UNITED STATES – CERTAIN MEASURES AFFECTING IMPORTS OF POULTRY FROM CHINA
Document: Report of the Panel
Date: 29 September 2010
Document codes: WT/DS392/R
Complainant: China
Respondent: U.S.
Third parties: Brazil, EU, Guatemala, South Korea, Taiwan, Turkey
Dispute stage: Panel
Agreements cited: Art. I:1, XI:1  GATT 1994Art. 4.2  AgricultureArt. 2.1, 2.2, 2.3, 3.1, 3.3, 5.1, 5.2, 5.3, 5.4, 5.5, 5.6, 5.7, 8  Sanitary and Phytosanitary Measures (SPS)

UNITED STATES – CERTAIN MEASURES AFFECTING
IMPORTS OF POULTRY FROM CHINA

Report of the Panel

I. INTRODUCTION
1.1 On 17 April 2009, the People's Republic of China ("China") requested consultations with the
United States pursuant to Article 4 of the Unde rstanding on Rules and Procedures Governing the
Settlement of Disputes ("DSU"), Article XXII of the General Agreement on Tariffs and Trade 1994
("GATT 1994") and Article 19 of the Agreement on Agriculture concerning measures taken by the
United States affecting the importation of poult ry products from China. In addition, in its
consultations request, China indicated that, if it we re demonstrated that any such measure is an
SPS measure, China also requested consultations with the United States pursuant to Article 11 of the
Agreement on the Application of San itary and Phytosanitary Measures ("SPS Agreement").1 China
and the United States held consultations on 15 May 2009. However, no mutually agreed solution was
found.
1.2 On 23 June 2009, China requested the establishmen t of a panel pursuant to Article 6 of the
DSU, Article XXIII:2 of the GATT 1994, Article 19 of the Agreement on Agriculture, and Article 11
of the SPS Agreement.2
1.3 At its meeting on 31 July 2009, the DSB established a panel pursuant to the request of China
in document , in accordance with Article 6 of the DSU.
1.4 The Panel's terms of reference are the following:
"To examine, in the light of the relevant provisions of the covered agreements cited
by the parties to the dispute, the matter referred to the DSB by China in 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."
1.5 On 16 September 2009, China requested the Dire ctor-General to determine the composition
of the panel, pursuant to paragraph 7 of Article 8 of the DSU.
1.6 On 23 September 2009, the Director-General accordingly composed the Panel as follows:
 Chairman: Mr Ole Lundby

 Members: Mr Felipe Lopeandía
 Mr Mohammad Saeed

1.7 Brazil, the European Union
3, Guatemala, Korea, Chinese Taipei and Turkey reserved their
rights to participate in the Panel proceedings as third parties.
1.8 The Panel held its first substantive meeti ng with the parties on 15 and 16 December 2009.
The session with the third parties was held on 16 December 2009. The second substantive meeting
was held on 9 and 10 March 2010.
1.9 On 1 October 2009, the United States submitted a request for a preliminary ruling pursuant to
paragraph 11 of the Panel's working procedures on whether China had requested consultations on its

1 See also further clarification at footnote 1 to China's Panel Request, WT/DS392/2.
2 WT/DS392/2, para. 3.
3 On 1 December 2009, the Treaty of Lisbon amendi ng the Treaty on Europe an Union and the Treaty
establishing the European Commun ity (done at Lisbon, 13 December 2007) entered into force. On
29 November 2009, the WTO received a Verbal Note (WT/L/779) from the Council of the European Union and
the Commission of the European Communities stating that, by virtue of the Treaty of Lisbon, as of
1 December 2009, the European Union replaces and succeeds the European Communities.

SPS claims. In its oral statement at the first substa ntive meeting of the Panel with the parties, China
also requested a preliminary ruling from the Pane l on whether Section 743 of the Agriculture, Rural
Development, Food and Drug Administration, an d Related Agencies Appropriations Act ("AAA") of
2010 was within the Panel's terms of reference. In a letter of 18 December 2009, the Panel informed
the parties that it would not issue a separate deci sion on the two requests for a preliminary ruling on
jurisdiction, but rather would defer its ruling on bot h requests until issuance of its Report. In response
to the Panel's letter, China informed the Panel in a letter dated 7 January 2010 (Exhibit CN-51) that it
would not pursue a claim that Section 743 was inco nsistent with the United States' WTO obligations
in this dispute, but reserved its right to ch allenge Section 743 in separate dispute settlement
proceedings.
1.10 On 3 May 2010, the Panel issued the descriptive part of its Panel Report to the parties. The
Panel issued its interim report to the parties on 14 June 2010. The Panel issued its final report to the
parties on 26 July 2010.
II. FACTUAL ASPECTS
A. B
ACKGROUND
2.1 This dispute concerns China's pursuit of access to the US market for poultry. According to
China, the possibility to access the US market was cut off by legi slation passed by the United States
Congress ("US Congress") which, restricted the ability of the United States Department of Agriculture
("USDA") and its agency, the Food Safety and Insp ection Service ("FSIS") to use funds allocated by
the US Congress for the purpose of establishing or implementing a rule permitting the importation of
poultry products from China into the United States.
4
B. THE MEASURE AT ISSUE
2.2 The measure at issue in this dispute is Section 727 of the AAA of 20095 which 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."
6
2.3 Section 727 was accompanied by a Joint Expl anatory Statement ("JES") which provides the
following:
"There remain very serious concerns about contaminated foods from China and
therefore the bill retains language prohibiting FSIS from using funds to move forward
with rules that would allow for the importation of poultry products from China into
the U.S. It is noted that China has enacted revisions to its food safety laws. USDA is
urged to submit a report to the Committees on the implications of those changes on
the safety of imported poultry products from China within one year. The Department
is also directed to submit a plan for act ion to the Committees to guarantee the safety
of poultry products from China. Such plan should include the systematic audit of
inspection systems, and audits of all pou ltry and slaughter facilities that China would

4 The US Congress enacts annual appropriation bills which provide funding for the agencies and
programmes previously authorized. The US Congress can determine the terms and conditions under which an
appropriation may be used. Provisions in appropriations acts may be intended to prevent or restrict federal
agencies from taking certain rulemaking or regulatory actions. See Exhibits US-2 and 4.
5 China has stated that it was only challenging Section 727 of the AAA 2009. See China's response to
Panel's question 12, and the letter China sent to the Panel on 7 January 2010.
6 Section 727, AAA of 2009 (Exhibit CN-1).

certify to export to the U.S. The plan also should include the systemic audit of
laboratories and other control operations, expanded port-of-entry inspection, and
creation of an information sharing progr am with other major countries importing
poultry products from China that have conduc ted audits and plant inspections among
other actions. This plan should be made public on the Food Safety and Inspection
Service web site upon its completion."7
2.4 As a matter of United States law, a JES serves to explain the purpose of a given provision in
an appropriations bill.8 Section 727 expired on 30 September 2009.
C. THE UNITED STATES' REGIME FOR THE IMPORTATION OF POULTRY
2.5 On 28 August 1957, the US Congress adopted th e Poultry Products Inspection Act ("PPIA"),
which is set forth in Title 21 of the United States Code ("USC"). 9 This statute has been subsequently
amended on numerous occasions. In the PPIA, the US Congress sets out the general legal framework
governing all aspects of trade in poultry produc ts, both imported and domestically produced. 10
Because poultry, among other food products, falls within the competency of the USDA 11, the
US Congress delegated to the Secretary of Agricult ure ("the Secretary") the duty to set out detailed
rules and regulations relating to the in spection of poultry and poultry products. 12 The Secretary
promulgated regulations13 establishing the conditions under whic h poultry products are allowed to be
imported in the United States14 which are contained in the US Code of Federal Regulations ("CFR").15
2.6 The Secretary has established an "equivalence" based regime for gaining permission to import
poultry into the United States. The FSIS, which is an agency of the USDA, implements and enforces
the regulations on poultry importation. 16 The FSIS authorizes the importati on of poultry products into
the United States on a country-by-country basis. 17 Countries wishing to export poultry products to the
United States have to first request a determina tion of eligibility by the FSIS. The FSIS will then

7 JES, Division A of AAA of 2009, p. 82. (Exhibit CN-33).
8 Congressional Research Service, Conference Reports and Joint Explanatory Statements,
1 December 2004. p. 7. Exhibit US-58.
9 United States' first written submission, para. 23.
10 PPIA, 21 USC § 463. Rules and Regulations. (a) Storage and handling of poultry products; violation
of regulations: The Secretary may by regulations prescribe conditions under which poultry products capable of
use as human food, shall be stored or otherwise handled by any persona engaged in the business of buying,
selling, freezing, storing, or transpor ting, in or for commerce, or impor ting, such articles, whenever the
Secretary deems such action necessary to assure that su ch articles will not be adulterated or misbranded when
delivered to the consumer. Violation of any such regulation is prohibited. (Exhibit CN-4).
11 PPIA, 21 USC § 463 (a)-(c) (Exhibit CN-4).
12 PPIA, 21 USC § 463 (b) (Exhibit CN-4).
13 PPIA, 21 USC §§ 463 and 466 (Exhibit CN-4).
14 9 CFR § 381.196 (Exhibit CN-6).
15 The CFR is the codification of the general and permanent rules published in the Federal Register by
the executive departments and agencies of the US Government (United States' first written submission, para. 23,
footnote 26).
16 The Animal and Plant Health Inspection Service (" APHIS") is also a USDA agency which has some
authority over the importation of poultry into the Un ited States. APHIS is responsible for preventing the
introduction and dissemination of animal diseases, incl uding poultry diseases, into the United States. With
respect to poultry imports, APHIS's main responsibility is to inspect particular shipments of poultry as they
arrive at the border to ensure that they meet APHIS's requirements to prevent the introduction of disease into the
United States.
17 PPIA, 21 USC §466 (Exhibit CN-4), implemented through the rules detailed in 9 CFR § 381.196
(Exhibit CN-6).

establish whether an applicant's poultry inspection system is equivalent to that of the United States in
order to allow the importation of its poultry products.
18
2.7 If the FSIS determines that an applicant country's poultry inspection system is equivalent to
that of the United States, it publishes rules allowi ng the importation of poultry products from that
country in the Federal Register. Subsequent to th at initial determination, the FSIS also does annual
reviews to determine if approved countries' poultry safe ty standards continue to be equivalent to those
of the United States. The FSIS also re-inspects im ported products to ensure that they meet the
United States' poultry safety standards. The procedures followed by the FSIS in order to determine the
equivalence between the countries' poultry inspection systems are explained in detail below.
2.8 The equivalence process starts by an appli cant country making a request for eligibility to
export poultry products to the United States. 19 After the equivalence request has been submitted, the
FSIS will evaluate the equivalence of the applicant country's poultry inspection system. If the FSIS
determines that the applicant country's system is equivalent, the applicant country must certify
establishments as fit to export. After the app licant country commences exporting, the FSIS conducts
ongoing equivalence verifications. The process includes:
 (1) Initial equivalence determination: In this first stage the FSIS determines whether the
poultry inspection system of the applicant country is equivalent to the inspection
system of the United States own poultry safety measures.
20 If FSIS makes a
preliminary determination that the system s are equivalent, it publishes a proposed
rule in the Federal Register. If, after re viewing the comments it receives, FSIS makes
a final determination that the country's system is equivalent, the FSIS publishes a
final rule in the Federal Register and adds the applicant to the list in the CFR of
countries eligible to export poultry products to the United States.21

 (2) Certification of establishments : During this second stage, the eligible applicant
country must certify individual establishments as fit to export to the United States;
and,

 (3) Ongoing equivalence verification : In this third stage, the eligible applicant country
submits to an ongoing (typically annual) equivalence process to maintain eligibility to
export to the United States.
22

2.9 These three stages are discussed in greater detail below.
1. First Stage: Initial equivalence determination
2.10 As explained above, in this initial stage, th e FSIS investigates whether the poultry inspection
system of the applicant country is eq uivalent to that of the United States.23 This first stage is triggered
by the request of an exporting country to obtain authorization to export poultry products to the

18 9 CFR § 381.196 (Exhibit CN-6).
19 9 CFR § 381.196(a)(2)(iii) (Exhibit CN-6).
20 9 CFR § 381.196(a)(2)(i)-(ii) (Exhibit CN-6) and USDA/FSIS, Process for Evaluating the Equivalence of
Foreign Meat and Poultry Food Regulatory Systems (Exhibit CN-7), p. 10.
21 USDA/FSIS Process for Evaluating the Equivalence of Foreign Meat and Poultry Food Regulatory
Systems, p. 10 (Exhibit CN-7).
22 9 CFR § 381.196(a)(2)(iii) and USDA/FSIS, Process for Evaluating the Equivalence of Foreign Meat and
Poultry Food Regulatory Systems, p.10-14 (Exhibit CN-7). Both the initial equivalence determination and the ongoing
equivalence verification require the active involvement of numerous FSIS employees.
23 9 CFR §381.196 (Exhibit CN-6) and USDA/FSIS, Process for Evaluating the Equivalence of Foreign
Meat and Poultry Food Regulatory Systems, p. 10 (Exhibit CN-7).

United States. The application has to include copies of all the laws and regul ations on which its own
poultry inspection system is based.24
2.11 Once eligibility for importation of poultry is re quested, an initial equivalency evaluation is
conducted25 including three sequential steps: (a) a documen t review, (b) an on-site audit, and (c) the
publication of the proposed and final rules in the Fede ral Register and the country's addition to the list
in the CFR.
(a) Document review
2.12 The first step in the initial equivalence stage is the evaluation of the applicant country's laws,
regulations and other written info rmation related to the applicant's poultry inspection system. As
indicated above, further to the application for authorization to import, the applicant country is asked to
provide the FSIS with copies of the laws and regul ations on which its poultry inspection system is
based. Once this stage is successfully concluded, the FSIS moves onto the second stage of the process,
the on-site audit.
(b) On-site audit
2.13 During the on-site audit, a team of FSIS experts verify that the applicant's regulatory system
has satisfactorily implemented all the laws, regul ations, and other inspection or certification
requirements that the FSIS had found to be equivalent during the document review step.26
(c) Publication in the Federal Register
2.14 The third step is the publication of the final rule allowing the importation of poultry products
from certified establishments in the applicant country . After both the document review and the on-site
audit steps have been satisfactorily completed, the FSIS publishes a draft rule in the Federal Register
that announces the results of the first two steps and proposes to add the applicant country to the list of
eligible exporters in the CFR. Upon receipt and co nsideration of public comments, the FSIS makes a
final decision about equivalence based upon all ava ilable information and, if favourable, publishes a
final rule in the Federal Register announcing the applicant country's eligibility.27
2. Second Stage: Certification of establishments for export by the eligible exporting
country
2.15 Once the initial equivalence determination stage has been completed, the applicant country
must conduct inspections of establishments wishing to export to the United States. 28 Only those
establishments that are determined by the applican t country's authorities to fully meet the entire
equivalent sanitary requirements may be certified to export to the United States. 29 The applicant
country authorities must ensure ongoing compliance with the equivalent sanitary requirements,
especially with respect to establishments that are exporting to the United States. 30 The applicant

24 9 CFR § 381.196(a)(iii) (Exhibit CN-6).
25 USDA/FSIS, Process for Evaluating the Equivalence of Foreign Meat and Poultry Food Regulatory
Systems, p. 10 (Exhibit CN-7).
26 USDA/FSIS, Process for Evaluating the Equivalence of Foreign Meat and Poultry Food Regulatory
Systems, pp. 11-12 (Exhibit CN-7).
27 USDA/FSIS, Process for Evaluating the Equivalence of Foreign Meat and Poultry Food Regulatory
Systems, p. 12 (Exhibit CN-7).
28 9 CFR § 381.196 (a)(3) (Exhibit CN-6).
29 9 CFR § 381.196 (a)(3) (Exhibit CN-6).
30 9 CFR § 381.196 (a)(2)(iv)(A)–(C), 9 CFR § 381.196 (a)(3) (Exhibit CN-6).

country notifies the FSIS of the certification by tr ansmitting a certification list according to the form
specified in the CFR.
31 This certification must be renewed annually.32
3. Third Stage: Ongoing equivalence verification
2.16 The regulations require that ongoing reviews be conducted by the FSIS. 33 The purpose of the
ongoing equivalence verification is to maintain eligibility for exportation.34 Like an initial equivalence
determination, the ongoing equivalence ve rification is conducted in three stages: 35 (i) a recurring
document analysis, (ii) further on-s ite audits, and (iii) continuous port-of-entry re-inspections of
poultry products shipped to the United States from the eligible exporting country.36
D. CHINA'S REQUEST FOR EQUIVALENCE
2.17 China requested an initial equivalence determ ination to export poultry products to the
United States on 20 April 2004. 37 Further to this request, the FSI S conducted an initial equivalence
audit, the objective of which was to "evaluat e the performance of China's Central Competent
Authority ('CCA') with respect to controls over the slaughter and processing establishments proposed
for certification by the CCA as eligible to e xport poultry products to the United States." 38 The final
report concerning this audit was issued on 17 May 2005. 39 The report found a number of deficiencies
in some processing and slaughter plants 40, and as a consequence, the FSIS sent a letter to China
proposing a follow-up equivalence audit to check whet her the deficiencies identified in the slaughter
system during the December 2004 audit had been corrected. 41 The FSIS conducted the second initial
equivalence audit on China's poultry slaughter insp ection system in July and August 2005, and on
4 November 2005 issued its Final Report.42
2.18 On the basis of the Report of the first on-site audit, on 23 November 2005, the FSIS proposed
to amend the Federal Poultry Products Inspection regulations 43 to add China to the list of countries
eligible to export processed poultry products to th e United States, provided that the poultry products
processed in certified establishments in China came from poultry slaughtered in the United States or
certified establishments in other countries eligible to export poultry to the United States.44

31 9 CFR § 381.196 (a)(3) (Exhibit CN-6).
32 9 CFR § 381.196 (a)(2)(iii) (Exhibit CN-6).
33 9 CFR § 381.196 (a)(2)(iii) (Exhibit CN-6).
34 9 CFR § 381.196 (a)(3) (Exhibit CN-6).
35 USDA/FSIS, Process for Evaluating the Equivalence of Foreign Meat and Poultry Food Regulatory
Systems, p. 15 (Exhibit CN-7).
36 USDA/FSIS, Process for Evaluating the Equivalence of Foreign Meat and Poultry Food Regulatory
Systems, p. 14 (Exhibit CN-7).
37 United States' first written submission, para. 33.
38 Final Report of an Initial Equivalence Audit carried out in China covering China's Poultry Inspection
System, 1 – 17 December 2004, p. 4 (Exhibit CN-13).
39 Exhibit CN-13.
40 In one laboratory test, FSIS found that sampling and handling procedures could have led to cross-
contamination. Deficiencies were also found in three establishments concerning preoperational, operational and
other sanitation deficiencies. Further, it was found that the General Administration of Quality Supervision,
Inspection and Quarantine (AQSIQ) did not have adequate control and supervision over the establishments. See
Final Report of an Initial Equivalence Audit carried out in China covering China's Poultry Inspection System,
pp. 7, 9 and 11. Exhibit CN-13.
41 Letter sent from FSIS to China (Exhibit US-7).
42 Exhibit CN-16.
43 These regulations refer to the United States' CFR.
44 Exhibit CN-14.

2.19 On 24 April 2006, the FSIS published notification in the Federal Register that it would be
adding China to the list in the CFR of countries e ligible to export processed poultry products not
slaughtered in China as described above. As noted above, China also applied for equivalence with
respect to its inspection system for slaughtered poultry. The April Federal Register Notice only
covered processed poultry and did not propose allo wing the importation of poultry slaughtered in
China.45
2.20 Two weeks after publication of the Federal Register Notice, on 9 May 2006, the FSIS sent
China a letter outlining the remaining two steps that had to be completed before China could export
processed poultry products to the United States. 46 According to this letter, China needed to: (i) submit
to the FSIS a list of establishments certified by the Chinese inspection services as satisfying the
requirements for exporting processed poultry products to the United States, and (ii) submit product
labels by certified establishments in China for revi ew by the Labelling Consumer Protection Staff of
the FSIS.47
2.21 In June 2006, based in part on previous on-s ite audit of the slaughtered poultry operations in
China, the FSIS made a preliminary determinat ion that China's poultry inspection system for
domestically slaughtered poultry was e quivalent to United States standards. 48 Notwithstanding, the
FSIS did not publish a draft rule in the Federa l Register requesting public comments on China's
slaughtered poultry operations or announcing the results of the document review and the on-site audit.
2.22 At this point, the FSIS had thus determined that China's poultry production system was
equivalent to that of the United States for processed poultry products from the United States or
another country that the FSIS had determined was e quivalent to the United States. At the same time,
FSIS had determined that China's inspection sy stem for slaughtered poultry was preliminarily
equivalent pending further evaluation through the rulemaking process.
2.23 On 20 December 2007, the FSIS sent a letter to China requesting the annual certification of
establishments eligible to export processed m eat or poultry products to the United States. 49 Six days
later, on 26 December 2007, the Consolidated Appropriations Act of 2008 entered into force.50
2.24 This Act contained the AAA of 2008 which provided the funds for the USDA and its
agencies, such as the FSIS, to execute their activities. 51 In particular, Section 733 of the AAA of 2008
restricted the use of funds to establish or implem ent any rule allowing poultry products from China to
be imported into the United States. 52 Section 733 which expired on 30 September 2008, is not a
measure at issue in this dispute.53

45 Exhibit CN-14.
46 Exhibit US-20.
47 9 May 2006. Exhibit US-20.
48 USDA, Office of Inspector General Northeast Region. Audit Report: Follow up Review of Food and
Safety Inspection Service's Controls Over Imported Meat and Poultry Products, August 2008. p. 14.
Exhibit CN-17.
49 Exhibit CN-19.
50 Exhibit CN-8.
51 House Report 110-258, 24 July 2007. p. 54 (Exhibit US-42).
52 Section 733 provides: "None of the funds made ava ilable 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."
53 China's response to Panel question No. 17.

2.25 The funding restriction established by Section 733 was maintained by Division A of the
Consolidated Security, Disaster Assistance, and Continuing Appropriations Act of 2009.
54
2.26 Nearly two years after the United States' first request, on 12 March 2008 55, China sent the list
of certified establishments to the FSIS. 56 On 23 July 2008, the FSIS published the list of countries
eligible to export poultry products to the United States. China was included as eligible to export
processed poultry products. For certain countries, indi cated with shading in the table, eligibility was
suspended for animal health reasons (directing re aders to see country specific notes) or pending
equivalence re-verification. The country specific note for China states that "FY 2008 appropriation
legislation bars FSIS from spending funds on import of poultry from China."57
2.27 On 28 February 2009, China's National People's Congress Standing Committee enacted a new
food safety law.58
2.28 On 11 March 2009, the US Congress enact ed the Omnibus Appropriations Act. 59 This Act
contained the AAA of 2009. Section 727 of the A AA of 2009, which is the measure being challenged
by China in this dispute, shared the same wording of Section 733 and thus restricted the use of funds
to establish or implement any rule allowing poultr y products from China to be imported into the
United States.
2.29 Upon its expiry at the end of the 2008-2009 Fiscal Year on 30 September 2009, the funding
restriction instituted by Section 727 was conti nued by Division B of the Legislative Branch
Appropriations Act (Continuing Appr opriations Resolution) of 2010. 60 Division B also expired once
the AAA of 2010 entered into force on 21 October 2009. 61 This new AAA of 2010 included
Section 743 a measure that also relates to funding of FSIS activities relating to China's application for
equivalency of its poultry inspection system. In particular, Section 743 allows that funding to
establish or implement a rule permitting the impor tation of poultry products from China can be
restored if the Secretary complies with certain conditions set forth in that provision. As noted above,
China has decided not to pursue a claim with respect to Section 743 in this dispute.62
2.30 As noted in paragraph 2.3 above, Section 7 27 was accompanied by a JES which listed two
actions that the US Congress expected the FSIS to ta ke. In particular, the JES urged the USDA to
submit a report to the Committees on the implications of the recent changes to China's food safety law
within one year. The JES also "directed" the USDA to submit a plan for action to the Committees to
guarantee the safety of poultry products from China and stated that the plan should be made public on
the FSIS web site upon its completion.
2.31 With respect to how it complied with the request s in the JES, the United States noted that two
months after the passage of Section 727, the FSIS had sent a letter to the Chinese authorities
requesting "information to understand the nature and implication of revisions in food safety laws,
regulations, and inspection and cont rol procedures enacted since 2006." 63 At the first substantive

54 Exhibit CN-9.
55 9 May 2006. Exhibit US-20.
56 Exhibit CN-20.
57 Exhibit CN-21.
58 Exhibit US-40.
59 Exhibit CN-1.
60 Exhibit CN-2.
61 Exhibit CN-3.
62 On 7 January 2010, China sent a letter to the Panel indicating that it would not argue the WTO
inconsistency of Section 743 of the AAA 2010 and reserved its rights to do so in separate dispute settlement
proceedings.
63 Exhibit US-44.

meeting of the Panel with the parties, China indi cated that it did not respond to this letter because it
had already initiated dispute settlement proceedings at the WTO.
2.32 Additionally, the United States informed the Pa nel that the USDA had sent a document to the
US Congress which it argues is the action plan calle d for in the JES. The one-page document, which
is undated and not on official USDA letterhead, is entitled "FSIS Action Plan for Creation of
Congressionally-Mandated China Poultry Inspection System Reports". 64 According to this document,
the FSIS had to review the changes to the Chinese food safety law, and develop a plan of action to
guarantee the safety of poultry products from China.
III. PARTIES' REQUESTS FOR FINDINGS AND RECOMMENDATIONS
3.1 China requests the Panel to find that Section 727 is inconsistent with:
 (i) Article I:1 of the GATT 1994, because it fails to extend the advantage of the
opportunity to export to the United States immediately and unconditionally to like
poultry products from China
65;

 (ii) Article XI:1 of the GATT 1994, because it imposes import restrictions that limit
competitive opportunities for poultry products from China
66;

 (iii) Article 4.2 of the Agreement on Agriculture , because it imposes a quantitative
restriction on poultry products from China
67;

 (iv) Article 2.3 of the SPS Agreement
68, because it arbitrarily and unjustifiably
discriminates against China69;

 (v) Article 5.5 of the SPS Agreement, because the higher level of sanitary protection
applied to China is arbitrary and unjustifiable, resulting in discrimination
70;

 (vi) Article 5.1 and 5.2 of the SPS Agreement, because it is not based on a risk assessment
within the meaning of Article 5.1 that takes into account the factors in Article 5.271;

 (vii) Article 2.2 of the SPS Agreement, because it is not maintained based on scientific
evidence
72;

 (viii) Article 5.6 of the SPS Agreement, because it is inconsistent with the obligation that
SPS measures not be unduly trade-restrictive73; and

64 Exhibit US-43.
65 China's first written submission, para. 191, China's second written submission, para. 114.
66 China's first written submission, para. 191, China's second written submission, para. 114.
67 China's first written submission, para. 191, China's second written submission, para. 114.
68 China first requested findings on its SPS claims "to the extent that the measure constituted a sanitary
and phytosanitary measure within the meaning of the SPS Agreement", See China's first written submission,
para. 192. Further to its first oral statement, on the grounds that it had been demonstrated that Section 727 is an
SPS measure within the meaning of the SPS Agreement, China removed that qualification from its requests for
findings regarding the SPS Agreement in further submissions.
69 China's first written submission, para. 192, China's second written submission, para. 114.
70 China's first written submission, para. 192, China's second written submission, para. 114.
71 China's first written submission, para. 192, China's second written submission, para. 114.
72 China's first written submission, para. 192, China's second written submission, para. 114.
73 China's first written submission, para. 192, China's second written submission, para. 114.

 (ix) Article 8 of the SPS Agreement, because the delay resulting from its application is
unjustifiable, or undue.
74

3.2 Given that Section 727 has expired, China further requests the Panel to issue a
recommendation that the United States does not revert to language similar to that in Section 727 in its
future legislation.
75
3.3 The United States requests that the Panel rejects China's claims in its entirety.76
IV. ARGUMENTS OF THE PARTIES
A. EXECUTIVE SUMMARY OF THE FIRST WRITTEN SUBMISSION OF CHINA
1. Introduction
4.1 A series of US measures over the past three years have grossly violated China's most
fundamental rights under the GATT 1994, i.e. the ri ghts to most-favoured nation treatment and to
trade without quantitative restrictions. The resu lt of these measures is that the US rules and
procedures regulating the import of poultry products are applied to every WTO Member except China.
The United States has enacted these measures despite the fact that Chinese poultry is eligible for
export to a number of WTO Members with high leve ls of sanitary and phytosanitary protection, such
as Japan, Korea, and the European Communities, and was found by the United States authorities, in
April 2006, as deserving inclusion among an elite list of countries eligible to export poultry to the US.
4.2 China emphasises that it has not initiated this dispute to force the United States to import its
poultry products. However, in preventing China from even being considered under the normal
approval rules and procedures, the United States is arbitrarily discriminating against Chinese poultry
and violating a number of its obligations under WTO rules.
2. The measures at issue
(a) Section 727 of the Agriculture Appropriations Act 2009
4.3 The first set of measures challenged in this dispute is Section 727 of the Agriculture
Appropriations Act 2009 and any replacement measures, subsequent closely-related measures or
future closely-related measures. Among such m easures are the 2010 Continuing Appropriations
Resolution, and Section 743 of the Agriculture Appropriations Act 2010 . As Section 743 had not yet
been signed into law at the time China submitted its First Written Submission, China does not fully
address it in this submission, but is of the initia l view that Section 743 violates the same WTO
provisions as Section 727 and the moratorium. China reserves the right to more fully challenge, in
later submissions, the compliance of Section 743 with the United States' WTO obligations.
4.4 Section 727 is contained in an appropriations act that allocated 'funds' for fiscal year 2009
(1 October 2008 – 30 September 2009). It prohibits appropriated funds
 from being used to establish or
implement a rule allowing poultry products to be imported from China.77
4.5 A 'rule' is first used to formally establis h a given country's eligibility to export poultry
products to the United States. 78 Rules then also provide the basis for the procedures used to

74 China's first written submission, para. 192, China's second written submission, para. 114.
75 China's closing oral statement at the second substantive meeting, para. 7.
76 United States' first written submission, para. 165, United States' second written submission,
para. 125.
77 Section 727, Agriculture Appropriations Act 2009 (Exhibit CN-1).

implement and maintain eligibility. They are established and implemented by the sole government
department competent to establish or implement ru les relating to the importation of poultry – the US
Department of Agriculture (USDA) and its subor dinate food safety agency, the Food Safety
Inspection Service (FSIS). As Section 727 means that no funds can be expended by the sole executive
branch department responsible for creating a nd implementing these rules on poultry imports from
China, Section 727 limits the competitive opportun ities for Chinese poultry products and effectively
restricts imports of Chinese poultry products to zero.
4.6 Yet, at the same time, the USDA and FSIS can expend funds to implement existing rules and
establish new rules permitting the import of poultry from all other WTO Members. It is this arbitrary
and blatant discrimination against China as compared to other WTO Members (and US poultry
producers) that violates a number of WTO provisions.
(b) Ongoing moratorium on the establishment or implementation of authorization for the
importation of poultry products from China
4.7 The second measure at issue is th e ongoing moratorium on: (a) the consideration of
applications for approval, (b) the granting of approval, and (c) the implementation of approval, for the
import of poultry products from China under the US system for regulating the importation of poultry
products. The moratorium was initiated followi ng the enactment of Section 733 of the Agriculture
Appropriations Act 2008 and has been maintained by several su ccessive measures. It has operated on
a multi-year basis in much the same way as Se ction 727 has operated during the 2009 fiscal year.
Thus, the practical effect of the moratorium is to limit China's competitiv e opportunities for Chinese
poultry products, and to restrict imports of Chin ese poultry products to zero, as compliance with the
rules is a legal pre-requisite for the importation of poultry products into the United States. As the
ongoing moratorium denies only China the right to benefit from the opportunity to export poultry
products to the United States, the moratorium is inconsistent with a number of WTO provisions.
3. US regulations and procedures applicable to the authorization of poultry products
(a) US regulations and procedures
4.8 The Poultry Products Inspection Act (PPIA) constitutes the legislative basis for the import
and inspection procedures relating to the import of p oultry products into the United States. Under the
PPIA, the Secretary of Agriculture is author ized to make rules to implement the PPIA. 79 These rules
are detailed in section 381.196 of Title 9 of the Code of Federal Regulations (CFR), and are enforced
by FSIS.
4.9 In accordance with 9 CFR § 381.196, elig ibility to export poultry products to the
United States requires completing three sequential steps. First, in a 3 – 5 year procedure known as an
"initial equivalence determinati on", the FSIS investigates whether the food safety measures of the
exporting country are equivalent to those employed by the United States. 80 The FSIS investigation
includes a document review stage and on-site audits. If equivalence is confirmed, this step culminates
in the establishment of a rule in the CFR stating th at the country is eligible to export poultry products
to the United States. Second, the eligible exporting country must certify individual establishments as
fit to export to the United States. Finally, the third step involves a procedure known as "ongoing

78 This occurs following an extensive, 3-5 year e quivalence determination that establishes whether an
exporting country's poultry regulatory procedures are equivalent to US poultry regulatory procedures. Process
for Evaluating the Equivalence of Foreign Meat and Poultry Food Regulatory Systems (Exhibit CN-7).
79 All imported poultry products are within the jurisdiction of the USDA. See the PPIA (Exhibit CN-4).
80 Process for Evaluating the Equivalence of Foreign Meat and Poultry Food Regulatory Systems , p.
12 (Exhibit CN-7).

equivalence verification" whereby the eligible e xporting country submits to an ongoing program to
maintain eligibility to export to the United States. Li ke the initial equivale nce determination, it
involves document reviews and on-site audits; it also involves port-of-entry re-inspection of goods at
the US border by FSIS.
(b) Application of procedures before and after the moratorium
(i) China
4.10 China completed its first initial equivalen ce determination in April 2006. FSIS then
established a rule placing China on the list of eligible importing countries for processed poultry
products. This rule related only to poultry slaughter ed elsewhere and processed in China, as the
equivalence determination did not extend to Chinese slaughter inspection systems. However, the
measures at issue prevent the FSIS from using any f unds to implement this rule, and thus no action
has been taken by FSIS on its ongoing equivalence procedures.
4.11 A second initial equivalence dete rmination concerning poultry slaughtered in China was
ongoing when the moratorium began in 2007. Review s and audits had been completed, and FSIS
concluded that China's poultr y slaughter inspection system was equivalent to the US system.
However, FSIS never issued a proposed rule due to the measures at issue.
(ii) All other WTO Members
4.12 While China's progress through its initial equi valence determination on slaughtered poultry
was halted, FSIS imposed no similar moratorium for other WTO Members. There are nearly 20 other
Members currently in various stages of their equiva lence determinations. Furthermore, there are nine
other countries and territories currently authorized to export poultry products to the United States.
81
FSIS has remained very active with respect those countries, including, e.g. conducting audits in
eligible exporting countries.
4. Legal analysis and argument
4.13 The United States' refusal to apply its norm al FSIS approval procedures for imported poultry
products with respect to China, while continuing to consider, grant, and implement authorization to
import poultry products from other WTO Memb ers, constitutes arbitrary and unjustifiable
discrimination. Section 727 and the ongoing moratorium, which form the basis for the non-application
of normal approval procedures, eliminate any competitive opportunities for China's poultry products
in the United States. These measures, including the replacement measures, subsequent closely-related
measures, and future closely-related measures, violate a number of WTO provisions.
(a) Section 727 and the moratorium each violate Article I:1 of GATT 1994
4.14 By denying only Chinese poultry products the opportu nity to be exported to the United States
(through blocking Chinese access to FSIS procedures ), the measures at issue fail to accord poultry
products originating in China immediately and unconditionally the advantages accorded to like
poultry products originating in all other Members. Consequently, they violate GATT Article I:1.
4.15 Advantage: Poultry products from all WTO members have the competitive opportunity to be
exported to the United States (the advantage), if pr oduced under an equivalent food safety system and
if that finding is maintain ed by ongoing FSIS procedures – except Chinese poultry products. This is a
denial of an advantage within the meaning of Article I:1.

81 Australia, Canada, Chile, France, Great Britain, Hong Kong, Israel, Mexico, and New Zealand.

4.16 Like Product: Section 727 and the moratorium apply exclusively to poultry products imported
from China – i.e. they apply an origin-based produc t distinction. A hypothetical like product analysis
is appropriate for measures that impose an origin-based distinction.82
4.17 Unconditionally: Section 727 and the moratorium apply their conditions solely to Chinese
poultry products, removing Chinese poultry from a ny chance to access the US market. Section 727
and the moratorium thus do not operate on an MFN basis, and do not unconditionally accord
advantages to the like products of all WTO Members, in violation of Article I:1.
(b) Section 727 and the moratorium each violate Article XI:1 of GATT 1994
4.18 GATT Article XI:1 requires Members to eliminat e any 'prohibitions' or 'restrictions' on the
importation of any product from any other Member. Section 727 and the moratorium each violate
Article XI:1 because they impose restrictions on importation that negatively impact the competitive
opportunities for poultry products from China. Each me asure also violates Article XI:1 by instituting
de facto prohibitions on imports of poultry from China.
4.19 While other WTO Members may seek and obtain authorization under FSIS rules in order to
export poultry products to the United States, Chin a cannot, as a result of the measures at issue. FSIS
authorization is a necessary precondition for th e importation of any poultry products into the
United States. Thus, the measures at issue each eliminate China's co mpetitive opportunities in the US
poultry market, constituting "restrictions" on Chinese impor ts within Article XI:1. Also, to the extent
that the practical impact of the measures is an import ban on Chinese poultry products, the measures
each institute import prohibitions in violation of Ar ticle XI:1, by precluding the possibility of gaining
the necessary FSIS authorization, therefore restric ting the importation of such products from China to
zero.
(c) Section 727 and the moratorium each violate Article 4.2 of the Agreement on Agriculture
4.20 Article 4.2 of the Agreement on Agriculture prohibits Members from instituting quantitative
restrictions on agricultural products including pou ltry products. Section 727 and the moratorium are
both inconsistent with Article 4.2 of the Agreement on Agriculture because the measures result in the
maintenance of quantitative restrictions on the importation of poultry products from China. The
measures at issue each prohibit the application of FSIS approval procedures to China, making it
impossible for China to obtain the authorization th at is required in order to export poultry products.
Thus, the volume of Chinese poultry products that ma y be imported is set at zero, and the practical
impact is the maintenance of restrictions equivalent to an import ban, a violation of Article 4.2.
(d) Claims under the Agreement on the Application of Sanitary and Phytosanitary Measures
4.21 China understands that the United States has not notified the measures at issue to the WTO, as
it would have been expected to do under Article 7 of the SPS Agreement if it considered them
SPS measures. Nevertheless, to the extent that th e measures may be considered to be sanitary and
phytosanitary (SPS) measures within the SPS Agreement, China advances the following arguments.
(i) To the extent they are SPS measu res, the measures are inconsistent with Article 2.3 of the
SPS Agreement
4.22 Article 2.3 of the SPS Agreement prohibits Members from arbitrarily or unjustifiably
discriminating between Members where identical or similar conditions prevail. As Section 727 and

82 Panel Report, Colombia – Ports of Entry, para. 7.356; Appellate Body Report, Canada – Periodicals,
pp. 20-21.

the moratorium discriminate between China and all other WTO Members without justification,
Section 727 and the moratorium violate Article 2.3.
4.23 There is a three-part test to establish a violation of Article 2.3. First, the measure
discriminates between the territory of the Member imposing the measure and that of another Member,
or between two other Members. In this case, the measures at issue restrict only China from seeking
and obtaining authorization to export poultry produc ts to the United States – clear discrimination
against China. Second, the discrimination is arbitrary or unjustifiable. In this case, there is no
scientific evidence, risk assessment, or other justification for treating Chinese poultry products
differently from those of other WTO Members.
4.24 Third, identical or similar conditions prevail in the territory of the Members compared
83,
i.e. China and all other poultry-exporting WTO Member s. A key "condition" that is "identical" is the
scope and effectiveness of FSIS procedures, as a pplied to poultry products from all WTO Members.
These rules are capable of determining whether poultry products from any Member are safe for
importation into the United States. There is nothing unique to China with respect to the functioning
and effectiveness of these rules. Thus, the measures at issue arbitrarily and unjustifiably discriminate
against China in violation of Article 2.3.
(ii) To the extent they are SPS measu res, the measures are inconsistent with Article 5.5 of the
SPS Agreement
4.25 Article 5.5 of the SPS Agreement prohibits Members from applying different levels of
sanitary protection to comparable situations. Th e higher level of SPS protection applied by the
United States to China, reflected in Section 727 an d the moratorium, is arbitrary and unjustifiable and
results in discrimination, in violation of Article 5.5.
4.26 There are three cumulative conditions that must be met in order to establish a violation of
Article 5.5. First, the Member applies different levels of protection in different situations. In this case,
the 'different situations' are (a) the importati on of poultry products from China, to which the
United States applies restrictions resulting in an import ban; and (b) the importation of poultry
products from all other WTO Members, to which the United States applies the FSIS equivalence
procedures, reflective of a lower level of SPS protection. Second, the levels of protection show
arbitrary or unjustifiable differences in their treatme nt of different situations. The application of such
a high level of sanitary protection to China alone is arbitrary and unjustifiable. China could have the
world's best food safety system, but the measures at issue would still operate to exclude Chinese
poultry products from the consideration, granting, or implementation of authorization to export to the
United States. Thus, the distinction in levels of sanitary protection is arbitrary and unjustifiable. Third,
these arbitrary or unjustifiable differences lead to di scrimination or a disguised restriction on trade.
Because the United States applies FSIS equivalen ce procedures to every other WTO Member while
applying restrictions resulting in an import ban to China, the difference in sanitary protection results
in "discrimination", fulfilling the third cumula tive element and establishing a violation of
Article 5.5.
84
(iii) To the extent they are SPS measures, the measures are inconsistent with Article 5.1 and 5.2 of
the SPS Agreement
4.27 Article 5.1 requires Members to ensure that any SPS measures are based on a risk assessment,
and Article 5.2 sets out the criteria which Members must take into account when conducting said risk
assessment. There is no publicly-available documen tation indicating that Section 727 and the

83 Panel Report, Australia – Salmon (Article 21.5 – Canada), para. 7.111.
84 Appellate Body Report, EC – Hormones, paras. 214-215.

moratorium are based on any risk assessment addressing Chinese pou ltry, let alone a risk assessment
within the meaning of Article 5.1 and 5.2. Furtherm ore, available evidence suggests that the measures
at issue would not be supported by the likely c onclusions of a risk assessment conducted pursuant to
Article 5.1 and 5.2. Indeed, the USDA had concluded in 2006, prior to the moratorium, that Chinese
poultry products are safe for importation. In addition, since December 2007, Chinese poultry has been
exported to other Members applyi ng high levels of SPS protection, including the EC, Japan and
Korea.
(iv) To the extent they are SPS measu res, the measures are inconsistent with Article 2.2 of the
SPS Agreement
4.28 Article 2.2 requires that Members ensure that SPS measures are maintained on the basis of
sufficient scientific evidence. As Section 727 and the moratorium are maintained without any
scientific basis, the measures violate Article 2.2. The Appellate Body has interpreted Article 2.2 to
require "a rational and objective relationship between the SPS measure and the scientific evidence". 85
Nothing in the texts or legislative contexts of th e measures, or in publicly-available documentation,
indicates that the measures at i ssue were enacted on the basis of any scientific evidence, let alone
evidence sufficient to meet the standards of Article 2.2 of the SPS Agreement.
(v) To the extent they are SPS measu res, the measures are inconsistent with Article 5.6 of the
SPS Agreement
4.29 Article 5.6 requires that SPS measures are not more trade-restrictive than necessary. The
measures at issue are inconsistent with the obligation in Article 5.6, as they are significantly more
trade-restrictive than necessary. The footnote to Ar ticle 5.6 clarifies that a measure is more trade-
restrictive than required if: First, there is another measure reasonably available to the Member
imposing the SPS measure. In this case, the alternative measure is the FSIS equivalence procedures. It
is technically and economically feasible, as it is applied on a regular basis to all other WTO Members.
Second, the alternative measure achiev es the Member's appropriate level of SPS protection. The FSIS
procedures clearly meet the US' "appropriate level of protection" for poultry imports as the US applies
it to all WTO Members except for China. Third, the alternative measure is significantly less restrictive
to trade than the contested measure. 86 The application of the FSIS procedures would be significantly
less trade-restrictive than the measures at issue, as it would provide the possibility of obtaining
authorization to export to the US instead of a restricti on automatically resulting in an import ban. As
the alternative measure meets all three criteria, the measures at issue violate Article 5.6.
(vi) To the extent they are SPS measures, the measur es are inconsistent with Article 8 of the
SPS Agreement
4.30 Article 8 requires that Members observe the provisions of Annex C when applying control,
inspection, and approval procedures. The United Stat es, in unduly delaying the application of the
FSIS procedures to Chinese poultry imports by in stituting Section 727 and the moratorium, has
violated Article 8 of the SPS Agreement. Annex C(1)(a) obliges Members to "undertake and
complete" the procedures for assessing compliance with an SPS requirement "without undue delay" or
"with no unjustifiable loss of time ".87 Section 727 and the moratorium unduly delay the application of
the normal FSIS procedures to China. The delay cannot be justified on any ground, constituting a
violation of Article 8.

85 Appellate Body Report, EC – Hormones, paras. 180, 193.
86 This approach was affirmed by the Appellate Body in Australia – Salmon, para. 194.
87 Panel Report, EC – Approval and Marketing of Biotech Products, para. 7.1495. Emphasis added.

5. The US Preliminary Ruling Request must fail, as consultations pursuant to the
SPS Agreement were requested and held
4.31 In its Preliminary Ruling Request, the United Stat es contends that any claims made by China
pursuant to the SPS Agreement are outside the scope of the Panel's terms of reference, as the claims
were presented in the alternative/conditionally. Ho wever, China's consultations request specifically
invoked Article 11 and devoted fully 303 of the 9 89 words of the request to claims under the
SPS Agreement. Alternative claims are also "very common in WTO dispute settlement".
88
Furthermore, had China's claims under the SPS Agreement been raised without presenting them in the
alternative/conditionally, it could have been u sed as an admission against China's interests. Any
efforts by the United States to place China in that untenable position must fail, as must any reading
that would render over 30% of this critical document entirely meaningless.
4.32 Furthermore, nowhere in its preliminary ruling request does the United States allege that its
due process rights have been impacted by China's c onsultations request and in fact, the United States
seems to acknowledge that its request h as nothing to do with due process rights. 89 Given that a key
purpose of a consultations request is that a r esponding member "is fully informed about [the
complainant's] intention" (providing for due process)90, this is a notable admission.
(a) China's consultations request clearly invoked Article 11 of the SPS Agreement
4.33 Consultations in this dispute were, in f act, requested pursuant to Article 11 of the
SPS Agreement. The core of the US argument appears to re late to China's use of the phrase "if it were
demonstrated that any such measure is an SPS m easure". However, that phrase simply shows that
China was contemplating a "bilateral diplomatic di alogue" to better delineate the dispute. Also, under
Article 4.2 of the DSU, "sympathetic consideration" must be given to " any representations" made by
China – including those framed as alternative arguments.
4.34 Contrasting the requirements of Article 4.4 of the DSU (on consultations requests) with the
heightened requirements of Article 6.2 (on pane l requests) also shows China has fully met its
obligations under Article 4.4 states that a consultations request "shall give ... an indication of the legal
basis for the complaint". In contrast, 6.2 states that a panel request must "provide a brief summary of
the legal basis of the complaint sufficient to present the problem clearly ". The heightened burden for
panel requests reflects the understanding that the legal bases of a claim often evolve during
consultations. The Article 4.4 requirement to provide an " indication" (a "hint, suggestion" 91) was
clearly met, as by devoting over 30% of the document to SPS claims, there is no doubt that China
provided the United States with the requisite "hint" that the SPS Agreement was at issue in
consultations.
(b) Pursuant to its consultations request, China actually consulted regarding the SPS Agreement,
and in a manner fully consistent with Article 4 of the DSU
4.35 China actually consulted on the SPS Agreement. China provided the United States with over
40 questions to be answered during consultation, including at least 8 that sought to clarify whether the
measures at issue were considered SPS measures by the United States. 92 The panel in Korea –

88 Panel Report, Korea – Commercial Vessels, para. 7.2 at subparagraph 29.
90 Panel Report, Chile – Price Band System, para. 7.120.
91 Lesley Brown, (ed.), The New Shorter Oxford English Dictionary , Clarendon Press, 1993, Vol. 1,
p. 1348.
92 (Exhibit CN-39).

Commercial Vessels accepted questions posed in consultati ons as "alone ... sufficient for us to
conclude that the parties consulted on the entirety of the measure".93
4.36 Furthermore, the US assertion that its representa tives explained during c onsultations that the
United States "was not consulting pursuant to Article 11 of the SPS Agreement"94 is irrelevant to the
Panel's terms of reference. A responding party can no t unilaterally control the jurisdiction of a panel.
Indeed, Article 4.3 of the DSU provides that wher e a respondent refuses consultations a complainant
may proceed more quickly to a panel. It does not indicate that a refusal somehow makes it impossible
for the complainant to establish a panel with terms of reference that encompass measures stated in
their consultations requests.
4.37 For the foregoing reasons, China requests the Pa nel to reject the US preliminary ruling
request and determine that China's claims under the SPS Agreement are properly within the Panel's
jurisdiction.
B. EXECUTIVE SUMMARY OF THE FIRST WRITTEN SUBMISSION OF THE UNITED STATES
1. Introduction
4.38 In 2007, adulterants added to pet food ingredie nts by Chinese producers led to the deaths of
thousands of US domestic animals. In 2008, adulterants added to milk by Chinese processors sickened
hundreds of thousands of persons, and led to the de aths of over a dozen children. The contamination
of these products was not allowed under China's food safety laws. Rather, these food safety crises
arose from massive failures in China's system of food safety enforcement. Earlier this year China
attempted to address these and other enforcement failures by adopting a comprehensive overhaul of
its food safety regime.
4.39 In response to failures of food safety enforcemen t in China, and in the context of pending
administrative proceedings concerning the authorization of the import of poultry products from China,
the US Congress enacted Section 727. Section 727 impo sed a six and a half month funding restriction
that prevented the establishment or implementa tion of rules approving the importation of poultry
products from China, thereby ensuri ng an additional time period for review of food safety issues
relating to China. Section 727 expired on 30 Sept ember 2009, and the funding restriction has been
lifted as of 12 November 2009. Accordingly, US food safety regulators no longer face any restriction
on the establishment or implementation of such rules.
4.40 The temporary, now-expired, funding restriction was a measured reaction to China's major
problems of food safety enforcement. Section 727 falls squarely within the GATT Article XX(b)
exception for measures necessary to protect human or an imal life or health and meets the elements of
the Article XX chapeau. It imposes no arbitrary or unjustifiable discrimination between countries
where the same conditions prevail; indeed, no othe r country subject to a US poultry-product safety
assessment had major crises of food safety enfor cement. And Section 727 was not an instance of a
disguised restriction on trade. In fact, the US pou ltry industry opposed it. Thus, Section 727 is not
inconsistent with any US obligations under the GATT 1994.
4.41 The United States disagrees with most of the factual and legal assertions in China's first
written submission and has two over-arching comments . First, China's submission repeatedly asserts
that "This is a case about arbitrary discriminati on." China, however, is well aware of its own
problems of food safety enforcement, and of the food safety rationale for the temporary restriction
imposed by Section 727. Yet, China's submission addresses none of these issues – indeed, it

93 Panel Report, Korea – Commercial Vessels, para 7.2, at subparagraph 11.

misleadingly implies that Section 727 was adopted only for "budgetary" reasons. Thus, despite its
repeated assertions of "arbitrary discrimination," Ch ina's submission fails to explain why any alleged
discrimination resulting from Section 727 was arbitr ary or unjustifiable. Instead, China runs away
from the food safety issues that lie at the core of this dispute.
4.42 Second, China's submission repeatedly mi scharacterizes Section 727 as "denying access" to
the US procedures for authorizing the import of pou ltry products. Yet Section 727 had no such effect.
Instead, it allowed ongoing work on the evaluation of food safety issues involving poultry products
from China, and only restricted the establishment or implementation of rules authorizing importation.
Even in the absence of Section 727, China has no basis for asserting that China necessarily would
have succeeded in obtaining such authorizations. In any event, the restriction on the establishment or
implementation of rules authorizing importation has now been removed, and the ongoing work
continues. Thus, China overstates the effect of Section 727.
4.43 Finally, any claims by China under the SPS Agreement are not within the Panel's terms of
reference. In its submission, China fails to rebut the fundamental point that China did not request
consultations on any claims under the SPS Agreement. The United States has offered to cooperate on a
procedural way forward in the event China would wish to consult on any SPS claims. However, China
– perhaps for the same reason that its submission fails even to acknowledge any relationship between
Section 727 and food safety – has denied the offer. This is China's choice. But China cannot have it
both ways – it cannot refuse to consult on SPS issues, while at the same time request that the Panel
issue findings under the SPS Agreement.
2. Section 727 is the only measure at issue in this dispute
4.44 The argumentation in China's submission is a ddressed to alleged inconsistencies between
Section 727 and provisions of the WTO Agreemen t. However, China also asserts that two other
measures – an alleged "moratorium" and Section 743 of the 2010 appropriations bill – are inconsistent
with the WTO Agreement. These assertions do not a nd cannot expand the scope of this proceeding.
The alleged "moratorium" does not exist, and the subsequent appropriations provision is not in the
Panel's terms of reference.
4.45 China alleges the existence of "the moratorium". In particular, China alleges the existence of a
measure that "indefinitely suspends: (a) the consideration of applications for approval, (b) the granting
of approval, and (c) the implem entation of approval for the import of poultry products from China
under the United States system for regulating the impor tation of poultry products". No such measure
ever existed.
4.46 China puts forth only two types of evidence to support its allegation, and neither shows the
existence of an indefinite moratorium. First, Chin a cites two related pieces of legislation: Section 733
(affecting fiscal year 2008) and Section 743 (affe cting fiscal year 2010). Section 733 contains the
same language as Section 727 and is also of lim ited duration. The fact that a time-limited funding
restriction was created twice does not show the existence of an "indefinite" suspension of approvals.
There is no basis for deriving a separate, distinct measure from the existence of discrete, time-limited
measures. Moreover, Section 743 lifts any funding rest riction. Thus, China fails to show the existence
of an indefinite moratorium on approvals. The only other evidence China cites to support its
allegation is that FSIS has not yet authorized the importation of poultry from China. This absence of
an authorization is not separate from Section 727.
4.47
 Finally, the alleged second measure was not identified in China's consultations request. As the
Appellate Body has explained, DSU Articles 4 a nd 6 "set forth a process by which a complaining
party must request consultations, a nd consultations must be held, befo re a matter may be referred to
the DSB for the establishment of a panel". Although these provisions do not "require a precise and

exact identity between the specific measures that were the subject of consultations and the specific
measures identified in the request for the estab lishment of a panel", the Appellate Body has
emphasized that any such measures not precisely identified must not "change the essence of the
[measures identified in the request for consultati ons]". The so-called "moratorium" of indefinite
duration does not, however, constitute such a measure whose "essence" is the same as the explicitly
time-limited restriction in Section 727.
4.48 China's attempt to bring this second measure before this Panel also runs afoul of the Appellate
Body's concern that a complaining party must "not expand the scope of the dispute" in its panel
request beyond the matter identified in the consulta tions request. The allegation of the "moratorium"
would indeed expand the scope of the dispute beyond the measure identified in the request for
consultations. Accordingly, the United States respectf ully requests the Panel to find that the alleged
"moratorium" is outside the terms of reference of this Panel proceeding.
4.49 China's submission states that China has the "initial view" that Section 743 violates WTO
provisions, and "that [China] reserves the right to more fully challenge, in later submissions, the
compliance of Section 743 with the United States' WTO obligations". The States does not understand
how or why China would argue that Section 743 is WTO-inconsistent as Section 743 has resulted in a
removal
 of the funding restriction contested by China. In any event, however, Section 743 is not
within the Panel's terms of reference.
4.50 Here, China issued its consultation request on April 17, 2009, and Section 743 was adopted
on 21 October 2009 – over six months later. Furthermore, the language of 743 evolved over time. The
version enacted differed from versions under cons ideration at the time of panel establishment.
Accordingly, China's request for consultations did not (and could not) specifically identify
Section 743, and it was impossible for the parties to consult on its provisions.
4.51 Finally, although Section 743 is generally rela ted to Section 727 in that it also involves
funding for the implementation and establishment of rules governing importation of poultry products
from China, Section 743 plainly changes the essence of Section 727. While Section 727 imposed a
temporary funding restriction, the enactment of Section 743 has resulted in a removal of the
restriction. Indeed, the fact that China's first subm ission only manages to state cursory, "initial views"
on the WTO-consistency of Section 743 highlights the fundamental differences between the newly
adopted Section 743 and Section 727.
3. China mischaracterizes the legal effect of Section 727 in US domestic law
4.52 China asserts that Section 727 has the effect of banning imports of poultry from China.
Further, China asserts "This funding restriction mean s that FSIS cannot engage in activities related to
the establishment or implementation of any rule allowing Chinese poultry to enter the United States".
China's characterization of the measure is incorr ect as it fails to take account of the "scope and
meaning" of legislative conditions contained in appr opriations legislation in US law generally, and of
the particular conditions contained in Section 727 specifically.
4.53 When Congress inserts funding restrictions into appropriations legislation, it is exercising its
oversight power over the executive branch. As such, each funding restriction is limited to its terms
and only applies to the fiscal year covered by the appropriation. In addition, the funding restriction
does not amend or modify the permanent law administ ered by an executive agency, and therefore, it
does not prevent the agency from taking actions re lated to the prohibited act as long as the agency
does not take the prohibited act itself.
4.54 Accordingly, Section 727 was limited to preventing USDA from "establishing" or
"implementing" a rule allowing the import of poultry from China for a temporary period during the

2009 fiscal year. Section 727 did not create a permanent funding restriction or prohibit FSIS from
using funds to implement or establis h a rule after its expiration. Th ere are no longer any restrictions
on FSIS's ability to "use funds to implement or establish a rule allowing poultry products to be
imported from China".
4.55 Section 727 also did not ban imports of poultry from China. Even without Section 727,
USDA procedures required a review of the prior equivalence determinati on before imports of
processed poultry could have been authorized due to a substantial time period between the 2006
processed poultry rule and China's designation of f acilities eligible to export to the United States.
With respect to slaughtered poultry, USDA had not completed an equivalen ce determination. Thus,
the most that China can allege is that Section 727 prevented USDA from taking final actions during
fiscal year 2009 that might have otherwise occurred; China has no basis for alleging how, if at all, any
final actions would have differed during that period.
4.56 Finally, Section 727 did not prevent FSIS from engaging in activities under the Poultry
Products Inspection Act ("PPIA") related to the estab lishment or implementation of a rule allowing
China to export poultry to the United States. Rath er, Section 727 directed FSIS to engage in work
related to China's equivalency application, and FSIS did in fact engage in this work during the 2009
fiscal year.
4. Of the three claims presented by China, the Panel need only consider the claim under
Article XI of the GATT 1994
4.57 The Panel's consideration of China's Artic le XI claim (and any needed defense under
Article XX(b)) would serve to resolve this dispute. Accordingly, the Panel should not and need not
make substantive findings under China's Article I or Agreement on Agriculture claims.
4.58 China has not provided any basis for the Panel to make a finding under Article I:1. China's
Article I claim misses the point, because it fails to recognize that Section 727 has no independent
meaning, but only has meaning in the context of the overall operation of an equivalency-based food-
safety regime under the PPIA. China does not
 challenge the PPIA, nor the right of a WTO Member to
establish such equivalency-based regimes for the purposes of ensuring food safety. Yet, under an
equivalency-based regime, products of different WTO Members are necessarily treated differently.
Products of Members found to be equivalent may be imported, while similar products of Members not
yet found equivalent may not be imported.
4.59 Section 727 temporarily prevented USDA from im plementing or establishing a rule finding
equivalence for poultry imports from China to ensure that additional safety issues could be evaluated.
Section 727 is specific to one WTO Member, but so are many actions taken in implementing an
equivalency-based food-safety regime. For example – a finding of equivalence, a failure to make a
finding of equivalence, and a delay in making a fi nding to allow for further evaluation – all affect
products of some WTO Members differently than apparently similar produc ts of others. Thus,
Section 727 is not inconsistent with MFN obligati ons because any differential treatment results from
the underlying adoption of an equivalency-based regime that differentiates among WTO Members
based on each Members' particular food safety status.
4.60 China's Article I claim also lacks essential legal and factual argumentation. China provides no
explanation for why poultry products from China ar e "like products" to poultry products from other
WTO Members, including those authorized to expo rt poultry products to the United States. While
China correctly notes that some panels have consid ered that a measure that distinguishes between
products solely on the basis of origin can be consid ered to provide less favourable treatment to certain
like products without the need for a separate "like pr oduct" analysis, none of those reports has applied
this approach to a situation like this one. Health and safety systems vary from country to country and

equivalency-based regimes respond to this fact. To be sure, China may believe that its poultry
products present no particular safety issues as compared to products from any other WTO Member.
But if so, that is an unsupported factual allegati on which the United States does not accept, and there
is no basis to assume it is true. Moreover, Ch ina conveniently igno res disputes such as EC-Asbestos,
in which a panel examined issues of "likeness" in the context of products with different levels of
safety.
4.61 However, the Panel need not address factual and legal issues under Article I to reach a
resolution of this dispute. In particular, the core of this dispute involves whether Section 727 is
justified by legitimate concerns with human and anim al life and health. The most appropriate analytic
framework to consider these is sues is to examine the measure under Article XI, followed (if
necessary) by findings under Article XX(b). If the me asure is justified by Article XX(b), such a
finding would excuse any alleged br each of Article I. It would not promote the resolution of this
dispute to venture into issues under Article I c oncerning its application to equivalency-based
regulatory regimes or to the likeness of products with different levels of safety.
4.62 China has the burden of establishing the elemen ts of the alleged breach of Article XI:1.
However, if the Panel were to find the existence of an import restriction, such a finding would not be
unusual or a matter of systemic concern. The natu re of many health and safety regulations is to
impose import restrictions. As Article XX(b) states , "nothing in [the GATT 1994] shall be construed
to prevent the adoption or enforcement ... of measures necessary to protect human, animal or plant life
and health". Section 727 meets all of the requirements of Article XX(b).
4.63 Article 4.2 of the Agreement on Agriculture prohibits certain measures with respect to
agricultural products. Article 4.2 provides that, with certain exceptions not relevant here, "Members
shall not maintain, resort to, or revert to any m easures of the kind which have been required to be
converted into ordinary customs duties". Footnote 1 to the Agreement on Agriculture provides an
illustrative list of measures subject to the prohibiti on in Article 4.2, as well as an illustrative list of
measures to which the prohibition does not apply.
4.64 Footnote 1 specifically excludes from the scope of Article 4.2 "measures maintained under ...
general, non-agriculture-specific provisions of [t he] GATT 1994". Section 727 is a measure that the
United States maintains consistently with GATT Ar ticle XX(b), which is a "general, non-agriculture-
specific provision" of the GATT 1994. Therefore, Article 4.2 does not apply to Section 727, and the
United States did not act inconsistently with Article 4.2.
5. Section 727 is justified pursuant to GATT Article XX(b)
4.65 To justify a measure under Article XX(b), th e Appellate Body has explained that the
responding party must demonstrate the measure (1) falls under the scope of the Article XX(b)
exception and (2) satisfies the requirements of the Article XX chapeau. Two elements must be met for
a measure to fall under the scope of the Article XX (b) exception: (1) the policy in respect of the
measure for which the provision is invoked must fall within the range of policies designed to protect
human, animal, or plant life or health; and (2) th e inconsistent measure for which the exception is
invoked must be necessary to fulfil the policy objective.
4.66 To determine whether a measure pursues a polic y objective of protecting human and animal
life and health, the Panel should first consider whet her a risk to human and animal life and health
exists. If a risk is found to exist, the Panel s hould determine whether the policy objective underlying
the measure is to reduce that risk. If so, the Pane l should conclude that the measure's policy falls
within the range of policies designed to protect hu man and animal life or health in accordance with
Article XX(b).

4.67 It is clear that there is a risk to human and animal life and health from the importation of
poultry products from China. This risk results from the inherent danger of consuming poultry not
produced under sanitary conditions or inspected for contaminants, the risk from the import of poultry
infected with avian influenza, and the particular risk that exists when importing food from China due
to China's history of food safety scandals and longstanding systemic issues.
4.68 First, notwithstanding country of origin, it is well established that poultry products can
contain pathogenic bacteria and contaminants wh ich can pose a potential risk to human life and
health. Because it is impossible for FSIS to test all products at the border, FSIS's equivalence process
is designed to ensure that poultry products ar e "subject to inspection, sanitary, quality, species
verification, and residue standards that achieve a level of sanitary protec tion equivalent to that
achieved under US standards and have been processed in facilities and under conditions that achieve a
level of sanitary protection equivalent to that achieved under US standards" before they are allowed to
be imported into the United States. It is notewor thy that FSIS's equivalence process under the PPIA is
not being challenged by China.
4.69 It is also well established that imported poultr y can pose a risk to human and animal life and
health if the poultry is infected with a serious di sease, such as avian influen za. If poultry or poultry
products infected with this disease entered the Unite d States, this could significantly threaten human
and animal life and health. Again, it is noteworthy that China is not challenging APHIS's restrictions
on the import of poultry from regions such as China that are classified as a region where the highly
pathogenic avian influenza HPAI subtype H5N1 is considered to exist.
4.70 Third, the risk is exacerbated by significan t problems with China's food safety system.
China's food safety issues have been the subject of numerous studies by international agencies,
governmental bodies, and academics noting China's disorganized governmental structure and its
ongoing systemic problems with smuggling, corrup tion, and the inadequate enforcement of food
safety laws. China has also been the source of mu ltiple food safety scandals, many of which have
occurred recently and have been directly related to China's systemic problems.
4.71 FSIS's experience with China during the equiva lency process also highlighted problems with
China's food safety system. FSIS found deficiencies in two of the four processing plants and serious
sanitation problems in all three slaughter plants it visi ted in 2004. In addition, all four slaughter plants
FSIS visited during 2005 failed to meet US standards.
4.72 Section 727 was enacted with the policy objective of protecting against this risk to human and
animal life and health posed by the importation of poultry products from China. The first sentence of
the Joint Explanatory Statement ("JES") accompanying Section 727 makes that clear: "There remain
very serious concerns about contaminated foods from China and therefore the bill retains language
prohibiting FSIS from using funds to move forward w ith rules that would allow for the importation of
poultry products from China into the U.S.". Sim ilarly, the Committee Report accompanying the
FY 2008 appropriations act also clearly demonstrates that Section 727's purpose is to protect human
and animal life and health.
4.73 Statements by Section 727's author, Representa tive DeLauro, also indicate the measure was
enacted to address this risk: "It is clear that the 2006 FSIS declaration that China's safety and
inspection system was, quote, equivalent to the US system for processed poultry products, was based
on trade goals. From a public health and safety persp ective, the equivalency determination was deeply
flawed and cannot be relied on to protect US consumer's safety."
4.74 Section 727 was also necessary to protect human and animal life and health from this risk.
Imports of poultry from China pose a severe risk as a result of the broad systemic problems with
China's food safety system. These problems include smuggling, corruption, and the inadequate

enforcement of China's food safety laws, issues that FSIS is not typically faced with when making
equivalency determinations. Moreover, many food safety scandals ha ve originated in China in recent
years, including the melamine scandal that occurre d in 2008 after FSIS issued a final rule on the
equivalency of China's poultry processing sy stem. Finally, some members of Congress were
concerned about the process FSIS followed and believed that FSIS had not spent enough time
considering the particular problems with food safety in China.
4.75 Given this situation, it was necessary to pause the equivalency process so that FSIS could
thoroughly consider the particular risks posed by poultry products from China as well as the
implications of recent food safety scandals and the overhaul of China's food safety regime that
resulted from them.
4.76 The congressional enactment of Section 727 play ed a role analogous to an administrator or
supervisor in a governmental agency who has the responsibility of reviewing (and, where appropriate,
questioning) a decision made within the agency and as king for it to be considered at greater length in
light of recent developments before moving forwar d. In fact, had a USDA administrator taken the
same action as Congress did here to pause the proces s and evaluate the facts after becoming aware of
new food safety scandals, it is unlikely that th is dispute would be before this Panel. The
administrator's action would have been viewed as reasonable and routine.
4.77 Likewise, Section 727 was reasonable and routin e. Congress had many legitimate health and
safety reasons to be concerned about the import of poultry products from China and was taking the
necessary action to ensure that all of these issu es were addressed before FSIS moved further.
Accordingly, Section 727 was necessary to protect human and animal life and health.
4.78 The Panel should reach the same conclusion if it follows the method used by past panels
when faced with the question of whether a measure is necessary. Other panels have engaged in "a
process of weighing and balancing a series of fact ors," which include (1) the importance of the
interests or values at stake; (2) the contribution made by the measure to its objective; and (3) the trade
restrictiveness of the measure.
4.79 The first factor strongly weighs in favour of a determination that Section 727 was necessary.
Section 727 was enacted to protect human and anim al life and health from the risk posed by the
import of poultry from China, including protection from the risks of eating poultry products not
prepared in sanitary conditions or contaminated with disease. In Brazil-Tyres, the panel noted "the
objective of protecting human health and life agai nst life-threatening diseases ... is both vital and
important in the highest degree." The United States agrees. The risks posed to human life and health
by consuming potentially contaminated poultry from China is of utmost importance as is the need to
protect animal life and health from the threat of avian influenza.
4.80 The second factor also favours a determination that Section 727 was necessary. Section 727
has directly contributed to the protection of human and animal life and health by ensuring FSIS did
not implement or establish a rule without focusing on the risks posed by China's food safety system or
reexamine the issue in light of China' recent food safety scandals. Further, Section 727 also directed
FSIS to develop an action plan to address food safet y issues with China. As a result, Section 727
materially contributed to its objective of protecti ng human and animal life and health from the risk
posed by consuming imported poultry products from China.
4.81 Section 727's limited trade restrictiveness also favours a determination that it was necessary.
Because Section 727 was an appropriations measure, it did not change the un derlying law and only
applied temporarily. As the funding restriction has b een lifted, FSIS is now able to move forward on
implementing the rule for processed poultry produc ts or establishing a rule for cooked poultry
products if it determines that this is the appropriate action to take under the PPIA.

4.82 Section 727 also only applied to the implementa tion or establishment of a rule regarding the
importation of poultry products from China. It did not restrict FSIS from taking actions related to the
importation of poultry products, such as the developm ent of an action plan that contemplated the
possibility of future imports and was designed to a llow FSIS to move forward expeditiously when the
funding restriction was lifted.
4.83 Additionally, even in Section 727's absence, it is highly unlikely that China could have
exported any significant quantity of poultry products to the United States. While FSIS's equivalency
determination for China's processed poultry inspec tion system would allow imports of processed
poultry product from China (including raw process ed as well as cooked processed poultry product),
China would only be able to export poultry that w as fully cooked due to APHIS's restrictions on
countries with avian influenza. Moreover, since FSIS has not found China's slaughter inspection
system equivalent, any cooked poultry exports fro m China would have to be produced from poultry
slaughtered in the United States or another country with an equivalent slaughter inspection system.
Trade under these circumstances is likely to be limited.
4.84 To justify a measure under Article XX(b), th e responding party must also show that the
measure meets the requirements of the Article XX chapeau. To do so, the Appellate Body has
explained that the responding party must demonstrate that its measure (1) is not a means of arbitrary
or unjustifiable discrimination between countries where the same conditions prevail; or (2) a disguised
restriction on international trade.
4.85 Previous Appellate Body reports have explained that a measur e will be considered to be
applied in a manner that results in arbitrary or unjustifiable discrimination if: (1) the application of the
measure results in discrimination; (2) the discrimination is arbitrary or unjustifiable in character; and
(3) the discrimination occurs between countries where the same conditions prevail.
4.86 These conditions are not met. Although Section 727 only applies to imports from China, it did
not discriminate against Chinese products in an arb itrary or unjustifiable way. To show that any
discrimination to a particular country is not "arbitr ary or unjustifiable," past panels have required the
responding party to show that its action is not "capricious or random." The panel in Brazil-Tyres also
noted that an analysis under this element should focus "on the cause of the discrimination, or the
rationale put forward to explain its existence." T hus, a responding party must provide a rationale for
the measure that is not capricious, random, or indefensible.
4.87 There was a strong rationale for Section 727. There are many legitimate concerns about
China's food safety system, and the equivalency pro cess needed to be paused to give FSIS additional
time to consider and address these concerns, includi ng the food safety scandals that occurred after the
final determination was made on a rule for processed poultry. Given this situation, it was certainly not
arbitrary or capricious for Congress to exercise its oversight role.
4.88 In addition, there is no other country where the same conditions prevailed as they did for
China at the time Section 727 was enacted. Besides China, there w as no other country as far along in
the equivalency process with recent food safety sca ndals and systemic pr oblems with smuggling,
corruption, and enforcement. Since no other country has presented the same set of challenges that the
US government faced with regard to China at the time of Section 727's enactment, there is no other
country where it can be said that the same conditions prevail.
4.89 Finally, the evidence clearly demonstrates that Section 727 is not a disguised restriction on
trade. The text of the measure, which states "There remain very serious concerns about contaminated
foods from China and therefore the bill retains la nguage prohibiting FSIS from using funds to move
forward with rules that would allow for the impor tation of poultry products from China into the U.S."

clearly indicates that the measure's policy objective, or intent, was to protect human and animal life
and health from the risk of poultry from China.
4.90 Further, the fact that the JES directs FSIS to take actions related to the rulemaking also
demonstrates the measure was not enacted with protectionist intent. If Section 727's intent were to
restrict trade, it would not have included language setting the stage for expeditious action on China's
equivalency application as soon as it expired. Statem ents by members of Congress further support the
view that the policy objective of the measure was to protect human and animal life and health, not to
protect a domestic industry. In this respect, th e widespread opposition to the measure from the US
poultry industry is relevant. On 30 April 2009, 56 companies and trade associations representing the
domestic industry wrote a letter to President Obama asking him to oppose Section 727. If
Section 727's purpose were to protect the domestic indus try, it is unlikely that many of the industry's
most influential members would be opposed.
6. China has not made a prima facie case in support of its claims under the SPS Agreement
4.91 China's SPS claims are outside the Panel's terms of reference. Further, China fails to make a
prima facie case in support of its claims.
4.92 In particular, China fails to demonstrate – or even to assert – that Section 727 is an
SPS measure subject to the SPS Agreement. To demonstrate that a measure is inconsistent with a
particular provision of the SPS Agreement, it is necessary first to show that the measure is an
SPS measure that is subject to the particular provisi on with which an inconsis tency is claimed. China
makes no such showing with respect to Section 727 or any of SPS provisions it cites.
4.93 Indeed, China frames its complaint by asserting that, "to the extent that Section 727 and the
moratorium may be considered to be sanitary and phytosan itary measures within the meaning of the
SPS Agreement, such measures would be inconsistent with Articles 2.3, 5.5, 5.1, 5.2, 2.2, 5.6 and 8 of
the SPS Agreement." In other words, China claims merely that if Section 727 is subject to the cited
provisions of the SPS Agreement, then it would be inconsistent with them. But China does not assert
that Section 727 is, in fact, subject to any of th ese provisions. Rather, China expressly avoids making
such any assertion.
4.94 China explains that it framed its claims under the SPS Agreement as conditional claims or
claims in the alternative. According to China, it considered that the United States might invoke
Article 2.4 of the SPS Agreement in order to defend Section 727, and if so, it would be for the
United States to "meet the threshold requirement of demonstrating that the measures at issue are
sanitary or phytosanitary measures." The Unite d States does not agree that the invocation of
Article 2.4 by a responding party in a dispute would shift the burden of proof with respect to the
complaining party's claims, as China appears to assert. However, the Panel need not decide this issue
since the United States is not invoking Article 2.4 of the SPS Agreement.
4.95 Because China has chosen not to assert, let alone prove, one of the essential elements of a
prima facie case in support of its claims, the Un ited States does not address those claims. However,
the United States reserves its right to respond to an y further assertions in this regard, should China
choose to make them.
7. Reply to China's response and third party comments on US Preliminary Ruling request
of 1 October
4.96 Although China states that it intended to make claims under the SPS Agreement in the
alternative (that is, if the United States invoked Article 2.4 of the SPS Agreement as a defense), it is
undeniable that China's consultations request does not request consultations to pursue alternative

claims, but makes the request for consultations condi tional on future developments. This is the defect
in China's consultations request with respect to the SPS Agreement, and China's subsequent attempts
at clarification cannot cure the jurisdictional requirement set forth in DSU Article 1.1 that
consultations must be requested pursuant to the consultation and dispute settlement provision of each
covered agreement for which dispute settlement is sought.
4.97 Many other Members have properly invoke d the consultation and dispute settlement
provisions of a covered agreement to pursue alterna tive claims under that agreement. Canada recently
requested consultations with the United States pursuant to a number of provisions, including
Article 11 of the SPS Agreement, in order to pursue claims that certain measures were inconsistent
with, "in the alternative, Articles 2, 5 and 7 of the SPS Agreement." The United States had no
objection to the invocation of the consultation and dispute settlement provision of a covered
agreement in order to pursue an alternative claim unde r that agreement. It is the failure actually to
invoke the consultation and dispute settlement provision of a covered agreement that gives rise to the
jurisdictional problem with China's consultation and panel request here.
4.98 There is no basis for China's assertion that the United States is pursuing a preliminary ruling
merely to delay the proceedings. The United Stat es alerted China to the deficiency in China's
consultation request at the earliest possible moment , at which point China could have submitted an
amended consultation request clearly reques ting consultations under Article 11 of the SPS Agreement
and indicating that it was raising its SPS claims in the alternative. That would have been the end of
the matter. Even if China did not agree with the United States, China could have nonetheless decided
that the most pragmatic way forward would be to am end its consultations request to put an end to the
matter once and for all.
4.99 The issue presented by China's consultations requ est is not a mere technicality. In raising the
deficiency of China's consultations request, the United States is pursuing an important systemic
concern. If China's approach were to be accepte d, it could lead to more and potentially greater
confusion in future disputes. A responding party and potential third pa rties would be unable to divine
what the exact legal issues will be in a dispute. The DSU provisions are clear and were agreed – a
complaining party's consultations request "sha ll give the reasons for the request, including
identification of the measures at issue and an indi cation of the legal basis for the complaint." A
complaining party is not free to say that it is not
 using as the basis for its complaint a particular
covered agreement only to say later that it is. Clarit y in the request for consultations is important for
the overall operation of the dispute settlement system.
4.100 Finally, China argues that it provided an "indication" of the legal basis for its complaint under
the SPS measures. While the United States does not ag ree with that assertion, more fundamentally,
that is not the relevant issue before the Panel. Th e core issue before the Panel is whether, in its
consultations request, China brought this dispute "p ursuant to the consultation and dispute settlement
provisions" of the SPS Agreement. China did not.
C. EXECUTIVE SUMMARY OF THE OPENING ORAL STATEMENT OF CHINA AT THE FIRST
SUBSTANTIVE MEETING OF THE PANEL
1. Introduction and background
4.101 This is a case about arbitrar y discrimination. A series of measures over the past two years
have prevented only China from accessing US poultry impor t approval procedures. These include
Section 733 and Section 727 of the Agriculture Appropriations Acts of 2008 and 200995, respectively,
both of which have prohibited the relevant governme nt agency from using any funds to "establish or

95 Exhibits CN-1 and CN-8.

implement a rule allowing poultry products to be imported into the United States from the People's
Republic of China ". Sections 733, 727, and the latt er's replacement, Section 743 of the Agriculture
Appropriations Act 2010, reference the "establishment or im plementation of a rule". This phrase
implicates all of the Food Safety Inspection Service's (FSIS) "equivalence" procedures – the
procedures that are essential prerequisites for exporting poultry to the United States. During the past
two years, Section 727 and Section 733 have for eclosed any opportunity for China to secure and
maintain such status, therefore denying China the opportunity to access the US poultry market.
4.102 FSIS is the only US entity with both the legal authority and the institutional capability to
evaluate the food safety regime for poultry in exporting countries. It does so by examining five broad
risk areas. FSIS, after applying its procedures to China, determined that it met all FSIS requirements
and established a rule permitting imports of processed poultr y products, making China one of just 10
countries to have successfully completed these procedures. FSIS was in the process of both
maintaining that approval and applying the initial procedures to China's poultry slaughter inspection
system when Congress abruptly removed China's ac cess to the procedures. This all occurred as the
United States was steadily increasing its consumption of Chinese food products, importing $5.2
billion worth in 2008 alone.
96 This discrimination violates various provisions of the WTO
Agreements and cannot be cured by recourse to the exception in GATT Article XX(b).
2. Section 727 of the Agriculture Appropriations Act 2009
(a) Section 727 is inconsistent with Articles 2.2, 2.3, 5.1, 5.2, 5.5, 5.6, and 8 of the
SPS Agreement
4.103 Having stated repeatedly in its first written s ubmission that the purpose of Section 727 is the
protection of human life and health 97, there is no doubt that the United States has demonstrated that
Section 727 is an SPS measure as defined in the SPS Agreement.98
(i) Relationship between the SPS Agreement and GATT Article XX(b)
4.104 Both the SPS Agreement and GATT Article XX(b) prohibit the enactment of health-related
measures in a manner that arbitrarily or unjustifiably discriminates among WTO Members. As the
European Union correctly points out in its third-party submission 99, the provisions of the
SPS Agreement provide relevant and immediate context for interpreting Article XX(b). Thus, the
evidence and arguments supporting China's claims under the SPS Agreement are highly relevant and
applicable to the rebuttal of the US defence under XX(b).
(ii) Section 727 is inconsistent with Articles 5.5 and 2.3 of the SPS Agreement
4.105 Article 5.5 of the SPS Agreement prohibits Members from applying different levels of
sanitary protection to comparable situations withou t justification. The higher level of SPS protection
applied by the United States to Chinese poultry produc ts, reflected in Section 727, is arbitrary and
unjustifiable and results in discrimination, in violation of Article 5.5.
4.106 In particular, Section 727 requires the United States to apply an "ALOP" to Chinese poultry
that is different from the ALOP that is applied to, first, other food products imported from China and,
second, to poultry products imported from any othe r WTO Member. This distinction in ALOPs in

96 Exhibit US-24, p. 5. Processed poultry would amount to 0.2% of China's total food exports
(Exhibit CN-41).
97 United States' first written submission, paras. 119, 121, 122.
98 See, e.g., Panel Report, EC – Hormones, para. 8.40.
99 Third party written submission by the European Union, paras. 35-40.

both situations is arbitrary and unjustifiable, and it results in discrimination against China. The ALOP
that the United States applies to Chinese poultry produc ts is stricter than zero tolerance, whereas the
ALOP applied by the United States to both other Chinese food imports and poultry imports from
other WTO Members is significantly lower. With respect to the rationale for applying an ALOP of
less than zero tolerance to Chin ese poultry products, the United States has provided no scientific
evidence or justification for singling out poultry products from China for different treatment. This
distinction in ALOPs results in discrimination, confirmed on the basis of the various warning signs
developed by the Appellate Body. Having demonstrated Section 727's inconsistency with Article 5.5,
China requests that the Panel also find a violation of Article 2.3, in accordance with Appellate Body
case law.
100
(iii) Section 727 is inconsistent with Articles 2.2, 5.1, and 5.2 of the SPS Agreement
4.107 Article 5.1 of the SPS Agreement requires that SPS measures be based on the conclusions of a
scientific risk assessment that tak es into account the factors in Article 5.2. As discussed in China's
first written submission 101, there is no publicly available indication th at Section 727 was enacted on
the basis of scientific evidence demonstrating that Chinese poultry products pose any specific health
threat, as required under Article 2.2, or on the basis of an Article 5.1-consistent risk assessment.
Therefore, China requests the Panel fi nd that Section 727 is inconsistent with Articles 2.2, 5.1 and 5.2
of the SPS Agreement.
(iv) Section 727 is inconsistent with Article 5.6 of the SPS Agreement
4.108 Article 5.6 requires that Members' SPS measures not be more trade restrictive than required to
achieve their appropriate level of sanitary protection. To establish a violation of Article 5.6, a Member
must demonstrate that there is an alternative SPS measure that is reasonably available, achieves the
Member's appropriate level of protection, and is significantly less trade restrictive. 102 An alternative
measure that meets all of these criteria is the application to China of the normal FSIS poultry import
approval procedures.
(v) Section 727 is inconsistent with Article 8 of the SPS Agreement
4.109 Section 727 is inconsistent with Article 8 of the SPS Agreement because it leads to "undue
delay" in the completion of conformity assessment procedures for the importation of Chinese poultry
products. Section 727, together with its predec essor Section 733, delayed the application of FSIS
procedures to China by 2 years. The prohib ition imposed under Section 727 on Chinese access to
FSIS approval procedures is without scientific or ot her justification, and it results in arbitrary and
unjustifiable discrimination against Chinese poultry pr oducts. The delay created by Section 727 in the
application of FSIS procedures to China is therefore unjustifiable, or "undue".
(b) Section 727 is inconsistent with Article I:1 of GATT 1994
4.110 Section 727 violates Article I of GATT 1994 as it has denied only Chinese poultry products
the possibility of obtaining the necessary import approval under FSIS procedures.
4.111 Hypothetical like product analyses are appropriate when a measure imposes a de jure origin-
based distinction.
103 Thus, the "like products" for the purposes of this analysis are the "poultry

100 Appellate Body Report, Australia – Salmon, para. 109.
101 China's first written submission, paras. 137-147.
102 Appellate Body Report, Australia – Salmon, para. 194.
103 Panel Report, Colombia – Ports of Entry , para. 7.356, Appellate Body Report , Canada –
Periodicals, pp. 20-21.

products" of any other Member whose poultry product s inspection system could have been evaluated
(and possibly found to be equivalent) under the FSIS pro cedures. To the extent th at the United States
claims104 that Chinese processed poultry is not "like" processed poultry produced in any other WTO
Member due to alleged vague "differences in safe ty", it has presented no evidence to support that
assertion.
(c) The United States concedes that Section 727 is inconsistent with GATT Article XI:1 and
Article 4.2 of the Agreement on Agriculture
4.112 China demonstrated in its first written submissi on that Section 727 violates Article XI:1 and
Article 4.2. The United States appears to concede these violations 105, but argues that they can be
justified under Article XX(b) of GATT 1994. This defence, however, must fail.
(d) Inconsistency of Section 727 with GATT 1994 and the Agreement on Agriculture cannot be
justified on the basis of GATT Article XX(b)
4.113 To justify a measure under the exceptions in Article XX, it must meet the requirements of
both the specific exception invoked and the chapeau.106 The requirements of neither are met in this
case.
(i) Section 727 is not "necessary" within the meaning of GATT Article XX(b)
4.114 The United States has not met its burden of dem onstrating that Section 727 falls within the
scope of the exception in paragraph XX(b). The Appellate Body has identified the factors that must be
considered when determining whether a measure at issue is "necess ary" for the achievement of its
stated objective under the relevant exception in Article XX. 107 Analysis of these factors demonstrates
that Section 727 was not necessary for its objective – the protection of human life and health from
"contaminated foods".
4.115 First, any contribution of Section 727 to this objective was insignificant. The United States
claims that Section 727 was necess ary to protect against contaminated foods, but it targets only one
product – a product for which the United States gave no evidence of China-specific problems and
which was expected to be imported in low quantiti es. While blocking the import of Chinese poultry,
the United States continued to import massive quan tities of other foods from China, any of which
could have in theory been contaminated. Moreove r, the FSIS procedures were entirely capable of
identifying any problems with Chinese poultry and preventing importation if there was cause to do so.
Second, Section 727's insignificant contribution does not outweigh its extreme trade-restrictiveness.
The Appellate Body has confirmed that a measure as trade-restrictive as an import ban may be
justified under Article XX(b), but only if its contribution to its stated objective is "material".
108 Third,
there is an alternative measure available to the United States – the FSIS procedures. This alternative
measure is reasonably available and would allow th e United States to achieve the level of sanitary
protection normally applied to imported poultry. Finally, the United States illogically instituted
Section 733 in December 2007, just when Chin a was scheduled to undergo an equivalence
maintenance audit – a process that would have requi red FSIS to examine any allegedly "unique" risk
posed by Chinese poultry that the United States claims justified Sections 733 and 727. Based on the

104 United States' first written submission, para. 98.
105 United States' first written submission, paras. 101-105.
106 Appellate Body Report, US – Gasoline , Section IV; Appellate Body Report, Brazil – Retreaded
107 Appellate Body Report, Brazil – Retreaded Tyres, para. 82.
108 Appellate Body Report, Brazil – Retreaded Tyres, paras. 150-151.

above, Section 727 was not "necessary" and ther efore does not fall within the exception in
paragraph (b).
(ii) Section 727 does not comply with the chapeau of GATT Article XX
4.116 The United States has also not met its burden of demonstra ting that Section 727 fulfils the
requirements of the chapeau
 of Article XX. The application of Section 727 has resulted in both
unjustifiable discrimination and arbitrary discriminat ion between countries where similar or identical
conditions prevail, within the meaning of Article XX. Section 727 has blatantly discriminated against
China, as compared to every other WTO Member similarly seeking to obtain FSIS approval for
poultry products. The discrimination resulting from Sec tion 727 is arbitrary for several reasons. First,
there is no indication that it was enacted based on any scientific evidence regarding risks posed by
Chinese poultry. Also, the United States has failed to demonstrate why it singled out poultry, as
opposed to other food products from China, or why it singled out Chinese poultry, as opposed to
poultry from other WTO members. China is one of just 10 countries with a poultry inspection system
that has been deemed equivale nt, yet its poultry is treated as more dangerous than poultry from all
other WTO Members, including those without any or without any effective food safety laws.
3. Section 743 of the Agriculture Appropriations Act of 2010
4.117 China believes that Section 743 is a subsequent , closely-related measure to Section 727 that
continues the US policy embodied in Section 727 of subjecting the import of only Chinese poultry
products to discriminatory restrictions. On bala nce, Section 727 and Section 743 have the same
substance, essence, and/or legal implications. The Panel should find that Section 743 is within its
jurisdiction, and then provide China with the opportunity to detail the substantive violations caused by
Section 743.
4.118 The US first written submission challenges Chin a's assertion that Section 743 is within the
Panel's terms of reference. China thus believes that it would be in the interest of all of the participants
in this proceeding for the Panel to make a prelimin ary ruling with respect to whether Section 743 is
within the Panel's jurisdiction.
4. Request for enhanced third party rights
4.119 China does not believe that this dispute merits enhanced third party rights.
D. E
XECUTIVE SUMMARY OF THE CLOSING STATEMENT OF CHINA AT THE FIRST SUBSTANTIVE
MEETING OF THE PANEL
4.120 Mr Chairman, distinguished Members of the Panel, during the past two days, China has
explained that Section 727 and Section 733 served to prevent the experts at FSIS from doing their job
for nearly two years, but only with respect to China. Because FSIS is the only US government entity
with both the legal authority and institutional capability to evaluate the food safety regime of Chinese
poultry and to authorize poultry imports, these meas ures have served to for eclose China from having
even the possibility of importing poultry into the United States. And they have done so without any
regard to the actual safety and health risks of Ch inese poultry, the facilities in which that poultry is
processed, or the Chinese poultry inspection system.
4.121 At the same time, every other WTO Member that wished to import poultry into the
United States continued to have full access to the standard FSIS procedures, including countries in
which there was actual evidence of specific pr oblems with poultry processing and safety. For
example, as I mentioned yesterday, Mexico contin ued to access the FSIS procedures even after audits
revealed a number of unsanitary conditions in Mexican poultry processing and slaughter

establishments that pointed to the systemic failure by Mexican officials to enforce food safety laws. 109
n fact, US-origin poultry has its own risks, and China has identified a survey finding Salmonella
and/or Campylobacter in about two-thirds of chickens tested in the United States. 110 Scientific and
other evidence does not support the conclusion that there is a health threat specific to poultry from
China that is not also present in any other WTO Members.
4.122 China has explained in great detail why Sections 727 and 733 are inconsistent with the US
obligations under the SPS Agreement, the GATT 1994, and the Agreement on Agriculture , based on
the total absence of scientific evidence or risk assessment supporting these measures, the fact that they
were not "necessary" within the meaning of Ar ticle XX(b), and the arb itrary and unjustifiable
discrimination inherent in, and resulting from, these measures.
4.123 In response, the United States has argued that Section 727 was "adopted in the context of an
ongoing food safety equivalency process" and that it was an " intermediate" "step in an ongoing
review of the equivalency of China's food safet y enforcement system as applicable to poultry
products."111 Mr Chairman, distinguished members of the Pa nel, this is an incredible statement. As
China has explained, it is FSIS that performs th e "ongoing food safety equivalency processes" with
respect to poultry for the US Government, and it is FSIS that performs all of the steps in those
ongoing reviews of equivalency, including reinspection of products at the US border. In stark contrast,
Section 727 and its predecessor were extraordinary actions taken by the US Congress that suddenly
and unexpectedly terminated any "ongoing" process that FSIS was conducting with respect to China,
by taking away FSIS's funding for these purposes for several years.
4.124 In attempting to justify Sections 727 and 733 as qualifying as an exception under GATT
Article XX(b), the United States repeated its allegations about generalized problems with China's food
safety regime, citing to a number of reports on the topic. 112 Yet, given that the value of imports of
food products from China has increased dramatically from $1 billion in 1999 to $5.2 billion in
2008113, the United States is in no position to argue that the treatment of Chinese poultry is not
arbitrary when it fails to present any evidence demo nstrating why such pou ltry is somehow riskier
than the other Chinese food products that are imported in massive quantities.
4.125 Next, the United States dedicated a substantial portion of its opening statement yesterday to
telling us about alleged problems with Chinese-origin spinach, baby formula, seafood, turbot fish,
pork, pet food, milk, and eggs, and cited to ten exhibits in support. 114 But these allegations are
completely irrelevant to this case – which is a dis pute about arbitrary measures that are specifically
targeted at poultry, and only poultry.
4.126 The United States does mention generalized concer ns related to the avian flu and its impact
on poultry 115, but again does not explain why China should be treated differently than every other
country that has avian flu issues, all of which ha ve access to the normal FSIS procedures. Nor did it
provide any evidence whatsoever – other than the unsupported statements in a Congressional
Committee Report – to contradict the finding by FSIS that China was fully capable of exporting
poultry that was not affected by the avian flu, findi ngs that FSIS made when it first promulgated the

109 Final Report of an Audit Covering Mexico's Meat and Poultry Inspection System FY 2008-1
(Exhibit CN-27). See also Exhibits CN-28 and CN-29.
110 Chicken survey finds two-thirds harbour salmonella, campylobacter (Exhibit CN-46).
111 United States' oral statement at the first substan tive meeting of the Panel, paras. 3, 6 (emphases
added).
112 United States' oral statement at the first substantive meeting of the Panel, paras. 31-33.
113 Exhibit US-24.
114 United States' oral statement at the first substantive meeting of the Panel, paras. 34-35.
115 United States' oral statement at the first substantive meeting of the Panel, para. 29.

rule allowing China to export processed poultry af ter years of detailed reviews, audits, and
inspections.
116
4.127 The only other evidence that the United States described yesterday that specifically related to
Chinese poultry involved a reference to one instance of alleged smuggling of poultry, none of which
was found to pose any health risk to US consumers. 117 Yet, as China explained yesterday, there is
simply no basis for the United States to concl ude that cutting off funding for FSIS equivalence
rulemaking is somehow "necessary" to control sm uggling from China, or that alleged smuggling
justifies in any way the arbitrary discrimination established by Section 727. This is clear from the
FSIS response during its 2006 rule-making with respect to processed poultry from China, that "[t]his
rule is not expected to have any impact on illegal entry of products" 118 because "U.S. Customs and
Border Protection, rather than FSIS, addresses smugg ling" and "acts as a first line of defense for all
products entering the country."119
4.128 In the end, although the United States would lik e to believe, as it states, that its "evidence
makes clear" that "the importation of potentiall y unsafe poultry from China may pose a significant
risk to human and animal life and health" 120, the most cursory review of this so-called "evidence"
reveals a lack of any connection to problems that are in any way specific to Chinese poultry or
China's poultry inspection system.
4.129 Why, one might ask, does the United States have nothing specific to say about the health and
safety risks that could arise from importing Chinese poultry as a result of alleged deficiencies in the
Chinese inspection system? The answer is simple. Fo r almost two years, the people at FSIS with the
capability to develop any such evidence have b een precluded from doing so as a direct result of
Section 727 and Section 733. I recall that, yester day, the United States provided the Panel with the
definition of "arbitrary", a term that is critical to evaluating both China's SPS claims and the
United States' GATT Article XX(b) defense. Arbitrary is defined as something that is "based on mere
opinion or preference as opposed to the real nature of things".
121 With respect to evaluating the safety
of Chinese poultry products, FSIS is the only agen cy with the institutional capability and scientific
expertise to determine the "real nature of things ", and they were foreclosed from making that
determination in the year leading up to the imposition of Section 727, and beyond. It follows that
Congress was instead acting "based on mere opinion or preference" of some of its Members, and that
such action was, by definition, "arbitrary".
4.130 In its efforts to defend Section 727 as a measure that is not "arbitrary" pursuant to the
Article XX chapeau, the United States emphasised at paragraph 50 of its opening statement that "there
is no other country that had been as far along in th e equivalency process" where "the same conditions
prevail." In essence, the United States was asserting that there was some sense of urgency with
respect to Chinese equivalence that made it appropr iate for Section 727 to single out China. But,
several minutes earlier, in paragraph 23 of the same statement, the United States contradicted itself,
stating that "even in the absence of Section 727, FSIS would not have necessarily allowed China to
export poultry to the United States." In fact, there was no sense of urgency in view of how "far along
in the equivalency" process China had gone. This is because, for a variety of reasons, more than two
years had passed since the most recent on-site audits of the poultry safety and control system had last

116 United States' oral statement at the first subs tantive meeting of the Panel, para. 39, quoting
Exhibit US-42.
117 United States' oral statement at the first substantive meeting of the Panel, para. 35; Exhibit US-30
(noting that the smuggled poultry products contained no bird-flu virus).
118 Exhibit CN-14, p. 20869.
119 Exhibit CN-14, p. 20869.
120 United States' oral statement at the first substantive meeting of the Panel, para. 41.
121 Exhibit US-52.

taken place in China, in August 2005. 122 As a result, at the time that Section 727 and its predecessor
were enacted and in force, FSIS, in the exercise of its normal equivalen ce rule-making procedures,
would have been required to analyse and conduct on-site audits of China's poultry safety and control
regime before Chinese poultry could enter the United States. Through such audits, FSIS would have
naturally evaluated and examined, inter alia, any allegedly unique risks posed by China, and any
alleged food "safety scandals".
4.131 Consequently, the United States once again fails in its attempt to characterize China's
situation as unique, as it has previously failed when trying to distinguish China by discussing health
and safety concerns such as avian flu, bacteria, a nd contaminants that are all inherent in other
countries that have never lost access to FSIS procedures.
4.132 Yesterday, the United States pointed out that "while Section 727 was in effect, 56 major US
companies and trade associations representing the domestic industry wrote a letter to President Obama
asking him to oppose an extension of Section 727." 123 In particular, the industry argued in the letter
that "Section 727 and its predecessors effectiv ely bar FSIS from conducting a necessary and
appropriate risk assessment on whether imports of cooked chicken from China pose any risk to
American consumers."124
4.133 Mr Chairman, distinguished Members of the Panel, the companies that signed on to that letter
(including through the various trade associations) in clude many profit-seeking companies that are in
the business of selling poultry products in US ma rkets. Other than the US Government, these
companies have the greatest knowledge of the capab ilities of FSIS, and they would also have the
greatest commercial risk from advocating the remova l of legislation that genuinely protected the
safety of the poultry sold in the United States. If US consumers were to fear the safety of any poultry
sold in US grocery stores and restaurants as a re sult of a scare related to imported Chinese poultry, it
would certainly have spillover effects on the demand for US-origin poultry. 125 Consequently, the US
industry letter actually supports China's arguments th at Section 727 was not "necessary", and that the
normal FSIS procedures constitute an alternativ e SPS measure that achie ves the United States'
appropriate level of protection, and is significantly less trade restrictive.
4.134 Yesterday, in its latest attempt to distract the Panel from the substantive problems with
Section 727 and Section 733, the United States asked a series of questions to China to identify
precisely when China believed that it was first "demonstrated" that the US measures were
SPS measures. China believes that this question is entirely irrelevant to the issue of whether its
consultation request properly requested consultations under Article 11 of the SPS Agreement. That is
because China's consultations request not only specifically invoked Article 11 of the SPS Agreement,
but it also included potential violations of specific provisions of that agreement, namely Articles 2.1,
2.2, 2.3, 5.1-5.5, and 8 of the SPS Agreement, and a brief statement of the basis for those violations.
China framed its SPS claims just like any othe r arguments in the alternative, and China's
understanding of the true objective of the US measur es has evolved during the course of this dispute.
An argument in the alternative can not be a proper basis for disrupting the ability of China to achieve
a "prompt settlement of" this dispute that is "essen tial to the effective functioning of the WTO and the
maintenance of a proper balance between the ri ghts and obligations of Members", pursuant to
Article 3.3 of the DSU.

122 Exhibit CN-16.
123 United States' oral statement at the first subs tantive meeting of the Panel, para. 39, citing
Exhibit US-55.
124 Exhibit US-55.
125 See, e.g., Exhibit US-14, in which one concerned company explained that "[i]f American consumers
cannot buy with confidence, they may decide to avoid poultry products altogether".

4.135 With respect to the question of whether Secti on 743 falls within the scope of the terms of
reference, China provided a list of five key reasons why Section 743 has the sa me substance, essence,
and/or legal implications as Section 727.
126 In response, the United St ates emphasised that "because
Section 743 was drafted and adopted after consultations were held, it was impossible for consultations
to be held on the measure." 127 But China notes that the lack of cons ultations in this situation can not
be a determining factor, or else future measures could never fall within the scope of the terms of
reference of any dispute, which would be contrary to Appellate Body precedent.128
4.136 Finally, in closing, I would like to recall one of the key points that China made yesterday.
Even if, during the term of Sections 727 and 733, every scientist in the world had independently
concluded that China's poultry inspection system and, in turn, Chinese poultry products were the
safest in the world, Section 727 would have still operated to exclude Chinese poultry products from
obtaining FSIS import approval and therefore, fr om being exported to the United States. The
United States has not disputed this conclusion. In China's view, it is inconceivable that such an
arbitrary measure, with such a dramatic trade effe ct, could be consistent with the disciplines of the
GATT 1994, the SPS Agreement, and the Agreement on Agriculture. It clearly is not.
E. E
XECUTIVE SUMMARY OF THE ORAL STATEMENT OF THE UNITED STATES AT THE FIRST
SUBSTANTIVE MEETING OF THE PANEL
4.137 China's submission and oral statement overlook tw o important facts: first that Section 727
was adopted in the context of an ongoing food saf ety equivalency procedure, and second that
Section 727 and was of only limited duration and e ffect. A proper examination of Section 727 under
relevant WTO rules requires both of these facts to be fully taken into account.
4.138 First, under the US system for ensuring the safety of imported poultry products, FSIS must
determine that the exporting country has a poultry inspection system that achieves the same level of
sanitary protection as the US system. The equivale ncy determination is not addressed to the food
safety of particular products, but to the equivalency of the inspection system of the exporting country.
China does not contest the right of a WTO Member to adopt an equivalency-based food safety system.
However, China argues that Section 727 was "discriminatory" simply because it mentions China. This
argument ignores the fundamental point that Section 727 was addressed to China because the measure
was an exercise of Congressional oversight over the ongoing equivalency procedure involving China's
poultry inspection system. An action taken in the cont ext of an equivalency review of a particular
country's food safety inspection system will, by its very nature, make explicit reference to that
country. The country-specific nature inherent in an equivalency review does not automatically raise
questions of "discrimination".
4.139 Second, Section 727, on its face, was of only limited duration and effect. Neither Section 727,
nor any other US measure, imposed an indefinite restriction on the completion of the equivalency
procedures applicable to China's poultry inspectio n system. Rather, Section 727 applied for a period
of less than seven months, and was intended to ensu re that China's lax food safety enforcement was
properly considered. The measure has expired, and under a separate measure – Section 743 – the
funding restriction has been removed. Section 727 also applied only to the establishment or
implementation of equivalency rules for Chinese poultry; it did not prohibit – and indeed
contemplated – the consideration of issues related to China's food safety enforcement system during
the period subject to the measure.

126 China's opening oral statement at the first substantive meeting of the Panel, paras. 126-131.
127 United States' oral statement at the first substantive meeting of the Panel, para. 15.
128 Appellate Body Report, Chile – Price Band System, paras. 139-144.

4.140 Thus, to the extent that China establishes that the measure is inconsistent with any discipline
of the GATT 1994, the question is not – as China see ms to frame it – whether a Member may impose
an indefinite import ban. Rather, the question is whether the measure actually at issue, which was
limited in both time and substantive effect and wh ich was adopted for the purpose of ensuring the
consideration of a legitimate food safety issue, may be justified under GATT Article XX.
4.141 Finally, the mere fact that a measure implicat es food safety does not dictate whether or how
such a measure is covered by the SPS Agreement. To the contrary, the SPS Agreement – in its
Annex A – contains a specific and detailed definitio n of covered measures. And as illustrated in the
EC – Approval and Marketing of Biotech Products dispute, even if a measure is covered by Annex A,
it is far from trivial to determine how each of th e differing SPS obligations a pply to any particular
measure.
4.142 Along these lines, it is up to China, as the co mplaining party, to allege how and why a
measure is covered by the SPS Agreement if it wishes to receive DSB findings under that agreement.
In this dispute, China has not chosen to ma ke the case that Section 727 is covered by the
SPS Agreement. In fact, China's request for consultations plainly states that "China does not believe
that the US measures at issue restricting poultry products from China constitute SPS measures within
the meaning of the SPS Agreement".
4.143 China, however, has alleged that the US measure is s ubject to, and is inconsistent with,
disciplines under the GATT 1994. As a result, the United States has presented its defense of the
measure under the relevant provisi ons of the GATT 1994. Had Chin a requested consultations under
the SPS Agreement, and had China made a prima facie case of how and why the US measure fell
under the SPS Agreement, the United States would have presente d its defense under that framework.
But the United States, as responding party, cannot be expected to present a defense based on claims
never consulted upon and with respect to which China has failed to make even a prima facie case.
4.144 China asserts that two other measures – an "i ndefinite moratorium" and the subsequently
enacted Section 743 – also are inconsistent with the WTO Agreement. Section 727, however, is the
only measure within the terms of reference of the Panel. China has no basis for the allegation of the
separate, distinct measure that it calls "the moratorium". In particular, China's citation to a provision
in the 2008 appropriations bill does not establish an indefinite moratorium. The fact that Congress
enacted a time-limited funding restriction twice does not show the existence of an "indefinite"
suspension of approvals. Moreover, Section 743 disp roves China's claim as it has resulted in a lifting
of the funding restriction.
4.145 In addition, contrary to China's assertions, S ection 743 is not a measure that the Panel may
examine for conformity with the covered agreemen ts because it is not within the Panel's terms of
reference as part of the "matter" referred to the Pa nel by the DSB. First, the parties did not consult on
its provisions. Second, Section 743 plainly changes the "essence" of Section 727.
4.146 China also mischaracterizes the effect of Secti on 727 by failing to take account of the "scope
and meaning" of provisions contained in US appropria tions legislation generally, and of the particular
conditions contained in Section 727 specifically. US domestic law dictates that a congressional
funding restriction is limited to its explicit terms. Funding restric tions do not amend or modify the
underlying law administered by an executive agency . Accordingly, these restrictions do not prevent
the agency from taking actions related to the prohibited act as long as the agency does not take the
prohibited act itself. Further, unless the funding restriction states otherwise, it only applies to the
fiscal year covered by the appropriations bill in which it is contained.
4.147 Thus, Section 727's legal meaning was limite d to preventing USDA from "establishing" or
"implementing" a rule allowing poultry products from China to be imported into the United States for

a temporary six and a half month period during the 2009 fiscal year. Section 727 did not create a
permanent funding restriction that would impact FSIS's ability to establish and implement rules
related to equivalency after its e xpiration. And indeed, as a consequence of Section 743, the funding
restriction on FSIS has been lifted.
4.148 Further, Section 727 did not prohibit FSIS from using funds to engage in activities under the
PPIA related to an equivalency rulemaking for China. To the contrary, Section 727 directed FSIS to
engage in this work, and it did so during 2009. FSIS reviewed its documentation with regard to
China's equivalency application, it sent a letter to China requesting additional information on its new
food safety law, and it provided an equivalency ac tion plan to Congress. FSIS could have done even
more work, including the PPIA's document analysis step , but its work was thwarted by China's failure
to respond to its letter requesting additional information.
4.149 Finally, Section 727 did not ban imports of poultry from China. Rather, the import prohibition
was imposed by the PPIA, a measure not at issue in this dispute. And even in the absence of
Section 727, FSIS procedures would not have nece ssarily allowed China to export poultry to the
United States. For neither processed or slaughter ed poultry was it a foregone conclusion that FSIS
would find China's inspection system to be equivalent.
4.150 Thus, the most China can allege is that S ection 727 prevented FSIS from taking final actions
to specifically establish or implement equivalency rules during fiscal year 2009 that might have
otherwise occurred. China has no basis for alleging how, if at all, any final actions would have
differed during the period covered by Section 727 had this measure not been enacted.
4.151 In any event, Section 727 is justified pursuant to GATT Article XX(b).
4.152 Section 727's policy objective falls within Article XX(b)'s range of policies. First, it is well
known that poultry can contain bacteria, contaminan ts, and other additives and substances that pose a
risk to human life and health. Thus, if China's aut horities fail to enforce its laws to ensure that its
poultry is produced under equivalent conditions, then the life or health of US consumers would
potentially be at risk. Similarly, avian influenza-in fected poultry can pose a risk to animal and human
life and health. And entry of infected poultry fro m China could occur if Chinese authorities did not
adequately enforce the law to ensure that poultry had been cooked or otherwise processed sufficiently
to kill the disease.
4.153 The risk posed by China's lax enforcement of its food safety laws is further highlighted by
critical reports on China's systemic problems and the series of food safety crises that have plagued
China in recent years. For example, the Asian De velopment Bank noted that "unsafe food in the PRC
remains a serious threat to public health," and i ndicated that "there is a pressing need for further
reform". Similarly, the World Health Organiza tion's food safety chief characterized China's food
safety system as "disjointed", noting that this fe ature of the system helped prolong the melamine
crisis. Finally, a study by Global Health Governance pointed out that the reluctance of local officials
in China "to enforce standards or regulations set at the provincial or national level makes it unlikely
that food safety can be ensured consistently across the country." The report also stated: "corruption
within the Chinese government poses a further cha llenge" to food safety as this problem "extends
from grass-roots cadres to the highest levels."
4.154 In addition, numerous high-profile crises have occurred, threatening the life and health of
consumers and leading to frequent bans on Chin ese products. Most notably, in 2007, the use of
melamine in China to adulterate feed and gain bigger profits led to the deaths of numerous US
household pets, with unofficial figures indicating the practice responsible for the death of up to 4,000
cats and dogs. In 2008, it was discovered that Ch inese producers were using melamine in products
intended for human consumption, such as baby form ula, milk, and eggs. Consumption of melamine-

tainted products led to over 300,000 illnesses and the deaths of at least 14 infants. The World Health
Organization dubbed China's melamine crisis "one of the largest food safety events the agency has
had to deal with in recent years".
4.155 China's central government even recently acknowle dged the extent of its problems with food
safety. For example, China's Ministry of Health stated that "China's food security situation remains
grim, with high risks and contradictions". And as a result of these problems, China was forced to
enact a new food safety law earlier this year.
4.156 These many broad-ranging food safety crises rais e serious questions about China's ability to
enforce its laws. And the question of enforcement is of particular importance in the context of an
equivalency regime where the United States must rely on China to enforce its la ws to ensure that the
poultry it is exporting to the United States is safe.
4.157 With these risks in mind, the US Congress en acted Section 727. The measure and its Joint
Explanatory Statement ("JES") make clear that its policy objective was to protect against the risk
posed to human and animal life and health from potentially unsafe poultry from China. In fact, the
JES accompanying Section 727 states: "There remain very serious concerns about contaminated foods
from China and therefore the bill retains language prohibiting FSIS from using funds to move forward
with rules that would allow for the importation of po ultry products from China into the U.S." Similar
language was also included in the Committee Report accompanying Section 733.
4.158 Section 727 was necessary to achieve this im portant policy objective in light of the severe
risks posed by the importation of potentially unsaf e poultry from China. China's food safety system
suffers from broad systemic problems, problems that FSIS is not typically faced with when making an
equivalency determination. These include widespread smuggling, corruption, and the lax enforcement
of China's food safety laws. Furthermore, China has experienced numerous food safety crises in
recent years, such as the devastating melamine crisis that occurred shortly after FSIS had made a final
determination about China's poultry processing system.
4.159 The conclusion that Section 727 was necessary is bolstered by the analysis that past panels
have used when addressing whether a measure was "n ecessary" in the context of Article XX(b). Other
panels have often found it helpful to weigh and balance the importan ce of the interest s or values at
stake, the contribution made by the measure to its policy objective, and the trade restrictiveness of the
measure. In the instant dispute, these factor s all support the conclusion that Section 727 was
necessary.
4.160 First, the need to protect human life and health from the risk posed by consuming potentially
unsafe poultry is of the utmost importance, as is th e need to protect animal life and health from the
threat of avian influenza. Second, there is a di rect relationship between Section 727's policy objective
and its contribution to food safety. Section 727 directly contributed to the protection of human and
animal life and health by ensuring that FSIS did not establish or implement equivalency rules that
would allow for potentially unsafe poultry to be imported into the United States. In addition,
Section 727 set up a process by which FSIS could further evaluate the rules in light of China's
systemic problems and recent food safety crises. Finally, Section 727 was temporary and did not stop
work related to China's equivalency application, and it was explicitly designed to allow FSIS to move
forward with the implementation and establishment of equivalency rules when the funding restriction
was lifted.
4.161 Section 727 also meets the conditions of the Article XX chapeau. Section 727 was not
discriminatory because there is no other country wh ere the same conditions prevail as they did for
China at the time the measure w as enacted. No other country as fa r along in the equivalency process

had experienced food safety crises of such a serious magnitude. Neither had any country in that
situation suffered from the systemic problems that plagued China's food safety system.
4.162 Even if the Panel considers Section 727 discrimin atory, it was not applied in an arbitrary or
unjustifiable manner. The Brazil – Retreaded Tyres Appellate Body Report noted that whether a
measure is applied in a way that is "arbitrary or unjustifiable" should focus "on the cause of the
discrimination, or the rationale put forward to expl ain its existence". Section 727's application was
not arbitrary or unjustifiable because there was a strong rationale for the measure's treatment of China
that directly relates to the measure's policy obj ective – namely the many legitimate concerns about
China's food safety system.
4.163 Section 727 is also not a disguised restriction on trade. First, the text of the explanatory
statement accompanying the measure explicitly indi cates that the measure's policy objective was to
protect human and animal life and health, not to prot ect a domestic industry. Further, if Section 727's
objective were to restrict trade, it would not have included language instructing FSIS to set the stage
for expeditious action on the implementation and establishment of the equivalency rules as soon as the
funding restriction was lifted. Statements by members of Congress directly involved with
Section 727's enactment also support this view , as does the US poultry industry's widespread
opposition to the measure.
4.164 The United States believes that any SPS claims by China are not within the Panel's terms of
reference. DSU Article 1.1 states that consultations must be requested pursuant to the consultation and
dispute settlement provisions of each covered agre ement for which dispute settlement under the DSU
is sought. But here, China's request for consultations plainly states that "China does not believe that
the US measures at issue restricting poultry prod ucts from China constitute SPS measures within the
meaning of the SPS Agreement".
4.165 China's ex post facto explanation that it wanted to invoke claims under the SPS Agreement as
"alternative claims" is unavailing. First, regardless of what China subjectively intended, the governing
document is the request for consultations itself, which does not request consultations in order to
pursue alternative claims, but asserts that the US measures at issue are not
 SPS measures. Second,
Members routinely invoke alternative claims by stat ing just that: that particular claims are presented
"in the alternative". China in its request for consu ltations could have, but did not, present SPS claims
in the alternative.
4.166 The issue presented by China's consultations requ est is not a mere technicality. In raising the
deficiency of China's consultations request, the United States is pursuing an important systemic
concern. A complaining party should not be free to claim that it is not invoking the dispute settlement
provisions of a covered agreement a nd then later claim that it did . China's approach could lead to
greater confusion in future disputes. The DSU provisions are clear and were agreed upon – a
complaining party's consultations request "sha ll give the reasons for the request, including
identification of the measures at issue and an indication of the legal basis for the complaint". As stated
in the US preliminary ruling request, clarity in the request for consultations is important for the
overall operation of the dispute settlement system.
4.167 Finally, the United States agrees with China that the Panel should not accept the EU's request
that the Panel alter its working procedures in order to provide enhanced third party rights. The present
dispute is not comparable to past cases where pane ls have granted enhanced third-party rights. For
example, in EC – Bananas III and EC – Tariff Preferences, the panel granted enhanced rights because
third parties had substantial trade interests in the measure at issue in the dispute. And in EC –
Hormones, the panel granted enhanced rights to what were essentially co-com plainants in parallel
proceedings. But here, the basis for the EU's request is that issues under the SPS Agreement may be
further developed after the first substantive meeti ng. The United States submits that this rationale

cannot suffice as the basis for granting enhanced thir d party rights. It is a common element of nearly
every dispute that the legal and factual issues contin ue to develop after the first substantive meeting.
Indeed, if this were not the case, the DSU's requi rement for a second substantive meeting would be
pointless.
F. EXECUTIVE SUMMARY OF THE SECOND WRITTEN SUBMISSION OF CHINA
1. Introduction and summary
4.168 The Parties' responses to the Panel's questions confirmed certain undisputed facts:
• Securing and maintaining on an annual basis an equivalent status under FSIS rules is
the essential prerequisite for exporting poultry to the United States.

• During the past two years, Section 727 and Section 733 foreclosed for China – but
not any other WTO Member – any opportunity to secure and maintain equivalence
status and, consequently, any opportunity to access the US poultry market.

• The termination of China's access to the fu ll range of FSIS rule-making procedures
began with the implementation of Secti on 733 in December 2007 and has continued
until at least 12 November 2009.

• There was no possibility that poultry from Ch ina could have been imported into the
United States at any time between D ecember 2007 and 12 November 2009 without
FSIS first conducting a detailed audit and examination of China's poultry safety and
inspection regime.

• During the period from December 2007 through 12 November 2009, FSIS rules-
based equivalence procedures continued to be available to countries (a) affected by
highly pathogenic avian influenza, (b) that failed to adequately enforce their food
safety laws, and/or (c) where FSIS found "systemic failures" in food safety inspection
procedures, including those previously found to be equivalent.

• Chinese exports of non-poultry products to the US market increased considerably
throughout the December 2007 – 12 November 2009 period, without Congress ever
suspending China's access to normal import procedures applied by the FDA.
129

4.169 China has previously established that Section 727 violates the GATT 1994, the Agreement on
Agriculture and the SPS Agreement
130, and that Section 727 cannot be justified under Article XX(b) of
GATT 1994. The arguments set forth by China to rebut the US Article XX(b) defence also support
China's SPS claims.
2. The United States cannot sustain its argument that China and the United States did not
consult under the SPS Agreement
4.170 The United States continues to elevate form over substance in addressing the Panel's
jurisdiction over the SPS claims, maintaining its ass ertion that China did not request consultations
pursuant to Article 11 of the SPS Agreement . However, China's consultations request specifically
invoked Article 11 and
 listed potential violations of specific provisions of that Agreement.
Furthermore, the United States has not claimed that China's consultations request affected US due

129 See China's second written submission, para. 1.
130 These arguments are not repeated in detail in this submission.

process rights with respect to the SPS Agreement claims. This leaves the United States' argument as
one that is purely formalistic.
3. China has established prima facie claims under Articles I:1 and XI:1 of GATT 1994 and
the Agreement on Agriculture
(a) China's claims under Article I:1 of GATT 1994
4.171 In enacting Section 727, the United States withhe ld an advantage it accorded to all other
WTO Members by denying only Chinese poultry products the opportunity to access FSIS procedures
and, thus, the possibility of being exported to the United States. China has repeatedly demonstrated
that "like products" in this dispute are "poultry products" hypothetically capable of accessing the
procedures and being exported to the United St ates. While China has established a prima facie case,
the United States has never presented a rebuttal.
(b) China's claims under Article XI:1 of GATT 1994
4.172 Section 727 is inconsistent with Article XI:1 of GATT 1994, because it imposes import
restrictions that negatively impact the compe titive opportunities for Chinese poultry products, and
also imposes a de facto import prohibition on such products. The United States effectively concedes a
violation of Article XI:1, as the only defence it presents is under Article XX(b).
(c) China maintains its claim under Article 4.2 of the Agreement on Agriculture
4.173 China is confused by the US st atements asserting that China indi cated that it would no longer
pursue its claim under Article 4.2 of the Agreement on Agriculture . China did no such thing. China
has established a prima facie case that Section 727 is inconsistent with Article 4.2, because the
measure results in the maintenance of quantitativ e restrictions on the import of Chinese poultry
products.
131 The United States has not rebutted Chin a's prima facie case other than asserting a
defence under Article XX(b) of GATT 1994, which lacks any merit.
4. The United States has not established that Section 727 falls within the exception under
Article XX(b) of GATT 1994
(a) Introduction
(i) Section 727 is not "necessary" to the protection of human life and health under paragraph (b)
of Article XX
4.174 Section 727 does not fall within the scope of the exception in GATT Article XX(b) because,
inter alia, it is not "necessary" for the protection of human or animal life and health.132
4.175 First, Section 727 (and Section 733 before it) prohibited the entry of just one of the many
types of food products that were imported fro m China between December 2007 and November 2009
in ever-increasing amounts. During the time that th ese measures were in effect there was no evidence
of any food safety problems related to Chinese processed poultry. Second, there was no imminent risk
posed by Chinese poultry as importation was never "imminent" during the period of December 2007 –
November 2009. FSIS was required to conduct a udits of China's poultry processing inspection
system, and Chinese poultry could only have been imported following a multi-month, science-based

131 China's first written submission, paras. 107-114. China argued this no less than 6 times in its
opening (paras. 4, 29, 32, 83) and closing oral statement at the first substantive meeting (paras. 3, 17).
132 These arguments are also relevant to China's claims under the SPS Agreement.

confirmation by FSIS that the system remained equivalent to that of the United States. Similarly,
China would have had to obtain an initial equivale nce determination by FSIS to export other types of
poultry. Sections 727 and 733 were thus not even remotely "necessary" to protect US consumers from
any alleged imminent danger. A less trade-restric tive approach that would have achieved the US'
preferred level of protection would have been application of the standard FSIS procedures, correctly
described by the United States in its responses to the Panel's questions as being "based on science". 133
In sum, Section 727 does not fall within the scope of Article XX(b), as it is not "necessary" for the
achievement of its stated objective.
(ii) Section 727 does not fulfil the requirements of the chapeau to Article XX
4.176 The United States also has failed to establish th at Section 727 does not result in "arbitrary or
unjustifiable discrimination between countries wher e the same conditions prevail", within the
meaning of the chapeau of Article XX. China has demonstrated that the de jure discrimination against
China in Section 727 is arbitrary for several reasons , including: the lack of scientific risk assessment
for the measure; the absence of evidence that China's processed poultry inspection system was
deficient; the different treatment accorded to other WTO Members such as Mexico; the different
treatment accorded to non-poultry food products from China relative to Chinese poultry products; and
the lack of evidence that Chin ese poultry was more likely to be contaminated or that such
contamination was less likely to be detected in China as opposed to in other Members.
134
(b) Various US Arguments related to its Article XX(b) defence are unsupported by the evidence
and legally erroneous
4.177 In its responses to questions, the United States raised various arguments in an attempt to
justify Section 727 under Article XX(b) of GATT 1994. China addresses each one below.
(i) China did not have access to normal PPIA/FSIS pro cedures, by the explicit terms of
Section 727 and its predecessor
4.178 The United States claims that Section 727 did no t deny China's access to the PPIA, allowing
FSIS to conduct activities "related to" China's equiva lence. These claims are irrelevant, however, as
the explicit terms of Section 727 prohib it any action that could result in the establishment or
implementation of an equivalence rule for China. An FSIS document specifically states that
equivalence verification is "pending" for China because "FY 2008 appropriati on legislation bars the
FSIS from spending funds on import of poultry from China".135
4.179 Yet the United States now suggests that, when read in light of the JES, Section 727 permitted
FSIS to take a number of e quivalence-related actions. 136 This is a unjustified, post hoc attempt to
rewrite the unambiguous, explicit wording of Section 72 7. Furthermore, legislative history only has a
limited role under US law; only if the textual me aning is unclear should an advocate examine the
legislative history. China notes that the interpretati on of a domestic measure is a question of fact for
the Panel. However, even if the Panel elects to refer to the JES, it only confirms the extent to which
Congress restricted the role for the FSIS in relation to China's poultry equivalence. Consistent with
the text of Section 727, it does not authorize any funding for FSIS to implement or establish a rule in
respect of China. At most, it permits two limited activities: first, USDA is "urged" to "submit a report"

133 United States' response to Panel question No. 61.
134 China's opening oral statement at the first substantive meeting of the Panel, paras. 107-120.
135 Exhibit CN-21. China has established in detail the meaning of the terms of Section 727 and its
extremely restrictive (essentially prohibitive) effect in China's first written submission (paras. 10-23, 30-54,
56-60).
136 United States' response to Panel question No. 23.

on China's food safety laws and, second, USDA is "directed" to submit a "plan of action" to guarantee
the safety of poultry products from China. Neither ac tivity actually forms a part of the equivalence
procedures and neither permits the establishment or implementation of a rule.
4.180 Finally, the United States suggests that th e 12 May 2009 letter to China requesting
documentation regarding China's general food safety laws was a normal part of FSIS's equivalence
process under the PPIA. But nothing in that letter states that th e information was needed for a
equivalence procedures – instead, it references the report that FSIS was "urged" to submit to Congress
under the JES. The letter did not, and could not, cr eate any expectation in China that submitting the
requested information would result in the establishment or implementation of an equivalence rule.
137
4.181 In sum, it is misleading and incorrect for th e United States to now suggest that FSIS was
taking steps to maintain China's equivalency status for processed poultry and to establish its
equivalency for domestically-slaughtered poultry by creating a "plan" starting in May 2009. Even
under the most expansive interpretation, the preparati on by FSIS of a "plan of action" or a "Report to
Congress" does not come close to fulfilling the ma ny procedures necessary to secure and maintain
equivalence. Even if FSIS theoretically could have performed work "r elated to" China's equivalence
determinations, the explicit terms of Section 727 manifestly excluded the possibility of FSIS
finalizing or maintaining a finding of equivalence for China, due to the restriction on funding for
establishing or implementing a rule in Section 727.
(ii) Section 727 was not necessary because there were no "immine nt" imports of Chinese poultry
at the time it was enacted
4.182 The United States repeatedly argues that Sec tion 727 was "necessary" within the meaning of
Article XX(b) because no other country that was allegedly "imminently" able to export poultry
products had recently experienced food safety crises . However, after claiming that Chinese imports
were "imminent" at the time that Section 727 (and presumably 733) was enacted, the United States
contradicts itself, pointing out that China was not in a position to immediately export poultry products
when funding was restricted as FSIS would have to conduct an equivalen ce maintenance audit for
processed poultry and finalize a rule for slaughtered poultry before the relevant poultry products could
enter the United States.
4.183 Equivalence maintenance audits include in-c ountry meetings with officials, on-site
inspections, and analysis of information about Chin a's inspection system. If FSIS found the system to
be somehow deficient, it would suspend or withdraw equivalence. Similarly, the finalization of a rule
also involves several procedural steps. At a minimum, the as-yet-uncompleted steps would include the
publication of a proposed rule, review of comments, and a final decision by FSIS, followed by – if
positive – the publication of a final rule in the CFR. If started at the beginni ng, an initial equivalence
determination would take three to five years of resource intensive work before a rule may be finalized.
4.184 The United States confirms why FSIS was uniquely placed to determine whether general
Chinese problems with food safety were actually impacting China's poultry inspection system. It
stated: "[u]nder its applicable statute and regulations, FSIS is permitted to consider any issue relevant
to the equivalency of another country's poultry inspection system when it is making an equivalency
determination".138 First, it is clear from this passage that the FSIS already had the ability to consider
the issues of concern to the United States in the cour se of its procedures. Thus, it is those procedures,
not Section 727, that would be "necessary" to de termine whether China's processed poultry safety and
inspection system is reliable. Thus Section 727 ca nnot be considered "necessary" within the meaning

137 Such laws and information were made available to, inter alia, the United States, through the
SPS Committee.
138 United States' response to Panel question No. 77 (emphases added).

of Article XX(b). Second, if it were true that China had such severe food safety problems, logically
that should have made it easier for FSIS to find and reject or withdraw equivalence. Third, FSIS
procedures are "based on science". 139 Yet Sections 733 and 727 cut off funding allowing FSIS
scientists to conduct audits of China's inspection regime. It is illogical to assert that Section 727 was
necessary to ensure FSIS would fully consider these serious issues as, by removing FSIS funding,
Section 727 ensured that FSIS scientists and experts could not examine these alleged problems in any
comprehensive manner leading to an equivalence rule.
(iii) FSIS equivalence procedures for poultry are not inherently more risky for human life and
health than non-equivalence safety and inspection procedures
4.185 The United States argues that equivalence systems involve significant risk, and that systemic
enforcement problems would be of particular importance in the context of equivalence due to the
reliance placed on the exporting country. However, contrary to the US suggestion, FSIS is not
permitted to blindly rely on the exporting country. Foreign poultry cannot enter the United States
unless the scientific experts at FSIS affirmatively gr ant – and regularly confirm the maintenance of –
equivalence. Under the procedures, FSIS officials must confirm that the applicant country's poultry
inspection regime achieves sanitary results equivalent to those of the US system. Without such an
initial determination – which tak es several years to obtain and which has only been achieved by
10 countries – foreign poultry cannot enter the Un ited States. Furthermore, the initial equivalence
determination is constantly re -verified on an ongoing basis, th rough reviews, audits, and re-
inspection. Indeed, the United States has pointed out that, in the absence of Section 727 and 733, FSIS
would have audited China's inspection system befo re any imports from China could have entered the
United States.
4.186 Moreover, there is no evidence that non-equivale nce-based systems, such as those employed
by FDA, are inherently less risky than FSIS equivalence procedures. The active involvement of FSIS
inspectors and scientists in the establishment and a nnual maintenance of equivalence, coupled with
enforcement of a poultry safety and inspection syst em by the exporting country, does not create a
greater risk to human life or health than FDA rules and procedures regulating the importation of non-
poultry food products. To the contrary, FDA procedures generally regulate the safety of imports of
many food products by relying on individual e xporting companies to certif y compliance with FDA's
import requirements.
140 For the vast majority of imported food products, FDA does not appear to
conduct any "in-country" audits prior to exporta tion to the United States. Furthermore, FDA
inspectors are not present at every port-of-entry. Th e fact that FDA rules generally do not employ
equivalence procedures does not mean that FDA procedures can guarantee less risk to human life or
health than FSIS procedures related to equivalence. Thus, the US argument that Sections 733 and 727
were necessary because the FSIS system is somehow more vulnerable than other import procedures
cannot be sustained. To the contrary, the targeting of poultry was both unnecessary and constituted
arbitrary and unjustified discrimination.
(iv) US arguments alleging a fear of a breach of APHIS Regulations and avian influenza do not
support a conclusion that Section 727 is necessary
4.187 The United States incorrectly contends that Sections 727 and 733 were necessary because of a
risk that China's poultry inspection system could not protect against the spread of poultry diseases
such as highly pathogenic avian influenza (HPAI).
4.188 China's approval to export poultry to the EU is limited to processed poultry in a hermetically
sealed container that has been heated to at least 70 degrees. This reflects current science and OIE

139 United States' response to Panel question No. 61.
140 FSIS Fact Sheets: Production and Inspection (Exhibit CN-61).

recommendations about avian influenza, includi ng the understanding that processing (cooking) kills
the H5N1 virus and that cooked poultry cannot transmit the virus. China had obtained FSIS
authorization in 2006 to export only processed poultry to the United States (and even then , only
poultry slaughtered in the United States or an e quivalent country). Thus, there was no need for
Sections 733 and 727 to protect domestic US poultry fro m the risk of avian influenza, since: (a) the
virus is not transmitted via cooked poultry; and (b) China could not have exported anything other than
cooked processed poultry to the United States at that time, due to its limited FSIS authorization and
APHIS avian flu restrictions.
4.189 There was also no "imminent" risk from avian in fluenza, as FSIS audits were required before
even fully-cooked poultry could be exported. "Animal diseases" and "enforcement" are two of the five
risk areas evaluated by FSIS auditors. When audits were conducted in 2004 and 2005, a period during
which HPAI was a major worldwide concern, the FSI S found "no deficiencies" in China's handling of
poultry diseases with respect to processed poultry, and w as satisfied with China's ability to enforce its
poultry safety regulations. Had this not been th e case, FSIS would have denied equivalence for
processed poultry. In addition, if Sections 733 and 727 had not been enacted, FSIS would have
conducted a maintenance audit before China c ould have exported any processed poultry to the
United States under the 2006 rule. Had inspectors un covered problems during this audit, FSIS could
have withheld the confirmation of equivalence, and no Chinese poultry would have entered the
United States. Furthermore, if the US poultr y industry was concerned that Chinese poultry could have
posed a risk to US animals, or to consumer confidence, it would have opposed the removal of
Section 727. It did not. China also notes that more than 80 countries have been affected by avian
influenza, including some facing significant problems in regulating food safety. The US Congress did
not block access to FSIS procedures for these or any other countries – only for China.
(v) The United States references anecdotal news re ports on eggs and animal feed, but provides
no evidence of food safety problems related to processed poultry
4.190 The United States submitted two further exhibits (US-62 and 63), to support its claim that
Section 733 and 727 were "necessary" to respond to poultry-related food safety issues in China.
However, both exhibits relate to feed for poultry raised and (possibly) slaughtered in China. Under the
terms of the established processed poultry rule, Chin a could only export poultry that had been raised
and slaughtered in the United States (or another e quivalent country). Alleged food safety crises that
related to contents of the feed given to birds raised in China could therefore not have affected: (a) the
health at slaughter of poultry raised in the United States or other equivalent countries; or (b) the safety
of processed poultry from China. China also notes th at there is no evidence that the US Congress took
these cases of alleged contamination into account when enacting Sections 727 and 733.
(vi) The United States fails to demonstrate that china is different than all other countries in a
manner that justifies arbitrary discrimination
4.191 A key element of the US Article XX(b) defen ce is establishing that the same conditions do
not prevail between China and other countries eligib le for normal FSIS procedures. The United States
has this burden and it has not met it. It asserts gene rally that the same conditions do not prevail for
China because no other WTO Member that had the sc ope and type of alleged food safety problems as
China was so far along in the equivalence process, but it provides no credible evidentiary support.
141
Pool of countries to assess whether "same conditions" prevail
4.192 It is proper for the Panel to compare China to every other WTO Member to assess "same
conditions", as each had the opportunity to seek, achieve, and maintain equivalence. Every WTO

141 See, e.g., United States' response to Panel question No. 62.

Member except China had the right to access normal FSIS procedures and to possibly obtain
authorization to export poultry if they obtained and maintained equivalent status. Only China was
irrebuttably presumed to not be equivalent. However, even if the pool of Members are those that had
applied for or had already been granted equivalency, China was still in the same position as these
other countries, as elaborated below.
Issue of "imminent" imports of Chinese poultry
4.193 The United States acknowledges that China is "s imilarly situated" in "some ways" to WTO
Members that had applied for equivalence. However, it then incorrectly asserts that only China was in
the position of imminently being able to export pou ltry products and had recently experienced food
safety crises. As China has demonstrated a bove, the United States admits that China was not in a
position to imminently export poultry products at the time that Section 733 or 727 were enacted.
Thus, during the pendency of those provisions, Chin a arguably posed less of a risk than other
"equivalent" countries, such as Mexico – which was exporting poultry to the United States when FSIS
concluded that it was experiencing "systemic fa ilures" in its poultry inspection regime. Thus, even if
the US' unsupported allegations of risks were true, such risks would appear to be the "same" as the
actual risks posed by Mexico's "systemic failure".
Applicability of US – Shrimp
4.194 China is similarly situated to any WTO Me mber seeking access to FSIS procedures to secure
an equivalence determination or to maintain a prio r finding of equivalence, under the rationale of the
Appellate Body's decision in US – Shrimp . In that case, the 'same conditions prevailing' 'between
countries' were that each of the shrimp producing c ountries sought to be certified to export shrimp to
the US market. The Appellate Body found that th e different treatment of exporting countries desiring
certification in order to gain access to th e United States shrimp market constituted unjustifiable
discrimination within the meaning of the chapeau of Article XX. The Appellate Body made a similar
finding on arbitrary discrimination. It saw no need to examine the conditions within each of those
countries in making these findings.
4.195 These findings are highly relevant and analogous to this dispute. Like in US – Shrimp, the
only way to obtain the right to export to the US ma rket is to have access to and comply with FSIS
regulations, and all applicants are in the same position because all expect that these regulations will be
applied consistent with due process and in a tran sparent and timely manner. China is in the same
position as other Members who seek access to equivalence procedures.
Poultry risk factors in countries seeking to export poultry to the United States

4.196 Even assuming arguendo that the "same conditions" are those inside the applicant or
equivalent countries, China was still in the same position as these other countries. Poultry
contaminants are common to many poultry-producing countries, including countries with significant
resources allotted to food safety such as the US, EU, and Japan. As to the alleged threat from avian
influenza, in terms of the application of APHIS and FSIS rules, all other countries have generally
been treated the same – except China. No othe r country has ever had extraordinary congressional
action bar its access to FSIS proce dures. To the contrary, Israel, affected by HPAI in 2008, exported
1,957,215 pounds of poultry that year to United States.
4.197 While it provided no evidence of systemic issues relating to Ch ina's poultry inspection
system, the United States argues that no other country allegedly experienced systemic failures in food
safety. The evidence in Exhibit CN-28, an audi t report from Mexico, directly contradicts this,
showing FSIS found " systemic failures" in three enforcement-rela ted risk areas. Yet Mexico's access

to FSIS procedures was never blocked by extraordinary action by Congress, and Exhibit CN-72 shows
that poultry products were imported from Mexico during that time.
4.198 This evidence strongly supports China's assertions that normal FSIS procedures are a
reasonable, and less trade-restrictive, alternative to Section 727. FSIS is clearly capable of identifying
and working through a wide range of problems, even systemic failures. This evidence also strongly
contradicts US arguments that Sections 727 and 733 did not "arbitrarily" or "unjustifiably"
discriminate against China. It is not credible fo r the United States to argue that Mexico somehow
presented a far less serious problem to human life a nd health. In addition, what is relevant for the
purposes of the "same conditions" element of the Article XX chapeau is that both China and Mexico
export or seek to export poultry to the United Stat es, both have achieved a rule of equivalence for
processed poultry, and FSIS procedures and resources are capable of conducting a full examination of
each country's poultry inspection system. In sum, th e United States cannot meet its burden under the
chapeau of Article XX to establish that the same conditio ns do not prevail between China and other
countries seeking to take advantage of FSIS procedures and potentially export to the United States.
5. China's claims under the SPS Agreement
4.199 The United States has not yet presented a substantive defence of the SPS claims. It claims it
will do so in its second written submission. China w ill respond to any such defences asserted by the
United States if and when they are made.
G. E
XECUTIVE SUMMARY OF THE SECOND WRITTEN SUBMISSION OF THE UNITED STATES
1. Introduction
4.200 Section 727 was justified under GATT Article XX(b). The measure, which was enacted in the
context of an ongoing equivalence determination, was necessary to protect human and animal life and
health against the risk posed by Chinese poultry. Section 7 27 was necessary to ensure FSIS
thoroughly considered China's systemic food safety problems, its widespread food safety crises, and
its enactment of a new food safety law before "implementing" or "establishing" rules that would allow
China to export its potentially dangerous poultry to the United States.
4.201 Throughout this dispute, China has attempted to distract the Panel from the question of
Section 727's necessity for poultry. For example, China implies that Section 727 was not necessary
because it did not apply more broadly to all Chinese products; however, this argument ignores the fact
that poultry was the only product subject to an equivalence determinati on when Section 727 was
enacted. Similarly, China downplays the relevance of its many food safety crises, but ignores the
concerns that they raise about its ability to enfo rce its food safety laws. Finally, China argues that
Section 727 is arbitrarily or unjustifiably discrimin atory while ignoring dis tinctions between China
and others who have tried to export poultry to the United States.
4.202 The US submission will focus on the key issues that China has chosen to ignore. In doing so,
the United States will rebut China's flawed ar guments and again dem onstrate Section 727's
justification under GATT Article XX(b).
4.203 In addition, the United States will address Ch ina's arguments, first submitted in its oral
statement at the first substantive meeti ng, that Section 727 is subject to the SPS Agreement and
inconsistent with certain SPS Agreement obligations. Any claims by China under the SPS Agreement
are not within the Panel's terms of reference. Fu rther, China has failed to show either that the
SPS Agreement provisions cited by China apply to Section 727, or that Section 727 is inconsistent
with those provisions. Finally, as China's substan tive arguments under its SPS claims are essentially

the same as those presented in c onnection with Article XX(b) of the GATT 1994, there is no need for
the Panel to address these additional claims under the SPS Agreement.
2. Section 727 is justified under GATT Article XX(b)
4.204 Section 727 was justified under GATT Article XX( b). Section 727 was within the scope of
the XX(b) exception because it was necessary to protect against the risk posed by the importation of
Chinese poultry. At the same time, Section 727 was consistent with the chapeau because it was not
applied against China in a manner resulting in arbitr ary or unjustifiable discrimination, nor was it a
disguised restriction on international trade.
4.205 The United States has demonstrated that Section 727 falls under the scope of the
Article XX(b) exception because its policy objective w as to protect human and animal life and health
from the risk posed by Chinese poultry. Since China has not challenged this element, the
United States will focus on issues related to Section 727's necessity.
4.206 Section 727 was necessary to protect against th e risk posed by the importation of Chinese
poultry. China has struggled with corruption, smugg ling, and the lax enforcement of its food safety
laws. In addition, avian influenza exists in China, and China has su ffered numerous food safety crises
in past years. As a result, China was in th e process of overhauling its food safety law when
Section 727 was enacted. At the same time, China w as also in the midst of an ongoing equivalence
proceeding for poultry. Therefore, Section 727 was necessary to ensure that FSIS fully considered
China's systemic food safety problems before "establishing" or "implementing" rules that would allow
China to export poultry products to the United States.
4.207 This conclusion is consistent with the analys is used by the Appellate Body to determine
whether a measure is necessary, which involves a weighing and balancing of multiple factors
(importance of the policy objective, contributi on of the measure to its policy objective, trade
restrictiveness). All of these factors support Section 727's necessity.
4.208 Section 727 directly contributed to the protec tion of human and animal life and health by
ensuring FSIS did not implement" or "establish" rules related to China's equivalence without fully
considering the systemic problems with China's f ood safety system and their relevance to China's
poultry inspection system. Before China's equivale nce application, FSIS had never before been
confronted with a situation that presented such severe systemic problems with food safety law
enforcement or such numerous and widespread food safety crises. Therefore, Section 727 was
necessary to ensure FSIS adequately dealt with these unique issues.
4.209 To help accomplish this task, the JES accompan ying Section 727 specifically directed FSIS
on how to move forward with China's equivalence determinations. In accordance with the JES, FSIS
developed an action plan shortly after Section 727 took effect. FSIS implemented the action plan's
first three steps during 2009. FSIS reviewed and summarized all of its documentation related to
China's equivalence application and reached out to China via letter on May 12, 2009. This letter
included a summary of the documents FSIS had un covered and requested that China provide any
changes to its relevant food safety laws to FSIS for review.
4.210 FSIS needed updated documentation from China to complete the document review step, a
normal part of the equivalence process under the PPIA. However, because China did not provide the
requested information, FSIS has not been able to complete its document review or any of the action
plan's subsequent steps, such as the on-site audits , which are also part of the PPIA. If China had
provided this information, FSIS could have taken further actions under the PPIA.

4.211 In response to its experience evaluating Chin a's equivalence and Section 727, FSIS has
reconsidered the extent to which the agency communicates with US trading partners and the extent to
which it considers food safety issues that do not direc tly involve meat, poultry, or egg products. In the
past, FSIS limited its equivalence evaluations to the information provided by the country regarding its
food regulatory systems for meat, poultry, or egg pr oducts. Now, FSIS has expanded the scope of its
equivalence review to consider information that do es not directly involve the products it regulates but
have a bearing on the integrity of the country's food safety system. This new process will apply to
China's equivalence review as well as the review of other countries. FSIS believes that this will help
address some of the issues raised by China's equiva lence application and US consumers will be better
protected as a result.
4.212 During 2009, FSIS took other steps to im prove the equivalence process. For initial
equivalence determinations, FSIS revised the Sel f-Assessment Tool it asks exporting countries to
submit as a part of their initial application. Sim ilarly, for ongoing monitoring of equivalent countries,
FSIS improved its audit methodology to better ensure the ongoing adequacy of system controls after a
country has been found equivalent. FSIS believes th ese new processes will be more effective and has
requested all of its trading partners, including China, adhere to them.
4.213 In response to the issues raised by China's equivalence application, the rest of the US
Government has also taken action to evaluate a nd address the risks posed by Chinese poultry imports.
In June 2009, the House Agriculture Appropriations Subcommittee held a hearing to examine "the
process the US Department of Agriculture used to determine China's equivalency to export processed
poultry to the United States." USDA also relea sed a report in June 2009 thoroughly examining the
safety of food imported from China. Further, in March 2009, President Obama created a Food Safety
Working Group focused on enhancing US food saf ety laws, including improving the United States'
ability to ensure the safety of imported food from Ch ina and other countries. These actions all made a
material contribution to the protection of human and animal life and health, the vitally important
policy objective of Section 727.
4.214 China argues that its widespread food safety cri ses are not relevant to Section 727's necessity.
The United States disagrees. In fact, China's melami ne crisis and many othe r non-poultry crises are
relevant to an equivalence decision because they raise questions about a country's ability to enforce its
food safety laws. And enforcement problems are pa rticularly troubling in the context of an
equivalence regime. The reason for this is th at after FSIS has made its initial equivalence
determination for a particular expor ting country, it relies on that country to enforce its laws to ensure
that the US level of sanitary protection is being me t. And if the exporting country fails to enforce its
laws, it could pose a direct risk to the life and health of those who consume the poultry produced in
potentially dangerous conditions.
4.215 China argues that Section 727's necessity is underm ined by the fact that the measure did not
apply to other Chinese products. In essence, China's argument appears to be that a Member may not
take action to protect life or health from the risk posed by a particular product until after that Member
has evaluated the risks posed by all products, and any action must be comprehensive with respect to
all products. But of course nothing in Article XX(b ) says this, nor does Article XX(b) say that a
Member must delay action to protect life or health until after such a comprehensive approach can be
put in place. Not only does China's approach have no basis in the text of Article XX(b), but it does not
make sense to say that Members agreed that they could not apply measures to protect life or health
with respect to particular products, but only with re spect to all products. It is clear that the delays
inherent in such an approach, and the resultant ri sks to life and health, would not be acceptable to
Members.
4.216
 In addition, there were several very good reas ons why Section 727 app lied only to poultry.
First, poultry is subject to FSIS's equivalence re gime, which is different from FDA's regime for

ensuring the safety of the products under its jurisdic tion, which include all of the food products China
has exported to the United States to date. While FSIS and FDA share a similar goal – namely,
ensuring that imported food is safe – they use different legal frameworks to achieve this goal.
4.217 Under FSIS's equivalence system, countries desi ring to export an FSIS-regulated product to
the United States must apply to FSIS for appr oval. FSIS's approval process examines whether a
country's inspection system achieves the same leve l of sanitary protection as the US system. If FSIS
determines that the foreign country's system is equiva lent, the country is then approved to export that
product to the United States. Although FSIS conducts follow-up audits, FSIS generally relies on the
exporting country to enforce its laws to ensure that its inspection system con tinues to achieve the US
level of sanitary protection after the initial determination is made. If a country fails to enforce its laws,
this level of sanitary protection may not be maintained.
4.218 By contrast, FDA does not require an exporting country's system to be found equivalent to the
US regulatory system prior to allowing the entry of food products. Rather, FDA approaches
compliance on a firm-by-firm basis, and any firm whose products comply with applicable FDA
requirements can ship to the United States. When the product reaches the US border, it is then
examined for violations of FDA requirements. If a violation is found, FDA works with the firm to
have the product brought into compliance. If the product cannot be brought into compliance, it is
re-exported or destroyed.
4.219 These differences between the regulatory regimes are relevant to the question of Section 727's
necessity. The reason is that China's lax enforcement of its food safety laws raise particular concerns
in the context of an equivalence regime that re lies on the exporting country to enforce its laws to
ensure that the US level of sanitary protection is ma intained that may not be raised in other contexts.
Thus, Section 727 was necessary in the context of FSIS 's equivalence regime to ensure that China did
not export potentially unsafe poultry to the United States.
4.220 Second, China had never before tried to e xport a product under FSIS's jurisdiction to the
United States, and before China's poultry application, FSIS had never before been faced with a review
of any food inspection system w ithin China. Therefore, FSIS was not accustomed to dealing with a
country with such severe food safety problems. Given the unique nature of the task FSIS was facing,
Section 727 was necessary to ensure the agen cy more thoroughly considered its ultimate
determination on the equivalence of China's poultry inspection systems. Further, because poultry was
the only product from China with a pending equivalence application, Section 727 was targeted to only
affect the equivalence of poultry products.
4.221 Third, China's poultry industry has suffered from food safety crises. For instance, in 2008,
melamine was found in animal feed that was cons umed by chickens in China and in eggs laid by
Chinese chickens. As a result of this, China's Health Secretary stated that China would begin testing
chicken meat for melamine. Similarly, in 2006, ducks and hens in China's Hebei and Zhejiang
Provinces were fed carcinogenic red dye so their red-yolk eggs would sell for a higher price. Poultry
from China was also smuggled into the United States in 2006. Further, China is a country where avian
influenza is known to occur. This is of particular concern due to China's problems with lax food safety
enforcement. Under APHIS regulations to prevent th e spread of avian influenza, any poultry exported
to the United States must be fully cooked or ot herwise processed sufficiently to kill the avian
influenza virus. Thus, China's poor enforcement tr ack record raised concerns about whether Chinese
authorities would enforce APHIS's requirements to protect against the potential spread of avian
influenza.
4.222 Finally, Section 727 is not th e only measure that the United States has taken to address the
risk posed by unsafe Chinese imports. In fact, FDA has issued import alerts against Chinese products
that it has determined are unsafe, including red mel on seeds, bean curd, dried fungus and mushrooms,

fresh garlic, honey, farm-raised fish, wheat gluten, rice protein products, shrimp, eel and milk
products. FDA refuses a much higher proportion of food from China than other countries. Further,
FDA in 2007 also negotiated a Memorandum of Understanding (MOU) with China to address its
concerns about the melamine crisis.
4.223 Despite the numerous problems FDA has had w ith Chinese imports, China continually refers
to its increasing exports of these products in an attempt to undermine Section 727's necessity. For
example, China rhetorically asks why the US Congress did not cut out funding to allow the import of
products regulated by FDA. Putting aside whether Ch ina believes it would be advisable to take this
action, the implication that the United States has not acted against other unsafe Chinese products is
simply untrue. The United States will and does take appropriate measures to protect human life and
health when it is necessary to do so. For exampl e, while Section 727 was necessary to achieve this
goal in the context of poultry, FDA's import alerts and an MOU were necessary in the context of other
Chinese food products.
4.224 If China's export statistics prove anything, it is that the United States is willing to trade with
China when it can be confident that the products China is exporting are safe. That said, the fact
remains that FDA's treatment of products under its jurisdiction is simply not relevant to whether
Section 727 was necessary to protect against the risk posed by poultry imports from China. The Panel
need not examine whether the United States could have or did take add itional steps to address
concerns about other Chinese food products. Th e only question before the Panel is whether
Section 727 was necessary to protect human and an imal life and health based on concerns about
Chinese poultry. As the United States has demonstrated, this was the case.
4.225 While the United States bears the burden to de monstrate that Section 727 was necessary in
accordance with Article XX(b), it does not have to "s how in the first instance, that there are no
reasonable alternatives to achieve its objective." Rather, the complaining party must put forward a
reasonably available WTO-consistent alternative. In the instant dispute, China has failed to present a
reasonably available alternative that achieves th e US level of protection, which requires that
processed and slaughtered poultry be safe. China's pr oposed alternative – "the application of normal
FSIS procedures" – is not an alternative at all. Ra ther, China's suggestion that the US adopt this so-
called "alternative" is simply another way of say ing that Section 727 was not necessary in the first
place. In this sense, China is making a circular argument.
4.226 Section 727 also complies with the Article XX( b) chapeau because it is not applied in a
manner that results in arbitrary or unjustifiable discrimination against China nor is it a disguised
restriction on trade. Because China does not appear to be challenging Section 727 as a disguised
restriction on trade, the United States will focus its discussion on the issue of discrimination.
4.227 Section 727 did not discriminate against China in an arbitrary or unjustifiable manner. At the
time the measure was enacted, Chinese poultry was the subject of an ongoing equivalence review. An
action taken in the context of an equivalence review of a particular country's food inspection system
will, by its very nature, make explicit reference to that country. The country-specific nature that is
inherent in an equivalence review does not, as Chin a seems to argue, automatically raise questions of
arbitrary or unjustifiable discrimination.
4.228 In addition, Section 727 did not deny China acce ss to the PPIA. The legal impact of an
appropriations restriction is limited to its explic it terms. Section 727 states that "None of the funds
made available in this Act may be used to establis h or implement a rule allowing poultry products to
be imported into the United States from ... China." S ection 727's legal effect is limited to prohibiting
the "establishment" or "implementation" of equi valence rules for Chinese poultry, nothing more. In
accordance with the action plan accompanying Section 727, FSIS was permitted to engage in
activities related to the equivalence rulemaking durin g fiscal year 2009. This includes actions that are

part of the PPIA. Therefore, China was not di scriminated against vis-a-vis other WTO Members
because it was not denied access to the PPIA.
4.229 China also argues that it was di scriminated against because the United States is not applying
the same ALOP to Chinese poultry as it is applyi ng to poultry from other WTO Members. China's
assertion is untrue. In general, the United States requ ires that poultry be safe. However, requiring the
same ALOP for all Members who are seeking to export poultry products to the United States does not
mean that all of these Members will have identical experiences with the equivalence process. Some
Members will take a long period of time to achieve equivalence, while others may never be found
equivalent. These different experiences by Memb ers seeking to export poultry products to the
United States make sense. In order to ensure that its ALOP is met, the United States may have to take
different steps in different circumstances in orde r to respond to the particular challenges that each
application presents.
4.230 China also compares itself with those WTO Members who have achieved equivalence for
their poultry inspection systems and are currently eligible to export poultry products to the
United States in an attempt to show discriminati on. However, Section 727 did not arbitrarily or
unjustifiably discriminate against China vis-a-vis th ese Members because the same conditions did not
prevail in any of them as prevailed in China when Section 727 was enacted.
4.231 From a broad standpoint, China is unlike any of the other Members whose poultry inspection
systems have been found equivalent with that of th e United States. The reason for this is that none of
these Members have experienced widespread food safety crises that have raised fundamental concerns
about the Member's ability to enforce its laws. In a ddition, none of these countries have dealt with an
issue like the melamine crisis, which the head of the World Health Organization dubbed "one of the
largest food safety events the agency has had to deal with in recent years." Thus, it is not accurate to
say that the same conditions that prevail in these Members prevailed in China at the time that China
was going through the equivalence process.
4.232 Another distinction between China and these Member s is that many of them had been trading
with the United States under an "equal to" regime fo r many years without significant incident before
their applications for equivalence were consider ed. Indeed, FSIS's equivale nce process only dates to
1995 and the adoption of the Uruguay Round Agreements Act. Before that time, Canada, France,
Great Britain, Israel and Hong Kong had already been exporting poultry products to the United States
under FSIS's old regime and all of these countries had a history of supplying safe products without
incident. Thus, at the time these WTO Members were subject to FSIS's equivalence process to
determine whether they could continue to import poultry products to the United States, FSIS already
had confidence in their systems for ensuring the safet y of the poultry that they produced. Therefore,
their situations were different from China's, wh ich had never before exported poultry to the
United States when it applied for equivalence in 2004.
4.233 Many of these Members also had a history of exporting meat products to the United States at
the time they applied for equivalence for poultry. For example, Chile was found eligible to export
meat products to the United States in 2005 before it was found eligible to export poultry in 2007.
Thus, at the time FSIS was examining Chile's poultr y inspection system, it already had familiarity
with Chile's inspection controls and had confidence that Chile could be relied upon to enforce its law
to ensure that the poultry it exported to the Unite d States was produced in conditions that met the US
level of sanitary protection. Similarly, both Austra lia and New Zealand had exported meat products at
the time they were found equivalent for ratites.
4.234 Among the equivalent Members that China compares itself with, it singles out Mexico as a
Member who has had problems with food safety enfo rcement. While it is true that FSIS found some
deficiencies during audits of Mexico's meat and pr ocessed poultry system, it is not unusual to find at

least some deficiencies during audits of food regu latory systems. In genera l, when deficiencies are
found, the Member is advised of the deficiencies and then initiates appropriate corrective actions.
During the next audit, FSIS verifies the effectivene ss of the corrective actions taken by the country.
This is the process that was followed after the Me xico audits. Because Mexico took immediate and
appropriate actions, FSIS continues to have confidence in the ability of Mexico's meat and poultry
inspection system to produce products for export to the United States that are wholesome and not
adulterated. Further, the United States is also not aware of such widespread crises in Mexico as have
occurred in China and is not aware of any broad systemic problems that raise significant questions
about Mexico's ability to enforce its own laws to th e extent that they do with China. Finally, it is
notable that Mexico is still not equivalent for slaughtered poultry.
4.235 China was also not discriminated against vis-a-vis other countries that China alleges have
food safety enforcement problems. For example, Ch ina notes that "in Bangladesh, reports indicated
that two children died and more than forty people were sickened with viral encephalitis contracted
from eating poultry." The reason this comparison do es not prove discrimination is simple – unlike
China, Bangladesh has not filed an equivalence app lication for poultry and is not actively seeking to
export to the United States. As a result, even if Bangladesh's food safety problems, and in particular
its problems with enforcement, were established a nd shown to be of the same magnitude as China's,
China is not being discriminated against vis-a-vis Bangladesh.
4.236 Finally, China was not discriminated against vis-a-vis all 151 other WTO Members. First of
all, as the United States has explained, China con tinued to have access to the PPIA. Second, only a
small subset of these 151 Members had submitted an e quivalence application and shown an interest in
exporting poultry to the United States. Further, among the 28 Members seeking to export to the
United States, none of them was as far along in th e process as China when Section 727 was enacted.
Finally, among the majority of those Members who have submitted equiva lence applications for
poultry, and certainly among those whose have ma de significance progress, the United States is not
aware of problems of the same magnitude as exist in China. China even c ites one of these Members,
Korea, as an example of a Member "known for requiring strict levels of sanitary protection." This
fact alone would seem to distinguish Korea from China.
4.237 Thus, although China may compare itself to numerous other Members and claim that it is
being discriminated against when compared with these Members, this is simply not the case.
Section 727 was not applied against China in a manne r that resulted in arbitrary or unjustifiable
discrimination. To the contrary, the measure was ju stified by legitimate concerns that existed with
regard to China, and the measure did not arbitrar ily or unjustifiably discriminate against China vis-a-
vis any other WTO Member.
3. China has failed to show that Section 727 results in a breach of any obligation under the
SPS Agreement
4.238 In it oral statement, China for the first time alleged that Section 727 was enacted for food
safety purposes and is subject to several different obligations of the SPS Agreement. As the
complaining party, China has the burden of proving that Section 727 meets the definition of an
SPS measure and of explaining how each SPS provision cited applies to the measure. But China has
not met its burden, and China mainly relies on inapposite provisions of the SPS Agreement.
4.239 In particular, the central provisions of the SPS Agreement on equivalence processes are
contained in Article 4, Equivalence. Article 4 recognizes that Members may adopt equivalence-based
regimes to ensure the achievement of their ALOP, and provides certain obligations with respect to
equivalence-based systems. Equivalence systems are premised on the differential treatment of
products from different WTO Members. That is, under Article 4.1, importing Members need only
accept the equivalence of SPS measures in exporting countries if the exporting Member objectively

demonstrates that the measures meet the importing Member's appropriate level of protection.
Likewise, under Article 4.2, recognition agreements need not be reached with all Members. The
existence of SPS Article 4 helps show that China' s basic approach is flawed. The question is not
whether China is treated differently than other Me mbers – indeed, the course of proceedings and the
outcome of each equivalence determination n ecessarily will be based on the specific facts and
circumstances of the exporting Member's SPS measures.
4.240 To the extent that China wish ed to invoke disciplines under the SPS Agreement, China had
the option of claiming a breach of the fundamental equivalence provision under Article 4. China,
however, chose not to cite Article 4. Instead, China cited other SPS provisions that are unrelated to
equivalence determinations, or th at, at most, do not add anything to the issues under Article XX that
have been briefed by the parties.
4.241 Articles 2.2 and 5.1. China has not shown that Article 2.2 and 5.1 of the SPS Agreement apply
to a measure – such as 727 – specifying the pr ocess to be used in the course of an ongoing
equivalence determination. China's logic is vastly over-simplistic, ignores the context provided by the
language of other provisions of the SPS Agreement, and (if applied) would result in absurd and often
circular interpretations. As the panel discussed at length in the EC –Approval and Marketing of
Biotech Products dispute, the SPS Agreement cannot be applied in such a "mechanistic fashion".
4.242 Consider, for example, a procedure or requirement adopted in the course of conducting a risk
assessment being undertaken in the application of a food safety measure. By the type of mechanistic
reading adopted by China, the risk assessment pr ocedure would itself be an SPS measure, and would
need to be based on scientific ev idence and a risk assessment under Articles 2.2. and 5.1. And on it
would go: any secondary procedure adopted to find a scientific basis for th e initial risk assessment
procedure would itself require a scientific basis. This absurd result cannot be the proper way to
interpret the broad scope of Articles 2.2/5.1 ("any SPS measure"), combined with the broad definition
of "SPS measure" in Annex A.
4.243 In EC – Approval and Marketing of Biotech Products , the panel addressed this interpretive
issue by examining the context of other SPS Articl es, and finding that Article 5.1 was intended to
require a scientific basis not for any measure th at might fall under Annex A, but only for measures
"applied for achieving the relevant Member's ap propriate level of sanitary or phytosanitary
protection". Applying this type of reasoning to the present dispute, it is the PPIA itself – not
Section 727 – which achieves the US ALOP by requi ring equivalence of the regulatory regimes of
exporting Members. Section 727 does not itself provide the level of protection; rather, Section 727 is
a procedural requirement adopted in the course of an ongoing equivalency review. As such, the
SPS Agreement cannot be mechanistically interpreted – as China suggests – as requiring that this
measure be based on sufficient scientific evidence or a risk assessment.
4.244 Moreover, the process of determining equivale nce for an exporting Member's SPS measures
is not the same as the process of performing a ri sk assessment of products imported from another
Member. The determination that poultry poses a risk of being unsafe, and therefore that measures are
needed to protect against that risk, pre-dates Secti on 727 and applies regardless of origin. Indeed, it is
not contested in this dispute that imported poultry can pose a risk of being unsafe. Accordingly, the
issue is not whether there is a basis for measures to ensure that poultry is safe. The only real issue is
whether the proper procedure was being followed to make the determination as to whether China's
measures are equivalent to US measures for poultry. Th is is not an issue for Article 2.2 or 5.1, but
rather for Article 4.
4.245 Article 2.3
. It is uncertain whether Article 2.3 is intended to apply to every procedural
requirement adopted in the course of operating SPS m easures, or whether – like Articles 2.2 and 5.1 –
Article 2.3 should be applied to substantiv e SPS measures intended to achieve the importing

Member's ALOP. Similarly, it is unclear whether, in the context of equivalency-based regimes,
Article 2.3 was intended to apply in addition to th e main SPS equivalence provision (Article 4.1). As
noted, by their very nature, equivalence-based regi mes must discriminate between different Members.
Article 4.1 provides a specific type of claim that exporting Members may bring: namely, that they
have objectively demonstrated equivalence to the importing Member's SPS measures. China's
submissions have addressed none of these issues.
4.246 In the context of this dispute, the Panel has no need to reach any issue under Article 2.3. The
language of Article 2.3 mirrors the language of the Article XX chapeau, and the United States has
already explained why the US measure meets the chap eau requirements. Similarly, China's Article 2.3
arguments are essentially the same as China's positi on regarding the application of the Article XX
chapeau. Thus, in the context of this particular dispute, the Panel would have no need to address
Article 2.3 because the very same issues have been examined under the Article XX chapeau.
4.247 Article 5.5
. China's argument as to why Section 727 is inconsistent with obligations under
Article 5.5 of the SPS Agreement is without merit – it fundamentally misconstrues the SPS Agreement
and the US measure at issue. China has not show n, and cannot show, that Section 727 resulted in
distinctions in levels of protecti on in different situations. The PPIA establishes the level of protection
for poultry, not Section 727: the basic question evaluated under the PPIA is whether each exporting
Member's poultry safety system will result in th e same level of protection as the US system. And
indeed, this is the fundamental description of "equivalence" provided under Article 4 of the
SPS Agreement.
4.248 China's Article 5.5 argument also confuses th e concepts of the ALOP and the measures
applied to achieve the ALOP. A disagreement about whether, for example, a measure results in
arbitrary discrimination under Article 2.3 or the Article XX chapeau does not automatically create a
claim under Article 5.5 of the SPS Agreement. In short, under China's approach, any difference in the
measures applied by a Member to various produc ts would by definition mean that there is a
distinction in the ALOP sought to be achieved by that Member. China's approach is incorrect – the
SPS Agreement is clear that these two concepts are separate and distinct.
4.249 Article 5.6. The response of the United States to China' s Article 5.6 claim is similar to that
with respect to China's SPS Article 2.3 claim: Ch ina has not shown that Article 5.6 applies to a
procedural requirement adopted in the context of an equivalency determina tion. Article 5.6 does not
appear to apply to every procedural requirement adopted in the course of operating SPS measures.
Instead, it appears to apply to substantive meas ures "establishing or maintaining" the importing
Member's ALOP. In addition, it is difficult to see how the language of Article 5.6 applies in the
context of equivalence determinations. In an e quivalence regime, it is the exporting Member that
chooses the SPS measures intended to achieve a level of protection, and the question for the importing
Member is whether those measures achieve the result of equivalence. In this context, it is hard to
apply Article 5.6, which turns on whethe r SPS measures chosen by the importing Member are more
trade restrictive than required.
4.250 Article 8 and Annex C . China's arguments regarding allege d "undue delay" under Article 8
and Annex C(1)(a) of the SPS Agreement fail to show that Section 727 breaches those provisions.
Article 8 and Annex C of the SPS Agreement apply to "control, inspecti on, and approval procedures,"
which do not include equivalence de terminations described under SPS Article 4. In addition, China's
Annex C "undue delay" claim adds very little, if anything, to the substance of China's arguments.
Rather, China's Annex C argument is concluso ry, merely stating that "China has already
demonstrated, in connection with its other claims", that Section 727 is lacking in "justification" and
results in "discrimination". But to the contrary , as the United States has shown, Section 727 falls
squarely within the Article XX(b) exception and is both necessary under the meaning of
Article XX(b), and not discriminatory under the meaning of the chapeau.

H. EXECUTIVE SUMMARY OF THE OPENING ORAL STATEMENT OF CHINA AT THE SECOND
SUBSTANTIVE MEETING OF THE PANEL
1. Section 727 is inconsistent with the SPS Agreement
4.251 Section 727 and its predecessor violate multiple provisions of the SPS Agreement. The US
response to China's SPS claims generally does not address the substance of China's SPS claims. The
United States has never stated that Section 727 is not an SPS measure and it acknowledges that the
purpose of its "law", Section 727, is the protec tion of the life and health of US consumers from
potentially contaminated foods.
(a) Section 727 is not an intermediate step in FSIS equivalence procedures
4.252 Section 727 is not an "intermediate" step in an "equivalence review". The CFR and FSIS
documents describe the equivalence process in de tail and neither refers to Congressional action
blocking the application of procedures to a count ry for a potentially unlimited period of time. The
PPIA is a separate law from Section 727. Thus, legal questions such as whether the SPS Agreement
applies to every incremental step, or "secondary procedure", taken to apply an SPS measure – are not
before this Panel.
4.253 The US "intermediate" step argument appears to be based on EC – Approval and Marketing
of Biotech Products – the reasoning from which is inapplicable to Section 727 for at least five key
reasons. First, this Panel is not faced with a situation where the normal process for product approval
has been delayed for all producers – only China. Second, unlike the measure in EC – Approval and
Marketing of Biotech Products , Section 727 is clearly a "law". Third, as 727 applies a "less than zero
tolerance" ALOP to poultry from China, it clear ly implies a particular level of protection. Fourth,
China had already been granted equivalence by FSIS for processed poultry, and thus the key
"pre-marketing approval requirement" had been satisfied and 727 is clearly the source of the ban.
Fifth, 727 set out a "particular mode or course of action" and, with the JES, established its own
"procedures".
(b) 727 is subject to Articles 2.2, 2.3, 5.1, 5.2, 5.5, 5.6, and 8 of the SPS Agreement
4.254 The United States claims that equivalence procedures are only subject to a limited subset of
obligations in the SPS Agreement, primarily Article 4. On this basis, the United States claims that
Articles 2.2, 2.3, 5.1, 5.6, a nd 8 do not apply to Section 727; according to the United States, only
Article 4 should apply to Section 727.
4.255 Section 727 cannot be considered part of the FSIS equivalence procedures. Even assuming it
was in arguendo, and if the US Article 4 argument were ac cepted, it would mean that even the basic
rights and obligations in Article 2 of the SPS Agreement would not apply to equivalence measures.
This would create an enormous gap in the SPS disci plines. SPS measures can take a variety of forms,
and equivalence measures are not singled out for special treatment under Annex A(1). Nothing in
Article 4 explicitly exempts equivalence-related SPS measures from any of the other disciplines in the
Agreement. And where the drafters intended to establish an exception to the disciplines of the
SPS Agreement, such exceptions are made explicit in the text, e.g., Articles 2.2 and 3.1.
4.256 The US argument would transform Article 4 into a safe haven allowing Members to apply
equivalence-related SPS measures in, for example, a discriminatory manner, or without scientific
justification. But Members cannot av oid fundamental obligations in the SPS Agreement (such as
Article 2) by inserting the word "equivalence" in an SPS measure. Furthermore, China's challenge is
not to the PPIA or the FSIS equivalence proce dures. China's challenge is to Section 727 , a measure
wholly distinct from the US equivalence procedures, which prevents importation of Chinese poultry.

(c) China has sustained its burden of proving a violation of Article 5.5 of the SPS Agreement
4.257 Unlike China's other claims, the United States app ears to accept that Section 727 is subject to
Article 5.5 of the SPS Agreement, and therefore addresses the substance of that claim. These US
arguments, however, fail to rebut China's prima facie case.
(i) The two situations identified by China are comparable under Article 5.5 of the
SPS Agreement
4.258 The United States asserts that China has not shown that Section 727 resulted in distinctions in
levels of protection in different but comparable situations, and argues that "it is the PPIA that
establishes the level of protection for imported poultr y", not 727. However, 727 is legally distinct
from the PPIA, and it reflects the strict ALOP applicable to only China.
4.259 Different situations may be compared if "they present some common element or elements
sufficient to render them comparable". In EC – Hormones , the Appellate Body found that situations
involving the same substance and the same health risk were "comparable". In Australia – Salmon, the
Appellate Body found that in comparing different s ituations "it is sufficient for these situations to
have in common a risk of entry, establishment or spread of one disease
 of concern". This confirms
that the two sets of situations described by Chin a are comparable under Article 5.5, based on common
potential contaminants. These situations are: first, the importation of poultry versus non-poultry
products from China; and, second, the importation of Chinese poultry versus poultry from other WTO
Members.
4.260 First, in relation to poultry products, the United States has mentioned pathogenic bacteria
such as Salmonella and Campylobacter as potential contaminants. It has al so discussed avian flu. It is
undisputed that these contaminants are not unique to China. Based on the shared risk of their
transmission, these situations are "comparable" under Article 5.5.
4.261 Second, Chinese poultry and Chinese non-poultry foods also share one or more potential
contaminants. Per the logic of the JES and US arguments, any food product from a country
experiencing an alleged food safety crisis coul d be contaminated, including with the same
contaminant. For instance, Salmonella, which the United States has cited in connection with poultry,
can also affect other food products. The shared risk of transmission of the same contaminant via the
importation of different food products from Chin a thus renders the second set of situations
"comparable" under Article 5.5.
4.262 China is not arguing that any time a different measure is imposed in respect of different but
comparable situations, there is necessarily a violati on of Article 5.5. Instead, Article 5.5 prohibits the
application of arbitrary or unjustifiable distinctions in ALOP in different but comparable situations, if
such distinctions results in discrimination. China has demonstrated that in this case, the distinction in
ALOPs is arbitrary and unjustifiable.
(ii) The United States applies distinct ALOPs to comparable situations
4.263 The United States asserts that the ALOP fo r all imported poultry, including poultry from
China, is that reflected in the PPIA. But this facile assertion ignores the fact that normal FSIS
procedures were not, and could not be, applied to China for two years.
4.264 Because the United States has not specified th e ALOP for Section 727, China has deduced
that Section 727 reflects a level of sanitary protection of lower than zero risk tolerance. Even if
Chinese poultry was the safest poultry in the worl d Section 727 would still prevent its importation
into the US. In contrast, all other WTO Members have the possibility, under normal FSIS procedures,

of obtaining equivalence and exporting to the United States. Section 727 (and 733) thus resulted in a
much stricter ALOP than that normally consider ed appropriate for imported poultry under the PPIA:
that imported poultry must be "safe".
4.265 The US ALOP has also not been specified in respect to non-po ultry food products. China has
deduced it based on the SPS measure applied to th em: the FDA import procedures. FDA procedures
continued to be funded and ac tive while 727 and 733 were in e ffect. During this period, over
$5 billion of non-poultry food products were imported from China. These continued imports
necessarily reflect a less strict ALOP than 727's less than zero tolerance.
(d) In addition to Article 5.5, Section 727 is inconsistent with Articles 2.2, 2.3, 5.1, 5.2, 5.6, and 8
of the SPS Agreement
4.266 The US asserted that Articles 2.2, 2.3, 5.1, 5.6, and 8 do not apply to 727 because it is an
"intermediate measure", and offers no substantiv e defences to China's claims under these provisions.
China refers the Panel to its earlier arguments and addresses just two issues here:
4.267 First, China confirms that it has brought a separate claim under Article 5.2. Second,
Section 727 violates Article 8 because it resulted in an unjustifiable delay of nearly two years in the
appraisal of China's compliance with the US requirements for imported poultry.
4.268 The United States incorrectly claims that Artic le 8 and Annex C do not apply to Section 727,
based on the argument that equivalence procedures ar e only subject to Article 4. Apart from the fact
that Section 727 is not part of any US equivalence procedures, Annex C does indeed apply to
Section 727. China agrees with the US that the lis t of measures covered by Article 8 is "inclusive
rather than exhaustive".
(e) SPS violations cannot be justified on the basis of GATT Article XX(b)
4.269 The SPS Agreement provides specific "obligations which are not already imposed by GATT",
and which are "additional" to the requirements of Article XX of GATT. There is no presumption of
consistency with the SPS Agreement for measures that are found to be consistent with GATT
Article XX(b). Therefore, even if the US demonstrated that Section 727 fell within Article XX(b), this
would not be sufficient to defend against China's SPS claims.
(i) Violations of GATT 1994 and of the Agreemen t on Agriculture cannot be justified under
Article XX(b)
(f) Section 727 was not "necessary"
4.270 A "necessary" measure is one that is close to "indispensable" for the achievement of an
objective. Section 727 does not meet that test. First, there were no imminent poultry imports from
China. Second, Section 727 actually undermines the protection of US consumers by denying funding
to the very agency able to examine the condition of China's poultry regime. Third, 727 and 733 were
not enacted as part of a general program to enhance food safety.
(i) Section 727 did not materially contribute to its objective
4.271 The Appellate Body has explained "when a measu re produces restrictive effects", it cannot be
considered necessary unless its contribution to the achie vement of its stated objective is "material".
Sections 727 and 733 did not materi ally contribute to protecting human life and health from
"contaminated foods". To the contrary, they prevented FSIS from conducting science-based analysis
that would have uncovered any risk of contamination.

(ii) FSIS procedures are a reasonably available alternative to Section 727
4.272 The conclusion that 727 and 733 were not "necessary" is confirmed by the existence of an
alternative measure: the normal FSIS equivalence pro cedures. They were reasonably available, would
achieve the same objective as Section 727, and would do so in a far less trade-restrictive manner.
Further, as FSIS experts were aware of press reports of alleged food safety crises in China, they would
have paid close attention to whether such a lleged crises had any impact on poultry production.
Logically, this makes it more, rather than less, likely that FSIS would have identified any problems,
weighing against the need for Congress to suspend FSIS procedures.
4.273 The US preferred level of sanitary protecti on for imported poultry is set by the PPIA as
follows: imported poultry must be "safe". The FSIS procedures are the "implementing regulations" for
the PPIA. Therefore, by definition, they meet the level of sanitary protection imposed by that law. The
new US post hoc "policy objective" for Section 727 is different: to ensure that FSIS "fully
consider[ed] China's systemic food problems". Bu t Section 727 severely restricted FSIS' activities,
cutting off all funding for the evaluation of China's poultry inspection system FSIS would have
otherwise conducted. Thus, the US assertion that sta ndard FSIS procedures are "not an alternative at
all" is clearly erroneous.
(g) Section 727 is inconsistent with the requirements of the Article XX chapeau
4.274 The United States has also failed to establish that Section 727 meets the requirements of the
chapeau to Article XX. China has shown that Sec tion 727 is applied in a manner that constitutes
arbitrary and unjustifiable discrimination between China and other WTO Members where the same
conditions prevail. China notes its earlier submi ssions, where the evid ence demonstrates that: First,
during the pendency of Sections 727 and 733, FSIS procedures were available to all WTO Members
except China despite the fact that it was one of just 10 equivalent WTO Members; Second, China
exported to Japan, Korea and the EU while 727 and 733 were in effect; Third, there is no evidence
that any alleged general food safety problems affected China's poultry safety regime; Fourth, the
United States imported approximately $5 Billion of non-poultry food annually; Fifth, unlike 727,
FDA always worked within its procedures; Sixth, during 727, FSIS used its normal procedures to
address "systemic" and "deeply rooted" problems in other WTO Members; and finally, during
Section 727, over 80 other Avian Influenza-affected WTO Members had access to FSIS procedures,
and one such Member even exported over a million pounds of poultry to the US. Thus, Section 727
arbitrarily and unjustifiably discriminated against Chinese poultry.
I.
CLOSING STATEMENT OF CHINA AT THE SECOND SUBSTANTIVE MEETING OF THE PANEL
4.275 Mr Chairman, distinguished Members of the Pa nel, this has always been a dispute about
arbitrary discrimination. For two years, poultry from China alone was subject to an import ban. The
ban was unrelated to the actual safety of Chinese poultry or the quality of its poultry inspection
system. It was created and maintained without any science-based justification. As confirmed by the
text of Section 727, its JES
142, and the FSIS Action Plan 143, China did not have access to FSIS
equivalence procedures during this time. These rule -making procedures are applied for the purpose of
denying or granting approval to export poultry to the United States. Section 727 eliminated any
possibility of such approval, and did so for China alone.

142 Exhibit CN-33, p. 82 (directing USDA only to "submit a plan of action" and to post it on the
Internet "upon its completion", but not to take any other action).
143 Exhibit US-43 (compare description of steps th at FSIS "will" take to prepare "report on Chinese
Food Safety Revisions" with steps FSIS "would" take with respect to the "Plan of Action").

4.276 The arbitrary nature of this discrimination is unde rscored by the undisputed fact that, even if
every scientist in the world had independently verified that Chinese poultry was 100% risk-free,
China would still not have been able to export to the United States while Section 727 was in effect.
4.277 Despite the United States' suggestion to the contrary 144, if an Executive Branch official had
issued an arbitrary directive with the same impact as Section 727, and based on the same limited and
non-science-based information relied upon by Congress, the measure would certainly be subject to
challenge on the same grounds as Section 727. It makes no difference who precisely in the US.
Government adopts a particular measure. What matt ers is whether that m easure complies with WTO
disciplines.
4.278 The United States stated yesterday that Section 727 should not be deemed a "ban" on Chinese
poultry. But a "ban" is a "formal and authoritative prohibition; a prohibitory command or edict". 145
There is no dispute that Sections 733 and 727 are "formal and authoritative" measures that
"prohibited" the import of Chinese poultry – regard less of anything that FSIS or China did during
their pendency.
4.279 The United States also emphasised yesterday the "temporary nature" of Section 727, and that
it was in effect until the "set period" expired. 146 Of course, whether a ban exists for two years or ten
years does not change the fact that it is a ban. Mo reover, the United States fails to acknowledge that
there was no reason for China or FSIS to believe that the ban was, in fact, temporary. That is because
when the first so-called "temporary" ban – Sec tion 733 – was supposed to "expire" in September
2008, after its so-called "set period", it was ex tended for another 6 months by the Continuing
Appropriations Resolution of 2009. Then, when that Resolution was replaced by Section 727 in
March 2009, it was supposed to "expire" in September 2009. Again, it was extended by a continuing
appropriations resolution that maintained Section 727 until the passage of yet another China-specific
measure, Section 743.147 This certainly was not a ban effective over a "set period" of time.
4.280 China recalls that it is not bringing this case to force the United States to accept its poultry.
China is also not claiming that its food safety insp ection system is perfect; no country's is. China is
simply seeking the opportunity, which has remained available to every WTO Member except China,
to participate in the normal FSIS equivalence process. This is a process that can provide China with
the ability to import poultry into the United States, rather than a process that can do nothing more than
provide the US Congress with a report and "plan of action" but nothing for China.
4.281 In view of the overwhelming and un-refuted evid ence of the arbitrary and unjustifiable nature
of Section 727, China requests that the Panel fi nd that Section 727 is inconsistent with the
United States' obligations under the GATT 1994, the Agreement on Agriculture , and the
SPS Agreement. Although Section 727 has now expired, it is clear from its predecessors and
successors that China's ability to access FSIS procedures – unlike any other Member – is dependent
on provisions in annual appropria tions measures of the US Congress. Consequently, China requests
that the Panel issue a recommendation that the United States not revert to language similar to that in
Section 727 in its future legislation.
4.282 In closing, I would like to thank the Panel and the Secretariat for their efforts and attention,
and we look forward to answering your further questions.

144 United States' opening oral statement at the second substantive meeting of the Panel, para. 9.
145 The New Shorter Oxford English Dictionary (4th ed. 1993), p. 175.
146 United States' opening oral statement at the second substantive meeting of the Panel, para. 15.
147 See China's first written submission, para. 26.

J. E
XECUTIVE SUMMARY OF THE ORAL STATEMENT BY THE UNITED STATES AT THE SECOND
SUBSTANTIVE MEETING OF THE PANEL
4.283 China's second submission makes six arguments in an effort to undermine Section 727's
necessity and to demonstrate that the measure is app lied in a manner that would constitute arbitrary or
unjustifiable discrimination against China. China' s arguments often miss the point and frequently
mis-characterize the US position. China also overlooks the fact that Section 727 was an act of
congressional oversight taken in the context of an ongoing equivalence proceeding.
4.284 China's first substantive Article XX(b) argumen t is that Section 727 denied China access to
the PPIA. However, this is not the question presented. There is nothing in the GATT provisions China
cites requiring a Member to utilize a particular set of procedures when evaluating whether another
Member's system ensures the safety of its exported food. In fact, there is nothing that speaks to
providing an exporting Member with "access" to any procedures.
4.285 Rather, the question presented is whether food exported from a Member poses risks to life or
health such that it is necessary for the importing Member to take steps to ensure that the exported food
will be safe. That is what the United States did here. The United States was faced with a situation
where China had massive food safety problems and had overhauled its food safety system while a
process was underway to ascertain and ensure the safety of exports of Chinese poultry. It was in this
context that Congress took the steps it deemed nece ssary to ensure the safety of the US food supply
with respect to Chinese poultry exports.
4.286 There are many legitimate steps a Member coul d take to ensure food safety within this
context. A Member could decide that it could not complete an equivalence process until after it sought
additional information, additiona l audits, further explanation, or additional scientific studies.
Section 727, which provided that the United States could not complete its equivalence process for a
short time while additional work was underway, was also a legitimate step.
4.287 Thus, China's argument is simply incorrect because it overlooks that Section 727 was a
normal act of congressional oversight taken in th e context of an ongoing equivalence proceeding.
Congressional oversight is commonplace in the US syst em of governance. In this instance, Congress
enacted Section 727 to ensure that FSIS protected life and health by fully considering China's
systemic food safety enforcement problems and new food safety law before establishing or
implementing equivalence rules for Chinese poultry. Congress's action was not separate and apart
from the US system to ensure the safety of imported food, but is a part of that system. Had an
executive branch official taken action to ensure that China's enforcement problems were fully
considered, we doubt that we would even be before this Panel today.
4.288 Putting this aside, the United St ates agrees with China that Section 727 did not allow FSIS to
undertake every possible aspect of the equivalence procedure. In fact, for a short time period, FSIS
could not complete two specific tasks. FSIS could not use funding to "establish" a rule related to
Chinese slaughtered poultry and it could not use fu nding to "implement" a rule related to Chinese
processed poultry. However, Section 727's impact went no further and did not prevent FSIS from
conducting activities related to China's equivalence application, including specific PPIA activities. As
a result, China was not denied access to the PPIA.
4.289 China also suggests that whether FSIS could take related activities is "ultimately irrelevant".
However, FSIS's ability to conduct this work dur ing Section 727's applicability is far from
meaningless. Indeed, FSIS's ability to engage in re lated work underscores Section 727's contribution
to its objective and its limited trade restrictiveness. In this context, China's submission incorrectly
asserts that FSIS's equivalence-related actions durin g 2009 were "minimal". To the contrary, FSIS did
considerable work related to China's equivalence application including the development of an action

plan, steps under the action plan, and steps to improve its equivalence process. FSIS could have done
more had China been responsive to its request for information about its food safety overhaul.
4.290 China concedes it did not respond to the US request of 12 May 2009, but relies on
notifications made much later to the SPS Committee . In addition, the regulations were not effective
until 1 December 2009. It was reasonable for the Unite d States to want to know what changes China
was making to its system, how they would operate in the real world, and how they would affect
China's poultry inspection system. Yet China did not find it important to respond.
4.291 China's second argument is that Section 727 was not necessary to protect life and health
because imports of Chinese poultry were not imminent when Section 727 was enacted. China quotes a
US response to questions noting that "China was not in a position to immediately export poultry
products to the United States at the time the funding restriction was enacted".
4.292 China misses the point. By stating that China would not have been able immediately to export
poultry in Section 727's absence, the United St ates was illustrating the measure's limited
restrictiveness by contrasting it with other measures that would have impeded products upon
enactment, such as an import ban. Further, the n eed for FSIS to conduct certain procedures before
China could export poultry does not undermine Secti on 727's necessity. Implementing or establishing
equivalence rules is one, significant step in the process by which China could ship poultry to the
United States. It was important that this step only be taken when there was reason to be confident that
poultry exports would be safe. Additionally, the equiva lence review process that China refers to could
have been completed within the period set by the meas ure, and even if it could not, this is irrelevant.
After all, the need for protection begins with the first shipment of Chinese poultry and continued into
the future to protect against every shipment of Chinese poultry that could enter the United States and
harm consumers if FSIS were to "establish" or "implement" equivalence rules without fully
considering China's systemic food safety problems.
4.293 China also attempts to use the fact that FSI S theoretically could ha ve considered China's
systemic food safety problems in Section 727's absen ce as evidence against its necessity. However, it
is typical for a Member to have different options to ensure food safety. The mere existence of these
options does not mean that any given option is not "necessary". Chinese poultry exports posed a risk,
and it was necessary to be sure that these exports were safe to protect life or health. The fact that there
might be another way to do so does not take away from Section 727's necessity.
4.294 China also ignores that FSIS had never before made an equivalen ce determination for a
Member with such widespread food safety crises and systemic problems like China. As a result, there
were strong concerns that FSIS did not and would not fully account for these novel risks.
Accordingly, Section 727 was necessary to focus FSI S's attention on these problems to ensure they
were fully considered before equivalence rules we re established or implemented to ensure life and
health was protected.
4.295 China's third argument relates to the diffe rences between FSIS and FDA procedures for
ensuring the safety of imported food. China argues that "the United States cannot justify having
blocked application of only FSIS procedures by sugg esting that equivalency systems involve greater
risk than other types of food import procedures".
4.296 China ignores the significant measures taken to protect life and health from the risk posed by
FDA-regulated Chinese products, including import alerts and efforts to deal with China's serious, and
unfortunately, still ongoing, melamine crisis. The fact that these measures were necessary to protect
life and health for FDA-regulated products does not undermine the fact that Section 727 was
necessary to protect from the risk posed by Chinese poultry.

4.297 Section 727's necessity was in large part due to concerns about China's food safety
enforcement track record. China's food safety en forcement problems raise particularly serious
concerns under an equivalence regime because FSIS heavily relies on the exporting country to enforce
its laws to ensure that the US level of sanita ry protection is being met. While FSIS does conduct
audits and re-inspections, these measures are not sufficient to protect life and health. FSIS's
re-inspections simply monitor compliance with ce rtification and labeling requirements. It is the
equivalence determination itself that is FSIS's primary tool to protect life and health.
4.298 China's fourth substantive argument involves its widespread problems with avian influenza
(AI). China's argues that since it is not the only country that has suffered from the highly pathogenic
strain of the virus, its AI problems do not support Section 727's necessity.
4.299 China's argument overlooks key facts related to AI. China points out that more than
80 countries have been affected by highly pathogenic avian influenza, but China fails to mention that
it is one of only 15 of these countries that the OIE has classified as having current unresolved disease
events, infection present, or demonstrated clinical disease. China also argues that Section 727 was not
justified by AI concerns because cooked pou ltry cannot transmit the disease. However, under
APHIS's requirements to protect against AI, Chin a would have to certify that its poultry is fully
cooked or otherwise processed sufficiently. APHI S would be relying on China to make this
certification and enforce the related requirements. In this context, China's problems with the
enforcement of its laws raise concerns about wh ether China's poultry inspection system could be
relied upon to protect against the potential spread of AI.
4.300 China's fifth argument involves the various poultry-related crises that have been cited by the
United States in this dispute. According to China, these crises are not relevant to the risk posed by
Chinese poultry. China also points out that other countries, such as the EU member States, have
accepted poultry imports from China in recent years.
4.301 Again, China's arguments avoid or overlook key facts. China argues that its chicken feed
crises are not relevant to the safety of Chinese poultry because contaminated chicken feed does not
increase the risk of consuming the related poultry meat . However, China fails to mention that China's
Health Secretary responded to the chicken feed cr isis by announcing that all Chinese chicken meat
would be tested for melamine to ensure that it wa s safe to eat. Similarly, China notes that the EU
currently accepts Chinese poultry, but avoids the fact that the EU banned Chinese poultry for six years
from 2002 to 2008. Perhaps China does not raise th is issue because the EU's ban on Chinese poultry
was largely based on concerns about AI in China, an issue China argues is not relevant to the safety of
Chinese poultry.
4.302 China's sixth argument is an attempt to demonstrate that Section 727 is applied such that it
discriminates against China in an arbitrary or unju stifiable manner. In short, China argues that the
same conditions prevail in China and in other countries not within Section 727's scope.
4.303 China's discrimination arguments are not persuasi ve. By its very nature, any action taken in
the context of an equivalence review of a count ry's food inspection system may make explicit
reference to that country alone. This country-sp ecific nature of an equivalence review does not
automatically raise questions of arbitrary or unju stifiable discrimination. China was the only country
whose poultry product exports raised such a high leve l of concern for food safety and that was subject
to an imminent equivalence determination at the ti me Section 727 was enacted. Therefore, it simply
would not have made sense to apply this measure to other countries. Further, Section 727's treatment
of China was not arbitrary or unjustifiable due to well-established concerns about China's food safety
enforcement problems and its food safety crises.

4.304 In determining whether Section 727 was applied against China in an arbitrary or unjustifiable
manner, China argues that it should be compared w ith all other Members. However, a comparison of
this nature does not make sense. After all, most Members have never attempted to export poultry to
the United States and there would never be a reason to enact a measure like Section 727 with regard to
their products. Instead, the proper comparison fo r Article XX purposes is between China and those
Members whose poultry inspection systems had already been found equivalent or those Members who
had progressed far enough along in the equivalence pro cess such that a determination was imminent.
It is these Members who were similarly situated as China in that they had an expressed desire to
export poultry to the United States, acted on that desi re, and were in a position to be able to export in
the near future.
4.305 Among these Members, China's application sta nds out for its unique concerns. No other
Member who has been found equivalent or who is n earing an equivalence determination has had such
severe enforcement problems or massive food safety cri ses. Another distinction is that many of these
Members had been exporting poultry or meat to th e United States for many years without incident
before they were found equivalent under FSIS's curr ent equivalence regime. Thus, at the time these
WTO Members were subject to FSIS's equivalence process for poultry, FSIS already had a familiarity
with them and confidence in their inspection systems for ensuring the safety of the products that they
exported to the United States. By contrast, China ha d never before exported poultry or meat to the
United States when it applied for equivalence in 2004.
4.306 Among these Members, China spends a lot of ti me comparing itself with Mexico. We agree
that FSIS's audit reports on Mexico are troubling. In fact, the 2008 audit that China cites led FSIS to
suspend Mexico from being able to export poultr y products to the United States. However, FSIS's
reports on China are also troubling. For example, for every single Chinese slaughtering facility that
FSIS audited in 2005, it concluded: "If this estab lishment were certified to export to the US, this
establishment would be immediately delisted."
4.307 Despite the fact that FSIS's audits of both Chin a and Mexico raised concerns, this comparison
does not prove discrimination. Unlike China, Mexico was not in the middle of an ongoing equivalence
proceeding in which new rules had to be implem ented and established to allow Mexico to export
poultry to the United States at the time Section 727 was enacted. Additionally, Mexico had a long
history of exporting meat and poultry products to th e United States at the time of the audit, which
gave FSIS confidence that Mexico would work to resolve the problems it identified during the audit
as it had done in the past. More fundamentally, China's discrimination argument appears to rest on a
faulty premise. China asserts that it was discrimin ated against because FSIS continued to work with
Mexican officials to resolve its issues while by enacting Section 727, FSIS was refusing to work with
China. However, to the contrary, FSIS did engage in work related to China's equivalence application
during 2009 and did reach out to China so it could do even more work on this matter.
4.308 China also has no basis for an Article I clai m. China's argument misses the point of an
equivalency-based regime. Many of a Member's act ions taken in implementation of an equivalency-
based food-safety regime will differ for different Members, depending on the specific facts and
circumstances of that Member's status in the proces s of applying for a determ ination of equivalency.
China tries to get around this fundamental point by claiming that the US measure is somehow
different than a regulatory action, because it was a dopted by the US Congress as opposed to FSIS, the
US regulator. China's argument, however, relies on an artificial distinction between procedures
administered only by FSIS, and the broader US system of ensuring food safety, which includes
congressional oversight. This distin ction has no basis in the WTO Agreement. The fact that the
particular exercise of oversight involved in this dispute applied to one Member does not establish an
Article I violation, just as the fact that a specif ic FSIS regulatory action applied to only one Member
would not establish an Article I violation.

4.309 In addition, China has provided no explanation for why poultry products from China are "like
products" to poultry products from other WTO Members, including those already authorized to export
poultry products to the United States. China's "hypothetical like product" approach is circular. China
is assuming that its exports of poultry products woul d be as safe as exports from other Members, yet
that is the point of an equivalency process.
4.310 China's claims under the SPS Agreement are not within the terms of reference because China
failed to request consultations under the SPS Agreement. China characterizes this issue as one of an
"initial" failure by the United States to understand China's consultations request, and that the matter
was subsequently clarified in further communications from China. The issue here is not a matter of
misunderstanding: China stated that it considered that the SPS Agreement did not apply, and China
would only request consultations under the SPS Agreement in the future if there were a subsequent
demonstration that any US measure was subject to the SPS Agreement. Thus, under the plain meaning
of China's consultations request, and as China h as confirmed, China would only have requested
consultations under the SPS Agreement well after this panel process began. Accordingly, China had
not invoked the SPS Agreement, nor consulted under it, such that the SPS Agreement could be within
the terms of reference of the Panel.
4.311 Thus, the question is whether the DSU allows a Member to include claims under a covered
agreement without seeking consultations under that agreement. Members agreed in the DSU to the
rules that would apply in invoking the DSU. China has not followed those rules, but still asserts that it
is entitled to the mechanisms under the DSU. If China's approach here were to be accepted, it would
be in derogation of the agreed ru les, would undermine the usefuln ess of the consultation process, and
lead to uncertainty and confusion in all future disputes.
4.312 China's second submission also argues that the United States has not "advanced a claim that
the consultations request affected the United Stat es' due process rights". Although the United States
has not used that phrase, certainly "due process" must include the right to have disputes conducted in
accordance with the rules set out in the DSU, and those rules also serve to protect the rights of other
Members.
V. ARGUMENTS OF THE THIRD PARTIES
A. E
UROPEAN UNION
1. Executive summary of the third party written submission by the European Union
(a) Concerning the existence of the alleged measures
(i) On the notion of "future closely-related measures"
5.1 The European Union notes that the Appellate Body and the WTO panels generally limit their
analysis and findings on the compatibility of a cont ested measure with the covered agreements to the
provisions of that measure as they were on the date of the establishment of the panel. Amendments
introduced after the date of the est ablishment of the panel are genera lly taken into consideration in
reaching such findings only in circumstances where specific conditions are met.
5.2 Applying the principles that the Appellate Body clarified in the Chile – Price Band System
case to the facts of the present case, the European Union first notes that the terms of reference of the
Panel, which reflect the measures challenged by Ch ina in its request for the establishment of the
Panel, are broad enough to include amendments to Section 727. They also include an express
reference to the draft provision of the United States Bill that served as the basis for Section 743 and
the Agriculture Appropriations Act 2010 . We also note that China's request defined such "future

closely-related measures" as measures that have "the same substance, essence and/or legal
implications for imports of poultry products from China", as Section 727. However, the United States
argues that, far from having the same substance, essence or legal implications with Section 727,
Section 743 "plainly changes the essence of S ection 727" because it "removes the restriction"
introduced by Section 727.
5.3 If, after having analysed the facts of the case, the Panel comes to the conclusion that
Section 743 does not have "the same substance, es sence and/or legal implications" as Section 727,
then the Panel should also conclude that Section 743 does not fall within its terms of reference. On the
other hand, if the Panel concludes that Section 743 and Section 727 have the "same substance, essence
and/or legal implications", then the Panel shoul d further assess whether Section 743 was adopted
"with a view to shielding from scrutiny a measure", or whether an analysis of Section 743 "is
necessary in order to secure a positive solution to th e dispute", as required by the Appellate Body's
report in the Chile – Price Band System case. If the Panel concludes that either of these conditions is
satisfied, then the Panel should conclude that Sec tion 743 falls within its terms of reference and
should make findings on its compatibility with the covered agreements.
(ii) On the notion of the "moratorium"
5.4 The European Union notes that China bases its claim for the existence of the "measure" called
"the moratorium" on two elements: first, the existe nce of Section 727 and its predecessor, Section 733
of the Agriculture Appropriations Act 2008 ; and second, the alleged "ongoing inaction of FSIS with
respect to rules related to the importation of Chin ese poultry products", both in relation to existing
rules and in relation to expanding the scope of Ch inese poultry products that could be imported into
the United States.
5.5 On the first point, the European Union agrees with the United States that the existence of
different pieces of legislation, adopted at different points in time, relating to the same product market
and imposing similar rules and procedures (or even restrictions) is not necessarily sufficient evidence
of the existence of another, separate and distinct "measure" qualified as a "moratorium" and
consisting of the "sum" of the individual measure s. China should have produced additional specific
and precise evidence establishing the existence of a Un ited States' measure to prohibit indefinitely the
importation of Chinese poultry products. In the absen ce of such evidence, the Panel should conclude
that there is no "measure" called "moratorium" and should limit its analysis only to the examination of
Section 727 (and, eventually, Section 743) and their compatibility with the covered agreements.
5.6 On the second point, the European Union notes that both China and the United States have
included in their first written submissions extensive descriptions of the United States' legislation,
which regulates the functioning of the FSIS. There is nothing in these descriptions indicating that, for
as long as Section 727 was in place, the FSIS could have taken action to promote the importation of
Chinese poultry products into the United States, let alone expand the scope of Chinese poultry
products that could be imported, contrary to the provi sions of Section 727. If this is confirmed by the
Panel's assessment of the United States' legislation, then the alleged "inaction of the FSIS" during the
period when Section 727 was in place, would be simply the direct result and consequence of
Section 727. In such circumstances, the alleged "i naction" of the FSIS would not constitute additional
evidence establishing the existence of another, separate and distinct "measure" called "the
moratorium".
(iii) On the expiry of Section 727 and the letter of 12 November 2009
5.7 According to the United States Section 727 e xpired on 30 September 2009, i.e. after the
establishment of the Panel. Nevertheless, China seeks not only findings but also a recommendation. In
light of this, even if the Panel would make findings with respect to Section 727, the Panel may need to

consider the jurisprudence suggesting that, in such circumstances, it may not be necessary to make a
recommendation. Also according to the United St ates, with respect to Section 743, on
12 November 2009 a letter from the Secretary of Agriculture to Congress set forth certain
commitments, with the consequence that there ar e no longer any funding restrictions. Nevertheless,
China seeks not only findings but also a recommendati on. In light of this, the Panel may also need to
consider whether or not it is necessary to make a recommendation with respect to Section 743.
(b) Claims relating to the application of the GATT
(i) On the application of GATT XI
5.8 The European Union notes that the parties do not dispute the fact that the United States'
legislation contains a general prohibition on the importation of poultry products into the United States.
The United States' legislation introduces an exception to this general rule, by allowing the importation
of poultry products produced in countries that can "show that their food safety regulatory system
results in the same level of public health protecti on achieved by the United States' regulatory system".
For as long as such a determination of equivalence has not been made by the competent United States
authorities, for any reason, a WTO Member cannot e xport any poultry products to the United States.
One reason for the absence of such determination may be that the competent authorities of the
United States have concluded that a particular WTO Member failed to show that its food safety
regulatory system results in the same level of pub lic health protection as the level achieved in the
United States. Another reason may be that th e WTO Member has not asked the competent
United States authorities to engage in the proce dures necessary for the evaluation of its food safety
system. A third reason may be that the competent United States authorities have been requested to
perform the evaluation, but have not completed the necessary procedures yet, or have not yet started
them.
5.9 In any and all of these cases the general prohi bition on the importation of poultry products
would apply and the WTO Member would not be allowed to export any poultry products to the
United States. The particular reason for which this WTO Member would not be able to make use of
the exception allowed under the PPIA would not matter: the inability to export poultry products into
the United States would be the consequence of th e general prohibition. In these circumstances, it
would appear that the "measure" imposing the "restriction" on the importation of poultry products into
the United States is the underlying legislation cont aining the general prohibition on the importation of
poultry products. An exception to this general prohibi tion exists and this exception may be granted to
a WTO Member, or not. The refusal to extend the advantage of this exception to a particular WTO
Member (while it is extended to other WTO Member s) may constitute a violation of GATT Article I,
if the conditions for the application of that Ar ticle are met. However, the mere absence of
authorization would not constitute an additional or different "restriction", which would exist alongside
the real restriction imposed by the general prohib ition and which could give rise to a separate claim
under GATT Article XI.
5.10 This does not preclude that, depending on the f acts of the case, an additional and distinct
measure permanently or temporarily closing down the exception might constitute an additional
restriction. In this respect, for the purposes of interpreting and applying Article XX(b) of the
GATT 1994, whether there is an inconsistency with Ar ticle I or Article XI of the GATT might not be
the critical point, if it is clear that at least one of those provisions is breached.
5.11 The European Union notes that, in the present case, China expressly states that it does not
challenge (i) the general prohibition on the impor tation of poultry products and (ii) the exception
introduced by the "procedures for evaluating equivale nce and approving imports of poultry products".
China only challenges the United States' alleged re fusal to allow China to participate in the
procedures for the evaluation of China's food safet y system, while the United States allows other

WTO Members to participate in these procedures. In light of the above, the European Union considers
that, if on the basis of its assessment of the facts of this case, the Panel concludes that the contested
measure constitutes an additional restriction to th e main restriction imposed by the underlying
legislation of the United States, then the Panel should also examine whether such additional restriction
also constitutes a "restriction" within the meaning of Article XI of the GATT.
(ii) On the relation between GATT XX(b) and the SPS Agreement
5.12 The European Union notes that the United States has confirmed that the contested measures
were "enacted in order to protect human and an imal life and health from the risk posed by the
importation of poultry products from China". This would seem to indicate that the United States
accepts that the contested measures satisfy the de finition of "sanitary measures" included in the
SPS Agreement.
5.13 The European Union also notes that the Preamble of the SPS Agreement starts by repeating
the text of Article XX(b) and of the chapeau of Article XX of the GATT and concludes with the
statement that the purpose of the SPS Agreement is to "elaborate rules for the application of …, in
particular, GATT XX(b)".
5.14 The European Union also notes that Article 2.4 of the SPS Agreement provides that "sanitary
or phytosanitary measures which conform to the re levant provisions of this Agreement shall be
presumed to be in accordance with the obligat ions of the Members under the provisions of
GATT 1994 which relate to the use of sanitary or phy tosanitary measures, in particular the provisions
of Article XX(b)." Similarly, Article 3.2 of the SPS Agreement provides that SPS measures that
conform to international standards are deemed ne cessary and presumed consistent with the relevant
provisions of the SPS Agreement and the GATT 1994. The European Union takes the view that
because of this close relationship between GATT Article XX(b) and the SPS Agreement, the
provisions of the SPS Agreement provide immediate context for the in terpretation of the provisions of
GATT Article XX(b).
5.15 The European Union draws support for this view from the fact that, as clearly stated in the
Preamble of the SPS Agreement, the SPS Agreement "elaborates rules for the application" of "in
particular" Article XX(b) and the chapeau of Article XX of the GATT, as well as from the fact that
measures which satisfy the provisions of the SPS Agreement are expressly stated to satisfy also the
provisions of GATT Article XX(b). Consequently, wh ere a contested measure satisfies the definition
of "sanitary measure" included in the SPS Agreement, the Panel's assessment of its compatibility with
GATT Article XX(b) needs to take into cons ideration the relevant provisions of the SPS Agreement.
The European Union considers that this is particul arly true for the Panel's assessment of whether the
contested measure is "necessary" in order to achie ve the stated objective of protection of human,
animal or plant life or health.
5.16 In light of the above, the European Union considers that, if after having examined the facts of
this case, the Panel concludes that the contested measures constitute "sanitary measures" in the terms
of the SPS Agreement, then the Panel should assess their compatibility with the provisions of GATT
Article XX(b) also taking into consideration the relevant provisions of the SPS Agreement.
5.17 In this respect, the European Union consider s that the present case is not procedurally or
substantively comparable to the Brazil – Retreaded Tyres case. In that case the European Union made
no claims under the SPS Agreement and Brazil invoked in its defence Article XX(b) of the GATT but
not the SPS Agreement. Moreover, in that case, the European Union never argued that the provisions
of the SPS Agreement should be included in the assessment as immediate context for the interpretation
of Article XX(b) of the GATT. The present case is pr ocedurally different. China is seeking review of
the measures at issue against various obligations in the SPS Agreement (and the Panel will have to

decide whether those clai ms are within its terms of referenc e) and in any event will no doubt be
referencing those very same provisions as i mmediate context for the interpretation of GATT
Article XX(b).
5.18 The present case is also substantively different . In the present case the focus of the discussion
is on whether the poultry products subjected to th e "pause" in the approvals regime constituted a
direct threat to human or animal health, justifying the measure at issue – a classic SPS problem. By
contrast, in the Brazil – Retreaded Tyres case the public health issue was not related to the product
itself, but was more attenuated, and related rather to the manner in which the product was disposed
off. As a result, it is not clear whether the Brazilia n measure against the importation of retreated tyres
was covered by the definition of "sanitary measure" in Annex A, paragraph 1 of the SPS Agreement.
(c) Claims relating to the application of the SPS Agreement
5.19 The European Union considers that the legal fra mework that most readily lends itself to an
objective assessment of this case, which appears to involve an admitted "temporary restriction" on the
import of certain poultry products for reasons of human or animal health, is the SPS Agreement. The
European Union observers that notwithstanding c onsultations and the exchange of first written
submissions, there has as yet been no detailed development of substantive arguments under the
SPS Agreement. Consequently, as a Third Party having notified its substantial interest to the DSB, the
European Union considers that, to-date, its inter ests have not been fully taken into account, pursuant
to Article 10 of the DSU. It is for that reason th at the European Union requests enhanced third party
rights, as set out in the following section. For the time being, and pending a response to that request,
the European Union has the following observati ons. Leaving aside the question of which GATT
provisions other than Article XX(b), if any, the SPS Agreement implements, as e xplained above, the
European Union considers that, at least in this case, the SPS Agreement must be constantly read
together with the relevant provisions of Article XX of the GATT, and eventually other relevant GATT
provisions (in this case, Articles I and XI of the GATT 1994). That is because the rights and
obligations of the parties are dispersed amongst these various provisions, so that it is only by
objectively assessing all of them that the Panel can pr operly carry out its task of considering whether
or not the balance between the various interests at pl ay struck in the measures at issue is consistent
with the cited provisions of the covered agreements . These observations have particular implications
for burden of proof issues. The principles are not controversial: a party asserting a fact should prove
it; a complaining party should make its case; and a defending party invoking an "affirmative defence"
should do likewise. These principles need to be r easonably applied with flexible intelligence in the
context of any covered agreement, but particularly one such as the SPS Agreement, which touches on
issues of scientific proof or evidence, including circumstances where there is a paucity bordering on
an absence of science.
5.20 With respect to the characte risation of Section 727 (and Section 743), the European Union
notes that the United States describes it as a "pause". To the European Union, that description seems
apt. One might conceptualise such a "pause" as a "delay", within the meaning of Article 8 and
Annex C.1(a) of the SPS Agreement
, in which case the essential legal question before the Panel would
resolve itself into whether such delay was "due", i.e. justified. Alternatively, one might conceptualise
such pause as a temporary or provisional measure, such as is referenced in Article 5.7 of the
SPS Agreement. The United States has not invoked Article 5.7; but China has made a claim under
Article 2.2, which cross-references the exception in Article 5.7. In either case, the same basic
principles would apply, since the disciplines of Article 5.7 would certainly constitute immediate
context relevant to determining whether a "delay" was "due".
5.21 One of the particular features of the measures at issue in this case that the Panel may no doubt
wish to consider is that, unlike in most if not a ll of the past SPS cases, the measures would not appear
to be in the nature of a general or specific measur e prohibiting or restricting the import of a particular

product and having regard to relevant science. Rather, the measures at issue would appear to be in the
nature of a measure, such as any Member might adopt , were it to determine that a particular facility
(such as a slaughterhouse) previously authorized in fact no longer complied with the applicable rules.
For example, it is not controversial that Salmonella constitutes a public health risk (no need for an
extended debate on the science), and that an impor t ban would be a proportionate response to any
Member demonstrating itself incapable of sufficiently eliminating that threat (no need for an extended
debate on alternative measures). Rather, the more li mited question in this case would appear to be
whether or not the particular circumstances justifie d the "pause". With this in mind, the Panel may
consider Article 8 and Annex C.1(a) of the SPS Agreement particularly relevant.
5.22 Turning to the reasons for which the measu re at issue was apparently adopted, the
United States appears to refer to three public he alth issues: "poultry that is not produced under
sanitary conditions or thoroughly inspected for contamin ants"; avian influenza; and a "particular risk"
associated with China. With this in mind, and to begin the analysis in conventional fashion under the
SPS Agreement, and looking at the provisions of Articles 5.1 and 5.7, the European Union would have
been interested to know whether or not the Un ited States had conducted any risk assessment under
those provisions, or based itself on any available pertinent information, or sought additional
information within a reasonable period of time. China asserts that no such documents exist. The
United States first written submission does refer to certain documents. For example, the United States
refers to USDA facts sheets about Salmonella, Campylobacter and Listeria; a weekly report from the
Center for Disease Control about avian influenza; and APHIS restrictions on imports of poultry from
regions such as China where avian influenza exists . The United States also refers to a number of
documents about food safety in China generally. However, the European Union would have been
interested to better understand, within the terms of the SPS Agreement, how such general documents
might relate to and justify the measures at issue.
5.23 The European Union has also reviewed the Final Report of an Initial Equivalence Audit
Covering China's Poultry Inspection System and th e Final Report of an Initial Equivalence Audit
Covering China's Poultry 'Slaughter' Inspection Syst em. The European Union observes that the Panel
may have to consider whether or not these documents could justify, perhaps with other documents, the
"delay" occasioned by the measures at issue. The la tter document, in particular, appears to suggest
deficiencies with respect to poultry slaughter. With respect to the former document, the European
Union would agree with a proposition that it understands to be implied in the United States' defence,
namely that the existence of an internal muni cipal law document providing for approval does not
determine or pre-judge a position s ubsequently adopted by a risk manager. In other words, the Panel's
task is to objectively determine whether or not th e "pause" occasioned by the measures at issue was
consistent with the cited provisions of the covered agreements. In carry ing out that task, the fact that
one agency within the municipal system had pr ovisionally indicated a favourable attitude towards
approval carries very little if any weight in the Panel's assessment.
5.24 In similar vein, the European Union would have been interested to understand how the
United States would characterise its acceptable level of risk or appropriate level of protection with
respect to this matter, but again, there is an absen ce of explanation. In similar vein, the European
Union would have been interested to understand wh ether or not the United States has ever applied
such a measure to other WTO Members' poultry products (Article 2.3) or other products (Article 5.5),
but again, there is an absence of explanation. In similar vein, the European Union would have been
interested to understand what other measure, if any, might have been available, or why such other
possible measure would not have been considered suitable, but again, there is an absence of
explanation. In the absence of such explanation, the European Union can only observe that, at this
stage, a defence of the measures under Article 5.1 of the SPS Agreement would appear to be
attenuated.

5.25 The European Union could not, however, rule out the possibility of a defence of the measures
under Article 8 and Annex C.1(a) or Article 5.7, if the European Union could better understand, for
example, the relationship between the alleged unsan itary or inadequate conditions and the mooted
public health threat, and any specific associated evidence or information.
(d) Request for enhanced third party rights
5.26 The European Union notes that the parties have not yet engaged in a detailed discussion of the
core issue raised in this case, namely the compatibility of the contested measures with the provisions
of the SPS Agreement. It is reasonable to expect that a profound discussion of this issue will take
place through the parties' second written submissi ons and during the ensuing second substantive
meeting with the Panel. Regrettably, as the Panel' s working procedures currently stand, Third Parties
will not have the opportunity to participate to that discussion and offer to the Panel their views on the
positions taken by the Parties. The European Union cons iders that, in order to ensure that the interests
of third parties under the GATT and the SPS Agreement at issue in this dispute are fully taken into
account during the panel process, the working proce dures should be amended to provide for enhanced
third party rights. In particular, third parties should be given access to the parties' second written
submissions and allowed the opportunity to make their views known to the Panel and the parties
through another third party written submission, or through their participation in the second substantive
meeting with the Panel, or both. The European Un ion hereby respectfully requests the Panel to amend
its working procedures accordingly.
B. K
OREA
1. Executive summary of the third-party submission of Korea
5.27 It is undisputed that China's consultation re quest did contain language invoking the dispute
settlement provisions of the SPS Agreement in a conditional manner ("if it were demonstrated that any
such measure is an SPS measure"). And the United States contends that this conditional invocation
was legally ineffective because it does not comply w ith jurisdictional requirements that are allegedly
established by Article 1.1 of the DSU.
5.28 In light of analysis of the relevant text based on the Vienna Convention on the Law of
Treaties, Korea believes that there may be sound reas ons for a panel to insist upon procedural
requirements of the type suggested by the United States where compliance with such requirements is
necessary to uphold the responding party's due process ri ghts to have adequate notice of the nature of
the claims against it. In this case, however, the Un ited States has not claimed that the alleged defects
in China's consultation request caused it any prejudi ce. Consequently, Korea does not believe that the
claims raised by China under the SPS Agreement are outside the terms of reference of this Panel.
5.29 In addition, Korea is of the view that the United States has invoked the exception of
Article XX(b) of the GATT 1994 as a defense to cl aims presented by China, thereby accepting that
the measure at issue is an SPS measure in accordance with Annex A(1) of the SPS Agreement.
5.30 Having said that, Korea reiterates the importance of taking a precautionary perspective in the
SPS regulation, especially when human life and health are at stake. The United States has yet to, and
may decide not to submit a defense based on the SPS Agreement, such as Article 5.7. Nonetheless,
Korea deems that the precautionary principle embodied in the provisions of the SPS Agreement must
also be fully taken into account in interpreting Article XX(b) of the GATT 1994.
5.31 For the foregoing reasons, Korea respectfully requests the Panel to actively review the SPS
issues in this dispute and keep mindful of legitim ate concerns of the public or people of a Member

state regarding risks on human life and health fro m a precautionary perspective in interpreting the
SPS Agreement or Article XX(b) of the GATT 1994.
5.32 Lastly, Korea is of the opinion that there can be systemic benefits, such as improving
transparency of dispute settlement proceedings, fro m enhancing third party rights. However, Korea
also believes that expanding third party rights without obtaining the consent of the parties of a dispute
is contrary to the mandate of the DSU. Notwith standing the foregoing, should the Panel decide to
grant third parties access to the second set of su bmissions, opportunity to participate in the second
substantive meeting or to present its views to th e Panel on the second submissions, Korea reserves its
right to participate in those proceedings with other third parties as the Panel sees fit.
C. CHINESE TAIPEI
1. Oral statement by Chinese Taipei
5.33 Mr Chairman, distinguished members of the Panel, the Separate Customs Territory of
Taiwan, Penghu, Kinmen and Matsu ("Chinese Taipei "), as a third party in this proceeding, would
like to thank the Panel for this opportunity to presen t its views on this dispute. Chinese Taipei joined
this dispute as a third party because of its systemic interest in the correct interpretation of the covered
agreements at issue, in particular, the Agreement on the Application of Sanitary and Phytosanitary
Measures (SPS Agreement) and the Agreement on Agriculture.
5.34 Chinese Taipei notes that the Eu ropean Union ("EU") requested for enhanced third party
rights in their written submission 148, and Chinese Taipei would like to echo the EU's request for the
following reasons.
5.35 While Article 12.1 and Annex 3 of the DSU do not specifically address this issue of granting
enhanced third party rights, the Appellate Body has found that such decisions are well within the
scope of the panel's authority and discreti on. As the Appellate Body indicated in EC – Hormones, the
decision to grant enhanced third rights is a "decisi on that falls within the scope of discretion and
authority of the panels, particularly if the panel considers it necessary for ensuring to all parties due
process of law." 149 The Appellate Body then found that Panel's grant of enhanced third party rights
justified under the particular circumstances.150
5.36 In the present dispute, as the EU has rightly observed, "the parties have not yet engaged in a
detailed discussion of the core issues raised in th is case, namely the compatibility of the contested
measures with the provisions of the SPS Agreement."151 We share the EU's observations and also
expect that the in-depth discussi on of these issues will very likely ta ke place in the parties' second
written submissions and during the Panel's second substantive meeting with the parties.152
5.37 Without participating in the entire proceeding of the Panel's second substantive meeting with
the parties, third parties can hardly assess whether the provisions of the SPS Agreement are interpreted
correctly, let along providing their views accordingly fo r the Panel's consideration. To ensure that the
interests of third parties under the covered agreem ents in this dispute are fully taken into account
during the panel process, we respectfully request th e Panel to amend its working procedures and grant
third parties the following enhanced rights:

148 European Union's third party written submission, paras. 57-58.
149 Appellate Body Report, EC – Hormones, para. 154.
150 Appellate Body Report, EC – Hormones, para. 154.
151 Supra footnote 144, para. 57.
152 Id.

(a) to receive the parties' second submissions and other documents associated with the
Panel's second substantive meeting with the parties;
(b) to observe the Panel's second substantive meeting with the parties; and
(c) to make a brief statement during the Pane l's second substantive meeting with the
parties.
5.38 Chinese Taipei believes that granting enhanced third party rights in this dispute not only
would allow the third parties to assist the Panel in reaching correct interpretations of the relevant
provisions of the covered agreements but would also ensure the systemic interests of Members. We
also believe that the additional rights granted by the Panel would not become an "inappropriate
blurring of the distinction drawn in the DSU between parties and third parties".
153 Thank you.
D. TURKEY
1. Oral statement by Turkey
5.39 Mr Chairman, respective Members of the Panel, fi rst of all, I would like to express Turkey's
appreciation for giving the opportunity to third parties in the current proceedings to present their
views and contribute to the settlement of this dispute.
5.40 I would also especially like to indicate that, Turkey is not in the intention to present an
opinion on the specific factual context of this dis pute and takes no position what so ever as to the
defense and allegations presented by the parties on whether the specific legislation at issue is
inconsistent to the subject provisions of the WTO Agreements. Turkey wishes to contribute, by
expressing its opinion on some systemic issues regard ing the interpretation of the provisions of the
Agreement on the Application of Sanitary and Phytosanitary Measures (SPS Agreement).
5.41 The first issue Turkey wishes to address is that, Turkey believes the restriction on the
importation of certain poultry products is actually an SPS measure because as defined in Annex A
Article 1 of the SPS Agreement, it aims to protect animal or plant life or health within its territory
from the risks arising from the entry, establishment or spread of pests, diseases, disease-carrying
organisms or disease-causing organisms or from risks arising from additives, contaminants, toxins or
disease-causing organisms in foods, beverages or feedstuffs.
5.42 When taken into account, the definition in GA TT Article XX(b), we believe that for a
member to be able to take a measure under pa ragraph (b) of Article XX, it has to meet the
requirements under the SPS Agreement if the risk is caused by additives, contaminants, toxins or
disease causing organisms in food, beverages and feedstuff.
5.43 The second issue Turkey wishes to address is the definition of the expression "scientific
evidence" in Article 2.2 of the SPS Agreement. To the extent that by the panel, the contested measures
are to be considered sanitary and phytosan itary measures within the meaning of the SPS Agreement
and in the scope of the terms of reference of the current dispute, clarification of the meaning and
scope of this expression will contribute to the resolution of the dispute and to the proper application of
SPS measures.
5.44 As foreseen in Article 2.2 of the SPS Agreement, the SPS measure should bring no more
restriction than needed to realize the aim of protection.

153 Panel Report, EC – Tariff Preferences, Annex A, para. 7(d).

5.45 In regard to Articles 3.1 and 3.3 of the SPS Agreement, we are of the view that these articles
should be addressed together. When done so, it is clear that an SPS measure can only be introduced
provided that it is based on international standards, guidelines and recommendations where they exist,
and if not, the country introducing the measure should have scientific evidence as to the consequences
of what the potential damage might be, considering the measure is not introdu ced. This is to ensure
that measures are not taken arbitrarily and are not used as a tool for manipulating international trade.
5.46 Another Article under which China is challengi ng the United States is Article 5 of the
SPS Agreement which envisages that the appropriate level of sanitary or phytosanitary protection is to
be taken according to a risk assessment taken by the country introducing the measure.
5.47 Members are obliged to take available scien tific information into account. The level of
protection taken under any SPS measure must not exceed the level that satisfies the need for
protection. This again is to ensure fair and e qual treatment among member states and a foreseeable
environment for international trade.
5.48 In Article 5.7 of the SPS Agreement it is envisaged that, where scientific evidence is
insufficient, a member may provisionally adopt S PS measures on the basis of available pertinent
information but it is also determined that the member must at the same time continue to seek to obtain
the additional information necessary for a more objective risk assessment.
5.49 Finally, Article 8 and Annex C of the SPS Agreement determines that the control, inspection
and approval procedures of members must be consis tent with the provisions of the aforementioned
Agreement, therefore has to be carried out w ithout undue delays and must be applied in a non-
discriminatory manner.
5.50 As I conclude Turkey's oral statement, I would like to state that Turkey will be pleased to take
any questions that the Panel may have.
VI. INTERIM REVIEW
A. GENERAL
6.1 On 14 June 2010, the Panel issued its Interim Report to the parties. On 28 June 2010, both
parties submitted written requests for the review of precise aspects of the Interim Report. The parties
submitted written comments on the other party's comments on 8 July 2010. Neither party requested an
interim review meeting.
6.2 In accordance with Article 15.3 of the DSU, this section of the Panel Report sets out the
Panel's response to the arguments made at the inte rim review stage, wherever the Panel felt that
explanations were necessary. The Panel has also mo dified certain aspects of its Report in light of the
parties' comments wherever it considered appropria te. Finally, the Panel has made a limited number
of editorial corrections to the Report for the pur poses of clarity and accuracy. References to sections,
paragraph numbers and footnotes in this Section VI relate to the Interim Re port. Where appropriate,
references to paragraphs and footnotes to the Final Report are included.
B. CHINA'S COMMENTS ON THE INTERIM REPORT
1. Factual aspects
6.3 Regarding paragraph 2.26 of the Interim Report, China suggests to the Panel that the first
sentence be amended to read: "Nearly two years after the United States' first request, o On 12 March
2008 ...". China argues that the sente nce is duplicative and that the date is sufficient to indicate the

amount of time that had passed. This, it claims, also harmonises the style of paragraph 2.26 with its
surrounding paragraphs, particularly 2.23, 2.27 and 2.28.
6.4 The United States disagrees and points out that the releva nt language is accurate and that
China is not arguing otherwise. For the United States, the language is not duplicative because
mowhere else does the Interim Report note the period of time between the FSIS's request for a list of
certified establishments and China's response to that request.
6.5 Having considered the comments of both parties, the Panel declines China's request to delete
the said language. The Panel considers that it is not duplicative, it is accurate and assists the reader in
understanding the time span between the request for a list of certified establishments by the FSIS and
China's response to such a request.
2. Whether Section 727 is an SPS measure
6.6 China has made two requests for review concerning the Panel's charaterisation of China's
position towards Section 727 being an SPS measure. The paragraphs concerned are 7.71 and 7.72.
6.7 Regarding paragraph 7.71 of the Interim Report, China suggests to the Panel that the first
sentence be amended to read: "China's characterization of Section 727 as an SPS measure has, during
the proceedings, evolved from one extreme to the other
significantly." Regarding paragraph 7.72,
China suggests the sentence be amended to read: "During the first substantive meeting, China
radically changed its position and argued for the first time that Section 727 is an SPS measure."
6.8 China makes this suggestion because it believ es that the amended language would more
accurately reflect the evolution of China's characte risation of Section 727. China submits that, from
the beginning of this dispute, China left open th e possibility that Section 727 could potentially be
considered an SPS measure, which China does not believe should be considered an "extreme"
position.
6.9 The United States disagrees and points out that the language chosen by the Panel is the more
accurate characterisation of the developments in th is dispute. For the United States, it is hard to
imagine a more stark contrast between a measure adopted for "budgetary purposes", as China initially
described Section 727, and a measure adopted to protect against food safety risks, as China
subsequently described Section 727. In contrast, China's suggested phrasing ("evolved significantly")
would inaccurately suggest that China had gradually shifted its position over time. The United States
further argues that China's suggested modification to the first sentence of paragraph 7.72 is a less
accurate description of the developments in this dis pute. In its view, the language used in the Interim
Report appropriately notes that China changed its pos ition – which is a fact that China does not even
dispute. Yet, it argues, China's suggested modi fications would delete from the first sentence of
paragraph 7.72 the information that China had changed its position.
6.10 Having considered the comments of both parties, the Panel declines China's request to amend
the language in paragraphs 7.71 and 7.72. The Panel reminds China that it began its argumentation on
the basis of Section 727 not being an SPS measure and referred to its SPS claims as being in the
alternative in the event that "it were demonstrated " that Section 727 was an SPS measure. China then
changed its position at the first substantive meeti ng and argued that Section 727 was an SPS measure.
For the Panel, "being an SPS measure" lies at the op osite extreme of "not being an SPS measure". In
our view, such a change in position can only be qualified as moving from one extreme to the other.

3. Miscellaneous
6.11 In addition to the substantive comments presented above, China offered a number of
typographical, editorial and stylistic suggestions . The Panel has accommodated China's suggestions
where appropriate.
6.12 In particular, concerning footnote 294, China suggests adding (Exhibit CN-33) to the end of
the footnote. The United States has not objected. The Panel h as made the suggested change in
footnote 298 of the Final Report.
C. UNITED STATES' COMMENTS ON THE INTERIM REPORT
1. General comments on judicial economy
6.13 The United States requests the Panel to exercise judici al economy in respect of China's
claims under Articles 2.3, 5.5, 8 and Annex C of the SPS Agreement, and Article I of the GATT 1994.
The United States submits that the Panel should ex ercise judicial economy with respect to these
claims based on several factors. The United States points out that this is the first WTO dispute
involving a food-safety regime based on the principle of equivalence and therefore there are a number
of issues of systemic importance regarding the le gal relationship between Article 4 and other SPS
provisions. According to the United States, th e result of the Interim Report's analysis under
Article 5.5 and Article 8 of the SPS Agreement is to make far-reaching findings on the legal
relationship between Article 4 and other SPS provisi ons. The United States further argues that the
Interim Report's reliance on Japan -- Apples to support the application of other SPS provisions to
Article 4 equivalence measures is misplaced because Article 4 is "clearly different" from Articles 2.2,
5.1 and other provisions of the SPS Agreement.
6.14 The United States is concerned about the systemic implication of the Interim Report's analysis
under Article 5.5 of the SPS Agreement (and the consequential Article 2.3 findings), especially with
respect to the operation of an equivalence-based re gime. The United States argues that the approach
in the Interim Report would appear to turn many ordinary actions taken in the course of an
equivalence review into breaches of Article 5.5 of the SPS Agreement while Article 5.5 analysis is not
essential to the resolution of this dispute.
6.15 The United States is also concerned about the sy stemic implication of the finding that an
equivalence regime falls within the scope of an "approval procedure" under Article 8 of the
SPS Agreement. The United States argues that the Panel's analysis of the scope of Article 8 and
Annex C in the Interim Report is not supported by any language within the SPS Agreement itself or by
the SPS Committee's Decision on the Implementation of Article 4. The United States fundamentally
disagrees with the reasoning in the Interim Report, which the United States describes as filling a
"loophole" in SPS disciplines.
6.16 Additionally, the United States submits that th e Panel's findings regarding China's claims
under the other provisions largely flow from the Article 5.1 findings and involve little if any
additional factual analysis and therefore do not add to a resolution of this dis pute. The United States
considers that these types of consequential breaches would seem ideal candidates for judicial
economy.
6.17 Finally, the United States argues that it w ould seem unnecessary to the effective resolution of
this dispute that the Interim Report finds nine different breaches of the WTO Agreements arising from
a one-sentence, expired measure.

6.18 Having noted the approach of previous panels towards judicial economy when claims were
made under more than one GATT 1994 provision, and r ecognizing that the core issues in the dispute
were determined in the context of an Article XX exception, the United States requests the Panel to
adopt the same approach by exercising judicial ec onomy with respect to China's claim under Article I
of the GATT 1994. The United States is concerned a bout the systemic implication of the application
of the GATT "like product" standard between two otherwise identical products based on the food
safety system in place at the product's origin which, it submits, has long been one of the more difficult
and controversial aspects of the GATT and the WT O. The United States argues that under Article 4
of the SPS Agreement, the products from an exporting Member who fails to demonstrate that its
measures are equivalent, are not "like products" to those shipped by another exporting Member whose
food safety regime has been demonstrated to be equivalent to the importing Member's food safety
regime or otherwise any difference in procedures a pplied in determining Memb er's equivalence– as
well as any difference in procedures applied in an y origin-based safety determination – will be
deemed to result in a breach of Article I of the GATT 1994.
6.19 China strongly objects to the United States' request that we exercise judicial economy in
respect of its claims under Articles 2.3, 5.5, 8 and Annex C of the SPS Agreement, and Article I of the
GATT 1994.
6.20 China submits that the United States' request reads more like a party's special third written
submission on the merits of judicial economy, rath er than comments on the Interim Report of a panel
that has already gone through the time and effort of carefully considering and deciding the numerous
legal questions presented in this dispute. China contends that the substance of the United States'
arguments regarding judicial economy largely mirrors and repeats virtually identical arguments that
were made in the United States' previous submissions – arguments that were rejected by the Panel and
that need not be considered again in this contex t. Consequently, it submits, the United States'
arguments on judicial economy are inappropriate as part of a request for review of an Interim Report.
More importantly, China argues, they are based on erroneous statements about the SPS Agreement,
the GATT 1994, and of the underlying facts.
6.21 For China, to the extent that judicial economy is intended to reduce the workload of a panel,
the United States' request for judicial economy woul d instead call for the opposite – it would require
additional work by the Panel. China argues that the United States extensively reiterates and expands
arguments from its earlier submissions in its attempt to persuade the Panel to remove certain of its
findings from the Interim Report on the grounds of judi cial economy. China recalls that panels and
the Appellate Body have found it inappropriate for a party to repeat prior arguments at the interim
review stage, and they have found that further deve lopment of arguments at the interim review phase
were outside of a panel's jurisdiction.
6.22 China submits that each of the findings ma de by the Panel are necessary for an effective
resolution of this dispute and it is important to r ecall that judicial economy is not referred to in the
DSU, and should be applied carefully in exceptional cases at the discretion of the Panel. China argues
that the three factors invoked by the United States are not justification to exercise judicial economy of
any of the claims. As for the first factor being this is the first WTO dispute that tangentially relates to
an equivalence regime, China submits that the United States' argument on a number of issues of
systemic importance concerning the relationship between Article 4 and other provisions of the
SPS Agreement does not justify a request that the Panel redact its findings on Articles 2.3, 5.5, 8, and
Annex C of the
SPS Agreement and Article I of the GATT 1994. With respect to the United States'
argument that Article 5.1 of the SPS Agreement is the only provision that the Panel need consider,
China believes this argument is deeply flawed a nd inconsistent with the object and purpose of the
SPS Agreement. According to China, because each individual claim under the SPS Agreement
addresses a different element of Section 727 exer cising judicial economy on the other SPS claims
would result in reversible error in law as well as be "false judicial economy" because the Panel's

findings will only provide a partial ineffective resoluti on to the matter at issue. With respect to the
idea that the number of breaches found of various provisions of the WTO agreements arising from an
expired measure that would seem unnecessary to the e ffective resolution of this dispute, China argues
that all of the findings are important for providing predictability for future cases dealing with the same
or similar matters taking particular note that th e same language used in Section 727 was used in
previous appropriations measures. China also notes that the expiration of a measure at issue has not
prevented panels and the Appellate Body from making extensive findings in respet of those measures.
6.23 With respect to the United States' request to exercise judicial economy on China's claims
under Articles 5.5 and 2.3 of the SPS Agreement, China argues that the findings under Articles 5.5 and
2.3 regarding Section 727 will not have any of the ominous impacts on equivalence-based systems
that the United States claims to fe ar because Section 727 is not a part of, or an "ordinary action taken
in the course of", the FSIS equivalence proce dures but instead a discriminatory ban on poultry
products from China – and only China. Moreover, China contends that if the Pa nel were to delete its
findings under Articles 2.3 and 5.5, it must th en go on to more fully develop and expand its
Article XX(b) analysis – which is clearly not something that can be considered "judicial economy".
6.24 With respect to the United States' request to exercise judicial economy on China's claims
under Articles 8 and Annex C of the SPS Agreement, China argues that the Unit ed States' request that
the Panel reconsider the same arguments they made with respect to the substantive interpretation of
the provisions, this time as a justification for judicial economy, is inappropriate and based on the same
erroneous reasoning presented in its second written submission which has been properly considered
by the Panel.
6.25 With respect to the United States' request to exercise judicial economy on China's claim under
Article I of the GATT 1994, China contends that out of the three reasons invoked by the United States
only the reason where there is already a finding unde r Article XI of the GATT 1994 relates to judicial
economy. China considers that, nevertheless, such a reason is unconvinc ing because the Panel's
ruling highlights a line that WTO Members cannot cross – to violate the core most favoured nation
non-discrimination principles of Article I of th e GATT. China additionally argues that the
United States enactment of Section 743, which it says is the successor to Section 727, is an important
reason for not exercising judicial economy on this cl aim, as this Section continues to single out and
impose restrictios on China. Therefore, China believes that there is a compelling need for the Panel to
send a clear and strong reminder to the United States and other WTO Members that such
discriminatory treatment is not, and cannot be, ju stified under GATT and WTO rules. Furthermore,
China supports the Panel's reliance on an hypothetical like product analysis where there is an origin-
based discrimination or it is not possible to make the like product comparison because of, for
example, a ban on imports. China reiterates that Section 727 is not the outcome of an equivalence
procedure but instead it blocked access to the norma l equivalence procedures for China, and China
alone, in a manner that was grossly discriminatory and completely unrelated to the outcome of an
equivalence procedure.
6.26 The Panel has carefully considered both the Unite d States' request that we exercise judicial
economy in respect of China's claims under Articles 2.3, 5.5, 8 and Annex C of the SPS Agreement,
and Article I of the GATT 1994, and China's objections thereof.
6.27 As put by the Appellate Body, the practice of judicial economy allows a panel to refrain from
making multiple findings that the same measure is inc onsistent with various provisions of the covered
agreements when a single, or a certain number of findings of inconsistency, would suffice to resolve
the dispute.154 Behind this practice lies the understanding that the job of panels is not to create law or
provide authoritative interpretations of provisions of the WTO Agreements but rather to provide a

154 Appellate Body Report, Canada – Wheat Export and Grain Imports, para. 133.

positive solution to the dispute at hand. Panels are ne vertheless not constrained to resort to judicial
economy.
155 Indeed, as the Appellate Body has concluded, "[a]lthough the doctrine of judicial
economy allows a panel to refrain from addressing claims beyond those necessary to resolve the
dispute, it does not compel a panel to exercise such restraint."156 In fact, the Appellate Body has ruled
that in some instances, a panel's decision to conti nue its legal analysis and to make factual findings
beyond those that are strictly necessary to resolve the dispute may assist the Appellate Body should it
later be called upon to complete the analysis.157
6.28 We are therefore not compelled to exercise judicial economy but have discretion to do so
where we believe our findings under one or more provisions of the covered agreements within our
terms of reference have already provided a positiv e solution to the dispute and additional findings
would serve no purpose. The Panel recalls that we have resorted to judicial economy in respect to
China's claims under part of Article 5.5 of the SPS Agreement and Article 4.2 of the Agreement on
Agriculture. We are however of the view that, in the circumstances of the present dispute, we should
not be exercising judicial economy in respect of China's claims under Articles 2.3, 5.5, 8 and Annex C
of the SPS Agreement, and Article I of the GATT 1994.
6.29 The United States submits that the Panel should exercise judicial economy with respect to
these claims based on three factors. The first of these factors is that, as we acknowledge in
paragraph 7.134 of the Interim and Final Reports, this is the first WTO dispute involving a food-
safety regime based on the principle of equivalen ce. The United States seems to argue that because
there are a number of issues of first impression which have systemic importance, particularly the legal
relationship between Article 4 and other SPS provisi ons, the Panel should avoid these issues through
the guise of judicial economy. First, the Panel notes that it was the United States who raised the
relationship between Article 4 a nd the other provisions of the SPS Agreement when it argued that
those provisions were inapplicable to Section 727 because it was governed solely by Article 4, a
provision which is outside the Panel's terms of reference. The Panel is obliged under Article 11 of the
DSU to determine the applicability of the provisions cited in the Panel Request, before entering into
an examination of whether the challenged measures ar e in conformity with those provisions. Because
the United States argued particularly that Article 4 was the applicable provision to the exclusion of the
ones cited by China, the Panel was compelled to enter into an examination of the relationship between
Article 4 and the other provisions of the SPS Agreement, in particular the question of whether
coverage under Article 4 precludes the applicability of other provisions of the SPS Agreement. If the
Panel had not done so we would have been acting c ontrary to our obligation under Article 11 and to
the due process rights of the United States. Additiona lly, the Panel fails to understand why, as China
points out, the fact that this is the first WTO dispute involving a food-safety regime based on the
principle of equivalence and that some of the findings may have systemic relevance should be a factor
in deciding whether the Panel exercises judicial econo my on China's claims under Articles 2.3, 5.5, 8,
and Annex C of the SPS Agreement. As explained above, judicial economy relates to finding a
positive solution to the dispute at hand rather than to the systemic nature of the claims being raised. It
is our view that panels should not use judicial economy to avoid tough questions as this does not
provide a positive solution to the dispute. Additionall y, if every panel were to avoid systemic issues
of first impression, those provisions would never be clarified, which is one of the principal purposes
of the dispute settlement system articulated in Article 3.2 of the DSU.
6.30 The second factor alleged by the United States as a reason for this Panel to exercise judicial
economy is that the Panel's findings regarding Chin a's claims under the other provisions largely flow
from the Article 5.1 findings and involve little if an y additional factual analysis and therefore do not

155 The Appellate Body has often cautioned panels against exercising "false judicial economy".
Appellate Body Report, Australia – Salmon, para. 223.
156 Appellate Body Report, Canada – Wheat Export and Grain Imports, para. 133.
157 Appellate Body Report, US – Gambling, para. 344.

add to a resolution of this dispute. We disagree with the United States. As pointed out by China, each
individual provision of Article 5 addresses a different obligation some address risk assessment others
the appropriate level of protection. We do not belie ve that a finding solely on the lack of a risk
assessment provides a positive resolution with respect to a claim of discrimination in the application
of the appropriate level of protection. We do not contend that panels need always examine each and
every claim under the SPS Agreement. The Panel recalls that we did exercise judicial economy in
respect to part of China's claim under Article 5.5 of the SPS Agreement and on China's claim under
Article 4.2 of the Agreement on Agriculture. Furthermore, we did not make findings under Article 5.6
of the SPS Agreement because, as explained in paragraph 7.336 of both the Interim and Final Reports,
we did not have the necessary elements before us to examine the claim. However, under the
circumstances of this dispute, the Panel does not believe that exercising judicial economy on China's
claims under Articles 2.3, 5.5, 8, and Annex C of the SPS Agreement is appropriate.
6.31 The third factor put forward by the United Stat es is that finding nine different breaches of the
obligations in the WTO agreements arising fro m a one-sentence, expired measure would seem
unnecessary to the effective resolution of this dis pute. Again, the Panel fails to understand the
relationship between the length of the measure at issue and the need to exercise judicial economy on a
number of claims. If panels were to consider the le ngth of the measures at issue as a factor in their
decision to whether or not exercise judicial economy, we wonder what would happen in cases where
the measure at issue is an omission, rather than a legal provision. The United States also stresses the
fact that Section 727 has expired. The Panel agre es with prior panels and the Appellate Body that
making findings on expired measures may serve to provide a positive resolution to a dispute.
Particularly in a case such as this, where the measure at issue was one that was contained in annual
appropriations measures which by their nature expire at the end of every fiscal year, basing a decision
to exercise judicial economy on the fact that the me asure is expired could deprive the complainant of
any meaningful review of its claims and any finding s that would assist in the positive solution of the
dispute. The Panel does address the fact that the me asure is expired precisely in paragraphs 8.7 to 8.9
of the Interim and Final Reports where we explai n that, although the Panel is making findings on the
consistency of Section 727 with the SPS Agreement and the GATT 1994, it refrains from making
recommendations under Article 19 of the DSU.
6.32 The United States' other argumentation in s upport of its position on judicial economy seems
to repeat or expand its prior submissions to this Pa nel on its views of the substantive interpretation of
the provisions of the SPS Agreement and the GATT 1994. We note that the interim review is not the
appropriate forum for relitigating ar guments already put before a panel
158 and that the Panel has
already addressed the United States' arguments where appropriate in its findings. We will therefore
briefly address the United States' arguments and will t hus refrain from engaging in a new analysis of
the United States' substantive arguments on these provi sions. We will also make a brief clarification
with respect to the United States' arguments on Article 8 and Annex C.
6.33 In the context of requesting the Panel exer cise judicial economy on China's claims under
Article 8 and Annex C, the United States argues that the Panel has characterise d its interpretation of
Article 8 and its relationship to e quivalency procedures that might also be governed by Article 4 as
filling a "loophole". The Panel would like to clarify that in paragraphs 7.37 5-7.376 of the Interim
Report, we were expressing our understanding that the implications of following the United States'
interpretation that equivalency procedures are exem pt from the strictures of Article 8 and Annex C
would create a loophole in the SPS Agreement. The Panel did not say nor did it intend to imply that
its interpretation was "filling" a loophole that currently exists in the Agreement as we understand it.
6.34 The last point raised by the United States that we should exercise judicial economy on China's
claim under Article I:1 of the GATT 1994 and instead examine China's claim only under Article XI of

the GATT 1994. The main reasoning of the United States is again its concern of the systemic
implications of the like products analysis under Article I given the alleged food safety difference
between the products. The Panel renews its view th at judicial economy is not appropriately used to
avoid issues of first impression or those that might have systemic implications. Secondly, we note
that Articles I:1 and XI:1 address different obliga tions, namely MFN treatment and the prohibition on
quantitative restrictions. We do not see how a fi nding of violation of Article XI:1 on import
prohibitions provides a positive solution to a dispute with respect to discrimination.
6.35 Accordingly, the Panel declines the United Stat es' request that the Panel exercise judicial
economy on China's claims under Articles 2.3, 5.5, 8, and Annex C of the SPS Agreement and
Article I of the GATT 1994.
2. Factual aspects
6.36 Regarding paragraph 2.17 of the Interim Report, the United States suggests to the Panel that
the last sentence be amended to read: "The repor t found a number of deficiencies in some processing
and slaughter plants, and as a consequence, the FSIS sent a letter to China proposing a follow-up
equivalence audit to check whether the defi ciencies identified in the slaughter system
 during the
December 2004 audit had been corrected". The United States argues that this change is necessary to
reflect the fact that the letter sent by the United States on 13 June 2005, which is cited in this
paragraph, only related to the deficiencies identifie d in the slaughter system, not to any deficiencies
FSIS found in the process system.
6.37 China does not object to this insertion in particular.
6.38 The Panel has made the suggested change in paragraph 2.17 of the Final Report.
6.39 Regarding paragraph 2.18 of the Interim Report, the United States suggests to the Panel that
the paragraph be amended to read:
"The FSIS conducted the second initial equivalence audit on China's poultry slaughter
inspection system in July and August 2005, and on 4 November 2005 issued its Final
Report. On the basis of the first on-site audit this Report, on 23 November 2005, the
FSIS proposed to amend the Federal Poultry Products Inspection regulations to add
China to the list of countries eligible to export processed poultry products to the
United States, provided that the poultry products processed in certified establishments
in China came from poultry slaughtered in the United States or certified
establishments in other countries eligible to export poultry to the United States."
6.40 The United States argues that these changes are ne eded to reflect the fact that the second
initial equivalence audit was only focused on China's poultry slaughter inspection system.
6.41 China does not object to this insertion.
6.42 The Panel has amended the first sentence in pa ragraph 2.17 of the Final Report as suggested
but decides to partially keep the language of the second sentence. The Panel has also redistributed the
language between the relevant paragraphs for clarity purposes.
6.43 Regarding paragraph 2.19 of the Interim Report, the United States suggests to the Panel that
the third sentence in that paragraph ("The initia l equivalence audits fo r poultry processed but not
slaughtered in China and that of the slaughtered poultry in China were conducted separately.") be
deleted. The United States argues that this deleti on is needed to reflect the fact that the initial

equivalence audit included an assessment of China' s processed poultry inspection system and poultry
slaughter inspection system.
6.44 China does not object to this insertion.
6.45 The Panel has made the suggested change in paragraph 2.19 of the Final Report.
3. Whether Article 4 is the only provision of the SPS Agreement applicable to Section 727
6.46 The United States has requested that the Panel insert the following sentence at the end of
pargraph 7.151 of the Interim Report: "In addition, the United States argues that Section 727 and its
JES also contributed to the protection of life and h ealth by ensuring that FSIS would take additional
steps to evaluate China's food safety inspection sy stem in light of its recent food safety crises,
enforcement issues, and new food safety law".
6.47 China objects to the proposed insertion because it do es not add anything material to the
Panel's summary of the United States' argument s. However, should the Panel accept the
United States' suggestion, China suggests some redrafti ng. In particular, China requests that the text
be removed from "by ensuring that FSIS ..." onwards and replaced with "by urging USDA to submit a
'report' within one year, and to submit a 'plan of action' to guarantee the safety of poultry products
from China to Congress". China submits that such a language is a more accurately reflection of the
only actions FSIS could have undertaken during the pendency of Section 727.
6.48 Having considered the comments of both parti es, the Panel agrees with the insertion of the
sentence at the end of paragraph 7.151 of the Fi nal Report as suggested by the United States because
the paragraph in question intends to summarize th e arguments put forward by the United States and
such a language reflects the United States' argument ation in paragraphs 17-30 of its second written
submission.
6.49 The United States also requests that the Panel modify the first sentence of paragraph 7.154 in
the following manner: "It is through this ban, as well as the related activity that the U.S. government
took while the ban was in place , that Section 727 would be contributing to combating the risks
highlighted by the United States." The United States indicates that it is suggesting this modification
to avoid the misleading implication that the limitation on Chinese poultry imports during FY 2009
related to the funding restriction was the only manner in which Section 727 contributed to the
objective of protecting human and animal life and h ealth from the risk posed by Chinese poultry. The
United States submits that the JES which accompanied Section 727 also contributed to this objective
by instructing the FSIS to take certain actions to respond to the concerns that US Congress raised with
regard to the safety of poultry from China.
6.50 China has not raised any objections to the proposed insertion.
6.51 The Panel will insert a reference to the acti ons the JES urged the USDA to undertake but
declines to use the exact language volunteered by the United States and instead uses language closer
to that actually contained in the JES. The Pa nel has thus inserted the following language in
paragraph 7.154 of the Final Repor t: "It is through this ban, as well as the related activity that the
USDA was urged to undertake, that Section 727 would be contributing to combating the risks
highlighted by the United States."

4. Whether Section 727 is based on scientific principles and is not maintained without
sufficient scientific evidence as required by Article 2.2 of the SPS Agreement
6.52 The United States has requested the Panel to modify the language of paragraphs 7.196 and
7.202. Concerning paragraph 7.196, the United States would like the panel to revise as follows:
"The United States argues that evidence of China's food safety crises and enforcement
problems support Section 727, especially in light of the fact that FSIS's equivalence
system places a large reliance on the exporting country to enforce its own laws to
ensure that the food being exported is safe. In addition, the United States produced
scientific evidence related to avian influe nza, poultry smuggling, and melamine in
chicken feed. The United States also contends that it follows scientifically from this
evidence, of food safety enforceme nt problems in China that there was a need to take
additional action to ensure that exports from China would be safe."
6.53 With respect to paragraph 7.202, the Unite d States proposes that the Panel modifies its
language as follows:
"Additionally, with respect to the evidence the United States refers to, we note that
the majority while it of this evidence deals generally with widespread food safety
issues in China, it and does not specifically address China's poultry inspection
system. The United States also introduced evidence with regard to avian influenza
and the particular risk posed by China' s enforcement problems in the context of
FSIS's equivalence regime . We also note that the evidence does not address the
existence of the risk which the measure is suppo sed to address. We accept the
United States' point that the general science on the safety of poultry products was
well established prior to the imposition of Section 727. However, the evidence
referred to ...".
6.54 The United States explains that these changes ar e necessary to accurately reflect the evidence
that the United States introduced in the record with regard to the ri sk posed by Chinese poultry. The
United States submits that, as currently drafted, the Interim Report ignores the evidence provided by
the United States regarding poultr y-related crises that occurred in China, such as China's avian
influenza problems, poultry smuggling, and the testin g of Chinese poultry for melamine. At the same
time, the United States submits, the Interim Report also ignores the discussion of the unique risk
posed by China's enforcement probl ems in the context of an equiva lence regime, including the fact
that the United States would be re lying on China to enforce its own laws to ensure that American
consumers are protected. Finally, the United States indicates that the Interim Report also ignores the
numerous problems that FSIS uncovered while co nducting audits of Chinese poultry inspection
facilities. The United States contends that it discuss ed the relevance of these three issues at length
and introduced numerous exhibits into the record to support these points.
6.55 China objects to the changes requested by the Un ited States in both paragraphs. According
to China, the two most problematic elements in the United States' suggestions are the proposed
additions to each paragraph. The suggested inser tions to both paragraphs relate to the Panel's
characterisation of the evidence that the United States tendered to support Section 727. In this regard,
China argues, the most troublesome additions relate to the FSIS procedures, such as the insertion on
the third line of paragraph 7.202, immediately af ter the Panel's statement that "the evidence the
United States refers to . . . does not specifically address China's poultry inspection system." The
insertion suggested by the United States effectively asks the Panel to state that the United States, in
fact, adduced evidence "with regard ... to the particular risk posed by China". China submits that this
is patently false. In successive submissions, the United States never a dduced specific scientific
evidence of the particular risks posed by China's poultry products or its poultry inspection system.

6.56 China further indicates that it can agree only that the United States did submit several
anecdotal and unconfirmed newspaper articles rega rding alleged enforcement problems – generally
relating to foodstuffs other than poultry. China can also agree that the United States adduced evidence
that Chinese poultry flocks had been affected by Av ian Influenza – despite the facts that (a) China
was not yet eligible to export domestically slaugh tered poultry to the United States (making avian flu
irrelevant for the poultry products that China initia lly expected to export); (b) the United States
readily imported poultry products from Israel when Israel was affected by Avian Influenza; and
(c) FSIS recognizes that "processed poultry" is p oultry "processed with k ill steps sufficient to
inactivate bacteria and viruses".
6.57 Having considered the comments of both parties, the Panel notes that some of the language
suggested by the United States could be misinterpret ed as if the Panel considers that Section 727 was
based on scientific evidence and thus an appropriate risk assessment was conducted. It is correct that
the United States has submitted evidence relating to f ood crisis (baby formula, food additives etc) and
enforcement problems in China. Th is evidence which was mainly in the form of newspaper articles,
studies from international bodies or by US authorities such as the USDA, relates to food products
other than poultry from China. While one could argue that given these incidents, a risk to human and
animal life and health may arise from imports of poultry products from China, other than the FSIS report
itself, the United States has provided no scientifically conducted study which would justify the existence
of such risk. The United States has also provi ded newspaper articles co ncerning poultry from China
which had been smuggled into the Unit ed States and thus has illegally entered into the territory of the
United States.
6.58 In light of the above comments, the Panel par tly agrees with the insertions proposed by the
United States in paragraph 7.196 below of the Final Report, which summarizes the arguments put
forward by the United States. This paragraph would now read:
"The United States argues that evidence of China's food safety crises and enforcement
problems support Section 727, especially in light of the fact that FSIS's equivalence
system places a large reliance on the exporting country to enforce its own laws to
ensure that the food being exported is safe. The United States produced a number of
newspaper articles and publications related to avian influenza, poultry smuggling, and
melamine in chicken feed. The United States thus contends that it follows
scientifically from that evidence, of food safety enforcement problems in China that
there was a need to take additional action to ensure that exports from China would be
safe."
6.59 In respect to paragraph 7.202 of the Final Report, the Panel does not consider that it is
necessary to change the first sentence since the word "generally" does not mean "exclusively". We
are however inserting the following sentences in orde r to take into account the concerns of both
parties:
"... The United States has produced a number of newspaper articles and publications
related to avian influenza, poultry smuggling, and melamine in chicken feed. Apart
from the FSIS reports in the framework of the equivalence proceedings, the
United States has not submitted to the Pane l any specific scientific justification,
notably through a risk assessment carried out according to the principles and
disciplines in Article 5 and paragraph 4 of Annex A of the SPS Agreement,
concerning the risk posed by poultry products from China ..."

5. Whether Section 727 is inconsistent with Article 5.5 of the SPS Agreement
6.60 With respect to paragraph 7.209 of the Interim Report, the United States proposes that the
Panel changes the third sentence of such paragra ph as follows: "While on the other hand, the ALOP
for all other WTO Members' poultry provided in the FSIS procedures or non
-poultry food products
provided in FDA import procedures tolerates some risk as long as the WTO Members' inspection
system has been deemed equivalent to the US system."
6.61 The United States suggests this modification for two reasons. First, the United States argues
that it is inaccurate to state that the FDA's import procedures "tolerate risk as long as the WTO
Members' inspection system has been deemed equiva lent to the US system" because the United States
does not operate an equivalence regime for pr oducts under FDA's jurisdiction. Second, the
United States submits that it cannot find this asser tion in China's answer to Panel question No.117
from the Panel, which the Panel cites to support this point.
6.62 China does not object to this change in particular.
6.63 The Panel notes that paragraph 7.209 includes a summary of China's arguments concerning
Section 727's inconsistency with Article 5.5 of the SPS Agreement. It is not the Panel's
argumentation. Accordingly, the Pa nel declines to make the changes suggested by the United States.
Concerning the United States' argument on the absence of a reference to the FDA in China's response
to Panel question No. 117, the Panel agrees that this reference was incorrect. Therefore the Panel has
corrected the citation to reflect where China actually made this argument, which is in China's response
to Panel question No.124 in footnote 432 of the Final Report.
6. Miscellaneous
6.64 In addition to the substantive comments presen ted above, the United States offered a number
of typographical and stylistic suggestions. The Panel has accommodated the United States'
suggestions where appropriate.
VII. FINDINGS
A. PRELIMINARY ISSUES
1. Terms of reference of the panel
(a) Introduction
7.1 A number of issues that may affect its terms of reference have been put before the Panel in
these proceedings. At the outset of the proceedings , the United States requested a preliminary ruling
concerning China's SPS claims. Additionally, the i ssue has arisen whether an alleged moratorium 159

159 In its first written submission, China challenged as a measure an alleged moratorium that it
contended the United States had been maintaining since 26 December 2007. China described the moratorium as
consisting of a suspension of (a) consideration of applications for the approval of, (b) granting of approval of,
and (c) implementation of approvals of, the import of poultry products from China under the US system for
regulating the import of poultry products. According to China, this alleged moratorium was initiated by the
predecessor to Section 727 (i.e. Secti on 733) and continued by Section 727, as it would be by any amendments
or replacement measures, any subsequent closely-relate d measures, and any future closely-related measures.
China argued that the alleged moratorium was also effectuated by the deliberate failure of the United States to
follow and implement the PPIA and the FSIS Regulations (e.g., for inspections, auditing, and evaluation) related
to the eligibility of countries and entities to import poultr y products, as applied to China. China's first written

existed and whether the allege d moratorium and a measure 160 enacted after the establishment of the
Panel were within our terms of reference. As expl ained below, the Panel need not resolve the latter
two issues because China has decided not to pursue th em within the confines of this dispute. Others,
such as the United States' contention that China ha d not requested consulta tions on its claims under
the SPS Agreement and that, therefore, these are not within th is Panel's terms of reference, will be
addressed below.
7.2 Another issue that pertains to this Panel's term s of reference is whether the Panel can rule on
an expired measure given that Section 727 is no longer in force.
(b) Request for a preliminary ruling by the United States
(i) Background
7.3 As indicated above, the United States argues that consultations were not requested under the
SPS Agreement. China's consultations request reads in the relevant parts as follows:
"In addition, although China does not believe that the US measures at issue restricting
imports of poultry products from China constitute sanitary and phytosanitary
measures ('SPS measure') within the meaning of the Agreement on the Application of
Sanitary and Phytosanitary Measures ('SPS Agreement'), if it were demonstrated that
any such measure is an SPS measure, China also requests consultations with the US
pursuant to Article 11 of the SPS Agreement . In particular, to the extent any such
measure is demonstrated to be an SPS measure, China considers that the measure is in
breach of the US obligations under the SPS Agreement, including but not limited to
Articles 2.1-2.3, 3.1, 3.3, 5.1-5.7, and 8 thereof.
Generally, to the extent it is demonstrated that any such measure is an SPS measure,
China is concerned that the US measure may violate Articles 2.1, 2.2, 5.1-5.4, and 5.6
of the SPS Agreement, because any SPS measure is not based on a proper assessment
of the particular risks presented and is not supported by sufficient scientific evidence.
China is also concerned that any such measur e, to the extent not applied with respect
to similarly situated imports from other Members, may violate Articles 2.3 and 5.5 of
the SPS Agreement. Moreover, China is concerned that any SPS measure fails to
observe the provisions of Annex C of the SPS Agreement with respect to the
operation of control, inspection and approva l procedures, and may therefore violate

submission, para. 24. In response to Panel question No. 12, China confirmed that it was no longer making any
claims with respect to the alleged moratorium.
160 As explained in paragraph 2.29, Section 743 wa s enacted on 21 October 2009; therefore two days
after the deadline for China's first written submission (1 9 October 2009). In its first written submission, the
United States alleged that Section 727 had expired and thus been supplanted by Section 743. The United States
further contended that any funding restriction imposed by Section 743 had been lifted as a consequence of the
Secretary of Agriculture's issuance of a letter to the US Congress on 12 November 2009. United States' first
written submission, paras. 62, 68 and 74. The letter can be found in Exhibit US-45.
At its oral statement at the first substantive meeting of the Panel with the parties, China requested a
preliminary ruling from the Panel on whether Section 743 was part of the Panel's terms of reference. China
stated that it would refrain from providing substantive arguments regarding what it considered to be the WTO-
inconsistencies of Section 743 until the Panel decides wh ether Section 743 was within its terms of reference.
Further to the Panel's letter of 18 December 2009 info rming the parties of its decision not to rule on a
preliminary basis and thus defer ruling on both these matters until issuance of the Interim Report, China
informed the Panel China in a letter dated 7 January 2010 (Exhibit CN-51) that China would not argue the WTO
inconsistency of Section 743 in its second written submission, but reserved its rights to challenge Section 743 in
separate dispute settlement proceedings.

Article 8 of the SPS Agreement. Additionally, China is unaware of any basis on
which any such US measure is justified under international sta ndards, guidelines or
recommendations, or otherwise, consisten tly with Articles 3.1 and 3.3 of the
SPS Agreement. Finally, China is unaware of any basis on which such US measure is
justified by Article 5.7 of the SPS Agreement, if applicable." (emphasis added)
7.4 A few days after receiving the request for cons ultations the United States informed China, via
a letter, that based on its understanding of China's consultations request:
"[I]t appears that China is not
 requesting consultations pursuant to Article 11 of the
[SPS Agreement] since China does not believe that the SPS Agreement applies to the
measures at issue. China provides that it would request consultations under the
SPS Agreement, only if a particular condition were met. That condition is that "it
were demonstrated that any [measure at i ssue] is an SPS measure." Yet there is no
avenue or mechanism for such a demonstra tion to occur, and China's belief that none
of the measures at issue is an SPS measure continues to govern China's request. The
United States therefore understands from your letter that China is not, in fact,
requesting consultations pursuant to Article 11 of the SPS Agreement."161
7.5 The next day, China responded with a letter cl arifying that the United States' understanding
was not correct:
"Through its request for consultations (WT/DS392/1), China has requested
consultations under Article 11 of the SPS Agreement to cover a contingency, namely
the demonstration that any of the listed measures is an SPS measure. To that end,
China will shortly provide the United Stat es with written questions requesting the
United States to provide answers during th e consultations concerning the nature and
status of measures identified in the cons ultation request. Thus, China has indeed
requested, and the United States and China w ill engage in, a consultation that fully
addresses relevant questions concerning whether any of the US measures are
SPS measures within the meaning of the SPS Agreement. The parties will also consult
on the questions regarding the various claims under the SPS Agreement applicable to
such measures, as stated in China's consultations request."162
7.6 Three days before the organizational meeting held on 28 September 2009, the United States
addressed a letter to the Panel indicating its intentio n to request a preliminary ruling by the Panel on
whether China's SPS claims are part of its terms of reference. The United States contended that China
had failed to request consultations under the SPS Agreement and thus the SPS claims put forward by
China could not be part of the Panel's terms of refe rence. In that letter, the United States requested the
Panel to include a preliminary ruling stage in its timetable for panel proceedings. China responded in
a letter to the Panel dated 28 September 2009 where it argued that, in the light of, in particular, the
exchange of letters, China's consultations request was made pursuant to, inter alia, the SPS Agreement
and therefore its SPS claims were well within this Panel's terms of reference.
7.7 Further to the organizational meeting, the Pane l sent its working procedures and timetable to
the parties on 1 October 2009. Regarding the United St ates' request that a preliminary ruling stage be
included in the Panel's timetable, the Panel informed the parties as follows:
"Concerning the United States' request for th e Panel to include a preliminary ruling
stage in its timetable and thus working pro cedures, the Panel considers that it is not

161 Letter from the United States to China, 27 April 2009 (Exhibit US-1).
162 Letter from China to the United States, 28 April 2009 (Exhibit CN-38).

necessary at this time to modify its proposed timetable and working procedures,
which would further delay its proceedings . The Panel is of the view that the
procedures foreseen in paragraph 11 of its working procedures provide adequate
means to address preliminary ruling requests. If the United States wishes to request a
preliminary ruling prior to the deadline for its first written submission, the Panel
would then set a deadline for China to respond to the United States' request, and
would thereafter dedicate a portion of its firs t substantive meeting with the parties to
discuss the United States' request. If the Pa nel were to receive a request from the
United States and a subsequent response from China, and thereafter determine that an
earlier meeting with the parties would be n eeded, the Panel will inform the parties
and amend its timetable accordingly. Having heard the parties at the first substantive
meeting (or at an earlier stage if deemed necessary), the Panel would then decide
whether to issue a preliminary ruling, or withhold ruling on matters until issuance of
the Interim Report."
7.8 On 1 October 2009, the United States submitted a request for a preliminary ruling pursuant to
paragraph 11 of the Panel's worki ng procedures. By letter of 7 Oct ober 2009, the Panel informed the
parties and third parties as follows:
"Further to the request for a preliminary ruling submitted by the United States to the
Panel on 1 October 2009, the Panel invites China to submit its comments on such a
request within the deadline for its first written submission (i.e. 19 October 2009). The
Panel further invites the third parties to submit their comments on the preliminary
ruling request by 26 October 2009. Were the Panel to decide that a preliminary ruling
hearing is needed before its first substantive meeting, the Panel will inform the parties
and third parties accordingly."
7.9 In response to the Panel's instructions, Ch ina submitted its comments in its first written
submission. The European Union and Korea were the only third parties that submitted comments on
this issue. After the first substantiv e meeting, the Panel, in a letter to the parties, indicated that it
would refrain from ruling on the issue of whethe r China had requested consultations under the
SPS Agreement until its Interim Report. The parties were encouraged to make decisions about
presenting arguments with respect to the consistency of Section 727 with the SPS Agreement bearing
that decision in mind.
7.10 In the same letter, the Panel also addressed Ch ina's request, made during the first substantive
meeting, for a preliminary ruling on whether Section 743
163 was part of this Panel's terms of reference.
Specifically, the Panel informed the parties of its decision not to rule on a preliminary basis on this
request. The Panel noted that if China were to make arguments with respect to Section 743, the
United States would need to be given an opportunity to reply and that this could delay the process.
Therefore, China was requested to inform the Panel by 11 January 2010 whether it would argue the
WTO inconsistency of Section 743 in its second written submissi on. On 11 January 2010, China
informed the Panel that it would not be pursuing claims against Section 743, although it did not
foreclose the possibility of a future dispute on this measure.
(ii) Arguments of the parties
7.11 The United States contends that China's claims under the SPS Agreement are outside the
Panel's terms of reference. In its view, China has failed to request consultations under Article 11 of

163 We recall in paragraph 2.29, the Panel noted that in the annual appropriations act for 2010 there was
a provision, Section 743, which, a lthough worded differently than Sec tion 727, also relates to access to
appropriated funds for the FSIS to establish or implement a rule allowing the importation of poultry from China.

the SPS Agreement. The United States submits that Article 4.7 of the DSU provides that a request for
establishment of a panel may be submitted only afte r consultations have first been requested and
therefore should a "matter" have been left out of the request for consultations, it will be outside the
terms of reference of the panel.
164 The United States argues that in order for a Member to bring a
dispute under the DSU with respect to the SPS Agreement, that Member must, according to Article 1.1
of the DSU bring the dispute "pursuant to the c onsultation and dispute settlement provisions of the
agreements listed in Appendix 1 to this Understanding", including the SPS Agreement. The
United States argues that China's consultations re quest was only made pursuant to Article 4 of the
DSU, Article XXII of the GATT 1994 and Article 19 of the Agreement on Agriculture.
7.12 Although China's consultations request does refer to Article 11 of the SPS Agreement, the
United States argues that China's conditional langua ge means that consultations were not actually
requested.165 The United States explains that China first st ated in its consultations request that it does
not believe that the measures at issue fall within the SPS Agreement. China then stated that if it were
demonstrated that any such measure is an SPS m easure, it also requests consultations with the
United States pursuant to Article 11 of the SPS Agreement. The United States argues that as China
stated that it does not believe that the relevant measures are SPS measures, China also rendered it
clear that the imposed condition for a request fo r consultations pursuant to Article 11 of the
SPS Agreement had not been fulfilled. The United States th erefore submits that the only conclusion
that can be reached is that the condition was not fulfilled and thus that no request pursuant to
Article 11 of the SPS Agreement was made.166
7.13 The United States argues that although China states that it intended to make claims under the
SPS Agreement in the alternative (that is, if the United States were to invoke Article 2.4 of the
SPS Agreement as a defence), 167 it is undeniable that China's consultations request, as written, does
not request consultations in order to pursue altern ative claims, but makes the request for consultations
itself conditional on future developments. For the United States, this is the defect in China's
consultations request with respect to the SPS Agreement, and China's subsequent attempts at
clarification cannot cure the jurisdictional requi rement set forth in Article 1.1 of the DSU that
consultations must be requested pursuant to the consultation and dispute settlement provisions of each
covered agreement for which dispute settlement under the DSU is sought.168 169
7.14 According to the United States, it is unclear what entity could be empowered to determine
whether the measures at issue had been "demonstrated " to be SPS measures, and thus whether China's
purported condition had been fulfilled. 170 The United States insists that the Panel cannot be the entity
that determines whether the measures at issue ha ve been "demonstrated" to be SPS measures, for
purposes of interpreting China's consultations request , because "if that were th e case, then the scope
of China's consultations request – and therefore of the Panel's terms of re ference – would depend on
the substantive findings of the Panel." The United States believes such a role for the Panel is not
permitted under the DSU. According to the United Stat es, the Panel cannot alter its terms of reference

164 United States' request for a preliminary ruling, para. 14.
165 Paragraph 6 of China's consultations request read s: "In addition, although China does not believe
that the US measures at issue restricting imports of poultry products from China constitute sanitary or
phytosanitary measures ('SPS measure') within the meaning of the Agreement on the Application of Sanitary and
Phytosanitary Measures ('SPS Agreement'), if it were demonstrated th at any such measure is an SPS measure,
China also requests consultations with the US pursuant to Article 11 of the SPS Agreement ...".
166 United States' request for a preliminary ruling, para. 20.
167 The United States refers to China's first written submission, para. 164.
168 The United States refers the Panel to the Appellate Body Report, US – Upland Cotton , para. 287
(stating that the panel in that dispute "should have limited its analysis to the request for consultations" in
assessing whether consultations were requested for purposes of a preliminary ruling request).
169 United States' first written submission, para. 160.
170 United States' request for a preliminary ruling, para. 20.

by its findings; to the contrary, the terms of re ference set the boundaries of the Panel's work. They
thus cannot be expanded by virtue of findings that the Panel makes. 171
7.15 The United States contends that the DSU confirms that the complainant must clearly specify
the scope of its consultations request and that it can not make that scope conditional on future events
or demonstrations of particular factual and lega l conclusions. For the United States, China has failed
to comply with Articles 4.3, 4.4 and 4.7 of the DS U. The United States claims that Article 4.3 of the
DSU makes it clear that the obligation to consult und er a particular covered agreement is based on a
request for consultations "made pursuant to" that covered agreement. The United States argues that
given the conditional request for consultations under the SPS Agreement, no request for consultations
was "made pursuant to" that Agre ement. The United States also argues that, in accordance with
Article 4.4 of the DSU, a Member requesting consu ltations is required to give the reasons for the
request and indicate the legal basis of the complaint. In the present case, the consultations request did
not, according to the United States, make any "rep resentations" whether the measures were "affecting
the operation" of the SPS Agreement. Rather, the United States argues, the consultations request stated
the opposite.172
7.16 The United States argues that China's letter of 28 April 2009 cannot cure deficiencies in the
consultations request. According to the United States , the Appellate Body has ruled that a deficiency
in a Panel Request cannot be subsequently cured by a complaining party's argumentation in its first
written submission to a panel or statement made later in that proceeding, at least to the extent that the
deficiency is one that affects the panel's terms of reference. 173 The United States argues that China's
28 April 2009 letter was not a new or revised consultations request, nor did it meet the requirements
set forth in the DSU for consultations requests. 174 Consequently, according to the United States, the
absence of consultations pursuant to the SPS Agreement on 15 May 2009 was attributable to a failure
by China to request such consultations, and not a refusal by the United States to consult. 175 The
United States submits that its pos ition is consistent with, and sup ported by, Articles 3.10 and 4.2 of
the DSU.176 The United States suggests that China may make a new request for consultations under
the SPS Agreement, and that the two panel proceedings may eventually be harmonized. 177 In response
to Panel question No. 7, the United States indicated that adding claims under a different covered
agreement cannot be considered an "evolution" of th e legal basis for claims; rather, the DSU is clear
that in order to bring claims under a covered ag reement, the dispute has to be brought under the
consultation and dispute settlement provisions of that Agreement.
7.17 China argues that its consultations request was fully in accordance with Article 11 of the
SPS Agreement and Article 4 of the DSU. In China's view, not only was Article 11 of the
SPS Agreement invoked in the consultations request, but a number of potential violations of specific
provisions of that Agreement were included in both paragraph 6 and paragra ph 7 of its consultations
request. China also states that it even anticipated and rejected a number of the potential defences of
the United States under the SPS Agreement in paragraph 7 of its Request. China submits that it has
made an alternative claim, and that an argument in the alternative is not a proper basis for disrupting
the ability of China to achieve a "p rompt settlement" of this dispute. 178 China stresses that over
30 per cent of its consultations request was dedicated to claims under the SPS Agreement.179

171 United States' request for a preliminary ruling., para. 21.
172 United States' request for a preliminary ruling, para. 23.
173 Appellate Body Report, EC – Bananas III, para. 143.
174 United States' request for a preliminary ruling, para. 28.
175 United States' request for a preliminary ruling, para. 9.
176 United States' request for a preliminary ruling, paras. 23, 24, 26 and 37.
177 United States' request for a preliminary ruling, paras. 33, 34 and 39.
178 China's first written submission, para. 163.
179 China's first written submission, para. 161.

7.18 According to China, its letter of 28 April 2009 addressed to the United States should have
eliminated any doubts that the United States could possibly have had as to whether the upcoming
consultations would include issues relating to the SPS Agreement. This letter, it argues, was not, as
argued by the United States, an attempt to cure a defi ciency in the consultations request but rather an
attempt to clarify and re-state the basis of consu ltations in light of the le tter China received from the
United States on 27 April 2009. China further argues th at, consistent with its letter, it provided the
United States with numerous questions in another le tter of 8 May 2009, seeking to determine whether
the United States considered the measures at issue to be SPS measures.
180
7.19 China argues that even if there was a flaw in the consultati ons request, by the time the actual
consultations were held on 15 May 2009, the United States cannot claim that it did not understand that
China's consultations request expressed intent to consult pursuant to Article 11 of the SPS Agreement.
The letter dated 28 April 2009 and the consultations request demonstrate that it had always been
China's intent to actively consu lt pursuant to Article 11 of the SPS Agreement. China argues that a
responding party cannot unilaterally control the jurisd iction of a panel by simply refusing to consult
on measures or violations properly raised in a consultations request.181
7.20 China argues that the United States' reading of th e consultations request must also be rejected
as it fails to accord "sympathetic consideration" to "any representations" made by China as required
by Article 4.2 of the DSU. China states that the pr ovision is not limited to representations framed as
direct challenges rather than arguments in the alte rnative or conditional arguments. China states that
the core of the US critique of China's consultations request is the phrase "if it were demonstrated that
any such measure is an SPS measure". China argues that the US argument fails to appreciate the role
of consultations in WTO dispute settlement, and the fact that, as the Appellate Body explained, "the
claims set out in a panel request may thus be e xpected to be shaped by, and thereby constitute a
natural evolution of, the consultation process".182 According to China, one of the legitimate purposes
of the consultations was to give the United States th e opportunity to provide its views, together with
requested factual information, that may have dem onstrated a basis upon which it could be concluded
that the measures at issue were SPS measures.183 The wording chosen shows, according to China, that
China was contemplating a bilateral diplomatic di alogue to clarify and better delineate the dispute,
thus precisely what the United States asserts it understands as the purpose of consultations.184
7.21 China refers to Mexico – Anti-Dumping Measures on Rice where the Appellate Body stated
that it was entirely appropriate that during the consultation process, a "reformulation" of the complaint
and legal claims may occur, that "takes into account new information". 185 The Appellate Body
explained further that "the claims set out in a panel request may thus be expected to be shaped by, and
thereby constitute a natural evol ution of, the consultation process". 186 China thus submits that one
type of such "evolution" that can take place pursuan t to consultations is the evolution from a claim in
the alternative to a less conditional (or unconditional) claim. China indicated that it had anticipated
receiving new information and greater clarity about the measures pursuant to the consultations.
7.22 In China's view, a comparison of the requirements of Article 4.4 of the DSU with those of
Article 6.2 of the DSU provides a helpful context confirming that China has fully met its obligations
under Article 4.4. China states that the relevant part of Article 4.4 of the DSU holds that a
consultations request "shall give the reasons for the request, including identification of the measures

180 China's first written submission, para. 184.
181 China's first written submission, para. 187.
182 China refers to the Appellate Body Report, Mexico – Anti-Dumping Measures on Rice, para. 138.
183 China refers to the Appellate Body Report, Brazil – Aircraft, para. 132.
184 China's first written submission, para. 177.
185 Appellate Body Report, Mexico – Anti-Dumping Measures on Rice, para. 138.
186 Appellate Body Report, Mexico – Anti-Dumping Measures on Rice, para. 138.

at issue and an indication of the legal basis for th e complaint". In contrast, Article 6.2 of the DSU
provides, in relevant part, that a panel request shall "identify the specific measures at issue and
provide a brief summary of the legal basis of the complaint sufficient to present the problem clearly".
Accordingly, China argues, Article 4.4 of the DSU requires merely an "indication" of the legal basis
of the complaint. China suggests that the l esser requirement in Article 4.4 of the DSU compared to
that in Article 6.2 of the DSU reflects the understanding that the lega l bases of claims often evolve
during the course of consultations. China argues that it satisfied the burden of providing an
"indication" with the consultations request submitted. Thus, China argues that even if formulating the
legal basis for a claim as a conditional claim were not "sufficient to present the problem clearly", as
required for the panel request and Article 6.2 of th e DSU, it would certainly meet the threshold of
providing an "indication" of the legal basis for the complaint as required by Article 4.4 of the DSU.
187
7.23 China argues that, in any event, given that many of the same questions that relate to China's
claims under the GATT 1994 also impact upon China's alternative claims under the SPS Agreement, it
is China's understanding that the United States did, in fact, consult on SPS-related measures. Also,
China argues that this is clear considering the expl icit reference to this effect in the Request for
establishment.
188
7.24 China also argues that to the extent that th e Panel finds it necessary to look beyond the scope
of the consultations request to confirm the inclusion of claims under the SPS Agreement, the existence
of the questions posed by Chin a to the United States for the purposes of the consultations has
significant evidentiary value. To support its contentio n, China refers to what it claims is an analogous
situation in the Korea – Commercial Vessels dispute. In those proceedings, the complainant put
forward a list of questions that had been supplied to the respondent prior to consultations as evidence.
The Panel found that the very fact that the measure appeared in the questions was, along with the brief
reference to available evidence, "alone … sufficient for us to conclude that the parties consulted on
the entirety of the KEXIM Act, including any impl ementing decrees and other regulations, and that
the European Communities was th erefore entitled to include tho se measures in its request for
establishment of a panel".189
(iii) Analysis by the Panel
7.25 The Panel is therefore called upon to determin e whether China's use of the conditional tense
in its consultations request means that China has not requested consultations under the SPS Agreement
and whether that would deprive the Panel of jurisdiction to hear China's claims under the
SPS Agreement. We note that there is substantial jurispr udence on the relevance of the consultations
request and the holding of consultations to a panel's terms of reference. Howeve r, the implications of
using the conditional tense in a consultations request have never been consider ed by previous panels
or the Appellate Body.

187 China's first written submission, para. 179.
188 China refers to its Panel Request, WT/DS392/2, para. 2.
189 Panel Report, Korea – Commercial Vessels, para. 7.2, subparagraphs 8 and 11.

The relevance of the consultations request and th e holding of consultations to a panel's terms
of reference
7.26 A panel's terms of refere nce, as provided for in Article 7.1 of the DSU 190, are generally set in
the Panel Request which must follow the rules set forth in Article 6.2 of the DSU.191 Additionally, the
Appellate Body has explained that "as a general matter, consultati ons are a prerequisite to panel
proceedings"192 and has underscored the importance and benef its of consultations. In particular the
Appellate Body has pointed out that consultations serve to help the parties assess the strengths and
weaknesses of the case, narrow the scope of differe nces between them and reach a mutually agreed
solution. In addition, consultations provide the par ties with an opportunity to define and delimit the
scope of the dispute.193
7.27 Consultations are regulated in Article 4 of the DSU. Article 4.2 of the DSU provides that
"[e]ach Member undertakes to ... afford adequa te opportunity for cons ultation regarding any
representations made by another Member concerning measures affecting the operation of any covered
agreement taken within the territory of the former".
7.28 The Appellate Body also observed in Brazil – Aircraft, that "Articles 4 and 6 of the DSU ...
set forth a process by which a complaining party mu st request consultations, and consultations must
be held, before a matter may be referred to the DSB for the establishment of a panel". 194 In that same
proceeding, the panel had considered that because the DSU essentially requires the DSB to establish a
panel automatically upon request of a party, a panel cannot rely upon the DSB to ascertain that
requisite consultations have been held and to establish a panel only in those cases.195 Accordingly, the
panel determined "that a panel may consider whether consultations have been held with respect to a
'dispute', and that a preliminary objection may proper ly be sustained if a party can establish that the
required consultations had not been held with respect to a dispute."196
7.29 The requirements that apply to consultations re quests are set out in Article 4.4 of the DSU,
which provides, in relevant part, that "[a]ny request for consultations shall be submitted in writing and
shall give the reasons for the request, including identification of the measures at issue and an
indication of the legal basis for the complaint."

190 Article 7.1 of the DSU states that the standard terms of reference, unless otherwise agreed by the
Parties shall be:
"To examine, in the light of the relevant provisions in (name of the covered agreement(s) cited by the
parties to the dispute), the matter referred to the DSB by (name of party) in document . . . and to make such
findings as will assist the DSB in making the recommendations or in giving the rulings provided for in
that/those agreement(s)"
191 Appellate Body Report, Guatemala – Cement I, paras. 69-76; see also Appellate Body Report, US –
Carbon Steel, paras. 125-127.(explaining that the identification of the specific measure and the legal basis of the
complaint in the Panel Request comprise the "matter referred to the DSB".)
192 Appellate Body Report, Mexico – Corn Syrup (Article 21.5 – US), para. 58.
193 Appellate Body Report, Mexico – Corn Syrup (Article 21.5 – US), para. 54.
194 Appellate Body Report, Brazil – Aircraft, para. 131. We note that in certain instances panels and the
Appellate Body have recognized that a responding party may be considered to have waived its objection to a
lack of consultations if it does not object in a timely manner. Appellate Body Report, Mexico – Corn Syrup
(Article 21.5 – US) , para. 63 (dealing with a lack of consultations request under Article 21.5 of the DSU);
Appellate Body Report, US – FSC, paras. 165-166. However, the United States objected to China's consultations
request upon receipt of the request for consultations, at the DSB meeting where the panel was established, and
directly to the Panel during the timeframe set forth for requesting preliminary rulings. Therefore we do not
consider "waiver" as a possible basis for why China's claims under the SPS Agreement, might be included in our
terms of reference.
195 Panel Report, Brazil – Aircraft, para. 7.10 (citing) Appellate Body Report, EC – Bananas III,
para. 142.

7.30 We note that the term "legal basis of the comp laint" has not been interpreted in respect of
Article 4.4 of the DSU. The Appellate Body has, however, interpreted the same term as used in
Article 6.2 of the DSU to mean the claim made by the complaining party. 197 The Appellate Body has
also clarified that a claim sets forth the complainan t's view "that the respondent party has violated, or
nullified or impaired the benefits arising from, an identified provision of a particular agreement." 198
Given the nearly identical language in Article 4.4 of the DSU, we consider that this understanding
could also be applied to the term "legal basis for the complaint" in Article 4.4.
7.31 Article 4.4 of the DSU however requires the cons ultations request to include an "indication of
the legal basis of the complaint" while Article 6.2 of the DSU requires the panel request to "provide a
brief summary of the legal basis for the complaint sufficient to present the problem clearly".
7.32 In this respect, China argues that "indication" of the legal basis of the complaint under
Article 4.4 requires significantly less than what is re quired under Article 6.2, i.e. "identify the specific
measures at issue and provide a brief summary of the legal basis for the complaint sufficient to
present the problem clearly". In China's view, an "i ndication" under Article 4.4 is a "hint suggestion,
or piece of information from which more may be inferred" while Article 6.2 requires a description
that is "sufficient" meaning adequate for a certa in purpose, enough, to present the problem clearly.
199
China considers that this difference reflects the he ightened burden of panel requests under Article 6.2
of the DSU and the understanding that the legal ba sis of a claim often evolve during the course of
consultations.200 China thus submits that it had met the burden of providing as "indication" in terms
of Article 4.4 of the DSU.201
7.33 The United States agrees that an "indication" of the legal basis does not require that all the
claims be spelled out in the consultations reque st. However, the United States argues that this
distinction is not pertinent to the issue of whether claims under the SPS Agreement are within the
Panel's terms of reference, because, in its view, China's consultations request plainly states China's
view that the United States' measure is not subject to the SPS Agreement.202
7.34 In describing how a panel must examine a panel request for consistency with the obligations
in Article 6.2 of the DSU, the Appellate Body has noted that the panel request must be examined as a
whole and in light of attendant circumstances. 203 Given the relationship between the consultations
request and the panel request, the shared language in Article 4 and Article 6.2 of the DSU, the similar
purposes of the two requests, i.e. to delimit the scope of the dispute, and the need to interpret both
provisions in a harmonious way204, we find the Appellate Body reasoning pertinent for the analysis of
the consistency of consultations requests with the obligations of Article 4.4 of the DSU as well.

197 Appellate Body Report, US – Oil Country Tubular Goods Sunset Reviews, para. 162.
198 Appellate Body Report, Korea – Dairy, para. 139.
199 China's response to Panel question No. 6.
200 China's response to Panel question No. 6.
201 China's response to Panel question No. 6.
202 United States' response to Panel question No. 6.
203 Appellate Body Report, Korea – Dairy, paras. 124-127; also Appellate Body Report, US – Carbon
Steel, para. 127.
204 The Appellate Body has recognized the applicability of the principle of effectiveness ( ut res magis
valeat quam pereat ) in the interpretation of the covered agreem ents. This principle was first discussed in
Japan – Alcoholic Beverages II, para. 24. In US – Gasoline, the Appellate Body noted that this principle obliges
a treaty interpreter to give meani ng and effect to all the terms of a treaty. (Appellate Body Report, US –
Gasoline, p. 23). In light of the interpretative principle of effectiveness, the Appellate Body in Argentina –
Footwear (EC) ruled that it is the duty of any treaty interpreter to "read all applicable provisions of a treaty in a
way that gives meaning to all of them, harmoniously." (Appellate Body Report, Argentina – Footwear (EC) ,
para. 81). The Appellate Body further held in Korea – Dairy that Article II:2 of the WTO Agreement expressly

7.35 The Panel is aware that in making its analysis of whether a particular claim was included in
the consultations request, it should not inquire as to what actually occurred during consultations. The
panel in Korea – Alcoholic Beverages correctly noted that "[t]he only requirement under the DSU is
that consultations were in fact held ... [w]hat takes place in those consultations is not the concern of a
panel".
205 The Appellate Body explained in US – Upland Cotton that examining what took place in
the consultations would seem contrary to Article 4. 6 of the DSU, which provides that "[c]onsultations
shall be confidential, and without prejudice to the rights of any Member in any further proceedings."
Finally, the Appellate Body noted that, there is no public record of what actually transpires during
consultations and parties will often disagree about what, precisely, was discussed.206
7.36 Therefore, the Panel will inquire whether China indicated the SPS Agreement as a legal basis
for its complaint in its consultations request and in doing so will look at that consultations request as a
whole and in light of the attendant circumstances. However, the Panel will not use as a basis for its
determination what either party a lleges took place during consultations. 207 Therefore, while we will
consider the exchange of letters in April 2009 – which are precisely about the scope of China's
consultations request – we will not consider an y questions posed or answers given during the
consultations.
Whether China has requested consultations pursuant to the SPS Agreement
7.37 The United States focuses its argumentation on China's statement that it does not believe that
the United States' measures are SPS measures and th at it is requesting consultations with the
United States pursuant to Article 11 of the SPS Agreement "if it were demonstrated that any such
measure is an SPS measure".
7.38 According to the United States, a "conditional" request for consultations under Article 11 of
the SPS Agreement does not amount to an "actual" request for consultations pursuant to Article 11 of
the SPS Agreement.208 Most importantly, the United States c ontends that it would have no way of
knowing whether the condition had been satisfied and that China's request had become operative.
7.39 Although the language in China's consultations re quest and, in particular, the reference to a
"demonstration" that the measures in question are SPS measures, is not the most artful, the Panel,
further to the above-mentioned jurisprudence, s hould not look at one phrase in the consultations
request in isolation, but rather examine the cons ultations request as a whole and in light of the
"attendant circumstances." This means that the Panel needs to consider the consultations request in its
entirety and place the SPS references in the contex t of the rest of the consultations request.
Additionally, the Panel will consider whether the exchange of letters are part of the "attendant
circumstances" of the consultations request.
7.40 With respect to the rest of the consultations re quest, the Panel notes that China's consultations
request deals with US measures affecting the im portation of poultry products from China into the
United States.209 Additionally, in paragraph 1 of the cons ultations request, China states that it "is
concerned that Section 727, in conjunction with the overall US regime for regulating imports of

manifests the intention of the Uruguay Round negotiators that the provisions of the WTO Agreement and the
Multilateral Trade Agreements included in its Annexes 1, 2 and 3 must be read as a whole. (Appellate Body
Report, Korea – Dairy), para. 81).
205 Panel Report, Korea – Alcoholic Beverages, para. 10.19.
206 Appellate Body Report, US – Upland Cotton, para. 287.
207 Although China, in its first written submission, refe rs to its questions to the United States and what
actually took place during consultations, given the Appellate Body findings in US – Upland Cotton, we will not
base our decision on what one party or another says occurred during consultations.
208 United States' Preliminary Ruling Request, para. 19.
209 China's consultations request, WT/DS392/1, opening paragraph.

poultry products places restrictions on the import from China of poultry products that are inconsistent
with the United States' WTO obligations." 210 The Panel is of the view that it is reasonable to interpret
this reference to the overall regime for the importation of poultry products to be a reference to the
PPIA as well as its implementing regulations, especia lly given China's reference, in the immediately
succeeding paragraph to 9 CFR §381.196 211 as one of several US regulations that cannot be
implemented because of Section 727. There is no dispute among the parties that the PPIA and the
regulatory regime set up pursuant to its mandate are SPS measures.
7.41 China's consultation request, after outlining the le gal basis for its complaint with respect to
Articles I and XI of the GATT 1994, includes, in para graphs 6 and 7, controve rsial language where it
specifically references the SPS Agreement.
7.42 It appears to the Panel that China was a ttempting to challenge Section 727 under the
GATT 1994 and the Agreement on Agriculture , and, in the alternative, under the SPS Agreement in
the event the United States argued that Section 727 is an SPS measure within the scope of the
SPS Agreement. It thus seems to the Panel that China wanted to ensure that the SPS Agreement was
within the Panel's terms of reference in such a case. Rather than being confusing, this seems
consistent with the panel's reasoning in Korea – Commercial Vessels that "if a complaining party
wishes to pursue claims in respect of a gi ven measure under multiple provisions, whether
complementarily or alternatively, not only is it permitted by Article 6.2 of the DSU to refer to all of
those provisions in its request for establishment, but it is required to do so." 212 The Panel is of the
view that the same logic should also apply to consultations requests.
7.43 Given the surrounding context, the Panel is of th e view that China's consultations request did
"indicate" an SPS basis for its complaint, even if that basis, seen in isolation, was qualified in
somewhat unclear conditional language. 213 In that respect, it is important to note that although there
are many similarities between Articles 4.4 and 6.2 of the DSU and they should be interpreted in an
harmonious way, the obligation on a Member in its consultations request is to "indicate" the legal
basis for the complaint whereas the obligation in the panel request is to provide a "brief legal
summary of the legal basis of the complaint sufficien t to present the problem clearly." Therefore, an
indication is something less than a summary suffici ent to present the problem clearly. While the Panel
does not wish to be perceived as encouraging WTO Members to present their problems confusingly in
their consultations request, it does seem that there is a bit more leeway in how WTO Members phrase
complaints in a consultations request vis-à-vis the clarity required in a panel request which is the final
word on the scope of the dispute.
214
7.44 Additionally, if we move beyond the consultati ons request itself to an examination of the
"attendant circumstances" and include in that ex amination the exchange of letters between the

210 China's consultations request, WT/DS392/1, para. 1.
211 Code of Federal Regulations, 9 Ch. III, Food Safety and Inspection Service, USDA (1-1-08
Edition).
212 Panel Report, Korea – Commercial Vessels, subparagraph 29 of para. 7.2. Recall our discussion
above on the relevance of Article 6.2 jurisprudence to an understanding of similar obligations in Article 4.4.
213 We do note that upon receipt of the United Stat es' letter, China could have filed an amended or
supplemental consultations request which would have eliminated any doubt on the part of the United States and
avoided spending time and resources on this matter.
214 We note that China also brings up whether th e United States was "prejudiced" by the supposed
confusion in the consultations request (China's first wr itten submission, para. 173). Although some panels and
indeed even the Appellate Body have delved into the issue of prejudice, we note that the Appellate Body has
also found that jurisdiction is a fundamental prerequisite for lawful panel proceedings. (Appellate Body Report,
US – Carbon Steel, para. 127.) Therefore it is our view that non-compliance with the various provisions that set
forth how to establish a panel and its terms of reference cannot be overcome by a lack of prejudice to the
respondent.

United States and China, China's intentions an d the United States' understanding thereof, becomes
even clearer.
7.45 We note that China's letter advises the United St ates that its understanding is not correct and
goes on to say that:
"Through its request for consultations (WT/DS392/1), China has requested
consultations under Article 11 of the SPS Agreement to cover a contingency, namely
the demonstration that any of the listed measures is an SPS measure. To that end,
China will shortly provide the United Stat es with written questions requesting the
United States to provide answers during th e consultations concerning the nature and
status of measures identified in the cons ultation request. Thus, China has indeed
requested, and the United States and China w ill engage in, a consultation that fully
addresses relevant questions concerning whether any of the U.S. measures are
SPS measures within the meaning of the SPS Agreement. The parties will also consult
on the questions regarding the various claims under the SPS Agreement applicable to
such measures, as stated in China's consultations request."
215
7.46 As noted by the United States itself, the Appe llate Body has concluded that "consultations
provide the parties an opportunity to define and delimit the scope of the dispute between them." 216
Accordingly, if through consultations the comp laining party obtains a better understanding of the
operation of a challenged measure such that additi onal provisions of the covered agreements become
relevant, it may reformulate its complaint to include these other provisions, even from covered
agreements not mentioned in the c onsultations request, so long as the legal basis in the panel request
may reasonably be said to have evolved from the legal basis that formed the subject of consultations.
7.47 We also recall the reasoning of the panel in China – Publications and Audiovisual Products,
pursuant to the Appellate Body's conclusions in Mexico – Anti-Dumping Measures on Rice, that:
"[I]n some circumstances, a claim based upon a WTO provision of a covered
agreement which was not contained in the request for consultations, can nevertheless
be considered to be within a panel's term s of reference. If through consultations the
complaining party obtains a better unders tanding of the operation of a challenged
measure such that additional provisions of th e covered agreements become relevant it
may reformulate its complaint to include these other provisions so long as the legal
basis in the panel request may reasonably be said to have evolved from the legal basis
that formed the subject of consultations.
217

215 China's letter of 28 April 2009. Exhibit CN-38.
216 Appellate Body Report, Mexico – Corn Syrup (Article 21.5 – US), para. 54.
217 Panel Report, China – Publications and Audiovisual Products , para. 7.115 citin g Appellate Body
Report, Mexico – Anti-Dumping Measures on Rice, para. 138 where it stated:
"A complaining party may learn of additional inform ation during consultations—for example, a better
understanding of the operation of a challenged measure—that could warrant revising the list of treaty provisions
with which the measure is alleged to be inconsistent. Such a revision may lead to a narrowing of the complaint,
or to a reformulation of the complaint that takes into account new information such that additional provisions of
the covered agreements become relevant. The claims set out in a panel request may thus be expected to be
shaped by, and thereby constitute a natural evolution of, the consultation process. Reading the DSU, as Mexico
does, to limit the legal basis set out in the panel request to what was indicated in the request for consultations,
would ignore an important rationale behind the requirement to hold consultations—namely, the exchange of
information necessary to refine the contours of the dispute, which are subsequently set out in the panel request.
In this light, we consider that it is not necessary that the provisions referred to in the request for consultations be
identical to those set out in the panel request, provided th at the 'legal basis' in the panel request may reasonably

7.48 It seems to us that what has happened in this case is that China merely forecasted its
expectation of obtaining a better understanding of th e operation of the challenged measures and that
the SPS Agreement might be relevant in the consultations re quest rather than simply waiting to reveal
the possibility of an SPS claim in the Panel Request. The Panel finds it difficult to sustain a reading of
Articles 4 and 6 of the DSU whereby a complainant c ould make no reference to the possibility of an
evolution of its claims in its cons ultations request and nevertheless have those claims included in the
terms of reference of the panel, yet a complainant who did mention them would have them excluded.
7.49 In light of the above, the Panel therefore concl udes, examining the consultations request as a
whole, that China, in its Consultation Request, indicated that the SPS Agreement would serve as the
basis of its claims, albeit in a conditional manner. Additionally, an examination of the attendant
circumstances, most notably the exchange of lette rs prior to consultations taking place, supports the
conclusion that the SPS Agreement was indicated as a basis for China's claims. Accordingly, the Panel
finds that China did request consultations inter alia pursuant to Article 11 of the SPS Agreement and
that, therefore, China's SPS claims are within its terms of reference.
(iv) Conclusion
7.50 The Panel therefore disagrees with the United St ates' contention that China did not request
consultations under the SPS Agreement and finds that China did request consultations pursuant to
Article 11 of the SPS Agreement, indicated the various provisions of that Agreement that were the
basis for its claims, and that, therefore, China's SPS claims are within its terms of reference.
2. Whether the Panel may rule on an expired measure
(a) Background
7.51 The United States has contended, and China agreed 218, that Section 727 expired on
30 September 2009, i.e. two days after the deadline for China's first written submission. This raises
the question of whether the Panel should make findings on a measure that is no longer in force. We
note that the United States has not requested the Panel not to make findings on an expired measure. 219
Nevertheless, the Panel believes that before going ahead and examining the WTO consistency of
Section 727 pursuant to China's various claims, we need to decide whether we may make rulings and
recommendations on a measure that is no longer in force.
(b) Arguments of the parties
7.52 The United States alleges that Section 727 has expired 220 and thus has been supplanted by
Section 743.221 The United States further argues that any funding restriction imposed by Section 743
has been lifted as a consequence of the Secretar y of Agriculture's issuance of a letter to the
US Congress on 12 November 2009. 222 As indicated above, the United States has not requested the
Panel not to rule on Section 727.

be said to have evolved from the 'legal basis' that formed the subject of consultations. In other words, the
addition of provisions must not have the effect of changing the essence of the complaint."
218 United States' first written submission, para. 2; China's response to Panel question No. 11.
219 See United States first written submission, para. 93. The United States argues that the Panel only
needs to consider China's claims under Article XI:1 of the GATT 1994 and any needed defence under
Article XX(b) in order to resolve this dispute.
220 United States' first written submission, para. 62.
221 United States' first written submission, para. 68.
222 United States' first written submission, para. 74. The letter can be found in Exhibit US-45.

7.53 China does not contest that Section 727 is no longer in force. For China, though, the
expiration of Section 727 has no bearing on the Panel' s terms of reference, as Section 727 expired
after the Panel was established a nd its terms of reference were set. China contends that measures
expiring after the establishment of a panel or during the panel process have repeatedly been found by
panels and the Appellate Body to be within a panel's jurisdiction. As an example, China argues, in
Indonesia – Autos, the panel rejected Indonesia's argument th at the National Car program was a moot
issue because it had expired. In doing so, China explains, the panel referenced several GATT and
WTO disputes where measures included in the term s of reference were terminated after the
commencement of the panel proceedings, and where pane ls nevertheless went on to make findings in
respect of those measures.
223 China submits that this approach has been followed in subsequent
disputes, such as EC – Selected Customs Matters and US – Upland Cotton. China stresses that, in US
– Upland Cotton , the Appellate Body noted that "GATT and WTO panels have frequently made
findings with respect to measures withdrawn after the establishment of the panel [and] [i]n none of
these cases has a panel or the Appellate Body premised its decision on the view that, a priori , an
expired measure could not be within a panel's terms of reference".224
(c) Analysis by the Panel
7.54 The Panel will therefore determine whether it should rule on an expired measure. The
Appellate Body explained in EC – Bananas III (Article 21.5 – Ecuador II) , "once a panel has been
established and the terms of reference for the panel have been set, the panel has the competence to
make findings with respect to the measures covered by its terms of reference." The Appellate Body
thus concluded that it is "within the discretion of the panel to decide how it takes into account … a
repeal of the measure at issue." 225 It is therefore within our discretion to decide whether to make
findings on Section 727.
7.55 We note that, in the past, panels have decide d to make rulings on expired measures where the
respondent Member had not conceded the WTO in consistency of the measure and the repealed
measure could be easily re-imposed.226 In our view, this is precisely the case of Section 727 since the
United States does not concede the alleged WTO inco nsistency of Section 727 and the appropriations
legislation in the United States is of an annual nature. As explained in Section II.D above, Section 727
reiterated the language of a previous annual ap propriations provision with identical wording,
Section 733, and it has now expired and a new provis ion, Section 743, has been adopted to address
FSIS access to appropriated funds for activities regard ing China's equivalence application. Although
we acknowledge that Section 743 does not share the same language as Section 727 and its
predecessor, Section 733, we consider that if we we re to refuse to make findings on the expired
measure – Section 727 – the Panel might be depriv ing China of any meaningful review of the
consistency of the United States' actions with its WTO obligations, while allowing the repetition of
the potentially WTO-inconsistent conduct. This would certainly call to mind the "moving target"
scenario which the Appellate Body in Chile – Price Band System stated that a complainant should not
have to face.
7.56 The Panel will thus proceed to make findings on the WTO consistency of Section 727 which
is within its terms of reference. Nevertheless, th e Panel recognizes that it would not be appropriate to

223 China refers to the Panel Report, Indonesia – Autos , para. 14.9, citing Panel Report, US – Wool
Shirts and Blouses and GATT disputes EEC – Dessert Apples , EEC – Apples (US) , EEC – Apples I (Chile),
US – Canadian Tuna, EEC – Animal Feed Proteins and US – Section 337 . China's response to Panel question
No. 11.
224 China refers to the Appellate Body Report, US – Upland Cotton, footnote 214. China's responses to
Panel question No. 11.
225 Appellate Body Report, EC – Bananas III (Article 21.5 – Ecuador II), para. 270.
226 Panel Report, India – Additional Import Duties, paras. 7.69-7.70.

make recommendations pursuant to Article 19 of the DSU with respect to a WTO-inconsistent
repealed measure that has ceased to have legal effect. 227 Indeed, if the Panel finds that Section 727
was inconsistent with any of the provisions of the co vered agreements within its terms of reference, it
would be pointless to ask the United States to bri ng Section 727 into conformity with those covered
agreements since the measure is no longer in force.
(d) Conclusion
7.57 The Panel therefore concludes that it will pro ceed to make findings on the WTO-consistency
of Section 727 which is within its terms of reference.
3. European Union's request for enhanced third party rights
7.58 In Section V of its third-party submission, the European Union requested the Panel to amend
its working procedures and provide enhanced thir d-party rights to all third parties to these
proceedings. The Panel consulted the parties whic h were both against the Panel granting such a
request.228 The Panel also consulted the third parties wh ich – except for Korea – were all in favour of
the European Union's request.229 On 22 January 2010, the Panel informed the European Union of the
following decision:
"Further to the European Union's request for enhanced third party rights and after
having heard the parties' views, the Panel c onsiders that the views and interests of the
third parties have been fully taken into account during the Panel proceedings. The
Panel does not believe that the current proceedings demand that the panel deviate
from the rights embodied in Article 10.2 of the DSU. Accordingly, the Panel has
decided not to grant the European Union's request for enhanced third party rights."
B. O
RDER OF ANALYSIS OF CHINA'S CLAIMS AND THE UNITED STATES' DEFENCE
7.59 China has put forward claims under Articles I a nd XI of the GATT 1994, Article 4.2 of the
Agreement on Agriculture and, Articles 2.3, 5.5, 5.1, 2.2, 5.6 and 8 of the SPS Agreement. 230 The
United States has made an affirmative defence under Article XX(b) of the GATT 1994. 231 T h e
United States invokes this provision as a defence of a violation of Articles I:1 and XI of the
GATT 1994.232
7.60 Because the Panel has found that all of China's claims are within our terms of reference233, we
need to decide the appropriate order of analysis of China's claims and the United States' defence.
7.61 We note that China has not told the Panel its preferred order of analysis. It has however
drawn our attention to the ruling of the panel in EC – Hormones , where it was said that the

227 Appellate Body Report, US – Certain EC Products, para. 81; Appellate Body Report, US – Upland
Cotton, para. 272; and Appellate Body Report, EC – Bananas III (Article 21.5 – Ecuador II), para. 271.
228 See parties responses to Panel question No. 1. Both China and the United States disagreed with the
European Union's request for enhanced third party rights.
229 See third parties responses to Panel question No. 1. All of the third parties to this dispute agreed
with the request by the European Union.
230 See China's Panel Request, WT/DS392/2.
231 We note that the United States also argues that Section 727 satisfies the exception in the footnote to
Article 4.2 of the Agreement on Agriculture because it is justified under Ar ticle XX(b) of the GATT 1994. See
United States' first written submission, para. 105.
232 United States' first written submission, paras. 99, 102-103.
233 See Section VII.A.1(b)(iv).

SPS Agreement provides specific "obligations whic h are not already imposed by GATT",
234 and
which are "additional" to the requirements of Article XX of GATT. 235 For China, there is no
presumption of consistency with the SPS Agreement for measures that are found to be consistent with
Article XX(b) of the GATT 1994. On the contrary, China argues that measures such as Section 727
must comply with the requirements in both the GATT and the SPS Agreement. Therefore, in China's
view, even if the United States were successful in demonstrating that Secti on 727 "falls squarely
within the Article XX(b) exception" 236, this would not be sufficient defence against China's
SPS claims.237
7.62 In response to China's arguments, the United States submits that the Panel has the discretion
with regard to how it structures its analysis and that it is for the Panel to decide whether to consider
the GATT 1994 claims before the SPS claims or vice versa . For the United States, this is not a
situation where either the WTO Agreement requires or the Appellate Body has found that there must
be a particular order of analysis. 238 The United States argues that although there is no general rule
requiring that GATT 1994 claims be analysed prior to SPS claims, the appropriate order of analysis in
this case is to start with Article XI because China claimed that Section 727 was a budgetary measure
and that, in any case, "China's SPS arguments are primarily a rephrasing of its fundamental argument
under GATT 1994 Article XX – namely, that Sec tion 727 was not 'necessary' because FSIS
procedures were sufficient to meet the U.S. goa l of ensuring the safety of poultry imports from
China".239
7.63 The Panel notes that this is not a case of c onflict between provisions of different covered
agreements240; but rather of deciding in which order we are going to examine the various provisions at
issue. In doing so, the panel in India – Autos explained that it is important to first consider if a
particular order is compelled by principles of valid interpretative methodology, which, if not
followed, might constitute an error of law. 241 The panel also pointed out that the order selected for
examination of the claims may also have an impact on the potential to apply judicial economy.242
7.64 We recall that, in EC – Bananas III , the Appellate Body enunciated the test that should be
applied in order to decide the order of analysis where two or more provisions from different covered
Agreements appear a priori to apply to the measure in question. According to the Appellate Body, the
provision from the Agreement that "deals specifically, and in detail" with the measures at issue should
be analysed first.243

236 China refers to the United States' second written submission, para. 124.
237 China's opening oral statement at the second substantive meeting of the Panel, para. 50.
238 United States' response to Panel question No. 88, para. 7.
239 United States' response to Panel question No. 88, para. 9.
240 As put by the panel in Turkey – Textiles , "a conflict of law-making treaties arises only where
simultaneous compliance with the obligations of different instruments is impossible. ... There is no conflict if
the obligations of one instrument are stricter than, but not incompatible with, those of another, or if it is possible
to comply with the obligations of one instrument by refraining from exercising a privilege or discretion
accorded by another." Panel Report, Turkey – Textiles , para. 9.92. In the WTO context, conflict may, for
example, arise between obligations contained in GATT 1994 and obligations contained in agreements listed in
Annex 1A, such as the SPS Agreement, "where those obligations are mutua lly exclusive in the sense that a
Member cannot comply with both obligations at the same time", or "where a rule in one agreement prohibits
what a rule in another agreement explicitly permits." Panel Report, EC – Bananas III, para. 7.159.
243 Appellate Body Report, EC – Bananas III, para. 204.

7.65 In EC – Hormones , where claims under both the GATT 1994 and the SPS Agreement were
raised by the complainant, the panel, in a finding not reviewed by the Appellate Body, considered that
the SPS Agreement was to be addressed first because it "specifically addresses the type of measure in
dispute".244 This approach was also followed by the panel in Australia – Salmon.245
7.66 The order of analysis of the claims would therefore depend on whether the Panel finds that
Section 727 is an SPS measure. If so, the SPS Agreement would be lex specialis as it "deal[s]
specifically, and in detail" with the type of measure at issue, i.e. an SPS measure. Therefore, if the
Panel finds that Section 727 is an SPS measure and we were to follow the order of analysis as set out
in EC – Hormones and Australia – Salmon, we should start by analysing China's SPS claims.
7.67 The Panel draws further guidance from Article 2.4 of the SPS Agreement which provides that
SPS measures which conform to the provisions of the SPS Agreement shall be presumed to be in
accordance with the provisions of the GATT 1994 wh ich relate to the use of SPS measures, in
particular the provisions of Article XX(b). 246 Therefore, if the Panel were to find that Section 727 is
an SPS measure, a finding that it is not inconsistent with the SPS Agreement, would yield a
presumption that Section 727 is in accordance with Article XX(b) of the GATT 1994. Accordingly,
the Panel would not need to consider the GATT clai ms because the measure would be presumed to be
consistent with Article XX(b). However, we agr ee with China in that there is no presumption of
consistency with the SPS Agreement for measures that are found to be consistent with Article XX(b)
of the GATT 1994. Hence, if the Panel were to start with the claims under GATT 1994 and find
Section 727 to be consistent with that Agreement, then the Panel would still have to look at the
SPS claims, because a measure consistent with th e GATT 1994 is not presumed necessarily to be
consistent with the SPS Agreement.
7.68 The Panel will therefore commence by examini ng whether Section 727 is an SPS measure
within the scope of the SPS Agreement. If we find that Section 727 is indeed an SPS measure, we will
proceed to examine China's claims under the SPS Agreement, by first addressing the arguments of the
United States that China has rais ed claims under provisions of the SPS Agreement that are not
applicable to Section 727.
7.69 If we find that Section 727 is inconsiste nt with one or more provisions of the SPS Agreement
within our terms of reference, this Panel could conclude that it has provided a positive solution to this
dispute and therefore finalize its legal analysis with out entering into an examination of China's claims
under Articles I:1 and XI:1 of the GATT 1994, the Un ited States' defence pursuant to Article XX(b)
of that same Agreement and China's claim under Article 4.2 of the Agreement on Agriculture .
However, given that the United States has focu ssed its defence solely on the claims under the
GATT 1994 and the Agreement on Agriculture by invoking the general exception under
Article XX(b) of the GATT 1994, the Panel finds it appropriate for due process reasons to go forward
with an analysis of China's claims under those Agre ements and evaluate the United States' defence on
its own merit.

244 Panel Report, EC – Hormones, paras. 8.41-8.42.
245 Panel Report, Australia – Salmon, para. 8.39. See also Panel Report, EC – Sardines , para. 7.16, in
context of the TBT Agreement.
246 Panel Report, US – Continued Suspension, para. 7.327 footnote 471. The panel stated that the
reference to presumption in Article 2.4 of the SPS Agreement is to a legal presumption that is intended to
address potentially conflicting interpretations between two provisions.

C. W
HETHER SECTION 727 IS AN SPS MEASURE WITHIN THE SCOPE OF THE SPS AGREEMENT
1. Background
7.70 As explained in Section VII.B above, a crucial i ssue in this dispute is whether Section 727 is
an SPS measure. Indeed, determining whether Sec tion 727 is an SPS measure will not only dictate
whether the SPS Agreement is applicable but also, as we explained, in which order we will analyse
China's claims.
7.71 China's characterization of Section 727 as an SPS measure has, during the proceedings,
evolved from one extreme to the other. Following the language in both its consultations and Panel
requests, China had argued in its first written submissi on that based on its text and legislative context,
Section 727 was but a budgetary measure which resulted in the banning of imports of poultry
products from China, and thus would not appear to be an SPS measure. 247 Therefore, China's
SPS claims were conditionally made to the extent that Section 727 may be considered to be an
SPS measure within the meaning of the SPS Agreement.248
7.72 During the first substantive meeting, China ra dically changed its position and argued for the
first time that Section 727 is an SPS measure. China justified its new approach on the assertion by the
United States that the policy objective for enac ting Section 727 was the protection of human and
animal life and health from the risk posed by the importation of poultry products from China.249
7.73 The United States first notes that the burden is on China, in establishing its claim, to prove
that Section 727 is an SPS measure. Further, the United States argues that the mere fact that a measure
implicates food safety does not dictate whether a measure is covered by the SPS Agreement.
Additionally, for the United States, even if a measu re is covered by the definition of SPS measures in
Annex A, it does not necessarily follow th at all of the obligations in the SPS Agreement apply to that
particular measure.250
7.74 The Panel will therefore examin e whether Section 727 is an SPS measure within the scope of
the SPS Agreement.
2. Arguments of the parties
7.75 After having initially argued that Section 727 was only a budgetary measure as opposed to an
SPS measure251, China changed its position and argued at the first substantive meeting that the
United States had demonstrated that Section 727 is an SPS measure.252
7.76 Concerning the definition of an SPS measure, Ch ina argues that SPS measures are defined in
Annex A(1) of the SPS Agreement based on their purpose and legal form. 253 In its view, this
conclusion is reached when interpreting Annex A(1) on the basis of the Vienna Convention on the

247 China's first written submission, para. 116.
248 China's first written submission, para. 117.
249 Specifically, China said that: "[b] ecause the United States has stated repeatedly in its first written
submission that the purpose of Section 727 is the protection of human life and health, there is no doubt that the
United States has demonstrated that Section 727 is an SPS measure as defined by the SPS Agreement" (footnote
omitted). China's opening oral statement at the first substantive meeting of the Panel, para. 37, citing the
United States' first written submission at paras. 119, 121, 122.
250 United States' first oral statement, para. 9, citing the Panel Report, EC – Approval and Marketing of
Biotech Products at paras. 7.1326–7.1448.
251 China's first written submission, para. 116.
252 China's opening oral statement at the first substantive meeting of the Panel, para. 39.
253 China's opening oral statement at the first substantive meeting of the Panel, para. 38.

Law of the Treaties ("VCLT"). 254 According to China, "SPS measures are defined in Annex A(1) as
measures enacted for one of the purposes enumerated in paragraphs (a) through (d) – including the
protection of 'human or animal life or health with in the territory of the Member from risks arising
from additives, contaminants, toxins or disease causing organisms in food, beverages or feedstuffs"255,
"and the 'form' of which are 'laws, decrees, regulations, requirements or procedures."'256
7.77 China refers to the statements made by the Un ited States in its first written submission that
"Section 727 was enacted with the policy objective of protecting against the risk to human and animal
life and health posed by the importation of poultry products from China" 257, and to the Joint
Explanatory Statement accompanying Section 727 wh ich in its view "defines the alleged risk to
human health addressed by the measure in the broadest of terms, namely "concerns about
contaminated foods" originating in China. 258 China points out that, in the United States' first written
submission, the United States refers to the risk posed by Salmonella, Listeria, and Campylobacter to
illustrate the inherent danger of consuming poultry that is not pr oduced under sanitary conditions or
thoroughly inspected for contaminants and the FSI S audit procedures that were suspended due to
Sections 727 include rigorous assessment of the tes ting methods for Salmonella, Listeria, and E. coli
in production facilities.
259 China argues that "[b]ased on the description of the purpose of Section 727
in the Explanatory Statement and the representa tions made in the United States' first written
submission, Section 727 clearly falls within the confines of the definition of an SPS measure, as stated
in Annex A(1)(b)."260 Further, it notes that the form of Section 727 – a legal provision – clearly falls
within the illustrative list in Annex A(1). China conc ludes by stating that because Section 727 affects
international trade, it is subject to the SPS Agreement under Article 1.1.261
7.78 China notes that the United States has never de nied, rebutted or otherwise responded to the
Panel's question on whether the United States considers that Section 727 satisfies the definition of an
SPS measure in Annex A of the SPS Agreement.
262
7.79 The United States notes that China, as the complaining party, bears the burden of proving
that Section 727 meets the definition in the SPS Agreement of an SPS measure and of explaining how
and why each SPS provision cited applies to Section 727 including a consideration of the nature of the
measure.263 Moreover, China also has the burden of explaining precisely what has changed from its
first written submission where it claimed that Sectio n 727 was simply a "budgetary" measure to the
first substantive meeting when China ar gued that Section 727 is an SPS measure. 264 According to the
United States, China has not met its burden to pr ove how the measure meets each element of the
definition in the SPS Agreement.265

254 China's response to Panel question No. 43.
255 China's response to Panel question No. 42, para. 97 citing Annex A(1)(b) of the SPS Agreement.
256 China's response to Panel question No. 42.
257 China's opening oral statement at the first substan tive meeting of the Panel, para. 39 referring to the
United States first written submission, paras. 199, 121, 122.
258 China's opening oral statement at the first substantive meeting of the Panel, para. 40, citing the Joint
Explanatory Statement of the Agriculture Appropriations Act 2009 (Exhibit CN-33).
259 China's response to Panel question No. 96, para.2 1 citing the Final Report of an Initial Equivalence
Audit Covering China's Poultry Inspection p. 11 (Exhibit CN-13).
260 China's opening oral statement at the first substantive meeting of the Panel, para. 42.
261 China's opening oral statement at the first substantive meeting of the Panel, para. 42.
262 China's comments on United States' response to Panel question No. 95, paras. 22 and 25.
263 United States' response to Panel question No. 95.
264 United States' response to Panel question No. 93.
265 United States' second written submission, para. 86.

3. Analysis by the Panel
7.80 The Panel will thus examine whether the measure at issue, i.e. Section 727, is an SPS measure
within the scope of the SPS Agreement. We will first review the provisions of the SPS Agreement
setting forth what an SPS measure is and how they ha ve been interpreted by panels and the Appellate
Body. We will then look into whether Section 727 fa lls within the definition of an SPS measure under
the SPS Agreement. In doing so, we acknowledge that it is China's burden to prove that Section 727 is
indeed an SPS measure.
(a) The concept of SPS measure under the SPS Agreement
7.81 Article 1 of the SPS Agreement provides for the scope of application of the Agreement as
follows:
"1. This Agreement applies to all san itary and phytosanitary measures which
may, directly or indirectly, affect inte rnational trade. Such measures shall be
developed and applied in accordance with the provisions of this Agreement.
2. For the purposes of this Agreement, the definitions provided in Annex A
shall apply."
7.82 Therefore, there are two conditions for the application of the SPS Agreement to a given
measure; namely, (i) the measure must be an SPS measure as defined in Annex A of the
SPS Agreement, and (ii) the measure has to directly or indir ectly affect international trade. We turn to
examine these two conditions.
(i) Definition of SPS measures
7.83 Annex A of the SPS Agreement defines SPS measures in the following manner:
"1. Sanitary or phytosanitary measure – Any measure applied:

(b) to protect human or animal life or he alth within the territory of the Member
from risks arising from additives, contaminants, toxins or disease-causing organisms
in foods, beverages or feedstuffs;

Sanitary or phytosanitary measures include all relevant laws, decrees, regulations,
requirements and procedures including, inter alia, end product criteria; processes and
production methods; testing, inspection, certification and approval procedures;
quarantine treatments including relevant requirements associated with the transport of
animals or plants, or with the materials necessary for their survival during transport;
provisions on relevant statistical methods , sampling procedures and methods of risk
assessment; and packaging and labelling re quirements directly related to food
safety."
266

266 We note that Annex A(1)(a) defines as an SPS measure, any measure taken to protect animal or
plant life or health from the establishment or spread of pests, diseases, disease-carrying organisms, or disease-
causing organisms and that Annex A(1)(c) defines as an SPS measure, any measure taken to protect human life
or health from risks arising from diseases carried by animals. The United States has referred in its argumentation

7.84 The Panel notes that there have been six comple ted disputes, to date, which have dealt with
SPS issues.267 In all of these cases, with the exception of EC – Approval and Marketing of Biotech
Products, determining whether the measure at issue is an SPS measure has been straight forward.268
7.85 The first dispute where the panel examined th e definition of an SPS measure in depth was
EC – Approval and Marketing of Biotech Products. In that case, the panel examined whether various
EC actions constituted SPS measures that would fall under the SPS Agreement. In particular, the panel
looked at the definition of an SPS measure set out in Annex A(1) and explained that in determining
whether a measure is an SPS measure, regard must be had to elements such as the purpose of the
measure, its legal form and its nature. The panel considered that the purpose element is addressed in
Annex A(1)(a) through (d) ("any measure applied to"); the form element is refe rred to in the second
paragraph of Annex A(1) ("laws, decrees, regulati ons") and the nature of the measure is addressed by
the second paragraph of Annex A(1) "requirements and procedures". 269 The panel thus took the
phrase "laws, decrees, regulations, requirements a nd procedures including ...," and divided it into two
components: "Laws, decrees and regulations," it said, referred to the "form" of the measure; and
"requirements and procedures" referred to its "natur e". The panel found that one of the measures at
issue, a moratorium
270, did not have the "nature" of an SPS measure – because it did not provide for
requirements or procedures – and therefore could not be considered an SPS measure for purposes of
Annex A(1) of the SPS Agreement.271
7.86 The panels in US/Canada – Continued Suspension followed the approach of the panel in EC –
Approval and Marketing of Biotech Products to the extent that they indicated that they were
examining the purpose, form and nature of the meas ure but did not examine the meaning of the term
"nature".272 The panels first determined whether the purpose of the measure fell within
Annex A(1)(b), then they considered whether the measure fell within "laws, decrees and regulations
as well as requirements and procedures'." 273 Thus, the panels found that the measure at issue was
adopted for the purpose of protecting human life from contaminants in food and took the form and
nature contemplated in the second paragraph of Annex A, hence an SPS measure pursuant
Annex A(1)(b) of the SPS Agreement.274

to the purpose of the measure being to also protect from Avian influen za. However, since China has only
referred to the types of measures described in Annex A(1)(b) in its argumentation, we will not address the types
of measures described in Annex A(1)(a) and (c) in detail.
267 EC – Hormones , Australia – Salmon , Japan – Agricultural Products II , Japan – Apples , EC –
Approval and Marketing of Biotech Product and US/Canada – Continued Suspension . We note that for some
of these disputes, there is more than one complainant.
268 Panel Report, EC – Hormones, para. 8.22 (where the panel saw no need to further examine if the
measures were "applied to protect human ... life or hea lth" because both parties agreed that the EC measures
were "sanitary measures"); Panel Report, Australia – Salmon, para. 8.30 (noting that the parties agreed that the
measures fell under the SPS Agreement and that the main issue was whether they were applied to serve the
purposes outlined in either Annex A(1)(a) or Annex A(1)(b)); Panel Report, Japan – Agricultural Products II ,
para. 8.12 (where the panel noted that the parties agreed that the measures at issue were SPS measures); Panel
Report, Japan – Apples, para. 8.9 (where the panel noted that the par ties agreed that the measures at issue were
SPS measures).
269 Panel Report, EC – Approval and Marketing of Biotech Products, para. 7.149.
270 The so-called moratorium consisted of a decision taken by the EU and its member States to delay
the final approval decisions for the mark eting of biotech products. Panel Report, EC – Approval and Marketing
of Biotech Products, para. 7.1355.
271 Panel Report, EC – Approval and Marketing of Biotech Products, para. 7.1334.
272 Panel Report, US – Continued Suspension , para. 7.429. We note that the panel in that case was
examining a measure that was the su ccessor to the one challenged in the EC – Hormones case and it was not
disputed that it was an SPS measure.
273 Panel Report, US – Continued Suspension, para. 7.433.
274 Panel Report, US – Continued Suspension, para. 7.434.

(ii) Directly or indirectly affect[s] international trade
7.87 Even if a measure falls within the definiti on of an SPS measure in Annex A(1) of the
SPS Agreement, further to Article 1.1 of the SPS Agreement, such measure still needs to be a measure
that directly or indirectly affect[s] internati onal trade to be covered by the disciplines of the
SPS Agreement.
7.88 If we look at the previous SPS disputes, in Australia – Salmon , neither of the parties to the
dispute contested that the measure at issue affected international trade. The panel indicated that it
agreed it affected international trade.
275 In EC – Hormones, the panel agreed with the parties that the
measure at issue affected international trade, and added that it could not be contested that an import
ban affects international trade.276
7.89 The panel in EC – Approval and Marketing of Biotech Products stated that, consistent with
panels interpreting other pr ovisions of the WTO agreement, it determined that "it is not necessary to
demonstrate that an SPS measure has an actual effect on trade" (emphasis added). It further noted that
Article 1.1 of the SPS Agreement merely requires that an SPS measure "may, directly or indirectly,
affect international trade."277 The panel thus concluded that measures which caused delays or imposed
information and documentation requirements on applicants affected international trade.278
(b) Whether Section 727 is an SPS measure under the SPS Agreement
7.90 The Panel therefore needs to determine whether S ection 727: (i) falls within the definition of
Annex A(1) of the SPS Agreement and (ii) affects directly or indirectly international trade. We begin
by recalling the measure at issue. We will then an alyse whether Section 727 is an SPS measure within
the definition of Annex A(1) of the SPS Agreement, and if so, turn to see whether it directly or
indirectly affects international trade.
(i) The measure at issue
7.91 The Panel recalls that Section 727 was enacted on 11 March 2009 279 and that it expired on 30
September 2009. 280 We further recall that the AAA of 2009 , in which Section 727 appears, is a
regular appropriations bill that provides the necessary funding for the FSIS to carry out, inter alia, the
functions foreseen by the PPIA.281
7.92 Section 727 reads as follows:
"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."
282

277 Panel Report, EC – Approval and Marketing of Biotech Products , para. 7.435. We note that the
panels in Japan – Apples and Japan – Agricultural Products II and US/Canada – Continued Suspension, did not
assess whether the measures at issue directly or indirectly affected international trade.
278 Panel Report, EC – Approval and Marketing of Biotech Products, para. 7.435.
279 China's response to Panel question No. 19.
280 United States' first written submission, para. 62. Th e Panel's ability to make findings on an expired
measure, and the wisdom of doing so, is analysed in Section VII.A.2 above.
281 Omnibus Appropriations Act of 2009, p. 12.
282 Section 727, Agriculture Appropriations Act 2009 (Exhibit CN-1).

7.93 We recall that the AAA of 2009 was accompanie d by a Joint Explanatory Statement (JES)
which explains why the Congress restricted the funds for establishing or implementing rules allowing
the import of poultry products from China. The JES provides the following:
"There remain very serious concerns about contaminated foods from China and
therefore the bill retains language prohibiti ng FSIS from using funds to more forward
with rules that would allow for the importation of poultry products from China into
the U.S. It is noted that China has enacted revisions to its food safety laws. USDA is
urged to submit a report to the Committees on the implications of those changes on
the safety of imported poultry products from China within one year. The Department
is also directed to submit a plan for act ion to the Committees to guarantee the safety
of poultry products from China. Such plan should include the systematic audit of
inspection systems, and audits of all pou ltry and slaughter facilities that China would
certify to export to the U.S. The plan also should include the systemic audit of
laboratories and other control operations, expanded port-of-entry inspection, and
creation of an information sharing progr am with other major countries importing
poultry products from China that have conduc ted audits and plant inspections among
other actions. This plan should be made public on the Food Safety and Inspection
Service web site upon its completion."
283
(ii) Whether Section 727 falls within the definition of Annex A(1)
7.94 The Panel will thus consider whet her Section 727 falls within the definition of Annex A(1) of
the SPS Agreement. We recall that the panel in EC – Approval and Marketing of Biotech Products ,
later followed by the panels in US/Canada – Continued Suspension , explained that, in determining
whether a measure is an SPS measure within the definition in Annex A(1) of the SPS Agreement,
regard must be had to elements such as the purpo se of the measure, its legal form and its nature. The
panel in EC – Approval and Marketing of Biotech Products considered that the purpose element is
addressed in Annex A(1)(a) through (d) ('any measure a pplied to'); the form element is referred to in
the second paragraph of Annex A(1) ('laws, decrees, regulations') and the nature of the measure is
addressed by the second paragraph of Annex A(1) "requirements and procedures".284
7.95 We have asked the parties for their views on whether the Panel should follow the above three-
pronged test elaborated by the panel in EC – Approval and Marketing of Biotech Products. 285 The
parties have opposing views; while China wants us not to follow the test instituted by the panel in EC
– Approval and Marketing of Biotech Products , the United States requests that we do so. For China,
interpreting the definition of Annex A(1)(b) in light of the rules in the VCLT, SPS measures are
defined on the basis of their purpose and legal form but claims that the third element, "nature", is not

283 Joint Explanatory Statement, Division A of AAA of 2009, p. 82. (Exhibit CN-33).
284 The panel in EC – Approval and Marketing of Biotech Products reasoned as follows:
"Annex A(1) indicates that for the purposes of de termining whether a particular measure constitutes an
'SPS measure' regard must be had to such elements as th e purpose of the measure, its legal form and its nature.
The purpose element is addressed in Annex A(1)(a) through (d) ('any measure applied to'). The form element is
referred to in the second paragraph of Annex A(1) ('laws, decrees, regulations'). Finally, the nature of the
measures qualifying as SPS measures is also addressed in the second paragraph of Annex A(1) ('requirements
and procedures, including, inter alia , end product criteria; processes and production methods; testing,
inspection, certification and approval procedures; [etc.]')."
Panel Report, EC – Approval and Marketing of Biotech Products, para. 7.149. See also para. 7.1334.
285 The question posed by the Panel was the following: "The panel in EC – Approval and Marketing of
Biotech Products explained that in determining whether a measure is an SPS measure, regard must be had to
such elements as the purpose of the measure, its legal form and its nature. This approach was followed by the
panel in US – Continued Suspension. Should the Panel follow the same ap proach? Please elaborate." Panel
question No. 43.

mentioned in the definition. The United States, how ever, argues that it is essential for the Panel to
review carefully all aspects of a measure, including its nature, purpose and form, in order to determine
how, if at all, a food safety measure fits under any particular provision of the SPS Agreement.
286 The
United States, however, did not elaborate on how the nature of the measure should be determined, or
how the reasoning of the panel in EC – Approval and Marketing of Biotech Products applies to the
facts of this case.
7.96 The Panel must therefore decide which approach to follow; i.e. look into the purpose, form
and nature of Section 727, or just into the purpose and form.
7.97 We note that the text of Annex A(1) does not mention the term "nature" but neither does it
mention the terms "purpose" and "form" . This does not mean that an analysis of the ordinary meaning
of the wording of Annex A(1) in its context and in light of its object and purpose, would not lead us to
examining both the purpose and form of Section 727 in order to determine whether it is an
SPS measure.
7.98 We note that the first part of Annex A(1) (a) to (d) refers to an SPS measure as "any measure
applied ... to protect ... to prevent". Both parties a nd the Panel agree that this language refers to the
"purpose" of a measure.
7.99 The second part of Annex A(1), after having enunciated the possible purposes for which an
SPS measure could be applied, goes on to provide a list of the types of SPS measures. It reads "[SPS]
measures include all relevant laws, decrees, regulations, requirements and procedures including,
inter alia ..." This wording is followed by a list of possible types of SPS measures such as:
"[E]nd product criteria; process and pro duction methods; testing, inspection,
certification and approval procedures; qua rantine treatments including relevant
requirements associated with the transport of animals or plants, or with the materials
necessary for their survival during transport; provisions on relevant statistical
methods, sampling procedures and methods of risk assessment; and packaging
labelling requirements directly related to food safety."
7.100 The Panel has carefully examined the panel's findings in EC – Approval and Marketing of
Biotech Products as regards the legal basis for distinction of "form" and "nature" and has difficulty
with following the reasoning. The rationale for di viding the phrase "laws, decrees, regulations,
requirements and procedures including ...," into "form" a nd "nature" is not clear to us as the panel did
not elaborate on this point. The panel did not ex plain how "requirements and procedures" were
somehow fundamentally different from "laws, de crees, regulations" or why it believed that all
SPS measures somehow have the nature of a "require ment" or "procedure". If we examine the text of
Annex A(1), we note that there is no such separati on and a plain reading might lead one to believe
that "requirements and procedures" are also descr iptions of the possible types or "forms" of an
SPS measure while the substantive descriptions following "including inter alia" are just illustrative
examples of the types of SPS measures Members have imposed.
7.101 While we do not see the examination of whether a particular measure is an SPS measure as a
rigid three-part test, as seems to have been adopted by the panel in EC – Approval and Marketing of
Biotech Products, we do agree that the Panel is to review carefully all aspects of a measure in order to
determine whether it is an SPS measure. In our view, the nature of a measure is an intrinsic element of
its form. Therefore, reading the second part of Annex A(1) as a whole, means that an examination of
whether a measure is of the type set forth in A nnex A(1) will encompass an holistic examination of
the measure, including, both its form and nature.

286 United States' response to Panel question No. 43.

7.102 We will therefore examine whether Section 727 is an SPS measure by looking at whether it
serves one of the purposes set forth in Annex A(1)(a) through (d) and whether it is of the type listed in
the second part of Annex A.
Annex A(1)(a) through (d)
7.103 According to the panel in EC – Approval and Marketing of Biotech Products , the purpose
element is addressed in Annex A(1)(a) through (d) ("any measure applied to").287
7.104 As explained by the panel in Colombia – Ports of Entry288, municipal law is to be approached
as a "factual issue". 289 In making an objective assessment of municipal legislation, a panel should
consider the very terms of the law 290, in their proper context 291, and complemented, whenever
necessary, with additional sources, which may include proof of the consistent application of such
laws, the pronouncements of domestic courts on the meaning of such laws, the opinions of legal
experts and the writings of recognized scholars. 292 The nature and extent of the evidence required to
satisfy the burden of proof will vary from case to case.293
7.105 We recall that it is China who bears the bur den of adducing evidence as to the scope and
meaning of the relevant US legisl ation to substantiate its assertion that it is WTO-inconsistent. Such
evidence will typically be produced in the form of the text of the relevant legislation or legal
instrument, which China has done. In this case, Chin a has produced not only the text of Section 727,
but also the JES which explains the purpose of Section 727. 294 In addition, China has argued that the
exhibits produced by the United States including a number of statements from the US Congress,
support the premise that the purpose of Section 727 is the protection against the risk to human and
animal life and health from contaminated food.
7.106 The Panel will begin its analysis by considering the very terms of Section 727 to ascertain its
purpose.
295 As we recall, 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."
296

287 Panel Report, EC – Approval and Marketing of Biotech Products, para. 7.149; Panel Report, US –
Continued Suspension, para. 7.429.
288 Panel Report, Colombia – Ports of Entry, para. 7.93.
289 Appellate Body Report, India – Patents (US) , para. 66; See also Panel Report, US – Section 301
Trade Act, para. 7.18. See also PCIJ, Certain German Interests in Polish Upper Silesia, PCIJ, 1926, Rep., Series
A, No. 7, p. 19. The Panel is aware that the Appellate Body has explicitly stated that when a panel examines the
municipal law of a WTO Member for purposes of determining whether the Member has complied with its WTO
obligations, that determination is a legal characterization by a panel, and is therefore subject to appellate review
under Article 17.6 of the DSU. Appellate Body Report, US – Section 211 Appropriations Act, para. 105.
290 Appellate Body Report, Dominican Republic – Import and Sale of Cigarettes , para. 112; See also
Panel Report, US – 1916 Act (EC), para. 6.48.
291 Panel Report, US – Section 301 Trade Act, para. 7.27.
292 Appellate Body Report, US – Carbon Steel, para. 157.
293 Appellate Body Report, US-Carbon Steel , para. 157; Appellate Body Report, US – Corrosion-
294 Exhibit CN-33. We note that the United States also relies on the JES to support its view of the
intended purpose of the legislation.
295 Appellate Body Report, Dominican Republic – Import and Sale of Cigarettes , para. 112; See also
Panel Report, US – 1916 Act (EC), para. 6.48.
296 Exhibit CN-1.

7.107 Hence, on its face, Section 727 is a measure which purely relates to the appropriated funds for
the activities of an Executive Branch agency of the United States Government. There is nothing in its
specific text which addresses the purposes embodied in Annex A(1)(a) through (d).
7.108 As China has pointed out
297, the United States itself has argued that the policy objective
underlying Section 727 was to protect against the risk to human and animal life and health arising
from the importation of poultry products from China. 298 It has further argued that this policy
objective is reflected in the legislative history of the measure.299
7.109 We recall that we are to consider the very terms of the law 300, in its proper context 301, and
complemented, whenever necess ary, with additional sources. 302 We will therefore examine both the
JES and the relevant statements on the Congressional R ecord to ascertain whethe r they are helpful in
determining the purpose of Section 727. Both parti es agree that, under United States law, the JES is
considered part of the legislative history of the AAA 2009.303 304
7.110 As explained in Section II.B above, appropria tion bills are sometimes enacted with a JES
which serves to explain the purposes of the provisions in the bill. 305 The JES to Section 727 reads in
pertinent part:
"There remain very serious concerns about contaminated foods from China and
therefore the bill retains language prohibiting FSIS from using funds to move forward
with rules that would allow for the importation of poultry products from China into
the U.S."
306
7.111 The Panel notes that the JES plainly states that the purpose of Section 727 was to prohibit the
FSIS from taking actions which the Congress felt w ould be contrary to its concerns about
contaminated food from China.
7.112 The United States has drawn the Panel's atte ntion to a number of statements from the
US Congress showing that the objective of Secti on 727 was to address concerns about the risk to
human and animal life and health posed by the prospect of importation of poultry products from
China. The legislative history of the measure appear s to reflect the policy objective referred to by the
United States. The United States provided the Pane l with the FY 2008 Omnibus Appropriations Act
Committee Report which refers to the barring of th e funds due to food contamination episodes in
China:
"Given the recent situation involving pet foods contaminated with melamine from
China and the repeated, serious food contamin ation incidents within China, it is clear
that we cannot rely on the Chinese government to ensure its plants adhere to U.S.
standards in processing. Weak government cont rols in China, coupled with the high

297 China's opening oral statement at the first substantive meeting of the Panel, para. 39.
298 United States' first written submission, para. 119. Exhibit CN-33.
299 United States' first written submission, paras. 119-121 citing the JES accompanying Section 727.
300 Appellate Body Report, Dominican Republic – Import and Sale of Cigarettes , para. 112; See also
Panel Report, US – 1916 Act (EC), para. 6.48.
301 (footnote original) Panel Report, US – Section 301 Trade Act, para. 7.27.
302 (footnote original) Appellate Body Report, US – Carbon Steel, para. 157.
303 China's response to Panel question No. 20; United States' response to Panel question No. 20.
304 Both China and the United States agree that, under US law, legislative history is relevant when
interpreting a statute. See China's response to Panel's question 20, United States' response to Panel's question 20.
305 Congressional Research Serv ice, Conference Reports and Joint Explanatory Statements, 1
December, 2004. p. 7. Exhibit US-58.
306 Joint Explanatory Statement, Division A of AAA of 2009, p. 82. (Exhibit CN-33).

incidence of H5N1 in that country, provid e no assurance that the returned product is
actually from U.S. poultry or that poultry carrying the H5N1 virus is not used instead
of U.S.-produced poultry. While FSIS has said that the products would be safe
because processing would kill any H5N1 viruses, U.S. inspectors will not be standing
over the shoulders of Chinese workers; in fact, U.S. inspectors would visit the
Chinese plants at most once a year."
307
7.113 The United States also cites the statements of Representative Rosa DeLauro, the author of
Section 727, where she said that the objective of Section 727 was to address concerns about the health
risks posed by the importation of poultry products from China. 308 These statements could be seen to
reflect the legislative intent of Section 727.
7.114 We note that China asserts that, according to th e JES, the purpose of Section 727 is to protect
human life and health and not animal health. 309 It states that the JES refers to "serious concerns about
contaminated food' without mentioning any animal diseases at all." 310 The United States argues that
the policy objective of Section 727 was to protect human and animal life and health from the risk
posed by the importation of poultry products from China.
311 We note that the House Committee
Report also refers to the protection of animal life and health.
7.115 In the Panel's view, Section 727 was enacted for the purpose of protecting human and animal
life and health from the risk posed by the prospect of the importation of contaminated poultry
products from China. Accordingly, the Panel conclud es that Section 727 is a measure applied for the
purpose set forth in Annex A(1)(b).
Second part of Annex A(1)

7.116 The second part of Annex A(1) provides that SPS measures "include all relevant laws,
decrees, regulations, requirements and procedures ... ."
7.117 China argues that Section 727 is a budgetary measure under the legal system of the
United States.312 The Panel understands this to be a fact not contested by the United States. According
to China, the obvious conclusion is that, given that Section 727 is a provision of a law, it falls within
the illustrative list of measures in Annex A(1).313
7.118 We recall that we have concluded that the na ture of a measure may be of relevance as an
intrinsic part of the form to determine whether such measure is an SPS measure. The Panel notes that

307 House Report 110-258, at 54 (July 24, 2007) (Exhibit US-42).
308 Exhibit US-50.
309 China's opening oral statement at the first substantive meeting of the Panel, para. 41.
310 China's opening oral statement at the first substantive meeting of the Panel, para. 41.
311 United States' first written submission, para. 119, United States second written submission, para. 12.
312 China's first written submission, para. 116; China' s opening oral statement at the first substantive
meeting of the Panel, para. 42 We note that China often refers to Section 727 as a budgetary provision. We note
however that the law is appropriations legislation, which allocates funds for an Executive Branch agency, in this
case the FSIS, to use according to the manner authorized in separate legi slation. In this case Section 727
included a limitation on how the appr opriated money could be utilized. We recall that the US Congress enacts
annual appropriation bills which provide funding for the agencies and programmes previously authorized. The
US Congress can determine the terms and conditions under which an appropriation may be used. Provisions in
appropriations acts may be intended to prevent or restrict federal agencies from taking certain rulemaking or
regulatory actions. See Exhibits US-2 and 4.
313 China's opening oral statement at the first substantive meeting of the Panel, para. 42.

Section 727 is a provision of a law, the AAA of 2009
314, dealing with appropriations relating to the
activities of an Executive Branch agency of the United States Government.
7.119 The fact that Section 727 deals with monetary appropriations concerning the activities of an
Executive Branch agency of the Un ited States Government, instead of directly regulating sanitary and
phytosanitary issues, could be viewed as signifyi ng that Section727 is not an SPS measure. Indeed, a
legal provision dealing with monetary appropria tions which will affect the activities of a given
government agency does not appear to fit the co mmon perception of an SPS measure. The Panel has
thus carefully pondered this approach, being the first time that a measure such as Section 727 has
been challenged under the SPS Agreement. Although, Section 727 is an appropriations bill, it is
Congress' way of exerting control over the activities of an Executive Branch agency responsible for
implementing substantive laws a nd regulations on SPS matters. Thus the fact that it is an
appropriations bill does not exclude it from the scope of the types of SPS measures set forth in the
second part of Annex A(1).
7.120 Given that Section 727 is a measure applied to achieve the purpose set forth in
subparagraph (b) of Annex A(1) a nd it is a measure of the type de scribed in the second part of
Annex A(1), the Panel concludes that Section 727 falls within the definition of an SPS measure in
Annex A(1) of the SPS Agreement.
(iii) Whether Section 727 affects directly or indirectly international trade
7.121 Once we have concluded that S ection 727 falls within the defi nition of an SPS measure in
Annex A(1) of the SPS Agreement, we need to look at the second element of the test to decide
whether Section 727 is an SPS measure within the scope of the SPS Agreement, i.e. whether it affects
directly or indirectly international trade.
7.122 In this respect, China argues that by preven ting China from exporting poultry products to the
United States, Section 727 directly or indirectly affects international trade within the meaning of
Article 1.1 of the SPS Agreement" and therefore Section 727 is a measure subject to the
SPS Agreement.
315 We note that the United States has not contested this statement by China.
7.123 In the Panel's view, Section 72 7 did affect international tr ade because it prohibited the FSIS
from using appropriated funds for the establishmen t and implementation of a rule allowing the
importation of poultry products from China. Whether a measure affects international trade directly or
indirectly depends on how one views it. The Panel no tes that regardless of whether one considers the
effect of Section 727 as direct or indirect, the effect of the measure was such that while it was in force
poultry exports from China to the United States coul d not commence. Therefore, Section 727 directly
or indirectly affected international trade in poultry products. Thus, the Panel concludes that
Section 727 also satisfies the second condition in Article 1 of the SPS Agreement.
(c) Conclusion
7.124 Having concluded that Section 727 falls with in the definition of an SPS measure in
Annex A(1) of the SPS Agreement and that it directly or indirectly affected international trade, the
Panel finds that Section 727 is an SPS measure within the scope of the SPS Agreement.

314 The AAA of 2009 is a regular appropriation bill that provides the necessary funding for the FSIS to
carry out, inter alia, the functions foreseen by the PPIA.
315 China's opening oral statement at the first substantive meeting of the Panel, para. 42. China's
response to Panel question 42.

D. WHETHER ARTICLE 4 IS THE ONLY PROVISION OF THE SPS AGREEMENT APPLICABLE TO
SECTION 727
1. Background
7.125 The United States has argued that Section 727 was a normal act of congressional oversight
taken in the context of an ongoing equivalence proceeding. 316 In this context, the United States
contends that Section 727 would be subject to the provisions of Article 4 of the SPS Agreement
instead of the various claims presented by Chin a because Article 4 is specifically addressed to
regulate equivalence-based measures. We note that Article 4 of the SPS Agreement is not part of our
terms of reference. Pursuant to our obligatio n under Article 11 of the DSU to determine the
applicability of the cited provisions, before entering into an examination of China's claims, we are
going to examine the United States' co ntention that the provisions of the SPS Agreement China cited
do not apply to Section 727 and that only Article 4 of the SPS Agreement is the applicable provision.
2. Arguments of the parties
7.126 The United States argues that Section 727 was a normal act of congressional oversight taken
in the context of an ongoing equivalence proceeding.317 It continues to explain that action by Congress
was not separate and apart from the system in the Un ited States to ensure the safety of imported food,
but rather, part of the system. 318 It states that Section 727 is pa rt of the equivalence regime itself. 319 In
this respect, it characterizes Section 727 as a "proce dural requirement adopted in the course of an
ongoing equivalency review". 320 The United States further explains that the requirement imposed by
Section 727 was that FSIS could not use appropriate d funds to establish or implement equivalence
rules related to Chinese poultry during fiscal year 2009.321
7.127 The United States further argues that Article 4 is the only Article in the SPS Agreement that is
specifically addressed to regulate equivalence-based measures. 322 The United States argues that to
determine which SPS provisions apply to a measur e adopted in the context of an equivalence
proceeding, one must carefully ev aluate the specific measure, and the specific arguments regarding
the alleged breach. 323 Accordingly, it submits that China has not met its burden of explaining how
each SPS provision cited by China applies to Section 727.324
7.128 The United States recognizes that Articles 2.2, 2.3, and 5.1 could apply to a measure – such as
the PPIA – that establishes an equivalence-based regime. 325 However, it notes that it would be
difficult to see how these provisions necessarily apply to every measure adopted in the context of an
equivalence proceeding.326 Based on the panel on EC – Approval and Marketing of Biotech Products,
the United States argues that a scientific basis is required for substantive SPS measures only – such as
product ban or a requirement to quarantine or bor der testing – which provides protection from an
SPS risk, and not to intermediate measures used in assessing risk and deciding on what substantive

316 United States' opening oral statement at the second substantive meeting of the Panel, para. 9.
317 United States' opening oral statement at the second substantive meeting of the Panel, para. 9.
318 United States' opening oral statement at the second substantive meeting of the Panel, para. 9.
319 United States' response to Panel question No. 109.
320 United States' second written submission, para. 99.
321 United States' response to Panel question No. 107.
322 United States response to Panel question No. 99. United States' second written submission,
paras. 89-92.
323 United States' responses to Panel question No. 99.
324 United States' second written submission, para. 86.
325 United States' response to Panel question No. 99, para. 27, United States' response to Panel question
No. 100, para. 29.
326 United States' response to Panel question No. 100, para. 29.

measures should be applied.
327 In its view, "it would be difficult to see why there would be a need to
be scientific evidence for, or a b asis in scientific principles for, an y number of measures adopted in
the context of an equivalence proceeding, such as the language, form, means of delivery, or number of
copies of information submitted." 328 Accordingly, the United States' argues that Section 727 is a
procedural requirement adopted in the course of an ongoing equivalency review, and as such, cannot
be required to be based on sufficient scientific evid ence or a risk assessment separate from that of the
PPIA.329
7.129 As for Articles 5.5 and 5.6, the United States argues that it would not appear that these
provisions apply to an equivalence regime. 330 It argues that an equivalence regime is aimed at
determining if another Member's measures achieve the importing Member's ALOP, hence, in its view,
by definition there would be only one ALOP at issue. It continues to argue then, that as Article 5.5
regulates distinctions in the ALOP, Article 5.5 would not appear to apply. 331 As for Article 5.6, the
United States argues that this provision is about th e measures that a Member itself adopts rather than
the measures another Member has adopted. An equi valence proceeding on the other hand is aimed at
determining if the exporting Member's measures meet the importing Member's ALOP. Accordingly, it
concludes that Article 5.6 does not appear to apply.332
7.130 China challenges the United States' characterizat ion of Section 727. It argues that the
measure is not an "intermediate step" or a "proce dural requirement" in the standard FSIS equivalency
process and that rather, it prevented FSIS from performing any science-based analysis of the
equivalence of China's poultry safety and inspection regime. 333 To that end, China notes that neither
the CFR nor the FSIS handbook refer to Congressional action blocking the application of procedures
for one applicant country. 334 China further argues that Section 727 is a "law" enacted as part of the
AAA 2009 which is separate and legally distinct from the PPIA and the FSIS regulations. 335
Accordingly, China submits that Section 727 is a distinct SPS measure reflecting a separate ALOP
that is applied only to China 336, and that it must comply with all of the provisions of the
SPS Agreement.337
3. Analysis by the Panel
7.131 The parties have argued vigorously about the legal characterization that the Panel should
assign to Section 727, and the implications it has for the application of several provisions of the
SPS Agreement. The parties dispute two main issues: firs t, whether Section 727 is part of an
equivalence regime, and second, whether it is the t ype of SPS measure subject to the obligations
embodied in Articles 2 and 5 of the SPS Agreement or rather only subject to Article 4 of the
SPS Agreement.
7.132 In the Panel's view, the paramount question is to determine whether Section 727 is an
SPS measure subject to the provisions of the SPS Agreement claimed by China. The Panel will
commence its analysis by addressing the United States' argument that Article 4 is the only provision

327 United States' second written submission, para. 98 citing the Panel Report, EC – Approval and
328 United States' response to Panel question No. 99.
329 United States' second written submission, para. 99.
330 United States' response to Panel question No. 100.
331 United States' response to Panel question No. 100.
332 United States' response to Panel question No. 100.
333 China's opening oral statement at the second substantive meeting of the Panel, paras. 9-10.
334 China's opening oral statement at the second substantive meeting of the Panel, para. 10.
335 China's opening oral statement at the second substantive meeting of the Panel, para. 11.
336 China's opening oral statement at the second substantive meeting of the Panel, para. 11.
337 China's comment to United States' to Panel question No. 106.

in the SPS Agreement that is applicable to equivalence-ba sed measures, such as, in its view
Section 727.338 We recognize that China has made no claim with respect to the consistency of
Section 727 with Article 4 and thus Article 4 is outside our terms of reference. Therefore, we are not
going into an analysis of what is required to comp ly with the obligations in Article 4. Rather, our
examination of this provision, simply con cerns a determination of whether it is the only provision in
the SPS Agreement that could apply to Section 727.
7.133 The Panel will first turn to the text of Article 4 which provides as follows:
"1. Members shall accept the sanitary or phytosanitary measures of other
Members as equivalent, even if these measures differ from their own or from those
used by other Members trading in the same product, if the exporting Member
objectively demonstrates to the importing Member that its measures achieve the
importing Member's appropriate level of sanitary or phytosanitary protection. For this
purpose, reasonable access shall be given, upon request, to the importing Member for
inspection, testing and other relevant procedures.
2. Members shall, upon request, enter into consultations with the aim of
achieving bilateral and multilateral agreemen ts on recognition of the equivalence of
specified sanitary or phytosanitary measures."
7.134 We note that equivalence regimes adopted pursuan t to Article 4 have never been the subject
of a dispute before the DSB. There is however, a decision from the SPS Committee entitled " Decision
on the Implementation of Article 4 of the Agreemen t on the Application of Sanitary and Phytosanitary
Measures" (the Decision).
339 This Decision was adopted under the authority of the SPS Committee to
carry out the functions necessary to implement and further the objectives of the SPS Agreement under
Article 12.1. Its preamble provides that the Deci sion was adopted "[d]esiring to make operational the
provisions of Article 4" of the SPS Agreement.
7.135 The Decision sets out guidelines for any Member who requests the recognition of equivalence
of their SPS measures and for the importing Member who is the addressee of such request. As
contemplated in the Decision, upon a request for equivalence, the importing Member should explain
the objective and rationale of the SPS measure and iden tify clearly the risks that the relevant measure
is intended to address.340 The Decision further explains that the importing Member should indicate the
ALOP which its SPS measure is designed to achieve. 341 Such an explanation should be accompanied
by a copy of the risk assessment on which the SPS m easure is based or a technical justification based
on a relevant international sta ndard, guideline or recommendation. 342 The exporting Member should
then provide appropriate science-based and technical information to support its objective

338 United States response to Panel question No. 99.
339 Committee on Sanitary and Phytosanitary Measures, Decision on the Implementation of Article 4 of
the Agreement on the Application of Sanitary and Phytosanitary Measures , document G/SPS/19/rev. 2, dated
23 July 2004.
340 Committee on Sanitary and Phytosanitary Measures, Decision on the Implementation of Article 4 of
the Agreement on the Application of Sanitary and Phytosanitary Measures , document G/SPS/19/rev. 2, dated
23 July 2004, para. 2.
341 Footnote 3 of the Decision states that "[i]n doing so, Members should take into account the
Guidelines to Further the Practical Implementation of Article 5.5 adopted by the Committee on Sanitary and
Phytosanitary Measures at its meeting of 21-22 June 2000 (document G/SPS/19/rev. 2, dated 23 July 2004).
342 Committee on Sanitary and Phytosanitary Measures, Decision on the Implementation of Article 4 of
the Agreement on the Application of Sanitary and Phytosanitary Measures , document G/SPS/19/rev. 2, dated
23 July 2004, para. 2.

demonstration that its measure achieves th e ALOP identified by the importing Member.
343 The
importing Member should analyse such information with a view to determining whether the exporting
Member's SPS measure achieves the ALOP provided by its own relevant SPS measure.344
7.136 The Panel notes, that while this decision is not binding and does not determine the scope of
Article 4, we do consider that this Decision expands on the Members' own understanding of how
Article 4 relates to the rest of the SPS Agreement and how it is to be implemented. 345 The Panel sees
nothing in Article 4 or the Decision which suggests that Article 4 is the only provision in the
SPS Agreement which regulates the operation of equivale nce regimes, including their "procedural
requirements" or that it should be applied in isolation from other relevant provisions of the
SPS Agreement. In fact, the Decision states that the importing Member should explain its
SPS measures by identifying the risk and provide a copy of the risk assessment or technical standard
on which the measure is based. Further, it requires the importing Member to analyse the science-based
and technical information provided by the exportin g Member with respect to that Member's own
SPS measure(s) to examine if the measure achieves the importing Member's ALOP.
7.137 The Decision refers inter alia to risk assessments, international standards and ALOPs, which
are governed by Article 2 which embodies the "Basic Rights and Obligations"
346, Article 3 governing
harmonization with international st andards and Article 5 which regulates the assessment of risk and
determination of the ALOP. The Decision, therefore, implies that measures taken as part of an
equivalence regime, subject to Article 4, should also comply with the other relevant provisions of the
SPS Agreement.
7.138 In addition, there is nothing in the text of Artic le 4 that suggests that it should be applied in a
vacuum, isolated from other relevant provisions of the SPS Agreement. This is further reinforced by
the fact that, as stated by the panel in Japan – Apples, Article 4 is not a defence against violations of
other provisions of the SPS Agreement.
347
7.139 The Panel does not intend to exhaustively explain the relationship between Article 4 and other
provisions of the SPS Agreement. Suffice it to say that we do not believe that Article 4 is to be applied
to the exclusion of other relevant provisions of the SPS Agreement. A determination of which
particular provisions are applicable to a given measure, must be done on a case-by-case basis. It is the
Panel's view that nothing in Article 4 a priori precludes a given measure from being subject to the
disciplines of Article 2, 4 and 5 at the same time.
7.140 As the United States notes, Section 727 is a measu re related to the equivalence regime set up
by the United States. In particular, Section 727 is an expression of the US Congress role in overseeing
Executive Branch agencies. As noted a bove, we do not accept that Article 4 is ipso facto the only
provision applicable to measures adopted in the c ontext of an equivalence regime. In our view, a
determination of what provisions of the SPS Agreement may apply to a given measure should be done
on a case-by-case basis. Consequently, we will exam ine the particular features of Section 727 and

343 Committee on Sanitary and Phytosanitary Measures, Decision on the Implementation of Article 4 of
the Agreement on the Application of Sanitary and Phytosanitary Measures , document G/SPS/19/rev. 2, dated
23 July 2004, para. 4.
344 Committee on Sanitary and Phytosanitary Measures, Decision on the Implementation of Article 4 of
the Agreement on the Application of Sanitary and Phytosanitary Measures , document G/SPS/19/rev. 2, dated
23 July 2004, para. 7.
345 We note that typically, decisions of the SPS Committee indicate that they are not meant to affect the
rights and obligations of the Members under the SPS Agreement. Such language is not present in this particular
Decision.
346 Specifically, Article 2.2 applies to "any measure", and Article 2.3 states that "their sanitary or
phytosanitary measures", which suggests that no SPS measure is outside the scope of this provisions.

determine whether the provisions cited by China, namely Articles 2 and 5 of the SPS Agreement are
applicable to it.
7.141 The Panel notes that prior panels have discussed the scope of both Articles 2 and 5 by making
a distinction between "substantive" SPS measure s taken to achieve a Member's ALOP and
"procedural requirements". In particular, the panel in Australia – Salmon (Article 21.5 – Canada) ,
made a distinction between risk reduction measur es allegedly needed to achieve a WTO Member's
ALOP, which it called "substantive SPS measures in their own right" and procedures or information
requirements to check and ensure the fulfilment of sanitary measures that are subject to Annex C(1)(c)
of the SPS Agreement.
348
7.142 We note that Article 2 is entitled "Basic Rights and Obligations". The overarching and
encompassing title of this Article, leads the Panel to conclude that the obligations in Article 2 inform
all of the SPS Agreement. We find support for our understanding in the prior decisions of panels and
the Appellate Body with respect to the relations hip between Articles 2 and 5. In particular, the
Appellate Body has explained that the obligations in Article 2 and Article 5 should be constantly read
together. The Appellate Body stated that Article 2. 2 informs and imparts meaning to Article 5.1, and
that similarly, Article 2.3 informs Article 5.5. 349 Further, the panel in Japan – Agricultural Products
II stated that the more specific language of Article 5.6 should be read in light of the more general
language in the first requirement of Article 2.2.350
7.143 Article 2.2 provides that:
"Members shall ensure that any sanitary or phytosanitary measure is applied only to
the extent necessary to protect human, animal or plant life or health, is based on
scientific principles and is not maintained without sufficient scientific evidence,
except as provided for in paragraph 7 of Article 5. "
7.144 The panel in EC – Approval and Marketing of Biotech Products explained that Article 2.2
contains three separate requirements: (i) the requi rement that SPS measures be applied only to the
extent necessary to protect human, animal or pl ant life or health; (ii) the requirement that
SPS measures be based on scientific principles; a nd (iii) the requirement that SPS measures not be
maintained without suffi cient scientific evidence. 351 We note that China's claim relates only to the
third requirement of Article 2.2 of the SPS Agreement.352 Therefore, the Panel will only focus on
whether this third requirement, is applicable to Se ction 727. We recall that the text of Article 2.2
plainly states that it applies to "any" SPS measure. We, thus see nothing in the language of Article 2.2
that would somehow exempt an SPS measure from its scope. We have found that Section 727 is an
SPS measure, regardless of whether it relates to e quivalence. Accordingly, we conclude that the
disciplines of Article 2.2 apply to Section 727 and China may pursue a claim on this basis.
7.145 The Panel now turns to Article 2.3. This provision provides that:
"Members shall ensure that their san itary and phytosanitary measures do not
arbitrarily or unjustifiably discriminate between Members where identical or similar
conditions prevail, including between their ow n territory and that of other Members.

348 Panel Report, Australia – Salmon (Article 21.5 – Canada), para. 7.156.
349 Appellate Body Report, Australia – Salmon , para. 130, Appellate Body Report, EC – Hormones ,
para. 250.
350 Panel Report, Japan – Agricultural Products II , para. 8.71. This statem ent was endorsed by the
Panel Report, EC – Approval and Marketing of Biotech Products, para. 7.1433.
351 Panel Report, EC – Approval and Marketing of Biotech Products, para. 7.1424.
352 China's first written submission, paras. 144-147 . China's opening oral statement at the first
substantive meeting of the Panel, paras. 69-70.

Sanitary and phytosanitary measures shall not be applied in a manner which would
constitute a disguised restriction on international trade."
7.146 The United States argues that "it is unclear wh ether Article 2.3 is intended to apply to a
procedural requirement, rather than a subs tantive SPS measure, and China has presented no
explanation of how Article 2.3 would apply."
353 China contests this assertion by arguing that the text
of Article 2.3 refers to SPS measures without distinguishing between different types or forms, and that
all SPS measures are disciplined by Article 2.3.354
7.147 The text of Article 2.3 obliges Members to ensure non-discrimination in "their SPS measures"
without making any distinction between possible types of SPS measures. Given that it embodies a
non-discrimination obligation, the Panel sees no r eason to conclude that Article 2.3 of the
SPS Agreement would be inapplicable to procedural requi rements as the United States argues. Indeed,
both "substantive" SPS measures as well as procedur al and information requirements can be applied
in a manner which arbitrarily or unjustifiably discriminates between Members or constitutes a
disguised restriction on international trade. We do not see why such arbitrary or unjustifiable
discrimination or disguised restrictions on trade wo uld be prohibited for one type of SPS measure and
yet allowed for another. The broad wording of Article 2.3 of the SPS Agreement and the nature of the
obligations it contains is bound to be applicable to all SPS measures. Because we have found that
Section 727 is an SPS measure, regardless of whether it relates to equivalence, we conclude that the
disciplines of Article 2.3 apply to Section 727 and China may pursue a claim on this basis.
7.148 With respect to China's claims under Ar ticle 5, we note that the panel in EC – Approval and
Marketing of Biotech Products assessed the scope of Articles 5.1, 5.5, and 5.6 of the SPS Agreement
and determined that that these provisions apply to measures aimed at achieving the relevant Member's
ALOP.355 The type of measure referred to by the panel in EC – Approval and Marketing of Biotech
Products as being subject to Article 5 appears to be the same as the "substan tive SPS measure in its
own right" referred to by the panel in Australia – Salmon (Article 21.5 – Canada). We find the
reasoning of these prior panels to be persuasive and make it our own.356
7.149 Because the provisions in Article 5 cited by Ch ina apply to "substantive" SPS measures, we
turn now to assess whether Section 727 is a "substa ntive" SPS measure which must comply with the
obligations in Articles 5.1, 5.2, 5.5 and 5.6.
7.150 We recall the United States' argument that there is a risk to human and animal life and health
from the importation of poultry products from China. 357 In its view, "this risk results from both the
inherent danger of cons uming poultry that is not produced unde r sanitary conditions or thoroughly
inspected for contaminants, the risk to animal life and health from the import of poultry infected with
avian influenza, and the particular risk that ex ists when importing food from China due to China's

353 United States' second written submission, para. 102, United States' comment to China's response to
Panel question No. 99.
354 China's opening oral statement at the second substantive meeting of the Panel, para. 24.
355 Panel Report, EC – Approval and Marketing of Biotech Products . paras. 7.1388, 7.1402, 7.1416,
7.1433, 7.1439.
356 We believe a close examination of the types of measures which satisfy the definition of an
SPS measure in Annex A(1) supports our view that not all SPS measures are subject to th e disciplines of
Article 5 on risk assessment and determining the ALOP. For example, it would not make sense for a Member to
be required to conduct a risk assessment, as defined in Annex A(4), for determining its risk assessment
methodology (which is one of the identified types of SPS measures in the second part of Annex A(1)).
357 United States' first written submission, para. 113.

history of food safety scandals and longstanding sy stemic issues with smuggling, corruption, and the
inadequate enforcement of its food safety laws."358
7.151 The United States thus contends that Section 727 ensured that no Chinese poultry would be
imported during 2009 by ensuring that equivalence rules for Chinese poultry would not be established
and thus protect life and health. 359 The United States further argues that this is one of the ways in
which Section 727 contributed to poultry pr oducts from China being considered "safe" 360, and it had
already mentioned that "safe" was the ALOP enshrined in the PPIA. 361 In addition, the United States
argues that Section 727 and its JES also contributed to the protection of life and health by ensuring
that FSIS would take additional steps to evaluate China's food safety inspection system in light of its
recent food safety crises, enforcement issues, and new food safety law.
362
7.152 We note that the establishment and implementation of a rule by FSIS in the Federal Register
allowing the importation of poultry products from a give n country is a prerequisite for the importation
of such products.363 Without the establishment or implementation of this rule, countries are prohibited
from importing poultry products to the United States.
7.153 Section 727 thus forbids the FSIS to use appropr iated funds to "establish" or "implement" a
rule allowing the importation of poultry products from China. This funding restriction, although not
directly prohibiting the importation of Chinese poultr y products, has the effect of prohibiting the
importation of poultry products from China because w ithout a rule being established / implemented,
Chinese poultry products are banned from entering the US market.
7.154 It is through this ban, as well as the related activity that the USDA was urged to undertake,
that Section 727 would be contributing to combating the risks highlighted by the United States. The
United States has referred to certain risks that Ch inese poultry might entail – contaminants and avian
influenza – and the need to prevent them entering its territory through a prohibition on importation.
The United States has sought to achieve its ALOP – poultry products in the market being safe –
through a ban on the importation of Chinese poultry pr oducts. We therefore conclude that Section 727
is a "substantive SPS measure in its own right"
364 because it was enacted to achieve the United States'
ALOP for poultry products from China. 365 Section 727 is therefore subject to the obligations under
Articles 5.1, 5.2, .5.5, 5.6, 2.2 and 2.3 of the SPS Agreement.
7.155 Having concluded that China has raised claims regarding the consistency of Section 727 with
provisions that are applicable to it, we thus pro ceed to examine the claims presented by China under
the SPS Agreement.
E. ORDER OF ANALYSIS OF CHINA'S CLAIMS UNDER THE SPS AGREEMENT
7.156 The Panel notes that China has presented its claims under the SPS Agreement starting with the
basic obligation in, Article 2.3 not to arbitrarily or unjustifiably discriminate between Members and
Article 5.5 of the SPS Agreement, which prohibits distinctions in ALOPs that result in arbitrary or

358 United States' first written submission, para. 113.
359 United States' response to Panel question No. 110.
360 United States' response to Panel question No. 110.
361 United States' second written submission, para. 57.
362 United States' second written submission, paras. 17-30.
363 USDA/FSIS, Process for Evaluating the Equivalence of Foreign Meat and Poultry Food Regulatory
Systems, p. 12 (Exhibit CN-7), 9 CFR § 381.196(a)(1) and § 381.196 (b) (Exhibit CN-6).
364 Panel Report, Australia – Salmon (Article 21.5 – Canada), para. 7.156.
365 We recall the findings of the panel in EC – Approval and Marketing of Biotech Products .
paras. 7.1388, 7.1402, 7.1416, 7.1433, 7.1439, where it found that measures adopted to achieve a Member's
ALOP are subject to these provisions.

unjustifiable discrimination. Next, China focuses on the provisions requiring that SPS measures be
based on scientific evidence: Articles 5.1, 5.2 and 2.2 of the SPS Agreement, and then moving to
Article 5.6 of the SPS Agreement, which relates to the extent the measure is applied to achieve the
ALOP. Finally, China concludes with the operation of control, inspection and approval procedures, in
Article 8 of the SPS Agreement.
7.157 Although the SPS Agreement does not provide any guidance on a sequence for analysing its
provisions, the Panel prefers to follow a different orde r of analysis to that ch osen by China. In our
view, it would be preferable to start the analysis by looking at whether Section 727 is based on
scientific evidence, before examining how Section 727 is applied. Accordingly, we will start by
analysing Articles 5.1, 5.2 and 2.2 of the SPS Agreement. We will commence with Article 5.1 and 5.2
because any inconsistency that the Panel finds with these provisions would by implication lead to a
finding of inconsistency with Article 2.2 of the SPS Agreement.
366
7.158 We will next examine whether Section 727 is inconsistent with the prohibition against
arbitrarily or unjustifiable discrimination among Memb ers in Article 2.3 and whether the application
of different ALOPs in different, but comparable situations, results in arbitrary or unjustifiable
discrimination that is inconsistent with Article 5.5 of the SPS Agreement. Similarly to the analysis of
the relationship between Articles 2.2 and 5.1, the Appellate Body has found that Article 5.5 may be
seen to mark out and elaborate a particular route lead ing to the same destination set out in Article 2.3.
Therefore, a finding of a violation of Article 5.5 necessarily implies a violation of Article 2.3.367
7.159 In those disputes, the Appellate Body was faced with a situation where the discrimination
resulting from distinctions in ALOPs was discrimi nation between Members. However, we note that
Article 5.5 does not contain the phrase "between Me mbers" and it is conceivable that a case could
arise where the distinction in ALOPs in different situations was between products coming from the
same Member. In such a case while an inconsiste ncy with Article 5.5 could be established, there
would be no discrimination between Members. Ther efore, a violation of Article 2.3 would not
necessarily follow.
7.160 In this dispute, China has presented two "diffe rent situations" for the purposes of analysis
under Article 5.5. One of those "different situati ons" involves an allegation of discrimination between
the same product, poultry, coming from different Memb ers. Given that in cases of an allegation of
discrimination between Members a violation of Article 5.5 necessarily implies a violation of
Article 2.3, we will follow the practice of prior pane ls and begin with the more specific obligation in
Article 5.5, before moving on to Article 2.3.
7.161 We will then consider whether Section 727 is mo re trade-restrictive than required pursuant to
Article 5.6 of the SPS Agreement. Finally, we will analyse whether Section 727 is inconsistent with
Article 8 by failing to observe the provisions of Annex C(1)(a) of the SPS Agreement.
F. W
HETHER SECTION 727 IS INCONSISTENT WITH ARTICLES 2.2, 5.1 AND 5.2 OF THE
SPS AGREEMENT
1. Arguments of the parties
7.162 China argues that Section 727 is not supported by a risk assessment and, therefore, it is
inconsistent with Articles 2.2, 5.1 and 5.2 of the SPS Agreement. China notes that there is no
indication in any publicly available documentati on that Section 727 was enacted on the basis of

366 Appellate Body Report, Australia – Salmon, para. 151.
367 Appellate Body Report, EC – Hormones, para. 212; See also Appellate Body Report, Australia –
Salmon, para. 252.

scientific evidence demonstrating that Chinese poultr y products posed any specific health threat as
required by Article 2.2, or on the basis of a risk assessment as required by Article 5.1 of the
SPS Agreement.
368
7.163 China submits that the legislative history of Section 727 does not indicate that there was any
scientific evidence underpinning the provision sufficien t to meet the standards of Article 2.2 of the
SPS Agreement.369 It points to the fact that the JES does not mention any specific health threat posed
by Chinese products that Section 727 was meant to a ddress. Further, that the JES does not provide an
explanation why poultry products are targeted in order to address undefined concerns about
contaminated foods in general. 370 In response to the evidence the United States proffered regarding
China's food safety crises, China argues that th e "newspaper stories and USDA reports alleging
'contamination' and food safety crisis in China" are not referenced by the JES, and that none of the
evidence submitted by the United States indicates that there has been even one food safety crisis
related to Chinese poultry. 371 China submits that newspaper stories and reports are irrelevant to the
question of whether Section 727 was enacted on the basis of specific, scientific evidence related to
Chinese poultry.
7.164 Further, China argues that the funding restriction would eventually impede the elaboration of
a risk assessment because the FSIS' expert scientists were prohibited from investigating the risk by the
very terms of Section 727.
372
7.165 Finally, China notes that had the United Stat es conducted a proper risk assessment, it would
not have resulted in a total ban of Chinese poultry. It finds support for its contention in the FSIS 2004
and 2006 audit reports of China's poultry inspection system as part of its equivalency application
which conclude that China's food safety regulatory system for poultry products achieves food safety
results which are "equivalent" to those achieved under the United States system .373
7.166 As explained in Section VII.D above, the United States argues that Articles 2.2, 5.1 and 5.2
of the SPS Agreement do not apply to Section 727 because it is a procedural requirement adopted in
the course of an equivalence determination. 374 In response to a question by the Panel, the
United States argued that Section 727 was based on science and that it is intended to address food
safety problems identified with respect to China and th at there was a need to ensure that exports from
China would be safe.375
2. Analysis by the Panel
(a) Relationship between Articles 2.2, 5.1 and 5.2 of the SPS Agreement – Order of analysis
7.167 We note that Articles 2.2, 5.1 and 5.2 of the SPS Agreement are provisions that deal with the
scientific foundation of SPS measures. We note that the Appellate Body has ruled that Articles 2.2
and 5.1 of the SPS Agreement should "constantly be read toge ther", because Article 5.1 of the
SPS Agreement may be viewed as a specific application of the basic obligations contained in
Article 2.2 of the SPS Agreement.376 Therefore, according to the Ap pellate Body, Article 2.2 informs

368 China's first written submission, para. 137, China' s opening oral statement at the first substantive
369 China's first written submission, para. 146.
370 China's opening oral statement at the first substantive meeting of the Panel, para. 70.
371 China's opening oral statement at the first substantive meeting of the Panel, para. 71.
372 China's opening oral statement at the first substantive meeting of the Panel, para. 72.
373 China's opening oral statement at the first substantive meeting of the Panel, para. 73.
374 United States' second written submission, para. 101.
375 United States' response to Panel question No. 114.
376 Appellate Body Report, EC – Hormones, para. 180.

Article 5.1 and thus the elements that define the b asic obligation set out in Article 2.2 impart meaning
to Article 5.1.
 377
7.168 The Panel further notes that prior panels and th e Appellate Body have reasoned that in the
event that an SPS measure is not based on a risk assessment conducted according to the requirements
in Article 5.1 and 5.2, this measure can be presume d, more generally, not to be based on scientific
principles or to be maintained without sufficient scientific evidence. 378 Nonetheless, given the more
general character of Article 2.2 of the SPS Agreement not all violations of Article 2.2 are covered by
Article 5.1 and 5.2 of the SPS Agreement.379
7.169 Consistent with prior rulings of panels and the Appellate Body, the Panel will therefore begin
its consideration of China's claims under Articles 2.2, 5.1 and 5.2 of the SPS Agreement by examining
the two latter "more specific" provisions first.380
(b) Article 5.1 and 5.2 of the SPS Agreement
7.170 We note that Article 5.1 of the SPS Agreement enunciates the basic principle that
SPS measures must be based on a risk assessment. This provision reads as follows:
"Members shall ensure that their sanitary or phytosanitary measures are based on an
assessment, as appropriate to the circumstances, of the risks to human, animal or
plant life or health, taking into account risk assessment techniques developed by the
relevant international organizations."
7.171 Article 5.2 of the SPS Agreement further instructs WTO Members on how to conduct a risk
assessment. Specifically, Article 5.2 states that:
"In the assessment of risks, Members sha ll take into account available scientific
evidence; relevant processes and production methods; relevant inspection, sampling
and testing methods; prevalence of specific di seases or pests; exis tence of pest- or
disease-free areas; relevant ecological and environmental conditions; and quarantine
and other treatment."
7.172 The panel in Japan – Apples noted that Article 5.1 and 5.2 of the SPS Agreement "directly
inform each other, in that paragraph 2 sheds light on the elements that are of relevance in the
assessment of risks foreseen in paragraph 1".381 Therefore, because Article 5.2 imparts meaning to the
general obligation contained in paragraph 1 to base measures on an "assessment...of risks", we may
also consider elements contained in Article 5.2 in the course of our analysis under Article 5.1.382
7.173 Accordingly, an analysis under Article 5.1 of the SPS Agreement would consist of answering
two fundamental questions: first, was a risk assessme nt, appropriate to the circumstances, taking into
account risk assessment techniques developed by th e relevant internationa l organizations and the
elements listed in Article 5.2, conducted? Second, is the SPS measure based on that risk assessment?

377 Appellate Body Report, EC – Hormones, para. 250.
378 Appellate Body Report, Australia – Salmon , para. 138; Panel Report, Australia – Salmon
(Article 21.5 – Canada) , paras. 7.85 and 7.161; and Panel Report, EC – Approval and Marketing of Biotech
Products, para. 7.3399.
379 Panel Report, Australia – Salmon , para. 8.52. "Article 5.1 and 5.2 – in the words of the Appellate
Body in EC – Hormones when dealing with the relationship between Articles 2.3 and 5.5 – 'may be seen to be
marking out and elaborating a particular route leading to the same destination set out in' Article 2.2.
380 Appellate Body Report, Australia – Salmon, para. 137.

7.174 In determining whether a measure is based on a risk assessment within the meaning of
Article 5.1 of the SPS Agreement, one needs to first determine whether a risk assessment was
conducted at all. In order to do so it is helpful to start by looking into what a risk assessment is, in
light of the definition in Annex A(4).
(i) The concept of risk assessment pursuant to Annex A(4) of the SPS Agreement
7.175 The concept of risk assessment is defined in Annex A(4) of the SPS Agreement as follows:
"The evaluation of the likelihood of entry, establishment or spread of a pest or disease
within the territory of an importing Member according to the sanitary or
phytosanitary measures which might be applied, and of the associated potential
biological and economic consequences; or the evaluation of the potential for adverse
effects on human or animal health arising from the presence of additives,
contaminants, toxins or disease-causing organi sms in food, beverages or feedstuffs."
(Emphasis added).
7.176 Annex A(4) therefore provides for two differe nt types of risk assessment depending on
whether the imposing Member is analysing the "like lihood"of entry, establishment or spread of a pest
or disease" or rather analysing "the potential for ad verse effects on human or animal health arising
from the presence of additives, contaminants, toxi ns, or disease-causing organisms in food, beverages
or feedstuffs".
7.177 As noted in Section VII.C above, Section 727 satisfies the definition of an SPS measure under
Annex A(1)(b) of the SPS Agreement. It would seem that SPS measures under Annex A(1)(a) and (c)
would require risk assessments conducted pursuant to the definition under the first sentence of
Annex A(4), while those which satisfy the definiti on of an SPS measure under Annex A(1)(b) would
require that the risk assessment be conducted pursuant to the second sentence of Annex A(4).
383
7.178 With respect to the second sentence of Annex A(4) of the SPS Agreement, the panels in
US/Canada – Continued Suspension held that such a risk assessment required the imposing Member
to: (i) identify the additives, contaminants, toxins or disease-causing organisms in food, beverages or
feedstuffs at issue (if any); (ii) identify any possible adverse effect on human or animal health; and
(iii) evaluate the potential for that adverse effect to arise from the presence of the identified additives,
contaminants, toxins or disease-causing organisms in food, beverages or feedstuffs.384
7.179 We note that the Appellate Body has found that the requirement to conduct a risk assessment
is not satisfied merely by a general discussion of the disease sought to be avoided by the imposition of

383 See Panel Report, Canada – Continued Suspension , para. 7.461. We note that the distinction
between the two types of assessment is not merely academic. In Australia – Salmon, the Appellate Body further
elaborated on the dis tinction between the two standards for risk assessment contained in Annex A(4) and the
need for a substantive distinction between the evaluation of "likelihood" in the first sentence and the evaluation
of "potential" in the second sentence. Specifically, the Appellate Body stated:
"We note that the first type of risk assessment in paragraph 4 of Annex A is substantially different from
the second type of risk assessment contained in the same paragraph. While the second requires only the
evaluation of the potential for adverse effects on human or animal health, the first type of risk assessment
demands an evaluation of the likelihood of entry, estab lishment or spread of a dis ease, and of the associated
potential biological and economic consequences. In view of the very different language used in paragraph 4 of
Annex A for the two types of risk assessment, we do not believe that it is correct to diminish the substantial
differences between these two types of risk assessments..."
Appellate Body Report, Australia – Salmon, footnote 69.
384 Panel Report, Canada – Continued Suspension, para. 7.479.

an SPS measure.
385 Rather the risk assessment must address the specific risk at issue.386 We also note
that, in Japan – Apples, the Appellate Body clarified that a ri sk assessment should refer in general to
the harm concerned as well as to the pr ecise agent that may possibly cause the harm. 387 M o r e
recently, in US/Canada – Continued Suspension , the Appellate Body also clarified that the risk
assessment cannot be entirely isolated from the appropriate level of protection.
(ii) When is a measure "based" on a risk assessment?
7.180 The Appellate Body in EC – Hormones explained that "Article 5.1, when contextually read as
it should be, in conjunction with and as informed by Article 2.2 of the SPS Agreement, requires that
the results of the risk assessment must sufficiently warrant – that is to say, reasonably support – the
SPS measure at stake." 388 In other words, there must be a "rational relationship" between the
SPS measure and the risk assessment.389 The Appellate Body went on to explain that this requirement
is a substantive one.390 However, the Appellate Body has clarified that while Article 5.1 requires that
SPS measures be "based on" a risk assessment, this does not mean that the SPS measures have to
"conform to" the risk assessment.391
7.181 Moreover, the risk assessment need not "come to a monolithic conclusion that coincides with
the scientific conclusion or view implicit in the SPS measure", nor does the risk assessment have to
"embody only the view of a majority of the relevant scientific community."392 While recognizing that,
in most cases, WTO Members "tend to base thei r legislative and administrative measures on
'mainstream' scientific opinion", the Appellate Body has observed that, "[i]n other cases, equally
responsible and representative governments may act in good faith on the basis of what, at a given
time, may be a divergent opinion coming from qualified and respected sources." 393 The Appellate
Body added that an approach based on a diverg ent opinion from a qualified and respected source,
"does not necessarily signal the absence of a reasonable relationship between the SPS measure and the
risk assessment, especially wh ere the risk involved is life-threatening in character and is perceived to
constitute a clear and imminent threat to public health and safety."394
7.182 Finally, we note that the Appellate Body in EC – Hormones determined that "Article 5.1 does
not insist that a Member that adopts a sanitary m easure shall have carried out its own risk assessment

385 Appellate Body Report, Japan – Apples, para. 202.
386 Appellate Body Report, US/Canada – Continued Suspension , para. 559. Specifically, in EC –
Hormones, the Appellate Body concluded that a risk assessment in this instance required not a general
evaluation of the carcinogenic potential of entire categories of hormones, but rather should include an
examination of residues of those hormones found in meat derived from cattle to which the hormones had been
administered for growth promotion purposes. Appellate Body Report, EC – Hormones, para. 200.
387 Appellate Body Report, Japan – Apples, para. 202. In a footnote, the Appellate Body explained:
"Indeed, we are of the view that, as a general matter, 'risk' cannot usually be understood only in terms
of the disease or adverse effects that may result. Rather, an evaluation of risk must connect the possibility of
adverse effects with an antecedent or cause. For example, the abstract refe rence to the 'risk of cancer' has no
significance, in and of itself, under the SPS Agreement, but when one refers to the 'risk of cancer from smoking
cigarettes', the particular risk is given content."
Appellate Body Report, Japan – Apples, at footnote 372.
388 Appellate Body Report, EC – Hormones, paras. 193-194.
389 Appellate Body Report, EC – Hormones, para. 193.
390 Appellate Body Report, EC – Hormones, para. 193.
391 Appellate Body Report, US/Canada – Continued Suspension, para. 528.
392 Appellate Body Report, EC – Hormones, para. 194.
393 Appellate Body Report, EC – Hormones, para. 194.
394 Appellate Body Report, EC – Hormones, para. 194.

… The SPS measure might well find its objective justification in a risk assessment carried out by
another Member, or an international organization".395
(c) Whether the United States has conducted a risk assessment and whether Section 727 is based
on such a risk assessment
7.183 The Panel will therefore examine whether the United States has based Section 727 on a risk
assessment.396
7.184 China argues that the evidence demonstrates that Section 727 is not based on any risk
assessment that specifically addresses risks posed by poultry products from China, let alone one that
meets the requirements of Article 5.1 and 5.2. 397 Additionally, China argues that the available
evidence suggests that Section 727 would not be supported by the likely scientific conclusions of a
risk assessment consistent with the requirements of the SPS Agreement.398
7.185 The United States does not dispute that no risk assessment was conducted. In fact, the
United States has not presented any risk assessment to this Panel. The United States has merely
responded to a question from the Panel that there was a scientific basis underlying Section 727 as
required by Article 2.2 of the SPS Agreement.399
7.186 In the context of its defence under Artic le XX(b) of the GATT 1994, though, the
United States does present some evid ence with respect to increased h ealth and safety concerns with
respect to China.
7.187 In particular, the United States has argued, in the context of its defence under Article XX(b)
of the GATT 1994, that China's food safety problems have been written about at length in reports
from international organizations and governmental bodi es, and they have also been the subject of
academic study, such as an Asian Development Bank Policy Note, and some United Nations bodies
reports, where it was stated that enforcement in Ch ina of food control places an excessive reliance on
end-product testing with very little use of auditing as an inspection tool.400
7.188 The United States also cites to a 2009 USDA re port which elaborates on the problems with
China's food safety system and cites some of the sp ecific safety risks posed by imports from China 401
The USDA report indicates that China accounts for a disproportionate percentage of import refusals
resulting from over 50 different types of food safety violations, the most common of which include
"general filth, unsafe additives or chemicals, microbi al contamination, inadequate labelling, and lack
of proper manufacturer registrations." Additionall y, the USDA report explains some of the problems
with China's current system for verifying the saf ety of its exports, which failed to detect these
numerous shipments of unsafe products to the United States.
402 The United States contends that an
academic study published by Global Health Governance reaches many of the same conclusions,
expounding at length on some of the problems with enforcement of China's food safety laws as well

395 Appellate Body Report, EC – Hormones, para. 190, followed by Panel Report, EC – Approval and
396 We understand that it is not our role to conduct our own risk assessment based on scientific
evidence gathered by us or submitted by the parties during the Panel proceedings. Panel Report, EC – Hormones
(Canada), para. 8.104; Panel Report, EC – Hormones (US), para. 8.101. Likewise, we acknowledge that we are
not to impose any scientific opinion on the United States. Panel Report, Australia – Salmon, para. 8.41.
397 China's first written submission, para. 141.
398 China's first written submission, para. 142.
399 United States' response to Panel question No. 114.
400 United States' first written submission, paras. 50-51.
401 United States' first written submission, para. 52 citing Exhibit US-24.
402 United States' first written submission, paras. 53-54 citing Exhibit US-24.

as corruption.
403 The United States stresses that numerous hi gh-profile scandals have threatened the
health of consumers and have led to bans on products from China.404
7.189 The United States has drawn our attention to so me other incidents related to China's food
safety problems that had a direct impact on the United States, including smuggled poultry from China
which potentially put consumers at risk for avian influenza.
405
7.190 The United States also presented China's Minist ry of Health statement in a March 2009 news
release that "China's food security situation remains grim, with high risks and contradictions".406
7.191 We recall that the Appellate Body has held that the risk assessment need not be conducted by
the WTO Member imposing the SPS measure. 407 So the fact that some of the studies have not been
carried out by United States authorities does not mean they cannot constitu te the risk assessment.
However, the United States has not contended that these various studies form the "risk assessment"
upon which Section 727 is based. Because the United States has not presented any arguments or
evidence to prove the existence of a risk assessment , we can only conclude that the United States has
not based Section 727 on any risk assessment, whet her conducted by its authorities or by any other
entity.
7.192 Having examined the evidence presented by the pa rties, the Panel thus concludes that China
has made a prima facie case that the United States h as not conducted a risk assessment in respect of
Section 727, within the terms of Articles 5.1, 5.2 and Annex A(4) of the SPS Agreement. The Panel
further concludes that the United States has not re butted the presumption of inconsistency. Therefore,
the Panel finds that Section 727 is not based on a ri sk assessment and is therefore inconsistent with
the obligations in Article 5.1 and 5.2 of the SPS Agreement.
(d) Whether Section 727 is based on scientific princi ples and is not maintained without sufficient
scientific evidence as required by Article 2.2 of the SPS Agreement
(i) Arguments of the parties
7.193 China argues that Section 727 is not based on a ny scientific evidence let alone that which
would be sufficient to meet the standards of Article 2.2 of the SPS Agreement.
408 Additionally, China
argues that the legislative history of Section 727 does not indicate that there was any scientific
evidence underpinning the provision nor does it men tion any specific health th reat posed by Chinese
poultry products that Section 727 is meant to address.409
7.194 With respect to the United States' references, in its submission, to newspaper stories and
USDA reports alleging "contamination" and China's f ood safety crises, China argues that none of this
evidence is referenced in the JES, none describes any specific health threat posed by poultry products,
and none indicates that there has been even one fo od safety crisis related to Chinese poultry. Thus,
China concludes that for purposes of Articles 2.2 and Article 5.1 claims, these newspaper stories and

403 United States' first written submission, para. 55 citing Exhibit US-25.
404 United States' first written submission, para. 56.
405 United States' first written submission, para. 57.
406 United States' first written submission, para. 58.
407 Appellate Body Report, EC – Hormones, para. 190, followed by Panel Report, EC – Approval and
408 China's first written submission, paras. 144-147.
409 China's opening oral statement at the first substantive meeting of the Panel, para. 70.

reports are irrelevant to the question of whether Section 727 was enacted on the basis of specific,
scientific evidence related to Chinese poultry.410
7.195 The United States first argues that Section 727, whic h is not a substantive SPS measure
designed to achieve the United States' ALOP, is not subject to the obligation in Article 2.2 to be based
on scientific principles and not maintained without sufficient scientific evidence. 411 Additionally, the
United States argues that China has failed to ad dress another difficulty in attempting to apply
Articles 2.2 and 5.1 to the measure at issue, name ly, that the process of determining equivalence for
an exporting Member's SPS measures is not the sam e as the process of performing a risk assessment
of products imported from another Member. In particular, the United States notes that:
"The determination that poultry products po se a risk of being unsafe, and therefore
that measures are needed to protect against that risk, pre-dates Section 727 and
applies regardless of origin (whether imported or domestically produced). Indeed, it is
not contested in this dispute that imported poultry products can pose a risk of being
unsafe."
412
7.196 The United States argues that evidence of China's food safety crises and enforcement
problems support Section 727, especially in light of the fact that FSIS's equivalence system places a
large reliance on the exporting country to enforce its own laws to ensure that the food being exported
is safe. The United States produced a number of newspaper articles and publi cations related to avian
influenza, poultry smuggling, and melamine in chicke n feed. The United States thus contends that it
follows scientifically from that evid ence that there was a need to take additional action to ensure that
exports from China would be safe.413
(ii) Analysis by the Panel
7.197 We start our analysis by looking at the text of Article 2.2 of the SPS Agreement which reads
as follows:
"Members shall ensure that any sanitary or phytosanitary measure is applied only to
the extent necessary to protect human, animal or plant life or health, is based on
scientific principles and is not maintained without sufficient scientific evidence,
except as provided for in paragraph 7 of Article 5."414
7.198 We note that Article 2.2 not only requires that measures be based on scientific principles, but
that they not be maintained without sufficien t scientific evidence, except as provided for in
Article 5.7. The Appellate Body has interpreted the ob ligation in Article 2.2 to require that there be a
rational or objective relationship between the SPS measure and the scientific evidence. 415

410 China's opening oral statement at the first substantive meeting of the Panel, para. 71.
411 United States' second written submission, paras. 98-99.
412 United States' second written submission, para. 100.
413 United States' response to Panel question No. 114, para. 236.
414 Article 5.7 of the SPS Agreement provides for the provisional adoption of SPS measures on the basis
of available pertinent information, where it is not possible to conduct a full risk assessment. If a Member
imposes a measure pursuant to Article 5.7 it is required to seek to obtain additiona l information necessary for a
more objective assessment of risk and review the sani tary or phytosanitary m easure accordingly within a
reasonable period of time. We note in this respect th at the United States has not invoked Article 5.7 as a
justification for why it did not conduct a risk assessment prior to imposing the prohibition on the use of funds
which prevented the FSIS from establishing or implementing a rule enabling the importation of processed
poultry products from China into the United States.
415 Appellate Body Report, Japan – Agricultural Products II , para. 84 upholding the Panel Report,
Japan – Agricultural Products II, paras. 8.29 and 8.42.

Additionally, the panel in Japan – Apples (Article 21.5 – US) , noted that in order for scientific
evidence to support a measure sufficiently, it seems l ogical to us that such scientific evidence must
also be sufficient to demonstrate the existence of the risk which the measure is supposed to address.
416
7.199 We also recall that the Appellate Body expl ained that Articles 3.3, 5.1 and 5.7 provide
relevant context for understanding the extent of the obligation in Article 2.2 not to maintain a measure
without sufficient scientific evidence. 417 We find relevant context in the reference in Article 3.3 to
"scientific justification" which is defined in the footnote to that Article as "examination and
evaluation of available scientific information in c onformity with the relevant provisions of this
Agreement." It is our understanding, purs uant to the Appellate Body's reasoning in EC – Hormones,
that this language implies that "scientific justifica tion" is of the nature of a risk assessment required
under Article 5.1. 418 With respect to Article 5.7, which pe rmits provisional measures when there is
"insufficient scientific evidence", the Appellate Body has reasoned that the relevant scientific
evidence will be considered "insufficient" for purposes of Article 5.7 "if the body of available
scientific evidence does not allow, in quantitative or qualitative terms, the performance of an adequate
assessment of risks as required under Article 5.1 and as defined in Annex A to the SPS Agreement."419
7.200 Given the foregoing, it is the Panel's view that for the United States to maintain Section 727
with sufficient scientific evidence, the scientific evidence must bear a rational relationship to the
measure, be sufficient to demonstrate the existenc e of the risk which the measure is supposed to
address, and be of the kind necessary for a risk assessment.420
7.201 As explained above, in paragraph 7.168, wh ere an SPS measure is not based on a risk
assessment as required in Article 5.1 and 5.2 of the SPS Agreement, this measure is presumed not to
be based on scientific principles and to be maintained without sufficient scientific evidence.421
7.202 Additionally, with respect to the evidence the United States refe rs to, we note that while it
deals generally with food safety issues in China, it does not specifically address China's poultry
inspection system. We also note that the evidence does not address the existence of the risk which the
measure is supposed to address. 422 The United States has produced a number of newspaper articles
and publications related to avian influenza, poultr y smuggling, and melamine in chicken feed. Apart
from the FSIS reports in the frame work of the equivalence proceed ings, the United States has not
submitted to the Panel any specific scientific justifi cation, notably through a risk assessment carried
out according to the principles and disciplines in Article 5 and paragraph 4 of Annex A of the
SPS Agreement, concerning the risk posed by poultry products from China. We accept the
United States' point that the general science on the safety of poultry products was well established
prior to the imposition of Section 727. However, the evidence referred to by the United States does
not establish the existence of a risk of consumi ng unsafe poultry from China. Therefore, the Panel
finds that the evidence of food safety enforcemen t problems presented by the United States is not

416 Panel Report, Japan – Apples (Article 21.5 – US), para. 8.45.
417 Appellate Body Report, Japan – Agricultural Products, paras. 74-80.
418 Appellate Body Report, EC – Hormones, para. 175.
419 Appellate Body Report, Japan – Apples, para. 179; Appellate Body Report, US/Canada – Continued
Suspension, para. 674.
420 The Panel notes that Article 5.2 of the SPS Agreement includes relevant scientific evidence as one of
several factors Members are to take into account in their assessment of the risks.
421 Appellate Body Report, Australia – Salmon , para. 138; Panel Report, Australia – Salmon
(Article 21.5 – Canada) , paras. 7.85 and 7.161; and Panel Report, EC – Approval and Marketing of Biotech
Products, para. 7.3399.
422 We note that the evidence submitted by the United St ates on China's food safety enforcement issues
does not concern the safety of Chinese pou ltry products. The evidence presented by the United States rather
refers to other food products such as seafood or pork.

"sufficient" within the meaning of Article 2.2. 423 The Panel thus concludes that Section 727 was
maintained without sufficient scientif ic evidence in contravention of the obligation in Article 2.2 of
the SPS Agreement.
7.203 Hence, having found that Sec tion 727 is not based on a risk assessment in violation of
Article 5.1 and 5.2 of the SPS Agreement, and further, finding that the United States has not
maintained Section 727 with sufficient scientific ev idence, the Panel finds that Section 727 is not
consistent with Article 2.2 of the SPS Agreement.
(e) Conclusion
7.204 In the absence of a risk assessment, the Panel fi nds that the Section 727 is inconsistent with
Article 5.1 and 5.2 of the SPS Agreement because it is not based on a risk assessment which took into
account the factors set forth in Article 5.2. Addi tionally, the Panel finds that Section 727 is
inconsistent with Article 2.2 of the SPS Agreement because it was maintained without sufficient
scientific evidence.
G. WHETHER SECTION 727 IS INCONSISTENT WITH ARTICLE 5.5 OF THE SPS AGREEMENT
1. Arguments of the parties
7.205 Relying on the Appellate Body Report in EC – Hormones , China claims that Section 727 is
inconsistent with Article 5.5 of the SPS Agreement because the United States applies different ALOPs
to comparable situations, the application of such different ALOPs is arbitrary and the distinction in
ALOPs leads to discrimination.424
7.206 In particular, China claims that Section 727 resulte d in distinctions in levels of protection "in
different but comparable situations" because the Un ited States imposes a different and stricter ALOP
to Chinese poultry products compared to other WTO Members' poultry or to Chinese non-poultry
food products which share a common risk of potential contaminants, namely Salmonella,
Campylobacter and Listeria. China also refers to E. coli and Highly Pathogenic Avian Influenza
(HPAI) virus.425
7.207 With respect to the comparison of Chinese poultry to poultry from other WTO Members,
China argues that it is one of just ten WTO Member s that have obtained FSIS authorization to export
poultry to the United States. However, it contends that , under Section 727, its poultry products are, in
effect, treated as more dangerous than those origin ating in Members that have never obtained an
equivalence determination from the FSIS. China thus argues that, regardless of the possibility of
improving its food safety system for poultry, China is prevented by Section 727 from having such
authorization considered, granted or implemented.426
7.208 With respect to the comparison of Chinese pou ltry to other food products from China, China
notes that neither the text nor the legislative history of Section 727, nor FSIS documentation asserts or

423 The Panel is not, however, sayi ng that evidence of the type adduced by the United States could not
be considered in an adequate assessment of the risks. Indeed, we recall that the Appellate Body has explained
that evidence of risk is not limited to that which is susceptible of quantitative analysis by the empirical or
experimental laboratory methods commonly associated w ith the physical sciences, but also includes "risk in
human societies as they actually exist, in other words, the actual potential for adverse effects on human health in
the real world where people live and work and die." Appellate Body Report, EC – Hormones, para. 187.
424 China's comment to the United States' response to Panel question No. 121.
425 China's opening oral statement at the second substantive meeting of the Panel para.36-37, China's
response to Panel question No. 123.
426 China's first written submission, para. 131.

otherwise provides contemporaneous evidence that poultry is more likely to be "contaminated" than
other types of food products.
427 China asserts that these contaminants are within the meaning of
footnote 4 and are not unique to China as well as not only found in poultry products.428
7.209 Moreover, China agrees with the United Stat es that its ALOP for poultry is normally
expressed by Section 466(a) of the PPIA 429 of which the implementing regulations are the FSIS
procedures.430 However, China submits that Section 727 is legally distinct from the PPIA since it
targets only China. China further cl aims that Section 727 constitutes "less than zero risk" tolerance
which eliminates any opportunity for only China to export its poultry to the United States even if
Chinese poultry had been scientifically confir med to meet the United States' ALOP. 431 While on the
other hand, the ALOP for all other WTO Member s' poultry provided in the FSIS procedures or non-
poultry food products provided in FDA import procedures tolerates some risk as long as the WTO
Members' inspection system has been deemed equivalent to the US system. 432 Therefore, China
concludes that the ALOP applied to Chinese poultry is thus "different" from – and much stricter than
– the ALOP normally applied by the United States for imported poultry.433
7.210 In response to questions from the Panel, China ad mitted that the relevant point of analysis is
not whether the FDA measures that are applied to non-poultry products are "different" from the FSIS
procedures applied to poultry products but rather whether the difference in ALOPs is arbitrary.
According to China, the United States has violated Article 5.5 by applying a different and much
stricter ALOP to Chinese poultry (compared to pou ltry from other countries, or compared to other
non-poultry Chinese products) which share common risk of potential contamination
434 without
scientific or other justification. 435 China argues that Section 727 was not necessary to ensure the
compliance with the US ALOP because Section 727 prevents the only US Government employees
capable of evaluating the safety of Chinese poultry products by means of budget restriction from
conducting scientific audits, investigations and rule making in and for China.
436
7.211 China further argues that the dis tinction in ALOPs is arbitrary. 437 China submits that there is
no legitimate justification why the FSIS procedures ca nnot be applied to China to determine whether
its poultry products may be exported to the United St ates. China contends that given the absence of
any scientific evidence or risk assessment, th e United States has provided no publicly available
justification for applying such a disparate level of sanitary protection to China.
7.212 China argues that, by forbidding the consid eration, granting or implementation of
authorization for Chinese poultry products, while offering the possibility to every other WTO
Member to seek and obtain FSIS authorization to export poultry products to the United States,
Section 727 discriminates against China. 438 China further argues that th e distinction in ALOPs leads
to discrimination because Section 727 blocks the importation of only Chinese poultry while other
Chinese food products posing the same health risks may be imported.
439

427 China's opening oral statement at the first substantive meeting of the Panel, para. 55.
428 China's response to Panel question No. 123.
429 China refers to 21 USC §466 which is where the PPIA is codified.
430 China's response to Panel question No. 116.
431 China's response to Panel question No. 116.
432 China's responses to Panel questions Nos. 117 and 124.
433 China's response to Panel question No. 116.
434 China's response to Panel question No. 123.
435 China's response to Panel question No. 123.
436 China's comment to the United States' response to Panel question No. 121.
437 China's first written submission, para. 132.
438 China's first written submission, para. 121.
439 China's comment to the United States' response to Panel question No. 121.

7.213 The United States contends that, for both situations, Ch ina has not demonstrated a difference
in the ALOPs applied. The United States submits th at there is only one ALOP and thus there is no
distinction in its ALOP for poultry from China as opposed to that of the United States or other WTO
Members.
440 Moreover, the United States argues that Section 727 does not impose an "import ban" or
preclude a finding of equivalence on Chinese poultry; ra ther it is just a procedural measure meant to
ensure that China's food safety problems are fu lly considered in the process of determining
equivalence due to the heightened risk posed by Chinese poultry. 441 The United States explains that
the FSIS operates under an equivalence regime wh ile the FDA relies on "import alerts" and more
rigorous border measures so such a comparison is inappropriate.442
7.214 With respect to China's comparison of Chinese poultry to other food products from China, the
United States asserts that China has not established that the types of risks addressed by the PPIA are
the same as the risks associated with other types of food products and that poultry has a different
ALOP than other food products.443
7.215 The United States further argues that China has not put forward an argument showing that the
alleged distinction in ALOPs results in interna tional trade discrimination and that China has not
established that any distinction in ALOPs is arbitrary or unjustifiable.444
7.216 The United States points out that China's food safety enforcement problems and food safety
crises have been the subject of reports and articles by numerous well-regarded international
organizations (including the WHO) and academics. 445 Moreover, to justify whether there was
discrimination in an arbitrary and unjustifia ble manner between China and other WTO Members
because of Section 727, the United States contends that China's proposed situations are not
comparable to other WTO Members. This is because the United States argues, first, most Members
have never attempted to export p oultry products to United States; second, many of the equivalent
WTO Members have been exporting to the United States for many years without any significant
incident resulting in confidence and familiarity with their inspection system including their ability to
resolve any problems that may arise such as in the case of Mexico.
446
2. Analysis by the Panel
7.217 We are therefore called upon to examine whether Section 727 is inconsistent with Article 5.5
of the SPS Agreement. We shall start by looking at the text of Article 5.5 of the SPS Agreement and
how it has been interpreted by previous panels and the Appellate Body.
(a) Article 5.5 of the SPS Agreement
7.218 Article 5.5 of the SPS Agreement embodies a non-discrimination principle in respect of the
application of the appropriate level of sanitary or phytosanitary protection ("ALOP"). This provision
reads as follows:

440 United States' response to Panel question No. 120.
441 United States' comment to China's response to Panel question No. 116 and United States' response
to Panel question No. 118.
442 United States' comment to China's response to Panel question No. 124.
443 United States' response to Panel question No. 121.
444 China's comment to the United States' response to Panel question No. 121.
445 United States' opening oral statement at the sec ond substantive meeting of the Panel, paras. 39
and 42.
446 United States' opening oral statem ent at the second subs tantive meeting of the Panel, paras. 43-44
and 48.

"With the objective of achieving consistency in the application of the concept of
appropriate level of sanitary and phytosanita ry protection against risks to human life
or health, or to animal and plant life or health, each Member shall avoid arbitrary or
unjustifiable distinctions in the levels it considers to be appr opriate in different
situations, if such distinctions result in discrimination or a disguised restriction on
international trade."
7.219 Annex A(5) further defines the concept of ALOP as "the level of protection deemed
appropriate by the Member establishing a sanitary or phytosanitary measure to protect human, animal
or plant life or health within its territory".
7.220 We note that the Appellate Body has explained that there is an implicit obligation for
Members to determine their ALOP.
447 Although it need not be determ ined in quantitative terms, the
ALOP cannot be determined "with such vagueness or equivocation that the application of the relevant
provisions of the SPS Agreement ... becomes impossible". 448 Precisely, the Appellate Body has ruled
that if a Member fails to determine its ALOP, or does so with insufficient precision, then the ALOP
"may be established by [the panel] on the basis of the level of protection reflected in the SPS measure
actually applied."449
7.221 The Appellate Body in EC – Hormones identified three conditions that must all be satisfied in
order to establish a violation of Article 5.5 of the SPS Agreement, which are that: (i) the Member has
set different levels of protection in "different situa tions"; (ii) the levels of protection show "arbitrary
or unjustifiable" differences in their treatment of different situations; and (iii) these arbitrary or
unjustifiable differences lead to "discrimination or disguised restrictions" on trade.450
7.222 Additionally, we note that the panel in EC – Hormones held that "in order to give effect to all
three elements contained in Article 5.5 and giving full meaning to the text and context of this
provision, we consider that all three elements n eed to be distinguished and addressed separately." 451
We also note that the panel on Australia – Salmon (Article 21.5 – Canada) held that the complainant
"bears the burden of demonstrating that the compar isons it refers to meet all three elements under
Article 5.5."452
7.223 The Panel must therefore determine whether China has met its burden of proof with respect to
its claim of violation of Article 5.5 of the SPS Agreement. Our first step will be to ascertain whether
China has presented any such comparisons to demonstr ate that the three elements of Article 5.5 are
met. In this respect, we note that China has pr esented two possible comparisons: (i) a comparison of
Chinese poultry vis-à-vis poultry from other WTO Members and (ii) a comparison of Chinese poultry
vis-à-vis other Chinese food products.
7.224 We will address whether each of the three elemen ts are satisfied for each of the comparisons
China refers to, in turn.

447 Appellate Body Report, Australia – Salmon, para. 206.
448 Appellate Body Report, Australia – Salmon, para. 206.
449 Appellate Body Report, Australia – Salmon, para. 207.
450 Appellate Body Report, EC – Hormones, paras. 214-215.
451 Panel Report, EC – Hormones (Canada), para. 8.187.
452 Panel Report, Australia – Salmon (Article 21.5 – Canada), para. 7.88.

(b) The importation of Chinese poultry products vis-à-vis that of poultry products from other
WTO Members
(i) Whether Section 727 results in distinctions in ALOPS in different yet comparable situations
7.225 As we explained above, the Appellate Body has id entified the first of the three elements to be
assessed under Article 5.5 of the SPS Agreement as "the Member imposing the measure complained
of has adopted its own appropriate levels of sanitary protection against risks to human life or health in
several different situations." 453 Thus, the first element of Article 5.5 appears to have two, closely
related aspects: (1) the existence of different situ ations; and (2) and the existence of different ALOPs
in such situations.
7.226 The Appellate Body, in EC—Hormones, noted that, although the situations must be
"different", the situations exhibiting differing leve ls of protection cannot, of course, be compared
unless they are comparable, that is, unless they pr esent some common element or elements sufficient
to render them comparable. 454 According to the Appellate Body, if the situations proposed to be
examined are totally different from one another, they woul d not be rationally comparable and the
differences in ALOP cannot be examined for arbitrariness. 455
7.227 We note that several panels have addressed the question of what constitutes "common
elements" or "elements sufficient to render" th e different situations comparable. The panel in EC –
Hormones, for example, considered that for the pur poses of its dispute, which dealt with an
SPS measure to protect human health from contaminants in food, "different" yet comparable
situations in the sense of Article 5.5 were those wh ere the same substance or the same adverse health
effect is involved.
456
7.228 With respect to an SPS measure imposed to protect plant or animal life or health from pests or
disease, the Appellate Body in Australia – Salmon held that a "common element" can be "either a risk
of entry, establishment or spread of the same or a similar disease, or a risk of the same or similar
associated potential biological and economic consequences.457
7.229 We shall therefore examine whether poultry products from China and poultry products from
other WTO Members are such "different situations " that are comparable. If we conclude in the
affirmative, we will then examine whether the United States has made distinctions in ALOPs in that
"different situation".
Whether different yet comparable situations exist
7.230 The Panel therefore needs to decide whether we agree with China that the importation of
Chinese poultry products and that of poultry products from other WTO Members are two different but
comparable situations within the meaning of Article 5.5 of the SPS Agreement.
7.231 China argues that the establishment or implementation of a rule allowing importation cannot
occur while the funding restriction remains in place, whereas other WTO Members may (if their

453 Appellate Body Report, EC – Hormones, paras. 214-218; see also Appellate Body Report, Australia
– Salmon, paras. 140, 143 citing Panel Report, Australia – Salmon, para. 8.108.
454 Appellate Body Report, EC – Hormones, para. 217.
455 Appellate Body Report, EC – Hormones, para. 217.
456 Panel Report, EC – Hormones , para. 8.176 also referenced in Appellate Body Report, EC –
Hormones, para. 217.
457 Appellate Body Report, Australia – Salmon, para. 146 (emphasis in original); confirmed by
Document G/SPS/15, Committee on Sanitary and Phytosanita ry Measures, Guidelines to Further the Practical
Implementation of Article 5.5, 18 July 2000, para. A.2.

regimes are deemed equivalent by FSIS) have a rule established and implemented allowing imports of
poultry products into the United States from those Members. Therefore, according to China, poultry
products from China, which are subject to Section 727, is a "different situation" within the meaning of
Article 5.5 of the SPS Agreement to poultry products from other WTO members, who have access to
the regular FSIS procedures. In respect to the United States' position that there are no different
situations since the ALOP is the same, China di sagrees with the United Stat es' narrow interpretation
of "different situations" by quoti ng the Appellate Body decision in Australia – Salmon stating
different situations may be compared if they have just one risk factor in common.
458
7.232 The United States argues that there is no distinction in its ALOP for poultry from China as
opposed to that of the United States or other WT O Members and therefore there is no "different
situation".459
7.233 We recall that Section 727 specifically provides that "[n]one 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 " (emphasis added). It is thus clear that the
funding restriction imposed through Section 727 applies only to poultry products from China, and not
to poultry products from other WTO Members. Hence, the funding restriction in Section 727 results in
a differentiation being made between the measure applied to poultry products from China, i.e.
Section 727, vis-à-vis the measures applied to poultry products from other WTO Members, i.e. FSIS
procedures. We therefore agree with China that the importation of Chinese poultry products and that
of poultry products of other WTO Members qualify as different situations.
7.234 In addition to being different, though, we reca ll that the Appellate Body has called for the
situations to be comparable. In this respect , China identifies the common element between its
"different" situations as the risk of the sam e contaminants being present in the poultry. 460 To that end,
China references some of the pathogenic bacteria noted by the United States in its defence under
Article XX(b) of the GATT 1994, most notably Salmonella, Campylobacter and Listeria. 461 Based on
China's answers to our questions462, we understand that China believes that the purpose of Section 727
is to protect human health from contaminants in food as defined by Annex A(1)(b).
7.235 We note that the crux of the United States' arguments seems to be that Section 727 is a
supplement to the PPIA and is meant to further its goals of ensuring that poultry is wholesome,
unadulterated, and fit for human c onsumption. We further note that the three pathogenic bacteria
identified by China are not only identified by the Un ited States as a concern with respect to Chinese

458 China's comment to the United States' response to Panel question No. 120.
459 United States' response to Panel question No. 120.
460 China's response to Panel question No. 47.
461 During the second substantive meeting, the Panel asked China whether what China had identified as
the common element – Salmonella, Campylobacter, and Listeria, would not rather be "disease causing
organisms", which are also addressed by the definition of SPS measures in Annex A(1)(b), instead of
"contaminants", as defined in footnote 4. This footnote provides that "'contaminants' include pesticide and
veterinary drug residues and extraneous matter." China explained to the Panel that its argument is that
Salmonella, Campylobacter, and Listeria are pathogenic bacteria that can be considered as "extraneous matter"
within the scope of the definition of contaminants under footnote 4. For China, "extraneous" means "of external
origin, introduced or added from without; foreign to the object to which it is attached or which contains it".
China, nevertheless, argued that, in the alternative, pa thogenic bacteria may also be considered as disease-
causing organism. See China's response to Panel question No. 123.
Because both "disease causing organisms" and "con taminants" are addressed in the definition of
SPS measures in Annex A(1)(b), the Panel accepts that Ch ina has identified as a common element the risk of
Salmonella, Campylobacter, and Listeria being present in the poultry, irrespective of their classification as
contaminants or disease-causing organisms.
462 China's response to Panel questions Nos. 42(d) and 43.

poultry products, but are also identified as a basi s for the implementation of the PPIA regime as a
whole.
7.236 We therefore agree that the risk of Salmonell a, Campylobacter and Listeria being present in
respect to both the poultry products from Chin a and those from other WTO Members makes the
different situations – the importation of poultry products from China vis-à-vis that of poultry products
from other WTO Members – comparable for the purposes of Article 5.5 of the SPS Agreement.463
7.237 The Panel therefore concludes that the importation of Chinese poultry products is a different
yet comparable situation to that of poultry pr oducts from other WTO Members. Having made this
conclusion, and as explained by the Appellate Body in EC – Hormones , the Panel now turns to
consider whether the United States has applied di stinctions in ALOPs in these two different yet
comparable situations.
Whether distinctions in ALOPs exist
7.238 The second aspect of the first element of Article 5.5 of the SPS Agreement thus refers to the
existence of different ALOPs being applied in different but comparable situations.
7.239 We note that the Appellate Body in EC – Hormones , stated that "[c]learly, comparison of
several levels of sanitary protection deemed appropriate by a Member is necessary if a panel's inquiry
under Article 5.5 is to proceed at all." 464 The Appellate Body also refe rred to "situations exhibiting
differing levels of protection ."465 Finally, the panel in Australia – Salmon reasoned that a substantial
difference in the measures applied could reflect a di stinction in the ALOPs applied in two different
but comparable situations.466
7.240 We recall that China claims that Section 727 constitutes "less than zero risk" tolerance which
eliminates any opportunity for only China to export its poultry products to the United States, even if
Chinese poultry had been scientifically confir med to meet the United States' ALOP. 467 While on the
other hand, the ALOP for all other WTO Members' poultry provided in the FSIS procedures tolerates
some risk as long as the specific WTO Member's inspection system has been deemed equivalent to the
US system. 468 Therefore, China concludes that the ALOP applied to Chinese poultry is thus
"different" from – and much stricter than – th e ALOP normally applied by the United States for
imported poultry.469 China submits that Section 727 was not necessary to ensure the compliance with
the United States' ALOP since Section 727 prevents the only US Government employees capable of

463 Additionally, the Panel takes note that China has made significant arguments with respect to Avian
Influenza without specifically identifying it as one of the "common elements" which may render different
situations comparable or by alleging that Section 727 satisfies the definitions of an SPS measure set forth in
Annex A(1)(a) or (c) (China's opening oral statement at the second substantive meeting of the Panel paras. 36-
37, China's response to Panel question No. 123, paras. 90 and 93). China has therefore not specifically identified
how the two situations – the importation of poultry products from China vis-à-vis that of poultry products from
other WTO Members – involve a risk of entry, establishment or spread of the same or a similar disease, or a risk
of the same or similar associated potential biological and economic consequences, as would be required for an
SPS measure consistent with the defin ition in Annex A(1)(a) or (c). Theref ore, the Panel is not taking into
account China's arguments on this poin t in its analysis of whether the mentioned different situations are
comparable.
464 Appellate Body Report, EC – Hormones, para. 217.
465 Appellate Body Report, EC – Hormones, paras. 215 and 217.
466 Panel Report, Australia – Salmon, paras. 8.123-8.124, 8.129.
467 China's response to Panel question No. 116.
468 China's response to Panel question No. 117.
469 China's response to Panel question No. 116.

evaluating the safety of Chinese poultry products by means of budget restriction from conducting
scientific audits, investigations and rule making in and for China.
470
7.241 The United States disagrees and argues that China is confusing the ALOP with the measures
applied and that the PPIA sets the same ALOP for a ll poultry; it is just that the ALOP for poultry is
achieved through a different mechanism, Section 727, with respect to China. 471 The United States
submits that Section 727 does not impose an "import ban" or preclude a finding of equivalence on
Chinese poultry; rather it is a procedural measure meant to ensure that China's food safety problems
are fully considered in the process of determining equivalence due to the heightened risk posed by
Chinese poultry.472
7.242 We therefore need to asses whether the United Stat es is applying a different ALOP to imports
of poultry products from China than the ALOP it app lies to imports of poultry products from other
WTO Members. In this respect, the United Stat es has identified a single ALOP for all poultry
products as set forth in Section 466 of the PPIA as follows:
"The PPIA contains a more specific definition with regard to slaughtered poultry,
which states that 'no slaughtered poultry, or parts or products thereof, of any kind
shall be imported into the United States unl ess they are healthful, wholesome, fit for
human food, not adulterated, and contai n no dye, chemical, preservative, or
ingredient which renders them unhealthful, un wholesome, adulterated, or unfit for
human food.' PPIA, Sec. 466 (Exhibit CN-04)."473
7.243 The essence of the United States' requirement is that all poultry products must be "safe". 474
China agrees with the United States that its ALOP for poultry is normally expressed by Section 466 of
the PPIA of which implementing regulations are the FSIS procedures 475 but argues that Section 727 is
legally distinct from the PPIA because it targets only China.
7.244 The Panel recognizes that the United States is fre e to decide its own ALOP and thus accepts
that the United States' ALOP for poultry, in genera l, is embodied in Section 466 of the PPIA. This
however does not mean that we will not examine whether the ALOP actually being applied by the
United States to poultry products from China differs from that in the PPIA. We note that the Appellate
Body in Australia – Salmon explained that a panel may deduce an unexpressed ALOP from the
measure being applied. 476 In our view, even in a case where a Member has expressed a particular
ALOP, a panel should nevertheless examine the measur e in question to determine whether that ALOP
is the one actually being applied via that measu re. To ignore the measure and rely solely on a
Member's declared ALOP could permit a Member to evade the disciplines of Article 5.5 by simply
declaring one generic ALOP for all SPS-related matters.477
7.245 The United States correctly notes that the panel in Australia – Salmon concluded that the
application of different measures does not necessarily m ean that there is an application of different

470 China's comment to the United States' response to Panel question No. 118.
471 United States' response to Panel question No. 49.
472 United States' comment to China's response to Panel question No. 116 and United States' response
to Panel question No. 118.
473 United States' second written submission, footnote 59.
474 United States' second written submission, para. 62.
475 China's response to Panel question No. 16.
476 Appellate Body Report, Australia – Salmon, para. 207.
477 We do not mean to infer that the United States has attempted to hide behind a generic ALOP in this
case. However, we believe that we cannot ignore Section 727 in our analysis of what ALOP is being achieved
through the measure itself.

ALOPs.478 However, the United States cannot exp ect the Panel to completely divorce the
determination of whether different ALOPs are be ing applied from the measures adopted. As noted
above, substantial differences in the SPS measures app licable in different yet comparable situations
may demonstrate that the ALOPs are different.479
7.246 We will therefore assess whether we can deduce from the measures applied – Section 727 vis-
à-vis FSIS procedures – different ALOPs for poultry products from China and poultry products from
other WTO Members. To that end, the Panel will determine whether the differences in those measures
are substantial.
7.247 Through the PPIA, the United States prohibits the importation of poultry from any WTO
Member who cannot affirmatively demonstrate that it s internal SPS measures result in the equivalent
ALOP applied to domestic US poultry, i.e. the AL OP expressed in the quotation from Section 466 of
the PPIA above. Through Section 727, the US Congress prohibited the FSIS from establishing or
implementing a rule allowing the importation of poul try from China because it had concluded that the
poultry was not "safe" within the meaning set forth in the PPIA. Therefore, it could be concluded that
the same ALOP is applied in both measures.
7.248 However, while both measures – Section 727 vis-à-vis the FSIS procedures – result in a
prohibition on the importation of poultry products that the United States fears may be "unsafe",
Section 727 prohibits not only the importation of a llegedly "unsafe" poultry, it also prohibits one
branch of the US Government establishing or implementing a rule permitting the importation of
poultry products from China. Such a prohibition is not applied to any other WTO Member. China
argues that it is this prohibition which demonstrates that a different ALOP is applied to its poultry
products. For China, the FSIS procedures allow for some minimal and inherent risk that contaminated
poultry could enter the United States
480 and it compares this acceptance of some risk with
Section 727's prohibition on China obtaining FSIS approval to export poultry to the United States.
China argues that pursuant to Section 727, "[e]ven if China's food safety regime could guarantee
100% safety for all Chinese poultry, Section 727 would still prevent China from obtaining FSIS
approval to export poultry to the United States."
481
7.249 We acknowledge that an import ban does not necessarily reflect a different ALOP than an
equivalence regime, as even an import ban accepts some minimal and inherent risk that contaminated
poultry could enter the United States. However, we do note that the panel in Australia – Salmon found
that an import ban for salmon was substantially different from permitting the importation of
ornamental fish after control and therefore reflected a difference in the levels of protection considered

478 In particular, the panel in Australia – Salmon concluded that:
"[T]he level of protection achieved by a specific sanitary measure will also depend on the degree of
risk against which that measure is intended to protect. In that sense,… imposing the same sanitary measure for
different situations does not necessarily result in the same level of protection. Indeed, in many situations (e.g.,
situations representing different risks) the same sanitary measure might result in different levels of protection.
On the other hand, different sanitary measures for different situations might ensure the same level of protection.
Indeed, one given situation might only represent a small risk for which a lenient sanitary measure will achieve a
high level of protection, whereas another situation might pose very high risks requiring a very strict and
different sanitary measure in order to meet that same high level of protection."
479 Panel Report, Australia – Salmon, para. 8.129; See also Appellate Body Report, Australia – Salmon,
para. 232.
480 Specifically, China argues that "although the FSIS procedures are extensive, their application
nevertheless involves some minimal and inherent risk that contaminated poultry could enter the United States.
This is because, even if a country has been deemed equi valent, there is some minima l risk that it could export
unsafe poultry to the United States." China's response to Panel question No. 48.
481 China's response to Panel question No. 48.

to be appropriate in the sense of the first element of Article 5.5.
482 We find similarities in the present
dispute to the one examined by the panel in Australia – Salmon. The regular FSIS procedures prohibit
importation of poultry products from a particular country only until that country has demonstrated that
its SPS measures can achieve the ALOP expressed in the PPIA. However, the effect of Section 727
was to prohibit the importation of poultry from Chin a in any instance, regardless of whether China
demonstrated that its own SPS measures could ac hieve the ALOP expressed in the PPIA. The
absolute import ban imposed by Section 727 refl ects an ALOP substantially different from the
conditional import ban under the regular FSIS pro cedures, because the regular FSIS procedures at
least allow an avenue for an exporting Member to gain access to the United States market, which is
not available in any case for Chinese poultry products.
7.250 We agree with the panel in Australia – Salmon that the determination of the ALOP is not
dependent on the performance of a risk assessment. 483 However, the Panel is of the view that to prove
that such substantially different measures were n eeded to achieve the same ALOP, the United States
would have to demonstrate that poultry products from China presented a greater risk than poultry
products from other WTO Members.
7.251 The United States attempts to meet its burden by pointing out that no other WTO Members
with the same systemic issues with respect to f ood safety were as far along in the equivalency process
as China. Therefore, according to the United States, the measures applied to China were necessary to
achieve the ALOP set forth in the PPIA that poul try imports be "safe". The United States seems to
leave open the option that if the FSIS was about to establish or implement a rule permitting another
country with the same systemic issues exhibited in China to import poultry products, the US Congress
would have contemplated similar action. However, the Panel considers this to be a purely speculative
argument.
7.252 To counter this premise, China notes that Mexico had similar systemic problems yet the US
Congress did not step in and order the FSIS to suspe nd Mexico's equivalency st atus or deny funding
for the regular annual equivalency audits necessary to maintain Mexico's status as eligible to export to
the United States.484
7.253 In our view, as the panel in Australia – Salmon reasoned, a substantial difference in the
measures applied such as, in this case, Section 727 versus standard FSIS procedures, do reflect a
distinction in the ALOPs applied in two different but comparable situations; i.e. the importation of
poultry products from China and that of poultry products from other WTO Members. 485 We therefore
find that the standard FSIS procedures are so substa ntially different from Section 727 such that they
reflect a distinction in ALOPs.
Conclusion
7.254 Having found that the importation of poultry products from China and that of poultry
products from other WTO Members are different yet co mparable situations and that the United States
is applying different ALOPs to such situations, we co nclude that the first element of Article 5.5 of the
SPS Agreement is satisfied, with respect to this compar ison. Therefore, we will proceed with our
analysis of whether the distinction in ALOPs is arbitrary or unjustifiable.

482 Panel Report, Australia – Salmon, para. 8.129; See also Appellate Body Report, Australia – Salmon,
para. 232.
483 Panel Report, Australia – Salmon, paras. 8.125-8.126.
484 China's response to Panel question No. 48.
485 Panel Report, Australia – Salmon, paras. 8.123-8.124 and 8.129.

(ii) Arbitrary or unjustifiable differences in ALOPs
7.255 We recall that the second element of Article 5.5 involves the consideration of whether there is
an "arbitrary or unjustifiable" distinction between the relevant ALOPs.486
7.256 In this respect, China argues that it is one of just ten WTO Members that have obtained the
FSIS authorization to export poultry to the United States. However, it contends, under Section 727, its
poultry products are, in effect, treated as more dangerous than those originating in WTO Members
that have never obtained an equi valence determination from the FSIS. Regardless of the possibility of
China improving its food safety system for poultry, it says, it is prevented by Section 727 from having
such authorization considered, granted or implemented. 487 China further argues that there is no
legitimate justification why the FSIS procedures cannot be applied to China to determine whether its
poultry products may be exported to the United States and thus, the distinction in levels of sanitary
protection is arbitrary and unjustifiable.488
7.257 The United States responds that China has not establishe d that any distinction in ALOPs is
arbitrary or unjustifiable. 489 The United States points out that China's food safety enforcement
problems and food safety crises have been the subject of reports and articles by numerous well-
regarded international organizations (including WHO) and academicians. 490 Moreover, to justify
whether there was discrimination between China an d other WTO Members because of Section 727 in
an arbitrary and unjustifiable manner, the United St ates contends that China's proposed situations are
not comparable to other WTO Members. This is beca use, in its view, first, most Members have never
attempted to export poultry prod ucts to United States; and second, many of the equivalent WTO
Members had been exporting to the United States for many years without a significant incident
resulting in confidence and familiarity with thei r inspection system. This includes the ability to
resolve any problems that may arise, such as in the case of Mexico.491
7.258 The Panel will therefore need to assess whether there is an arbitrary or unjustifiable
distinction between the ALOPs that the United States applies to poultry products from China, on the
one hand, and poultry products from other WTO Members, on the other.
7.259 In examining the terms "arbitrary or unjustif iable", we recall the customary rules of
interpretation set out in the VCLT. Article 31 of the VCLT prescribes that a treaty has to be
interpreted "in good faith in accord ance with the ordinary meaning to be given to the terms of the
treaty in their context and in the light of its object and purpose." The starting point for determining the
ordinary meaning of the terms is, of course, the dictionary. A dictionary definition of the term
"arbitrary" is "based on mere opinion or preference as opp. to the real nature of things, capricious,
unpredictable, inconsistent." 492 In turn, the term "unjustifiable" is defined as "not justifiable,
indefensible", with "justifiable" meaning "[c]apable of being legally or morally justified, or shown to
be just, righteous, or innocent; defensible" 493 and "[c]apable of being ma intained, defended, or made
good."494

486 See, for example, the Appellate Body Report, EC – Hormones, para. 214.
487 China's first written submission, para. 131.
488 China's first written submission, para. 132.
489 United States' response to Panel question No. 121.
490 United States' opening oral statement at the sec ond substantive meeting of the Panel, paras. 39
and 42.
491 United States' opening oral statem ent at the second subs tantive meeting of the Panel, paras. 43-44
and 48.
492 Oxford English Dictionary Online, accessed on 29 August 2008.
493 Oxford English Dictionary Online, accessed on 29 August 2008.
494 Oxford English Dictionary Online, accessed on 29 August 2008.

7.260 The Appellate Body has also clarified that its findings with respect to the ordinary meaning of
"arbitrary or unjustifiable" from the chapeau of Article XX of the GATT 1994 are relevant and
provide guidance in interpreting the terms "arbitrary or unjustifiable discrimination" in Article 2.3 of
the SPS Agreement. Although the Appellate Body's conclusions were with respect of the use of the
terms in Article 2.3
495, we believe that they are equally releva nt for an interpretation of the obligation
in Article 5.5 which is, after all, a more specific enunciation of the basic obligation in Article 2.3.496
7.261 Turning, therefore, to the prior reasoning on the chapeau of Article XX of the GATT 1994,
we note that the Appellate Body Reports in US – Gasoline , US – Shrimp , and US – Shrimp
(Article 21.5 – Malaysia) show that the analysis of whether th e application of a measure results in
arbitrary or unjustifiable discrimination should fo cus on the cause of the discrimination, or the
rationale put forward to explain its existence. 497 In Brazil – Retreaded Tyres , the Appellate Body's
analysis of the measures at issue under the chapeau of Article XX focused on whether discrimination
that might result from the application of the measures at issue had a legitimate cause or rationale in
the light of the objectives listed in the paragraphs of Article XX. 498 Futher, the Appellate Body
explained that the assessment of whether discriminati on is "arbitrary or unjus tifiable" should be made
in light of the objectives of the measure and whethe r the discrimination bears a rational connection to
the stated objective of the measure. 499 It is important thus to remember that not all discrimination in
the application of measures is necessarily "arbitrar y or unjustifiable" and it is only the arbitrary or
unjustifiable inconsistencies that are to be avoided.500
7.262 Following the analysis conducted under the chapeau of Article XX, we must focus on the
justification for the distinction and whether that justification bears a rational relationship to the
objective of the measures. In this line, we agree with the panel in Australia – Salmon when, in
assessing the second element of Article 5.5 of the SPS Agreement, looked at the measures applied in
the specific context of the relevant risks and asserted that if there is no justification for the distinction
in sanitary measures and corresponding levels of protec tion, this distinction could be considered to be
"arbitrary or unjustifiable" in the sense of the second element of Article 5.5. 501 These findings were
later upheld by the Appellate Body.502

495 Appellate Body Report, Brazil – Retreaded Tyres , para. 227; see also Appellate Body Report,
Australia – Salmon, para. 251 (recognizing that Article 2.3 assembles obligations similar to those arising under
Article I:1 and Article III:4 of the GATT 1994 and that it in corporates part of the chapeau to Article XX of the
GATT 1994.)
496 We do recognize that Article 5.5 refers to "arb itrary or unjustifiable di stinctions" in the ALOPs
whereas Article 2.3 and the chapeau of Article XX refer to "arbitrary or unjustifiable discrimination". However,
we also recognize that this "distinction" is only forbidde n if it results in discrimination or a disguised restriction
on trade.
497 Appellate Body Report, Brazil – Retreaded Tyres, para. 226.
498 Appellate Body Report, Brazil – Retreaded Tyres, para. 225.
499 Appellate Body Report, Brazil – Retreaded Tyres, para. 227.
500 The Appellate Body in EC – Hormones clarified that: "We think, too, that the goal set is not
absolute or perfect consistency, since governments establish their appropriate levels of protection frequently on
an ad hoc basis and over time, as different risks present them selves at different times. It is only arbitrary or
unjustifiable inconsistencies that are to be avoided." Appellate Body Report, EC – Hormones, para. 213.
501 Panel Report, Australia – Salmon , para. 8.133. "[W]e… recall that Australia effectively bans the
import of the salmon products further examined, but allows the import of the other four categories of fish or fish
products. It might, therefore, be expected that some jus tification for this distinction in sanitary measures and
corresponding levels of protection exists, such as a higher risk related to imports of the salmon products further
examined. If not, these distinctions could be considered to be 'arbitrary or unjustifiable' in the sense of the
second element of Article 5.5."
502 Appellate Body Report, Australia – Salmon, para. 158.

7.263 Given that the measures involved in the comparison – Section 727 and the FSIS procedures –
are SPS measures 503, and must therefore necessarily be based on scientific principles and not
maintained without sufficient scientific evidence, we are of the view that the scientific support, or lack
thereof, for the difference between the ALOPs the measures seek to achieve should have a bearing on
an analysis of whether such a difference is ar bitrary or unjustifiable under Article 5.5 of the
SPS Agreement. Indeed, in the context of Article 5.5 to show that the distinction in ALOPs is not
arbitrary or unjustifiable, a Member must demonstrate that there are differing levels of risk between
the comparable situations. We are of the view that such a demonstration requires scientific evidence.
7.264 We shall therefore examine whether there is an y justification based on scientific evidence for
the distinction in ALOPs achieved by the measures used to address the risk of potentially unsafe
poultry – Section 727 for poultry products from China and the FSIS procedures for poultry products
from other WTO members – and corresponding ALOPs.
7.265 We recall again that the United States point s out that China's food safety enforcement
problems and food safety crises have been the subject of reports and articles by numerous well-
regarded international organizati ons (including WHO) and academics.
504 The United States contends
that China is not comparable with other WTO Members because most other Members have never
attempted to export poultry products to the United States. The United States further argues that many
of the WTO Members who the FSIS has determined to be equivalent to the United States had been
exporting to the United States for many years without a significant incident resulting in confidence
and familiarity with their inspection systems. This includes the ability to resolve any problems that
may arise, such as in the case of Mexico.
505
7.266 Nonetheless, as China points out, the FSIS had determined that China's poultry inspection
system was equivalent to that of the United St ates for processed foreign poultry products and had
made a preliminary decision also finding China's inspection system for domestically slaughtered
poultry products equivalent to that of the United Stat es. Therefore, China argues that it is one of the
ten WTO Members that have obtained FSIS authori zation to export poultry to the United States.
However, China explains, under Section 727, its poultry products are, in effect, treated as more
dangerous than those originating in WTO Memb ers that have never obtained an equivalence
determination from the FSIS.
7.267 The United States seeks to justify the different ALOP applied in Section 727 as opposed to
that in the PPIA, by arguing that poultry produc ts from China pose a higher risk that those from other
WTO Members because of China's food safety enfo rcement problems and food safety crises. As
indicated above, we will examine such a justificatio n by verifying whether it is based on scientific
principles and founded on scientific evidence. In this respect, we recall our findings that Section 727
is not based on a risk assessment in violation of Article 5.1 and 5.2 of the SPS Agreement. We have
also found that the United States has not prov ided sufficient scientif ic evidence underlying
Section 727 and thus we have concluded that Sec tion 727 was maintained without sufficient scientific
evidence in violation of Article 2.2 of the SPS Agreement.

503 We agree with the panel in EC – Approval and Marketing of Biotech Products which found that :
"In the light of this, we consider that although Ar ticle 5.5 does not explicitly refer to "SPS measures",
implicitly it envisages that the "measure complained of" is an "implementing measure". In other words, the
measure complained of must be an SPS measure applied for achieving a particular level of sanitary or
phytosanitary protection. In this respect, there is therefore no difference between Article 5.5, on the one hand,
and Articles 5.1 and 5.6, on the other hand." (footnote omitted)
Panel Report, EC – Approval and Marketing of Biotech Products, para. 7.1416.
504 United States' opening oral statement at the sec ond substantive meeting of the Panel, paras. 39
and 42.
505 United States' opening oral statem ent at the second subs tantive meeting of the Panel, paras. 43-44
and 48.

7.268 Because Section 727 is not based on a risk as sessment and was maintained without sufficient
scientific evidence, we can only conclude that ther e is no justification based on scientific principles
and founded in scientific evidence fo r the distinction in ALOPs, as reflected in the differences
between the measures used to tackle the risk of potentially unsafe poultry – Section 727 for poultry
products from China and the FSIS procedures for poultry products from other WTO Members.
7.269 We therefore find that the distinction in ALOPs for poultry products for China and for poultry
products from other WTO members is "arbitrary or unj ustifiable" within the terms of Article 5.5 of
the SPS Agreement. We thus conclude that the second element of Article 5.5 of the SPS Agreement is
satisfied, with respect to the importation of Chinese poultry products vis-à-vis that of poultry products
from other WTO members.
(iii) Discrimination or disguised restriction on international trade
7.270 Having found that both the first and the second elements of Article 5.5 of the SPS Agreement
are met, we proceed to examine the third element of this provision, i.e. whether the distinction in
ALOPs in different yet comparable situations results in discrimination or a disguised restriction on
international trade.
7.271 Relying on the Appellate Body Report in Australia – Salmon , China argues that the
Section 727 evinces all three "warning signals" that indicate discrimination is present. China also
contends that an additional f actor which demonstrates discrimination which was discussed by the
Panel in Australia – Salmon , is also present. Specifically, China asserts that the distinction between
the two ALOPs is arbitrary and unjustifiable, that the difference is significant, and there was a
substantial difference in official conclusions about the two situations without scientific justification.
506
China, therefore, concludes that the warning signa ls and additional factor suggest that Section 727
results in "discrimination", the third cumulative element establishing a violation of Article 5.5.507
7.272 China refers to its arguments under Article 2.3 of the SPS Agreement, where it affirms that the
measures at issue restrict only China from seeking and obtaining authorization to export poultry
products to the United States, which ultimately limits competitive opportunities and restrict imports of
poultry products originating in China. Therefore, according to China, by forbidding the consideration,
granting or implementation of authorization for Chinese poultry products, while offering the
possibility to every other WTO Member to seek and obt ain FSIS authorization to export poultry to the
United States, Section 727 discriminates against China.
508
7.273 China also considers that "identical or simila r" conditions prevail in China, on the one hand,
and in all other poultry-exporting WTO Members, on the other, based on the scope and effectiveness
of FSIS procedures, as applied to poultry products from all WTO Members. These comprehensive
rules are capable of determining whether poultry products from any Member are safe for importation
into the United States. China further bases its claim on the fact that FSIS has demonstrated before the
imposition of the measures at issue, that Chinese rules are fully applicable to and adequate to address
any risks posed by poultry products from China.509
7.274 China asserts that the discrimination against Chin a is "arbitrary or unjustifiable", as there is
no scientific evidence, risk assessment or other justification for treating Chinese poultry products
differently from those of other WTO Members. Fu rthermore, FSIS procedures are comprehensive and
able to address risks arising from poultry products produced anywhere in the world, including China.

506 China's opening oral statement at the first substantive meeting of the Panel, paras. 56 and 66.
507 China's first written submission, paras. 133-135.
508 China's first written submission, para. 121.
509 China's first written submission, para. 122.

China, once again recalls that, China was one of only ten WTO Members that had successfully
obtained authorization to export poultry to the United States under FSIS approval procedures, and due
to Section 727, its poultry products are treated wo rse than those originating in WTO Members that
have never been granted FSIS authorization.510
7.275 The United States contends that China relies solely on the panel and Appellate Body reports
in Australia – Salmon which are not applicable in this case be cause China has not even alleged any
factors that might show a disguised trade restriction. 511 The United States chooses to focus on the lack
of distinction in the ALOPs applied.
7.276 We shall therefore examine whether the distin ction in ALOPs applied to the importation of
poultry products from China and that of poultry pr oducts from other WTO Members which we have
found to be different but comparable situations, resu lts in discrimination or a disguised restriction on
international trade.
7.277 We note that the panel on Australia – Salmon identified three "warning signals" which
indicate whether the application of distinctions in ALOPs in different situations results in
discrimination or a disguised restriction on interna tional trade, but explained that none of these "is
… conclusive in its own right" 512:
(a) the arbitrary and unjustifiable character of differences in the levels of protection513;
(b) the "rather substantial" difference in the levels of protection; and
(c) the inconsistency of the SPS measure at issue with Articles 5.1 and 2.2 of the
SPS Agreement.
7.278 The panel and Appellate Body in Australia – Salmon, also considered additional factors
specific to the facts of that case. 514 One of the additional factors in that case, which China references
in its submissions, is that there were substan tial differences in the conclusions concerning the
measures required to address the perceived risk in a pa rticular situation, in sequential reports issued
by the importing Member government only one year apart.
7.279 It seems to us that the reasoning of the panel in Australia – Salmon may be somewhat circular
and appears to defeat the purpose of the conclusi on that the three elements in Article 5.5 are
cumulative and must all be present. Essentially, what th e panel is saying is that proof of the other two
elements as well as inconsistenc y with Article 5.1 and 2.2 ipso facto equates to discrimination or a
disguised restriction on trade with no further analysis being required.
7.280 The Appellate Body seems to have recognized that the analysis in Australia – Salmon did not
fully address the third element of Article 5.5 when it noted in EC – Hormones that "the difference in
levels of protection that is characterizable as arb itrary or unjustifiable is only an element of (indirect)
proof that a Member may actually be applying an SPS measure in a manner that discriminates
between Members or constitutes a disguised restriction on international trade."
515

510 China's first written submission, paras. 123-124.
511 United States' comment to China's response to Panel question No. 125.
513 The panel held that "[i]n this dispute, we do consider that the arbitrary character of the differences in
levels of protection is a 'warning signal' that the measure at issue results in 'a disguised restriction on
international trade'." Panel Report, Australia – Salmon, para. 8.149.
514 Appellate Body Report, Australia – Salmon, paras. 167-176.
515 Appellate Body Report, EC – Hormones, para. 240.

7.281 The Appellate Body added that:
"[T]he presence of the second element – the arbitrary or unjustifiable character of
differences in levels of protection considered by a Member as appropriate in differing
situations – may in practical effect operate as a 'warning' signal that the implementing
measure in its application might be a discrim inatory measure or might be a restriction
on international trade disguised as an SPS measure for the protection of human life or
health. Nevertheless, the measure itself need s to be examined and appraised and, in
the context of the differing levels of protec tion, shown to result in discrimination or a
disguised restriction on international trade."
516
7.282 Therefore, it seems, according to the Appellate Bo dy, that even if the presence of all three
warning signals was demonstrated, that would not necessarily support a conclusion that the measure
results in discrimination or a disguised restriction on trade. We further note that the Appellate Body in
EC – Hormones stated that in the context of the third element of Article 5.5 of the SPS Agreement, the
analysis should be on a case-by-case basis.517
7.283 Nevertheless, since Australia – Salmon , parties have typically structured their arguments
around the third element in Article 5.5 by discussi ng these warning signals and additional factors.
That is also the case in the current proceedings. Accordingly, the Panel will examine whether China
has demonstrated the warning signals and add itional factors and then determine whether any
additional proof is necessary to demonstrate discrimination.
7.284 The conclusion on whether the first warning signal is present, flows from the analysis of the
second element of Article 5.5. We recall that the Pa nel has found that there is a distinction in ALOPs
and that this distinction is arbitrary or unjustifia ble, therefore, the first warning signal is present and
we move to the second warning signal.
7.285 The second warning signal is the "rather substantia l" difference in the levels of protection. In
this respect, China argues that there are "significan t" differences in the applied ALOPs because one is
less than zero and one accepts that there may be some minimal and inherent risk of importing unsafe
poultry from an "equivalent" WTO Member. 518 In our view, it cannot be assumed that an import ban
reflects an ALOP of zero or, in fact, an ALOP different from a control regime. Conversely, it is also
difficult to maintain that the mere fact that there is no way to fully guarantee zero exposure through a
particular control regime means that the ALOP set by the importing Member is not, in fact, zero.
Additionally, it is unclear whether a "stricter than zero" tolerance exists.
7.286 Having said that, we refer to our findings u nder the first element of Article 5.5 of the
SPS Agreement in respect to the application by the Un ited States of two different ALOPs for poultry
products from China and poultry products from othe r WTO Members. We recall that, following the
panel in Australia – Salmon, we concluded that the ALOP reflected in Section 727, which imposed an
absolute import ban on poultry products from China, was substantially different from the ALOP in the
PPIA which is achieved via a conditional import ba n which at least provides an avenue for WTO
Members, other than China, to eventually achieve access to the United States market.
519 Therefore, the
second warning signal is also met.
7.287 We note that even though it has brought claims under Articles 5.1 and 2.2, China did not
argue that the warning signal of a violation of tho se articles was present. However, given our findings

516 Appellate Body Report, EC – Hormones, para. 215.
517 Appellate Body Report, EC – Hormones, para. 240.
518 China's response to Panel question No. 48.
519 See Section VII.G.2(b)(i) above.

of violation of both provisions in Section VII.F.2( e) above, we can conclude that the third warning
signal is also present.
7.288 Having concluded that the three warning signals are present, we will go ahead and determine
whether any additional proof is necessary to demonstrate discrimination.
7.289 In determining whether discrimination exists , we find the language of the panel in Canada –
Pharmaceutical Patents particularly interesting. In that case, which dealt with the TRIPs Agreement,
the panel noted:
"The primary TRIPS provisions that deal with discrimination, such as the national
treatment and most-favoured-nation provisions of Articles 3 and 4, do not use the
term 'discrimination'. They speak in more precise terms. The ordinary meaning of the
word 'discriminate' is potentially broader than these more specific definitions. It
certainly extends beyond the concept of diffe rential treatment. It is a normative term,
pejorative in connotation, referring to results of the unjustified imposition of
differentially disadvantageous treatment. Discrimination may arise from explicitly
different treatment, sometimes called 'de jure discrimination', but it may also arise
from ostensibly identical treatment which, due to differences in circumstances,
produces differentially disadvantageous effects, sometimes called 'de facto
discrimination'. The standards by which the justification for differential treatment is
measured are a subject of infinite complexity . 'Discrimination' is a term to be avoided
whenever more precise standards are available, and, when employed, it is a term to be
interpreted with caution, and with care to add no more precision than the concept
contains."
520
7.290 We recall that both the pane l and Appellate Body in Australia – Salmon 521, considered as an
additional factor that proved discrimination the s ubstantial differences in the conclusions concerning
the measures required to address the perceived risk in a particular situation, in sequential reports
issued by the importing Member government only one y ear apart. In this respect, China points to the
"substantially different conclusions " on how to deal with Chinese poultry in a short period of time.
China's argument focuses on the fact that in 2006, the FSIS concluded that Chinese processed poultry
was safe enough to satisfy the United States' ALOP articulated in the PPIA; yet in 2008 the US
Congress supplanted that determination with a finding that Chinese processed poultry was so
dangerous that the FSIS needed to be prev ented from going forward with establishing and
implementing a rule permitting its importation. We ag ree that this may be considered to be an
"additional factor".
7.291 Furthermore, the fact that Section 727 only applies to poultry products from China is
discriminatory by nature. Indeed, examining the measur e itself in the context of the differences in the
ALOPs, we conclude that discrimination was occu rring, in particular because Section 727 applies
only to China. We note that the panel in Canada – Pharmaceutical Patents considered that
"discrimination" refers "to results of the unjus tified imposition of differe ntially disadvantageous
treatment".
522 Therefore, a determination that "discrim ination" exists would still rest on whether the
different treatment applied was "justified". 523 Having determined that the differences in ALOPs are

520 Panel Report, Canada – Pharmaceutical Patents, para. 7.94.
521 Appellate Body Report, Australia – Salmon, paras. 167-176.
522 Panel Report, Canada – Pharmaceutical Patents, para. 7.94.
523 We however note that the panel in Argentina – Hides and Leather , when discussing the differences
between the types of discrimination discussed throughout the GATT, noted that a provision (Article III:2) could
prohibit even "justifiable" discrimination. Panel Report, Argentina – Hides and Leather, para. 11.315.
"It is important to bear in mind that the standard of "unjustifiable" discrimination is different in nature
and quality from the standard of discrimination contained in Article III:2, first sentence. As Argentina correctly

unjustified
524, we can reasonably conclude that the differences in ALOPs result in discrimination
against China.
7.292 We also recall the finding of the Appellate Body in US – Shrimp that "discrimination results
not only when countries in which the same conditions prevail are differently treated, but also when the
application of the measure at issue does not allo w for any inquiry into th e appropriateness of the
regulatory program for the conditions prevailing in those exporting countries."525 It would seem that a
ban preventing the FSIS from considering China's a pplication for equivalency would be just such a
measure as that described by the Appellate Body.
7.293 Therefore, it seems reasonable to conclude that Section 727 results in discrimination against
China. We thus find that the arbitrary or unjustifiable distinction in ALOPs applied by the
United States in respect of poultry products from China vis-à-vis poultry products from other WTO
Members results in discrimination against China. Acco rdingly, the third element of Article 5.5 of the
SPS Agreement is satisfied, with respect to the importation of Chinese poultry products vis-à-vis that
of poultry products from other WTO Members.
(iv) Conclusion
7.294 Having found that the importation of poultry products from China and that of poultry
products from other WTO Members are different yet co mparable situations and that the United States
is applying different ALOPs to such situations; that the distinction in ALOPs for poultry products
from China and for poultry products from other WTO Members is "arbitrary or unjustifiable"; and
that this arbitrary or unjustifiable distinction in AL OPs results in "discrimination " against China, we
conclude that the three elements of Article 5.5 of the SPS Agreement are present. Accordingly, the
Panel finds that Section 727 is inconsistent with Article 5.5 of the SPS Agreement.
(c) The importation of Chinese poultry products vis-à-vis that of other food products from China
7.295 The second set of comparable situations presen ted by China refers to a comparison of the
importation of Chinese poultry products and that of other food products from China. We shall
therefore commence our analysis by examining whet her such different situations exist and if so,
whether they are comparable.
Whether different yet comparable situations exist

7.296 We shall start by considering whether the im portation of Chinese poultry products and that of
other food products from China are "different" situati ons. This is not a difficult examination since the
measure applied to Chinese poultry products – Se ction 727 – is only applied to Chinese poultry
products; and hence all other food products from China will be subject to different measures and thus
will be in different situation. In response to a qu estion from the Panel, China clarified that the FDA
has jurisdiction over all imported food except for meat, poultry, and fresh eggs, which are under the
jurisdiction of the FSIS.
526 The basis for the FDA procedures is the Food, Drug and Cosmetic Act .527

points out, the prohibition on unjustifiable discriminati on in the application of a measure by necessary
implication leaves room for justifiable discrimination. On the other hand, this does not imply that some
discrimination is always justifiable. Whether or not any discrimination is justifiable, in a given instance, and if
so, to what extent, must be ascertained by way of analysis of the specific circumstances of each case."
524 See para. 7.269 above.
525 Appellate Body Report, US – Shrimp, para. 165.
526 Exhibit CN-7, Exhibit CN-48, Exhibit CN-57.
527 Sections 701, 801 of 21 USC §371, (Exhibit CN-89).

According to China, the FDA import procedur es are, like Section 727, an SPS measure under
Annex A.528
7.297 In addition to being different, though, we reca ll that the Appellate Body has called for the
situations to be comparable. China must thus establish a common element between the two situations.
7.298 At first, China broadly argued that "based on the logic of the JES, any food product from
China could in theory be contaminated, since all food products produced in China are subject to the
food safety laws that the United States cl aims in its submission are not enforced." 529 China also
argues that any food product, including but certainly not limited to poultry products, could be
contaminated, for example, basil, peanut butter, and pet food contaminated with Salmonella; candy
contaminated with lead; fish contaminated with mercury; and rice contaminated with unapproved
genetic material.
530 In China's view, the common element between these two situations is sharing
common risk of potential contaminants whic h are pathogenic bacteria such as Salmonella,
Campylobacter and Listeria in addition to E Co li and Highly Pathogenic Avian Influenza (HPAI)
virus.531 China asserts that these contaminants are within the meaning of footnote 4 or disease-causing
organism according to Annex A(1)(b), they are not unique to China, in addition they are not only
found in poultry products.532
7.299 In response to a question from the Panel, China clarified that it was not arguing that all food
products subjected to the same regulatory regime c ould be contaminated with the same contaminant.
According to China, each of these pathogenic bacteria affects different types of food products in
addition to poultry as explained in the FDA fact sheet in Exhibits CN 85, CN 87 and CN 88. 533 China
also notes that neither the text nor the legislativ e history of Section 727, nor the FSIS documentation
asserts or otherwise provides contemporaneous evidence that poultry is more likely to be
"contaminated" than other types of food products such as basil or pet food. 534 It contends that the
FDA which has jurisdiction over all imported food except for meat, poultry and fresh eggs considers
"contaminated foods" to include foods containing bacteria such as Salmonella, Campylobacter,
Listeria and E. coli.535
7.300 The United States responds that China has not established that the types of risks addressed by
the PPIA are the same as the risks a ssociated with other types of food products and that poultry has a
different ALOP than other food products. 536 Moreover, the United States also clarifies that FSIS
operates under an equivalence regime while the FDA relies on "import alerts" and more rigorous
border measures so the situations are not comparable.537
7.301 We note that China has not contended that all Chinese food products could have Salmonella,
Campylobacter and Listeria. It certainly has not argued that all Chinese food products could be
potential sources of Avian influenza. It has instead initially argued that many Chinese food products
could potentially be contaminated with the same pathogenic bacteria that the United States has
indicated are of concern with respect to poultry imports.
538 In China's response to a question from the

528 China's response to Panel question No. 124.
529 China's opening oral statement at the first substantive meeting of the Panel, para. 49.
530 China's opening oral statement at the first substantive meeting of the Panel, para. 54.
531 China's opening statement at the second substantive meeting, paras. 36-37 and China's response to
Panel question No. 123.
532 China's response to Panel question No. 123.
533 China's response to Panel question No. 123.
534 China's opening oral statement at the first substantive meeting of the Panel, para. 55.
535 China's response to Panel question No. 124.
536 United States response to Panel question No. 121.
537 United States' comment on China's response to Panel question No. 124.
538 China's response to Panel question No. 123.

Panel, China provided the following list of food products which could be contaminated by the
pathogenic bacteria namely:
 – Salmonella: Eggs, poultry, milk, juice, cheese, fruits, and vegetables.

 – Listeria: Cheese, milk, deli meats, and hot dogs.

 – Campylobacter: Poultry, and milk.

 – E.coli: Meat, milk, juice, fruits and vegetables, and cheese.

7.302 China also provided tables taken from UN Comtrade on the potential for contamination in
food groups imported from China.
539
7.303 We also note that China has only provided the more specific information about the
SPS measures applied to food products from China ot her than poultry products and that relating to
which pathogenic bacteria affect which types of f ood products late in the proceedings. Indeed, China
provided this information only in response to a qu estion from the Panel during and after the second
substantive meeting asking where that information could be found in China's prior submissions.540
7.304 It is questionable whether the above list is su fficient to establish the common elements that
make all "other food products" comparable to poultry products such that they are "different situations"
within the meaning of Article 5.5. We do not belie ve that Article 5.5 permits a "mix and match"
approach but rather requires that China links the measures to which it alleges the United States applies
a lower ALOP, with the risks it believes are comparable to those posed by poultry. It is certainly not
for the Panel to examine every other food product exported by China to the United States to determine
which ones have the same contaminants or adverse health effects as poultry and then examine whether
the measures applied to those products exhibit the same ALOP as Section 727.
7.305 However, given that the Panel has already found that Section 727 is inconsistent with the
obligations in Article 5.5 with respect to distinc tions in ALOPs for imports of poultry products from
China vis-à-vis poultry from other WTO Member s, the Panel does not see how continuing to make a
finding on the second comparable situations propos ed by China would assist in obtaining a positive
resolution to the dispute. Therefore, we exercise judicial economy with respect to this aspect of
China's claim under Article 5.5.
7.306 The Panel recalls that the principle of judicial economy is recognized in WTO law. The
Appellate Body has consistently ruled that panels ar e not required to address all the claims made by a
complaining party but rather a panel has discretion to determine which claims it must address in order
to resolve the dispute between the parties, provi ded that those claims are within its terms of
reference.
541 The Appellate Body has relied on the exp licit aim of the dispute settlement mechanism,
which is to secure a positive solutio n to a dispute, as provided in Article 3.7 of the DSU, or a
satisfactory settlement of the matter as per Article 3.4 of the DSU. The Appellate Body has stressed

539 China's response to Panel question No. 123, referring to Exhibit CN-41.
540 We note that pursuant to the working procedures of the Panel, all factual evidence was to have been
submitted at the time of the first substantive meeting unless in response to a specific question by the Panel for
that information or to rebut facts presented by the other pa rty. We note that China appended this information in
response to a question from the Panel asking where the information could be found in the closed factual record
and that the Panel did not specifically ask China to provide new factual information in response to the question.
However, the United States has not objected to this untimely submitted evidence and has had an opportunity to
comment on it, in its comments on China's responses to the Panel's questions after the second substantive
meeting.
541 Appellate Body Report, India – Patents (US), para. 87.

that the basic aim of dispute settlement in the WT O is to settle disputes and not to "make law" by
clarifying existing provisions of the WTO Agreement that fall outside the context of resolving a
particular dispute.
542
7.307 We bear in mind that, in Australia – Salmon , the Appellate Body cautioned panels against
false judicial economy arguing that the right to exercise judicial economy could not be exercised
where only a partial resolution of a dispute would result.543 The Panel believes that this is not the case
in the current proceedings. In maki ng findings under Article 5.5 of the SPS Agreement with respect to
distinctions in ALOPs for imports of poultry products from China vis-à-vis poultry from other WTO
Members, the Panel considers that it has effectively resolved China's claim under Article 5.5.
H. WHETHER SECTION 727 IS INCONSISTENT WITH ARTICLE 2.3 OF THE SPS AGREEMENT
1. Arguments of the parties
7.308 China argues that the United States is applying a hi gher level of protection to China which is
arbitrary or unjustifiable and results in discrimination.544
7.309 China affirms that the measures at issue rest rict only China from seeking and obtaining
authorization to export poultry products to the United States, which ultimately limits competitive
opportunities and restricts imports of poultry products originating in China. Therefore, by forbidding
the consideration, granting or implementation of authorization for Chinese poultry products, while
offering the possibility to every other WTO Member to seek and obtain FSIS authorization to export
poultry to the United States, Section 727 discriminates against China.
545
7.310 China seems to invoke only the firs t sentence of Article 2.3 of the SPS Agreement in its
claims. In its first written submission, China cites Article 2.3 of the SPS Agreement in full 546 but it
does not advance specific arguments in regard to whether the United States measures are a disguised
restriction on trade. 547 China submits that, under certain ci rcumstances, a finding of inconsistency
with Article 5.5 would necessarily imply incons istency with Article 2.3. Particularly the
demonstration of a "disguised restriction on inte rnational trade" which can be found in the second
sentence of Article 2.3 and Article 5.5 of the SPS Agreement.548 However, China claims that it is not
the case for the "discrimination" element since Article 2.3 of the SPS Agreement has a narrower non-

542 The Appellate Body has explained that given the explicit aim of dispute settlement that permeates
the DSU, it does not consider that Article 3.2 of the DSU is meant to encourage either panels or the Appellate
Body to make law by clarifying existing provisions of the WTO Agreement outside the context of resolving a
particular dispute. In the Appellate Body's view, a panel need only address those claims which must be
addressed in order to resolve the matter at i ssue in the dispute.. Appellate Body Report, US – Wool Shirts and
Blouses, DSR 1997:I, 323 at 340.
543 The Appellate Body explained that:
"The principle of judicial economy has to be applied keeping in mind the aim of the dispute
settlement system. This aim is to resolve the matter at issue and 'to secure a positive solution
to a dispute'. To provide only a partial resolution of the matter at issue would be false judicial
economy. A panel has to address those claims on which a finding is necessary in order to
enable the DSB to make sufficiently precise recommendations and rulings so as to allow for
prompt compliance by a Member with those recommendations and rulings 'in order to ensure
effective resolution of disputes to the benefit of all Members.'
Appellate Body Report, Australia – Salmon, para. 223.
544 China's first written submission, para. 126.
545 China's first written submission, para. 121.
546 China's first written submission, para. 118.
547 China's first written submission, paras. 120-125.
548 China's response to Panel question No. 125.

discrimination requirement which has a territorial component that is absent in Article 5.5 of the
SPS Agreement.
549
7.311 China also notes that it does not clai m a violation of Article 2.3 of the SPS Agreement based
on arbitrary distinctions in the ALOPs applie d by the United States to poultry and non-poultry
products from China.550
7.312 Finally, China argues that "identical or sim ilar conditions" prevail between it and all other
WTO Members that had the opportunity to seek an d achieve equivalence. China points to Mexico
which, in its view, is in the same situation as China in terms of its equivalence process and the
allegation of systemic food safety crisis.551
7.313 The United States contends that it is unclear whethe r Article 2.3 is meant to apply to a
procedural requirement rather than a substantiv e SPS measure. In particular, the United States
contends that it is unclear if Article 2.3 was intended to apply in addition to the main SPS equivalence
provision, Article 4.1. The United States also argues that there is no need to look at Article 2.3 of the
SPS Agreement, because the issues addressed under Article 2.3 are essentially the same as those under
the chapeau of Article XX(b) of the GATT 1994.552
7.314 The United States also argues that China has not even alleged any factors that might show a
disguised trade restriction.553
7.315 Finally, the United States argues that the prope r comparison to determine whether "identical
or similar conditions prevail" is not between Chin a and all countries who seek to export poultry to the
United States. Rather, it argues that the co mparison should be between China and other
WTO Members with equivalent food safety problems and whose poultry inspection systems have
already been found equivalent or fo r whom determination was imminent. 554 The United States asserts
that "identical or similar conditions" do not preva il in China and Mexico for numerous substantive
and temporal reasons inter alia Mexico has never experienced a food safety crisis characterized by the
WHO as one of the largest food safety events the ag ency has had to deal with in recent years, the
absence of broad systemic and food safety enfor cement problems, Mexico's exporting history of
poultry products to the United States and the diffe rent stages in the equivalence process where the
problems arose.555
2. Analysis by the Panel
(a) Article 2.3 of the SPS Agreement
7.316 Article 2.3 of the SPS Agreement provides:
"Members shall ensure that their san itary and phytosanitary measures do not
arbitrarily or unjustifiably discriminate between Members where identical or similar
conditions prevail, including between their ow n territory and that of other Members.
Sanitary and phytosanitary measures shall not be applied in a manner which would
constitute a disguised restriction on international trade."

549 China's response to Panel question No. 125.
550 China's response to Panel question No. 126.
551 China's response to Panel question No. 128.
552 United States' second written submission, paras. 102-107.
553 United States' comment to China's response to Panel question No. 125.
554 United States' response to Panel question No. 127.
555 United States' response to Panel question No. 129.

7.317 The panel in Australia – Salmon (Article 21.5 – Canada) found that there were three elements
required in order to establish a violation of Artic le 2.3, first sentence: (i) that the measure
discriminates between the territories of Members other than the Member imposing the measure or
between the territory of the Member imposing the m easure and that of another Member; (ii) that the
discrimination is arbitrary or unjustifiable; and (iii) that identical or similar conditions prevail in the
territory of the Members compared.556
7.318 We also recall that the panel in Australia – Salmon, upheld by the Appellate Body, noted that
because Article 2.3 sets forth the "basic obligation" and Article 5 is a more specific enunciation of that
obligation, a finding of a viola tion of Article 5.5 would necessarily imply a violation of Article 2.3.
557
We agree with the reasoning of the panel and the Appellate Body in Australia – Salmon and conclude
that because Section 727 is inconsistent with Article 5.5 of the SPS Agreement, by virtue of a
distinction in ALOPs which results in discrimination between Members, it is also inconsistent with the
first sentence of Article 2.3 of the SPS Agreement.
(b) Conclusion
7.319 The Panel finds that the inconsistency of Section 727 with Article 5.5 of the SPS Agreement
necessarily implies that Section 727 is also inconsistent with Article 2.3 of the SPS Agreement.
Therefore, the Panel finds that Section 727 is inconsis tent with the first sentence of Article 2.3 of the
SPS Agreement.
I. WHETHER SECTION 727 IS INCONSISTENT WITH ARTICLE 5.6 OF THE SPS AGREEMENT
1. Arguments of the parties
7.320 China claims that Section 727 is inconsistent with the obligation in Article 5.6 of the
SPS Agreement that SPS measures not be unduly trade-restrictive 558; China refers to the findings of
Australia – Salmon , where the Appellate Body stated that, to establish a violation of Article 5.6, a
Member must demonstrate that there is an altern ative SPS measure which: (i) is reasonably available
taking into account technical and economic feasibility; (ii) achieves the Member's appropriate level of
sanitary or phytosanitary protection; and (iii) is significantly less restrictive to trade than the contested
SPS measure.559
7.321 China argues that there is an alternative measure that meets all of these criteria, i.e. the
application to China of normal FSIS approval pr ocedures for the importation of poultry products. 560
China bases its arguments on the fact that FSIS approval procedures are applied on a regular basis to a
variety of WTO Members involving a number of different risk factors, the FSIS approval process is
technically and economically feasible and they have already been effectively applied to China,
resulting in the 2006 equivalence determination and subsequent establishment of a rule authorizing
the importation of processed poultry products from China.
561

556 Panel Report, Australia – Salmon (Article 21.5 – Canada), para. 7.111.
557 Panel Report, Australia – Salmon , para. 8.109. (concluding that a finding of violation of the more
specific Article 5.5, particularly a conclusion that the third element had been met, would imply a violation of the
more general Article 2.3. However, the panel did recognize, at the same time, that, given the more general
character of Article 2.3, not all violations of Article 2.3 are covered by Article 5.5); upheld by Appellate Body
Report, Australia – Salmon, para. 252.
558 China's first written submission, para. 192; China's second written submission, para. 114.
559 Appellate Body Report, Australia – Salmon , para. 194 cited in China's first written submission,
para. 150.
560 China's first written submission, para. 151.
561 China's first written submission, para. 152.

7.322 China considers that this alternative measure would meet the "appropriate level of protection"
of the United States in connection with imported poultry products. The United States' appropriate
level of protection for imported poultry from all WT O Members other than China, as reflected in its
normal FSIS approval procedures, is much lower than that implied by Section 727. Those measures
apply a risk tolerance of zero to Chinese poultry pr oducts. Application of the normal FSIS approval
procedures to China would achieve the lower level of sanitary protection applied by the United States
to all other imported poultry produc ts, and it would be significantly less trade-restrictive than the
measures at issue. FSIS procedures provide for the po ssibility of obtaining authorization to export to
the United States, if the applicant country's poultr y products conform to US food safety requirements.
Section 727 precludes this possibility, regardless of how safe the Chinese food safety system and
procedures are, or whether they are equivalent to the United States' system. The resulting de facto
import ban is far more trade-restrictive than necessary.
562 Moreover, China submits that FSIS
procedures would have made a greater contribution to protect human and animal life and health than
Section 727 because Section 727 prevented the FSIS from conducting any examination whatsoever of
alleged food safety problems that could affect Chinese poultry products.563
7.323 Finally, China contends that the possibility of having more restrictive measures is not relevant
under Article 5.6 because the relevant test requires th at there be a no less trade restrictive alternative
measure (compared to the measure at issue) available to the imposing Member.564
7.324 In its oral statement at the first substantive m eeting, China referred the Panel to its rebuttal of
the US Article XX(b) defence for a demonstration th at an alternative measure that meets all of the
criteria of Article 5.6 would be the application to China of the normal FSIS procedures.565
7.325 The United States reiterates its main point that the subs tantive obligations in Article 5 do not
apply to equivalence regimes set up pursuant to Article 4 of the SPS Agreement. Specifically, the
United States argues that Article 5.6 does not app ear to apply to every procedural requirement
adopted in the course of operating SPS measures. Inst ead, according to the United States, it appears to
apply to substantive measures "establishing or maintaining" the importing Member's ALOP.566
7.326 The United States finds support for its position in note 3 which clarifies that Article 5.6 is not
breached unless there is another measure that ach ieves the ALOP. The United States argues that
application of Article 5.6 to equivalence proce dures seems inapposite as in that context it is the
exporting Member that chooses the SPS measures intended to achieve a level of protection, and the
question for the importing Member is whether tho se measures achieve the result of equivalence.
According to the United States, it is hard to a pply Article 5.6, which turns on whether SPS measures
chosen by the importing Member are more trade restrictive than required, in the context of an
equivalency regime.
567
7.327 In response to Panel question No. 46 the Unite d States disagreed with China's assertion that
the normal FSIS procedures were a reasonably availa ble alternative to Section 727. According to the
United States, China's argument is "simply anot her way of asserting that Section 727 was not
necessary to protect human and animal life and heal th against the risk posed by potentially dangerous

562 China's first written submission, para. 154.
563 China's comment to the United States' response to Panel question No. 130.
564 China's response to Panel question No. 91.
565 China's opening oral statement at the first substantive meeting of the Panel, para. 76.
566 United States' second written submission, para. 116.
567 United States' second written submission, para. 117.

poultry products from China in the first place."568 According to the United States, it has demonstrated
that Section 727 was indeed necessary to accomplish this objective.
7.328 Moreover, the United States argues that the norma l FSIS procedures cannot be regarded as a
less-trade restrictive, technically and economically feasible alternative measure because although the
FSIS has the ability to temporarily suspend or permanently withdraw an equivalence finding,
potentially dangerous poultry from China could still enter the United States. This would put
consumers at risk before "something goes wrong" and th is approach is inconsistent with ensuring that
China's measures achieve the United States' ALOP.569
7.329 The United States finally contends that China's interpretation of Article 5.6 of the
SPS Agreement – by referring to Article XX of the GATT 1994 – is incorrect because it is contrary to
the customary rules of interpretation and in f act would appear to render Article 5.6 of the
SPS Agreement inutile. 570 However, the United States also argues that applying the normal FSIS
procedures is not an alternative at all or is not l ess trade restrictive because there is no guarantee that
the United States will determine that China's measures are equivalent. 571 In its view, Section 727 is
necessary because FSIS has never before been confront ed with a similar challenge to that poised by
China's food safety crisis and therefore the "norma l" procedures were not enough alone in order to
cope with the unusual circumstances.572
2. Analysis by the Panel
(a) Article 5.6 of the SPS Agreement
7.330 We commence by looking at the text of Article 5.6 of the SPS Agreement which provides that:
"Without prejudice to paragraph 2 of Artic le 3, when establishing or maintaining
sanitary or phytosanitary measures to achieve the appropriate level of sanitary or
phytosanitary protection, Members shall en sure that such measures are not more
trade-restrictive than required to achieve their appropriate level of sanitary or
phytosanitary protection, taking into account technical and economic feasibility.
3
Appellate Body agreed with the panel that footno te 3 provides a three-pronged test to establish a
violation of Article 5.6. In particular, the Appellate Body held that:
"The three elements of this test under Ar ticle 5.6 are that there is an SPS measure
which:
(1) is reasonably available taking into account technical and economic
feasibility;

568 United States' response to Panel question No. 46.
569 United States' response to Panel question No. 130.
570 United States' comment to China's response to Panel question No. 91.
571 United States' comment to China's response to Panel question No. 92.
572 United States' comment to China's response to Panel question No. 92.

(2) achieves the Member's appropriate level of sanitary or phytosanitary
protection; and
(3) is significantly less restrictive to trade than the SPS measure contested.
These three elements are cumulative in the sense that, to establish inconsistency with
Article 5.6, all of them have to be met. If any of these elements is not fulfilled, the
measure in dispute would be consistent with Article 5.6. Thus, if there is no
alternative measure available, taking into account technical and economic feasibility,
or if the alternative measure does not ach ieve the Member's appropriate level of
sanitary or phytosanitary protection, or if it is not significantly less trade-restrictive,
the measure in dispute would be consistent with Article 5.6."
573
7.332 We note that the burden rests on the complaining party to demonstrate that there is an
alternative measure that meets all three requirements in Article 5.6. 574 As noted above, China has
proposed as an alternatively available, less trade -restrictive measure the standard FSIS procedures
which would apply to China in the absence of Section 727.
7.333 We note that China argues that Section 727 is mo re trade restrictive th an required to achieve
the United States' ALOP for poultry as expressed in the PPIA. We recall our finding that the
United States applies a different ALOP via Section 727 from what it does via the PPIA. Indeed, China
has argued this strenuously in the context of its cl aims under Article 5.5. We note that Article 5.5
deals with determining whether a Member is applying distinctions that are arbitrary or unjustifiable in
the application of ALOPs to the same risk. We note that the analysis under Article 5.5 is with respect
to determining whether the Member is applying different ALOPs to the same risk. Article 5.6 deals
with whether a particular measure is more trade restrictive than required to achieve the Member's
ALOP. In our view, in a dispute where claims are made under both Articles 5.5 and 5.6 a finding of
inconsistency with Article 5.5 cannot be taken to mean that the ALOP used in the analysis under 5.6
would always necessarily be the less restrictive ALOP of those being applied. Therefore, a finding
that a Member is applying different ALOPs cannot be taken to mean that the Panel is determining
which ALOP the Member should apply.
575 A finding of inconsistency with Article 5.5 cannot deprive
the importing Member of its prerogative to choose its own ALOP.
7.334 In its arguments regarding its claims under Artic le 5.6, China has asked the Panel to assess
the trade restrictiveness of the measure Section 727, vis-à-vis what is required by the ALOP in the
PPIA and not the ALOP that it itself argues is reflect ed in Section 727. China is asking the Panel to
gauge the trade restrictiveness of the measure vis-à-vis what is required by the ALOP it believes the
United States should apply to its poultry products. We do not be lieve that it is an appropriate role for
this Panel to engage in a speculative exercise of what ALOP a Member should apply to protect its
own territory from public health risks. In particular , we recall the reasoning of the Appellate Body in
Australia – Salmon that "'the level of protection deemed appropriate by the Member establishing a
sanitary ... measure' is a prerogative of the Member concerned and not of a panel or the Appellate
Body."576
7.335 Additionally, we note that a determination of wh ether a measure is more trade restrictive than
required to achieve the ALOP of a Member must be done by comparing the ALOP actually applied to

573 Appellate Body Report, Australia – Salmon, para. 194.
574 Appellate Body Report, Japan – Agricultural Products II, para. 126.
575 The determination of the ALOP, as defined in paragraph 5 of Annex A, is a prerogative of the
Member concerned and not of a panel or of the Appellate Body. Appellate Body Report, Australia – Salmon ,
para. 199.
576 Appellate Body Report, Australia – Salmon, para. 199.

the risks posed by the products. We recall our fi ndings under Articles 5.1, 5.2 and 2.2 that the
United States has not based Section 727 on a risk a ssessment and that it has maintained Section 727
without sufficient scientific evidence. Without k nowing the level of risk posed by Chinese poultry
products the Panel would have to enter into an hypot hetical analysis that would be akin to the Panel
doing its own risk assessment and then comparing that risk to the United States' ALOP to determine
whether Section 727 is more trade restrictive than required. We recall that this is also not the
appropriate role for a panel. In particular prior panels have explained that, a panel should not conduct
its own risk assessment577 or impose any scientific opinion on the importing Member.578
7.336 Given the above considerations, in the present case an analysis under Article 5.6 would be
inappropriate for this Panel to engage in as it w ould be entirely speculative and be exceeding our role
under Article 11 of the DSU to make an objective assessment of the matter.
7.337 Accordingly, after careful consideration, th e Panel refrains from ruling on China's claim
under Article 5.6 of the SPS Agreement.
(b) Conclusion
7.338 For the above reasons, the Panel concludes that it would not be appropriate to proceed and
rule on China's claim under Article 5.6 of the SPS Agreement, and, thus, declines to do so.
J. WHETHER SECTION 727 IS INCONSISTENT WITH ARTICLE 8 OF THE SPS AGREEMENT
1. Arguments of the parties
7.339 China claims that the United States has violated Article 8 of the SPS Agreement by failing to
follow the requirements under Annex C(1)(a) of the SPS Agreement concerning WTO Members'
obligations to "undertake and complete" the pro cedures for assessing compliance with a substantive
SPS measure "without undue delays". China argues th at the application of Section 727 unjustifiably
delayed the application of the normal FSIS proce dures to Chinese poultry products, and it could not
be justified based on China's inaction. China ma intains that the delay which resulted from the
application of Section 727 was "undue" and c onstituted a violation of Article 8 of the
SPS Agreement.579
7.340 China specifically refers to the panel report in EC – Approval and Marketing of Biotech
Products, arguing that the obligation in Annex C(1)(a ) means that "approval procedures [must] be
undertaken and completed with no unjustifiable loss of time", and that such determination depends on
"whether there is a legitimate reason, or justifica tion for a given delay, not the length of a delay as
such".580
7.341 China notes that Section 727 was one of a ser ies of measures – including its predecessor,
Section 733, and the measure that replaced it, Sect ion 743 – that delayed the application of FSIS
procedures to China by two years.581
7.342 China clarifies that the normal FSIS procedures are "control, inspection and approval
procedures" covered by Annex C and Article 8 of the SPS Agreement582, and that Section 727 caused

577 Panel Report, EC – Hormones (Canada) , para. 8.104; Panel Report, EC – Hormones (US),
para. 8.101.
579 China's first written submission, paras. 156-160.
580 China's first written submission, para. 158.
581 China's opening oral statement at the first substantive meeting of the Panel, para. 78. As explained
in Section VII.A.1(a), Sections 733 and 743 are not part of our terms of reference.

"undue delay" in undertaking and completing th e FSIS procedures of "control, inspection and
approval".
583 China further asserts that Article 8 and Annex C of the SPS Agreement apply to all
types of "control, inspection and approval pro cedures" whether for one product or multiple
products584, and argues that Annex C(1)(a) of the SPS Agreement does not specify whether the source
of an "undue delay" must be caused by an SPS measure or by other requirements. According to China,
the only requirement to demonstrate a failure to obs erve the requirements in Annex C(1)(a) is "that
the 'undue delay' impacts the undertaking and co mpleting of 'control, inspection, and approval
procedures' used 'to check and ensure the fulfilment of sanitary and phytosanitary measures'."585
7.343 Alternatively, China maintains that Secti on 727 denied the approval of Chinese poultry
imports in a manner that allows it to be character ised as an "approval procedure", since it withheld
funds from the FSIS and, thereby, prevented the re view of China's applications to export poultry
under normal FSIS procedures.586
7.344 The United States contends that China has failed to show that Section 727 breached Article 8
and Annex C(1)(a) of the SPS Agreement first because these provisions apply to "control, inspection,
and approval procedures" which do not include equi valence determinations under Article 4 of the
SPS Agreement. Second, because China has not established the existence of any "undue delay".
7.345 The United States further argues that Article 8 of the SPS Agreement only mentions systems
for approving the use of additives and system s for establishing tolerances for contaminants.
According to the United States, these two exampl es relate only to the approval and control of
particular products or substances, rather th an an examination of an exporting Member's
SPS measure.587
7.346 Moreover, the United States submits that the text of Annex C of the SPS Agreement provides
contextual support for its view that "control, insp ection or approval" procedures involve particular
products or substances, and not the evaluation of an equivalence determination of another Member's
regulatory system.588
7.347 The United States further asserts that China's ar gumentation on this claim is conclusory and
merely repeats its other claims, in particular that Se ction 727 is lacking in ju stification and results in
discrimination. The United States argues that, to th e contrary, it "has shown that Section 727 falls
squarely within the Article XX(b) exception and is both necessary under the meaning of
Article XX(b) and not discriminatory under the meaning of the chapeau."
589
2. Analysis by the Panel
7.348 The Panel will therefore examine China's claim that the United States has acted inconsistently
with Article 8 of the SPS Agreement by failing to observe the requireme nts of Annex C(1)(a) of the
SPS Agreement, because Section 727 unduly delayed the application of the normal FSIS procedures to
Chinese poultry products . We will commence our analysis by reviewing the text of Article 8 and
Annex C(1)(a) of the SPS Agreement, and how these provisions had been interpreted in the past.

582 China's response to Panel question No. 133, para. 123; question 141, para. 142; and question 144,
paras. 149-151.
583 China's response to Panel question No. 133.
584 China's response to Panel question No. 134.
585 China's response to Panel question No. 139.
586 China's response to Panel question No. 133.
587 United States second written submission, paras. 118-122.
588 United States second written submission, para. 123.
589 United States second written submission, para. 124.

(a) Article 8 and Annex C(1)(a) of the SPS Agreement
7.349 Article 8 of the SPS Agreement, entitled "Control, Inspecti on and Approval Procedures"
requires, inter alia , that Members observe the provisions of Annex C in the operation of "control,
inspection and approval procedures". Article 8 of the SPS Agreement reads as follows:
"Members shall observe the provisions of Annex C in the operation of control,
inspection and approval procedures, includi ng national systems for approving the use
of additives or for establishing tolerances fo r contaminants in foods, beverages or
feedstuffs, and otherwise ensure that thei r procedures are not inconsistent with the
provisions of this Agreement."
7.350 We note that Annex C of the SPS Agreement which is also entitled "Control, inspection and
approval procedures", in footnote 7, clarifies that "[c]ontrol, inspection and approval procedures
include, inter alia, procedures for sampling, testing and certification."
7.351 Annex C(1)(a) of the SPS Agreement reads as follows:
"1. Members shall ensure, with respect to any procedure to check and ensure the
fulfilment of sanitary or phytosanitary measures, that:
(a) such procedures are undertaken and completed without undue
delay and in no less favourable ma nner for imported products than
for like domestic products;"
7.352 The panel in EC – Approval and Marketing of Biotech Products , was the first panel that
examined the disciplines in Annex C(1)(a) thoroughly. 590 The panel found that Annex C(1)
establishes obligations "with respect to any procedure to check and ensure the fulfilment of sanitary or
phytosanitary measures". In that respect, the measur es before the panel were SPS measures within the
terms of Annex A(1) and, according to the panel, also constituted procedures "to check and ensure the
fulfilment of sanitary or phytosanitary measures" within the meaning of Annex C(1).591
7.353 In that panel's view, the first clause of Anne x C(1)(a) determines that Members must ensure
that approval procedures are "undertaken and completed without undue delay". 592 With respect to the
textual interpretation of the phrase "undertaken and completed", the panel explained that the verb
"undertake" makes clear that Memb ers are required to begin, or start, approval procedures after
receiving an application for approval, while the ve rb "complete" indicates that approval procedures
are not only to be undertaken, but are also to be finished, or concluded. 593 For that panel, the phrase
"undertake and complete" covers all stages of appr oval procedures meaning that, once an application
has been received, approval procedures must be started and then carried out from beginning to end.594
7.354 The panel in EC – Approval and Marketing of Biotech Products further considered that the
ordinary meaning of the phrase "without undue delay" requires that "approval procedures be

590 We note that the panel in Australia – Salmon (Article 21.5 – Canada) succinctly addressed the scope
of Annex C(1), and concluded that the Australian requirements under the specific circumstances of that
particular case were substantive measures in their own right, and not "procedures or information requirements
'to check and ensure the fulfilment of sanitary ... meas ure' that are subject to paragraph 1(c) of Annex C."
Therefore, the panel did not consider the Australian measures vis-à-vis the obligations in Annex C(1). Panel
Report, Australia – Salmon (Article 21.5 – Canada), paras. 7.156-7.157.
591 Panel Report, EC – Approval and Marketing of Biotech Products, para. 7.1491.
592 Panel Report, EC – Approval and Marketing of Biotech Products, para. 7.1494.
593 Panel Report, EC – Approval and Marketing of Biotech Products, para. 7.1494.
594 Panel Report, EC – Approval and Marketing of Biotech Products, para. 7.1494.

undertaken and completed with no unjustifiable loss of time."
595 Therefore, only "undue" delay in the
undertaking or completion of approval procedures is contrary to the first clause of Annex C(1)(a).
Regarding "undue delay", what matters, according to the panel, is whether there is a legitimate reason,
or justification, for a given delay, not the length of a delay as such. 596 The panel also explained that
the determination of "without undue delay" must be made on a case-by-case basis according to the
relevant facts and circumstances of a specific case. In its view, delays attributable to action, or
inaction, of an applicant must not be held against a Member maintaining the approval procedure.597
7.355 The panel in EC – Approval and Marketing of Biotech Products further considered that the
phrase "without undue delay" relates to both elements of the phrase "undertake and complete". Thus,
Members must "undertake" approval procedures "without undue delay" and, subsequently, "complete"
them "without undue delay".598
7.356 Article 8 and Annex C(1) therefore apply to certain types of "procedures", namely those
dealing with control, inspection and approval which are aimed at checking and ensuring the fulfilment
of SPS measures. In order to determine whether both provisions apply to the specific circumstances of
this dispute, the Panel will first examine what we understand "control, inspection and approval
procedures" to be. We will then proceed to examin e the FSIS procedures in order to ascertain whether
they are "control, inspection, or approval proced ures" within the scope of Annex C(1) of the
SPS Agreement. If so, we will then turn to examine whethe r Section 727 had the effect of causing an
undue delay in the application of the normal FSI S procedures to Chinese poultry products failing to
observe the requirements in Annex C(1)(a) of the SPS Agreement and thus being inconsistent with
Article 8 of the SPS Agreement.
(b) Whether the procedures applied by the FSIS in the equivalence determination process are
control, inspection and approval procedures within the scope of Annex C(1) of the
SPS Agreement
7.357 We note that Annex C(1) of the SPS Agreement expressly provides a general obligation for
WTO Members to ensure that "any procedure", whic h aims to "check and ensure the fulfilment of
sanitary and phytosanitary measures", complies with the specific provisions found in the immediately
subsequent items (a) through (i). Accordingly, th e nature and coverage of items (a) to (i) under
Annex C(1) encompass a variety of general principles and guidance for Members to respect when
carrying out "control, inspection and approval proce dures" to check and ensure the fulfilment of a
particular SPS measure.
7.358 As explained above, the panel in EC – Approval and Marketing of Biotech Products concluded
that the scope of Annex C(1) covers "procedures" to "check and ensure the fulfilment of sanitary and
phytosanitary measures".
599
7.359 We recall that the United States argues that Annex C of the SPS Agreement applies to
"control, inspection and approval procedures" which do not include equivalence determinations as
described under Article 4 of the SPS Agreement. To support this assertion, the United States affirms
that Article 8 makes clear that Annex C does not apply to every SPS measure, but rather to a subset of
SPS measures, namely "control, inspection or approv al procedures". Furthermore, the United States
alleges that Article 8 mentions three specific types of SPS procedures, but does not mention the

595 Panel Report, EC – Approval and Marketing of Biotech Products, para. 7.1495.
596 Panel Report, EC – Approval and Marketing of Biotech Products, para. 7.1496.
597 Panel Report, EC – Approval and Marketing of Biotech Products, para. 7.1497.
598 Panel Report, EC – Approval and Marketing of Biotech Products, para. 7.1502.
599 Panel Report, EC – Approval and Marketing of Biotech Products , para. 7.1491; see also Panel
Report, Australia – Salmon (Article 21.5 – Canada), paras. 7.156-7.157.

procedures used in equivalence determinations. In addition, the United States argues that Article 8
provides context for what is meant by "control, in spection, and approval procedures" in Article 8 and
Annex C, specifying (i) systems for approving the use of additives, and (ii) systems for establishing
tolerances for contaminants. According to the Un ited States, both of these examples relate to the
approval and control of "particular products or s ubstances", and nothing in Article 8 indicates that
"control, inspection or approval procedures" were in tended to involve an examination of an exporting
Member's SPS measure.
600 The United States observes that th ese assertions are further corroborated
by the text of Annex C, which indicates that "c ontrol, inspection or approval" procedures involve
particular products or substances, and not the ev aluation of the equivalence of another Member's
regulatory system.601
7.360 China argues that Annex C of the SPS Agreement applies to any "procedure to check and
ensure the fulfilment of sanitary and phytosanitary measures" and that the list of measures in Article 8
is "illustrative rather than exhaustive". China furt her asserts that there is no basis to find that
equivalence-related procedures are not "control, inspection, or approval procedures". China also
argues that Article 8 of the SPS Agreement provides that Members "ensure that their procedures are
not inconsistent with the provisions of this Agre ement", indicating that Article 4 is one of the
provisions of the SPS Agreement and, thus, Article 8 reinforces that Article 4 provides an additional
obligation rather than some type of exception or safe haven.602
7.361 Moreover, China argues that Article 8 and Annex C of the SPS Agreement do not distinguish
between "control, inspection and approval procedures" covering one product or multiple products. In
its view, these provisions apply to all types of "control, inspection, and approval procedures".603
7.362 The Panel does not feel that it is necessary to define the whole universe of what could fall
within the scope of "control, inspection, and approval procedures." However, the Panel must
determine whether Section 727 caused an undue dela y in the operation of "control, inspection, and
approval procedures." We note that Section 727 affected the operation of the FSIS equivalence
determination process, which both parties have agreed includes "procedures". 604 Therefore, the
question before the Panel is the narrow one of wh ether these type of equivalence procedures fall
within the scope of "control, inspection, and approval procedures."
7.363 Considering the actual text of Annex C(1) of the SPS Agreement the Panel notes that
Annex C(1) does not specify, nor exclude, any type of "procedures". According to our reading,
Annex C(1) basically requires that "any procedure" is covered by its provisions so long as that
"procedure" is aimed at "checking and ensuring the fulfilment of sanitary or phytosanitary measures",
and is undertaken in the context of "control, inspection, or approval". In the Panel's view, no a priori
exclusion is contemplated by the SPS Agreement.
7.364 We find equally important to note that the SPS Agreement does not specify or limit, the
SPS measures referred to in Annex C(1). Indeed, Annex C(1) of the SPS Agreement merely provides
that any procedure to check and ensure the fulfilm ent of SPS measures is subject to the provisions of
items (a) through (i).

600 United States second written submission, paras. 118-122.
601 United States second written submission, para. 123.
602 China's response to Panel question No. 133.
603 China's responses to Panel questions Nos. 134 and 135.
604 United States' first written submission, para. 90; United States' response to Panel question No. 103;
China's first written submission, paras. 1, 2, 4 and 37.

7.365 As explained in Section II.C above, the United States has established an equivalence-based
regime for the importation of poultry into the United States following the provisions of the PPIA. This
equivalence-based regime is implemented and enforced by the FSIS.
7.366 We recall that the FSIS authorizes the importati on of poultry products into the United States
on a country-by-country basis, and countries wishing to export poultry products to the United States
have to first request a determination of eligib ility by the FSIS. Once eligibility for importation of
poultry is requested, the FSIS will then establish wh ether an applicant's poultry inspection system is
equivalent to that of the United States through up to three sequential processes: (a) a document
review; (b) an on-site audit; and (c) the publicatio n of the proposed and final rules in the Federal
Register and the country's addition to the list in the CFR.
7.367 Once the FSIS determines that an applicant country's poultry inspection system is equivalent,
the FSIS establishes and implements a rule allo wing the importation of poultry products from that
country. After the initial equivalence determination, a process of certification of establishments fit to
export is undertaken by the applican t country and submitted to the FSIS. This is then followed by an
ongoing equivalence review, comprising: (i) a recurring document analysis; (ii) further on-site audits;
and (iii) continuous port of entry re-inspections of poultry products shipped to the United States from
the eligible exporting country.
7.368 The Panel understands that the successful co mpletion of the equivalence determination
process undertaken by the FSIS, which includes th e establishment and implementation of a rule
allowing the importation of poultry products from a specific country, is the only means that any
country, including WTO Members, has to export poultry and poultry products to the United States.
7.369 We note that the Merriam-Webster's dictionary defines "approval" as the act of approving.
That same dictionary defines "approving" as:
"2. to have or express a favorable opini on of <couldn't approve such conduct>
3 a: to accept as satisfactory <hopes she will a pprove the date of the meeting> b : to
give formal or official sanction to: Ratify <Congress approved the proposed
budget>"
605
7.370 Based on the above-mentioned facts, we note that pursuant to the FSIS equivalence
determination process a country may not export poul try products to the United States unless the FSIS
accepts that country's SPS measures on the inspection and safety of poultry products as satisfactory
for achieving the United States ALOP for poultry products. It is only if these SPS measures are
satisfactory that a country may export poultry products to the United States Without a positive FSIS
equivalence determination, a c ountry would not, under any circumstances, be allowed to export
poultry and poultry products to the United States. It is, therefore, reasonable to conclude that the FSIS
equivalence determination process is an "approval pr ocedure" within the scope of Annex C(1) for
imported poultry and poultry products to enter into the United States, because the FSIS equivalence
determination process means that the FSIS is givi ng formal or official sanction (i.e. authorization)
606
and thus approval of a country to export poultry and poultry products to the United States.
7.371 The Panel acknowledges that nothing in the SPS Agreement seems to prevent a Member from
using an equivalence process to determine who is eligible to export certain products to its market. The

605 "approving" (2010). In Merriam-Webster Online Dictionary. Retrieved 8 June 2010, from
http://www.merriam-webster.com/dictionary/approving.
606 We note that Merriam-Webster lists "authorization" as a synonym for "sanction". "approving"
(2010). In Merriam-Webster Online Dictionary. Retrieved 8 June 2010, from http://www.merriam-
webster.com/dictionary/approving.

Panel also acknowledges that the FSIS equivale nce determination process, as described in
Section II.C above, involves a series of actions which may go beyond "control, inspection, and
approval procedures." Nevertheless, we are of the vi ew that, where the recognition of equivalence (as
the one granted through the FSIS equivalence determ ination process) is the only way that a Member
may export its products to an importing Member, th en the equivalence determination process of the
importing Member must comply with the pertin ent obligations on "approval procedures" under
Annex C(1) of the SPS Agreement.
7.372 The "approval procedures" encompassed by Annex C of the SPS Agreement may cover a
broad array of procedures, as the drafters of the SPS Agreement did not limit the scope of those
"procedures" to any specific type of "approval procedures". Bearing that in mind, the Panel considers
that the application of specific provisions of the SPS Agreement, such as Annex C(1), is by no means
restricted to the title or to the characterization of an SPS measure given to that measure by the WTO
Member maintaining it. To put it differently, it is not because the United States named its
requirements as "FSIS equivalence determination process" and characterizes it as a purely
"equivalence" process, that the only provisions applic able to the measure are those of Article 4 of the
SPS Agreement.
7.373 This Panel certainly understa nds that Article 4 of the SPS Agreement, has its own concepts
and disciplines separate from those governing "c ontrol, inspection, and approval procedures"
envisaged and regulated by Annex C and Article 8. Th is is illustrated by the existence of the decision
reached by the SPS Committee on the implementation of Article 4 of the SPS Agreement.
607 However,
we note that we have already concluded in Section VII.D that Article 4 cannot be read in isolation
from the other provisions of the agreement and that an SPS measure covered by Article 4 may
nevertheless be subject to other obligations in the SPS Agreement.
7.374 Having said that, the Panel understands that to deny that an equi valence determination
process, which also has the ultimate effect of approving the importation of a product from a given
WTO Member, as envisaged in any other "approval procedure", is subject to Annex C(1) of the
SPS Agreement, would unfairly reward the ingenuity of some WTO Members and possibly create a
dangerous safe haven for disguised protectionism. Such an understanding would result in an undesired
precedent that may entice some WTO Members to circumvent the application of the SPS Agreement.
7.375 In the Panel's view, the disassociation of the FSIS equivalence determination process from the
disciplines on "approval procedures" of Annex C(1) could ultimately result in an insurmountable
loophole in the SPS Agreement, contrary to the first and fourth preambular paragraphs of the
Agreement which determine that "[SPS] measures are not applied in a manner which would constitute
a means of arbitrary or unjustifiable discrimination" and WTO Members' desire for the "establishment
of a multilateral framework of rules and discip lines to guide the development, adoption and
enforcement of sanitary and phytosanitary measures in order to minimize their negative effects on
trade", respectively.
7.376 For instance, if a WTO Member is able to control imports only through the recognition of
equivalence according to Article 4 of the SPS Agreement, it could perhaps indefinitely postpone and
delay the importation of products from a given WTO Member by arguing that the SPS Agreement
does not prescribe a time-frame for conclusion of equivalence processes. In this hypothetical situation,
the indefinite delay of an equivalence process w ould completely undermine the application of the
SPS Agreement, and impede the importation of certain products into the WTO Member maintaining
the equivalence process based on the provisions of the SPS Agreement. In the Panel's view, this is
certainly not what the drafters of the SPS Agreement had envisaged according to the preambular

607 G/SPS/19/Rev.2 of 23 July 2004.

language seen above, nor would it be in accordance with the decision reached by WTO Members in
the SPS Committee on the implementation of Article 4 of the SPS Agreement.
608
7.377 Accordingly, the Panel concludes that the United States' FSIS equivalence determination
process for the importation of poultry and poultry pr oducts from other WTO Members qualifies as an
"approval procedure" within the meaning of Annex C(1) of the SPS Agreement.
7.378 The Panel recalls that according to China' s claim, the FSIS equivalence determination
procedures are covered by Annex C(1)(a) of the SPS Agreement, i.e. "control, inspection and approval
procedures".609 However, China also clarifies that if the Panel finds that the FSIS equivalence
determination process encompasses only one type of the procedures covered by Annex C(1), it would
be sufficient.610 On this basis, the Panel will limit its anal ysis to the fact that the FSIS equivalence
determination process is an "approva l procedure" within the meaning of Annex C(1). The Panel will
therefore assess whether Section 727 has affected the FSIS equivalence determination process in a
manner inconsistent with the United States' obligations under Annex C(1)(a) of the SPS Agreement.
(c) Whether Section 727 has resulted in an undue delay of the FSIS equivalence determination
process in respect of poultry products from China within the meaning of Annex C(1)(a) of the
SPS Agreement
7.379 The Panel is therefore called upon to decide whether, as claimed by China, Section 727 would
have unjustifiably delayed the application of FSIS equivalence procedures until its expiration,
resulting in an "undue delay" within the meaning of Annex C(1)(a) of the SPS Agreement.611
7.380 We recall that the measure at issue in this di spute, Section 727, reads: "None of the funds
made available in this Act may be used to establis h or implement a rule allowing poultry products to
be imported into the United States from the People's Republic of China."612
7.381 We also recall that, as explained by the panel in Colombia – Ports of Entry 613, municipal law
is to be approached as a "factual issue". 614 In making an objective assessment of municipal
legislation, a panel should consid er the very terms of the law 615, in their proper context 616, and
complemented, whenever necessary, with additio nal sources, which may include proof of the
consistent application of such laws, the pronouncem ents of domestic courts on the meaning of such
laws, the opinions of legal experts and the writings of recognized scholars.617

608 G/SPS/19/Rev.2 of 23 July 2004. For instance, paragraph 9 of the preamble provides " Recognizing
the importance of minimizing possible negative effects of sanitary or phytosanitary measures on trade and of
improving market access opportunities, particularly for products of interest to developing country Members".
609 China's response to Panel question No. 133.
610 China's response to Panel question No. 144.
611 China's first written submission, paras. 156-160.
612 Section 727, AAA of 2009 (Exhibit CN-1).
613 Panel Report, Colombia – Ports of Entry, para. 7.93.
614 Appellate Body Report, India – Patents (US) , para. 66; See also Panel Report, US – Section 301
Trade Act , para. 7.18, See also PCIJ, Certain German Interests in Polish Upper Silesia , PCIJ, 1926, Rep.,
Series A, No. 7, p. 19. The Panel is aware that the Appellate Body has explicitly stated that when a panel
examines the municipal law of a WTO Member for pur poses of determining whether the Member has complied
with its WTO obligations, that determination is a legal ch aracterization by a panel, an d is therefore subject to
appellate review under Article 17.6 of the DSU. Appellate Body Report, US – Section 211 Appropriations Act ,
para. 105.
615 Appellate Body Report, Dominican Republic – Import and Sale of Cigarettes , para. 112; See also
Panel Report, US – 1916 Act (EC), para. 6.48.
616 Panel Report, US – Section 301 Trade Act, para. 7.27.
617 Appellate Body Report, US – Carbon Steel, para. 157.

7.382 We accept the United States' explanation that the effect of Section 727 in United States
domestic law was limited to the e xplicit terms of that law, comprising a temporary restriction on
USDA's ability to use appropriated funds to implement or establish a rule allowing poultry products to
be imported into the United States during the 2009 fiscal year. 618 Therefore, Section 727 precluded
the FSIS from ultimately granting equivalence to poultry products from China.
7.383 The Panel recalls the comprehensive findings reached by the panel in EC – Approval and
Marketing of Biotech Products that the first clause of Annex C(1)(a) requires that WTO Members must
ensure that approval procedures are "undert aken and completed without undue delay" 619. The panel in
EC – Approval and Marketing of Biotech Products interpreted that the requirement in Annex C(1)(a)
to undertake and complete approva l procedures without undue delay makes clear that WTO Members
are required to begin, or start, approval proce dures after receiving an application for approval.
Additionally, the use of the term" completed" re quires that, approval procedures are not only to be
undertaken, but are also to be finished, or concluded. 620 Hence, once an application has been received,
approval procedures must be started and then carried out from beginning to end. 621 That panel also
concluded, that the ordinary meaning of the phr ase "without undue delay" requires Members to both
undertake and complete approval procedures with no unjustifiable loss of time.622 We agree with these
findings of the panel in EC – Approval and Marketing of Biotech Products and make them our own.
7.384 Accordingly, based on the very terms of Secti on 727, the Panel finds that regardless of the
actions undertaken or available to the FSIS during the period that Section 727 was in force, the FSIS
would have never been able to "complete" China' s equivalence determination process, as explicitly
prescribed by the US Congress through the terms of S ection 727. In our view, this interpretation finds
support in the United States' own definition of the effects of Section 727 as "comprising a temporary
restriction on USDA's ability to use appropriated funds to implement or establish a rule allowing
poultry products to be imported into the United States" 623, which to us is the only possible effect of
the succinct text of Section 727.
7.385 As we have explained above, the "establishmen t and implementation of a rule" allowing the
importation of poultry products from a specific country is the only means by which a WTO Member
may export poultry and poultry products to the United States' market. By prohibiting the
"establishment and implementation of a rule", Sec tion 727 undeniably eliminates any possibility for
"completion" of the FSIS equivalence determination process, which, if not "justified", as explained by
the panel in EC – Approval and Marketing of Biotech Products , must be characterised as an "undue
delay" according to Annex C(1)(a) of the SPS Agreement.
7.386 We shall therefore look at whether there was an y legitimate justification for the delay caused
by Section 727.
624
7.387 The Panel notes that the United States has submitted that its arguments regarding the
"necessity" of Section 727 under Article XX(b) of the GATT 1994 are also relevant in determining
whether any delay resulting from Se ction 727 was "due" or "undue". 625 China has also stated that the

618 United States' first written submission, para. 22.
619 Panel Report, EC – Approval and Marketing of Biotech Products, para. 7.1494.
620 Panel Report, EC – Approval and Marketing of Biotech Products, para. 7.1494.
621 Panel Report, EC – Approval and Marketing of Biotech Products, para. 7.1494.
622 Panel Report, EC – Approval and Marketing of Biotech Products, para. 7.1495.
623 United States' first written submission, paras. 5 and 22.
624 Panel Report, EC – Approval and Marketing of Biotech Products, para. 7.1496.
625 United States' response to Panel question No. 146.

Panel may look at the parties arguments under Article XX(b) when considering the issue of "undue
delay" in Article 8.
626
7.388 We thus note that the United States has attempted to justify Sec tion 727 on the basis that it
was necessary to protect against the risk posed by the importation of poultry products from China. 627
It argues that China has had numerous food safety cris is in the past years, that China is a country
where avian influenza" exists and that China has struggled with corruption, smuggling and lax
enforcement of its food safety laws. 628 The United States refers to the melamine crisis that struck
China in 2007 and which was documented by the World Health Organization (WHO). 629 The
United States argues that Section 727 contributed to the protection of human and animal life and
health by ensuring that FSIS would consider Chin a's recent food safety crises and China's enactment
of a new food safety law, provide FSIS the opportunity to improve its equivalence process, and
provide the United States' Government the chance to examine FSIS's equivalence process and its
overall efforts to ensure that imported food safety is safe.630
7.389 China argues that Section 727 was one of a series of measures – it mentions Section 733 and
Section 743 – that unjustifiably delayed the application of the normal FSIS procedures to China by
two years.631 Further, it argues that Section 727 delayed the application of the FSIS procedures until
the enactment of the Agriculture Appropriations Act 2010. Finally, China argues that the prohibition
imposed under Section 727 on Chinese access to FSIS approval procedures is without scientific
justification, and that it results in arbitrary a nd unjustifiable discrimination against Chinese poultry
products.632
7.390 The justification that the United States provides for the delay in the FSIS equivalence process
caused by Section 727 is the risk posed by the importation of poultry products from China. The Panel
is of the view that its findings concerning the lack of scientific justification in support of the arbitrary
or unjustifiable distinction in ALOPs applied to poultry products from China and poultry products
from other WTO Members are relevant in assessing the United States' alleged justification for the
undue delay caused by Section 727.
7.391 We recall our findings in Section VII.F.2(e) wh ere we found that Section 727 is inconsistent
with Articles 5.1, 5.2 and 2.2 of the SPS Agreement because it is not based on a risk assessment and is
maintained without sufficient sci entific evidence. We further recall our consequent findings in
Section VII.G.2(b)(ii) that there is no justificati on based on scientific evidence for the distinction in
ALOPs applied to the risk of potentially unsafe po ultry; and that, accordingly, the distinction in
ALOPs for poultry products for China and for poultry products from other WTO Members is arbitrary
or unjustifiable within the terms of Article 5.5 of the SPS Agreement. Accordingly, we do not see how
the delay in the completion of the FSIS approval procedures could be justified on the basis of
arguments already rejected by the Panel.
7.392 The Panel recalls that under Annex C(1)(a) of the SPS Agreement, WTO Members are
obliged to "undertake and complete" the proce dures for assessing compliance with a substantive
SPS measure "without undue delay". The Panel conclud es that Section 727 completely foreclosed the
possibility for "completion" of the FSIS equivale nce process for Chinese poultry products resulting in

626 China's response to Panel question No. 146.
627 United States' first written submission, paras. 123-129, United States' oral statement at the first
substantive meeting, paras. 42-48, United States' second written submission, para. 13.
628 United States' second written submission, para. 13.
629 Exhibit US-23.
630 United States' second written submission, para. 17.
631 China's first written submission, para. 158, China' s opening oral statement at the first substantive
632 China's opening oral statement at the first substantive meeting of the Panel, para. 78.

an unjustified and therefore undue delay with in the meaning of Annex C(1)(a) of the SPS Agreement.
Therefore, the United States has failed to obser ve the requirements under Annex C(1)(a) of the
SPS Agreement.
(d) Whether by failing to observe the provisions of Annex C(1)(a) of the SPS Agreement, the
United States has acted inconsistently with Article 8 of the SPS Agreement
7.393 We recall that China has claimed that the United States has violated Article 8 of the
SPS Agreement by failing to follow the requirements under Annex C(1)(a) of the SPS Agreement
concerning WTO Members' obligations to "under take and complete" the procedures for assessing
compliance with a substantive SPS measure "without undue delays".
7.394 The Panel notes that Article 8 of the SPS Agreement requires, inter alia, that WTO "Members
shall observe the provisions of Annex C in th e operation of control, inspection and approval
procedures". In this respect, both parties agree that the non-observance of the obligations in
Annex C(1)(a) implies a violation of Article 8 of the SPS Agreement.633 This understanding is in line
with the conclusions reached by the panel in EC – Approval and Marketing of Biotech Products.634
7.395 Having found that Section 727 has caused an "undue delay" in the FSIS "approval
procedures", by foreclosing any possibility of "c ompleting" the FSIS equivalence determination
process for Chinese poultry products to enter into th e United States; having thus concluded that the
United States has failed to observe the provisions of Annex C(1)(a) of the SPS Agreement, the Panel
accordingly finds that Section 727 is inconsistent with Article 8 of the SPS Agreement.
(e) Conclusion
7.396 The Panel therefore finds that, by failing to ob serve the provisions of Annex C(1)(a) of the
SPS Agreement, Section 727 is inconsistent with Article 8 of the SPS Agreement.
K. WHETHER SECTION 727 IS INCONSISTENT WITH ARTICLE I:1 OF THE GATT 1994
1. Arguments of the parties
7.397 China argues that Section 727 is inconsistent with Article I:1 of the GATT 1994 because it
affords an advantage to all other WTO Members that is not extended immediately and unconditionally
to the like poultry products from China. 635 In its view, all WTO Members other than China are being
offered the opportunity to export poultry products to the United States after successful completion of
the procedures applied by the FSIS. It further asserts that Section 727 operates to exclude only
Chinese poultry products from the competitive opport unity of entering the United States' market,
while allowing poultry products from all other WT O Members that same opportunity. In doing so,
Section 727 violates Article I:1 of the GATT.636
7.398 The United States responds that China has not provided any basis for the Panel to make a
finding under Article I:1 of the GATT 1994. 637 The United States argues that China fails to recognize
that Section 727 only has meaning within the context of the overall operation of an equivalency-based
food-safety regime under the PPIA. 638 The United States contends that "under an equivalency-based
regime, products of different WTO Members are neces sarily treated differently: that is products of

633 China's response to Panel question No. 143. United States' response to Panel question No. 143.
634 Panel Report, EC – Approval and Marketing of Biotech Products, para. 7.1569.
635 China's first written submission, para. 85.
636 China's first written submission, para. 93.
637 United States' first written submission, para. 94.
638 United States' first written submission, para. 95.

Members that are found to be equivalent may be imported, while similar products of Members that
have yet to be found equiva lent may not be imported".
639 It further contends that the Panel need not
address Article I:1 in order to solve this dispute, be cause in its view the core of the issue is whether
Section 727 is justified by legitimate concerns w ith human and animal life and health. In the
United States' view, it would not promote the resoluti on of this dispute for the Panel to analyse the
application of Article I to equivalency-based regulat ory regimes, or to the likeness of products with
different levels of safety. The order of analysis thus proposed by the United States is to review the
measures under Article XI, followed (if necessary) by findings under Article XX(b).640
2. Analysis by the Panel
7.399 In this instance, the Panel is called upon to ex amine whether Section 727 is inconsistent with
Article I:1 of the GATT 1994. The Panel takes note of the United States' contention that the Panel
need not to address this claim to resolve this dis pute. We are however of the view that it would be
appropriate for us to rule on China's claim under this provision.641
7.400 We shall start by looking at the text of Article I:1 of the GATT 1994 and how it has been
interpreted by panels and the A ppellate Body. In that light, we will proceed and examine whether
Section 727 violates this provision.
(a) Article I:1 of the GATT 1994
7.401 We note that Article I:1 of the GATT 1994 contains the Most-Favoured Nation (MFN)
principle, which "has long been a cornerstone of the GATT and is one of the pillars of the WTO
trading system."642 Article I:1 provides:
"With respect to customs duties and charges of any kind imposed on or in connection
with importation or exportation or imposed on the international transfer of payments
for imports or exports, and with respect to the method of levying such duties and
charges, and with respect to all rules a nd formalities in connection with importation
and exportation, and with respect to all matte rs referred to in pa ragraphs 2 and 4 of
Article III,* any advantage, favour, privilege or immunity granted by any contracting
party to any product originating in or destined for any other country shall be accorded
immediately and unconditionally to the like pr oduct originating in or destined for the
territories of all other contracting parties."
7.402 The Appellate Body in Canada – Autos explained that the object and purpose of Article I:1 of
the GATT 1994. "is to prohibit discrimination among lik e products originating in or destined for
different countries." The Appellate Body further expl ained that "[t]he prohibition of discrimination in
Article I:1 also serves as an incentive for concession s, negotiated reciprocally, to be extended to all
other Members on an MFN basis."643

639 United States' first written submission, para. 96.
640 United States' first written submission, para. 99.
641 See Section VII.B.
642 Appellate Body Report, Canada – Autos, para. 69.
643 Appellate Body Report, Canada – Autos, para. 84.

7.403 The Appellate Body in EC – Bananas III confirmed that, to establish a violation of Article I,
there must be an advantage, of the type c overed by Article I and which is not accorded
unconditionally to all "like products" of all WTO Members.644
7.404 In accordance with the approach followed by the panel in EC – Bananas III (Article 21.5 –
US), and upheld by the Appellate Body, the Panel will conduct its analysis by considering: (i) whether
Section 727 is a measure of the kind subject to the disciplines of Article I:1 of the GATT 1994, (ii)
whether it confers an advantage of the type covere d by Article I, and, if so, (iii) whether the
advantages are extended to all like products immediately and unconditionally.
(b) Whether Section 727 is a measure subject to the disciplines of Article I:1 of the GATT 1994
7.405 The first step in our analysis is to determin e whether Section 727 is a measure subject to the
disciplines of Article I:1 of the GATT 1994. In this respect, China argues that Section 727 is a rule in
connection with the importation of poultry products from China within the meaning of Article I:1. For
China, this is evident from the wording of S ection 727, which refers to the establishment or
implementation of a rule allowing the importation of poultry products into the United States from
China.645
7.406 The United States has not presented any arguments in this respect.
7.407 We note that prior panels and the Appellate Body have interpreted the terms "rules and
formalities in connection with importation" to enco mpass a wide range of measures. As China points
out, countervailing duties, additional bonding requi rements and activity function rules have been
found to be rules and formalities in connection with importation within the meaning of Article I:1.646
7.408 In the context of Article XI:1 of the GATT 1994, the panel in India – Autos when interpreting
the terms "restriction ... on importation", explained that this meant a restriction "with regard to" or "in
connection with" the importation of a product. The pa nel further explained that these terms would not
necessarily be limited to measures which directly rela te to the "process" of importation but could also
encompass measures which otherwise relate to other aspects of the importation of the product.647
7.409 The Panel recalls that Section 727 prohibits the FSIS from using appropriated funds to
establish or implement a rule allowing poultry products from China to be imported into the
United States. As described in Section II.C above, the establishment and implementation of a rule by
the FSIS is a prerequisite for the importation of poultry products into the United States. We also recall
that we have concluded that the effect of Section 72 7, which is a legislative provision, was to prohibit
the importation of Chinese poultry products into the United States.
7.410 The Panel finds the reasoning of the panel in India – Autos with respect to the terms "in
connection with importation" to be persuasive. We conclude that "i n connection with importation" as
used in Article I, not only encompasses measures wh ich directly relate to the process of importation
but could also include those measures, such as Sec tion 727, which relate to other aspects of the
importation of a product or have an impact on actual importation. Gi ven the foregoing, we determine

644 Panel Report, EC – Bananas III (Article 21.5 – US) , para. 7.555, Panel Report, Indonesia – Autos,
para. 14.138, citing to Appellate Body Report, EC – Bananas III , para. 206. Panel Report, Colombia – Ports of
Entry, para. 7.322.
645 China's first written submission, para. 85.
646 China's first written submission, para. 77 citing GATT Panel Report, US – MFN Footwear,
para. 6.8; Panel Report, US – Certain EC Products , para. 6.54 and Appellate Body Report, EC – Bananas III ,
para. 206 respectively.

that Section 727 is a rule in connection with impor tation within the meaning of Article I:1 of the
GATT 1994.
(c) Whether the United States confers an advantage of the type covered by Article I:1 of the
GATT 1994
7.411 The Panel's next step is thus to examine whet her the United States is conferring an advantage
of the type covered by Article I:1 of the GATT 1994.
7.412 We note that, according to China, the advantag e accorded to other countries and not extended
to China is "the opportunity to export poultry products to the United States, pending a successful
finding of initial or ongoing equivalence and cer tification of individual Chinese poultry producers."
648
China argues that in accordance w ith the United States' regulations and procedures governing the
importation of poultry products, WTO Members' poultry products have the opportunity to be imported
into the United States (the advantage) if produced und er a food safety system equivalent to that of the
United States. However, China contends that w ithout funding, the FSIS cannot use its personnel and
resources to implement existing rules or establishing rules, and in its view, it denies Chinese poultry
products the advantage identified above.649
7.413 The United States, however, has not contested Ch ina's argumentation on the existence of an
advantage of the type covered by Article I:1 of the GATT 1994.650
7.414 The Panel notes that the term "advantage" in Article I:1 of the GATT 1994 has been broadly
interpreted by panels and the Appe llate Body. The Appellate Body in Canada – Autos examined the
language in Article I:1 "any advant age … granted by any Member to any product" and gave a rather
broad interpretation of the term "advantage":
"We note next that Article I:1 requires that ' any advantage , favour, privilege or
immunity granted by any Member to any product originating in or destined for any
other country shall be accorded immediat ely and unconditionally to the like product
originating in or destined for the territories of all other Members.' (emphasis added)
The words of Article I:1 refer not to some advantages granted 'with respect to' the
subjects that fall within the defined scope of the Article, but to ' any advantage'; not to
some products, but to ' any product '; and not to like products from some other
Members, but to like products originating in or destined for 'all other ' Members."651
7.415 The Panel in EC – Bananas III considered that "advantages" within the meaning of Article I:1
are those that create "more favourable competi tive opportunities" or affect the commercial
relationship between products of different origins.652
7.416 We note that under the PPIA and the FSIS procedures 653, any country may request a
determination of eligibility for the importa tion of poultry products to the United States. 654 Once a

648 China's first written submission, para. 86.
649 China's first written submission, paras. 87-88.
650 See United States' first written submission, paras. 94-100. In fact, the United States has not
responded to China's arguments concerning the "advantage" being granted or whether this advantage is granted
"unconditionally and immediately". The United States has only focussed on contesting China's likeness
arguments.
651 Appellate Body Report, Canada – Autos, para. 79.
652 Panel Report, Colombia – Ports of Entry, para. 7.341, citing the Panel Report, EC – Bananas III
(Guatemala and Honduras), para. 7.239.
653 See Section II.C.

successful determination of equivale ncy is made and a final rule is published in the Federal Register,
countries can start exporting poultry products to the United States. 655 Thus, successful completion of
the mentioned procedures is the only way that an importer can enter the United States market for
poultry products.656 The opportunity to sell poultry products in the United States market is therefore a
very favourable market opportunity and not having such an opportunity would mean a serious
competitive disadvantage, or rather would amount to an exclusion from competition in the US market.
Such an opportunity would also affect the commerc ial relationship between pr oducts of two different
origins where one of the countries of origin is denied access to the PPIA and the FSIS procedures.
7.417 The Panel thus considers that the opportunity to export poultry products to the United States
after successful completion of the PPIA and the FSIS procedures is an advantage within the meaning
of Article I:1 of the GATT 1994 because it creates market access opportunities and affects the
commercial relationship between products of different origins.
(d) Whether like products from other Members are gr anted an advantage within the meaning of
Article I:1 of the GATT 1994
7.418 Having found that the opportunity to export poultry products to the United States after
successful completion of the FSIS procedures is an a dvantage within the meaning of Article I:1 of the
GATT 1994, the Panel will next consider whether like products from other Members are granted such
an advantage.
7.419 The Panel notes that China has argued that the measure at issue discriminates against Chinese
poultry products on the basis of origin, given that if China were to attempt to engage in either the
initial equivalence determination fo r products made from domestically slaughtered poultry or in an
ongoing equivalence verification for processed pou ltry products, Section 727 would operate to
exclude Chinese poultry products from those FSIS pr ocedures based simply on their origin. China
notes that in cases of origin-based distinctions, pane ls and the Appellate Body have resorted to a
hypothetical like products analysis. Accordingly, China considers that a hypothetical like product
analysis should be conducted657 and therefore poultry products originating from other WTO Members
whose poultry production system has been found to be equivalent to the United States are like
products to Chinese poultry products.658
7.420 The United States argues that China has not provided an explanation why poultry products
from China are "like products" to poultry prod ucts from other WTO Members, including those
already authorized to export poultry products to the United States.659
7.421 The United States argues that the different treatment is not based on origin but on the fact that
different countries have different food safety systems which afford different levels of protection. The
United States contends that the hypothetical like pro duct approach has not been applied by panels or
the Appellate Body to situations su ch as the one in this dispute, and that the cases cited by China in
support (Colombia – Ports of Entry and Canada – Autos) are not pertinent, because these disputes did

654 "Countries desiring to establish eligibility for importation of poultry products into the United States
may request a determination of eligibility by presenting copies of the laws and re gulations..." 9 CFR 381.196
(a)(2)(iii) (Exhibit CN-6).
655 9 CFR 381.196 (a)(1) (Exhibit CN-6).
656 See Section II.C.
657 China's first written submission, para. 91.
658 China's first written submission, para. 91. China supports its view on the following cases: Panel
Report, Colombia – Ports of Entry , para. 7.356, Panel Report, Canada – Periodicals , pp. 20-21 and Panel
Report, Indonesia – Autos, para. 14.113.
659 United States response to Panel question No. 31.

not involve differences in safety between products of different WTO Members.
660 In its view,
equivalency-based regimes respond to the fact that health and safety systems vary from country to
country, and it does not accept that Chinese poultry products present no particular safety issues as
compared to products from any other WTO Member. In this sense, the United States contends that
disputes such as EC – Asbestos in which a panel examined issues of "likeness" in the context of
products with different levels of safety should not be ignored. In sum, the United States seems to
argue that the determination of likeness in th is dispute should be done in accordance with the
traditional criteria.
7.422 China responds that the United States has not rebutted its argument that the "like products" in
this dispute are "poultry products" (as defined by the PPIA)
661, hypothetically capable of accessing the
FSIS procedures and being exported from any other WTO Member to the United States. 662 Further,
China argues that the United States has neither denied that Section 727 imposes a de jure origin-based
distinction between Chinese poultry and poultry from all other origins, nor distinguished the panel and
Appellate Body reports cited by China.663
7.423 The Panel notes that Article I:1 requires a co mparison between like products originating from
one country vis-à-vis products originating from a WTO Member. The products to be compared in this
dispute are the products at issue – poultry products as defined by the PPIA originating from China vis-
à-vis poultry products originating in the territory of other WTO Members which have been deemed
equivalent by the FSIS. China argues that the Pa nel should follow a hypothetical like product analysis
as several panels have done when confr onted with origin-based discrimination 664, while the
United States argues that the Panel should rely on the approach of the panel in the EC – Asbestos
dispute because it dealt with the i ssue of "likeness" in the context of products with different safety
levels.665
7.424 The concept of like product has been abundantly interpreted in the prior decisions of panels
and the Appellate Body. Whatever the provision at i ssue, the Appellate Body has explained that a like
product analysis must always be done on a case-by-case basis.666
7.425 The traditional approach for determining "likeness" has, in the main, consisted of employing
four general criteria: 667 "(i) the properties, nature and quality of the products; (ii) the end-uses of the
products; (iii) consumers' tastes and habits – more comprehensively termed consumers' perceptions
and behaviour – in respect of the products; and (iv) the tariff classification of the products."668
7.426 A different approach used by panels and the Appellate Body to determine the likeness of the
products has been to assume – hypothetically – that two like products exist in the market place when
one of two situations arises: first cases con cerning origin-based discrimination, and second, cases

660 United States' first written submission, para. 99 and footnote 110.
661 Exhibit CN-4.
662 China's response to Panel question No. 33.
663 China cites the panel reports in Colombia – Ports of Entry at para. 7.356, Canada – Periodicals at
pp. 20-21, and Indonesia – Autos at para. 14.114.
664 China's first written submission, para. 89.
665 United States' first written submission, para. 98.
666 Appellate Body Report, EC – Asbestos, para. 102.
667 Appellate Body Report, Japan – Alcoholic Beverages II , p. 21, DSR 1996:I, 97, at 113 and, in
particular, fn. 46; Panel Report, US – Gasoline , para. 6.8 (where the approach set forth in the Border Tax
Adjustment case was adopted in a dispute concerning Article III:4 of the GATT 1994).
668 The fourth criterion, tariff classification, was not mentioned by the Working Party on Border Tax
Adjustments, but was included by subsequent panels ( e.g., GATT Panel Report, EEC – Animal Feed Proteins,
para. 4.2; GATT Panel Report, Japan – Alcoholic Beverages I , para. 5.6; and Panel Report, US – Gasoline,
para. 6.8; Appellate Body Report, Japan – Alcoholic Beverages II, pp. 21-22, DSR 1996:I, 97, at 114.

where it was not possible to make the like product comparison because of – for example – a ban on
imports.669
7.427 The panel in China – Publications and Audiovisual Products 670 recalled the relevant WTO
jurisprudence which supports a hypothetical like product analysis where a difference in treatment
between domestic and imported products is based exclusively on the products ' origin. In these cases,
the complainant did not need to identify specific domestic and imported produc ts and establish their
likeness in terms of the traditional criteria in order to make a prima facie case of "likeness". Instead,
when origin is the sole criterion distinguishing the products, it has been sufficient for a complainant to
demonstrate that there can or will be domest ic and imported products that are "like". 671 For example,
the panels in Argentina – Hides and Leather and Canada – Wheat Exports and Grain Imports found
in the context of Article III:2 of the GATT 1994, that "where a Member draws an origin-based
distinction in respect of internal taxes, a co mparison of specific products is not required and,
consequently, it is not necessary to ex amine the various likeness criteria."672 We also note that panels
have found that foreign origin cannot serve as a b asis for a determination that imported products are
"unlike" domestic ones.673
7.428 The panel in Colombia – Ports of Entry applied a hypothetical like product analysis in respect
of products originating from Panama and other WT O Members in the context of Article I:1. The
measure at issue affected products coming from Panama into Colombia, whether originating or not in
Panama. Panama did not appear to produce goods fo r export to Colombia, but nevertheless the Panel
considered Panama's claim. Ba sed on the above jurisprudence u nder Article III of the GATT 1994 674,
the panel adopted a hypothetical likeness approach on the premise of an origin-based distinction that
would arise if Panama were to produce the subject goods and export them to Colombia. 675 The panel
considered that if Panama were to produce tex tiles, apparel and footwear, goods originating in
Panama would be "like products" to those originating in other countries.676
7.429 We note that the United States has argued that the differing safety levels of poultry from
China vis-à-vis other WTO Members may have an impact on the like products analysis. 677 However,
the United States did not provide specific evidence re lating to different safety levels between poultry
products from China and other WTO Members. Theref ore, we see no reason not to proceed with the
"hypothetical" like products analysis and base our determination on whether the products alleged to be
"like" are distinguished solely because of their origin.

669 Panel Report, Canada – Periodicals, paras. 5.22-5.23 upheld by the Appellate Body Report, Canada
– Periodicals, p. 12.
670 Panel Report, China – Publications and Audiovisual Products, para. 7.1446.
671 Panel Report, Indonesia – Autos , para. 14.113; Panel Report, Argentina – Hides and Leather ,
paras. 11.168 -11.170; Panel Report, Canada – Autos , para. 10.74; Panel Report, India – Autos ,
paras. 7.174-7.176.
672 Panel Report, Canada – Wheat Exports and Grain Imports, footnote 246 to para. 6.164.
673 Panel Report, US – FSC (Article 21.5 – EC II), para. 8.133.
674 The panel referred to the Appellate Body Report, Canada – Periodicals , pp. 20-21; Panel Report,
Indonesia – Autos, para. 14.113. Panel Report, Colombia – Ports of Entry, footnote 648 to para. 7.356.
675 Panel Report, Colombia – Ports of Entry, para. 7.356.
676 Panel Report, Colombia – Ports of Entry, para. 7.357.
677 United States' first written submission, para. 98.

7.430 We recall the language in Section 727:
"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."
678
7.431 The funding restriction imposed by Section 727 is origin-based in respect of the products it
affects, i.e. poultry products from China, and not from any other WTO Member. By targeting only
China, Section 727 imposes origin-based discrimination.
7.432 Given this origin-based distinction the Panel be lieves it is appropriate to follow prior panels
that have used a hypothetical like products analysis. 679 In this sense, for the purposes of determining
whether an advantage has been accorded immediately and unconditionally to other WTO Members
and not to China, the Panel will assume that pou ltry products originating from China are like products
to those originating from other WTO Members.
(e) Whether the United States confers an advantage that is not extended "immediately and
unconditionally" to poultry products from China
7.433 Having found that an advantage, i.e. the opportunity to export poultry products to the
United States, pending a successful finding of initia l or ongoing equivalence and certification of
individual poultry producers, has been granted to products which are "like" poultry from China, the
Panel will now determine whether by virtue of Sec tion 727 that "advantage" is extended immediately
and unconditionally to the like poultry products from China as required by Article I:1 of the
GATT 1994.
7.434 China argues that Section 727 is "inconsistent w ith Article I:1 because it applies a condition
in a manner that discriminates between like products of different origins."
680 It states that Section 727
applies solely to poultry products and that it rem oves the advantage of an opportunity to access the
United States' market.681 For these reasons, China concludes that Section 727 does not operate on an
MFN basis and cannot be seen to unconditionally acco rd advantages to the like products of all WTO
Members.682
7.435 The United States does not respond to the substance of China's claim under Article I:1,
because in its view China has not met the threshold of establishing that poultry products from China
are like those from other WTO Members.683
7.436 The Panel now turns to the interpretation of the phrase "immediately and unconditionally".
This phrase has already been interprete d by prior WTO panels. The panel in Canada – Autos
considered that the issue of whether an advantage within the meaning of Article I:1 of the GATT 1994
is accorded "unconditionally" cannot be determined independently of an examination of whether it
involves discrimination between like products of different countries. 684 The panel clarified that the
word "unconditionally" (i.e. "not subject to conditions") in Article I:1 of the GATT 1994 does not
pertain to the granting of an advantage per se, but to the obligation to accord to the like products of all

678 Section 727, Agriculture Appropriations Act 2009 (Exhibit CN-1).
679 Panel Report, Colombia – Ports of Entry , Panel Report, Indonesia – Autos and Appellate Body
Report, Canada – Periodicals.
680 China's first written submission, para. 92.
681 China's first written submission, para. 92.
682 China's first written submission, para. 92.
683 United States' response to Panel questions Nos. 31, 33 and 87.
684 Panel Report, Colombia – Ports of Entry, para. 7.361, citing the Panel Report, Canada – Autos ,
para. 10.22.

Members an advantage which has been granted to any product originating in any country. The panel
further explained that the purpose of Article I:1 of the GATT 1994 "is to ensure unconditional MFN
treatment." In this context, the panel considered that the obligation to accord unconditionally to WTO
Members an advantage which has been granted to an y other country means that the extension of that
advantage may not be made subject to conditions w ith respect to the situation or conduct of those
countries. The panel explained that this means that an advantage granted to the product of any country
must be accorded to the like product of all WT O Members without discrimination as to origin. The
panel went on to say:
"[I]t appears to us that there is an import ant distinction to be made between, on the
one hand, the issue of whether an advantag e within the meaning of Article I:1 is
subject to conditions, and, on the other, whether an advantage, once it has been
granted to the product of any country, is accorded 'unconditionally' to the like product
of all other Members. An advantage can be granted subject to conditions without
necessarily implying that it is not accorded 'unconditionally' to the like product of
other Members. More specifically, the fact that conditions attached to such an
advantage are not related to the imported product itself does not necessarily imply
that such conditions are discriminatory with respect to the origin of imported
products. We therefore do not believe that, as argued by Japan, the word
'unconditionally' in Article I:1 must be interp reted to mean that making an advantage
conditional on criteria not related to the imported product itself is per se inconsistent
with Article I:1, irrespective of whether and how such criteria relate to the origin of
the imported products."
685
7.437 The panel in Colombia – Ports of Entry followed the reasoning of the panel in Canada –
Autos and considered that it could assess whether an advantage was conferred "immediately and
unconditionally" "based on whether an advantage gran ted to textiles, apparel, or footwear of any
Member was not similarly accorded to those products originating in Panama for reasons related to its
origin or the conduct of Panama." 686 Colombia argued that it could condition its customs procedures
on the need to control and verify imported mercha ndise from Panama and to avoid circumvention of
such laws and regulation through under-invoicing, fraud and smuggling, without violating Article I:1
of the GATT 1994. 687 The panel reiterated the view expressed by the Canada – Autos panel that
conditions attached to an advantage granted in connection with the importation of a product will
violate Article I:1 of the GATT 1994 only when such conditions discriminated with respect to the
origin of the products, and ruled that Article I:1 of the GATT 1994 prohibited Members from
addressing such concerns through the use of customs rules that are applied on the basis of origin.688
7.438 We recall that China argues that Section 727 is inconsistent with Article I:1 of the
GATT 1994 as it applies a condition in a manner that discr iminates between like products of different
origins, given that it applies solely to Chin ese poultry products, hence not being applied on MFN
basis.689
7.439 Section 727 prohibited FSIS from spending funds to establish or implement a rule allowing
the importation of poultry products from China; it therefore applies solely to China. The Panel recalls
that without the establishment or the implementa tion of a rule allowing the importation of poultry
products – even if a country is determined by FSIS to provide equivalent food safety standards – it

686 Panel Report, Colombia – Ports of Entry, para. 7.362.
687 Panel Report, Colombia – Ports of Entry, para. 7.366.
688 Panel Report, Colombia – Ports of Entry, para. 7.366.
689 China's first written submission, para. 92.

cannot export poultry products to the United States.
690 This means that even if Chinese poultry
production system is found to provide equivalent food safety standards as those applied in the
United States691, it will not be able to export poultry pr oducts because of the funding prohibition.
Further, the United States acknowle dges that the purpose and effect of Section 727 was to prevent
Chinese poultry products from being imported into the United States.692
7.440 No other country was subject to the funding prohibition that Section 727 imposed on China.
This means that China is the only WTO Member that is denied the advantage that the Panel identified
earlier – the opportunity to export poultry produc ts to the United States after the successful
completion of the FSIS procedures. Therefore, Sect ion 727 discriminates against China with respect
to other WTO Members by denying the above-m entioned advantage, and this discriminatory
treatment means that the United States is not extending an advantage "immediately and
unconditionally".693
(f) Conclusion
7.441 For the above reasons, the Panel concludes that the United States is not extending an
advantage immediately or unconditionally to the like products originating from China, advantage that
it has extended to all other WTO Members. We theref ore find that Section 727 is inconsistent with
Article I:1 of the GATT 1994.
L. WHETHER SECTION 727 IS INCONSISTENT WITH ARTICLE XI:1 OF THE GATT 1994
1. Arguments of the parties
7.442 China argues that Section 727 is inconsistent with Article XI:1 of the GATT 1994 because it
imposes a restriction on importation which negatively impacts the competitive opportunities for
poultry products from China. In China's view, the measure institutes a de facto prohibition on the
importation of poultry products from China. 694 Further, it contends that since China cannot
participate in the FSIS approval procedures, the measure at issue effectively eliminates China's
competitive opportunities in the United States mark et, thus constituting a restriction within the
meaning of Article XI:1 of the GATT 1994.
695
7.443 In the alternative, China argues that to the extent that the practical impact of Section 727 is an
import ban on Chinese poultry prod ucts, Section 727 institutes an import prohibition in the sense of
Article XI:1 of the GATT 1994.696
7.444 The United States argues that China, as the complaining party, has the burden of establishing
all of the elements of the alleged breach of Article XI:1 of the GATT 1994. 697 The United States

690 See Section II.C.
691 The Panel notes that the FSIS has determined that China is equivalent to the United States for
processed poultry products and reached a preliminary determination that th e same was true for slaughtered
poultry products. See Section II.D.
692 United States' response to Panel question No. 110.
694 China's first written submission, para. 102.
695 China's first written submission, para. 104, China' s opening oral statement at the first substantive
696 China's first written submission, para. 106.
697 United States' first written submission, para. 101; United States response to Panel question No. 31.

contends that Section 727 meets the requirement of subparagraph (b) of Article XX of the
GATT 1994.698
2. Analysis by the Panel
7.445 As indicated above, the United States has not contested China's claim under Article XI:1 of
the GATT 1994. The absence of refutation of a claim ra ises the question of what the role of the Panel
should be in such a case. We note that in US – Shrimp (Ecuador) and US – Shrimp (Thailand), the
panels found that although the respondent was not seek ing to refute the claims, in order to make an
objective assessment of the matter before them they had to satisfy themselves whether the
complainant had established a prima facie case of violation.
699 In particular, the panels considered
whether the complainant had presented evidence a nd argument which "was sufficient to identify the
challenged measure and its basic import, identi fy the relevant WTO provision and obligation
contained therein, and explain the basis for the claimed inconsistency of the measure with that
provision".700
7.446 Although the United States has not presented argum ents seeking to refute China's claims, the
Panel, in order to make an objective assessment of the matter as directed by Article 11 of the DSU,
will still examine whether China has established a prima facie case of violation of Article XI:1 of the
GATT 1994.
(a) Article XI:1 of the GATT 1994
7.447 Article XI:1 of the GATT 1994 contains one of the fundamental principles of the
GATT/WTO legal system 701, the general prohibition of quantitativ e restrictions. This provision reads
as follows:
"No prohibitions or restrictions other than duties, taxes or other charges, whether
made effective through quotas, import or export licenses or other measures, shall be
instituted or maintained by any contracting party on the importation of any product of
the territory of any other contracting party or on the exportation or sale for export of
any product destined for the territory of any other contracting party."
7.448 Hence, Article XI:1 foresees the elimination of import and export restrictions or prohibitions
other than duties, taxes or other charges. The Panel will proceed to examine whether Section 727 is a
measure prohibiting or restricting the importation of poultry products inconsistent with Article XI:1 of
the GATT 1994.
(b) Section 727 as an "other measure"
7.449 Article XI:1 of the GATT 1994 covers prohibitions and restric tions "made effective through
quotas, import or export licenses or other measures". China argues that Section 727 institutes a
restriction on the importation of poultry products from China, made effective through "other
measures", because the restriction does not constitute a duty, tax or other charge within the meaning
of Article XI:1 of the GATT 1994.
702 We agree with China that Section 727 is not a duty, tax or other
charge, nor a quota or import/export license.

698 United States' first written submission, para. 102.
699 Panel Report, US – Shrimp (Ecuador) , paras. 7.7-7.11; and Panel Report , US – Shrimp (Thailand) ,
para. 7.20.
700 Panel Report, US – Shrimp (Ecuador), para. 7.11.
702 China's first written submission, para. 103.

7.450 In India – Quantitative Restrictions , the panel found that the text of Article XI:1 of the
GATT 1994 is "broad" in scope, providing for a general ban on import or export restrictions or
prohibitions "other than duties, taxes or other charges".
703 In this sense, the term "other measures" is
meant to encompass a "broad residual category". 704 The GATT panel in Japan – Semi-Conductors
found that "Article XI:1, unlike other provisions of the General Agreement, did not refer to laws or
regulations but more broadly to measures. This wo rding indicated clearly that any measure instituted
or maintained by a contracting party which restri cted the exportation or sale for export of products
was covered by this provision, irrespective of the legal status of the measure."705
7.451 As stated by the GATT panel in Japan – Semi-Conductors quoted above, laws and regulations
fall within the concept of "other measures". Gi ven that Section 727 is a law enacted by the
US Congress, the Panel considers that it falls within the residual category of "other measure" that may
be challenged under Article XI:1. Th e Panel will thus proceed to consider whether Section 727 is a
prohibition or restriction on importation within the meaning of Article XI:1.
(c) Whether Section 727 is a "prohibition or restriction" within the meaning of Article XI:1 of the
GATT 1994
7.452 In order to determine whether Section 727 viol ates Article XI:1 of the GATT 1994, the Panel
must establish whether the measure imposes a "prohib ition" or a "restriction" within the meaning of
Article XI:1.
7.453 China argues that the measure constitutes a rest riction on importation, and in the alternative
argues that, to the extent that the practical impa ct of the measure is an import ban on Chinese poultry
products, the measure institutes an import prohibition in the sense of Article XI:1.706
7.454 The panel in Brazil – Retreaded Tyres stated that the term "prohibition" in Article XI:1 meant
that "Members shall not forbid the importation of any products of any other Member into their
markets."
707 As for the term "restriction", the panel in the Colombia – Ports of Entry case, after
reviewing several GATT and WTO cases, concluded that "restrictions" in the sense of Article XI:1
contemplate measures that create uncertainties and aff ect investment plans, restrict market access for
imports or make importation prohibitively costly, and that the importance in an Article XI:1 analysis
is to look at the design of the measure and its potential to adversely affect importation.708 On the basis
of these considerations, the Panel will now proceed to examine Section 727 to determine whether it
constitutes a "restriction" or a "prohibition within the meaning of Article XI:1.
7.455 The establishment and implementation of a rule by FSIS in the Federal Register allowing the
importation of poultry products from a given country is a prerequisite for the importation of such

703 The panel in India – Quantitative Restrictions found:
"[T]he text of Article XI:1 is very broad in scope, providing for a general ban on import or export
restrictions or prohibitions 'other than duties, ta xes or other charges'. As was noted by the panel in Japan –
Trade in Semi-conductors, the wording of Article XI:1 is comprehensive: it applies 'to all measures instituted or
maintained by a [Member] prohibiting or restricting the importation, exportation, or sale for export of products
other than measures that take the form of duties, taxes or other charges.' The scope of the term 'restriction' is
also broad, as seen in its ordinary meaning, which is 'a limitation on action, a limiting condition or regulation'."
(original footnotes omitted).
Panel Report, India – Quantitative Restrictions , para. 5.128. See also Panel Report, Colombia – Ports
of Entry, para. 7.226.
704 Panel Report, Argentina – Hides and Leather, para. 11.17.
705 GATT Panel Report, Japan – Semi-Conductors, para. 106.
706 China's first written submission, paras. 103-106.
707 Panel Report, Brazil – Retreaded Tyres, para. 7.11.
708 Panel Report, Colombia – Ports of Entry, para. 7.240.

products.709 Without the establishment or implementati on of this rule, countries are prohibited from
importing poultry products into the United States.
7.456 Section 727 prohibited the FSIS to use appropriated funds to "establish" or "implement" a rule
allowing the importation of poultry products from Chin a. This restriction on the use of funds, had the
effect of prohibiting the importation of poultry pr oducts from China, because without a rule being
established / implemented, Chinese poultry products are banned from entering the US market. Hence,
Section 727 operated as a prohibition on the importati on of poultry products from China into the
United States.
(d) Conclusion
7.457 The Panel therefore finds that during the time Section 727 was in operation, it imposed a
prohibition on the importation of poultry products from China and thus is inconsistent with
Article XI:1 of the GATT 1994.
M. WHETHER SECTION 727 IS JUSTIFIED UNDER ARTICLE XX(B) OF THE GATT 1994
1. Background
7.458 The United States has put forward an affirmative defence under Article XX(b) of the
GATT 1994. For the United States, Section 727 was en acted in order to "protect human and animal
life and health from the risk posed by the importation of poultry products from China". 710 T h e
United States invokes this provision as a defence in case the Panel finds a violation of Article I:1
and XI of the GATT 1994 by Section 727.
7.459 Article XX(b) of the GATT 1994 provides for a ju stification to otherwise WTO-inconsistent
measures when they are "necessary to protect human, animal or plant life or health". Having found
that Section 727 is inconsistent with Articles I: 1 and XI:1 of the GATT 1994, the Panel will proceed
to examine the United States' defence under Article XX(b) of the GATT 1994.
7.460 We note that we have found that Section 727 is an SPS measure which is inconsistent with
Articles 2.2, 2.3, 5.1, 5.2 and 5.5 of the SPS Agreement. We also note that the preamble and other
provisions of the SPS Agreement specifically relate the SPS Agreement to Article XX(b) of the
GATT 1994. In this respect, the parties 711 have argued around the issue of the interpretation of
Article XX(b) of the GATT 1994 and how the SPS Agreement provides context. In our view, the crux
of the matter is whether it is possible to justif y Section 727 under Article XX(b) of the GATT 1994 as
necessary to "protect human and animal life and h ealth from the risk posed by the importation of
poultry products from China" 712 if that measure is inconsistent with various provisions of the
SPS Agreement.

709 USDA/FSIS, Process for Evaluating the Equivalence of Foreign Meat and Poultry Food Regulatory
Systems, p. 12 (Exhibit CN-7), 9 CFR § 381.196(a)(1) and § 381.196 (b) (Exhibit CN-6).
710 United States' first written submission, paras. 111 and 119.
711 Third parties have also commented on this. For example, the European Union suggests that the close
relationship between Article XX(b) of the GATT 1994 and the SPS Agreement means that the provisions of the
SPS Agreement provide immediate context for the interpretation of the provisions of Article XX(b) of the
GATT 1994. The European Union draws support for this vi ew from the fact that, as clearly stated in its
Preamble, the SPS Agreement "elaborates rules for the application" of "in particular" Article XX(b) and the
chapeau of Article XX of the GATT 1994, as well as from the fact that measures which satisfy the provisions of
the SPS Agreement are expressly stated to satisfy also the pr ovisions of Article XX(b) of the GATT 1994.
European Union's third-party submission, para. 38.
712 United States' first written submission, paras. 111 and 119.

7.461 Accordingly, we will commence our analysis of the United States' defence under
Article XX(b) by looking into the relationship between Article XX(b) of the GATT 1994 and the
SPS Agreement.
2. Relationship between Article XX(b) of the GATT 1994 and the SPS Agreement
(a) Arguments of the parties
7.462 When asked about the relationship between the SPS Agreement and Article XX(b) of the
GATT 1994, the United States agrees that the SPS Agreement, as one of the covered agreements, is
context for Article XX(b), just as other parts of the WTO Agreement are context. The United States
cautions, however, by stating that a consideration of "context" under the VCLT occurs when there is a
specific question of treaty interpretati on. In its view, the fact that the SPS Agreement is context for
Article XX(b) does not mean that any particular element of the SPS Agreement becomes a part of the
legal text for the consideration of a justification under Article XX(b). In the United States' view, it
would be incorrect to consider that Article XX(b) is to be interpreted as somehow incorporating all
the obligations of the SPS Agreement.
713 In the United States' view, th ere is nothing that makes the
SPS Agreement more relevant than, for example, Article XIV of the GATS.714
7.463 When asked about which provisions of the SPS Agreement the Panel should examine as
context for Article XX(b), the United States argu ed that it would be incorrect to view the
SPS Agreement as altering the scope or adding to the scope of Article XX(b), or as necessarily being
more "immediate" context than other provisions of the covered agreements.715
7.464 China argues that the provisions of the SPS Agreement provide relevant and immediate
context for interpreting Article XX(b). In China's view, the close relationship between Article XX(b)
and the SPS Agreement is reflected in the preamble and the presumption of consistency set forth in
Article 2.4 of the SPS Agreement.716 When asked about which provisions of the SPS Agreement
should the Panel examine as context for Article XX( b), China responded that the Panel should take
Articles 2, 3, 5, 6 and 8 of the SPS Agreement under consideration. China argued that these provisions
relate to the justification for a given measure , along with disciplines on non-discrimination in the
application of such measure.717
(b) Analysis by the Panel
7.465 The Panel is thus confronted with the issue of the relationship between Article XX(b) of the
GATT 1994 and the SPS Agreement. As explained above, it is an important issue because, given our
findings in Sections VII.F, VII.G and VII.H, th e question is whether it is possible to justify
Section 727 under Article XX(b) of the GATT 1994 as necessary to "protect human and animal life
and health from the risk posed by the importation of poultry products from China" 718 when we have
found that it is an SPS measure which is inconsistent with Articles 2.2, 2.3, 5.1, 5.2 and 5.5 of the
SPS Agreement.
7.466 In examining the relationship between Article XX(b) and the SPS Agreement, we recall the
customary rules of interpretation set out in the VC LT. The Panel also recalls that in accordance with
Article II:2 of the WTO Agreement, the multilateral trade agreements included in its Annexes 1, 2 and

713 United States' response to Panel question No. 54.
714 United States' response to Panel question No. 54.
715 United States' response to Panel question No. 56.
716 China's response to Panel question No. 54. China' s opening oral statement at the first substantive
meeting of the Panel, paras. 35-36.
717 China's response to Panel question No. 56.
718 United States' first written submission, paras. 111 and 119.

3 must be interpreted as a whole 719, and in a manner that gives meaning to all of them
harmoniously.720
7.467 We shall start by looking at the text of the chapeau of Article XX of the GATT 1994 and, in
particular, its paragraph (b), which read as follows:
"Subject to the requirement that such me asures are not applied in a manner which
would constitute a means of arbitrary or unjustifiable discrimination between
countries where the same conditions prev ail, or a disguised restriction on
international trade, nothing in this Agre ement shall be construed to prevent the
adoption or enforcement by any contracting party of measures:

(b) necessary to protect human, animal or plant life or health ..."
7.468 There is obviously no explicit reference to the SPS Agreement in the text of Article XX(b) of
the GATT 1994 because the text of this provision is a restatement of the GATT 1947 which pre-dates
the SPS Agreement. It does however refer to measures "necessar y to protect human, animal or plant
life or health".
7.469 We now turn to the SPS Agreement. Starting with the preamble of the SPS Agreement, we see
that it does either explicitly refer to Article XX(b) of the GATT 1994 or to its wording, on several and
meaningful occasions. The preamble reads as follows in the relevant portions:
"Reaffirming that no Member should be prevented from adopting or enforcing
measures necessary to protect human, animal or plant life or health, subject to the
requirement that these measures are not applied in a manner which would constitute a
means of arbitrary or unjustifiable discrimination between Members where the same
conditions prevail or a disguised restriction on international trade;

Desiring therefore to elaborate rules for the application of the provisions of
GATT 1994 which relate to the use of san itary or phytosanitary measures, in
particular the provisions of Article XX(b);*
*Footnote 1: In this Agreement, reference to Article XX(b) includes also the chapeau
of that Article."
7.470 Hence, the preamble explicitly states that the purpose of the SPS Agreement is to "elaborate
rules for the application of…, in particular, Article XX(b)", including a clarification in footnote 1 that
such a reference to Article XX(b) also includes the chapeau of that Article. We note that the preamble
actually commences by paraphrasing the wording of Article XX(b) and that of the chapeau of
Article XX of the GATT 1994.
7.471 We also note that the preamble uses the word "elaborate" to qualify the relationship of the
SPS Agreement with Article XX(b). The ordinary meaning of the word "elaborate" is to "explain
something in detail".
721 Accordingly, when the preamble states that the SPS Agreement elaborates the

719 Appellate Body Report, Korea – Dairy, para. 81.
720 Appellate Body Report, Argentina – Footwear (EC), para. 81.
721 The new Shorter Oxford English Dictionary, L. Brown (ed.) (Clarendon press, 1993), Vol. II,
p. 799.

rules for the application of Article XX(b), it is thus saying that the SPS Agreement "explains in detail"
how to apply Article XX(b). Because the SPS Agreement only applies to SPS measures
722, this
conclusion would apply in respect of measures found to be SPS measures, such as Section 727.
7.472 This is further confirmed by the wordin g of a number of provisions throughout the
SPS Agreement which either explicitly refer to Article XX(b) or mirror relevant language in that
provision.
7.473 As pointed out by the panel in EC – Hormones, Article 2 of the SPS Agreement is an example
of rules that elaborate Article XX(b). 723 In particular, Article 2.4 of the SPS Agreement includes a
presumption whereby SPS measures conforming to the SPS Agreement are presumed to be consistent
with Article XX(b) of the GATT 1994. Article 2.4 of the SPS Agreement reads:
"Sanitary or phytosanitary measures which c onform to the relevant provisions of this
Agreement shall be presumed to be in accordance with the obligations of the
Members under the provisions of GATT 1994 which relate to the use of sanitary or
phytosanitary measures, in particular the provisions of Article XX(b)."
7.474 Similarly, Article 3.2 of the SPS Agreement includes a presumption to the effect that
SPS measures that conform to international standa rds are deemed necessary and presumed consistent
with the relevant provisions of the SPS Agreement and the GATT 1994.
7.475 We also note that the definition of SPS measures in Annex A(1) of the SPS Agreement,
although not referring directly to Article XX(b) of the GATT 1994, does encompass measures applied
to protect animal or plant life or health as well as human life or health. We recall that Article XX(b) of
the GATT 1994 refers to measures "necessary to prot ect human, animal or plant life or health".
Hence, the same type of measures. Although Article XX(b) of the GATT 1994 could be seen as
encompassing more measures than those defined in Annex A(1) of the SPS Agreement; measures of
the type defined in Annex A(1) are included w ithin the type of measures contemplated in
Article XX(b) of the GATT 1994.
7.476 We also note that Articles 2.3 and 5.5 of the SPS Agreement refer to "arbitrary or
unjustifiable" discrimination and distinctions. Those same provisions also refer to "disguised
restrictions on international trade". Both of these phrases echo the language of the chapeau of
Article XX.
7.477 It is not uncommon for the specific agreements on trade in goods to be elaborations on
provisions of the GATT 1994.
724 Indeed, we find support for our un derstanding of such a relationship
in the way WTO Members have elaborated ot her provisions of the GATT 1994 through specific
covered agreements. The Customs Valuation Agreement , for example, elaborates the provisions of
Article VII of the GATT 1994 725, the Anti-Dumping Agreement and the Agreement on Subsidies and

722 For example measures that fall within the definition in Annex A(1) and that directly or indirectly
affect international trade. Article 1 of the SPS Agreement.
723 Panel Report, EC – Hormones, paras. 8.38-8.40.
724 We acknowledge the existence of a general interpretative note in Annex 1A of the WTO Agreement
which, in the words of the Appellate Body in Brazil – Desiccated Coconut, was included "in order to clarify the
legal relationship of the GATT 1994 with the other agreements in Annex 1A (Appellate Body Report, Brazil –
Desiccated Coconut, p. 12). It provides that in the event of a conflict between a provision of the GATT 1994
and a provision of another agreement in Annex 1A, the latte r shall prevail to the extent of the conflict. We are
not referring to this note since we do not understand this situation as a conflict.
725 The relevant part of the preamble of the Customs Valuation Agreement provides: "Recognizing the
importance of the provisions of Article VII of GATT 1994 and desiring to elaborate rules for their application in
order to provide greater uniformity and certainty in their implementation".

Countervailing Measures provide that they explain the implemen tation and application of Article VI
of the GATT 1994 726, and the Agreement on Safeguards provides that it clarifies and reinforces the
disciplines of GATT 1994, specifically those of Article XIX.727
7.478 The negotiating history 728 of the SPS Agreement also appears to confirm our interpretation.
The Negotiating Group on Agriculture established by the Group of Negotiations on Goods, sought to
strengthen the GATT rules and disciplines, in particular Article XX(b) recognizing the need to rely on
scientific evidence for SPS measures. 729 This strengthening of GATT rules and disciplines was to be
done by developing a set of principles that woul d govern the use of SPS regulations and barriers. 730
In this sense, one of the purposes of SPS Agreement was to complement Article XX(b) by providing
specific provisions that SPS measures must comply with in order to be consistent with Article XX(b).
7.479 We therefore conclude that the SPS Agreement elaborates and thus explains the provisions of
Article XX(b) in further detail when dealing with SPS measures. In the Panel's view, this
interpretation gives meaning to both Ar ticle XX(b) of the GATT 1994 and the SPS Agreement in a
harmonious manner.
7.480 Our next step would be to consider the implic ation of such a conclusion on our question; i.e.
whether it is possible to justify Section 727 un der Article XX(b) of the GATT 1994 as necessary to
"protect human and animal life and health from the risk posed by the importation of poultry products
from China"731 when we have found that it is an SPS measure which violates, inter alia, Articles 2.3,
5.1, 5.2 and 5.5 of the SPS Agreement.
7.481 We note that the United States has argued that merely because the SPS Agreement is context
for Article XX(b) does not mean that Article XX(b) is to be interpreted as somehow incorporating all
the obligations of the SPS Agreement.732 We disagree to a certain extent. Given our conclusion that
the SPS Agreement explains the provisions of Article XX(b) in further detail and because the
SPS Agreement only applies to SPS measures 733, the SPS Agreement thus explains in detail the
provisions of Article XX(b) in respect of SPS measures. Since that is the case, we have difficulty in
accepting that an SPS measure which is found inconsistent with provisions of the SPS Agreement such
as Articles 2 and 5, which are explanations of the disciplines of Article XX(b), could be justified
under that same provision of the GATT 1994. Additionally, we recall that Article 2.1 of the
SPS Agreement provides that Members have a right to ta ke SPS measures necessary for the protection
of human, animal, or plant life or health, provided that such measures are not inconsistent with the
provisions of the SPS Agreement.
734 Therefore, the Panel is of the view that an SPS measure which

726 Article 1 of the Anti-Dumping Agreement reads: "An anti-dumping measure shall be applied only
under the circumstances provided for in Article VI of GATT 1994 and pursuant to investigations initiated and
conducted in accordance with the provisions of this Agreement. The following provisions govern the application
of Article VI of GATT 1994 in so far as actions taken under anti-dumping legislation or regulations." See also
Article 10 of the SCM Agreement.
727 The relevant part of the preamble of the Agreement on Safeguards provides: " Recognizing the need
to clarify and reinforce the disciplines of GATT 1994, and specifically those of its Article XIX (Emergency
Action on Imports of Particular products), to re-estab lish multilateral control over safeguards and eliminate
measures that escape such control".
728 Supplementary means of interpretation under Article 32 of the VCLT.
729 MTN.GNG/NG5/10, para. 3.
730 MTN.GNG/NG5/WGSP/1.
731 United States' first written submission, paras. 111 and 119.
732 United States' response to Panel question No. 54.
733 For example measures that fall within the definition in Annex A(1) and that directly or indirectly
affect international trade. Article 1 of the SPS Agreement.
734 We note that other agreements on trade in g oods contain similar formulations. For example,
Article 10 of the SCM Agreement, which is entitled Application of Article VI of the GATT 1994, states that

has been found inconsistent with Articles 2 and 5 of the SPS Agreement, cannot be justified under
Article XX(b) of the GATT 1994.
7.482 We are not deciding that any analysis of Artic le XX(b) must be done with reference to the
SPS Agreement. We are only saying that, where an SPS measu re is concerned, the provisions of the
SPS Agreement become relevant for an analysis of Artic le XX(b) and, furthermore, where such an
SPS measure has been found inconsistent with provisions of the SPS Agreement such as Articles 2
and 5, the disciplines of Article XX(b) cannot be applied so as to justify such a measure.
(c) Conclusion
7.483 We therefore find that, because we have found that it is inconsistent with Articles 2.2, 2.3,
5.1, 5.2 and 5.5 of the SPS Agreement, the United States has not demonstrated that Section 727 is
justified under Article XX(b) of the GATT 1994.
N. W
HETHER SECTION 727 IS INCONSISTENT WITH ARTICLE 4.2 OF THE AGREEMENT ON
AGRICULTURE
7.484 The Panel observes that China claims that Section 727 violates Article 4.2 of the Agreement
on Agriculture. In particular, China requests the Panel to find that Section 727 restricts the volume of
Chinese poultry products that may enter the United St ates at zero, resulting in the maintenance of a
"quantitative import restriction" inconsistent to Article 4.2 of the Agreement on Agriculture.735
7.485 We recall that we have found that Section 727 is inconsistent with Article XI:1 of the
GATT 1994, entitled "General elimination of quantitativ e restrictions", because Section 727 operates
as a prohibition on the importation of poultry products from China into the United States.
7.486 The Panel, after careful consideration, on th e basis of judicial economy, refrains from ruling
on China's claim under Article 4.2 of the Agreement on Agriculture . As explained in
Section VII.G.2(c) above, the principle of judicial economy is recognized in WTO law. The Appellate
Body has consistently ruled that panels are not required to address all the claims made by a
complaining party provided they do not exercise judicial economy where only a partial resolution of a
dispute would result. The Panel believes that this is not the case. Indeed, in making findings under
Article XI:1 of the GATT 1994, the Panel considers th at it has effectively reso lved the aspects in this
dispute related to the "restrictions" on Chinese poultr y and poultry products into the United States.
The Panel finds support for its exercise of judicial economy in the practice of panels and the Appellate
Body in previous dispute settlement proceedings. For example, the Panel in US – 1916 Act (Japan) ,
after finding a violation of Article VI, held that in the case before it, Article VI addressed the "basic
feature" of the measure at issue more directly than Article XI although this did not mean that
Article VI applied to the exclusion of Article XI:1. On that occasion, the Panel found that it was
entitled to exercise judicial economy and decided not to review the claims of Japan under
Article XI.
736
7.487 For the above reasons, the Panel concludes that it would not be appropriate to proceed and
rule on China's claim under Article 4.2 of the Agreement on Agriculture, and, thus, declines to do so.

"[c]ountervailing duites may only be imposed pursuant to investigations initiated and conducted in accordance
with the provisions of this Agreement and the Agreement on Agriculture ." See also, Article 1 of the Anti-
Dumping Agreement and Article 2.1 of the Safeguards Agreement.
735 China's first written submission, paras. 113-114.
736 Panel Report, US – 1916 Act (Japan), para. 6.281.

VIII. CONCLUSIONS AND RECOMMENDATIONS
8.1 In light of the above findings, the Panel finds that Section 727 is inconsistent with:
(a) Articles 5.1 and 5.2 of the SPS Agreement because it is not based on a risk assessment
which took into account the factors set forth in Article 5.2;
(b) Article 2.2 of the SPS Agreement because it was maintained without sufficient
scientific evidence;
(c) Article 5.5 of the SPS Agreement because the distinction in ALOPs for poultry
products from China and for poultry products from other WTO Members is arbitrary
or unjustifiable and that this arbitrary or unjustifiable distinction in ALOPs results in
discrimination against China;
(d) Article 2.3 of the SPS Agreement, first sentence, because the inconsistency of
Section 727 with Article 5.5 of the SPS Agreement necessarily implies that
Section 727 is also inconsistent with Article 2.3 of the SPS Agreement;
(e) Article 8 of the SPS Agreement because Section 727 has caused an undue delay in the
FSIS approval procedures and thus the United States failed to observe the provisions
of Annex C(1)(a) of the SPS Agreement.
8.2 The Panel declines to rule on China's claim that Section 727 is inconsistent with Article 5.6 of
the SPS Agreement.
8.3 The Panel further finds that Section 727 is inconsistent with:
(a) Article I:1 of the GATT 1994 because th e United States is not extending an
advantage immediately or unconditionally to the like products originating from
China, advantage that it has extended to all other WTO Members;
(b) Article XI:1 of the GATT 1994, because during the time it was in operation,
Section 727 imposed a prohibition on the importation of poultry products from China.
8.4 The Panel finds Section 727 is not justified under Ar ticle XX(b) of the GATT 1994 because
we have found that it is inconsistent with Articles 2.2, 2.3, 5.1, 5.2 and 5.5 of the SPS Agreement.
8.5 Finally, the Panel declines to rule on China's claim that Section 727 is inconsistent with
Article 4.2 of the Agreement on Agriculture.

8.6 Under Article 3.8 of the DSU, in cases where there is infringement of the obligations assumed
under a covered agreement, the action is considered prima facie to cons titute a case of nullification or
impairment of benefits under that agreement. Accordingly, we concl ude that to the extent that the
United States has acted inconsistently with the specified provisions of the SPS Agreement and the
GATT 1994, it has nullified or impaired benefits accruing to China under those agreements.
8.7 Article 19.1 of the DSU is explicit concerning the recommenda tion a panel is to make in the
event it determines that a measure is inconsistent with a covered agreement: "it shall recommend that
the Member concerned bring the measure into conf ormity with that agreement." (footnotes omitted).
However, given that the measure at issue, Sec tion 727 has expired, we do not recommend that the
DSB request the United States to bring the relevant measure into conformity with its obligations under
the SPS Agreement and the GATT 1994.

8.8 In this respect, the Panel notes that China has requested the Panel to make use of its discretion
under the second sentence of Article 19.1 of the DSU by suggesting ways in which the United States
could implement the recommendations and rulings of the DSB.
737 In particular, China has requested
the Panel to issue a recommendation that the United St ates does not revert to language similar to that
in Section 727 in its future legislation.738
8.9 The Panel is of the view that we are not to make recommendations on measures other than
Section 727 itself because these other measures, including future measures, are outside our terms of
reference. We do note that any findings of the Panel on the consistency of Section 727 with the
relevant provisions of the covered agreements should clarify the obligations raised and provide some
predictability for future cases dealing with the same or similar matters.
739 The Panel also notes that
Section 743, the most recent appropriations measure , already includes language different from that of
Section 727.
8.10 The Panel therefore decides that, in the present circumstances, although it makes rulings on
the consistency of Section 727 with the SPS Agreement and the GATT 1994, it will refrain from
making recommendations under Article 19 of the DSU in the terms requested by China.

United States to implement the recommendations and rulings of the DSB (i) by withdrawing the measure and
(ii) by committing to exclude language identical (or substantially similar) to that used in Section 727 from any
future measure. China's first written submission, para. 194.
739 Appellate Body Report, US – Stainless Steel (Mexico), para. 161.