This is a guest post from Geneva trade lawyer Adarsh Ramanujan:
“Rebuttable” presumption of Article 2.2 inconsistency arising from Article 5.1 inconsistency?
Continuing from my earlier post on the AB Report on India – Agricultural Products, I found another finding of the AB to be an interesting one – this relates to the AB’s conclusion on the relationship between Articles 5.1 and 5.2 on the one hand, and Article 2.2 of the SPS Agreement on the other.
The AB Report states the obligations under Article 5.1 and 5.2 are specific applications of the general obligations under Article 2.2 of the SPS Agreement (Para 5.21, AB Report). In a way, when you start reading the AB’s analysis, it appears as if Article 5 forms a sub-set of the general obligations provided under Article 2.2 such that violation of Article 5 would imply an automatic violation of Article 2.2. This is in line with the findings of the AB in Australia – Apples. However, very quickly, the AB clarifies that this is not exactly the case since a violation of Article 5 would only create a rebuttable presumption that Article 2.2 has also been violated. The AB was not willing to state that a violation of Article 5 would always lead to a violation of Article 2.2 of the SPS Agreement since the terms used in the treaty provisions were not identical.
Nonetheless, the AB makes it clear that proving consistency with Article 2.2 despite a violation of Article 5, may be “difficult” (Para. 5.29, AB Report). This is because Article 2.2 requires the Respondent to demonstrate a rational or objective relationship between the SPS measure and the scientific evidence, and also establish that it is based on scientific principles, and in the AB’s view, this would ordinarily focus on risk assessment – the subject matter covered under Article 5 of the SPS Agreement (Paras. 5.25-5.27, AB Report).
The issue that now arises is this – how does one rebut this presumption? When applied to the specific appeal raised by India in this dispute, the AB clarifies that the Panel intended the same legal finding (Para. 5.34, AB Report), but finds fault with the Panel’s application of this legal finding to the facts of the dispute. The AB records that India had put forth arguments and evidence to potentially rebut this presumption of Article 2.2 inconsistency and the Panel simply failed to apply its mind to such evidence and arguments (Paras. 5.35-5.36, AB Report). India, in its arguments before the Panel, relied upon three pieces of evidence / arguments to show compliance with Article 2.2 (irrespective of violation of Article 5):
(i) The fact that the measure under challenge conforms to international standards; and / or
(ii) The fact that import bans upon an occurrence of LPNAI are being implemented by several countries; and / or
(iii) Certain scientific reports that are placed on record outlining the risk of trade in unprocessed meat and eggs from LPAI reporting countries.
Hypothetically, assuming these pieces of evidence / argument are actually considered, I wonder if one or more of the above would be considered sufficient to overcome the presumption of inconsistency with Article 2.2. When I say this, I am focussing more on the requirement under Article 2.2 that the SPS measure be applied “only to the extent necessary” and the AB’s clarification that there needs to be a rational or objective relationship between the SPS measure and the scientific evidence. I understand these requirements to imply a very specific assessment to that particular measure for that particular Member. Under the circumstances, the last two pieces of evidence mentioned above may not really be sufficient. Similarly, the fact that a measure conforms to international standards etc. relates more to Article 3, SPS Agreement and the mere fact of Article 3 compliance cannot imply automatic Article 2 compliance (I think).
Of course, the above three are only what were argued in this particular dispute. Nonetheless, I wonder if it would at all be possible for any Respondent to ever “rebut” the presumption of Article 2.2 inconsistency in cases of Articles 5.1/5.2 violation. I think the AB’s finding, with due respect, is a little too abstract and theoretical. Then again, I have been wrong before and one cannot predict the variety of factual circumstances one can come across in litigation.
Perhaps, the reason why I tend to think so is due to my belief that the finding is of little practical use. Once Article 5 violation is established, I do not think it matters whether the Respondent can or cannot rebut an Article 2.2 violation. On the other hand, if violation of Article 5 is disproved on facts, Article 2.2 violation would have to be proved on facts by the Complainant and here, the AB has clarification on the presumption of Article 2.2 violation would not appear to be relevant here.
On the other hand, would the compliance with Article 5 automatically imply compliance with Article 2? I would say that this is not necessarily true, both from an interpretation perspective as well as from the practical perspective.