Hon Jim Anderton
Minister of Agriculture
Minister for Biosecurity

Hon Phil Goff
Minister of Trade

20 August 2007

NZ to take Australia to WTO over apple access

The Government will initiate WTO dispute settlement proceedings against Australia to resolve the long-standing apples dispute, Trade Minister Phil Goff and Agriculture Minister Jim Anderton announced today.

“We have made every effort over many years to resolve this issue bilaterally. But we have said that if the bilateral route could not deliver commercially meaningful access for our apples, then WTO dispute settlement would be the only option left. Regrettably, we have now reached that point”, the Ministers said.

New Zealand had been working with Australia to determine how New Zealand would meet in practice the conditions specified in the Final Import Risk Analysis (IRA) for New Zealand apples access, which was released in November last year.

“There is no doubt that the Final IRA imposed a very restrictive regime for our apple exports and requires measures that are not scientifically justified.

“We will be challenging those measures in the WTO, which has already held that measures imposed by Japan for fire blight were not justified for trade in commercial apples.

“Despite our concerns, we had wanted to explore what access might be available under the terms of the IRA by working with Australia on detailed Standard Operating Procedures (SOP).

“We were disappointed with the delays that have taken place in finalising the SOP on the Australian side. New Zealand officials provided all of the information requested by Australia to allow them to complete the SOP in June.

“Since then, however, there have been more delays including a last minute “technical experts’ workshop” that was convened by Australia on 3 August. We are still waiting for feedback from this meeting.

“In any event, the draft SOP as it is currently stands could not deliver commercially meaningful access for our growers.

“Nonetheless, it certainly remains open to Australia to come back to us at any time if it has a proposal that would provide for a mutually satisfactory resolution to the issue.

“We must keep this issue in perspective and see it in the context of the $16 billion two-way trade between our two countries. Although apples access has been an irritant in the relationship, it cannot and should not overwhelm the enormous contribution both countries make to each others’ trade and well-being which will continue”, the Ministers said.

New Zealand will now shortly request formal consultations with Australia under the WTO dispute settlement mechanism. This would be the first step to independent arbitration of the dispute. It could be a lengthy process as WTO dispute cases can take between 2 and 6 years at the outside to resolve.

BACKGROUND Q AND A

How long has New Zealand been seeking apples access to Australia?
New Zealand has not been able to export apples to Australia since 1921, when fire blight was discovered here. Access was denied on the grounds that apples might be a pathway for the pathogen that causes the disease.
New Zealand has sought since 1986 to have the ban lifted, because studies have found no scientific evidence that commercially traded apples carry fire blight.

What has New Zealand done in recent years to get the ban lifted?
In 1999, New Zealand again asked Australia to lift the ban. In November 2006, Australia published a Final Import Risk Analysis (IRA), and in March this year it issued a Final Policy Determination – both required for Australian biosecurity procedures. The Final Policy Determination conceded for the first time the possibility of access for New Zealand apples. However, the documents still propose restrictions on apples which New Zealand considers scientifically unjustified.

What is the Final Import Risk Analysis?
The Final Import Risk Analysis (IRA) contains Australia’s examination of pests associated with New Zealand apples -- the likelihood of these pests being on the apple export pathway, the likelihood of these pests entering and becoming established in Australia, and an estimate of the consequences of entry and establishment of these pests. It combines these factors to provide an overall measure of the risk that Australia believes to be associated with each pest.

Australia’s Final IRA determined that risks associated with four pests (fire blight, European canker, apple leaf curling midge and leafrollers) needed to be addressed in order for apples to enter Australia. Risks associated with a further three pests (apple scab, codling moth and mealybugs) also needed to be addressed for Western Australia.

The Final IRA recommends that market access be granted for New Zealand apples to all Australian states (except Western Australia), subject to extensive quarantine conditions. A summary of these conditions is contained in Part A of the Final IRA for apples from New Zealand, which is available on Biosecurity Australia’s website (www.daff.gov.au/ira/final-plant/apples-nz).

Why has Western Australia been excluded?
Western Australia claims to be free of apple scab (black spot). The Final IRA considers there are no risk management measures to adequately address this disease except for a complete prohibition on access.

What happened after the Final Policy Determination was issued?
At that point, New Zealand and Australia did begin negotiating Standing Operating Procedures (SOP), which would have outlined how the New Zealand industry would be required in practice to meet the conditions specified in the Final IRA. New Zealand did this because we had wanted to explore what access might be available under the terms of the Final IRA, without accepting that those restrictions were justified. Unfortunately, the SOP process has become unduly complicated, and it has become clear that the draft SOP, as they currently stand, could not deliver the kind of access we are seeking.

On what grounds is New Zealand taking a case to the WTO?
We consider the measures stipulated by Australia in the Final IRA and in the draft SOP are not scientifically justified, and are inconsistent with Australia’s obligations under the WTO Agreement on the Application of Sanitary and Phytosanitary (SPS) Measures. We have made this point to Australia in every meeting of the WTO SPS Committee since June 2005.

Why are Australia’s measures scientifically unjustified?
To protect New Zealand’s legal position in the WTO case, we cannot comment on that at this stage. However, I can say that we are confident of winning.

Why did the Government not go to the WTO sooner?
The Government, supported by industry, decided that we needed to see what the conditions set out in the Final IRA meant in practice for our apples access.
The Government has said that if the bilateral route could not deliver commercially meaningful access for our apples, WTO dispute settlement would be the only option left. Regrettably, we have now reached that point.

What happens now?
New Zealand will shortly request formal consultations with Australia under the WTO dispute settlement mechanism.
It could be a lengthy process as WTO dispute cases can take between 2 and 6 years at the outside to resolve.
The primary steps in the process are:
- Consultations with Australia, which take a minimum of 2 months.
- If the consultations fail to settle the dispute, establishment of an independent panel of arbitrators who are familiar with WTO law.
- Submissions are made by the Parties to the panel
- Oral hearings are held before the panel in Geneva
- Consideration by the panel of the arguments and issue of its report,
- The Panel’s findings may be appealed to the WTO Appellate Body.

Further more detailed information on the timelines for a WTO case is available on the WTO website (www.wto.org).

Can we export next season?
No, the time has run out. The operating procedures would have set out how New Zealand growers would meet in practice the conditions imposed by Australia. Without the operating procedures, there can be no exports. For exports to take place in 2008, the procedures would have had to be finalised in time for winter orchard inspections to take place this year.

When will exports be able to take place?
That is up to Australia. The WTO will not give us quick access. The result would also have to be implemented which could take a few years longer.

What consultation did you have with industry?
Mr Goff and Mr Anderton, together with Hawkes’ Bay List MP Rick Barker, have met regularly with industry representatives, most recently in December, March, May and August. Government and industry shared a similar analysis of the problem and industry supports this strategy for addressing that problem.

What does this decision mean for New Zealand’s relationship with Australia?
New Zealand and Australia enjoy an exceptionally close, positive and cooperative relationship across a wide range of endeavours. The apples issue is undoubtedly an irritant within it, but should be kept in perspective and viewed in the context of the overwhelming successful trade and economic relationship (with two-way trade amounting to about NZ$16 billion). Although apples access is a significant issue for New Zealand and the action we are taking is serious, apples cannot and should not overwhelm the enormous contribution both countries make to each others’ trade and well-being which will continue.

Have you spoken with your Australian counterpart yet?
Mr Goff spoke with Australian Trade Minister Warren Truss earlier today and informed him of the Government’s decision. Mr Anderton also spoke to Australian Agriculture Minister Peter McGauran.

Does the earlier Japan-Apples case have any bearing on this case?
New Zealand has argued for a good many years that the grounds for removing the import ban on New Zealand apples were compelling, as study after study has found no scientific evidence that apples in commercial trade carry fire blight.

The New Zealand position was vindicated in 2003, following the ruling by the World Trade Organization (WTO) in the US-Japan apples dispute, which found that apples in commercial trade do not pose a risk of transmission of fire blight.

New Zealand took part as a Third Party in the dispute, presenting evidence to the WTO Dispute Settlement Panel demonstrating that Japan’s fire blight-related import controls on apples were not technically justified.

Why does New Zealand not take retaliatory action against Australian exports of agricultural produce?

It is not in New Zealand’s interests to engage in a ‘tit-for-tat’ policy on market access. Such an approach would not be in accord with New Zealand’s international commitments on fair and free trade, and would put us in breach of the obligations that we are asking the Australian Government to honour.

ENDS

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