The report of the Panel on Japan � Measures Affecting Agricultural Products is being circulated to all Members, pursuant to the DSU. The report is being circulated as an unrestricted document from 27 October 1998 pursuant to the Procedures for the Circulation and Derestriction of WTO Documents (WT/L/160/Rev.1). Members are reminded that in accordance with the DSU only parties to the dispute may appeal a panel report. An appeal shall be limited to issues of law covered in the Panel report and legal interpretations developed by the Panel. There shall be no ex parte communications with the Panel or Appellate Body concerning matters under consideration by the Panel or Appellate Body.

Note by the Secretariat: This Panel Report shall be adopted by the Dispute Settlement Body (DSB) within 60 days after the date of its circulation unless a party to the dispute decides to appeal or the DSB decides by consensus not to adopt the report. If the Panel Report is appealed to the Appellate Body, it shall not be considered for adoption by the DSB until after the completion of the appeal. Information on the current status of the Panel Report is available from the WTO Secretariat.

Table of Contents

I. Introduction
II. Factual Aspects

IX. Conclusions

X. Annex A - Transcript of the Joint Meeting with Experts

I. Introduction

1. In a communication dated 7 April 1997, the United States requested consultations with Japan pursuant to Article 4 of the Understanding on Rules and Procedures Governing the Settlement of Disputes ("DSU"), Article 11 of the Agreement on the Application of Sanitary and Phytosanitary Measures ("SPS Agreement"), Article XXIII of the General Agreement on Tariffs and Trade 1994 ("GATT 1994"), and Article 19 of the Agreement on Agriculture regarding the prohibition by Japan of imports of certain agricultural products. ¹
2. The United States specifically alleged that, for each agricultural product for which Japan required quarantine treatment, Japan prohibited the importation of each variety of that product until the quarantine treatment had been tested for that variety, even though the treatment had proven effective with respect to other varieties of the same product. The United States claimed that Japan's prohibition adversely affected exports of US agricultural products, and, furthermore, that Japan's measure appeared to be inconsistent with the obligations of Japan under the SPS Agreement, the GATT 1994 and the Agreement on Agriculture. The provisions of these agreements with which these measure appeared to be inconsistent included, but were not limited to: (i) SPS Agreement, Articles 2, 4, 5 and 8; (ii) GATT 1994, Article XI; and, (iii) the Agreement on Agriculture, Article 4. The measures also appeared to nullify or impair benefits accruing to the United States directly or indirectly under the cited agreements. Consultations were held on 5 June 1997, but failed to settle the dispute.²
3. In a communication dated 3 October 1997, the United States requested the Dispute Settlement Body ("DSB") to establish a panel with standard terms of reference as set out in Article 7 of the DSU. ³ The US claims of inconsistency in their Request for the Establishment of a Panel were identical to those set out in their request for consultations, except for an additional claim of inconsistency under Article 7 of the SPS Agreement.
4. On 18 November 1997, the DSB established a panel pursuant to the request of the United States, in accordance with Article 6 of the DSU. ⁴ In accordance with Article 7.1 of the DSU, the terms of reference of the Panel were:

"To examine, in the light of the relevant provisions of the covered agreements cited by the United States in document WT/DS76/2, the matter referred to the DSB by the United States in that document and to make such findings as will assist the DSB in making the recommendations or in giving the rulings provided for in those agreements."

5. On 18 December 1997, the Panel was constituted with the following composition:

Chairman:	Mr. Kari Bergholm
Panelists:	Mr. Germain Denis
	Mr. Eir�kur Einarsson

6. The European Communities, Hungary and Brazil reserved their right to participate in the Panel proceedings as third parties.
7. The Panel met with the parties on 2 and 3 April 1998. It met with third parties on 3 April 1998. The Panel consulted scientific and technical experts and met with them on 23 June 1998. The Panel held a second meeting with the parties on 24 June 1998.
8. On 3 July 1998 the Chairman of the Panel informed the DSB that the Panel had not been able to issue its report within six months. The reasons for that delay were stated in document WT/DS76/4.
9. The Panel issued its interim report on 6 August 1998. On 21 September 1998, on request by Japan, an interim review meeting was held with the parties. The Final Report was circulated to the parties on 6 October 1998. The report was circulated to Members in all three languages on [27 October 1998].

II. Factual Aspects

A. General

1. Codling moth

1. Codling moth (Cydia pomonella) is a pest which invades apples, cherries, nectarines and other fruit crops. Newly-hatched larvae of codling moth are known to enter into the fruit. In the United States, the codling moth is a pest of apples and walnuts; it is also known, on occasion, to infest nectarines and cherries. Other hosts of codling moth include apricots, plums, pears and quinces.
2. There are four identifiable life stages of the codling moth: egg, larva, pupa and adult. Mated female adults lay their eggs on a suitable substrate such as leaves, nuts or fruit. All life stages are highly dependent upon temperature for development; the higher the temperature, the more rapid the development. After the eggs hatch, newly hatched first stage (instar) larvae find a suitable host to complete their development. They usually burrow into the host. The larvae will molt (shed their skin) four times thereafter inside the fruit, thus producing five larval growth phases called instars. When mature, the fifth instar larvae will exit the host to form a pupae within a silken cocoon. The cocoon is usually formed on the bark of the tree or in the litter at the base of the host plant.
3. The next generation of adult moths will exit from the pupae in 1-2 weeks. Depending on temperature, emergence may take longer. Under optimum conditions, developmental time from egg to adult is about 30-40 days. As daylight hours become shorter (10 hours light; 14 hours dark) during the late summer and fall, mature fifth instar larvae will exit the host, but hibernate through the winter as mature larvae within cocoons on bark or litter at the tree base. This larval hibernation (diapause) is a mechanism for survival through the winter. The diapausing larvae will form pupae in the spring when daylight hours and temperature begin to increase toward 14 daylight hours or more. Depending upon temperature, moths will emerge in three to four weeks after the pupae are formed.
4. The seasonality of host fruits is important vis-�-vis what life stages of the codling moth might be expected to occur at harvest. In the United States, walnuts are harvested after diapause has been induced in mature larvae. Thus the quarantine treatment for codling moth in walnuts is more severe (using comparatively higher levels of fumigant) than that required for fruits such as cherries and nectarines.
5. The fruit development of apples coincides with the time, mid-to-late summer, during which the codling moth is numerous. Severe economic losses can occur if codling moth is not adequately controlled in the field. The quarantine treatment applied to harvested apples is a multiple treatment involving cold temperature and a methyl bromide treatment. The cold treatment destroys most of the codling moth eggs and the fumigation destroys any remaining larvae.
6. In contrast to walnuts and apples, cherries are an early spring/early summer crop and only eggs or non-diapausing larvae would be expected to be found. With regard to nectarines, the harvest of nectarines in the United States begins in May and ends in late July to early August, before diapause is induced.
7. The Japanese archipelago forms a chain spreading across 3,000 km. from the north to the south between the latitudes 20 to 45 degrees north. Although most of Japan belongs to the temperate monsoon zone, the northern island of Hokkaido lies in a sub-arctic zone and a subtropical climate prevails in the southern edge of the South-western and Ogasawara islands. Ocean currents and prevailing westerly winds contribute to a diversity of climatic conditions. While codling moth is prevalent throughout the temperate zone, the pest has not been discovered in Japan.
8. There is no dispute between the parties that Japan is free of codling moth and that it is a pest of quarantine significance to Japan.

2. Methyl bromide

9. The Montreal Protocol on Substances that Deplete the Ozone Layer (the "Montreal Protocol") requires developed countries to phase-out the production and importation of methyl bromide beginning in 1999 and ending, with a total phase-out, on 1 January 2005. Developing countries will freeze the production and importation of methyl bromide as of 1 January 2002 and begin a step-down reduction in 2005, with total phase-out by 2015. US law currently calls for a phase-out of methyl bromide production and importation by 1 January 2001.
10. Notwithstanding the above, the use of methyl bromide for quarantine and pre-shipment applications is exempted from the phase-out schedule. ⁵ The US Administration has expressed willingness to consult with the US Congress on changes to US law if alternatives do not exist for control of key pests as the 2001 phase-out date approaches.

3. Technical and scientific terms used in the parties' submissions

CxT value (Concentration times time)

11. The CxT value for a fumigation is an expression of the relationship between fumigant gas concentration and time in the fumigation enclosure or chamber. It is an expression of the active gas dosage to which the pest or test organism is exposed during the time of the treatment. Because the concentration decays during the fumigation time, "concentration" is an average value derived from a number of measurements and requires temperature, load and humidity to be specified for proper definition.

Dose-mortality test (DMT)

12. The dose-mortality test is an experimental procedure in which the response of an organism is estimated for a series of mortality-inducing doses of a specified treatment. Where possible, individual dose-mortality tests target a specific stage of an organism as the susceptibility to a treatment can vary between life stages. The main purposes of dose-mortality testing are to produce data for analysis used for the determination of parameters categorizing the response of an organism, and the comparisons of efficacies of different treatments. In developing quarantine treatments against codling moth for products exported to Japan, dose-mortality testing is used to produce data for analysis for the determination of the least vulnerable stage of the pest and the prediction of a treatment dose to meet a required level of efficacy. The target organism test unit is usually a sub-sample of 20 � 50 insects; the test is typically replicated three times, at each dose level. For a satisfactory result, five or more dose levels are usually required, evenly spaced between 0 and 100 per cent mortality.

Fumigation

13. To kill pathogens or insects by using gas or fumes. A fumigant is a pesticide which acts upon the target pest as a gas. For the purposes of this report, the fumigant is methyl bromide (MB), and "MB treatment" refers to fumigation with methyl bromide.

Probit analysis, LD (lethal dose) and probit 9

14. Probit analysis is a biometrical technique for analysis of experimental data in which the quantitative response of an organism, usually expressed as mortality, is subjected to regression analysis with respect to treatment dose. Mathematical transformation of mortality to probability units, termed "probits", assists in conversion of the normal distribution (curve) of the response data to a linear distribution to facilitate analysis. Dose data is frequently, but not invariably, logarithmically transformed for the same purpose of linearity. The outcomes of probit analysis are values such as LD (lethal dose), LC (lethal concentration) or LT (lethal time) for a nominated proportion of the population (for example, 50 per cent or 99.99 per cent), together with nominated confidence or fiducial intervals (for example, 95 per cent). ⁶ The main purposes of probit analysis are (i) to define susceptibility of a population of target organisms to a treatment in terms of LD, LC or LT values; (ii) subsequent comparisons of susceptibility of populations of target organisms, varying response according to substrates, or treatment; and, (iii) the prediction of the dose required for a specific level of treatment efficacy.
15. Probit 9 is equivalent to a target level of mortality, or level of treatment efficacy, of 99.9968 per cent mortality.

Sorption

16. The sum of adsorption, absorption and chemisorption. Adsorption is a physical surface effect and results from the attraction of molecules to the surface of products ⁷ and other materials in the fumigation chamber. Absorption is also a physical process whereby the chemical enters into the product and other materials in the fumigation chamber. Chemisorption is an irreversible reaction in which residues are left in the fumigated products and materials. When the pest takes in the fumigant while in a product, or takes in the fumigant while on the surface of the fruit, it may die.

Variety

17. A category within a species, based on some hereditary difference. ⁸

To continue with Japan's Plant Protection Law and the Enforcement Regulation

¹ WT/DS76/1 (Request for Consultations by the United States).

² WT/DS76/2 (Request for the Establishment of a Panel by the United States).

³ WT/DS76/2 (Request for the Establishment of a Panel by the United States).

⁴ WT/DS76/3 (Constitution of a Panel Established at the Request of the United States).

⁵ Article 2H:6 of the Montreal Protocol.

⁶ Dr. Heather referred to: Steel, R.G.D. and Torrie, J.H., Principles and Procedures of Statistics with Special Reference to the Biological Sciences, McGraw-Hill (1960) p.22.

⁷ In this report the word "product" is used instead of "commodity" or "species".

⁸ Webster's Encyclopaedic Unabridged Dictionary of the English Language, 1996 Random House. The International Convention for the Protection of New Varieties of Plants of 2 December 1961, Article 1, (vi) defines "variety" as: "[A] plant grouping within a single botanical taxon of the lowest known rank, which grouping, irrespective of whether the conditions for the grant of a breeder�s right are fully met, can be � defined by the expression of the characteristics resulting from a given genotype or combination of genotypes, - distinguished from any other plant grouping by the expression of at least one of the said characteristics and � considered as a unit with regard to its suitability for being propagated unchanged � .".

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