AUSTRALIA - dfat.gov.audfat.gov.au/trade/organisations/wto/wto-disputes/bulletin/... · This presentation will be divided into four broad areas. Mr Burmester will deal with the real

** AS DELIVERED **

WORLD TRADE ORGANIZATION

Panel established pursuant to Article 6 of the

Understanding on Rules and Procedures Governing the Settlement of Disputes

AUSTRALIA – MEASURES AFFECTING THE

IMPORTATION OF APPLES FROM NEW ZEALAND

(DS367)

Panel’s Second Substantive Meeting with the Parties:

Opening Statement of Australia

Geneva, 1 July 2009

Australia – Apples (DS367) Second Meeting: Opening Statement of Australia

1 July 2009

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Introduction

1. Good afternoon Mr Chairman and members of the Panel. Australia welcomes the

opportunity to present this statement to you. Before we do so, we would like to acknowledge the

assistance provided by the experts. We would be grateful if you could please convey our

appreciation to the experts.

2. This presentation will be divided into four broad areas. Mr Burmester will deal with the

real world context in which risk assessments occur and the impact that this has on the legal

approach that the Panel must take to an analysis of the issues. Mr Jennings will then address

methodology and Dr Roberts will address fire blight. I will then deal with European canker and

apple leafcurling midge (ALCM), and will make some concluding comments. I will now hand

over to Mr Burmester.

3. Mr Chairman and members of the Panel, this case is about the conduct of risk

assessments in the “real world”, where:

. scientific data are rarely comprehensive;

. limited scientific data available cannot fully resolve uncertainty about elements of potential

pathways;

. expert judgment is a legitimate and necessary part of risk assessments; and

. risk assessors must use their expert judgment to interpret available scientific data and to

address uncertainty.


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4. This is the real world in which WTO Members must base their SPS measures on

assessments, as appropriate to the circumstances, of the risks to human, animal or plant life or

health. And those assessments must themselves be based on scientific evidence.

5. In this context, you have to determine whether the three risk assessments before you in

the Final IRA Report are each objectively justifiable when taken in the context of Australia's

appropriate level of protection (ALOP).

6. To show that the risk assessments are not objectively justifiable, New Zealand must

establish serious flaws in the risk assessments for fire blight, European canker and ALCM. In

this statement, Australia will highlight why New Zealand has not done this and why its case

should be dismissed.

The practical realities of conducting risk assessments

7. We heard yesterday from Dr Schrader that lack of data is a problem with almost all plant

risk assessments, particularly where rare events are concerned. As a result, nearly every risk

assessment will involve expert judgment. Yet, faced with that reality, New Zealand seeks to take

a restrictive view of what should constitute sufficient scientific evidence. New Zealand, when it

suits it, does not accept that scientific evidence can be generated in a laboratory. It does not

accept risk pathways unless they have been historically documented and experimentally

confirmed in the orchard.

8. If New Zealand’s submissions were accepted, the scientific evidence used in risk

assessments would need to be absolute in its completeness and certainty; each step would need to

be supported by specific scientific evidence. New Zealand’s view not only fails to accord with

reality, as highlighted by discussions with the experts yesterday, but also runs contrary to the


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guidance provided in previous WTO SPS cases.1 Indeed, Biosecurity New Zealand’s own Risk

Analysis Procedures recognise that such a possibility is “impractical” and that there is a “need to

achieve a balance between acquiring perfect knowledge and obtaining reasonable estimates upon

which we can base our predictions with a reasonable level of confidence.”

Sufficiency of scientific evidence is not equivalent to scientific certainty

9. The SPS Agreement itself allows for this balance through the concept of “sufficient

scientific evidence”. What will be “sufficient” scientific evidence for the imposition of measures

must be assessed according to the specific facts and circumstances of each pest, taking into

account Australia’s ALOP.

10. By asserting that scientific evidence will only be “sufficient” if facts are experimentally

proven under orchard conditions,2 New Zealand in substance argues that “sufficient scientific

evidence” means “scientific certainty”. However, as Australia has noted, full scientific certainty

does not exist. New Zealand also applies the term “sufficient” as a requirement that the

conclusions of a risk assessment conform with its view of the scientific evidence. However, this

interpretation runs contrary to the standard of a “rational relationship” which is established in

Appellate Body guidance and has been consistently applied in past SPS cases. New Zealand’s

narrow standard of “sufficient scientific evidence” has no basis in the text of the SPS Agreement,

and if adopted, would deprive Article 2.2 of all meaningful connection with scientific knowledge

as it is developed and applied in the real world.

1 See, for example: Panel Report, Japan – Apples, para. 8.98; Appellate Body Report, EC – Hormones,

para. 187.2 For example, see: New Zealand’s second written submission, paras. 2.111 – 2.121.


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11. Australia agrees that the “conclusions drawn by the Member assessing the risk [must]

find sufficient support in the scientific evidence relied upon”.3 But certain steps in any given

pathway will be better supported by direct or experimental evidence than others. And there

could be many reasons for this, including that some steps are subject to greater levels of

investigation, while others may be very difficult to replicate experimentally to produce reliable

results. But, this fact alone cannot make the scientific evidence insufficient. The sufficiency of

scientific evidence relied upon by a Member is a judgment to be made in relation to the overall

risk assessment.

12. In the Final IRA Report, it is true that certain steps in the pathways assessed were better

supported by evidence than others. In those latter cases, expert judgment was employed. But

this does not affect the overall sufficiency of scientific evidence in the Final IRA Report, and the

Final IRA Report did not rely on 100% expert judgment.

Risk assessments may legitimately consider pathways that are not historically confirmed

13. Mr Chairman and Members of the Panel, in an effort to downplay the significance of the

risk, New Zealand devises an artificial distinction between a “hypothetical pathway” and a

“potential pathway”. However, New Zealand has focused on semantics – not substance. The

key issue is not how you label a pathway; it is whether the mere fact that it has not been

historically confirmed in every detail is a sufficient reason to dismiss a risk as pure speculation.

Australia does not consider that it is and the experts agree. Dr Paulin in particular recognised the

legitimate role of using hypotheses in conducting risk assessments.

14. It is common practice for many Members to impose SPS measures on fruit imports

despite there being no historically proven pathway for particular diseases. This is because

3 Appellate Body Report, US/Canada - Continued Suspension, para. 591.


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Members consider that, if fruit can be infected and carry the causal organism of a particular

disease, then it has the potential to introduce that disease to the importing country. In other

words, fruit is considered to be a potential pathway for the disease. Dr Schrader made precisely

this point yesterday.

15. In such circumstances, Members base their assessment on the biology of the disease. For

example, Australia understands that New Zealand has in place measures to protect against the

entry of certain pathogens on papaya and lychees,4 despite trade in these fruit not being a

historically proven pathway.

New Zealand is attempting to overturn Australia’s ALOP

16. Although New Zealand denies that it is judging what risks are significant for Australia, in

substance, it does precisely that when it argues that the standard of sufficient scientific evidence

contemplated by the SPS Agreement can only be met by conclusive, historical proof of a

pathway. Indeed, it notes that “the scientific evidence shows…that the likelihood that [the

pathway will be completed] is so small as to be insignificant”.5

17. But the judgment that the likelihood is “insignificant” is a value judgment about the

acceptable level of risk, not fact. This is exactly the kind of judgment which is not open to New

Zealand to make. The key issue is whether or not the risk is below Australia’s ALOP.

Standard of review and burden of proof remain fundamentally important

18. Mr Chairman and Members of the Panel, New Zealand has questioned Australia’s

motives in seeking to have the proper standard of review applied by the Panel. Australia has not,

4 Bipolaris hawaiensis, Pestalotiopsis sp. and Pytophthora capsici.5 For example, see: New Zealand’s second written submission, para. 2.454).


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as New Zealand claims, sought to “shelter” the Final IRA Report from review or to “divert the

Panel from the real issues in this case”.6 In fact, Australia’s position has been that the Panel

should begin its examination of this case by considering the Final IRA Report. And to facilitate

this examination, Australia has made its scientific and technical experts available for questioning

in all stages of these proceedings.

19. As Australia has made clear in its submissions, Australia recognises the legitimacy of

WTO scrutiny, but seeks to ensure that any review is consistent with the “delicate and carefully

negotiated balance” of rights and obligations contained in the SPS Agreement. Mr Chairman,

members of the Panel, you can review the Final IRA Report, but all that Australia asks is that

you apply the proper standard of review.

20. New Zealand’s only real contribution on the standard of review has been its objection to

Australia’s use of the term “considerable deference”. Again, by focusing on terminology, New

Zealand ignores the point that the substance of Australia’s submissions on standard of review has

been confirmed by the Appellate Body in US/Canada – Continued Suspension7. As previously

advised, in light of the detailed guidance provided by the Appellate Body since the first stage of

these proceedings, Australia no longer considers it necessary to use the term “considerable

deference”.8

21. The burden of proof on a complainant, which flows from the standard of review, requires

that New Zealand must establish serious flaws with the risk assessments at issue in order for the

Panel to be able to find that they are not objectively justifiable. Moreover, the objective

justifiability of a risk assessment is not impugned unless the complainant has demonstrated that

6 New Zealand’s second written submission, paras. 1.5 & 1.8.7 Australia’s rebuttal submission, paras. 13-18; US/Canada - Continued Suspension, paras. 590-615.8 Australia’s rebuttal submission, fn. 13.


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any serious flaws identified would have led to a lower level of assigned risk – not merely that

they might have done so.9

22. New Zealand has not proposed an alternative approach to determining whether a risk

assessment is objectively justifiable. Nor has it shown that any alleged flaws would have made a

difference to the overall conclusions of the risk assessments in the Final IRA Report.

23. Australia further recalls that New Zealand’s burden of proof means that it cannot rely on

either the Panel or the experts to make its case.10 It is up to New Zealand to raise arguments and

provide evidence in support of its claims. Furthermore, the Panel should be mindful that these

proceedings do not constitute some sort of “peer review” process, where the Panel is permitted to

rely on the experts to choose its preferred view of the science, because doing so would constitute

a de novo review of the Final IRA Report. As Australia has emphasised, multiple valid opinions

may result where there is a lack of data and therefore a degree of scientific uncertainty. This

point was exemplified by the experts’ sometimes differing responses to questions at the hearing.

The IRA is a legitimate scientific opinion

24. In inviting the Panel to make findings on the objective justifiability of the Final IRA

Report, it is clear that Australia does not consider that its risk assessments are self-justifying, or

that they are immune from review. WTO Members may legitimately rely on the scientific

opinions expressed in risk assessments as the basis of their SPS measures, if those risk

assessments are found valid. New Zealand makes the claim that the IRA "does not itself

constitute independent scientific opinion or scientific evidence".11 This is a surprising position

9 Appellate Body Report, Australia – Salmon (21.5), para. 7.57.10 See: Appellate Body Report, Japan – Agricultural Products II, para. 129.11 New Zealand’s opening statement at the first meeting, para. 49; New Zealand’s second written

submission, paras. 2.76, 2.107, 2.314.


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to maintain in the face of the repeated acceptance by both past WTO panels and the Appellate

Body that risk assessments unquestionably constitute scientific opinion.12

25. Thus, if Australia’s risk assessments are found valid, then Australia is entitled to rely

upon them as the basis of its measures, whether the conclusion on risk is a “divergent or minority

opinion” or not. In fact, Australia’s position from the very start13 has been that its SPS measures

stand or fall with the risk assessments in the Final IRA Report.

New Zealand seeks to revive its case

26. Mr Chairman and Members of the Panel, in response to Australia’s detailed explanation

in its first submission of the basis for the measures, New Zealand has attempted, in its rebuttal

submission, to revive its case by introducing new arguments which it had previously failed to

make. The Panel should not allow this to occur.

27. For example, New Zealand has used its rebuttal submission to attempt to expand its

claims under Article 5.6.14 New Zealand has sought to introduce further potential “alternative”

measures for the Panel’s consideration beyond its original argument that restricting imports to

“mature, symptomless apples” would achieve Australia’s ALOP for fire blight and European

canker.15 The introduction of such new claims should not be condoned by the Panel.

New Zealand explicitly restricted its claim to “mature symptomless apples”.16

12 See: Appellate Body Report, EC - Hormones, para. 194; Panel Report, EC - Biotech Products, paras.

7.3059-7.3060; US/Canada - Continued Suspension, para. 591. 13 See: Australia’s first written submission, para. 241.14 See: Australia’s rebuttal submission, paras. 448-452, 609-612; Australia’s responses to the Panel’s

questions after the first meeting, q. 138.15 See: New Zealand’s second written submission, paras. 2.894-2.895.16 New Zealand’s first written submission, paras. 4.490 & 4.491.


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28. Even more glaring is New Zealand’s suggestion that it identified a “measure limiting

imports to retail-ready packaged fruit” in the context of its ALCM claim under Article 5.6.17

The reference made in its first written submission to such a potential measure under Article 5.6

was clearly only in relation to fire blight.18 The only “alternative” measure identified by

New Zealand for ALCM was a 600-unit inspection.19 Therefore, that is the only “alternative”

measure which the Panel may consider in respect of ALCM.

The role of experts is limited

29. Mr Chairman, members of the Panel, the experts have provided a wealth of information

during the course of this dispute, both in response to your written questions, and now, orally.

However, it is not just what the information consists of which is important, but how you now

choose to use it. In this regard, the Appellate Body in US/Canada – Continued Suspension has

provided guidance as to how panels may draw upon the assistance of experts in SPS disputes.

30. In particular, experts assisting the Panel have a very specific and very limited role, and

that is to provide advice to the Panel, to assist the Panel on the technical and scientific aspects of

this dispute. Panels may not defer judgment to experts on matters which ultimately require the

Panel to draw legal conclusions, such as what amounts to “sufficient scientific evidence”. Nor

may experts make the case for New Zealand.

31. Further, the experts’ views cannot be considered determinative of the issues in dispute,

especially where the question is not whether something can occur, but how likely it is to occur.

Australia accepts that the experts disagree with Australia on certain aspects of the Final IRA

Report, but equally, Australia considers that a rigorous review of any risk assessment will always

17 New Zealand’s second written submission, para. 2.894.18 New Zealand’s first written submission, para. 4.490.19 New Zealand’s first written submission, para. 4.513.


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highlight particular points on which qualified and respected scientists disagree. The experts’

testimony is just one part of the evidence before the Panel, and simply because one or two

experts appointed by the Panel may disagree with particular aspects of a risk assessment, does

not mean that that risk assessment is not legitimate science. Nor is it for the Panel to choose

between different views.

32. In this dispute, seven experts from a field of potentially scores more have been selected

to assist the Panel in the four fields of expertise identified by the Panel. The practical reality is

that those seven experts may not be representative of the full spectrum of legitimate scientific

opinions held by their peers. Their views, those of the IRA Team and indeed, those of New

Zealand, may all sit on the same spectrum of legitimate scientific opinion.

New Zealand’s scientific claims fail to take into account the real world

33. Mr Chairman and members of the Panel, both parties in this dispute have set out lengthy

scientific and technical arguments on the risk assessments for the pests at issue in their written

submissions. Australia does not consider that it would be helpful, or in fact feasible, to rehearse

each and every one of these arguments in its oral statement today. Instead, Australia will focus

on certain key points to illustrate the superficial and selective, and ultimately flawed approach of

New Zealand to these complex issues. It fails to take account of the real world in which apple

production and trade occurs. Mr Jennings will begin this part of the presentation. Thank you.

Methodology

34. Mr Chairman and Members of the Panel, New Zealand asserts that there are three

fundamental flaws in the semi-quantitative methodology used in the Final IRA Report. These


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assertions contain significant technical errors and lack evidentiary support. Simply put, New

Zealand fails to make its case on methodology.

35. Before addressing New Zealand’s assertions in detail, Australia wishes to note that, in the

meeting with the experts, Dr Sgrillo advised that the semi-quantitative model used in the Final

IRA Report was acceptable. He observed that the assessment of the likelihood of entry,

establishment and spread was conducted on a quantitative basis, while the evaluation of

consequences was conducted on a qualitative basis. As Australia has emphasised, the conduct

of an assessment on a quantitative basis means that the attention has to be paid to the probability

intervals used, rather than engaging, as New Zealand has done as part of its argument, in a

semantic discussion of the meaning of “negligible”.

New Zealand’s first claimed fundamental flaw

36. New Zealand argues that the probability intervals listed in Table 12 of the Final IRA

Report20 are “arbitrary” and that this is the source of the first fundamental flaw. In this regard,

New Zealand takes issue with the use of the interval 0-10-6, in particular, the maximum value of

10-6 or one in a million.

37. New Zealand asserts that this maximum value is “significantly greater than can be

justified on the basis of known data”, including trade data.21 It contends that the IRA Team

could have concluded on the basis of trade data that this maximum value was too high.22 In this

20 Final IRA Report, Part B, p. 43.21 New Zealand’s first written submission, p. 95.22 New Zealand’s first written submission, para. 4.182.


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regard, New Zealand points to its trade in apples, and that of the United States, with Chinese

Taipei. Australia has demonstrated that New Zealand’s reliance on its trade data is flawed.23

38. Australia recalls that, at the meeting with experts, Dr Paulin confirmed his answer to the

Panel’s question concerning New Zealand’s reliance on its trade with Chinese Taipei to support

its arguments on fire blight. Dr Paulin noted very significant differences between Chinese Taipei

and Australia as far the introduction of fire blight is concerned.24

39. Australia notes there is a fundamental contradiction in New Zealand’s case which is

starkly illustrated by its claim that trade data may support its case and yet the Final IRA Report

is to be judged strictly against experimental evidence under orchard conditions. Indeed, New

Zealand insists that the IRA Team should have used trade data to inform its expert judgment. In

New Zealand’s view, “the availability of real world trade data should have led the risk assessors

to apply a ‘most likely value’ to their probability distributions”.25

40. New Zealand asserts that, in terms of the volumes of apples that may be exported to

Australia, the chance of something occurring once in a million apples may not be seen to be

negligible.26 It states that, and I quote:

an adverse event with a probability of 1 x 10-6 on a per-apple basis is

equivalent to an expected occurrence of once in a million apples, or 150 timesper year, based on … Australia’s estimate of the most likely volume of apples

traded (that is, 150 million apples per annum).27

41. In making this calculation, New Zealand assumes that an adverse event with the

probability of once in a million apples will occur within the total population of 150 million

23 See Australia’s first written submission, paras 308-311; New Zealand’s second written submission,

paras. 247-263.24 Dr Paulin’s reply to q. 44.25 New Zealand’s responses to the Panel’s questions after the first meeting, q. 107, para. 236.26 New Zealand’s first written submission, para. 4.180.27 New Zealand’s second written submission, para. 2.342.


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apples so that there would be 150 occurrences of the event every year. New Zealand states that

an event which occurs “150 times every year” is not an event that has a negligible likelihood of

occurring.28

42. However, New Zealand creates a misleading impression through its reference to an event

occurring “150 times every year”. New Zealand does not specify the nature of the adverse event,

where it occurs on a pathway, and whether that event would occur in the total population of 150

million apples. Australia asks the Panel to note that, without the specific case being given, New

Zealand’s calculation lacks any concrete connection to the Final IRA Report.

43. That this impression is misleading can be seen by reference to footnote 554 of New

Zealand’s second written submission, in which it states that, and I quote:

The median overall probability of entry, establishment and spread where a

small proportion of apples are handled through orchard based wholesalers is4.4 x 10-2 which equates to one instance … every 22 years. Based on the …

[importation of] 150 million apples per year, it can be ascertained that the IRA

assesses that 1 in every 3.3 billion apples will be contaminated with E .

amylovora and pass that contamination on to an uninfested host in a fire blightfree area with an infection occurring.

44. Unlike New Zealand’s failure to connect its calculation of 150 events per year with the

Final IRA Report, this footnote concerns the unrestricted risk assessment relating to the

probability of the entry, establishment and spread of fire blight. The relevant population in this

case is not the total volume of 150 million apples which may be imported into Australia, but the

subset of that population which will carry Erwinia amylovora, the organism which causes fire

blight. In relation to that population, Mr Chairman and Members of the Panel, one instance of

entry, establishment and spread of fire blight would be expected to occur every 22 years.

28 New Zealand’s second written submission, para. 2.342.


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45. When New Zealand concerns itself with a specific case of a relevant population

associated with a pest or disease, the outcome stands in stark contrast to that obtained from its

abstract calculation of 150 events occurring per year based on the total population of 150 million

apples.

46. In this regard, Australia recalls that, in the meeting with the experts, Dr Sgrillo

acknowledged that, if only a proportion of a total population of apples was infested, then the

expected number of events would be reduced proportionately. Based on his example of applying

one in a million to 200 million apples, giving 200 events, Dr Sgrillo agreed that if the infested

population was only 1% of the total population, or two million apples, then the number of

expected events would be two.

New Zealand’s second claimed fundamental flaw

47. Australia now turns to New Zealand’s assertion that the second fundamental flaw in the

semi-quantitative methodology is the use of uniform distributions in the Final IRA Report.

48. New Zealand states that the more times that the @RISK model randomly samples from

a uniform distribution, the more the mean of the output will draw closer to the mean of that

distribution, that is the value which is half-way between the minimum and maximum values of

the distribution.29 New Zealand’s statement does describe how @RISK operates in this regard.

To New Zealand, this highlights the importance of setting the maximum value of a uniform

distribution because it influences where the mean of a uniform distribution will lie.

49. By way of example, New Zealand returns to the interval 0-10-6. New Zealand correctly

notes that the mean of this interval when applied as a uniform distribution is 5 x 10-7, or one in

29 New Zealand’s first written submission, para. 4.190.


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two million. New Zealand states that, if an adverse event has a probability of occurring once in

two million apples, then, in a population of 150 million imported apples, 75 occurrences would

occur.30 Again, without the specific case being given, New Zealand’s calculation is in the

abstract and lacks any concrete connection to the Final IRA Report.

50. In its second written submission, New Zealand also asserts that there was “no evidence,

presented anywhere” that there was a “structured or recognised” process in place for eliciting the

opinions of IRA Team members and that this resulted in a “mechanistic approach” that produced

“frequent and unexplained” applications of uniform distributions.31 New Zealand’s glaring error

in making this assertion was highlighted in the meeting with experts yesterday when Australia

referred the Panel and New Zealand to Appendix 1 of the Final IRA Report.

51. Australia recalls that in Appendix 1 there is a summary of key points of the elicitation

process, which involved multiple discussions between the Bureau of Rural Sciences and the IRA

Team. As Australia noted in the meeting with the experts, Dr Barry was closely involved in

those discussions and would be happy to elaborate upon them to assist the Panel.

52. To conclude on this issue, Australia submits that uniform distributions may be

appropriately used in circumstances where the available evidence only allows the risk assessor to

estimate a minimum and maximum value, but not a most likely value for an interval. Dr

Schrader has identified this as a circumstance in which a uniform distribution can be used, as

does Firko and Podleckis (2000).

New Zealand’s third claimed fundamental flaw

30 New Zealand’s first written submission, para. 4.191.31 New Zealand’s second written submission, para. 2.348.


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53. Australia will now address New Zealand’s assertion that the third fundamental flaw in the

use of a semi-quantitative methodology is that it overestimates the likely volume of trade in

apples from New Zealand. This assertion is based on faulty suppositions.

54. The first is that New Zealand wrongly supposes that Australian consumers will not buy

the main varieties of apples it produces, such as Royal Gala and Braeburn. New Zealand

contends that the low production of Braeburn in Australia indicates it is not favoured by

Australian consumers. In its second written submission, Australia provides evidence that the low

production of the Braeburn variety in Australia is not due to consumer preference, but to the

difficulties associated with growing that variety.32

55. The second is that Australian supermarkets will be unlikely to stock New Zealand apples.

In its second written submission, New Zealand states that Australia has not challenged its

submissions regarding the position of Australian supermarkets. But Australia has done so in

both its first and second written submissions, demonstrating the lack of substance in New

Zealand’s assertions.33

56. The third is that the volume of New Zealand apples entering the Australian market would

lead to large price falls, making its exports uneconomic. In this regard, New Zealand seeks to

rely on an analysis prepared by the Australian Bureau of Agricultural and Resource Economics

(ABARE) that was taken into account in the Final IRA Report. Australia has demonstrated that

New Zealand’s assertions in relation to the ABARE analysis lack substance. As to the economic

viability of New Zealand apple exports, Australia recalls the views of advisors to the New

Zealand apple industry that Australia represents a significant export opportunity.

32 Exhibit AUS-126: Tancred (2009).33 See Australia’s first written submission, paras 331-333, and Australia’s second written submission, paras

284-289.


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57. The fourth is that New Zealand’s apple exporters will not divert apples to the Australian

market. Australia has exhibited material showing that a range of factors, such as increased

competition in New Zealand’s markets in the Northern Hemisphere, are placing significant

pressure on New Zealand exporters. In these circumstances, Australia would be a significant

new market.

58. In sum, New Zealand’s assertions concerning the semi-quantitative methodology in the

Final IRA Report lack substance and should be rejected by the Panel.

59. I will now hand over to Dr Roberts.

Fire blight

The fire blight case is essentially about the acceptable level of scientific uncertainty in risk

assessments

60. Mr Chairman and Members of the Panel, I now turn to address fire blight.

61. Countries with a very low tolerance for risk – such as Australia – face a difficult

challenge in performing risk assessments on the basis of available evidence in cases where rare

events have serious consequences. In such cases, an appropriate balance must be found between

a Member’s sovereign right to protect against rare events with serious consequences, and the

level of scientific evidence sufficient to justify the taking of measures.

62. Mr Chairman and members of the Panel, there is little doubt that fire blight is one of the

most serious and destructive plant diseases in the world. For this reason, it is also one of the

most studied diseases in the plant world. Yet despite the efforts of the scientific community,


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some issues on fire blight remain unresolved and those uncertainties lie at the heart of this

dispute.

63. The case for fire blight essentially comes down to the degree of scientific uncertainty that

the SPS Agreement can tolerate in a risk assessment. What is acceptable will depend on how the

elements of uncertainty – that is, what we do not know, and perhaps cannot prove about fire

blight – measure up against what we do know and have proven about fire blight. Importantly, it

is up to New Zealand to show that the element of uncertainty results in a flaw so serious that, if

absent, it would have – not might have, or could have – led to a lower level of overall assessed

risk.34 In practical terms, this means that the overall level of risk must be shown to drop below

Australia’s ALOP. Then, and only then, should the Panel find that uncertainty has compromised

the fire blight risk assessment to such an extent that it cannot have reasonable confidence in the

evaluation made.

64. In this regard, one of the most significant outcomes of yesterday’s meeting was that fire

blight experts not only confirmed that there is a potential pathway for fire blight through mature

apples,35 but that there is a real risk present to be assessed and managed. Dr Paulin again

explicitly supported Australia’s two principal risk reduction measures, which clearly indicates

that the risk associated with that pathway is above Australia’s ALOP. Australia considers that

there can be no better endorsement of the ultimate conclusion reached in the fire blight risk

assessment. As such, any flaws in the Final IRA Report cannot be regarded as compromising the

overall conclusion that fire blight measures are required for New Zealand apples, and the Panel

should have reasonable confidence in the evaluation made.

34 Panel Report, Australia – Salmon (Article 21.5 – Canada), para. 7.57. See: Australia’s first written

submission, para. 346.35 See also: Reply of Dr Paulin, qs. 16 & 45.


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65. New Zealand’s burden of proof is central to the fire blight case. This is not a diversion,

or a legal argument designed to distract you from the scientific evidence. This case is about the

scientific evidence and that includes whether New Zealand’s evidence, in light of what you have

heard yesterday, has satisfied you that the rare events which Australia seeks to protect against are

not supported by scientific evidence.36 It is not about what risks are most probable, not about

what risks are associated with small volumes of apples and not about what risks other WTO

Members consider significant. Australia has explained that its fire blight risk assessment is

concerned with a specific risk scenario,37 and yet it is this scenario which New Zealand has

consistently ignored. In doing so, New Zealand has failed to discharge its burden of proof in

relation to fire blight.

New Zealand’s “pathway” argument is the core of its fire blight case.

66. Mr Chairman and members of the Panel, the central pillar of New Zealand’s argument is

the claim that there is no scientific evidence supporting a pathway for fire blight through mature

apples.38 New Zealand has put forward several variations of this argument – that the pathway

does not exist,39 that it does not exist for practical purposes,40 that it is “insignificant”,41 that it

has not been shown to occur, and that it will never occur in the future.42

36 New Zealand’s central argument, as is discussed later, is that there is no pathway for fire blight through

mature apples.37 Australia’s rebuttal submission, paras. 322-324.38 See for example: New Zealand’s second written submission, paras. 2.104, 2.108, 2.110, 2.111, 2.120,

2.123, 2.127, 2.451-2.454.39 New Zealand’s second written submission, paras. 2.104, 2.108, 2.110, 2.111, 2.120 & 2.451-2.452.40 New Zealand’s responses to the Panel’s questions after the first meeting, qs. 59, 62 & 65 ; New

Zealand’s second written submission, para. 2.123.41 New Zealand’s responses to the Panel’s questions after the first meeting, qs. 59, 62, 63, 64 & 65. New

Zealand’s second written submission, paras. 2.452 & 2.454.42 New Zealand’s second written submission, paras. 2.120 & 2.297.


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Neither the SPS Agreement or ISPMs require risk assessments to be based on historically

“proven” pathways

67. Turning first to the claim that the pathway does not exist, New Zealand asserts that

“Australia’s fire blight measures would be justified only if there were scientific evidence to

support the overall pathway”;43 that is, “evidence supporting the linking together of the steps as a

complete pathway”.44 In effect, New Zealand claims that risks do not exist unless the pathway

has been historically documented and experimentally proven.

68. However, this requirement has no basis in the SPS Agreement or the international

standards45. Dr Schrader confirmed this point in yesterday’s meeting and in her written

responses to Question 45. As Dr Schrader is an expert on ISPM No. 2 and risk assessment

methodologies, Australia considers that her views should be given weight by the Panel.

69. Similarly, Articles 5.1 and 2.2 do not refer to pathways and do not impose any

requirement that Members assess only the pathways that have been historically documented.

New Zealand may assert that Japan – Apples is authority for the claim that the SPS Agreement

requires pathways to be “actual pathways, not merely hypothetical ones”.46 However, New

Zealand is silent on which part of the panel report supposedly supports this view. To read such a

requirement into either provision is tantamount to requiring full scientific certainty in relation to

every risk.

43 New Zealand’s second written submission, para. 2.120. (emphasis added)44 New Zealand’s second written submission, para. 2.111.45 For example, ISPM No. 11.46 New Zealand’s second written submission, paras. 2.371 & 2.440.


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70. However, as the fire blight experts have told us yesterday, the pathway for fire blight is a

long way from being wholly “speculative”. This is a pathway that is substantially confirmed

with some elements of uncertainty.

The fire blight pathway is substantially confirmed

71. Mr Chairman and Members of the Panel, you should not lose sight of this fact. While the

pathway for fire blight through mature apples as a whole may not be confirmed by direct

experimental evidence as New Zealand claims it should, a very substantial part of the pathway is

confirmed.

72. It is beyond doubt that live E. amylovora, the causal organism for fire blight, will enter

Australia on the surface of mature apples if trade occurs.47 It is beyond doubt, and undisputed by

New Zealand, that Australia has suitable conditions for the establishment of fire blight disease.48

It is also beyond doubt, that if fire blight were to establish in Australia, there is the potential for

spread within geographic regions.49 Finally, it is beyond doubt that fire blight, one of the most

serious plant diseases in the world, has the potential to cause severe economic and biological

loss.

73. Only one step in the pathway is subject to any real degree of uncertainty, and that is

whether E. amylovora can be transmitted from an apple to a susceptible host plant, and initiate a

fire blight infection. But even in relation to this point, there is indirect evidence that

transmission can occur. Dr Paulin confirmed yesterday that rotting apples discarded in an

47 CABI. Indeed, the vast preponderance of scientific evidence accept that E. amylovora will be found on

the surface of apple fruit when sourced from areas where fire blight is endemic.48 Australia’s first written submission, para. 482.49 Australia’s first written submission, para. 485.


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orchard can provide a possible source of inoculum.50 The experts also confirmed that the

relevant transmission mechanism contemplated by the IRA Team – that is, pollinating insects –

is a confirmed mechanism for the secondary spread of fire blight and that primary spread could

occur in the way described by the IRA Team.51 Finally, the IRA Team’s view that small

numbers of bacteria (around 10 colony forming units (cfu)) can multiply to cause infections in

susceptible hosts is supported by scientific evidence. It is true that some of this evidence is

uncertain. But as Dr Schrader said, uncertain evidence is quite different to no evidence, and it is

often the only evidence risk assessors have.52

74. When taken together, the IRA Team’s judgment that transmission could occur in a rare

case can hardly be dismissed as “speculation”.53 The available evidence on this point may not

support direct proof, but it does support a rational inference that the pathway can be completed.

Australia is not alone in taking this view. Australia’s view is corroborated in the phytosanitary

practices of other WTO Members who impose very similar risk management measures to

Australia.54

New Zealand’s evidence does not support the claim that the pathway will not be completed in

Australia’s circumstances.

75. Mr Chairman and Members of the Panel, however, even leaving these issues to one side,

New Zealand cannot simply assert that the pathway is “hypothetical”. It must prove this point

with evidence and argument.

50 Reply of Dr Paulin, q. 21.51 Even New Zealand agrees that insects are a means of secondary spread: New Zealand’s response to the

Panel’s questions after the first meeting, q. 61, para. 96. Reply of Dr Paulin, q. 35.52 Van der Zwet et al (1994); Hildebrande (1937); Taylor et al. (2003b), p. 328 & 331.53 New Zealand’s first written submission, paras. 4.8, 4.237, 4.252; New Zealand’s second written

submission, paras. 2.492 & 2.452.54 See: Australia’s rebuttal submission, paras. 342 & 343.


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76. New Zealand’s pathway argument, and indeed its fire blight case, rests primarily on three

pieces of evidence. These are: Japan – Apples, Roberts and Sawyer (2008) and “real world”

trade data. It is highly significant that each of these three bases have either been discredited by

Australia,55 rejected by the experts as irrelevant or inappropriate,56 or both. Recently, New

Zealand has asserted that several other studies, namely Roberts et al. (1998), Hale et al. (1996),

Taylor et al. (2003a) and Taylor et al. (2003b) also point to a lack of a pathway. However, New

Zealand fails to acknowledge that much of this evidence57 cannot be relied on for drawing

conclusions about the risk in Australia’s circumstances.

77. Dr Paulin and Dr Deckers confirmed yesterday that it is not possible to draw conclusions

about rare events from Hale et al. (1996) and Taylor et al. (2003a) as the sample sizes are not

comparable to commercial volumes of international trade in apples.

78. The data set in Roberts et al. (1998) was the same data set used by the later Roberts and

Sawyer (2008), and accordingly, suffers from the same defects identified by Australia in Annex

1 of its rebuttal submission. The key problem is that while the Roberts papers may indicate

something about the efficacy of phytosanitary measures, it is not possible to draw reliable

conclusions about potential risks when trade is unrestricted.58

79. Finally, apart from the two Roberts papers, it is highly significant that the majority of the

scientific evidence that New Zealand relies upon has not found that the pathway does not exist.

They have all found, including Japan – Apples, that the pathway is “negligible”. This is an

55 In relation to Japan – Apples, see: Australia’s first written submission, paras. 250-262; Australia’s

responses to the Panel’s questions after the first meeting, q. 40; Australia’s rebuttal submission, paras. 325-329. In

relation to Roberts and Sawyer (2008), see: Australia’s first written submission, paras. 363-376; Australia’s rebuttal

submission, paras. 330-337 & Annex 1. In relation to trade data, see: Australia’s first written submission, paras.

308-311; Australia’s rebuttal submission, paras. 247-263 & 338-343.56 Reply of Dr Paulin, qs. 41 & 44; Reply of Dr Deckers, qs. 41 & 44.57 With the exception of Taylor et al. (2003b), as Australia has discussed.58 Australia’s rebuttal submission, Annex 1.


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important point: a likelihood of “negligible” is not zero, nor does it mean that an event will not

occur, unless you apply a definition of “negligible” that means “insignificant” or “not worth

considering”. This is where, contrary to its denials, New Zealand has trespassed on Australia’s

sovereign right to determine ALOP.59 The significance or otherwise of a potential event is

ultimately a value judgment and therefore, a judgment for Australia alone.60 Since Australia is

concerned with rare events, non-zero findings are significant.

New Zealand has not demonstrated serious flaws in the Final IRA Report

80. Mr Chairman and Members of the Panel, once New Zealand’s pathway argument falls

away, the only remaining question is whether New Zealand has established serious flaws in the

Final IRA Report. New Zealand has consistently failed to show any serious flaws in the levels

of probability assigned to key steps in the pathway, and consequently, has not overturned the

overall conclusion that the risk is above Australia’s ALOP. The defects in New Zealand’s

arguments on the various steps in the pathway are discussed in detail in Australia’s rebuttal

submission and Australia will not rehearse them all here. Australia will refer to a number of

further issues that the Panel should consider when testing New Zealand’s claims.

81. In relation to Importation step 1, New Zealand asserts that the probability of 1 is

overestimated since E. amylovora cannot be present in all source orchards in New Zealand.61

This implies that the IRA Team should have taken into account that an undefined number of

potential export orchards have area freedom and factored this into their assessment.

82. However, under Article 6 of the SPS Agreement, it is up to exporting Members to

“objectively demonstrate” disease free areas and areas of low pest prevalence. A good example

59 See: New Zealand’s second written submission, paras. 320 & 321.60 See: European Communities’ third party submission, para. 33.61 New Zealand’s second written submission, para. 2.402.


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of this is Japan’s demonstration of area freedom in Tottori in relation to brown rot and Japanese

Erwinia. In the case of orchard freedom from E. amylovora, it would be very surprising if a

lesser standard of objective proof regarding the application and efficacy of measures would

apply in the risk assessment context under Article 5.1. In this case, New Zealand had many

opportunities to provide the relevant evidence to the IRA Team but declined to do so despite

repeated requests.62 It is therefore not credible for New Zealand to effectively argue that it has a

claim to area freedom when it clearly does not.

83. A similar problem arises in respect of New Zealand’s claims under Importation step 4.63

New Zealand claims that “disinfection of fruit as a routine procedure …occurs in New Zealand

packing houses and therefore…has to be considered in the assessment of unrestricted risk.”64

But again, this implies that the IRA Team should have assumed that that an undefined number of

packing houses achieve equivalence to Australia’s disinfection measure.

84. Article 4.1 of the SPS Agreement states that Members need only accept other measures as

equivalent “if the exporting Member objectively demonstrates to the importing Member that its

measures achieve the importing Member’s ALOP”. New Zealand has certainly provided

evidence that some disinfectant is used in some packing houses, but no “objective” proof as to

whether disinfectant is applied effectively.65 Accordingly, New Zealand has no legitimate claim

of equivalence, and the IRA Team could not have been expected to make such an assumption in

its unrestricted risk assessment.

85. As New Zealand correctly points out in Annex 1 of its second written submission, the

three key importation steps which make the most significant contribution to the probability of

62 Final IRA Report, Part B, p. 54.63 New Zealand’s comments on Australia’s comments on the experts’ replies, paras. 45 & 46.64 New Zealand’s comments on Australia’s comments on the experts’ replies, para. 46.65 Australia’s rebuttal submission, para. 382.


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entry are Importation steps 2, 3 and 5. However, New Zealand’s arguments on Importation step

2 are simply not credible in light of its failure to acknowledge the critical assumptions

underpinning the analysis66 and its insistence that endophytic infection is relevant to the IRA

Team’s assessment in the face of clear and explicit statements to the contrary.67

86. In relation to Importation steps 3 and 5, the Panel should bear firmly in mind that New

Zealand led no substantive evidence and argument of its own in the first stages of this dispute.

Realising the significance of these steps to the overall risk, it has retrospectively sought to use

the experts’ replies to advance a case it failed to make previously. This is not consistent with the

principle that the complainant bears the burden of proof in this dispute, and the Panel should take

care that it does not inadvertently make the case for New Zealand by allowing the experts’

replies to plug the significant gaps in New Zealand’s evidence.68

87. Mr Chairman and Members of the Panel, but even leaving the legal concerns aside, the

experts’ replies do not raise an inference of serious flaws. It may be superficially convincing

that New Zealand can point to potential problems in the Final IRA Report by asking the experts

to confirm some doubts about some of the IRA Team’s evidence. But this shows nothing more

than the fact that the experts did not agree with the IRA Team’s analysis in its entirety. For

when Australia asked the experts yesterday whether the key steps underpinning the IRA Team’s

analysis were based on science, they unanimously said “yes”. This affirmation is simply not

compatible with any assertion that Australia’s risk assessment lacks foundation.

88. No risk assessment conducted in the real world can be free of problems, and it is simply

not enough for New Zealand to point to minor flaws and assume that they have the kind of

66 Australia’s rebuttal submission, para. 371-373.67 Australia’s rebuttal submission, para. 370.68 Appellate Body Report, Japan – Agricultural Products II, para. 129. See also: Australia’s rebuttal

submission, para. 5.


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impact on the overall risk that New Zealand hopes for. New Zealand has to prove that the

absence of any shortcomings would have led to a lower level of assessed risk, and in this it has

failed. It has not shown that a reduction in the likelihoods assigned to Importation steps 2, 3 and

5 will result in the reduction in the overall risk such that it drops below Australia’s ALOP. I will

now hand over to Mr Baxter. Thank you.

European canker

89. Mr Chairman and members of the Panel, I would now like to turn to New Zealand’s

challenge to the IRA Team’s risk assessment for European canker.

90. At the outset, Australia recalls that at yesterday’s meeting with the experts,

Professor Latorre reiterated his view that there is a risk of introducing Neonectria galligena

associated with the importation of latently infected apple fruit.69 Moreover, both experts agreed

that the long distance spread of European canker via apple fruit could not be ruled out.70

Australia’s climatic conditions

91. One of the common threads running through New Zealand’s case on European canker is

the alleged unsuitability of Australia’s climatic conditions for the development of the disease.

However, as Australia elaborated at yesterday’s experts meeting, there are areas of Australia,

including commercial apple growing regions, which have climatic conditions suitable for the

establishment and spread of European canker.71

69 Reply of Prof Latorre, Guideline (g) and q. 65.70 Reply of Prof Swinburne, q. 64.71 Australia’s rebuttal submission, paras. 532-550.


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92. Contrary to what New Zealand asserts,72 the Final IRA Report contains an objective,

coherent and substantive analysis of the environmental conditions, including climate, relevant to

the establishment and spread of European canker.73 The validity of this analysis has been

confirmed by the detailed work undertaken by the Bureau of Rural Sciences (BRS).74

93. Rather than identifying any serious flaws in the IRA Team’s consideration of climate,

New Zealand has simply introduced an alternative climate analysis in an attempt to impose its

view of the science on Australia. This is a prime example of the underlying premise of New

Zealand’s case, namely that there is only one “correct” view of the science. In adopting such an

approach, New Zealand attempts to reverse the burden of proof in this dispute, arguing that

Australia has failed to demonstrate any errors in New Zealand’s climate analysis.75

94. What New Zealand fails to recognise is that, just because there may be alternative views

as to the climatic conditions conducive to European canker, this does not mean that the IRA

Team’s analysis is invalid. This is particularly so given the ongoing debate in the scientific

community regarding the climatic conditions required for European canker development

resulting in a variety of predictive models.76 In this regard, Australia notes Dr Swinburne’s

comments yesterday confirming that there is no complete model to assess the climatic conditions

required for the development of the disease. He also mentioned that there are a range models

around the world which are yet to be joined up and that this is a complicated area necessitating

expert judgement.

72 New Zealand’s second written submission, para. 2.639.73 Final IRA Report, Part B, pp. 119-120, 137, 140, & 141.74 Australia’s first written submission, Annex 2; and Australia’s rebuttal submission, Annex 2.75 New Zealand’s second written submission, paras. 2.178, 2.185, 2.617 & 2.666.76 Australia’s rebuttal submission, Annex 2, pp. 249-250.


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95. The BRS climate analysis draws on a range of these predictive models to demonstrate the

climatic similarity between parts of Australia and those areas of the world where European

canker is present.77 The BRS analysis shows that, if European canker entered Australia, it could

establish and spread to host plants in Australia’s commercial apple growing regions and

metropolitan areas, such as Sydney and Melbourne. Both European canker experts accepted this

at yesterday’s meeting. In fact, even New Zealand acknowledges that parts of Western

Australian and Tasmania, which include some of Australia’s major apple growing regions, have

suitable climates for European canker.78

96. To drive home this point, Mr Chairman and members of the Panel, Australia considers it

worth highlighting that the BRS climate analysis employed New Zealand’s own Beresford and

Kim model. In doing so BRS demonstrated that Melbourne, Sydney and one of Australia’s

major apple-growing regions in South Australia, all had months meeting Beresford and Kim’s

requirements during autumn, the most suitable period for infection.79 New Zealand has

completely failed to respond to this aspect of the BRS climate analysis.

97. Mr Chairman and members of the Panel, the alleged unsuitability of Australia’s climate

lies at the core of New Zealand’s case on European canker. It underpins New Zealand’s

arguments: on spore production, dispersal and infection;80 on establishment and spread;81 on

alternative hosts;82 on the Spreyton disease outbreak;83 and on consequences.84 Therefore, once

77 Australia’s rebuttal submission, Annex 2, pp. 251-257.78 New Zealand’s second written submission, paras. 2.186 & 2.644.79 Australia’s rebuttal submission, Annex 2, p. 252, Figure 6. See also: Australia’s first written submission,

Annex 2, Figure 10.80 New Zealand’s second written submission, paras. 2.580, 2.590, 2.591, 2.601, 2.602, 2.616.81 New Zealand’s second written submission, paras. 2.129, 2.162, 2.460, 2.638-2.645.82 New Zealand’s second written submission, paras. 2.650-2.652.83 New Zealand’s second written submission, paras. 2.186-2.188, 2.192, 2.199, 2.203.84 New Zealand’s second written submission, paras. 2.460, 2.664-2.674, 2.685


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you accept the reality that New Zealand does not have the only legitimate predictive model for

European canker development, its case falls away.

Importation step 2

98. Mr Chairman and members of the Panel, another criticism which New Zealand makes of

the Final IRA Report relates to the incidence of latent fruit infection in New Zealand which, as

you will recall, is the focus of the IRA Team’s analysis under Importation step 2. New Zealand

continues to equivocate on this matter.85 However, the reality is that fruit rot occurrences have

been reported in New Zealand and it follows that latent fruit infection does occasionally occur in

New Zealand.86 This was the view of the IRA Team87 and it was accepted by Dr Swinburne at

yesterday’s meeting.

99. In arriving at its conclusion on Importation step 2 the IRA Team took into account an

observation of latent fruit infection in New Zealand by a specialist field plant pathologist.88 This

observation was contained in an official report of the New Zealand Ministry of Agriculture and

Fisheries, a report New Zealand now seeks to disown in the context of this dispute.89

Proximity and exposure

100. Mr Chairman and members of the Panel, New Zealand also seeks to question the IRA

Team’s analysis of proximity and exposure for European canker.90 However, the IRA Team’s

view that discarded infected apples can produce spores, primarily conidia, which disperse and

85 New Zealand’s second written submission, para. 2.129, 2.143, 2.149, 2.150, 2.460 & 2.488.86 Australia’s rebuttal submission, paras. 473-485.87 Final IRA Report, Part B, p. 123.88 Personal communication from Mike Dance: Exhibit NZ-34: Braithwaite (1996), p. 5.89 New Zealand’s second written submission, paras. 2.138-2.147; 2.152-2.156 & 2.486-2.487.90 New Zealand’s second written submission, paras. 2.574- 2.635.


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initiate infection, is legitimate science.91 This view is consistent with the biology of fungal

pathogens as evidenced by photographic evidence showing masses of conidia on rotten fruit.92

101. In addition, Australia recalls that Professor Latorre yesterday reiterated his view that:

asymptomatic but infected mature apples could develop symptoms and eventually sporulate

during transit and commercialisation in Australia;93 and also that rotted fruits discarded near

susceptible hosts could potentially be a source of inoculum for infections in new areas.94 During

the experts meeting, Dr Swinburne also suggested that some latently infected New Zealand

apples arriving in Australia could develop spores.

Consequences

102. Mr Chairman and members of the Panel, New Zealand’s criticism of the IRA Team’s

consequences analysis completely disregards Australia’s ALOP and the fact that it is free of

European canker.

103. At yesterday’s experts meeting, Professor Latorre confirmed that plant pathology

information from around the world95 – which informed the IRA Team’s consideration of this

matter – invariably refers to European canker as being a severe disease with serious

consequences. Dr Swinburne confirmed that European canker can be very damaging.

104. Yesterday Dr Swinburne also noted the occurrence of 5% European canker fruit rot at

East Malling in the United Kingdom,96 an area which he confirmed only had marginal climatic

suitability for development of the disease. Australia cannot accept that such an event could be

91 Australia’s rebuttal submission, paras. 507- 521.92 Exhibit NZ-10: McCartney (1967), p. 279.93 Reply of Prof Latorre, q. 65.94 Reply of Prof Latorre, q. 69.95 Australia’s rebuttal submission, Annex 3.96 Exhibit AUS-142: Berrie (1989).


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considered as anything less than “moderate” – and that is the consequences rating assigned to

European canker by the IRA Team. This is especially so given Australia’s particular

circumstances, including the fact that there are a wide range of alternative hosts plants in

Australia.97

105. In sum, Mr Chairman and Members of the panel, although there is a low risk associated

with importing New Zealand apples, this risk exceeds Australia’s ALOP. Accordingly, the IRA

Team determined that it was necessary to source apples from New Zealand export orchards or

blocks free of the disease. Professor Latorre reiterated yesterday that in his view this is a

reasonable risk mitigation measure.98 Moreover, both experts agreed that an SPS measure

requiring New Zealand to export mature symptomless apples would not achieve Australia’s

ALOP.

ALCM

106. Turning now to ALCM, at the outset, Australia takes this opportunity to correct the

suggestion in New Zealand’s rebuttal submission that a 3000-unit inspection would be

undertaken by Australian officials99 in addition to the 3000-unit inspection required to be

undertaken by New Zealand. Australia requires only a single 3000-unit inspection per

consignment (rather than per orchard100) to be conducted under the auspices of New Zealand.101

107. Mr Chairman and members of the Panel, your consideration of the ALCM risk

assessment needs to be cognisant of the significant lack of data available on several of the key

97 Australia’s rebuttal submission, paras. 578-580.98 Reply of Prof Latorre, Guideline (g).99 Either on-arrival in Australia, or in New Zealand if part of a pre-clearance program: New Zealand’s

second written submission, paras. 2.909-2.911, fn. 1329.100 During the meeting with the experts, Professor Cross indicated that he understood that the 3000-unit

inspection would apply to apples from each orchard.101 See: Final IRA Report, Part B, pp. 319-320.


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issues in dispute – including the viability of ALCM on New Zealand apples, the time required

for adults to emerge following cold storage and also flight distance. ALCM is present in only a

few countries, and as Professor Cross confirmed yesterday, there has been relatively little

research conducted or reliable data generated on this pest. This point is illustrated by the

difficulty the Panel had in identifying an ALCM expert for the purposes of this dispute.

108. During these proceedings, New Zealand has provided new data on a number of issues in

its attempt to criticise the IRA Team’s evaluation of ALCM.102 Obviously, however, the

IRA Team could not have considered information that was not available to it during the IRA

process. Australia recognises that this new information would need to be taken into account in

any review of the import conditions; such a review mechanism is indeed provided for in the

Final IRA Report itself.103 But it is clear that still further reliable data is required, and as

Professor Cross indicated, New Zealand is in the best position to provide the appropriate

information.

109. New Zealand does not seriously dispute that ALCM could establish in Australia from a

biological perspective. Professor Cross’ reference to the “powerful life force” in the context of

the insect’s potential survival in a new environment was significant in this regard. Rather, New

Zealand relies on its assertion that the “majority” of its exports will be in the “retail ready” form,

which New Zealand contends means that insufficient numbers of infested apples would come

within proximity of suitable hosts. And secondly, that “Australian agricultural waste practices

would preclude any opportunity for ALCM establishment” because of New Zealand’s conjecture

that apple waste is never left exposed in Australia.104 Both its assertions are flawed.

102 New Zealand’s advice that the August 2005 data related to occupied cocoons in New Zealand’s

response to the experts’ factual queries, 17 February 2009; New Zealand’s clarification of the Rogers et al. (2006)

paper in Exhibit NZ-102; data on adult emergence in Sandanayaka & Rogers (2009), Exhibit NZ-119.103 See: Final IRA Report, Part B, p. 325.104 For example, see: New Zealand’s second written submission, paras. 2.252, 2.750, 2.752, 2.754.


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110. Professor Cross’ opinion that the level of risk associated with ALCM might be lower

than that evaluated by the IRA Team was clearly conditional on whether New Zealand apples

would not be distributed to orchard wholesalers and would be continuously held in cool chain

conditions until point of sale.105 In Australia’s view, New Zealand has failed to establish the

validity of either of these propositions. Professor Cross confirmed that if large volumes of

apples were directed to orchard packing houses, the risks would be much greater.

111. New Zealand has not established that the “majority” of its apples would be imported

“retail ready”. Australia has set out the reasons why this would be determined by commercial

factors. And even if the “majority” of apples were imported retail ready, New Zealand has not

demonstrated that such apples would never be sent to orchard wholesalers for repackaging or

reconditioning.106 Similarly, New Zealand has failed to establish that apple waste would be

managed in the way that it asserts, and that groups of apples would never be left out of cold

storage near host plants for a sufficient length of time.107

112. New Zealand has also failed to address Australia’s argument that waste from orchard

packing houses is not the only relevant risk scenario.108 Professor Cross agreed with Australia’s

point in this regard, and observed that ALCM could remain dormant in the soil in Australia until

environmental conditions became suitable for emergence.

113. Neither Australia nor New Zealand is in a position to specify with any degree of

precision how frequently the mode of trade would be via bulk fruit as opposed to packed “retail

ready” fruit. It will depend on commercial considerations which will vary according to the

105 Professor Cross stated: “If all fruit were shipped as retail ready and held in a cool chain conditions until

sold to consumers, the risk of importation, establishment and spread would be greatly reduced”. (Reply of Professor

Cross, q. 98)106 See: Australia’s rebuttal submission, paras. 651-654; Australia’s first written submission, paras. 781-

783.107 See: Australia’s rebuttal submission, paras. 659-665.108 See: Australia’s rebuttal submission, paras. 659-665.


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market circumstances at any given point of time. There is an established integrated supply

network for apples in Australia, with extensive facilities already in place, and there is also a need

for suppliers to meet weekly demand requirements and changing market specifications of major

supermarkets. It is therefore hard to imagine that there would not be some commercial

advantage in exporting bulk fruit to Australia. There would also be a freight costs advantage in

being able to ship containers loaded with bulk bins compared to containers loaded with packed

cartons or returnable crates.

114. Mr Chairman and Members of the Panel, Table 43 of the Final IRA Report illustrates that

there would be more than enough infested apples distributed to orchard packing houses for there

to be a reasonable likelihood of an establishment event taking place,109 even if the actual level of

infestation of New Zealand apples is somewhat lower than the IRA Team assumed on the basis

of the August 2005 data.

115. New Zealand has incorrectly suggested that the relationship between the level of viable

infestation (or the probability of importation) and the probability of entry, establishment and

spread, is a linear one.110 Even if there were only half as many infested apples as originally

estimated, this does not mean that the chance of a mating pair is also halved.

116. New Zealand’s claim that ALCM will need at least 13-18 days to emerge after removal

from cold storage has been refuted by Professor Cross. Professor Cross validated the

IRA Team’s judgment on this point, when he confirmed at the experts’ meeting that adults could

potentially emerge very quickly, and perhaps as quickly as within a couple of hours following

exposure to suitable environmental conditions.

109 See: Australia’s rebuttal submission, paras. 644-649.110 See: New Zealand’s second written submission, para. 2.694.


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117. New Zealand’s claim that “the IRA’s conclusions were based on the assumption that all

ALCM present on New Zealand apples would simultaneously emerge as soon as the apples were

removed from cold storage”111 is simply wrong. The IRA Team’s analysis was focussed on “the

likelihood of at least one establishment and spread event happening” in light of the number of

apples that might arrive at particular locations.112 Emergence of individuals over a period of

time113 does not mean that a mating pair could not emerge simultaneously.114 It is important to

understand that batches of New Zealand apples sent to orchard packing houses will not be

isolated from each other. Rather, the regular and continuous arrival of apples means that groups

of infested apples will overlap and a mating pair could be generated from separate deliveries – as

Professor Cross noted, viable ALCM may remain dormant for a year or more before emergence.

118. Further, at the experts’ meeting, Professor Cross was clear in his opinion that the

IRA Team’s consideration of flight distance was reasonable. In the view of Professor Cross,

there is no reason to assume that a mated female would not be able to fly 200 metres, or perhaps

even further. Professor Cross has specifically criticised New Zealand’s arguments on this

issue.115

119. Australia does not consider that New Zealand has established any flaws with the Final

IRA Report so serious that would suggest that, if absent, they would have resulted in a materially

different conclusion on unrestricted risk for ALCM. Even though the potential consequences

may be “low”, as the IRA Team concluded,116 Professor Cross agreed that risk management was

required for ALCM.

111 New Zealand’s second written submission, para. 2.741. (emphasis added; footnote omitted)112 Final IRA Report, Part B, p. 34. (emphasis added)113 See: New Zealand’s second written submission, para. 2.742.114 See: Australia’s rebuttal submission, paras. 644-646, 656-658.115 Reply of Prof. Cross, q. 94(iii).116 Final IRA Report, Part B, p. 187.


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120. If the unrestricted risk is above Australia’s ALOP, that means that risk management

measures are required, and the question then becomes what level of inspection would reduce that

risk to Australia’s ALOP. Dr Sgrillo agreed with Australia that the underlying level of

infestation is the appropriate factor for determining the requisite rate of inspection to reduce risk

to ALOP. ISPM No. 31 makes it clear that a 600-unit inspection would be insufficiently

sensitive for that purpose given the low level of ALCM-infestation on New Zealand apples.117

Australia submits that the Panel should find that Australia’s risk assessment and measures for

ALCM are valid.

Conclusion on the risk assessments for fire blight, European canker and ALCM

121. Mr Chairman and members of the Panel, in sum, Australia has shown you why New

Zealand’s arguments in relation to the risk assessments for the three pests at issue are flawed and

cannot be sustained.

122. In relation to methodology, Australia has demonstrated that New Zealand’s assertions on

methodology are deeply and irretrievably flawed. The Panel should dismiss them.

123. In relation to fire blight, New Zealand’s pathway argument has no basis in the SPS

Agreement or the ISPMs and the experts have provided valuable instruction in this regard. New

Zealand has failed to recognise that, far from being speculative, the fire blight pathway through

mature apples is substantially confirmed, albeit with some elements of uncertainty. Finally, New

Zealand’s own evidence and arguments fail to reliably show anything about rare events that

might occur in Australia’s circumstances.

117 Also, see: Australia’s rebuttal submission, paras. 682-687.


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38

124. In relation to European canker, the IRA Team determined that there is a risk associated

with the importation of latently infected apple fruit and the experts accept that such a risk exists.

Australia’s measure of sourcing apples from orchards or blocks free of the disease is required to

reduce this risk to achieve Australia’s ALOP.

125. In relation to ALCM, as I have just noted, the lack of adequate data is beyond dispute,

and in these circumstances, New Zealand has failed to demonstrate there are serious flaws with

the IRA Team’s risk assessment. Better data is required in order to make a more definitive

assessment.

The measures at issue

126. Mr Chairman and Members of the Panel, turning briefly to the measures at issue.

Australia has made it clear that it considers that the Panel may make findings in respect of each

of the remaining measures at issue in this dispute – that is, both principal and ancillary

measures.118 However, New Zealand has still not demonstrated that each of those measures fall

within the definition of “SPS measure” when taken alone.

127. Before concluding, Australia would also like to clarify the measure at issue listed at the

eighth bullet point in New Zealand’s panel request, which relates to the processing of fruit by

registered packing houses. As it stands, New Zealand’s description of this measure119 suggests

that packing houses which process apples intended for Australia may not also process apples

sourced from non-registered orchards or apples intended for other markets. Such an

interpretation of Australia’s measure is incorrect. The Final IRA Report makes clear that apples

118 See: Australia’s rebuttal submission, paras. 63, 75, 79-80.119 New Zealand has described the measure in question as follows: “The requirement that packing houses

registered for export of apples process only fruit sourced from registered orchards.” See: New Zealand’s panelrequest, p. 2; New Zealand’s first written submission, para. 3.83. New Zealand referred to page 317 of Part B of the

Final IRA Report in support of its view that Australia imposes such a measure (see: New Zealand’s first written

submission, para. 3.83, fn 85).


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39

intended for other markets may be processed by registered packing houses. Further, apples from

non-registered orchards may be packed by such packing houses, but not at the same time as

apples for Australia.120

Conclusion

128. Australia would like to close with a “real-world” example of Australia’s commitment to

seeing trade flow freely within the bounds of Australia’s ALOP. In 2000, Australia opened its

market to table grapes from the United States. Based on the experience and scientific data

collected once trade began, the measures applying to US table grapes have since been adjusted

five times. As a result of those changes, the relevant measures are now less trade restrictive, and

from initial trade worth A$4 million, trade has grown to be worth A$35 million in 2008-09. The

same review mechanisms that were applicable to US table grapes are available in the Final IRA

Report for New Zealand apples.

129. In this regard, the Western Australian government recently advised that it is no longer

pursuing eradication of apple scab. Accordingly, Australia has commenced a review of the

measures set out in the Final IRA Report for exporting apples to Western Australia. Australia

stands ready to allow commercially valuable trade to occur.

130. Thank you.

120 The Final IRA Report states: “Apples for other markets may be packed in conjunction with apples for

Australia provided that all apples have been sourced from orchards or orchard blocks registered for Australia. All

sorting, washing and packing operations for Australia must not be missed with operations for apples from non-

registered orchards at any time.” (Final IRA Report, Part B, p. 317.)

Documents

AUSTRALIA - dfat.gov.audfat.gov.au/trade/organisations/wto/wto-disputes/bulletin/... · This presentation will be divided into four broad areas. Mr Burmester will deal with the real