The Dispute Settlement Body (DSB) of WTO adopted on October 25, 2010 the panel report (WT/DS392/R) which was circulated on 29 September 2010.
China recalled that the dispute involved the US ban on the importation of poultry products from China since 2007 through its annual appropriation acts and other related measures. The measure at issue was Section 727 of the Agriculture, Rural Development, Food and Drug Administration, and Related Agencies Appropriations Act of 2009. Section 727 reads: “None of the funds made available in this Act may be used to establish or implement a rule allowing poultry products to be imported into the United States from the People’s Republic of China.” Section 727 was accompanied by a Joint Explanatory Statement which speaks about “very serious concerns about contaminated foods from China”.
China welcomed the panel report which had concluded that Section 727 was inconsistent with the WTO Agreement on Sanitary and Phytosanitary Measures (SPS) and with Articles I and XI of GATT 1994. Although Section 727 had expired, China was of the view that certain provisions in annual appropriations measures of the US Congress may still affect China’s ability to access the US poultry market in the future and thus hoped that the US would take positive steps to eliminate all discriminatory measures against Chinese poultry products.
The US expressed its disappointment with the panel’s findings which, in its view, had raised a number of significant questions. First, the relationship between equivalence reviews under Article 4 and other provisions of the SPS Agreement was complex and of systemic importance to all WTO members. The US was thus of the opinion that the matter warranted a more careful analysis than it had received in the report. Second, the US had systemic concerns with the report’s “like products” analysis. Third, the US was concerned with the treatment the report provided to the US defense under Article XX (b) of GATT 1994 which did not include a systematic analysis of the US arguments but instead found that no measure that breached Articles 2 and 5 of the SPS Agreement could be justified under Article XX(b). The US appreciated that the panel had exercised judicial economy with respect to China’s claim under Article 4.2 of the Agriculture Agreement and part of China’s claim under Article 5.5 of the SPS Agreement. As the measure at issue had expired, the US considered that the measure had been withdrawn and that the dispute had been resolved.
Speaking as a third-party in the dispute, the EU welcomed the panel’s findings but questioned the manner in which the panel had reached its conclusion. The EU was of the view that, while the SPS Agreement and GATT Article XX(b) were closely related, it would not be appropriate to assume that a breach of the SPS Agreement always and automatically resulted in the measure not being in line with Article XX(b).