Voluntary Report - public distribution

**Date:** 5/31/2005

**GAIN Report Number:** AS5017

AS5017

**Australia**

**Trade Policy Monitoring**

**Pork Imports in Doubt Following Court Decision**

**2005**

**Approved by:**

![](media/image1.wmf)Andrew C. Burst, Agricultural Counselor

U.S. Embassy

**Prepared by:**

Andrew Burst

**Report Highlights:**

On May 27, 2005, a Federal Court in Sydney handed down a decision in a
legal challenge of a recent change in quarantine conditions for imported
pork. The judge was extremely critical of the methodology used in the
government\'s recent pig meat Import Risk Analysis, particularly as it
relates to Post-weaning Multisystemic Wasting Syndrome, or PMWS. The
judge made no final ruling regarding pork imports, but a decision may
occur as soon as next week. Australian Pork Limited, who brought the
case, is calling for a stop to all imports from PMWS affected countries,
which would include product from Canada, the EU and the United States.

Includes PSD Changes: No

Includes Trade Matrix: No

Unscheduled Report

Canberra \[AS1\]

\[AS\]

**Pork Imports in Doubt Following Court Decision**

On May 27, 2005, a Federal Court in Sydney handed down a decision in a
legal challenge of a recent change to quarantine conditions for imported
pork. The judge in the case was extremely critical of the methodology
used in a final Import Risk Analysis (IRA) and the subsequent policy
decision by the Australian Director of Quarantine to adopt new import
conditions for pork. The judge made no final decisions in regards to
pork imports, pending both parties to the case submitting proposed
'orders' on how to proceed. This decision may come as early as next
week, and has the potential to impact pork imports, including from the
United States. This is apparently the first time an Australian court has
considered the way in which the government sets quarantine policy.

**The Pig Meat Import Risk Analysis:** In February 2004, Biosecurity
Australia (the government body responsible for quarantine policy,
including conducting IRAs) released a Final Import Risk Analysis Report,
entitled 'Generic IRA for Pig Meat', that proposed changes to import
conditions for pork. (This IRA was released together with two very
controversial draft IRAs for apples from New Zealand and bananas from
the Philippines.) The pig meat IRA considered the risk posed from pork
imports as regards a number of animal diseases, including Post-weaning
Multisystemic Wasting Syndrome, or PMWS. The IRA proposed various
mitigations that would reduce the disease risk in imported product,
including that for PMWS, to a level meeting Australia's appropriate
level of sanitary and phytosanitary protection (ALOP). The final pig
meat IRA, along with other matters related to it, can be accessed on
Biosecurity Australia's website at:

<http://www.affa.gov.au/content/publications.cfm?ObjectID=EAA47406-D373-4205-AC85A3D6A8AA7046>

On May 10, 2004, following a public comment and appeal period for the
IRA, the Australian Director of Quarantine formally made the policy
determination to accept the recommended import conditions outlined in
the pig meat IRA. This policy determination paved the way for the United
States, and other countries that could meet the IRA conditions, to
supply pork to Australia.

**The Court Case and Decision**: In July 2004, Australian Pork Limited
(APL), representing Australia's pork producers, and Windridge Farms Pty
Ltd, a pork producer, filed a case in the Federal Court in Sydney
questioning the recommended control measures for imported pork outlined
in the final IRA and the issuance of an import permit for pork from the
United States under the new import conditions. The case was argued
formally in November 2004, which entailed considerable testimony of
expert witnesses regarding the methodology utilized in the IRA and the
science regarding PMWS. (Of note, APL was unsuccessful in their attempts
to stop or change the pig meat IRA during the formal IRA appeal
process.)

The basis of the case was how the government dealt with protecting
Australian pig farmers from the risk of contamination by PMWS, which was
already proclaimed to be a 'quarantineable' animal disease in Australia.
Challenges to the government's decisions were made on four grounds:
error of law; failure to take into account a relevant consideration;
unreasonableness; and no evidence. All these challenges were based on
alleged deficiencies in the IRA.

On May 27, 2005, the court's decision was released. The judge found the
IRA decisions, and the subsequent issuance of an import permit under the
revised import conditions, 'unreasonable', given that the IRA panel's
reasoning was unsupported by any fact, scientific

evidence or scientific expertise. The judge also noted that 'no
evidence' grounds could also be argued. The judge withheld any ruling on
'relief' in the matter, but may do so as early as this week. The
complete text of the court decision can be accessed at:

<http://www.austlii.edu.au/au/cases/cth/federal_ct/2005/671.html>

**APL's Reaction:** APL issued a press release on May 27, following the
public release of the court's findings. APL characterized the decision
as a "win" and called on Biosecurity Australia to undertake the
necessary research into effective measures to protect Australia from
PMWS. Further, APL will be asking the government to agree to 1)
immediately stop the importation of pig meat from PMWS affected
countries; and 2) immediately prevent any further processing of imported
pig meat from PMWS affected countries already in Australia.

**Both Sides Criticize the Quarantine System:** Australia's quarantine
system, and very conservative import measures, has been roundly
criticized by many trading partners and is currently the focus of
challenges at the World Trade Organization (WTO). In 2003, the European
Union filed a case claiming that the Australian quarantine system
breached WTO rules laid out in the Agreement on SPS Measures. Similarly,
in 2002, the Philippines began pursuing a WTO case against Australian
quarantine measures for fresh fruit. In 1998, a WTO dispute settlement
panel ruled in favor of Canada that Australia's ban on salmon imports
was not consistent with the Agreement on SPS Measures.

Domestic interests, in addition to the pork industry, have also been
critical of Australia's quarantine policy. Prior to the release of the
final pig meat IRA, a Senate investigating committee examined and
ultimately took issue with the conclusions in the pig meat IRA. The
loudest arguments against any proposed changes in import quarantine
measures have come from industries currently shielded from import
competition. The apple industry, for example, is very opposed to changes
in import measures for fresh apples suggested in a draft IRA on apples
from New Zealand, while other industries have similar positions, e.g.,
bananas and poultry.

In 2004, several changes were made to Australia's quarantine regime and
the structure of policymaking body, Biosecurity Australia (BA), due in
part to domestic criticisms of quarantine policy. The changes entailed
making BA a 'prescribed' agency (financially independent), the
establishment of an 'Eminent Scientists Group' to examine draft final
IRA reports before release, a review and reissuing of all ongoing IRA's,
and the setting out of the IRA process and procedures in regulation and
statute. The Minister of Agriculture said that the changes were being
made to reinforce Australia's strong, science-based biosecurity
policies, to boost confidence in the rigor of the IRA process, and to
address perceptions that trade considerations, rather than scientific
analysis, were influencing the IRA process.

**Pork Import Overview:** Australia is a major importer of pork, with
approximately 70,000 MT (carcass weight equivalent) of product entering
the country in 2004. Canada and Denmark, which already had access to
Australia prior to the change in import conditions, were the major
suppliers. Pork shipments from the United States, under the new import
conditions, began arriving in the country in the later part of 2004. In
the first quarter of 2005, Australia imported 3,981 MT (shipped weight)
of U.S. pork valued at A\$14.3 million (US\$11 million). In the month of
March 2005 alone, Australian pork imports from the United States reached
2,331 MT valued at A\$7.8 million, and the U.S. share of the import
market reached 28 percent. At this monthly pace, Australian imports of
U.S. pork in 2005 would total about 28,000 MT, valued at about A\$94
million.

There is a significant Australian industry that is dependent on imported
pork for their business. These businesses would likely find it
impossible to source sufficient pork domestically.

**Industry Has Sought Other Ways to Restrict Pork Imports:** Changed
quarantine conditions on imported pork, and rising imports, have
prompted the Australian pork industry to agitate for other ways to
restrict import competition. In 1992, at the urging of the industry, the
Australian Customs Service conducted an inquiry into dumping and
subsidization of Canadian pork, which found no injury from imports.
Similarly, an 1995 Industry Commission inquiry found little influence of
imported pork on domestic pig prices. In 1998, the Productivity
Commission conducted a formal safeguard inquiry regarding pork imports.
The Commission found injury, but recommended against any safeguard
action. In 2004, a Productivity Commission study looked into economic
difficulties in the industry and found that declining industry
profitability and market share (vis-à-vis imports) reflected lower pig
prices in competitor markets, high feed prices due to the drought and an
appreciating Australian dollar. The Commission also warned that
restricting imports would increase pork prices for consumers, retailers
and manufacturers, and would blunt incentives for pig producers and
processors to adjust to the market environment.