growers Association Limited

Australian Egg Industry Association Inc

Department of Agriculture, Fisheries and Forestry - Australia

The Australian Veterinary Association Ltd

Dr Mary Maxwell, PhD

Environment Australia

Pork Council of Australia Limited

The Hon Paul Harriss MLC

Huon Aquaculture Company Pty Ltd

Ocean Wave Seafoods

Native Fish Australia

Pet Industry Joint Advisory Council of Australia Ltd

Tuna Boat Owners Association of Australia Inc

Tuna Boat Owners Association of Australia Inc

AQIS

Western Australian Fishing Industry Council Inc

NSW Fisheries

Australian Quarantine Inspection Service

Australian Chicken Meat Federation

NSW Fisheries

Mr Michael Tyler, University of Adelaide

Department of Primary Industry & Fisheries

VIC

QLD

TAS

TAS

NSW

ACT

NSW

SA

ACT

ACT

TAS

TAS

VIC

NSW

NSW

SA

SA

ACT

WA

NSW

ACT

NSW

NSW

SA

NT

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A PP E N D IX TW O

LIST OF WITNESSES

CANBERRA. Friday, 24 September 1999

Department of Agriculture, Fisheries and Forestry — Australia

Dr Simon Hearn, First Assistant Secretary, Portfolio Policy & International Division

Dr Dennis Gebbie, Assistant Secretary, International Branch

Mr Dominic Pyne, Director, WTO & Multilateral Trade Section

Dr Mike Nunn, Assistant Secretary, Animal Health Science & Emergency Management Branch

Dr Dean Merrilees, Acting Assistant Secretary, Animal Health & Welfare Branch

Mr Anthony Cox, Director, Fisheries Economics Section

Australian Quarantine and Inspection Service

Mr Paul Hickey, Executive Director

Mr Digby Gascoine, Director, Policy and International Division

Dr Sarah Kahn, Director, Fish Quarantine Policy Unit

Dr Peter Beers, Senior Principal Veterinary Officer, Fish Quarantine Policy Unit Dr David Wilson, Assistant Director, Quarantine Development Unit

Mr Greg O’Connor, Assistant Director, Compliance, Legal and Evaluation Branch

Ms Mary Fisher, Consultant/legal advisor

Department of Foreign Affairs and Trade

Mr Stephen Deady, Assistant Secretary, World Trade Organisation Branch

Ms Joan Hird, Director, World Trade Organisation Branch

The Australian Fishing Tackle Association Inc

Mr Doug Joyner, Executive Officer

Dr Julian Peppered, Specialist consultant in Recreational Fisheries

202

Mr Geoffrey Brennan, Senior Consultant, Canberra Liaison Pty Ltd

Institute of Fresh Water Anglers

Mr Rodney Tonkin, Secretary

Dr David Jones, Scientific Officer

Recfish Australia

Mr David Howes, Member of Executive

Mr Ray Walker, Environmental Officer

Pet Industry Joint Advisory Council of Australia Ltd

Mr Jared Patrick, Vice President and Chairman of Live Fish Subcommittee

HOBART, Tuesday, 5 October 1999

Tasmanian Professional Trout Guides Association

Mr Roger Butler, Vice President

Mr Ken Orr

Freshwater Anglers Council of Tasmania

Mr Peter Richards, President

Mr Harvey Taylor, Marketing Manager

Emeritus Professor Nigel Forteath (private capacity)

Huon Aquaculture Company Pty Ltd

Mr Peter Bender, Managing Director

Mr Innes Weir, Stock Manager

Ms Frances Bender, Director and Administration Manager

Dr John Purser, University of Tasmania (private capacity)

The Hon Sue Napier MHA (Member for Bass)

203

Nortas Pty Ltd

Mr Steven John, Finance Director

Mr Richard Doedens, Managing Director

Mr Guy Westbrook, Group Operations Manager

Tasmanian Salmonid Growers Association Ltd

Mr Tony Smithies, Executive Officer

Mr Pheroze Jungalwalla, Manager, Research & Development, Tassal Ltd

Tasmanian Government

Mr David Llewellyn, MHA, Minister for Primary Industries, Water & Environment

Mr Kim Evans, Secretary, Department of Primary Industries, Water & Environment

Mr Roger Hall, Senior Management Officer, Department of Primary Industries, Water & Environment

Mr Rod Andrewartha, Leader, Disease Management, Department of Primary Industries, Water & Environment

The Hon Paul Harriss MLC, Member for Huon

Tasmanian Conservation Trust

Mr Alistair Graham

Mr Colin Dyke (private capacity)

Mr Terence Byard (private capacity)

Australian Quarantine and Inspection Service

Mr Digby Gascoine, Director, Policy and International Division

Dr Sarah Kahn, Director, Fish Quarantine Policy Unit

204

CANBERRA, Thursday, 11 November 1999

Victorian Recreational Fishing (VR Fish)

Mr Patrick Washington, Chairman

Tuna Boat Owners’ Association of Australia Inc

Mr Brian Jeffriess, President

Victorian Trout Association

Mr Edward Meggitt, President

Mr Miles Rogers, Vice-President

Department of Foreign Affairs and Trade

Mr Stephen Deady, Assistant Secretary, World Trade Organisation Branch

Ms Joan Hird, Director, World Trade Organisation Branch

Mr Alistair Brown, Fish Veterinarian

Australian Quarantine and Inspection Service

Mr Digby Gascoine, Director, Policy and International Division

Dr Sarah Kahn, Director, Fish Quarantine Policy Unit

Dr Peter Beers, Senior Principal Veterinary Officer, Fish Quarantine Policy Unit

Mr Greg O’Connor, Assistant Director, Compliance, Legal and Evaluation Branch

CANBERRA. Friday, 18 February 2000

Australian Quarantine and Inspection Service

Mr Paul Flickey, Executive Director

Mr Digby Gascoine, Director, Policy and International Division

Dr Sarah Kahn, Director, Fish Quarantine Policy Unit

Ms Vanessa Findlay, Principal Scientific Officer

Mr Greg O’Connor, Assistant Director, Compliance, Legal and Evaluation Branch

205

Attorney-General’s Department

Mr Mark Zanker, Assistant Secretary, Officer of International Law

Department of Foreign Affairs and Trade

Mr Peter Hussin, First Assistant Secretary, Trade Negotiations and Organisations Division

Mr Richard Rowe, Assistant Secretary, International Legal Division

Ms Joan Hird, Director, World Trade Organisation Branch

...

V * J 1 '

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A P P E N D IX THREE

MINISTERIAL STATEMENT 17 MAY 2000

Trade News

209

Mark Vaile - Trade Minister

Deputy Leader of the National Party

Wednesday 17 May, 2000

MVT4712000

AUSTRALIA NEGOTIATES SETTLEMENT WITH CANADA ON SALMON

Minister for Trade, Mark Vaile, today announced that Australia and Canada had reached a mutually satisfactory settlement of Canada's WTO complaint on salmon. The agreement is scheduled to enter into force on 1 June.

"The settlement with Canada puts an end to this long-running dispute and has been achieved without any trade off of our conservative approach to quarantine", Mr Vaile said. "There are no changes to ten of the eleven measures above the international standard adopted by Australia last year.

In the case of the consumer ready provisions where the WTO found inconsistencies, we have found an alternative method to deliver the same high level of quarantine protection. For instance the requirement for product weighing more than 450 grams to be in skinless form has been replaced by other stringent

controls on processing including detailed packaging and certification requirements and legally enforceable compliance conditions for processors , Mr Vaile said.

"Canada has also accepted an undertaking from Australia that the Commonwealth will continue to seek observance on the part of Tasmania. Discussions will continue with the Tasmanian Government and I call on them to act responsibly in

terms of their commitment under the Commonwealth/State MOU on quarantine to take corrective action when quarantine measures have been found to be WTO-inconsistent."

"If the Tasmanian Government needs any reminding that the WTO system benefits Australia, it should note that this week Tasmania will send its second consignment of red fuji apples to Japan, a market opened up by the Commonwealth through the WTO system".

Mr Vaile said that the settlement with Canada would remove the prospect ot possible retaliation by Canada in other export sectors.

“I am delighted that the threat of retaliatory action has been removed. It was vital in reaching this settlement that innocent Australian exporters did not get caught in

210

the crossfire. Canada is an important export market for Australia valued at $1.2 billion in 1999 and it would have done no-one any good to get caught up in an unnecessary trade war.

I am confident that the settlement provides an excellent outcome for all stakeholders in Australia thereby putting an end to this long-running dispute."

** Text of bilateral settlement is attached.

Contact: Bruce Mills 0418 273 475

Parliament House, Canberra 2600 Ph. +612 6277 7420 Fx: +612 6273 4128

211

Text of Bilateral Settlement between Australia and Canada

As a result of bilateral consultations between our two governments, I am writing to confirm that the following understanding has been reached on the issue of fresh, chilled or frozen salmon product.

The requirement" that fresh, chilled or frozen salmon product imported into Australia be released from quarantine only if it is in consumer-ready form as defined in AQPM 1999169 will no longer apply. The consumer-ready specifications would be replaced with the following requirements.

1 Imported salmon product must be in at least head-off, gilled and gutted

form.

2. Holders of import permits would be required to provide a declaration in relation to each imported consignment of salmon product that such product will only be sold for commercial processing at AQIS approved premises, for processing for retail sale or for direct retail sale. Alternatively holders of permits

could enter into compliance agreements with AQIS that provide for importation under the same conditions.

The existing condition that commercial processors must have a compliance agreement with AQIS would remain in place. A compliance agreement would also be required for premises processing imported product for retail sale where such processing would lead to the generation of volumes of waste comparable with that

produced in commercial processing (ie the processing of more than . 0 g o imported salmon product daily in a single location).

3 Commercial processing is defined as the processing undertaken at a commercial premises that produces product for sale at another premises or location.

Processing fo r retail sale is defined as the processing undertaken at the premises (eg Practices that present an unacceptable risk are the sale of fresh, chilled r frozen scraps of imported salmon to fishing bait stores and commercial ventures based on feeding mild birds/fish on scraps of imported salmon, fish mongers, restauran , hotel or institution) where the resulting product will be directly sold to or used by

consumers.

Direct retail sale is defined as the sale to or use by consumers at a premises (eg supermarket, delicatessen, hotel, restaurant or institution) where the product is marketed or used in the same form (ie without processing) in which it was imported into Australia.

These provisions apply to salmon product other than from New Zealand.

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4. AQIS approval for commercial processing would be granted for premises that dispose of wastes via municipal and commercial systems for the disposal of sewage and solid wastes provided that such disposal does not present an unacceptable risk to significant salmonid populations'2 or create significant new exposure pathways'3.

5. AQIS approval, under the same provisions as in paragraph 4 above, will also be required for processing for retail sale, where such processing would lead to the generation of volumes of waste comparable with that produced in commercial processing (ie the processing of more than 300kg of imported salmon product daily

in a single location).

6. Imported salmon product should be packaged in a manner that is

appropriate to its intended end use. Other equivalent arrangements would be considered on a case by case basis taking into account end user requirements.

For processing for retail sale and direct retail sale:-Head-off, gilled and gutted fish (tranks) may be individually packaged in plastic sleeves. Alternatively multiple trunks for retail sale may be packaged in a plastic bag within a plastic tote, cardboard or polystyrene container with maximum weight

601b (27.3kg).

Pieces such as fillets and cutlets that are fresh may be individually packaged in plastic sleeves. Alternatively, they may be loose packed within a plastic bag in a plastic tote, cardboard or polystyrene container with maximum weight 601b (27.3kg).

If frozen, portions and pieces may be individually packaged in plastic sleeves. Alternatively, they may be individually quick frozen (IQF) or vacuum packed in plastic or coated with frozen brine (glaze) and packed within a plastic bag in a plastic tote, cardboard or polystyrene container with maximum weight 601b

(27.3kg).

For commercial processing:

Product of head-off, gilled and gutted form or further processed may be packed in plastic totes, cardboard or polystyrene containers with no weight restrictions.

Australia will adhere to its obligations under Article 13 of the SPS Agreement, including formulating and implementing positive measures and mechanisms in support of the observance of the provisions of the SPS Agreement by other than central government bodies, including Tasmania.

2 As provided in the IRA, approval will not be given to processing plants within the Delatite and

Murrindindi Shires in Victoria, the Snowy Mountains region of New South Wales and all of Tasmania.

3 Practices that present an unacceptable risk are the sale o f fresh, chilled r frozen scraps o f imported salmon

to fishing bait stores and commercial ventures based on feeding mild birds/fish on scraps of imported salmon.

2 1 3

Australia will implement the amendments to the quarantine policies on fresh, chilled or frozen salmon product, as specified above, by 1 June 2000. In this regard, upon a request of Canada, Australia will provide copies of the relevant regulations and other materials pertaining to the new quarantine policies.

Canada and Australia will notify the relevant bodies of the WTO that they have reached a mutually satisfactory solution upon fulfilment of the undertakings set out in this understanding with regard to fresh, chilled or frozen salmon product.

Although the scope of this bilateral agreement is limited to fresh, chilled or frozen salmon product covered by Canada's WTO complaint, the same arrangements will apply to imports of other fresh, chilled or frozen salmonids.

In accordance with the approach identified in AQIS 1999 report on non-viable salmonids, i.e. equivalent approaches to managing risk may be agreed generally or on a case-by-case basis, Australia and Canada are continuing discussion regarding existing certification requirements in relation to the disease ISA.

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APPENDIX 4

WTO CHRONOLOGY OF EVENTS

Chronology of events relating to the Fish Import Risk Analyses and the World Trade Organisation (WTO) process (Attachment B)

Jun 1975 Import restrictions place on salmonid product

1975-1993 Numerous exchanges with Canada re salmon restrictions

1989 First discussion paper on risk associated with the

importation of wild, ocean-caught Pacific salmon released for comment by AQIS

1992 AQIS commissioned the comprehensive study Aquatic Animal Quarantine in Australia

Jan 1994 Canada requests consultations in the GATT

Mar 1994 Consultations held with Canada in the GATT

Jul-Aug 1994 AQIS sends technical delegation to Canada and USA (included industry member)

Dec 1994 Preliminary draft import risk analysis provided to

Tasmanian Salmonid Growers Association, Canada, USA and CSIRO for technical review

May 1995 Draft IRA released for public comment draft

recommendation that consumer-ready product be permitted entry

May 1995 - Numerous meetings and exchanges with Tasmanian industry and Government representatives Dec 1996

Oct 1995 Canada request WTO consultations

Nov 1995 WTO consultations held with Canada

Nov 1995 USA request WTO consultations

Dec 1995 WTO consultations held with USA

Apr-May 1996 Scientific peer review, including industry participation, of draft final revised IRA

May 1996 Revised draft IRA released for public comment

217

Nov 1996 Scientific peer review, including industry participation, of draft final IRA

20 Dec 1996 Decision on salmon announced existing ban on uncooked salmon maintained

Jan 1997 Final Report circulated

Mar 1997 Canada requests WTO dispute settlement panel

Apr 1997 Panel established

June 1998 Panel finds against Australia on various grounds

Jul 1998 Australia and Canada appeal Panel’s findings

Oct 1998 Appellate Body finds against Australia (though upholding some of Australia and Canada’s appeals)

6 Nov 1998 WTO DSB adopts Panel findings as modified by the Appellate Body

24 Dec 1999 Canada asks for binding arbitration on period Australia will be allowed to implement

23 Feb 1999 Arbitration hands down decision giving Australia until 6 July to implement Appellate Body findings

Mar 1999 AQIS announces its intention to conduct import risk analyses on salmonids, non-viable non-salmonid marine finfish and ornamental fish

April 1999 AQIS convenes meeting of key stakeholders

Apr-Jul 1999 Sections of draft risk analyses published for comment progressively on AQIS’s web-site

May-Jun 1999 Series of public stakeholder meetings in NSW, Victoria, Tasmania, SA and WA

4 Jul 1999 AQIS announces deferral of decision to 19 July 1999

16 Jul 1999 AQIS convenes meeting of key stakeholders

19 Jul 1999 Announcement of AQIS’ decision

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APPENDIX 5

ANIMAL QUARANTINE POLICY MEMORANDUM 1999/51

AQIS A U S T R A L IA N Q U A R A N T IN E A N D IN S P E C T IO N S E R V IC E

Department of AGRICULTURE, FISHERIES AND FORESTRY - AUSTRALIA

♦

19 July 1999

ANIMAL QUARANTINE POLICY MEMORANDUM 1999/51

Chief Veterinary Officers, all States and the NT

Animal Programs Section, AQIS Operations

Office of the Australian CVO, AFFA

Scientific Assessment Branch, AFFA

Veterinary Counsellors, Washington, Brussels & Seoul

Agricultural Counsellor, Tokyo

Australian Trout and Salmon Farmers Association

Tasmanian Salmonid Growers Association Ltd

Australian Seafood Importers Association

Australian Fisheries Management Authority

Division of Marine Research, CSIRO

Australian Seafood Industry Council

Australian Institute of Marine Science

ACIAR Fisheries Coordinator

PIJAC

Tuna Boat Owners Association

Standing Committee on Fisheries & Aquaculture

Aquaculture Committee

Wildlife Australia, Environment Australia

Wildlife Protection Section, Environment Australia

CSIRO Division of Animal Health

National Farmers' Federation

Quarantine and Animal Health Task Force, NFF

Australian Animal Health Council

Australian Veterinary Association

Chief Veterinary Officer, MAF RA, NZ

National Meat Association o f Australia

Fisheries and Aquaculture Branch, AFFA

Fisheries Research & Development Corporation

Fishing Industry Advisory Committee

Australian Recreational & Sport Fishing Confederation

Aquaculture CRC Limited

Australian Prawn Farmer’s Association

Australian Aquaculture Forum

Food and Beverage Importers Council

WA Fishing Industry Council

Victorian Trout Association

Freshwater Anglers’ Council o f Tasmania

Health and Environment Committee

Aquatic Animal Disease Experts

Scientific and Research Organisations

Fishing, Industry and Community Organisations

FINAL REPORTS OF IMPORT RISK ANALYSES ON NON-VIABLE SALMONID PRODUCTS, NON-VIABLE MARINE FINFISH PRODUCTS AND LIVE ORNAMENTAL FINFISH AND ADOPTION OF NEW POLICIES As a result of the outcome of the WTO dispute with Canada on salmon, AQPM 1999/27 advised that AQIS would conduct an accelerated import risk analysis (IRA) process for three import risk analyses on aquatic animals and their products, with a deadline for completion of 6 July. AQPM 1999/44 advised that AQIS could not complete the IRAs by 6 July but it would complete the LRAs and make a decision on quarantine policy applying to the products covered by the risk analyses by 19 July. This notice advises -

• the outcome of the risk analyses, and

• AQIS’ new policies to be applied by delegates of the Director of Quarantine when considering, under section 70 of the Quarantine Proclamation 1998, whether to grant a permit, under sub­ section 43(4) of the Proclamation, for the importation of non-viable salmonid products and non- salmonid marine finfish products and live ornamental finfish.

EDMUND BARTON BUILDING BARTON ACT

GPO Box 858 Canberra ACT 2601 Tel: (02) 6272 4465

The policies include permit conditions which, because of the risk analyses, delegates may consider relevant when they carry out the considerations which are required by section 70 of the Proclamation.

The risk analyses cover a wide range of fish and fish products for import into Australia, including salmon, trout, chars, sweetfish, galaxias, smelt, halibut, eels, herring, cod, perch, pilchards, bass, haddock, sea bream, hake, turbot, goldfish, tetras, livebearers, barbs and gouramis.

The AQIS policies are based on the most comprehensive series of scientific studies undertaken by a quarantine service on the import of fish products for human consumption; fish for further manufacturing processes, such as for pet food; fish for use as bait; and live ornamental fish.

The overall purpose of the measures to be implemented from today is to strengthen Australia's fish quarantine laws in a way which limits the quarantine risk to a level that is acceptably low (consistent with section 70 of the Proclamation) and complies with Australia’s international obligations.

The measures are subject to, and must be applied by delegates in accordance with the Quarantine Act 1908 and the Quarantine Proclamation 1998.

To provide context to the new policies described in this memorandum, the Australian market for domestic-produced salmonids is about 7,000 tonnes annually. This compared in 1997-98 with imports of approximately 56,000 tonnes of all fresh, chilled and frozen edible fish products, 47,000 tonnes of fish for other purposes, particularly bait, and about 6.5 million ornamental fish.

Therefore the new policies are intended to have the net effect of tightening quarantine control over about 100,000 tonnes of imports whereas it is unlikely that additional imports of salmonids will exceed several thousand tonnes. A proportion of this is likely to be sourced from New Zealand whose aquatic health status is similar to Australia’s, and under AQIS’s new policies (particularly for control of risk of whirling disease) presents negligible disease risk.

The measures are consistent with Australia's traditional, very conservative approach to quarantine. Australia continues to have the strictest fish quarantine laws in the world.

The quarantine policies for the importation of non-viable salmonid products, non-viable marine finfish products and live ornamental finfish have been revised taking into account the recommendations in the draft reports of the IRAs lodged on the AQIS Internet homepage. The reports will be published shortly in final form.

As a consequence of the risk analysis, the new policies

• establish that importation of fresh, frozen and chilled non-viable salmonid product may be permitted (as contemplated by sub-section 43(4) of the Proclamation) where delegates have carried out the considerations referred to in section 70 of the Proclamation, taking into account the policies in Attachment 1;

• introduce additional quarantine conditions which delegates may impose when granting permits for the importation of non-viable marine finfish products, as described in Attachment 2;

• tighten the quarantine conditions which delegates may impose when granting permits for live ornamental finfish as described in Attachment 3.

The policies are based on an assessment of the risks associated with the establishment of identified disease agents of concern, and an examination of feasible risk management measures which could be used to bring the risk into conformity with Australia’s appropriate level of protection.

As Australia is required to be least trade restrictive in its approach to quarantine risk management, equivalent approaches to managing identified risk may be accepted, either generally or on a case-by-case basis. Exporting countries seeking to use alternative risk reduction measures to those listed in the new policies should provide a submission for consideration by AQIS. For example, exporting countries may be able to provide official

certification attesting to freedom from one or more of the disease(s) of concern, based on the results of a program of monitoring and surveillance of fish health. Such proposals should include supporting scientific data that clearly explain the degree to which alternative measures would reduce risk. AQIS will consider such applications on a case-by-case basis based on a

scientific assessment of the effectiveness of the alternative measures in reducing quarantine risk.

Implementation of the WTO Findings

In November 1998, the WTO found that Australia had not complied with its obligations under the WTO Agreement on the Application of Sanitary and Phytosanitary Measures (SPS Agreement) with regard to the measures applying to salmon. In short, the key findings were:

• Australia’s import risk analysis on uncooked wild caught Pacific salmon from Canada did not fulfil all the requirements of the SPS Agreement in relation to a risk analysis and there was no risk analysis to support the restrictions on the importation of other uncooked salmon products; and

• there were arbitrary or unjustifiable distinctions in the level of protection applied by Australia in relation to salmon and other fish, and these distinctions resulted in a disguised restriction on international trade.

AQIS conducted accelerated risk analyses on non-viable salmonid product and non-salmonid marine finfish product and on live, ornamental finfish to address the WTO findings. The reports of the risk analyses, together, address the WTO findings.

IRA Process

The risk analyses were conducted in accordance with an accelerated timetable necessitated by the WTO decision on implementation of the WTO findings on salmon (see AQPMs 1999/24 and 1999/27).

The new policies are subject to the requirements of the Quarantine Act and Quarantine Proclamation 1998 (as amended) and fully implement Australia’s WTO obligations.

The findings of the risk analyses are based on a comprehensive analysis of relevant scientific literature, including (for non-viable products) scientific information in previous reports of the Australian Government and a report of the New Zealand Government on the importation of non-viable salmonids into New Zealand. AQIS also obtained detailed comments from a number of experts in fish health and quarantine in Australia and overseas. AQIS took several steps to ensure the scientific validity of the risk analyses, including considering the reports of consultancies (most of which were commissioned in 1998) on identified gaps in information relating to these risk analyses (see AQPMs 1999/33 and 1999/38). AQIS also contracted 14 independent scientists (in Australia and overseas) to review one or both of the draft reports as they were being prepared (see AQPMs 1999/27 and 1999/30). AQIS asked the independent reviewers to advise on:

• the completeness and accuracy of scientific information in the report;

• the balance and objectivity with which scientific information was treated;

• the extent to which the exercising of professional judgement in the report was supported by and consistent with relevant scientific information; and

• the consistency of professional judgements on scientific issues that were common to each risk analysis report (where appropriate).

AQIS did not ask the independent reviewers to advise on Australia’s appropriate level of protection, as this is the responsibility of the Australian Government, having regard to the broad range of quarantine decisions and precedents within AQIS’s purview.

To ensure that the process fulfilled the Government’s commitment to an open and consultative approach to import risk analysis, AQIS held public meetings in 5 capital cities and 2 meetings of key stakeholders in Canberra (see AQPM 199/30 and 1999/33). AQIS also made each chapter of the draft reports available to the public for comment by posting them on the AQIS Internet site (see AQPM 1999/27, 1999/30 and 1999/44).

In the course of the risk analyses, AQIS received 35 submissions on scientific issues on the non-viable salmonid product, non-viable marine finfish product and live ornamental finfish IRAs. AQIS also received a large number of representations, most of which restated the importance of maintaining the current prohibition on importation of uncooked salmon, but presented no scientific issues requiring consideration in the risk analyses.

AQIS considered all scientific issues raised in the submissions of respondents and sought the advice of the independent scientific reviewers on significant points in the submissions. All submissions were taken into account in preparing the reports. For each risk analysis, AQIS reviewed each part of the report in light of stakeholder submissions.

The scientific information reviewed in these IRAs reports is comprehensive and up-to-date and the independent scientific reviewers have agreed that the scientific analysis is accurate, objective and balanced. On this basis the conclusions in the risk analyses will be incorporated (where appropriate) into legal instruments and procedures for the importation of non-viable salmonid product and non-salmonid marine finfish product and live ornamental finfish in accordance with the recommendations set out in the IRAs.

Implementation of new policies

With effect from the date of publication of this memorandum, these policies apply to countries that wish to export to Australia the live fish and products addressed in these IRAs. The necessary arrangements are being set in place for formal recognition of:

• the competent authorities of exporting countries in relation to fish health and control of fish processing plants, and live fish exporting premises; and

• the system for monitoring and surveillance of health of populations from which farmed fish for export to Australia are sourced.

In order to be able to export salmon to Australia, countries must demonstrate to AQIS that they are able to meet Australia’s conditions. As warranted by the conclusions of the risk analysis, AQIS will require that imported salmonid products will only be released to the public if they are consumer-ready.

AQIS will make arrangements to review exporting countries’ controls over fish health, standards in processing plants and export premises, and export certification as appropriate. At this time, New Zealand and Canada have provided sufficient recent information to satisfy

AQIS’s requirements. Other countries which have had long term trade in animals and animal products would satisfy AQIS’s requirements relating to export certification and controls over fish processing plants, but AQIS will need to review recent information on fish health controls.

AQIS has not conducted a formal assessment of competent authorities for fish health in many countries. For countries other than New Zealand and Canada, AQIS would enter into consultations with competent authority(ies) to satisfy itself as to controls over fish health and systems for approval and control of fish processing plants and fish export premises, and for monitoring and surveillance of fish health. Animal Quarantine Policy Memorandum 1999/41

provides guidelines for the approval of countries to export animals (including fish) and their products to Australia. The requirements set out in AQPM 1999/41 are based on the provisions of the OIE International Aquatic Animal Health Code (Chapter 1.4.3 Evaluation of competent authority) (1997).

AQIS will review information submitted by exporting countries on monitoring and surveillance systems for fish health before commencing to issue permits.

Transitional Arrangements

Under transitional arrangements, existing policies for the importation of cooked (canned and uncanned smoked) salmonids and salmonid roe, non-viable non-salmonid marine finfish product, and live ornamental finfish will continue to apply. AQIS will specify the time limit

for the transitional arrangements after consultation with relevant stakeholders. AQIS is reviewing current policy for the importation of salmonid roe (ie roe must be washed and pasteurised) and further advice will be provided shortly. The policies for the importation of uncooked salmonid products come into effect from the date of publication of this

memorandum.

Systems for monitoring and surveillance

AQIS will base its assessment of systems for monitoring and surveillance of fish health on the provisions of the OIE Diagnostic Manual for Aquatic Animal Diseases (Chapter 1.1 General

Information) (1997). The OIE refers to the general basis for fish health surveillance and control measures with reference to the health of cultured fish as follows:

‘A comprehensive approach for animal health control in fish culture requires: • Assessment of the health status of animals in a production site based on inspections and standardised sampling procedures followed by laboratory examinations conducted according to instmctions given in this Manual.

• The constraint of restocking open waters and farming facilities only with aquatic animal having a health status higher than or equal to that of animals already living in the considered areas.

• Eradication of disease when possible, by slaughtering infected stocks, disinfecting and restocking with pathogen-free fish.

• Notification by every Member Country of its particular requirements, besides those provided by the Code, for importation of aquatic animals and animal products.

If the above procedures are followed, it becomes possible to give adequate assurance of the health status of aquaculture products for specified diseases, according to their country, zone or site of origin.’

The OIE Manual goes on to state that the issuance of a health certificate, based on a health status report and examinations of aquatic animals, provides assurance that the aquaculture products in a consignment originate from a farm (or other defined zone) free of one or more of specified diseases1.

In considering minimum requirements for fish health monitoring and surveillance, AQIS will take into account the provisions of the OIE Diagnostic Manual for Aquatic Animal Diseases. However, the primary focus of the Aquatic Manual is on trade in live fish and genetic material; moreover, the provisions relate to fish diseases listed by the OIE. Australia is free of many serious pathogens that are not listed by the OIE and Government policy is to maintain freedom from these pathogens. For example, the importation of non-viable salmonids under the conditions recommended by the OIE as a minimum acceptable safeguard (ie evisceration of the carcase) would not meet Australia’s ALOP with regard to several serious diseases (such as infectious salmon anaemia). It is important to ensure that the system of monitoring and surveillance of fish health in exporting countries is sufficiently comprehensive to address the issues of concern in this risk analysis. Accordingly, in conducting its assessment, AQIS will also take into account relevant general provisions of the OIE International Animal Health Code (1998) contained in Chapter 1.4.5 Surveillance and Monitoring of Animal Health.

Announcement of outcome of the risk analyses

This AQPM advises new quarantine policies on the importation of non-viable salmonid products, non-viable marine finfish products and live ornamental finfish.

PAUL HICKEY Executive Director

1 The reference in the OIE Manual to the provision of assurances regarding disease freedom specifically relates to live fish and genetic material, not non-viable fish. For the OIE, provided that fish for human consumption have been eviscerated, they are considered to be safe for the purposes o f international trade.

Contact Officer: Warren Vant

Telephone no: 02 6272 4436

Facsimile no: 02 6272 3399

E-mail: warren.vant@aqis.gov.au

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ATTACHMENT 1

Where delegates grant permits, under sub-section 43 of the Quarantine Proclamation 1998, to import non-viable uncanned salmonid finfish, they should apply the following policies:

• the fish should be eviscerated; • the fish should not be derived from a population slaughtered as an official disease control measure; • the fish should not be juvenile salmonids or sexually mature adults/spawners;

• the fish should be processed in premises under the control of a competent authority;

. the head and gills should be removed and internal and external surfaces thoroughly washed; . the fish should be subjected to an inspection and grading system supervised by a competent authority;

. in addition, for farmed fish, the fish should be derived from a population for which there is a documented system of health monitoring and surveillance administered by a competent authority; • consignments exported to Australia should be accompanied by official certification

confirming that the exported fish fully meet Australia’s import conditions (as specified on an import permit issued by AQIS).

Policies for the importation of non-viable uncanned salmonids

In recognition of the health status of New Zealand, salmonids other than rainbow trout would be permitted import under the above policies, except that it would not be required that the head and gills be removed.

Product from countries other than New Zealand derived from non-viable salmonids meeting these policies will be released from quarantine if imported in consumer-ready form. For the purpose of these policies, consumer ready product is product that is ready for the householder to cook/consume, such as cutlets, fillets (without skin), skin-on fillets if less than 450g weight

and headless fish of ‘pan-size’ (ie less than 450g weight). Product that has been cooked for human consumption (eg canned, hot smoked, flash fned) is also regarded as consumer-ready product. Imported head-off, gilled and gutted salmonids of greater than 450g weight (ie, not consumer ready) should be processed to consumer-ready form in premises approved by AQIS

before release from quarantine.

Under previous policies, AQIS permitted the importation of cooked (smoked or canned) salmonids or salmonid roe. The existing policies may continue to be applied to permits for a transitional period to be determined following consultation with stakeholders. The existing policies for smoked salmon will be revoked after this time.

AQIS is reviewing current policies for the importation of salmonid roe (ie roe must be washed and pasteurised) and further advice will be provided shortly.

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ATTACHMENT 2

The policies in respect of the importation of non-viable, non-salmonid marine finfish from any country are that:

EITHER • the fish should be processed in a premises under the control of a competent authority, and • the fish should be eviscerated;

• the fish should be subjected to an inspection and grading system supervised by a competent authority; . the head and gills should be removed and internal and external surfaces thoroughly washed

• consignments exported to Australia should be accompanied by official certification confirming that the exported fish meet Australia’s import conditions in full;

OR • for product that has been further processed (beyond that described above) to a consumer-ready state, AQIS will not require an official health certificate.

For the purpose of these policies, consumer ready product is product that is ready for the householder to cook/consume, such as cutlets, fillets (without skm), skm-on fillets if less than 450g weight and headless fish of ‘pan-size’ (ie less than 450g weight). Product that has been cooked for human consumption (eg canned, hot smoked, flash fried) is also regarded as

consumer-ready product.

If neither of these options applies, an importer will need to apply for an import permit. The application for the permit will need to provide details of the finfish species to be imported, the waters in which the fish were farmed (if applicable) and harvested and the intended end use of the imported fish AQIS will assess the application in light of the quarantine risks it presents.

It is anticipated that, if the delegate concludes that the proposed importation is consistent with Australia’s appropriate level of protection (ie it presents an equivalent level of risk to certified, inspected, headless, eviscerated, washed fish), a permit for the importation of single or multiple consignments during a specified timeframe would ordinarily be granted.

Under these amended policies, non-salmonid marine finfish may continue to be imported into Australia. However, imports of certain marine finfish species would be subjected to additional controls to address risks associated with specified diseases". For non-susceptible species the most significant change is that importers would be required to obtain an import permit from

AQIS except for consignments of fish that are head-off, gilled, gutted, inspected and accompanied by an official health certificate (when no import permit would be required) or for consumer-ready product (as defined above).

Policies for the importation of non-viable, non-salmonid marine finfish product

Ε Ξ Ξ Ξ Ξ Ξ ΐ ΐ Î’ ί Ξapplies only to susceptible species (as specified in the IRA).

For fish that are susceptible to specified diseases, AQIS’s policy is that fish be head-off, gilled, gutted, inspected and accompanied by an official health certificate or imported as consumer-ready product (as defined above). The importation of specified, susceptible species for use as bait or fish feed would not generally be permitted; rather, AQIS will conduct a case-by-case assessment before deciding whether to grant a permit and under what conditions to permit such importations. For example, delegates could not permit the import of herring for use as bait under conditions which would present an unacceptable risk of the establishment of VHSV.

In general, it is anticipated that permits will be issued for the importation of non-salmonid marine finfish products under existing conditions for a transitional period to be determined following consultation with stakeholders. During this period countries that intend export such product to Australia must provide information to AQIS regarding competent authorities and export certification for fish products.

Policies applying to the importation of non-viable, non-salmonid marine finfish product from New Zealand

As a new restriction on the importation of non-viable marine finfish caught in New Zealand’s Exclusive Economic Zone by fishers approved/registered under controls administered by a government authority of New Zealand, consignments of such fish would have to be accompanied by official certification stating that they are of New Zealand origin. However, the remainder of the policies as set out in this attachment does not apply.

ATTACHMENT 3

The policies in respect of the importation of live ornamental finfish (both marine and freshwater) on Schedule 6 of the Wildlife Protection (Regulation o f Exports and Imports) Act 1982 from any country is as follows.

Policy for all ornamental finfish are that each consignment be accompanied by:

• an animal health certificate from a competent authority attesting to the health of the fish in the consignment and the health status of the premises of export; • certification from a competent authority that the premises of export are currently approved for export to Australia; and • certification from a competent authority that the fish had not shared water with food-

fish aquaculture premises.

It is policy that each consignment be subject to post-arrival quarantine detention for a minimum period in approved private facilities under quality assurance arrangements approved by AQIS. It is anticipated that the minimum period of quarantine would be 3 weeks for goldfish and 1 week for all other Schedule 6 listed finfish.

In addition to the above policies, delegates will have regard to the following risk management measures singly or in combination, as appropriate to the pathogens of concern, to the importation of ornamental finfish to address specific disease concerns:

• health certification from the competent authority that the source of the fish was free of specified disease agents; • testing of the source population of the fish for specified disease agents; • pre-export visual inspection; • visual inspection at the border to identify overtly diseased consignments and to ensure

that the fish are of species listed on Schedule 6; • quarantine security over procedures in quarantine premises, including the disposal of sick and dead fish, transport water, packaging materials and other waste; • testing of imported fish, on a random or routine basis, to address the likelihood that

unwanted disease agents may be present in a consignment, and/or to provide additional data to improve targeting of risk management measures generally; • if the presence of specific disease agents is suspected or confirmed by diagnostic testing, AQIS may require appropriate treatment of imported fish; • increased post-arrival quarantine over the minimum indicated period (for example, due

to concerns over the risks posed by iridovimses, the minimum quarantine period for gouramis and cichlids will be 2 weeks).

In general, it is anticipated that permits will be issued for the importation of live ornamental finfish under existing conditions for a transitional period to be determined following consultation with stakeholders, and existing consignment clearance procedures will continue to operate. During this period countries that intend to export fish to Australia must provide scientific and technical information to AQIS regarding competent authorities, fish health surveillance and export certification for live fish.

Policies for the importation of live ornamental finfish

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A PPEN D IX 6

AGREEMENT ON THE APPLICATION OF SANITARY AND PHYTOSANITARY MEASURES

Members,

Reaffirming that no Member should be prevented from adopting or enforcing measures necessary to protect human, animal or plant life or health, subject to the requirement that these measures are not applied in a manner which would constitute a means of arbitrary or unjustifiable discrimination between

Members where the same conditions prevail or a disguised restriction on international trade;

Desiring to improve the human health, animal health and phytosanitary situation in all Members;

Noting that sanitary and phytosanitary measures are often applied on the basis of bilateral agreements or protocols;

Desiring the establishment of a multilateral framework of rules and disciplines to guide the development, adoption and enforcement of sanitary and phytosanitary measures in order to minimize their negative effects on trade,

Recognizing the important contribution that international standards, guidelines and recommendations can make in this regard;

Desiring to further the use of harmonized sanitary and phytosanitary measures between Members, on the basis of international standards, guidelines and recommendations developed by the relevant international organizations, including the Codex Alimentarius commission the International Office of

Epizootics, and the relevant international and regional organizations operating within the framework of the International Plant Protection Convention, without requiring Members to change their appropriate level of protection of human, animal or plant life or health;

Recognizing that developing country Members may encounter special difficulties in complying with the sanitary or phytosanitary measures of importing Members, and as a consequence in access to markets and also in the formulation and application of sanitary or phytosanitary measures in their own

territories, and desiring to assist them in their endeavours in this regard;

Desiring therefore to elaborate rules for the application of the provisions of GATT 1994 which relate to the use of sanitary or phytosanitary measures, in particular the provisions of Article XX(b)l;

Hereby agree as follows:

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Article 1

General Provisions

1. This Agreement applies to all sanitary and phytosanitary measures which may, directly or indirectly, affect international trade. Such measures shall be developed and applied in accordance with the provisions of this Agreement.

2. For the purposes of this Agreement, the definitions provided in Annex A shall apply.

3. The annexes are an integral part of this Agreement.1

4. Nothing in this Agreement shall affect the rights of Members under the Agreement Technical Barriers to Trade with respect to measures not within the scope of this Agreement.

Article 2

Basic Rights and Obligations

1. Members have the right to take sanitary and phytosanitary measures necessary for the protection of human, animal or plant life or health, provided that such measures are not inconsistent with the provisions of this Agreement.

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.

4. Sanitary or phytosanitary measures which conform to the relevant provisions of this Agreement shall be presumed to be in accordance with the obligations of the Members under the provisions of GATT 1994 which relate to the use of sanitary or phytosanitary measures, in particular the provisions of Article XX(b).

In this Agreement, reference to Article XX(b) includes also the chapeau of that Article.

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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.

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.

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. 2.2 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.

4. Members shall play a full part, within the limits of their resources, in the relevant international organizations and their subsidiary bodies, in particular the Codex Alimentarius Commission, the International Office of Epizootics, and the international and regional organizations operating within the framework of the International Plant Protection Convention, to promote within these

organizations the development and periodic review of standards, guidelines and recommendations with respect to all aspects of sanitary and phytosanitary measures.

5. The Committee on Sanitary and Phytosanitary Measures provided for in paragraphs 1 and 4 of Article 12 (referred to in this Agreement as the "Committee") shall develop a procedure to monitor the process of international harmonization and coordinate efforts in this regard with the relevant

international organisations.

2 For the purposes o f paragraph 3 o f 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.

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Article 4

Equivalence

1. Members shall accept the sanitary or phytosanitary measures of other Members as equivalent, even if these measures differ from their own or from those used by other Members trading in the same product, if the exporting Member objectively demonstrates to the importing Member that its measures achieve the importing Member's appropriate level of sanitary or phytosanitary protection. For this purpose, reasonable access shall be given, upon request, to the importing Member for inspection, testing and other relevant procedures.

2. Members shall, upon request, enter into consultations with the aim of achieving bilateral and multilateral agreements on recognition of the equivalence of specified sanitary or phytosanitary measures.

Article 5

Assessment o f Risk and Determination o f the Appropriate Level

o f 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.

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.

3. In assessing the risk to animal or plant life or health and determining the measure to be applied for achieving the appropriate level of sanitary or phytosanitary protection from such risk, Members shall take into account as relevant economic factors: the potential damage in terms of loss of production or sales in the event of the entry, establishment or spread of a pest or disease; the costs of control or eradication in the territory of the importing Member; and the relative cost-effectiveness of alternative approaches to limiting risks.

4. Members should, when determining the appropriate level of sanitary or phytosanitary protection, take into account the objective of minimizing negative trade effects.

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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. Members shall cooperate in the Committee in accordance with paragraphs 1, 2 and 3 of Article 12, to develop guidelines to further the practical implementation of this provision. In developing the guidelines, the Committee shall take into account all relevant factors, including the exceptional character of human health risks to which people voluntarily

expose themselves.

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 feasibility.3

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.

8. When a Member has reason to believe that a specific sanitary or phytosanitary measure introduced or maintained by another Member is constraining, or has the potential to constrain, its exports and the measure is not based on the relevant international standards, guidelines or recommendations, or such

standards, guidelines or recommendations do not exist, an explanation of the reasons for such sanitary or phytosanitary measure may be requested and shall be provided by the Member maintaining the measure.

3 For the 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.

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Article 6

Adaptation to Regional Conditions, Including Pest- or Disease-Free Areas

and Areas o f Low Pest or Disease Prevalence

1 Members shall ensure that their sanitary or phytosanitary measures are adapted to the sanitary or phytosanitary characteristics of the area - whether all of a country, part of a country, or all or parts of several countries - from which the product originated and to which the product is destined. In assessing the

sanitary or phytosanitary, characteristics of a region, Members shall take into account, inter alia the level of prevalence of specific diseases or pests, the existence of eradication or control programmes, and appropriate criteria or guidelines which may be developed by the relevant international organizations.

2. Members shall, in particular, recognize the concepts of pest- or disease-free areas and areas of low pest or disease prevalence. Determination of such areas shall be based on factors such as geography, ecosystems, epidemiological surveillance, and the effectiveness of sanitary or phytosanitary controls.

3. Exporting Members claiming that areas within their territories are pest or disease free areas or areas of low pest or disease prevalence shall provide the necessary evidence thereof in order to objectively demonstrate to the importing Member that such areas are, and are likely to remain, pest-or disease-free areas or areas of low pest or disease prevalence, respectively. For this purpose, reasonable access shall be given, upon request, to the importing Member for

inspection, testing and other relevant procedures.

Article 7

Transparency

Members shall notify changes in their sanitary or phytosanitary measures and shall provide information on their sanitary or phytosanitary measures in accordance with the provisions of Annex B.

Article 8

Control, Inspection and Approval Procedures

Members shall observe the provisions of Annex C in the operation of control, inspection and approval procedures, including national systems for approving the use of additives or for establishing tolerances for contaminants in foods, beverages or

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feedstuffs, and otherwise ensure that their procedures are not inconsistent with the provisions of this Agreement.

Article 9

Technical Assistance

1. Members agree to facilitate the provision of technical assistance to other Members, especially developing country Members, either bilaterally or through the appropriate international organizations. Such assistance may be, inter alia in the areas of processing technologies, research and infrastructure, including in the establishment of national regulatory bodies, and may take the form of

advice, credits, donations and grants, including for the purpose of seeking technical expertise, training and equipment to allow such countries to adjust to, and comply with, sanitary or phytosanitary measures necessary to achieve the appropriate level of sanitary or phytosanitary protection in their export markets.

2. Where substantial investments are required in order for an exporting developing country Member to fulfil the sanitary or phytosanitary requirements of an importing Member, the latter shall consider providing such technical assistance as will permit the developing country Member to maintain and expand its market access opportunities for the product involved.

Article 10

Special and Differential Treatment

1. In the preparation and application of sanitary or phytosanitary measures, Members shall take account of the special needs of developing country Members, and in particular of the least-developed country Members.

2. Where the appropriate level of sanitary or phytosanitary protection allows scope for the phased introduction of new sanitary or phytosanitary measures, longer time-frames for compliance should be accorded on products of interest to developing country Members so as to maintain opportunities for their exports.

3. With a view to ensuring that developing country Members are able to comply with the provisions of this Agreement, the Committee is enabled to grant to such countries, upon request, specified time-limited exceptions in whole or in part from obligations under this Agreement, taking into account their financial, trade and development needs.

4. Members should encourage and facilitate the active participation of developing country Members in the relevant international organizations.

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Article 11

Consultations and Dispute Settlement

1. The provisions of Articles XXII and XXIII of GATT 1994 as elaborated and applied by the Dispute Settlement Understanding shall apply to consultations and the settlement of disputes under this Agreement except as otherwise specifically provided herein.

2. In a dispute under this Agreement involving scientific or technical issues, a panel should seek advice from experts chosen by the panel in consultation with the parties to the dispute. To this end, the panel may, when it deems it appropriate, establish an advisory technical experts group, or consult the relevant international organizations, at the request of either party to the dispute

or on its own initiative.

3. Nothing, in this Agreement shall impair the rights of Members under other international agreements, including the right to resort to the good offices or dispute settlement mechanisms of other international organizations or established under any international agreement.

Article 12

Administration

1. A Committees on Sanitary and Phytosanitary Measures is hereby established to provide a regular forum for consultations. It shall carry out the functions necessary to implement the provisions of this Agreement and the furtherance of its objectives, in particular with respect to harmonization. The Committee shall reach its decisions by consensus.

2. The Committee shall encourage and facilitate ad hoc consultations or negotiations among Members on specific sanitary or phytosanitary issues. The Committee shall encourage the use of international standards, guidelines or recommendations by all Members and, in this regard, shall sponsor technical consultation and study with the objective of increasing coordination and integration between international and national systems and approaches for approving the use of food additives or for establishing tolerances for contaminants in foods, beverages or feedstuffs.

3. The Committee shall maintain close contact with the relevant international organizations in the field of sanitary and phytosanitary protection, especially with the Codex Alimentarius Commission, the International Office of Epizootics, and the Secretariat of the International Plant Protection Convention,

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with the objective of securing the best available scientific and technical advice for the administration of this Agreement and in order to ensure that unnecessary duplication of effort is avoided.

4. The Committee shall develop a procedure to monitor the process of

international harmonization and the use of international standards, guidelines or recommendations. For this purpose, the Committee should, in conjunction with the relevant international organizations, establish a list of international standards, guidelines or recommendations relating to sanitary or phytosanitary

measures which the Committee determines to have a major trade impact. The list should include an indication by Members of those international standards, guidelines or recommendations which they apply as conditions for import or on the basis of which imported products conforming to these standards can enjoy

access to their markets. For those cases in which a Member does not apply an international standard, guideline or recommendation as a condition for import, the Member should provide an indication of the reason therefor, and, in particular, whether it considers that the standard is not stringent enough to provide the appropriate level of sanitary or phytosanitary protection. If a Member revises its position, following its indication of the use of a standard, guideline or recommendation as a condition for import, it should provide an explanation for its change and so inform the Secretariat as well as the relevant

international organizations, unless such notification and explanation is given according to the procedures of Annex B.

5. In order to avoid unnecessary duplication, the Committee may decide, as appropriate, to use the information generated by the procedures, particularly for notification, which are in operation in the relevant international organizations.

6. The Committee may, on the basis of an initiative from one of the Members, through appropriate channels invite the relevant international organizations or their subsidiary bodies to examine specific matters with respect to a particular standard, guideline or recommendation, including the basis of explanations for non-use given according to paragraph 4.

7. The Committee shall review the operation and implementation of this Agreement three years after the date of entry into force of the WTO Agreement, and thereafter as the need arises. Where appropriate, the Committee may submit to the Council for Trade in Goods proposals to amend the text of this Agreement having regard, inter alia to the experience gained in

its implementation.

2 4 4

Article 13

Implementation

Members are fully responsible under this Agreement for the observance of all obligations set forth herein. Members shall formulate and implement positive measures and mechanisms in support of the observance of the provisions of this

Agreement by other than central government bodies. Members shall take such reasonable measures as may be available to them to ensure that non-govemmental entitles within their territories, as well as regional bodies in which relevant entitles within their territories are members, comply with the relevant provisions of this Agreement. In addition, Members shall not take measures which have the effect of,

directly or indirectly, requiring or encouraging such regional or governmental entitles, or local governmental bodies, to act in a manner inconsistent with the provisions of this Agreement. Members shall ensure that they rely on the services of non governmental entities for implementing sanitary or phytosanitary measures only if these entities comply with the provisions of this Agreement.

Article 14

Final Provisions

The least-developed country Members may delay application of the provisions of this Agreement for a period of five years following the date of entry into force of the WTO Agreement with respect to their sanitary or phytosanitary measures affecting

importation or imported products. Other developing country Members may delay application of the provisions of this Agreement, other than paragraph 8 of Article 5 and Article 7, for two years following the date of entry into force of the WTO Agreement with respect to their existing sanitary or phytosanitary measures affecting importation or imported products, where such application is prevented by a lack of technical expertise, technical infrastructure or resources.

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ANNEXA

DEFINITIONS4

1. Sanitary or phytosanitary measure - Any measure applied:

(a) to protect animal or plant life or health within the territory of the Member from risks arising from the entry, establishment or spread of pests, diseases, disease-carrying organisms or disease-causing organisms;

(b) to protect human or animal life or health within the territory of the Member from risks arising from additives, contaminants, toxins or disease-causing organisms in foods, beverages or feedstuffs;

(c) to protect human life or health within the territory of the Member from risks arising from diseases carried by animals, plants or products thereof, or from the entry, establishment or spread of pests; or

(d) to prevent or limit other damage within the territory of the Member from-the entry, establishment or spread of pests.

Sanitary or phytosanitary measures include all relevant laws, decrees, regulations, requirements and procedures including, inter alia, end product criteria; processes and production methods testing, inspection, certification and approval procedures; quarantine treatments including relevant requirements associated with the transport of

animals or plants, or with the materials necessary for their survival during transport; provisions on relevant statistical methods, sampling procedures and methods of risk assessment; and packaging and labelling requirements directly related to food safety.

2. Harmonization - The establishment, recognition and application of common sanitary and phytosanitary measures by different Members.

3. International standards, guidelines and recommendations

(a) for food safety, 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;

(b) for animal health and zoonoses, the standards, guidelines and recommendations developed under the auspices of the International Office of Epizootics;

4 For the purpose of these definitions, “animal” includes fish and wild fauna; “plant” includes forests and wild flora; “pests” include weeds; and “contaminants” include pesticide and veterinary drug residues and extraneous matter.

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(c) for plant healt, the international standards, guidelines and

recommendations developed under the auspices of the Secretariat of the International Plant Protection Convention in cooperation with regional organizations operating within the framework of the International Plant Protection Convention; and

(d) for matters not covered by the above organizations, appropriate standards, guidelines and recommendations promulgated by other relevant international organizations open for membership to all Members, as identified by the Committee.

4. Risk assessment - The evaluation of the likelihood of entry, establishment or spread of a pest or disease within the territory of an importing Member according to the sanitary or phytosanitary measures which might be applied, and of the associated potential biological and economic consequences; or 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.

5. Appropriate level o f sanitary or phytosanitary protection - The level of protection deemed appropriate by the Member establishing a sanitary or phytosanitary measure to protect human, animal or plant life or health within its territory.

NOTE: Many Members otherwise refer to this concept as the "acceptable level of risk".

6. Pest- or disease-free area - An area, whether all of a country, part of a country, or all or parts of several countries, as identified by the competent authorities, in which a specific pest or disease does not occur.

NOTE: A pest- or disease-free area may surround, be surrounded by, or be adjacent to an area whether within part of a country or in a geographic region which includes parts of or all of several countries -in which a specific pest or disease is known to occur but is subject to regional control measures such as the establishment of protection, surveillance and buffer zones which will confine or eradicate the pest or disease in question.

7. Area o f low pest or disease prevalence - An area, whether all of a country, part of a country or all or parts of several countries, as identified by the competent authorities, in which a specific pest or disease occurs at low levels and which is subject to effective surveillance, control or eradication measures.

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ANNEXB

TRANSPARENCY OF SANITARY AND PHYTOSANITARY REGULATIONS

Publication o f regulations

1. Members shall ensure that all sanitary and phytosanitary regulations5 which have been adopted are published promptly in such a manner as to enable interested Members to become acquainted with them.

2. Except in urgent circumstances, Members shall allow a reasonable interval between the publication of a sanitary or phytosanitary regulation and its entry into force in order to allow time for producers in exporting Members, and particularly in

developing country Members, to adapt their products and methods of production to the requirements of the importing Member.

Enquiry points

3. Each Member shall ensure that one enquiry point exists which is responsible for the provision of answers to all reasonable questions from interested Members as well as for the provision of relevant documents regarding:

(a) any sanitary or phytosanitary regulations adopted or proposed within its territory;

(b) any control and inspection procedures, production and quarantine treatment, pesticide tolerance and food additive approval procedures, which are operated within its territory;

(c) risk assessment procedures, factors taken into consideration, as well as the determinations of the appropriate level of sanitary or phytosanitary protection;

(d) the membership and participation of the Member, or of relevant bodies within its territory, in international and regional sanitary and phytosanitary organizations and systems, as well as in bilateral and multilateral agreements and arrangements within the scope of this Agreement, and the texts of such

agreements and arrangements.

4. Members shall ensure that where copies of documents are requested by interested Members, they are supplied at the same price (if any), apart from the cost of delivery, as to the nationals6 of the Member concerned.

5 Sanitary and phytosanitary measures such as laws, decrees or ordinances which are generally acceptable.

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Notification procedures

5. Whenever an international standard, guideline or recommendation does not exist or the content of a proposed sanitary or phytosanitary regulation is not substantially the same as the content of an international standard, guideline, or recommendation, and if the regulation may have a significant effect on trade of other Members, Members shall:

(a) publish a notice at an early stage in such a manner as to enable interested Members to become acquainted with the proposal to introduce a particular regulation;

(b) notify other Members, through the Secretariat, of the products to be covered by the regulation together with a brief indication of the objective and rationale of the proposed regulation. Such notifications shall take place at an early stage, when amendments can still be introduced and comments taken into account;

(c) provide upon request to other Members copies of the proposed regulation and, whenever possible, identify the parts which in substance deviate from international standards, guidelines or recommendations;

(d) without discrimination allow reasonable time for other Members to make comments in writing, discuss these comments upon request, and take the comments and the results of the discussions into account.

6. However, where urgent problems of health protection arise or threaten to arise for a Member, that Member may omit such of the steps enumerated in paragraph 5 of this Annex as it finds necessary, provided that the Member:

(a) immediately notifies other Members, through the Secretariat, of the particular regulation and the products covered, with a brief indication of the objective and the rationale of the regulation, including the nature of the urgent problem(s);

(b) provides, upon request, copies of the regulation to other Members;

(c) allows other Members to make comments in writing, discusses these comments upon request, and takes the comments and the results of the discussions into account.

7. Notifications to the Secretariat shall be in English, French or Spanish.

6 When “nationals” are referred to in this Agreement, the term shall be deemed, in the case of separate customs territory Member o f the WTO, to mean persons, natural or legal, who are domiciled or who have a real and effective industrial or commercial establishment in that customs territory.

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8. Developed country Members shall, if requested by other Members, provide copies of the documents or, in case of voluminous documents, summaries of the documents covered by a specific notification in English, French or Spanish.

9. The Secretariat shall promptly circulate copies of the notification to all Members and interested international organizations and draw the attention of developing country Members to any notifications relating to products of particular interest to them.

10. Members shall designate a single central government authority as responsible for the implementation, on the national level, of the provisions concerning notification procedures according to paragraphs 5, 6, 1 and 8 of this Annex.

General reservations

11. Nothing in this Agreement shall be construed as requiring:

(a) the provision of particulars or copies of drafts or the publication of texts other than in the language of the Member except as stated in paragraph 8 of this Annex; or

(b) Members to disclose confidential information which would impede enforcement of sanitary or phytosanitary legislation or which would prejudice legitimate interests of particular enterprises.

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ANNEXC

CONTROL, INSPECTION AND APPROVAL PROCEDURES7

1. Members shall ensure, with respect to any procedure to check and ensure the fulfilment of sanitary or phytosanitary measures, that:

(a) such procedures are undertaken and completed without undue delay and in no less favourable manner for imported products than for like domestic products;

(b) the standard processing period of each procedure is published or that the anticipated processing period is communicated to the applicant upon request; when receiving an application, the competent body promptly examines the completeness of the documentation and informs the applicant in a precise and complete manner of all deficiencies; the competent body transmits as soon as possible the results of the procedure in a precise and complete manner to the applicant so that corrective action may be taken if necessary; even when the application has deficiencies, the competent body proceeds as far as practicable with the procedure if the applicant so requests; and that upon, request, the applicant is informed of the stage of the procedure, with any delay being explained;

(c) information requirements are limited to what is necessary for appropriate control, inspection and approval procedures, including for approval of the use of additives or for the establishment of tolerances for contaminants in food, beverages or feedstuffs;

(d) the confidentiality of information about imported products arising from or supplied in connection with control, inspection and approval is respected in a way no less favourable than for domestic products and in such a manner that legitimate commercial interests are protected;

(e) any requirements for control, inspection and approval of individual specimens of a product are limited to what is reasonable and necessary;

(f) any fees imposed for the procedures on imported products are equitable in relation to any fees charged on like domestic products or products originating in any other Member and should be no higher than the actual cost of the service;

7 Control, inspection and approval procedures include, inter alia, procedure for sampling, testing and certification.

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(g) the same criteria should be used in the siting of facilities used in the procedures and the selection of samples of imported products as for domestic products so as to minimize the inconvenience to applicants, importers, exporters or their agents;

(h) whenever specifications of a product are changed subsequent to its control and inspection in light of the applicable regulations, the procedure for the modified product is limited to what is necessary to determine whether adequate confidence exists that the product still meets the regulations

concerned; and

(i) a procedure exists to review complaints concerning the operation of such procedures and to take corrective action when a complaint is justified.

Where an importing Member operates a system for the approval of the use of food additives or for the establishment of tolerances for contaminants in food, beverages or feedstuffs which prohibits or restricts access to its domestic markets for products based on the absence of an approval, the importing Member shall consider the use of a

relevant international standard as the basis for access until a final determinations is made.

2. Where a sanitary or phytosanitary measure specifies control at the level of production, the Member in whose territory the production takes place shall provide the necessary assistance to facilitate such control and the work of the controlling authorities.

3. Nothing in this Agreement shall prevent Members from carrying out reasonable inspection within their own territories.

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' - V

A PPEN D IX 7

ORGANISATIONAL CHART - AUSTRALIAN SAFEGUARDS AND NON-PROLIFERATION OFFICE

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Domestic Stakeholders

ANSTO DSTO chemical industry

research and educational institutions

R & D entities Commonwealth departments importers/exporters

uranium industry CTBT facility operators

State and Territory Governments

Public

THE PARLIAMENT OF THE COMMONWEALTH OF AUSTRALIA

PARLIAMENTARY p a p f : r N o .111 of 2000 ORDERED Ό ΒΞ PRINTED

ISSN 0727--! 181