India Loses Appeal in WTO in Poultry Ban Case

· US Allegation of “Arbitrary and Unjust” Discrimination Upheld

· OIE Used as Support to Establish Discrimination in India

The WTO’s Appellate Body ruled in the US’ favour last week in its dispute (DS430) over India’s import ban on certain agricultural products, largely upholding a previous dispute panel’s findings. India had put the ban on poultry import on health grounds stating that imports would lead to spread of avian influenza (AI), otherwise known as bird/avian flu.

(Avian influenza is an infectious viral disease found usually in wild water fowl such as ducks and geese, which can sometimes spread to domestic poultry and cause large-scale outbreaks. The virus has also been reported to cross the species barrier and cause diseases or subclinical infections in humans and other mammals.)

Case history

India’s import ban is formed by both the Livestock Importation Act and Statutory Order 1663 (E), among other policies. The former confers the power to regulate livestock imports to respective government agencies and operates through customs notifications with assigned statutory orders.

The Statutory Order 1663 (E) issued in July 2011, imposes import prohibitions on ten categories of products from countries reporting cases of Notifiable Avian Influenza (NAI), which includes both highly pathogenic notifiable avian flu (HPNAI) and low pathogenicity notifiable avian flu (LPNAI).

HPNAI is extremely infectious and can be highly lethal to poultry, along with provoking other serious health complications. Poultry infected with LPNAI, by contrast, may exhibit little to no signs of illness.

Washington challenged New Delhi’s import ban in 2012, raising a series of allegations under the WTO’s Sanitary and Phytosanitary Measures (SPS) Agreement. This included claims that the ban was not based on international guidelines or a risk assessment, lacked scientific justification, and applied requirements that are not required of like domestic products.

The WTO uses the World Organization for Animal Health (OIE) as the reference organisation for standards relating to animal health and zoonoses, including the latter’s Terrestrial Animal Health Code (OIE Code). Chapter 10.4 of this code is specifically devoted to avian flu, requiring members to notify the agency of any domestic HPAI cases in birds and the occurrence of certain types of LPAI in poultry.

Between 2004 and January 2014, the United States did not notify the OIE of any HPNAI outbreaks, but did report LPAI cases in poultry. From the end of 2003 to March 2013, India notified 95 outbreaks of HPAI in poultry. As of October 2014, India had never notified an LPNAI poultry case to the OIE.

In its October 2014 report, a dispute panel agreed with the bulk of the US’ claims, stating that India’s restrictions are not justified through the relevant international standards – in other words, the OIE Code – and “arbitrarily and unjustifiably” discriminated between products from WTO members “where identical or similar conditions prevail.” India then appealed those findings in January.

Risk assessment, Scientific Basis, Automaticity

In its appeal, India contends that the panel incorrectly interpreted and applied Article 2.2 of the SPS Agreement, which sets out a basic requirement for SPS measures not to be maintained without sufficient scientific evidence.

The panel had said that these avian flu measures are inconsistent with that provision automatically as a result of violating two other WTO requirements – namely that SPS measures be based on a risk assessment, while taking into account a non-inclusive list of factors for the assessment.

The Appellate Body emphasised that, although a violation of those requirements may suggest that a WTO member may be imposing an SPS measure without enough scientific evidence, this presumption is not necessarily automatic.

The WTO judges therefore reversed the panel’s findings that India’s AI measures are inconsistent with Article 2.2 regarding the import ban of two product categories – fresh poultry meat and eggs – from countries reporting LPNAI, since the panel had not reviewed evidence of India’s alleged scientific basis for such a ban.

International Standards, Regional Conditions

The Appellate Body sided with the panel and found that India’s AI measures are not based on an international standard and that New Delhi is not entitled to benefit from the presumption of consistency of its avian flu measures with WTO rules.

The Appellate Body also agreed with the panel in finding that India’s AI measures are not adapted to regional conditions, while using different reasoning. Article 6 of the SPS Agreement requires WTO members to ensure that any SPS measures are adapted to regional characteristics. This also includes provisions with respect to pest- or disease-free areas and areas of low pest or disease prevalence, as well as the respective duties that apply to importing and exporting members in this regard.

In particular, the Appellate Body clarified that the obligation of adaptation of an importing member is a continuing obligation and is not contingent upon whether an exporting member has made the objective demonstration of its regional conditions.

Overall, the Appellate Body found India’s AI measures violate Article 6 for requiring bans of all imports from any country that has notified the OIE of avian flu, thus excluding the possibility of allowing imports from AI-free areas within those countries.

Trade Restrictiveness

India’s appeal had challenged the panel’s finding that the US had identified significantly less trade restrictive alternative measures that would achieve New Delhi’s appropriate level of protection.

In order to successfully challenge another member under Article 5.6 of the SPS Agreement, a complainant must establish that there is an alternative measure that is reasonably available taking into account technical and economic feasibility; achieves the member’s appropriate level of SPS protection; and is significantly less trade restrictive.

In particular, India took issue with the panel’s finding of inconsistency despite the fact that the US wrongly identified the former’s appropriate level of protection. New Delhi also argued that the proposed alternatives were not precise enough to correspond to the product categories banned.

Ultimately, the Appellate Body rejected India’s arguments and said that the trade restrictiveness of India’s AI measures exceed what is required for the appropriate level of protection, thus violating this rule.

National treatment

The panel supported the US’ claim that India’s import prohibition on account of LPNAI, coupled with its lack of a domestic surveillance regime capable of reliably detecting the disease in its own poultry, amounts to arbitrary or unjustifiable discrimination between members where identical or similar conditions prevail.

India had requested a reversal of the panel’s finding, raising arguments such as lack of evidence, as well as countering that the panel should have accepted its self-assessment that it was LPNAI-free and not required New Delhi to prove that the disease is “exotic” to the country. The Appellate Body ultimately rejected such claims, agreeing with the panel that India’s measures violate trade rules because of the above-mentioned discrimination.