E. Article 5.1

109. The Panel made no finding on the consistency of Japan's varietal testing requirement with Article 5.1 of the SPS Agreement. In paragraph 8.63 of the Panel Report, the Panel stated:

110. In its Appellant's Submission, the United States calls upon us to "complete the Article 5.1 analysis and find that the varietal testing requirement violates that provision", in the event that we do not extend the Panel's finding under Article 2.2 to apricots, pears, plums and quince, or in the event that we reverse the Panel's finding that the varietal testing requirement as it applies to apples, cherries, nectarines and walnuts is inconsistent with Article 2.2.⁵⁵

111. We note that there is an error of logic in the Panel's finding in paragraph 8.63. The Panel stated that it had found earlier in its Report that the varietal testing requirement violates Article 2.2, and that there was, therefore, no need to examine whether the measure at issue was based on a risk assessment in accordance with Articles 5.1 and 5.2 of the SPS Agreement. We note, however, that the Panel's finding of inconsistency with Article 2.2 only concerned the varietal testing requirement as it applies to apples, cherries, nectarines and walnuts.⁵⁶ With regard to the varietal testing requirement as it applies to apricots, pears, plums and quince, the Panel found that there was insufficient evidence before it to conclude that this measure was inconsistent with Article 2.2. The Panel, therefore, made an error of logic when it stated, in general terms, that there was no need to examine whether the varietal testing requirement was consistent with Article 5.1 because this requirement had already been found to be inconsistent with Article 2.2. With regard to the varietal testing requirement as it applies to apricots, pears, plums and quince, there was clearly still a need to examine whether this measure was inconsistent with Article 5.1. By not making a finding under Article 5.1 with regard to the varietal testing requirement as it applies to apricots, pears, plums and quince, the Panel improperly applied the principle of judicial economy.⁵⁷ We believe that a finding under Article 5.1 with respect to apricots, pears, plums and quince is necessary "in order to ensure effective resolution" of the dispute.⁵⁸

112. We consider it appropriate for us to complete the legal analysis and examine whether the varietal testing requirement as it applies to apricots, pears, plums and quince is consistent with Article 5.1. As already noted above, Article 5.1 requires that an SPS measure be based on a risk assessment.⁵⁹ In our Report in Australia - Salmon, we stated with regard to the type of risk assessment required in this case:

113. Japan argued before the Panel that its varietal testing requirement is based on the 1996 Pest Risk Assessment of Codling Moth (the "1996 Risk Assessment").⁶¹ We note, however, that the 1996 Risk Assessment does not discuss or even refer to the varietal testing requirement or to any other phytosanitary measure that might be taken to reduce the risk. The 1996 Risk Assessment does not, therefore, "evaluate the likelihood of the entry, establishment or spread" of codling moth "according to the SPS measures which might be applied" within the meaning of Article 5.1.

114. We, therefore, conclude that the varietal testing requirement as it applies to apricots, pears, plums and quince is inconsistent with Article 5.1 of the SPS Agreement.

F. Article 8 and Paragraph 1(c) of Annex C

115. In paragraph 8.117 of the Panel Report, the Panel stated:

116. In the event that we accept Japan's argument that the varietal testing requirement is an information requirement within the meaning of paragraph 1(c) of Annex C, and that Japan's measure is, therefore, consistent with Article 2.2, the United States requests that we find the varietal testing requirement inconsistent with Article 8 and paragraph 1(c) of Annex C, of the SPS Agreement.⁶²

117. We note that the United States does not appeal the Panel's failure to make a finding under Article 8 and Annex C of the SPS Agreement. It does not challenge the Panel's application of the principle of judicial economy. The United States merely submits to us arguments concerning the consistency of Japan's varietal testing requirement with Article 8 and paragraph 1(c) of Annex C for our consideration should we come the conclusion that the varietal testing requirement is an information requirement, and, therefore, is consistent with Article 2.2. We have not come to this conclusion⁶³ and we, therefore, do not consider it necessary to address the arguments on Article 8 and paragraph 1(c) of Annex C, submitted by the United States.

VI. General Issues

A. Burden of Proof

118. In paragraph 8.103 of the Panel Report, the Panel found:

119. In its reasoning, the Panel explicitly stated that the complaining party, the United States, had "not specifically addressed" the question whether the "determination of sorption levels" is an alternative measure within the meaning of Article 5.6 of the SPS Agreement.⁶⁴ With regard to the first and third elements under Article 5.6, namely, the economic and technical feasibility of the alternative measure, and the question whether the alternative measure is significantly less trade-restrictive than the SPS measure at issue, the Panel noted, however, that the United States "has given views which are consistent with" the idea that the "determination of sorption levels" meets these two elements.⁶⁵ With regard to the second element under Article 5.6, namely, the question whether the alternative measure meets the Member's appropriate level of protection, the Panel stated that "the United States ... suggests that [the "determination of sorption levels"] would meet Japan's appropriate level of protection".⁶⁶ The Panel noted that the United States submitted that "testing by product" would meet Japan's level of protection and that, since the determination of sorption levels "is more stringent than testing by product, it can thus be presumed that the US view on this alternative would be that it a fortiori meets Japan's level of protection".⁶⁷

120. Japan appeals the Panel's finding under Article 5.6 regarding the "determination of sorption levels", on the basis that it is contrary to the rules on burden of proof, as established by the Appellate Body in United States - Shirts and Blouses.⁶⁸ In Japan's view, panels cannot find facts neither argued nor proven by the parties.⁶⁹ Japan asserts that the Panel "exempts quite unjustly the United States from discharging the distributed burden of proof".⁷⁰

121. With regard to the rules on burden of proof, we stated in our Report in United States - Shirts and Blouses:

122. With regard to the rules on burden of proof in proceedings under the SPS Agreement, we noted in our Report in European Communities - Hormones, that the panel in that case appropriately described the issue of the burden of proof as one of particular importance, in view of the multiple and complex issues of fact which may arise in disputes under that Agreement.⁷² Furthermore, as we noted in European Communities - Hormones, the rules on burden of proof are rules "applicable in any adversarial proceedings".⁷³ We, therefore, agreed with the panel in that case that in proceedings under the SPS Agreement:

123. In this dispute, the United States claimed that the varietal testing requirement is more trade-restrictive than required to achieve Japan's appropriate level of protection and is, therefore, inconsistent with Article 5.6. As already set out above⁷⁵, a measure is considered more trade-restrictive than required if there is another SPS measure which:

124. As noted above, the United States argued that "testing by product" is an alternative measure which meets the three cumulative elements under Article 5.6. The Panel was not, however, convinced that there was sufficient evidence to find that "testing by product" would achieve Japan's appropriate level of protection.⁷⁶

125. The Panel then turned its attention to an alternative measure which had been suggested by the experts advising the Panel, i.e., the "determination of sorption levels".⁷⁷ The Panel explained that it deduced this alternative measure from the written answers of the experts to the Panel's questions and from their statements at the Panel's meeting with the experts.⁷⁸ We note that the Panel explicitly stated that the United States, as complaining party, did not specifically argue that the "determination of sorption levels" met any of the three elements under Article 5.6.⁷⁹ On the basis of the evidence before it, including its deductions from the views expressed by the experts⁸⁰, the Panel came to the conclusion that it could be presumed that the "determination of sorption levels was an alternative measure which would meet all of the elements under Article 5.6".⁸¹ The Panel pointed out that the United States had "given views which were consistent with" the argument that this alternative measure met the first and third elements under Article 5.6 and had "suggest[ed]" that it would meet the second element.⁸²

126. Pursuant to the rules on burden of proof set out above, we consider that it was for the United States to establish a prima facie case that there is an alternative measure that meets all three elements under Article 5.6 in order to establish a prima facie case of inconsistency with Article 5.6. Since the United States did not even claim before the Panel that the "determination of sorption levels" is an alternative measure which meets the three elements under Article 5.6, we are of the opinion that the United States did not establish a prima facie case that the "determination of sorption levels" is an alternative measure within the meaning of Article 5.6.

127. In paragraph 7.10 of the Panel Report, the Panel stated:

128. Furthermore, we note that the present dispute is a dispute under the SPS Agreement. Article 11.2 of the SPS Agreement explicitly instructs panels in disputes under this Agreement involving scientific and technical issues to "seek advice from experts".

129. Article 13 of the DSU and Article 11.2 of the SPS Agreement suggest that panels have a significant investigative authority. However, this authority cannot be used by a panel to rule in favour of a complaining party which has not established a prima facie case of inconsistency based on specific legal claims asserted by it. A panel is entitled to seek information and advice from experts and from any other relevant source it chooses, pursuant to Article 13 of the DSU and, in an SPS case, Article 11.2 of the SPS Agreement, to help it to understand and evaluate the evidence submitted and the arguments made by the parties, but not to make the case for a complaining party.

130. In the present case, the Panel was correct to seek information and advice from experts to help it to understand and evaluate the evidence submitted and the arguments made by the United States and Japan with regard to the alleged violation of Article 5.6. The Panel erred, however, when it used that expert information and advice as the basis for a finding of inconsistency with Article 5.6, since the United States did not establish a prima facie case of inconsistency with Article 5.6 based on claims relating to the "determination of sorption levels". The United States did not even argue that the "determination of sorption levels" is an alternative measure which meets the three elements under Article 5.6.

131. We, therefore, reverse the Panel's finding that it can be presumed that the "determination of sorption levels" is an alternative SPS measure which meets the three elements under Article 5.6, because this finding was reached in a manner inconsistent with the rules on burden of proof.

B. Findings on Apricots, Pears, Plums and Quince

132. With regard to the varietal testing requirement as it applies to apricots, pears, plums and quince, the Panel found in paragraph 8.45 of its Report:

133. The United States appeals these findings. With regard to the Panel's finding under Article 2.2, the United States argues that, under the Panel's interpretation of the burden of proof, complaining parties would be required, based on affirmative evidence, to prove a negative, namely, that there is no scientific evidence which supports a measure. According to the United States, this interpretation places an impossible burden on complaining parties and would render Article 2.2 unenforceable.⁸⁵ Furthermore, the United States asserts that it did establish a prima facie case under Article 2.2 with regard to all products, since it established that Japan failed to provide any specific evidence to support its measure.⁸⁶

134. We note that the Panel defined, on the basis of the United States' request for the establishment of a panel, the measure in dispute as Japan's varietal testing requirement as it applies to "US products on which Japan claims that codling moth may occur".⁸⁷ According to Japan, these products are apples, cherries, peaches (including nectarines), walnuts, apricots, pears, plums and quince. The Panel, thus, considered:

To continue with Findings on Apricots, Pears, Plums and Quince

⁵⁵Appellant's Submission of the United States, para. 62.

⁵⁶Panel Report, para. 8.43.

⁵⁷We note that the Panel, in paragraph 8.6 of its Report, stated that in light of its terms of reference it was called upon "to examine the [varietal testing requirement] as it applies to all products covered by the contested measure", i.e., apples, cherries, peaches (including nectarines), walnuts, apricots, pears, plums and quince.

⁵⁸Australia - Salmon, supra, footnote 13, para. 223.

⁵⁹See supra, paras. 75-78.

⁶⁰Australia - Salmon, supra, footnote 13, para. 121.

⁶¹Panel Report, para. 4.145 and following.

⁶²Appellant's Submission of the United States, para. 83.

⁶³See supra, para. 85.

⁶⁴Panel Report, footnotes 328, 332 and 333.

⁶⁵Panel Report, paras. 8.91 and 8.95. The Panel noted, in footnotes 328 and 332, that it had considered all the other arguments of the United States and that none of these arguments went against the idea that the determination of sorption levels would be technically and economically feasible and would be significantly less trade-restrictive than the varietal testing requirement.

⁶⁶Panel Report, para. 8.98.

⁶⁷Panel Report, footnote 333.

⁶⁸Appellant's Submission of Japan, para. 91

⁶⁹Appellant's Submission of Japan, para. 90.

⁷⁰Ibid.

⁷¹United States - Shirts and Blouses, supra, footnote 18, p. 14.

⁷²European Communities - Hormones, supra, footnote 12, para. 97.

⁷³European Communities - Hormones, supra, footnote 12, para. 98.

⁷⁴Ibid.

⁷⁵See supra, para. 95.

⁷⁶The United States appeals from this finding, but we have upheld it (supra, para. 100).

⁷⁷Panel Report, para. 8.74.

⁷⁸Ibid.

⁷⁹Panel Report, footnotes 328, 332 and 333. See supra, para. 119.

We note that the United States stated in its Appellee's Submission, para. 79, that it "emphasized [testing by product] in its Article 5.6 arguments because this alternative meets the requirements of Article 5.6, and because there is no scientific evidence to support even limited sorption testing." (emphasis added)

We also note that the United States declared before the Panel in its Comments on the Experts' Reponses (p. 3), that "it is not necessary in the context of this dispute for the United States to address the merits of [the "determination of sorption levels"], nor is it within the scope of the Panel's terms of reference to make findings with respect to the comparative efficacy of alternative treatments proposed by technical experts."

⁸⁰See Panel Report, paras. 8.92 and 8.93 (on the first element) and para. 8.100 (on the second element).

⁸¹See Panel Report, para. 8.94 (on the first element), para. 8.97 (on the third element), para. 8.101 (on the second element) and para. 8.103 (on all three elements).

⁸²Panel Report, paras. 8.91, 8.95 and 8.98.

⁸³Adopted 6 November 1998, WT/DS58/AB/R, para. 104.

⁸⁴United States - Shrimp, supra, footnote 83, para. 106.

⁸⁵Appellant's Submission of the United States, paras. 7 and 22.

⁸⁶Appellant's Submission of the United States, para. 18.

⁸⁷Panel Report, para. 8.6.

⁸⁸Ibid.